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PERSPECTIVE

200 Years of Hospital Costs and Mortality

Two Hundred Years of Hospital Costs and Mortality MGH and Four Eras of Value in Medicine
Gregg S. Meyer, M.D., Akinluwa A. Demehin, M.P.H., Xiu Liu, M.S., and Duncan Neuhauser, Ph.D. ecent discussions about health care delivery have focused on value, defined as health outcomes achieved per dollar spent. One unique window into value over the past two centuries is afforded by mortality and cost data from Massachusetts General Hospital (MGH), which celebrated its 200th anniversary in 2011. These data complement the chronicles of MGH care that the Journal has been publishing since 1924 in the form of Case Records of the Massachusetts General Hospital. The story these sources tell has implications beyond MGH, reflecting national trends in acute care. Feeling compelled to document MGHs care in order to justify on16.0 14.0

going philanthropic support, the hospitals trustees sought to evaluate the quality of care from the day the hospital opened in 1821 (after a 10-year delay attributable to the exigencies of the War of 1812 and the difficulty of securing financing). Each month, two trustees were assigned responsibility for the hospitals care and addressed any complaints or suggestions. In addition, MGH reported annually on the condition of patients leaving the hospital, originally classifying them as having left dead, unfit or eloped (equivalent to against medical advice), not relieved, much relieved, or well (MGH annual reports are available through Google Books). Classifi-

Mortality Rate (%)

12.0 10.0 8.0 6.0 4.0 2.0 0.0 40

35 30 25 20 15 10 5 0

MGHs Inpatient Mortality Rate (Brown) and Adjusted Cost per Patient Who Was Discharged Alive (in 2010 Dollars; Blue), 18212010.

cations were simplified in 1916 to include only dead, unchanged, or improved (leading some to erroneously conclude that no patient has left MGH well since 1915). The hospital also collected data on the inpatient cost per patient discharged alive (adjusted here to 2010 dollars using the Consumer Price Index method). The graphs thus represent a run chart on value, as measured in terms of mortality and costs per patient discharged alive. Hospital mortality is complex and should be used cautiously in evaluating quality of care,1 but longitudinal examination provides potentially valuable insights into value. As Oliver Wendell Holmes, Sr., once observed, The mortality of a hospital depends not merely on the treatment of the patients, but on the class of diseases it is in the habit of receiving, on the place where it is, on the season, and many other circumstances.2 Inpatient mortality is influenced by patient demographics, case mix, severity, and chance. Over extended periods, historical trends (e.g., increased life expectancy due to improving sanitation and nutrition), access to care, secular events (e.g., epidemics and wars), evolving patient preferences (e.g., desires to receive end-of-life care at home or in the hospital), declining length of stay, and the array of available services (e.g., increased numbers of surgical procedures after anesthesia and antisepsis were introduced) also powerfully affect hospital mortality. All these factors must be considered in analyzing a 189-year
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Adjusted Cost per Patient Alive at Discharge (thousands of $)

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21 33 18 45 18 57 18 69 18 81 18 93 19 05 19 17 19 29 19 41 19 53 19 65 19 77 19 89 20 0 20 1 10
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PERSPE C T I V E

200 Years of Hospital Costs and Mortality

mortality curve. The early volatility reflects the relatively small number of admissions during MGHs first three decades (ranging from 103 in 1822 to 866 in 1849), when the general hospital concept was new, patients were often those who couldnt afford home-based care, and epidemics caused marked swings in hospital use. By the last decade of the 19th century, when admissions surpassed 3300 per annum, mortality became more consistent. The data also tell an epidemiologic story. The cholera epidemics of 18321834, 18491854, and 1865 are clearly visible, as is the 1918 influenza pandemic. The hospitals role in caring for the sick and injured from wars, particularly the Civil War and World War II, may also have left its mark. The mortality peaks between 1848 and the Civil War probably have more complex contributing factors and do not align neatly with hospital mortality trends elsewhere.3 A notable peak closely followed the introduction of ether anesthesia, the use of which was first demonstrated at MGH on October 16, 1846. Perhaps the ability to perform more varied procedures on sicker patients with more complex conditions contributed to this increase, owing either to the introduction of infection (then called hospitalism) or to emboldened surgeons testing the limits of their armamentarium. The concurrent increase in admissions (from 447 in 1846 to 1255 by 1860) also raises the possibility that patients who would otherwise be cared for at home or receive no care because their illness was too advanced were now coming to the hospital. The increase in hospital mortality between the late 1940s and the late

