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A Leap Into Better Care

October 29, 2004
Related Topics: Health and Wellness, Featured Article, Compensation

With 53,000 employees in Washington state, Boeing wields considerable clout when it comes to health-care spending. So when the company wanted to discuss quality improvement with Seattle-area hospitals in 2001, administrators at the 20-plus facilities cleared their schedules.

    Boeing officials, early backers of an employer-driven health initiative called the Leapfrog Group, stressed that they didn’t want to bandy about abstract concepts.

    Instead, hospitals would be evaluated according to how they met specific Leapfrog standards, such as whether the facility used a computerized physician-order-entry system rather than the more error-prone route of paper medical records and physician chicken scratch. They would be asked to report the number of heart bypasses they’d performed. Boeing officials also would inquire whether specially trained ICU doctors, called intensivists, were the sole caregivers for critically sick or injured patients.

    Leapfrog estimates that, with widespread implementation, it could prevent as many as 65,341 deaths and at least 567,000 medication errors annually. The potential cost-savings: nearly $10 billion a year.

    Hospitals weren’t initially given specifics, but were reassured that they would be rewarded for their efforts, says Greg Marchand, a human resources generalist at Boeing. Apparently, they paid attention.

    Now at least 16 of the 26 Seattle-area hospitals meet Leapfrog intensivist standards, compared with four in 2002. In 2002, Children’s Hospital & Regional Medical Center in Seattle started using a computerized physician-order system for all inpatient and emergency department care, says Dr. Mark Del Beccaro, clinical director of information services. The technology was already in the planning stages, Del Beccaro says, but Boeing’s interest "gave us further impetus" to move forward.

    This summer, the incentives kicked in. Boeing employees and dependents who choose a hospital that meets Leapfrog standards don’t pay any money out of pocket beyond their deductible. Employees who select another facility pay 5 percent of their hospital bill. By early fall, it was still too early to tell whether the incentives had influenced employee choice, Marchand says: "We are certainly interested in seeing what the effect is."

    Leapfrog emerged out of The Business Roundtable, an association of Fortune 500 business leaders, as concerns about cost and quality converged in the late 1990s. Without doubt, the price pressures have proved relentless. From 2000 to 2004, the average family health insurance premium increased 59 percent, far outpacing inflation growth of 9.7 percent, according to the latest annual survey by the California-based Kaiser Family Foundation. But employers didn’t know much about the health care they were purchasing. And there were clearly weak spots.

    One widely publicized 1999 Institute of Medicine report estimated that there were as many as 98,000 medical errors annually, costing both dollars and lives. Last year, RAND researchers reported in the New England Journal of Medicine that only half of recommended health treatments, such as screening for colon cancer, are routinely performed.

    As employees are asked to pick up more of their health-care bill, it’s only fair that they have better information about health quality, says Suzanne Delbanco, chief executive officer of Leapfrog, which was formed in 2000. The organization’s goal is two-pronged, she says. "One is to help consumers make more informed health-care choices. The other is to reward providers that offer superior care."

    By mid-2004, about 160 companies, unions, health plans and other purchasing coalitions were involved with the effort, representing some $63 billion in health spending annually. Hospitals in 23 regions of the country submit their data to the Leapfrog Web site (

    Some employers, including Boeing and General Electric, disseminate the results on their own company Web sites. Initially, Leapfrog asked for information in three areas: installation of computerized physician-order-entry systems, usage of ICU doctors, and the number of surgeries performed for heart bypass and four other procedures.

    Earlier this year, Leapfrog also asked hospitals to start reporting details about 27 more practices endorsed by the nonprofit National Quality Forum (, including hygiene practices and safe administration of medication.

    Still, measuring health quality remains a matter of some debate. Some also argue that Boeing’s effort to take the next step, using financial incentives to steer employees toward better hospitals, remains the exception rather than the norm. A February analysis by the Washington, D.C.-based Center for Studying Health System Change didn’t find significant improvement among hospitals included in Leapfrog’s first regional efforts. Hospitals reported that big employers will have to provide more motivation to spur change.

    But even proactive employers may find their influence limited, says report co-author Kelly Devers, now an associate professor of health administration and family medicine at Virginia Commonwealth University. "If there are only two hospital systems in your area, it can be difficult to get them to compete with one another on these [quality and cost] issues."

