Is Quality Of Care Important?

Quality of health care is an important issue for employer and employee purchasers for a number of reasons. First, there are widespread documented errors in the delivery of health care services. Second, there is substantial evidence for extensive overuse and underuse of various health care services. Third, poor quality of care erodes the value of health care purchases. Fourth, failure to exercise due diligence in evaluating quality of care may impact an employer's liability for a bad outcome of care. And, finally, lack of attention to quality of care can have negative consequences for an employer in employee relations and relationships with providers and others in the local business community. 

Errors in the Delivery of Health Care Services

More than a decade ago, the Harvard Medical Practice Study found that injuries caused by medical management occurred in 3.7 percent of hospital admissions in New York State. Among these injuries were drug complications, wound infections, and technical complications. Fully 27.6 percent of these injuries were the result of negligence, and 13.6 percent of the injuries led to death. Extrapolating these results to all U.S. hospital admissions in 1997, as many as 98,000 Americans may have died because of errors during their hospitalization in a single year. Other studies have confirmed the order of magnitude of this estimate for injuries during hospital admissions. Yet, we must assume this is a gross understatement of the impact of medical errors, given that it does not include injuries because of outpatient care.

The Institute of Medicine focused attention on the impact of errors in medicine through the work of its Quality of Health Care in America Project. Its first published report—To Err is Human: Building a Safer Health System—notes: "More people die in a given year as a result of medical errors than from motor vehicle accidents (43,458), breast cancer (42,297), or AIDS (16,516)." The group estimated that preventable adverse events resulted in total national costs of between $17 billion and $29 billion, over one-half of which are direct health care costs. More recently, a study of 20 percent of all Medicare hospital admissions in the year 2000 found that patient safety errors resulted in excess lengths of stay ranging from 1.34 days for accidental puncture or laceration to 10.89 days for post-operative sepsis. The excess charges associated with these errors were $8,271 and $57,727, respectively. Excess mortality was also associated with these patient safety errors, from 2.16 percent for accidental puncture or laceration to more than 21 percent for postoperative sepsis. Clearly, medical errors have a significant negative impact on employer health care costs, as well as employee health outcomes and productivity. These findings beg the question of what employers and individuals can do to help minimize the likelihood and the impact of medical errors in the health care services they purchase and receive a question to be taken up later

Overuse of Health Care Services

Investigators have long noted dramatic geographic variations in the use of health care services, without apparent differences in the health of the populations being served. For example, one study showed that Medicare hospitalization rates were 60 percent higher in Boston than in New Haven, yet Medicare mortality rates did not differ between the two cities. A recent study of Medicare end-of-life spending found that beneficiaries in higher spending regions of the United States received approximately 60 percent more care than beneficiaries in lower spending regions, without finding consistent differences between these groups in quality of care or access to care.

There is a large and growing body of research on the extent of medical care that is inappropriate or unnecessary. Studies of appropriateness of care have found that as much as 32 percent of selected procedures are inappropriate. An excellent example of research supporting this estimate is the series of studies commissioned by the State of New York Cardiac Advisory Committee on the appropriateness of various cardiac procedures in New York State. Evaluation of coronary angiographies (inserting a catheter into coronary arteries and injecting contrast material) found that 20 percent were of uncertain appropriateness and 4 percent were clearly inappropriate. When percutaneous transluminal coronary angioplasty (PTCA) (using a balloon catheter to open blood flow through a coronary artery) was evaluated, 38 percent were of uncertain appropriateness and 4 percent were clearly inappropriate. At some hospitals, as many as 57 percent of PTCAs were either inappropriate or of uncertain appropriateness. In a companion study, inappropriate and uncertain use of coronary artery bypass graft surgery was found to be 2.4 percent and 7 percent, respectively. Though these rates may appear relatively low, they have significant health implications, given that the average mortality rate for patients undergoing surgery in the study was 2 percent, and the complication rate was 17 percent.

These are but a few examples of research suggesting that inappropriate and unnecessary medical care has substantial negative consequences both for employee health and the cost of health care.

Underuse of Health Care Services

Another deficiency identified in health care quality is the failure to apply services known to be beneficial in improving health. In a study of patients hospitalized for acute myocardial infarction (heart attack), Marciniak and colleagues found that between 11 percent and 68 percent of patients nationwide did not receive particular standard treatments for this condition, despite being "ideal candidates" for therapies. An earlier study found that internists and family physicians were less knowledgeable about, and less inclined to practice, state-of-the-art advances in treatment of acute myocardial infarction than were cardiologists.

Similarly, a study of patients with diabetes treated in primary care offices found that between 55 percent and 84 percent of these patients did not receive optimal services recommended for their condition according to national guidelines in use. Optimal use of services varied by location of practice by as much as 238 percent. A recent study of 439 indicators of quality of care for 30 conditions and preventive care among a random sample of adults in 12 U.S. metropolitan areas found that only 54.9 percent received recommended care. Quality of care varied by medical condition, from a high of 78.7 percent of recommended care received for senile cataract to a low of 10.5 percent of recommended care for alcohol dependence.

