Health-care costs in the Baltimore area could be cut by $749 million a year if unneeded hospital and physician services were eliminated, according to a Johns Hopkins School of Public Health study released yesterday.
Such savings could help "reduce the health-care cost crisis faced by consumers and moderate the inflationary increases in taxpayer-funded health-care programs," said the MidAtlantic Healthcare Purchasing Coalition, a Maryland employer-led group that commissioned the study.
Although the savings estimates are being challenged by some experts, the study underscores the increasing pressure that hospitals and doctors face from employers and insurers demanding less expensive care.
The study also is likely to increase pressure on state legislators to re-examine Maryland's health-care regulatory system, which sets hospital rates and controls the number of hospitals, nursing homes and surgery centers. Legislators are planning to study proposed changes in the system this summer.
The study comes on the heels of a U.S. Supreme Court ruling Wednesday that buttresses states' authority to regulate charges that insurers pay for hospital care. But many insurers would like to see less regulation in Maryland, arguing that it protects hospital inefficiency.
To enhance the credibility of the study, which cost $65,000, MidAtlantic said it created a committee of health-care experts and industry officials to work with a Johns Hopkins team headed by Gerard F. Anderson, a professor of health policy and management and director of the Center for Hospital Finance and Management.
The study was intended "to determine how efficiently the local health-care delivery system is performing and to anticipate what changes could occur" in light of changes occurring in other metropolitan areas, MidAtlantic said. The Baltimore area was defined as Baltimore and Anne Arundel, Baltimore, Carroll, Harford and Howard counties.
Dr. Anderson's team looked at Hartford, Conn.; San Francisco; Seattle; and the Minneapolis-St. Paul area. They were chosen because their health systems have changed considerably under the impact of "managed care," the term given to health FTC maintenance organizations and other health-care delivery systems that closely control the care patients receive from family doctors on through hospitals, nursing homes and other facilities.
Maryland's system is beginning to change in similar ways. Already 37 percent of state residents belong to HMOs, according to some estimates. Many experts believe more than 50 percent will be in HMOs by 2000.
Dr. Anderson's team concluded that increased use of managed care in the Baltimore area could reduce use of inpatient services by one-third, saving from $159 million to $385 million a year, depending on how hospitals are closed or scaled back.
Baltimore also may be able to eliminate use of one-third of its physicians, particularly specialists, saving $364 million, the study found. Combined total savings would range from $523 million to $749 million.
But these estimates were challenged by the Maryland Hospital Association, whose president was a member of the MidAtlantic committee that worked with Dr. Anderson, and by John Colmers, executive director of the state Health Care Access and Cost Commission. The commission guides Maryland's health-care reform planning.
Mr. Colmers said the estimates "are way too high" and questioned the choice of metropolitan areas compared with Baltimore. Nancy Fiedler, the association's spokeswoman, also disputed the estimates, saying the study doesn't take into account that savings on inpatient services would be offset to some extent by spending on outpatient care.
"There are costs that can be saved if the acute care [hospital] beds can be eliminated, but it's not in the dollar range that this particular study suggests," she said. "Care is going to have to be delivered somewhere. The need doesn't go away. The site just changes."
In fact, patients are increasingly undergoing surgery and receiving post-surgical care in cheaper nonhospital settings, such as surgery centers and nursing homes.
But Ms. Fiedler and Mr. Colmers nevertheless agreed with the prediction that Maryland's health-care system is going to change and the state must prepare for it.