Measuring quality
    Leapfrog officials tout the benefits of their first three "leaps’’ in saving both dollars and lives. These benefits, if they are achievable, can require a substantial up-front investment by sometimes cash-strapped hospitals. One 2003 analysis by First Consulting Group in Long Beach, California, found that a 500-bed hospital should expect to pay $7.9 million up front for a computerized physician-order-entry system and about $1.3 million annually to maintain the technology.

    Of the 544 hospitals surveyed by Leapfrog in August, 6.3 percent were using the technology, compared with 2 to 3 percent in 2001. While implementation hasn’t been as fast as Leapfrog officials would like, there have been signs of more widespread adoption, Delbanco says.

    Assessing the subtleties of heart surgery, though, isn’t as straightforward as crunching the bottom line. One spot of contention is how much hospital volume--the number of heart bypasses or other surgeries performed--corresponds with better survival. A 2002 study cited by Leapfrog found that mortality decreases as the number of surgeries increases for 14 different procedures, including heart bypass.

    A more recent study made the case that, at least for bypass, there was only a limited association between hospital volume and results. Other factors, such as the number of surgeries performed by individual surgeons at the hospital, could influence the outcome, researchers said. Volume is by no means a foolproof indicator, says Delbanco. "But in the absence of any other information, a consumer has far greater odds of making the right choice."

    In 2003, Leapfrog officials took the next step, asking hospitals to report death rates and other outcomes for several procedures, including heart bypass and angioplasty. Like all Leapfrog data, the information is voluntary, but it must be certified in writing by the hospital’s administrator.

The business case
    Beyond the numbers debate, there’s a larger issue. Does better health care always save money? The short answer is: sometimes. Certainly, preventing hospital medical errors doesn’t just save lives, but can also shorten costly medical stays, health-policy analysts say. Still, better treatment of chronic diseases such as diabetes may not benefit a company unless, like Boeing, they have a long-standing stable workforce.

    But GE’s program leader for health-care initiatives, Francois de Brantes, argues that it’s possible to do both. The company launched a hospital-comparison tool on its Web site in March ( In addition to offering a search tool that allows employees and their dependents to generate hospital reports, the Web site provides suggested questions to ask hospitals and physicians. From March to late August, about 10,000 hospital reports were generated, de Brantes says. During the same time span, there were 15,000 hospitalizations.

    This fall, GE officials took a similar step to Boeing’s, providing a financial incentive to the 25,000 employees working out of their Louisville office, as well as retirees and dependents. For those who require heart surgery, GE will waive the typical $150 hospitalization deductible if the patients select one of three facilities preferred by the company. The facilities, de Brantes says, were selected on the basis of both cost-effectiveness and adherence to Leapfrog’s criteria.

    Unlike Boeing, de Brantes can’t point to any immediate hospital initiatives emerging from GE’s change in reimbursement. He suspects that Louisville hospitals are playing a wait-and-see game. "They are waiting to see if patients are going to change their [hospital] choices. We’re waiting to find that out, too."

Boosting quality clout
    In the long term, de Brantes says, there is only so much pressure that big companies can bring to bear. "Ultimately, I think the clout is in the hands of the health plans. That’s what’s going to make a difference."

    Some health plans are taking steps in that direction. Blue Shield of California has grouped hospitals into two categories, "choice’’ and "affiliate,’’ depending on their cost-effectiveness and how well they meet quality benchmarks set by Leapfrog and other organizations. When employees pick a "choice’’ hospital, a higher percentage of their hospital bill is covered. During the first year of the program, Blue Shield tracked a 3.2 percent reduction in hospital treatment costs, as well as a 3.3 percent consumer shift from "affiliate’’ to "choice’’ hospitals.

    UnitedHealthcare has used some Leapfrog criteria to develop its national list of designated cardiac-specialty centers. A few employer groups are considering waiving hospital copays for employees who choose one of the designated cardiac-specialty centers, but no firm commitments have been made, according to spokeswoman Kelly Knigge.

    These various financial incentives, whether driven by employer or health plan, have "great potential," Devers says. "We’ll see how these experiments go.’’ Previous research has shown that employees will opt for the cheaper health plan, even if the premium difference is only a few dollars, she says. But choosing a hospital may be more complex, influenced by everything from driving distance to the physician’s preference.

    From Louisville to Seattle, employees will cast their votes, telling employers how much price and quality concerns matter when surgery looms.

Workforce Management, November 2004, pp. 69-70 -- Subscribe Now!

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