Medicare bills high at Los Angeles hospitals

Ampelio Garcia, 74, was barely able to walk when he got to White Memorial Medical Center in Boyle Heights, after the latest flare-up of a chronic lung condition that left him wheezing and gasping for air.

Emergency room physician Brian Johnston prescribed drugs and a breathing treatment to open Garcia’s airways. Then he admitted him -- for the second time in less than a week.

“I can’t send this guy home; there’s no way,” Johnston said. “And I don’t think our treatment here is extreme or excessive. We’re doing basic stuff.”

Basic stuff adds up. And the tab is especially high for chronically ill patients seen at White Memorial. Medicare spends an average of $130,992 on patients seen there in their last two years of life, the biggest share of it on hospital care.


That’s nearly three times the national average for similar patients, according to an influential study.

Why so much?

Some experts say high costs for patients at big-city hospitals such as White Memorial reflect a free-spending, out-of-control medical marketplace. Others say medical costs are higher in urban areas because the poor need more care and the rich demand it. Others say the profit motive is at play.

Still others say that when lives are at stake, cost should not be an issue.

Whatever the reason, the question itself has taken on added importance as the Obama administration pushes a massive expansion of medical care to the uninsured. In campaigning for a healthcare overhaul, President Obama has made repeated calls for changes that will help “Americans avoid the unnecessary hospital stays, treatments and tests that drive up costs.”

Among the ideas before Congress are rewards for hospitals that reduce costly readmissions and for physicians who coordinate care to keep patients out of hospitals.

Studies show that the sickest 10% of patients consume two-thirds of the nation’s healthcare outlay. So even small improvements could reap big savings.

In looking for answers, policymakers on different sides of the issue are turning to pathbreaking studies by the Dartmouth Atlas Project, a research institute at Dartmouth College. Some of the studies looked at what Medicare spends on chronically ill patients in their last two years of life, a time when medical costs are highest.

The national average for Medicare spending on such patients was $46,412, including outpatient care. But in Los Angeles County, the average cost was nearly double that, $84,179, according to a Los Angeles Times review of Dartmouth data.

In seeking to explain why, some researchers have concluded that doctors in areas such as Los Angeles, with more hospitals and other resources, are more likely to have patients admitted, order tests and schedule visits, largely because they can.

In fact, the researchers say, medical treatment often has more to do with resources -- available hospital beds, specialists and equipment -- than how sick patients really are. Where resources are abundant, studies show, physicians order more treatment.

Possible explanations for this range from physicians’ desire to err on the side of caution to doctors ordering discretionary procedures or tests to inflate revenue.

Whatever the motivation for ordering treatment, the idea that such a course may be driven by the availability of resources is known as “supply-sensitive medicine.”

“There’s pretty good evidence that we simply overbuilt the acute-care sector, and we’ve done that more extensively in places like Los Angeles than we have elsewhere,” said Dr. John Wennberg, founder of the Dartmouth atlas, which maps such variations. “Some places just have a lot more hospitals and a lot more doctors. They use them mostly for chronically ill patients, and it doesn’t seem to have a beneficial impact on outcomes.”


The poor get sicker

Doctors on the front lines bristle at the idea that they are doing too much for their patients.

“Our patients need more,” said White Memorial’s Johnston. “They are sicker.”

And poorer.

White Memorial serves some of the poorest people in the state. The median household income of its Boyle Heights neighborhood is $33,000, a little more than half the statewide figure. Almost nine out of 10 of its patients lack private health insurance. Many don’t have a regular doctor, hospital officials say. And even when they do, they have trouble getting to them.

As a result, they often get healthcare when they’re very sick and in the most expensive settings: the emergency room and the hospital. And when they get to the hospital, they often are in bad shape, Johnston said. That means more admissions and higher costs.

Indeed, White Memorial patients in their last six months of life spend an average of 22 days in the hospital, according to Dartmouth Medicare claims data.

By comparison, at Providence Little Company of Mary Medical Center San Pedro, where the median household income of the surrounding community is twice that of White Memorial, patients spend an average of 15 days in the hospital in the last six months of life. Not surprisingly, Medicare’s cost for Little Company patients in the last two years of life is less than half that of White Memorial patients.

In Medicare, prices vary somewhat. But the big differences in spending reflect variation in the amount of care patients receive, said UCLA public health professor Robert Kaplan.

Another explanation for Los Angeles’ higher costs is the chaotic and fragmented nature of its medical market, with myriad unaffiliated and competing hospital operators and physician groups. Medicare’s costs in places where hospital ownership is more consolidated, such as Sacramento, are lower.

Take Catholic Healthcare West, which operates hospitals in both cities, for example. In Sacramento, Medicare’s costs for CHW patients in the last two years of life averaged $49,157. In Los Angeles, the figure was almost twice that.

“Sacramento is less fragmented than is Los Angeles,” said Dr. Robert Wiebe, CHW’s chief medical officer. “You have larger groups of physicians and of hospitals that make up the system, so some of the transitions in care are easier to deal with.”

