This is a guest post by Kathy Rowell at HealthDataViz. Kathy and her team of healthcare experts help organizations align systems, design reports, and develop staff to communicate healthcare data clearly.
I have watched with great interest as the U.S. Center for Medicare and Medicaid Services (CMS) has made hospital charge data available to the public, and different groups have begun reporting on it. I imagine that many of you share my core feeling about this topic (one that I have long held, and that the publication of this data changed not at all): hospital charges do not reflect the true cost of delivering care. Displaying what these institutions charge without adequate explanation and context is therefore deeply misleading.
Here is one display of the data from a New York Times visualization that made me- and many hospital CEOs and CFOs- very uncomfortable:
Click image to explore this visualization
This graphic showing only
Medicare charge and reimbursement data for US hospitals displays the following information:
• The five most common types of procedures performed by a particular hospital
• What the hospital charges for these procedures
• How those charges in each case compare to the average of all other US hospitals for the same procedure
• How much Medicare reimburses the hospital for the types of procedures selected
• How that payment compares to those to other U.S. hospitals
Data displays like this one have elicited comments and re-design suggestions, such as comparing teaching hospitals only to other teaching hospitals, since their charge and reimbursement structure includes the cost of training physicians.
Additionally, there are factors crucial to correctly interpreting Medicare charges and payments: geographic location of respondents (urban v. rural), for example; and patient acuity, among others. These factors can and should be explained more fully in the displays—as should an even more central piece of information often left out: the hospital’s payor mix. Aside from Medicare, who is paying the bills and how much is being spent?
Here’s what I’m getting at: most of us who work in the system often dismiss hospital charges as a false construct, one that isn't based in any way on what it really costs to deliver care. We view these charges through the lens of cost-shifting – the process by which hospitals inflate their charges in order to capture higher reimbursement from private payors to make up for the reimbursement shortfalls in public ones, such as Medicare and Medicaid.