Hospitals have improved productivity dramatically in recent years

Is it truly possible for hospitals to become more productive, providing patients with better care for less money? Apparently yes, according to recent research that examined productivity growth in U.S. hospitals that treated Medicare patients who had a heart attack, heart failure and pneumonia during 2002-2011.

One major gambit of the Affordable Care Act (ACA) is the assumption that hospitals would become more efficient in the way they deliver care, both in terms of overall patient outcomes and the cost required to derive those outcomes, according to the New York Times. Citing a March study by economists from the Schaeffer Center for Health Policy and Economics at the University of Southern California published in Health Affairs, the newspaper columnist and researchers  concluded that gains in productivity in recent years have been far better than in the past. 

Overall, hospital productivity has improved by 14 percent between 2002 and 2011, based on the researchers' findings of more than 1 million hospital stays paid for by Medicare. That compares to years of negative productivity growth prior to that, averaging negative 0.9 percent between 1987 and 2006, according to the study.

Some hospitals try to improve outcomes and costs by making workflows more efficient; while others take a multidisciplinary approach.

One possible reason for the difficulty of improving outcomes is the economic theory of "cost disease," which a leading economist told the Times is also endemic in education. Organizations can't tame costs because they can't easily replace resources like physicians and other medical personnel.

The study was limited in many ways, as both the study authors and the Times noted it only focused on productivity gains in treating heart attacks, congestive heart failure and pneumonia. Although the Medicare program will issue financial penalties to hospitals that fall below certain quality thresholds, the study did not address that particular change specifically. Its authors observed that "innovative payment and delivery approaches under the Affordable Care Act and among private payers may increase the incentives of hospital leaders and managers to achieve productivity gains in the future. Thus, quality of care need not decline even if reimbursement does not keep up with healthcare cost inflation."

To learn more:
- read the New York Times article
- check out the Health Affairs study abstract