The Networks of Excellence Circus

Submitted by on Friday, August 22, 2014 - 02:36

As P.T. Barnum was fond of saying, without promotion something terrible happens….nothing – That's certainly not the only reason behind the recent announcement by the Cleveland Clinic and North Shore Long Island Jewish hospital to partner in a growing cardiac care network of "excellence", but it's a big reason. These self-promoted and described networks of excellence are forming in response to two important industry trends: (1) procedural episode carve outs, and (2) consumer price-sensitivity. For the first, employers who are looking to control the well documented variability in episode costs have been turning to carve outs as a way to accomplish that goal and gravitated towards marquee name facilities so that their network selection doesn't appear to be solely motivated by cost control. However, in doing so, they are far from optimizing the opportunity to control costs because the marquee names are also almost always the priciest. For the second, consumers who are subject to reference price programs, or simply sensitive to the amount of co-insurance they have to pay, are looking up prices and making rational decisions. The partnership of the marquee names into self-promoted national networks of excellence is a way of capturing market share from the first trend and avoid market share erosion from the second. But it also points to another important and worrisome aspect of U.S. healthcare….the almost complete lack of reliable consumer-friendly quality of care data.

What this means to you – A recent paper in Health Services Research points out what we've suspected, that differentiating hospital quality on the basis of available public measures, including the Surgical Care Improvement Program measures, is not possible. For common cardiac procedures such as stent placements and other PCIs, mortality is very low and that plus other publicly available quality measures fail to distinguish the performance of hospitals or physicians. The same is true for orthopedic procedures. Hence the emergence of self-promoted networks of "excellence" because if these hospitals don't self-promote, something terrible might happen…they'll start seeing the effect of consumer price-sensitivity. Employers and plans need to understand that we have to move beyond this self-promotion and look far more closely at the facilities' quality claims. And the extent to which their quality really can't be distinguished from others, then let's not agree to be fooled into paying higher prices for equal quality. Of course, the task of differentiating quality of care and better understanding which combination of processes could lead to better outcomes suffered a significant blow instead of a boost with the abysmal results from the grandiose and ill-advised Partnership for Patients Program. So instead of having a better basis from which to understand quality, we've collectively simply funneled an extra billion dollars in the pockets of….the self-promoted networks of "excellence". And now these expanding networks are looking at self-insured employers thinking about that other Barnum quote: In every crowd there's a silver lining.