Marketing medical care

People typically choose a hospital based on their doctor’s advice, their insurance coverage, or perhaps where a relative was treated.

Sometimes it’s a religious affiliation, or the hospital is nearby.

But as families pay an ever-increasing share of the rising cost of health care, industry experts believe consumers are ready to make their own decisions about how they spend their health care dollars.

The nation already has seen pharmaceutical companies market their products on television and in magazines in an effort to attract the attention of health care consumers. Now it’s the hospitals’ turn.

Since the beginning of the year, Deaconess Medical Center has invested heavily in electronic and print advertising as part of a marketing campaign on a scale unlike anything the region has seen. Spokane’s second-largest hospital is trying harder to win customers.

Deaconess makes bold statements in its advertising: “Best in state for overall cardiac services,” “Best in state for vascular services.”

The claims regarding treatment of heart conditions and strokes are based on a contract Deaconess has signed with a ratings company called Health Grades Inc.

Deaconess is paying Golden, Colo.-based Health Grades for the right to advertise its high ratings, although neither the hospital nor the company would disclose the amount of those fees. Typically, though, such arrangements are in excess of $45,000 per award, industry sources say – before a single radio spot, newspaper ad or billboard placement is purchased.

Becky Swanson, vice president of corporate and creative communications for Deaconess, said that while the campaign is different for Spokane, the practice is common in other cities with keen hospital competition.

Deaconess decided to step up its marketing effort after reading a study that found Spokane patients would like to use “report cards” to choose hospitals, even though the same study said eight in 10 people surveyed don’t know how to find such ratings or judge the veracity of the underlying data.

Across the county, these hospital report cards have grown from general patient satisfaction surveys to scoring success rates of medical procedures.

“It’s moved from, ‘Yeah I had a great stay and the food was warm when it got to me and the nurses were nice’ to actual clinical report cards,” Swanson said.

Deaconess has much to be proud of, she said, calling the advertisements a new way to reach customers.But how reliable are the ratings of for-profit companies that have a vested interest in keeping hospitals as customers? How do they arrive at their conclusions?

Critics of these report cards contend that the companies’ methodology is not transparent, results may be compromised by profit motive, scores are based on old data and that they do not differentiate between hospitals that treat higher-risk patients and those that do not.

Moreover, a 2002 study published in the Journal of the American Medical Association found that Health Grades’ ratings “poorly discriminate” between any two individual hospitals, undermining the value of such report cards to consumers.

Consumer-driven health care

Dr. Samantha Collier, vice president of medical affairs for Health Grades, said the business collects the most recent Medicare numbers available from the federal government. The information about Medicare patients” treatment at a particular hospital is coded according to diagnosis and procedure. The company audits the data and applies a statistical methodology called regression analysis that Collier said is a widely used practice in medical research to define cause and effect.

“We want to be able to make apples-to-apples comparisons between hospitals, because at Health Grades we understand that patients vary from hospital to hospital,” she said. “Some will get very sick patients, and some may not get such sick patients.”This analysis, Collier said, takes into account such things as a patient who may have diabetes and renal failure along with heart failure. “They’re going to be expected to have a higher mortality rate after a heart attack as compared to someone who doesn’t have those and is otherwise healthy,” she said.

Health Grades awards one-star, three-star and five-star ratings to hospitals. The difference between what was expected of hospitals versus what actually occurred dictates the rating. For example, a five-star rating is given when a hospital exceeds expectations. Three stars are given for meeting expectations, and one star is failing to meet expectations.

“It’s a program of not just throwing up banners and advertisements. It’s a strategic quality initiative,” Collier said. “This is about getting quality information and engaging and empowering consumers, which is absolutely the mandate that’s coming down from the government.”

“Consumer-driven health care” is an idea that’s rapidly gaining traction nationally. Employers, insurers and President Bush tout the benefits of providing consumers with information so they can make better decisions on how their health care dollars are spent. That idea does not appear to have taken hold in our region, where people contacted by The Spokesman-Review mostly said they would rely on a doctor’s recommendation when choosing a hospital.