Many experts believe that better coordination, such as managing patient transitions from hospital to home and follow-up care, can greatly reduce costs.

Dartmouth’s Wennberg and other experts point to the highly rated Mayo Clinic in Rochester, Minn. Medicare spends $50,273 on chronically ill Mayo patients in the last two years of life -- 8% more than the national average, to be sure, but still a relatively modest premium given the Mayo Clinic’s renowned care.

Some experts credit Mayo’s relative value to the collaboration of its physicians, as well as robust outpatient care that reduces relapses and costly hospital readmissions.

Not everyone agrees. Critics say the Mayo Clinic comes off looking good in the Dartmouth analysis because it treats patients who are relatively healthy and wealthy. Hospitals in Los Angeles and other urban areas, they argue, care for large populations of people beset by the high-cost health problems associated with poverty.

The poor, studies show, are at least twice as likely to suffer from diseases and disabilities. They also tend to have worse outcomes when they get sick. And, not surprisingly, they are more likely to seek hospital care.

“People from poor neighborhoods cost a lot,” said University of Pennsylvania medical professor and health economics fellow Richard A. Cooper. “Part of it is the burden of disease. Part of it is education. Part of it is [lack of] home support.”

To study the impact of poverty, J. Thomas Rosenthal, chief medical officer at Ronald Reagan UCLA Medical Center, looked at the hospitalization rates of Los Angeles County Medicare enrollees. Hospital stays are, by far, the biggest medical expense and account for the lion’s share of Los Angeles’ higher costs.

But, when impoverished Medicare enrollees are taken out of the mix, Rosenthal found that the remaining Los Angeles County patients spend almost as little time in hospitals as do Minnesotans -- an average of 1.77 days a year, compared with 1.61 days for Minnesotans.

This suggests that poverty plays a big role in Los Angeles’ high costs, Rosenthal said. “It’s pretty clear that too many providers and services is not causing overutilization in LA County.”

The Times review of the Dartmouth data found evidence to support the idea that either poverty or abundant medical resources, or both, are at play in Los Angeles County. Medicare claims are unusually high for beneficiaries using hospitals that treat a mix of patients from poor and more affluent areas.


Extending lives

There is another problem with the Dartmouth research analyzing Medicare spending in the last two years of patients’ lives, some healthcare experts say. The focus on patients who died, they say, dings hospitals that may keep patients alive longer -- or keep more of them alive -- because their physicians practice more aggressive, more expensive treatment.

“We don’t know, when a person comes to the hospital with heart failure, who’s going to live and who’s going to die,” said Michael Langberg, chief medical officer at Cedars-Sinai Medical Center. “People don’t come to the hospital with a tag saying, ‘I’m going to die, so don’t spend too much on me.’ ”

Heart patient Guy Adenis, 78, of Laguna Beach is one of those people.

Every few months, Adenis’ body swells with its own fluids, and his skin turns pale. He struggles for each breath, and he is rushed to the hospital looking, as his cardiologist P.K. Shah puts it, “like death warmed over.”

Adenis spends a week or so at Cedars until he is well enough to return home.

Diagnosed five years ago with congestive heart failure, a chronic weakening of the heart, Adenis has beaten the odds and gives full credit to Shah for saving his life -- again and again.

“Dr. Shah and his doctors have been able to keep me well,” he said.

Known as hospital “frequent fliers,” heart failure patients typically cost Medicare $24,000 in inpatient expenses annually. To patients like Adenis, it’s money well spent.

But a 2006 Dartmouth study contended that almost a third of the money spent on the chronically ill was wasted on “rescue medicine” for people with advanced diseases who could not be cured.

Shah questions that logic.

“Letting people die early is actually more cost effective,” said Shah, who heads the cardiology unit at Cedars-Sinai Heart Institute. “But that’s a perverted way of looking at things.”

Still, when Dartmouth reported that Cedars’ costs were higher than those at other teaching and research hospitals, Cedars took note. The study said Medicare spent an average of $71,637 per chronically ill patient over the last two years of life on hospital care at Cedars. At nearby UCLA, the figure was $63,900.

By comparison, the figures for the Cleveland Clinic and Mayo were, respectively, $34,437 and $34,372.

“The implication was that we were spending resources on care that was not necessary,” Cedars’ Langberg said.

So Cedars joined with the UC hospitals to investigate the costs and outcomes of patients admitted to their facilities. They studied heart failure patients who lived and died.

They found that the hospital with the most aggressive and expensive practices had the lowest death rate -- more surviving patients -- six months after initial admission. The inverse also was true: The hospital where physicians did the least had the highest death rate.

Next, the Cedars-UC researchers want to study what courses of treatment produce the best results, to improve the way physicians handle the costliest patients.

“We want to know why patients seem to do better at one hospital versus another, and we want to know whether there is a causal relationship between resource use and mortality,” Cedars’ Langberg said. “We don’t know that yet.”


Times staff writers Doug Smith and Sandra Poindexter contributed to this report.