The high variability in hospital costs for the elderly Medicare beneficiaries has been cited as evidence of hospitals’ inefficient resource use. Nonetheless, an accurate analysis on hospital efficiency must take account of both health outcomes and resource usage.
A 2009 paper published in Circulation: Cardiovascular Quality and Outcomes, “Looking Forward, Looking Back: Assessing Variations in Hospital Resource Use and Outcomes for Elderly Patients With Heart Failure,” addresses one of the key drawbacks of existing research that analyzed only individuals who have died (i.e., the “looking back” method). Adopting the “looking forward” approach, this study is able to account for the differences on health outcomes for those who have survived. Analyzing patients with heart failures, the study finds that Californian teaching hospitals that used more resources had lower mortality rates.
The specific findings from this study include:
- Using the “looking forward” methodology, the risk-adjusted hospital means ranged from 17% to 26% for mortality.
- The “looking forward” risk-adjusted hospital means ranged between 7.8 to 14.9 total hospital days, compared with 9.1 to 21.7 days for “looking back.”
- In terms of indexed total direct costs, “looking forward” method found that to be 0.66 to 1.30 times of the mean, compared with 0.91 to 1.79 times for “looking back.”
The authors conclude with a discussion of the caveats of this study and the future research direction of distinguishing between inefficient and beneficial resource use.