Policies aimed at referring patients who need high-risk procedures such as coronary artery bypass graft (CABG) surgery to hospitals that conduct a high volume of such surgeries could save thousands of lives each year, according to some estimates. However, this approach may not necessarily reduce direct health care costs, finds a study led by John Birkmeyer, M.D., of Dartmouth-Hitchcock Medical Center. The research was supported in part by the Agency for Healthcare Research and Quality (HS10141).
Dr. Birkmeyer and his colleagues examined the economic impact of regionalization from the hospital, payer, and societal perspectives. From the hospital perspective, this strategy will primarily redistribute surgical profits from smaller to bigger centers. Using data from a cross-section of New England hospitals, they estimated average hospital profits for four surgical procedures. Based on average hospital profits for CABG, a hospital giving up 100 procedures a year to a higher volume hospital would experience a net financial loss of $684,000.
From the payer perspective, prices paid for procedures will likely increase in some geographic areas, according to Dr. Birkmeyer, as a result of decreased competition among providers.
From society's perspective, it is uncertain how volume-based referral policies would affect the true cost of providing surgical care. Concentrating selected procedures in a smaller number of high-volume centers could create some financial efficiencies as well as savings associated with better quality of care.
However, there would also be new costs. Increasing procedure volume at high-volume centers would require adding capacity (operating rooms and beds) at some facilities. There would be new administrative costs associated with transferring medical information between referring and referral hospitals. Finally, volume-based referral strategies would concentrate more care at teaching hospitals, where care tends to be more expensive compared with smaller nonteaching hospitals.
Surgical costs could also increase to the extent that volume-based referral policies create incentives for hospitals to do more procedures. The risk that such policies could increase the use of surgery is highest with procedures performed for discretionary clinical conditions, notes Dr. Birkmeyer. For example, there is a considerable gray area as surgeons decide which patients should undergo CABG for lifestyle-limiting coronary artery disease.
For more details, see "Will volume-based referral strategies reduce costs or just save lives?" by Dr. Birkmeyer, Jonathan S. Skinner, Ph.D., and David E. Wennberg, M.D., M.P.H., in the September/October 2002 Health Affairs 21(5), pp. 234-241.
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