How to Get Lower Cost, Higher Quality Healthcare in Southwestern Pennsylvania

Is it good news that UPMC agreed to extend its contract with Highmark for an extra year?

Did that cause Highmark to file for increases in premiums on many of its insurance policies last week?

If you're confused about who's right and who's wrong and what should be done about healthcare in the Pittsburgh Region, a new report from the national Center for Healthcare Quality and Payment Reform can help. How to Get Lower-Cost, Higher Quality Health Care in Southwestern Pennsylvania explains what's really going on in the healthcare wars, why you're paying too much and getting too little for your health insurance premiums and copays, and what should be done about. Key points in the new report include:

• The major cause of high and growing health care costs in the Pittsburgh Region and other parts of the country is the high prices charged by large health systems. (See page 3 for more detail.)
• Prices for the same hospital procedures vary by 100% or more between hospitals in the Pittsburgh Region, and the higher-priced hospitals do not have higher quality. (See pages 3-4 and 14-15 for more detail.)
• There is no incentive for patients to use lower-cost hospitals for expensive procedures. Highmark does not offer the kind of tiered network product that employers in other regions are using to control costs. (See pages 4-5 for more detail.)
• Current healthcare payment systems penalize doctors and hospitals for reducing costs and improving quality. There are better ways to pay for health care, but no health plans in the Pittsburgh Region pay this way, and no health systems in the Pittsburgh Region are offering to be paid differently. (See pages 5-6 for more detail.)
• In addition to prices that are higher than necessary, health care costs are high in the Pittsburgh Region because of the over-utilization of hospital services here. The Pittsburgh Region has some of the highest rates of hospitalization, surgery, and emergency room usage of any major region in the country. (See pages 6-7 for more detail.)
• The high utilization of healthcare services is not just because the Pittsburgh Region has an older or sicker population. Even after controlling for age and illness, utilization is higher in the Pittsburgh Region than other major regions for both seniors and working-age adults. (See pages 6-7 and 9-10 for more detail.)
• The overuse problem is concentrated in hospitals. The Pittsburgh Region has more hospital beds and more hospital employees than other major regions of the country (see pages 8-9 for more detail.) In contrast, the Pittsburgh Region under-invests in primary care, which can help to keep patients well and reduce hospitalizations (see page 8 for more detail.)
• Reducing hospital costs doesn’t necessarily mean layoffs. The Pittsburgh Region spends more on hospital equipment and facilities, and less on hospital workers, than other parts of the country. (See page 11 for more detail.) Lower-cost healthcare will require more jobs in primary care offices and home care. (See pages 11-12 for more detail.)
• There is relatively little data to determine whether Pittsburgh Region hospitals are providing high-quality care. U.S. News and World Report hospital rankings are based primarily on opinion, not fact, and they give higher rankings to hospitals in the region that have lower quality on objective measures. There is much less information about the quality of hospital care in the Pittsburgh Region than people in other regions have. The limited data available suggest that most hospitals in the region provide equivalent quality care, and some smaller hospitals deliver better care than UPMC. (See pages 12-13 more detail.)
• Hospitals provide extremely large discounts to health plans, so if a hospital refuses to contract with a health plan, it could mean that employers or patients could pay 2-4 times as much for care if that hospital is the only place that offers a particular procedure. The best way to prevent this problem is to require hospitals to charge the same amount to everyone. (See pages 14-16 for more detail.)
• Increasing competition among health insurance plans in the Pittsburgh Region could increase premiums rather than reduce them. The biggest impact on costs will come from having more competition among hospitals, not health plans. (See pages 16-18 for more detail.)