Becoming a Magnet Hospital Can Increase Revenue, Offset Costs of Achieving Magnet Status

Several studies have found that Magnet Hospitals have lower mortality rates, shorter lengths of stay, higher patient satisfaction, and better patient outcomes than non-Magnet Hospitals. They are also more likely to adopt National Quality Forum-approved patient safety practices. Until recently, though, little was known about the effect of Magnet status on hospital revenue.

A study funded by INQRI and published in the May issue of Medical Care finds that achieving Magnet status is worth the investment - increasing hospital revenue by an average of $1,229,770 to $1,263,926 annually.

On average, it takes a hospital 4.25 years to complete the process of attaining Magnet Status, at an average cost of $500,000 annually, for an average total investment of $2,125,000. At that cost, the researchers calculate that hospitals begin to realize payback from achieving Magnet Status in two to three years.

“Since Magnet Hospitals have better patient outcomes, we suspect that these increases in revenue reflect increased reimbursement rates from private insurers, relative to non-Magnet Hospitals,” said co-principal investigator Richard Lindrooth, PhD, associate professor in the Department of Health Systems, Management and Policy in the Colorado School of Public Health, University of Colorado Anschutz Medical Campus. “That increased premium is related to the perceived higher quality of care and the desirability of including high-quality hospitals in insurers’ networks. The higher costs likely reflect a combination of the cost of providing high quality care and, to a lesser extent, a shift toward treating more complex cases.”

The study finds that, the increase in revenue overshadowed changes in patient costs.  Net patient revenue increased on average by 3.89 percent compared to non-Magnet hospitals, while costs increased only by 2.46 percent.

The research team data from 1998-2006 for 2,541 non-Magnet Hospitals and 141 Magnet Hospitals from the American Hospital Association Annual Survey, the Hospital Cost Reporting Information System from the Centers for Medicare & Medicaid Services, and the American Nurses Credentialing Center (ANCC). Data included information on hospital characteristics, as well as utilization, costs, charges, and other relevant financial information.

The interdisciplinary research team was led by Jayani Jayawardhana, PhD, assistant professor of health policy and management, University of Georgia; John M. Welton, PhD, RN, professor in the College of Nursing, University of Colorado Anschutz Medical Campus; and Lindrooth.

 

Nurses' Experience and Teamwork Contribute to Better Patient Care

A new study partially funded through the INQRI program reveals that nurse tenure and good team work improve the quality of hospital care and reduce costs. The research team, led by INQRI grantee Patricia Stone, found that patients received the best care when treated by nurses who have extensive experience in their current job. The study is in the current issue of the American Economics Journal: Applied Economics.

Stone and her team reviewed more than 900,000 patient admissions over four years at Veterans Administration Healthcare System hospitals. It is the largest study of its kind to link nurse staffing to patient outcomes, according to a statement by Columbia University Medical Center. Stone, centennial professor of health policy at Columbia Nursing, and her co-authors analyzed payroll records for individual nurses and medical records for individual patients to examine how changes in nurse staffing impacted length of stay.

"Reducing length of stay is the holy grail of hospital management because it means patients are getting higher quality, more cost-effective care," Stone said in the statement. "When the same team of nurses works together over the years, the nurses develop a rhythm and routines that lead to more efficient care. Hospitals need to keep this in mind when making staffing decisions–disrupting the balance of a team can make quality go down and costs go up."

Stone’s earlier INQRI-funded project: “The Impacts of Nurse Staffing, Skill Mix, and Experience on Quality and Costs in Long-Term Care” examined whether there is a causal relationship between nursing input and patient outcomes in long-term care facilities.

INQRI Grantee on the "Zero-Risk Bias"

The Robert Wood Johnson Foundation's Human Capital blog is in the midst of an exciting blog carnival, focused on "Health Care in 2013."  INQRI grantee Olga Yakusheva recently contributed an entry for this carnival, which outlines her wish for the U.S. health care system this year: "that we become more aware of the zero-risk bias" so that health care resources are used more effectively.

Click here to read Dr. Yakusheva's piece.

New RWJF and Health Affairs Brief on Waste in Health Care

A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation examines waste in US health care. Estimates are that more than a third of annual US health spending may be wasteful. A September 2012 Institute of Medicine report estimated that $765 billion a year was wasted through provision of unnecessary services, inefficiently delivered services, excessive prices and administrative costs, and missed prevention opportunities and fraud and abuse.

This policy brief discusses these and other types of waste in health care, ideas for eliminating waste, and the considerable hurdles that must be overcome to do so. It is the companion to a July 2012 Health Policy Brief, "Eliminating Fraud and Abuse."

Read it here.

Free Webinar Highlighting Healthcare Transitions and Coordination

Next week, former INQRI grantee, Gerri Lamb, PhD, FAAN, RN, is the featured guest for a webinar focusing on how healthcare transitions and coordination affect early readmissions, care effectiveness and the economics associated with the two. This is the second webinar in this two part series that highlights the importance of care transitions.

To register for the upcoming webinar, click here.

To view the first webinar of the two part series, which featured INQRI director, Mary D. Naylor, PhD, RN, click here.

The Need for Cost Information

Last week, the Robert Wood Johnson Foundation's Aligning Forces for Quality (AF4Q) program posted a new video that examines three different perspectives on the need for cost data. The video analyzes the need and potential impact of cost data on patients, providers, and employers' decision making.

Click here to access the video.

Study Shows That Nursing Home Medicaid Recipients Have Higher Hospitalization Rates

In a recently published study in the journal, Medical Care Research and Review, Helena Temkin-Greener, PhD, MPH, and her colleagues found that nursing homes may be enticed to send Medicaid recipients to the hospital for care due to financial incentives. The study identified that Medicaid reimbursement for hospitalizations are almost half that of Medicare reimbursements and as a result, may motivate decisions when determining if a patient needs to be transferred to a higher level of care.

Click here to read the full news article.

Click here to access the study (subscription may be required).