Collier said every hospital in the nation has received a rating from Health Grades. Furthermore, the company holds several workshops each year for the hospitals to present its findings and methodology.

The financial contracts between Health Grades and its hospital partners, however, are confidential, she said.

Need for ‘transparency’

Dr. Nick Fairchild, president of the Spokane County Medical Society, said he supports transparency in medical data so that patients can make intelligent decisions about health care.

“But it works both ways,” Fairchild said, voicing his concerns about companies like Health Grades rating hospitals and doctors. “They are not revealing what technology they use to arrive at their conclusions. Therefore it is not a level playing field.”

He would like to know how Health Grades comes to its conclusions and why Deaconess is on the list and Sacred Heart Medical Center is not.

“Is it because Sacred Heart is taking more high-risk patients and Health Grades’ data does not reflect this, or is it something Sacred Heart should improve on? If we had transparency, it would help everyone,” Fairchild said.

He also is concerned that there is so much scrutiny of doctors and hospitals that their decisions may not be “patient-focused.”

Fairchild fears doctors might ask themselves, “Should I be seeing patients without insurance? Should I take on a high-risk patient? It might hurt my standing with insurance companies.”

Denise Dominique, director of performance improvement at Sacred Heart Medical Center, said the coding and billing information at the basis of the rating programs used by Health Grades and its competitors, such as Evanston, Ill.-based Solucient, “does not necessarily tell the story of what the care of the patient is. They are taking this information and putting it in a grading system for the general public that does not show the whole picture.”

She said Sacred Heart is not at the top of the Solucient list, for example, because of the complexity of care the hospital offers.

“There isn’t a transplant hospital in the country that could” top that list, Dominique said. “We do cardiac transplants and ventricular assist devices, very high-risk surgeries, and we are one of the few hospitals in the country that do them. Sacred Heart would not rate as high under the Solucient model, and we brought that to their attention.”

Sacred Heart Communications Director Maureen Goins said that even though her hospital has received numerous cardiac and patient safety satisfaction awards, few people know about them.

“That’s because we can’t, in good conscience, pay the fees required by a few well-known rating agencies in order to share this information,” Goins said.

Griffin Trotter, associate professor at St. Louis University Center for Health Care Ethics, said he likes ranking systems in general. “I’m the kind of pro-consumer theorist that thinks people are smart enough to make decisions if they get themselves informed,” he said.

“But that doesn’t mean these things can run rampant,” Trotter said.

He called money transactions between a hospital and the people rating them “patently ridiculous” and not telling the consumer about such transactions “ethically compromised.”

“They should say, ‘Oh, and by the way, we receive money from these hospitals to publish our ratings,’” Trotter said, adding that such for-profit ratings would have no value to him.

There are a number of ratings organizations, and among those that charge for their services, the fees are levied in a variety of forms.

Kootenai Medical Center, for example, was named in February as a Magnet hospital by the American Nurses Credentialing Center. The Coeur d’Alene hospital’s application for Magnet status included an appraisal fee in excess of $12,000, and the hospital also was required to pay airfare, lodging, and daily fees of $1,500 per person for the time appraisers spent reviewing the hospital’s nursing program, said Jan Moran of the credentialing service.

There is no charge to use the Magnet trademark in marketing materials.

Rating business thriving

Health Grades is a 100-employee firm founded in 1995 that originally was called Specialty Care Network Inc. and was in the business of managing medical clinics.

That business failed, and the company was restructured to begin offering health care ratings. Today Health Grades owns trademark registrations for “The Healthcare Quality Experts” and “The Healthcare Rating Experts.” The company has applied to register a new trademark: “Guiding America to Better Healthcare.”

In 2005, Health Grades received $20.7 million for the sale of its ratings and advisory information, according to securities filings.

