December 17, 2018

By the Numbers: Are Quality & Cost Mutually Exclusive?

Quality & Cost By the Numbers

By Book Chrobak

The adage “you get what you pay for” implies that the value or quality of what is being purchased is determined by the price paid. Spend more, get something better. This adage is not always true and the numbers show this is definitely not the case when looking at medical care. This month’s ‘By the Numbers’ discusses the opposite of getting what you paid for with a spine surgery example. In the case of lumbar simple fusions, the data from research on the ManagedCare website shows that spending almost 18% more did not increase the quality of care received for the same service at other facilities.

The first part of the study was to divide the facilities into two groups based on costs — a lower cost group of facilities and a higher cost group of facilities. All costs calculated in the study were from actual claims data. The study compared the quality rankings of the facilities in those two groups. It determined that the facilities in the lower-cost group had better than or similar quality rankings to the facilities in the higher-cost group. 

In the lumbar simple fusion example, the average surgery cost was $45,023 in the low-cost group versus $55,048 in the high cost group. This means that by shopping for better quality facilities, the patients saved 18.2% (or approximately $10,000) in surgical costs.

An astute healthcare observer might point out that the surgery costs are only one component of the total care. Rehabilitation, testing, and follow up care contribute to the “total episode.” Maybe the highest-quality rated facilities had low surgery costs but made up for it with inflated ancillary costs?

Not so, according to the study. When it looked at the total episode, the cost savings of the high-quality facilities actually increased slightly to 18.4% over the lower quality facilities. The lower cost, better quality rated facilities were on average $49,370 for total episode; compared to $60,504 at the second group of facilities. The study noted that the lower cost, better quality group of facilities performed significantly more procedures than its comparison group. Lower costs were achieved because of the higher focus on surgeries combined with newer technology.

The lumbar simple fusion example from the study illustrates that better quality does not mean higher costs. Finding a high-quality provider can provide cost savings. One tool to help find high quality medical care are concierge services. The Roundstone Cost Savings Investigation Team has a list of high-quality concierge vendors available. Please contact us to learn more.

Book’s Bio

In the Health Analytics Manager role, Book Chrobak helps with all things related to data: creating reports and visuals, participating in our CSI (Cost Savings Investigators) Team, and researching new data tools to attract and retain clients. He graduated with a major in Mathematics from the College of Wooster and completed his M.B.A. with a Finance concentration at Cleveland State University. When he’s not crunching numbers and data, he serves on the College of Wooster Alumni Board, participates in multiple committees for the Old Brooklyn Community Development Corporation Board, and enjoys long distance running.