Best in the Midwest: Keeping Health Care Costs Low for Michigan Residents

Best in the Midwest: Keeping Health Care Costs Low for Michigan Residents

Editor’s note: This is the second in a series of blog posts examining key factors that make the healthcare system in Michigan an example to follow. Today, we’re looking at how Michigan is controlling costs. Read the first post in the series here

“Overall, Michigan is doing a pretty good job on managing healthcare spending,” said Marianne Udow-Phillips, director of the Center for Healthcare Research & Transformation (CHRT), a non-profit partnership between the University of Michigan and Blue Cross Blue Shield of Michigan (BCBSM).

A report released earlier this year by CHRT showed substantial variation in hospital costs between three Midwest states – Indiana, Michigan, and Wisconsin. Michigan came out on top, or more accurately, bottom, with the lowest cost among the three states.

Udow-Phillips said BCBSM’s size and scale in the state provides leverage when it comes to negotiating power, which helps keep costs low for consumers.

“We think that plays a significant role,” she said.

In fiscal year 2013, Wisconsin had per capita hospital costs of $3,107, higher than Indiana ($2,975) and Michigan ($2,624). Udow-Phillips said differences in the states’ regulations and market conditions likely contributed to these differences.

“Wisconsin has the most fragmented health insurance market in the nation, likely reducing the bargaining power of any one insurer,” she said. (“Wisconsin and Indiana have no Certificate of Need laws, while Michigan is one of 36 states that does.”) Certificate of Need laws regulate hospital construction and investment in technology.

Efforts to better coordinate care also play a role. BCBSM boasts the largest Patient-Centered Medical Home (PCMH) program of its kind in the United States. Located in 78 Michigan counties and including more than 4,340 individual physicians, the designation recognizes practices that have intensified efforts to coordinate patients’ health care through prevention, diagnosis, treatment and follow-up services. The program has saved an estimated $512 million over six years through disease prevention, reduced hospitalization and emergency room visits, and management of common acute and chronic medical conditions that have improved patient care outcomes.

“Improved care transitions and care coordination are key to efficiently resolving a patient’s medical issue and to curbing health care costs for both the provider and the patient,” said Joe Mullany, CEO, Detroit Medical Center. “Electronic medical records and evolving technologies related to the exchange and access to patient health information are providing caregivers with greater amounts of data on which to base medical decisions, resulting in fewer tests and a clearer overall picture of the patient’s recent health history.”

At the individual hospital level, making sure patients work their way through the system smoothly and without redundancy is a top priority for Beaumont Health. CEO and President John Fox said electronic medical records are helping his hospital system ensure patients aren’t treated for the same symptoms twice, eliminating unnecessary tests and that their medical history can be easily accessed by different hospital divisions to avoid prescribing medications that could potentially interact with each other.

“It’s really pulling the whole system together as a network that truly is high performance in terms of clinical outcomes and in providing great service to patients and families,” Fox said.

Robert Riney, Executive Vice President and Chief Operating Officer at Henry Ford Health System, said along with structural advantages and better coordination of care, technological advancements also play a role in reducing costs. He said it’s amazing to think about the leaps and improvements that have been made in the last ten years alone. Minimally invasive procedures have replaced five- to six-night hospital stays.

“I think Michigan can be a great leader in choosing how to organize all these advancements in a way that really drives great value,” he said.

Check back tomorrow to read about how Michigan healthcare providers are working together to improve patient care.      

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Photo credit: Zack McCarthy

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