Reining In Medicare Costs Isn't Hurting Patient Care

When the government imposed a prospective payment system on hospitals in 1983 to control runaway medicare costs, many critics in the medical community were alarmed. Because government reimbursement was now fixed in advance based on a patient's diagnostic category, they feared that hospitals would be prone to discharge elderly patients too quickly in order to avoid losing money.

The good news is that such fears appear to have been largely unfounded. According to an initial evaluation by a RAND Corp. research team led by physicians Katherine L. Kahn and Robert H. Brook, the quality of hospital-based care received by the elderly during the 1980s actually improved dramatically.

The researchers studied care and outcomes for more than 14,000 elderly patients suffering from conditions ranging from stroke and heart disease to pneumonia and hip fractures. They found that the average hospital stay of such patients declined by 3.4 days, or 25%, after the payment reform went into effect. Yet the percentage of elderly patients receiving poor or very poor hospital care fell sharply, from 25% to 12%. And mortality in the first 30 days after discharge declined significantly by more than one percentage point, to 15.5%.

The study did raise some warning flags. It found that the number of patients sent home in a medically unstable condition--rapid heart rate, shortness of breath, confusion, and the like--rose from 10.3% to 14.7%, a trend that lessened the improvement in survival rates recorded for the total patient population. And the postdischarge death rates for the 12% of patients who received poor hospital care remained far higher than for those receiving very good care.

In sum, despite clear improvements in care, says Brook, "we still have a long way to go to make hospital quality as good as we would like it to be."

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