Some studies suggest that physicians are more likely to underuse health care services when treating women, particularly black women. Research by Roger, et al. found that women with unstable angina (chest pain from blockages in arteries supplying blood to heart muscle) were 27 percent less likely to undergo non-invasive cardiac tests, and a startling 72 percent less likely to receive invasive cardiac procedures. Even within Medicare managed care health plans, black plan members were found to receive poorer quality of care than white plan members, specifically for eye examinations for patients with diabetes, for beta-blocker use after heart attack, and for follow up to hospitalization for mental illness.

There is also evidence to suggest that underuse varies by type of health plan. For example, a study found that Medicare patients with joint pain who were enrolled in HMOs reported less improvement in symptoms than similar fee-for-service Medicare beneficiaries. Yet, other research suggests no significant difference between quality of care in HMO and fee-for-service environments in such areas as hypertension and diabetes.

Failure to apply services known to be beneficial in improving health is a substantial and widespread problem. Clearly, this type of quality problem has negative implications for employee health and productivity. The implications for cost of care are more variable, because some of the underused services may result in a net increase in direct medical care costs, despite being effective in preventing negative and costly health outcomes. Nevertheless, in purchasing health care for ourselves or for employees, these are services we would want to receive as part of state-of-the-art quality in health care delivery. Whether one looks at quality from the perspective of individual providers, practices, or health plans, these landmark studies shed new light on deficiencies in quality of care, and suggest how appropriate to health care is the maxim: "Let the buyer beware."

Employer Liability

One reason employers should be concerned about health care quality is their potential liability for managed care programs they may purchase. The evidence for payer liability for managed care stems from two legal cases: Wickline v. State of California and Wilson v. Blue Cross of Southern California. In Wickline, the court concluded that a third-party payer can be legally liable for negligence in utilization review decisions. In Wilson the court determined that a third-party payer cannot escape liability for negligent utilization review based on the argument that the treating physician bears all legal responsibility for a hospital discharge decision.

In Fox v. Health Net, the estate of Nelene Fox was awarded damages from a managed care organization for its refusal to cover bone marrow transplantation and high-dose chemotherapy for advanced breast cancer. The total jury award was $89 million, $77 million of which was punitive damages. Some observers believed that the impact of this case on the liability of employers and MCOs was limited by the Employee Retirement Income Security Act (ERISA).

In the case of Goodrich v. Aetna U.S. Healthcare, a jury awarded the widow of David Goodrich $120 million for delays in approving coverage of high-dose chemotherapy and bone marrow transplantation for a form of stomach cancer. Although ERISA did not apply to this case because Goodrich was covered under a state-sponsored health plan, the size of the award and legislative action in 10 states to limit ERISA protection raised concerns about the exposure of MCOs and employer-sponsored health plans to litigation and resulting damage awards. More recent developments have mitigated these concerns. A 2003 study of the impact of state managed care liability statutes found that these statutes had produced no appreciable increase in liability exposure. In a 2004 ruling by the U.S. Supreme Court in Aetna v. Davila, the court essentially voided these statutes and found that employer-sponsored health plans cannot be held liable for damages for denial of coverage. While these developments represent a shift toward reduced liability of third-party payers for poor quality, negligent managed care processes, it nevertheless seems prudent for employers to address the issue of quality of care in their medical benefits plans as a matter of risk management.

Employee, Provider, and Community Relations

When medical benefits decisions are made without substantive consideration of quality of care, employees can take away the message that their health and well-being are not valued by their employer. This message can undermine one of the key objectives of offering medical benefits: to promote the recruitment and retention of employees. Incorporating quality assurance and continuous quality improvement (CQI) processes into medical benefits decisions, and effectively communicating these processes to employees, can help avoid the employee relations pitfall of employee dissatisfaction with their medical benefits.

Disillusioned providers also can undermine the extent to which employees value their medical benefits. Employee opinion may be influenced by negative assessments from physicians about the quality of an employer's health plan. In addition, physician performance may be adversely affected by a poor quality health plan, with consequences for employee health and productivity.

Failing to demonstrate a commitment to quality assurance and CQI in health care decisions can leave employers vulnerable to the charge of neglecting corporate social responsibility as well. This can have obvious negative implications for community relations.

Value of Medical Care Expenditures

The value of health care services can be defined as the health benefit per dollar spent. Chassin and the National Roundtable on Health Care Quality observed that errors in the delivery of health care services, as well as overuse of services, can reduce the value of health care services by both decreasing the numerator and increasing the denominator of this equation. Conversely, by reducing errors and overuse, the value of health care services can be increased. (The impact of underuse on value is more variable, as it tends to move the numerator and denominator in the same direction.) Most businesses would not view as prudent the practice of purchasing from suppliers based upon price alone. When viewing health plans and providers as you would view other suppliers to your business, considerations of quality and service, as well as cost, become essential components of the value equation.