Alarmed by rising health care costs, a coalition of Washington-area employers is conducting an unprecedented survey of how area hospitals treat about 20 common medical conditions, and how much they charge for each.
The study will look for differences in the treatment and cost of "high-volume" diagnoses -- such as appendicitis, pregnancy and heart attack -- at 38 hospitals throughout metropolitan Washington. Results are expected to be made public late next year.
The $100,000 project is sponsored by the National Capital Area Health Care Coalition (NCAHCC), a group of nearly 200 corporations, insurance companies, unions, trade associations and health care providers. It will be funded by member donations and a $42,965 matching grant from the CIGNA Foundation, an affiliate of the CIGNA Corp., a Hartford-based insurance and financial services company.
The survey will define hospital-to-hospital variations in the treatment of specific ailments -- for example, how long patients with pneumonia stay in each hospital, on average, and what sort of tests, X-rays and drugs they receive.
The project's goal is "not to point the finger at individual hospitals," said NCAHCC executive director Dindy Weinstein, but to let them see how they compare with other area hospitals and to make employers aware of cost differences among equally effective treatments. Those differences may spur cost-conscious employers to "shop around" and contract with the most efficient health providers for care of insured employes.
"Basically, we hope it will instill some competition into the system," Weinstein said.
Washington hospital charges are among the highest in the nation, averaging $501 per day, compared with the national average of $369. Nationally, hospital charges account for about 41 percent of health care costs.
NCAHCC, founded a year ago, is one of about 130 coalitions around the country, most of them led by major employers concerned about rising health costs.
Studies in other parts of the country have found wide variation in medical "practice patterns" -- the prevailing treatments and costs -- for identical medical diagnoses.
The type of medical care a patient gets is "as strongly influenced by subjective factors related to the attitudes of individual physicians as by science," says Dr. John Wennberg, professor of community and family medicine at Dartmouth Medical School and an expert on practice patterns.
For example, the chance a women will have a hysterectomy by age 70 was 20 percent in one Maine community and 70 percent in another, Wennberg found. In Iowa, the chance of a man having his prostate removed by age 85 ranged from 15 percent to 60 percent, depending on the hospital market. In Vermont, the probability that a child will undergo a tonsillectomy ranged from 8 percent in one market to nearly 70 percent in another.
Those differences have profound implications for efforts to control health costs.
"The different opinions of doctors over the need to hospitalize are much more influential" in determining total medical costs than are differences in cost per case or duration of hospital stay, Wennberg writes in the latest issue of Health Affairs.
In keeping with this growing attention to practice-pattern differences, Washington's NCAHCC will use data from hospitals, insurance companies and the federal government's Medicare claims to define local practice patterns for some 20 common procedures that account for a hefty portion of the area's health care bill.
"This is a major breakthrough," said Al Burfeind, vice president of human resources for Federal National Mortgage Association (Fannie Mae) -- a coalition member. "I don't know of a major corporation that doesn't know what it costs to produce its products, but you try to find out what our hospital costs are, and nobody knows."
Health care purchases are dominated by "a credit-card mentality," Burfeind said. "There's no shopping. You go where the doctor tells you. No one asks 'What does it cost?' or 'Is there another way?'
"We're trying to build that discipline into the system."
NCAHCC also plans to develop standards of care for about 10 of the most common diagnoses. Those standards, including costs, will be matched against "what is actually happening" at each hospital, Weinstein said. Similar comparisons in other areas have shown that actual procedures and charges generally exceed those indicated by professionally-developed standards of appropriate care.
"Every effort" will be made, Weinstein said, to adjust the findings to account for the differing missions of individual hospitals. For example, a hospital's location or affiliation with a medical school may result in its treating more uninsured patients or critical-care cases.
District hospitals "cautiously support" the practice-pattern study, said coalition board member Stephen H. Lipson, executive director of the District of Columbia Hospital Association.
"We knew that sooner or later the cost of health care would get the attention of the large employers and they'd sit down and get together on a study like this," Lipson said. "So we said, why don't we help organize it so we can have a seat at the table and a chance to share in the dialogue."
A key unresolved issue is confidentiality. While much of the data could be obtained from other sources, such as insurance records and Medicare claims, Lipson said doctors and hospitals may be reluctant to provide some of the information, unless it is kept confidential.
"Woodies and Hecht's don't share competitive information," he said. "Why should hospitals?"