Study: Despite Improvements, Academic Medical Centers Trail Non-Academics on Cost and Quality Metrics

Navigant analysis of Medicare cost and quality data suggests higher AMC operating expenses aren’t contributing to better quality performance compared to non-AMCs

CHICAGO – August 8, 2018 – Despite steady improvements, a new analysis shows academic medical centers (AMCs) generally trail non-AMCs across a variety of cost and quality metrics. 

The study from Navigant (NYSE: NCI) also found that quality outcomes are not significantly better at high-cost AMCs and non-AMCs, compared to low-cost ones.

According to the analysis, Medicare median wage and case mix index (CMI)-adjusted cost per case was 5.8% higher at AMCs versus non-AMCs in 2017. This equates to an estimated $3.1 million in average added annual operating expenses for traditional fee-for-service (FFS) Medicare patients per AMC analyzed. 

In addition, a 22% cost per case disparity exists between high (25th percentile) and low (75th percentile) performing AMCs, compared to 19.8% for non-AMCs. Thus, the differential for low performers would amount to approximately $12 million per AMC and $9.2 million per non-AMC in added annual operating expense attributed to Medicare FFS patients, compared to high performers.

Analysis results also suggest:

“While AMCs have earned strong reputations for cutting-edge and specialty care, our previous experience has found most AMC admissions and procedures could also be performed at non-AMCs,” said study author and Navigant Director Christopher Stanley, M.D. “As healthcare transparency increases, AMCs performing poorly on analyzed measures of care may face lower patient volumes, a decrease in revenue through CMS and commercial value-based payment models, and less favorable payer partnership opportunities. Results from this analysis reinforce the need for AMC quality and cost performance to be in line with non-AMCs.”

Facilities struggling with value-based programs could face further financial pressures due to such trends as:

Approaches AMCs can implement to minimize these negative implications and improve quality and cost include:

Navigant’s analysis is based on data from 387 U.S. hospitals (175 AMCs, 212 non-AMCs) with more than $500 million in annual net patient revenue and 10,000 annual discharges. Facilities that didn’t report financial data in 2016 and CMS value-based program scores for FY 2018 were excluded from the analysis.

About Navigant
Navigant Consulting, Inc. (NYSE: NCI) is a specialized, global professional services firm that helps clients take control of their future. Navigant’s professionals apply deep industry knowledge, substantive technical expertise, and an enterprising approach to help clients build, manage, and/or protect their business interests. With a focus on markets and clients facing transformational change and significant regulatory or legal pressures, the firm primarily serves clients in the healthcare, energy, and financial services industries. Across a range of advisory, consulting, outsourcing, and technology/analytics services, Navigant’s practitioners bring sharp insight that pinpoints opportunities and delivers powerful results. More information about Navigant can be found at navigant.com.

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