1950s came at a time when more Americans were being hospitalized, and dying in the hospital became more desirable than a traditional death at home.4 The cost per patient discharged alive also reflects the times. From MGHs opening until the end of the Great Depression, costs remained remarkably stable, while most hospital care was either charity care or paid for by patients themselves. With the growth of private insurance, Medicare and Medicaid after 1965, and medical technology, the cost data show a steep inflection point in the early 1960s (when costs first surpassed $4,000 per patient) and a rapid rise thereafter (with costs surpassing $25,000 in 2002). Notable exceptions to this inexorable growth occurred because of the wage-price freeze in the early 1970s and the growth of managed care in the mid-1980s. The past decade has seen even steeper cost growth. Although costs at an academic health center like MGH, which include research and teaching expenses, exceed those for the average U.S. hospital, the cost trends we observed parallel those seen in other hospitals since 1960.5 These data document an evolution of health care value through four distinct eras. The first, from 1821 to 1910, was characterized by random variation in inpatient mortality around a stable mean (8.7%) and flat costs (mean, $997 per patient discharged alive). The second, from 1911 through 1960, witnessed modest decreases in mortality accompanied by modest increases in cost. Between 1961 and 2000, there was a steeper decline in mortality and a steeper increase in costs. And the available data suggest that since 2001,

mortality has been level, while the cost per patient has escalated dramatically. To account for the complexity of hospital mortality and costs, we controlled for the influence of one years performance on the next, for secular trends (e.g., life expectancy at birth), and for significant events (wars and epidemics). We found that before 1910, there was no relationship between cost and mortality. Between 1911 and 1960, there was a weak relationship, and for every $1,000 increase in cost, mortality was reduced by two deaths per 1000 patients (P value for relationship between mortality and cost, 0.12). Between 1961 and 2000, the relationship was stronger, and for every $1,000 increase in cost, mortality dropped by 2.4 deaths per 1000 patients (P = 0.0008). The data are insufficient to determine the relationship between cost and mortality since 2001. We thus seem to have identified four eras of value in U.S. medicine, as chronicled at one academic medical center. The first was characterized by relatively high inpatient mortality but relatively low costs, with year-to-year variation probably determined by secular events and epidemics more than by the quality of care. During the second era, value increased modestly with the introduction of novel high-impact therapies, from salvarsan in 1910 to penicillin and other antibiotics; medical breakthroughs were being applied in hospitals that were caring for a wider spectrum of patients. In the third era, value increased further, as a growing researchindustrial complex introduced diagnostics and therapeutics to address an expanding array of diseases. In each of these

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PERSPECTIVE

200 Years of Hospital Costs and Mortality

eras, challenges were encountered and gradually addressed in a manner that improved value. The post-2000 era, however, seems to be characterized by diminishing returns, with growth in costs far outpacing reductions in inpatient mortality. Treatment of severely ill patients with increasingly complex conditions contributes to this phenomenon, but that fact does little to mitigate the reality that for the first time, improvements in inpatient mor-

tality may be coming at unsustainable increases in cost. Close examination of our past clarifies just how daunting is the challenge we face today.
Disclosure forms provided by the authors are available with the full text of this article at NEJM.org. From Dartmouth-Hitchcock Medical Center, Lebanon, NH (G.S.M.); the National Quality Forum, Washington, DC (A.A.D.); Massachusetts General Hospital, Boston (X.L.); and Case Western Reserve University School of Medicine, Cleveland, OH (D.N.). 1. Shahian DM, Wolf RE, Iezzoni LI, Kirle L,

Normand S-L. Variability in the measurement of hospital-wide mortality rates. N Engl J Med 2010;363:2530-9. [Erratum, N Engl J Med 2011;364:1382.] 2. Holmes OW. Homeopathy and its kindred delusions. In: Collected essays 1842 1882. Boston: Houghton, Mifflin, 1892. 3. New York City Department of Health and Mental Hygiene, Bureau of Vital Statistics. Summary of vital statistics 2009. City of New York, December 2010:106. 4. Stevens RA. Health care in the early 1960s. Health Care Financ Rev 1996;18(2):11-22. 5. Schactman D, Altman SH, Eilat E, Thorpe KE, Doonan M. The outlook for hospital spending. Health Aff (Millwood) 2003;22(6): 12-26.
Copyright 2012 Massachusetts Medical Society.

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