C-Sections Emerge as a Cost and Quality Measure: What Is Your Hospital’s Rate?

How much does it cost to have a baby at your hospital? Do you know?

Consumerism, a dominant theme in health care today, is a product of more transparent quality metrics and pricing data, as well as the reshaping of the payer landscape due to health care reform. Organizations now compete more openly on pricing for everything from discrete services, such as MRIs, to complicated episodes of care, such as joint replacement.

A consumer orientation is particularly relevant for obstetrics. Obstetrics tops the list of high-volume services in the US, and, among healthy women aged 18 to 44, pregnancy is the leading cause of hospital admissions. Yet, across the country growth in IP obstetrics is stagnant, growing only 1% above the population based-forecast by 2026, suggesting a zero-sum game in the competition for OB market share.

Obstetrics services are an integral component of the organizational portfolio, drawing large volumes for IP services, impacting downstream utilization by attracting patients and their families into the health system, and casting a halo on the organization as a whole.

C-Section Rates Garner Increased Attention
Organizations wishing to compete effectively for OB market share will need to consider the impact of consumerism and address both the push for cost reduction from payers and the demand for quality outcomes from patients. Institutional cesarean section rate is one obvious target of patient and payer concern. The cesarean delivery rate has direct impact on episode cost and is increasingly being tracked as a quality outcome measure.

In the US, the c-section rate peaked in 2009 at 33% of all live births, and since then it has been relatively stable. However, the c-section rate varies significantly by state, as well as among hospitals in the same geographic area. The overall c-section rate by hospital ranges from under 10% to nearly 70%; even among low-risk patients substantial variation exists (2.5% to 36.5%). This substantial variation suggests ample room for performance improvement—even a marginal reduction in c-section rate may have a significant impact on average cost per episode. At Sg2, we anticipate the national c-section rate will drop to 27% by 2025, due largely to increasing focus on this metric from payers and patients alike.

Despite healthy debate regarding the value in tracking c-section rates, third-party quality tracking organizations such as LeapFrog and The Joint Commission have placed increasing focus on it. We anticipate payer and patient attention to follow suit. To maintain market share and demonstrate performance to both payers and patients, health care organizations will need to track and evaluate their own c-section rates.

Patients Seek Low-Intervention Care
As we speak with many organization across the country, we have discovered a growing demand for low-intervention obstetrics care. This includes a preference for intermittent fetal monitoring, opting out of epidural use and approaches that minimize the likelihood of c-section. At this point, patients may only have access to your organization’s c-section rate and may be using this metric as a proxy for low-intervention care. Patients can find organizational statistics through self-reporting engines such as LeapFrog. In some markets, this information is also available through mandatory state and local reporting. As health care consumers become savvier and use more web-based platforms to make care decisions, we anticipate that patients seeking low-intervention services will rely increasingly on online information when choosing a hospital for their labor and delivery.

Risk Creeps Into Obstetrics
Risk-based payment for obstetrics is not new. Bundled payment pilots have existed for a number of years, yet these initiatives have been slow to gather steam. However, as payment incentives used to reduce costs receive increasing attention, we have seen a renewed interest in obstetrics bundled payments, largely from employer-based health plans and commercial payers.

Pregnancy lends itself well to bundled payment, as evidenced by the long-term use of the OB Global Code for physician payment. Bundled payment for obstetrics expands global payment to delivery as well. For example, Horizon Blue Cross Blue Shield of New Jersey developed a Pregnancy Episode of Care program, which aims to reduce costs along the continuum of pregnancy care. Currently 51 physicians are participating with 8,000 covered lives in New Jersey; participants have achieved a 32% reduction in c-sections. We fully expect that bundled payments for pregnancy will proliferate, especially as organizations grow their infrastructures for episode-based cost tracking across other service lines.

In the short-term, we also anticipate c-section rate transparency to have an impact on payer contracting. As reporting of c-section rates becomes standardized through quality tracking services, we expect payers will use this metric as a negotiating tool. Organizations that have lower c-section rates than their markets may be able to obtain better contracts with payers.

We will be following up with a deeper dive into obstetrics bundled payment later this summer—stay tuned for our Expert Insight on this topic!

Collaborate With Your Physicians, Payers and Patients to Maintain OB Market Share
Some organizations and physicians may bristle at the idea of using c-section rates as a quality outcomes measure, and with reason. The correlation between c-section rates and quality is unclear. Although there is reason to believe that c-section rates that fall outside the norm provide no benefit to pregnant women and newborn children, there is little evidence that marginal differences are clinically important. Clinicians may worry, justifiably, that pressure to diminish the cesarean section rate is all about cost control, and focusing on a single outcome may cause other kinds of unintended harm. Despite these truths, we see patients and payers honing in on c-section rates in many markets, especially due to the wide variability in rates across comparable organizations.

How will your organization remain competitive given this renewed focus on c-sections? Consider the following tips.

  • Work with your physicians. The physician will ultimately decide if a patient receives a c-section. An organization looking to curb its c-section rate must work with its physicians. There are several clever strategies for reporting c-section rates that help incentivize lower rates, including reporting the hospital average and then distributing the physician’s quarterly rate privately or publicly. Other options include creating financial incentives. Yet organizations that work with their physicians on a common strategy for reducing unnecessary c-sections will be the most effective, especially in preserving physician alignment.
  • Design new metrics. When faced with payer pressure to reduce c-section rates, it may be helpful to present additional metrics that demonstrate your quality and outcomes. Typically, we see organizations reporting the overall c-section rate, which includes both patients receiving their first c-section as well as those receiving their second or third and so forth. However, to reduce the c-section rate overall, a better metric would be to measure the rate for nulliparous, term singleton, vertex (NTSV) patients. Additional metrics that track quality and patient outcomes will offer a more complete picture of the care delivered at your organization and a stronger negotiating platform.
  • Educate patients. Share information with patients on care quality as well as efforts made to respect their health care wishes. Whereas in the past c-sections were a normative part of delivery, as c-section rates fall patients will increasingly perceive them as nonstandard outcomes. Informational sessions and outreach from nurse midwives can help assuage any fears or misinformation that can arise from isolated outcomes measures.

The current emphasis on c-section rates parallels the adoption of American Congress of Obstetricians and Gynecologists (ACOG) guidelines for less than 39-weeks elective delivery, which sought to reduce the late preterm birth rate by preventing elective deliveries before fetuses reached full term. The ACOG guidelines still face some controversy, yet most physicians have adopted these guidelines and many health systems have put in place means of tracking compliance. These protocols have had a large impact on both maternal and neonatal outcomes. Going forward we will closely monitor the effect of c-section rate guidelines on both maternal and neonatal outcomes.

Sg2 Fellow Jeremy Miller, MD, contributed to this post.

Sources: Impact of Change® v15.0; HCUP National Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP). 2012. Agency for Healthcare Research and Quality, Rockville, MD; The Nielsen Company, LLC, 2015; Martin JA et al. Births in the United States, 2014, NCHS Data Brief No. 216. September 2015; Kozhimannil KB et al. Health Aff (Millwood). 2013;32:527–535; Horizon Blue Cross Blue Shield of New Jersey website. University hospital in Newark and Horizon Blue Cross Blue Shield of New Jersey announce value based care collaborative. March 29, 2016; Sg2 Analysis, 2016.

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As of February 11, 2016, Vizient, Inc. has completed its purchase of MedAssets Sg2 and spend and clinical resource management segments from Pamplona Capital Management, LLC. MedAssets revenue cycle business will continue to operate as a wholly-owned subsidiary of Pamplona Capital Management LLP.

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