To grow, the publicly traded company needs to continue selling its ratings information and collecting advisory fees. Among the risks to its growth is the loss of hospital customers, if, for example, those customers don’t continue to achieve high ratings, the company’s most recent annual report said.

The answer to that risk, Health Grades disclosed in its financial filings, is to keep adding new award categories “designed to increase our ability to retain these clients.”

Collier said these new awards are meant to give hospitals the opportunity to highlight different pieces of quality without compromising with its “Star Ratings.” She likened it to car ratings.

“It’s really similar to what you’re very familiar with, like with what J.D. Power and Associates does, right? You see that they have ‘Best Big Trucks and Best SUV,’ ” she said.

No other major hospital in the region uses one of the for-profit ratings companies for marketing purposes.

Even though it paid to be evaluated as part of the nursing Magnet program, KMC differentiates between that program and for-profit grading companies.

“They generally give you a call and say, ‘You may be one of our top hospitals,’ ” said Joe Morris, Kootenai Medical Center CEO, of companies like Health Grades and Solucient. “We tend to not rely on proprietary graders. They are using Medicare data that is two years old.”

Patient numbers higher

The Washington State Hospital Association endorses the federal government’s Hospital Compare Initiative as an independent source of information about different facilities.

Both Deaconess and Sacred Heart scored well with Hospital Compare. But hospitals agreed to not use the information for competitive marketing purposes, said Cassie Sauer, spokeswoman for the hospital association.

This stripped some of its usefulness to Deaconess, which wants to tell Eastern Washington patients that it is alive and well after years of financial setbacks, layoffs and program closures such as pediatric care.

Deaconess, operating under Empire Health Services along with Valley Hospital and Medical Center, hired CEO Jeff Nelson in 2004. A turnaround specialist with Tatum Partners when he came to Empire, Nelson moved quickly to make tough financial decisions; restored more of the pay cuts that had sapped employee morale; hired a new management team; and seized upon the good things happening at the hospital, including its high scores from ratings companies like Health Grades and Solucient.

Swanson has since overseen those marketing messages that she said have bolstered pride within Deaconess.

It’s too early to know if the advertising has worked, but she noted that patient numbers are higher.

Collier added that consumers understand symbols and ranks. Not numbers.

“It’s all a great big waste of time and money if consumers can’t understand it,” she said. Health care providers cite two sources of information as the industry standards.

The Hospital Quality Alliance, a collaboration of consumers, hospitals, doctors, accrediting organizations and federal agencies, measures how often hospitals provide recommended care known to provide the best results for heart attack, heart failure and pneumonia.

The results, based on data voluntarily submitted by hospitals, are published on a Centers for Medicare and Medicaid Services Web site, www.hospitalcompare.hhs.gov.

The other is the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), which accredits 85 percent of all hospitals in the nation.

Accredited hospitals must meet JCAHO standards for such things as infection control, patient safety and performance and are required to submit performance data four times a year.

Neither charges to publish results, although hospitals pay a membership fee to belong to JCAHO.

Focus on quality a plus

Creating incentive for hospitals to improve performance can only be a good thing, according to Dr. Jonathan Sugarman, CEO and president of Qualis Health, a nonprofit quality improvement organization. The concern is over how these rating companies arrive at their conclusions and what they ratings actually demonstrate.

One of the things public reporting initiatives have found, for example, is that patients at risk of developing pneumonia while in the hospital weren’t getting vaccinated. Now they are.

“It’s unlikely patients will pick a hospital based on rates of getting a pneumococcal vaccine,” Sugarman said, suggesting that perhaps hospital administrators were relying on ratings more than consumers.

But to the extent that hospital administrators are focusing as much attention on quality of care as the financial health of the facility or how many buildings are built, the emergence of hospital rating agencies is a good thing, he said.

“There is no perfect hospital,” he said. “I would worry, for instance, about a hospital that said it never had any adverse events. Hospitals who openly recognize those events and adjust systems to make sure those events don’t happen again are probably good places to go to.”