ER Spending: More Is Better, Study Finds

Research found that increased hospital spending in the ER led to decreased mortality

An MIT economist studying tourists rushed to emergency rooms around Florida came to this conclusion: when it comes to emergency care for heart problems, you get what you pay for (or at least what your hospital has paid for).

The economist, Joseph Doyle, of MIT’s Sloan School of Management found that an increase of about $4,000 per patient in hospital spending led to a 1.4 percent decrease in the mortality rate. “The high spending hospitals in areas in Florida have lower mortality in what I consider comparable patients,” he said.

It might seem intuitive that investment in emergency care yields better health outcomes, but it’s a topic of hot debate, Doyle notes. (Think Atul Gawande in The New Yorker, and his pivotal piece on McAllen, Texas, which found that greater spending in various regions of the country doesn’t necessarily lead to better health.)

Doyle said that by studying ER visits by patients in Florida from out-of-town, you can reduce substantially the confounding factor of local patient variation that might otherwise occur. In his study, published in the American Economic Journal: Applied Economics, and condensed here by the MIT News office, Doyle looked at patient discharge data from nearly 37,000 hospitalizations between 1996-2003:

Doyle analyzed the patient data by ZIP code, age and even seasonality of visit to make sure that he was studying demographically similar tourists being treated throughout Florida.

Moreover, Doyle notes, Florida has significant “variation in how areas treat patients after heart attacks. Florida looks like a microcosm of the U.S., with high-spending and low-spending areas. And the per-capita income of an area is not correlated very well with [hospital] spending.” In Fort Lauderdale, for example, hospitals spend 30 percent more on heart patients than they do in nearby, affluent West Palm Beach.

Therefore, the variation in results that Doyle found does not stem from the prior health of patients, but from the level of care itself. Specifically, the greater expenses — and benefits — in heart treatment seem to come from a broader application of intensive-care-unit (ICU) tools and having more medical personnel on hand…

Overall, a 50 percent increase in what Doyle calls a hospital’s “spending intensity” allows it to reduce mortality rates due to heart problems to about 26 percent below the mean.

Interestingly, in Miami, one of the most expensive regions in the country, some hospitals, but not all, showed better survival. “I would expect some diminishing returns on spending,” Doyle said. “Some hospitals spend money wisely and some don’t,” he added. “The trick is to figure out which is the wise spending.”

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