Why Providers Differ

When reports are published that display performance measures, many differences can be seen throughout facilities in Florida. Variances in the data alone may not accurately represent a provider's level of quality and efficiency. There are many factors that must be considered when comparing providers based on measures of performance and associated charges for services.

Factors Affecting Providers:

• Facility case mix.

  Facilities differ in the types of diagnoses they typically treat or procedures they perform. Some accept the most severe and complicated cases, while others accept relatively simple cases. When performance measures are applied to an entire facility's discharges, or to a large portion of them, the mix of simple and complicated cases can have a significant effect on summary measures. Therefore, either the data should be adjusted to account for case mix, or one should be aware that different case mixes can affect summary performance measures.

• Patient severity of illness.

  Patients who have the same diagnoses or procedures performed may consume different amounts of resources due to variations in health status, age, co-morbidities, case severity or complexity. The same procedure performed on different patients may result in large differences in charges or length of stay due to unexpected complications or utilization of diagnostic tests. For example, an elderly patient is often more severely ill due to chronic and/or multiple health problems.

  Even when comparing a single procedure or condition, different levels of patient severity can have a major effect on length of stay, mortality, complications and charges. As with case mix, either the data should be adjusted to account for severity, or one should be aware that different levels of patient severity of illness can affect summary performance measures.

• Case outliers.

  The average (mean) charge or length of stay may be affected by a few high charges or long stay outliers, i.e., cases that are very different from the majority. The average charge or length of stay may appear to be inflated for facilities that have a few high-charge or long-stay outliers. Outliers may also occur for a short-stay due to those patients that left against medical advice or were transferred to another facility. Facility comparisons should be made cautiously if no outliers are removed.

• Facility size.

  Larger facilities offer a more extensive mix of procedures and services often requiring more complex equipment and specialty-trained personnel leading to greater expenses for the facility. Large facilities also tend to accept more severe and complex cases.

• Facility teaching status.

  Providing research and medical training is costly and can influence a hospital's charges. Other factors potentially influencing charges at teaching facilities include the use of the latest technology, resident training and the availability of unique services. Furthermore, teaching facilities tend to accept more severe and complex cases that can affect both patient outcomes and their length of stay.

• Types of services provided.

  Facilities differ in the range of services they provide to patients. Some provide a full range of services, while others may only stabilize certain patients and then transfer them to another facility. Hospitals offering specialty services may have higher average charges, longer lengths of stay, and less favorable outcomes.

• Physician practice patterns.

  The kinds of diagnostic tests ordered, treatments preferred and other factors vary from physician to physician and may influence charges and outcomes.

Factors Mainly Affecting Charges:

• Facility charges are for all services rendered, not just one procedure.

  When multiple procedures are performed, the charge for any individual procedure cannot be determined. Thus, comparing charges for a single procedure is difficult because other procedures are included in the total. Comparisons should only be made, if possible, using the same set of procedures performed on multiple patients. Charges do not include physician fees. See Explanation of Charges.

• Regional price differences.

  Charges for the same condition or procedure may vary substantially among geographic regions. Labor and other costs vary by geographic area within the state (e.g., urban vs. rural) and may influence charges.

• New technology.

  Facilities with the latest technology may have higher charges than those with older, less sophisticated equipment. Modern medical technology is very expensive, thus the level of technology in which a hospital invests will affect charges.

• Facility location - Urban/Rural.

  Facilities with the latest technology may have higher charges than those with older, less sophisticated equipment. Modern medical technology is very expensive, thus the level of technology in which a hospital invests will affect charges.

• Facility business expenses.

  Facilities differ in the amount of debt and depreciation they must cover in their rate structure. Hospitals must pay for new equipment, construction, maintenance, and malpractice insurance. Increased costs associated with these activities may be reflected in patient charges.

• Payer mix.

  Patients with insurance pay discounted, capitated or customary fees negotiated by their insurance company or HMO. Patients covered by Medicaid, and sometimes Medicare, reimburse hospitals at pre-established rates for services rendered. For patients who are under insured or lack insurance, the unpaid portion of a bill is absorbed by the hospital and paid in part by rates charged to those who have insurance coverage (cross subsidization). These facilities will also have a larger difference between charges and what they are actually paid.