Can we save money and still maintain quality?

Many of Medicare’s alternative payment models are based on the premise that there is a lot of waste in health care.  If that is the case, we could reduce cost with little to no effect on quality.  While that would be nice, is that really the case?  Consider two articles from the most recent edition of Health Affairs. 

Barnes et al. (2018) look at trends in the use of non-physician clinicians.  They find an:

increasing [nurse practitioner] NP presence in both rural and nonrural primary care practices in the period 2008–16. At the end of the period, NPs constituted 25.2 percent of providers in rural and 23.0 percent in nonrural practices, compared to 17.6 percent and 15.9 percent, respectively, in 2008. States with full scope-of-practice laws had the highest NP presence, but the fastest growth occurred in states with reduced and restricted scopes of practice.

A key question is whether or not this a positive development?  Clearly, nurse practitioners and physician assistants cost less than physicians.  Thus, on the cost side this is a positive.  The question is, whether, the cost reductions will affect quality of care.  On the one hand, NP and PAs do not have as much training as physicians.  Thus, we could expect lower quality.  On the other hand, if there are physician shortages, NPs and PAs can fill the gap and provide needed access to care.  I have written extensively about NPs, PAs in my blog in the past.  Most evidence says they provide similar quality of care.  That is likely true when NPs and PAs were a small share of providers, but as this percentage grows, the marginal (in the economic sense) service they provide may be low quality.

Let us consider a not dissimilar question: do teaching hospitals provide good value for the money?  Teaching hospitals are typically less expensive than non-teaching hospitals.  If quality of care is similar, payers could save money by incentivizing patients to go to non-teaching hospitals.

In a paper by Burke et al, (2018), however, they find that teaching hospitals do improve quality:

…high-severity patients had 7 percent lower odds, medium-severity patients had 13 percent lower odds, and low-severity patients had 17 percent lower odds of thirty-day mortality when treated at an academic medical center for common medical conditions, compared to similar patients treated at a nonteaching hospital. For surgical procedures, high-severity patients had 17 percent lower odds of mortality, medium-severity patients had 10 percent lower odds, and there was no difference for low-severity patients. The availability of technology explained some, but not all, of these differences.

In short, academic medical centers do have better quality and there is a cost-quality tradeoff.  One of the study authors writes in the N.Y. Times that:

Amid our enthusiasm for more efficient care settings, we should be cleareyed about the limitations: Sometimes less is more, but sometimes more is more.

As economists well know, in most cases, there is no such thing as a free lunch.

from Dental Tips

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