The Nation's 10 Costliest Medicare Markets

As the friction over healthcare reform has intensified, the Dartmouth Institute for Health Policy and Clinical Practice has become the gold standard of information about the costs of health care. Its studies—which look at variations in the cost, frequency, and outcomes of medical procedures—have taken center stage in a debate that could lead to substantial changes in the healthcare sector.

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The Dartmouth Atlas of Health Care 2008 contains some amazing and counterintuitive findings about healthcare. First, the amount of healthcare provided in the United States is not related as strongly to patient need as it is to the available supply of healthcare. Using identical patient profiles and medical needs, Dartmouth found that markets with more hospital beds, doctors, and high-end diagnostic equipment provided what amounted to excess healthcare. The primary reason, it said, is that government and private health insurance plans are based on compensating healthcare providers for the procedures they perform, not for the rate at which they cure patients or make them healthier.

The researchers concluded that the people receiving this extra care often suffered worse health outcomes than comparable patients in "low treatment" markets. The reasons are open to debate, but researchers said they very likely include the health risks of hospitalization itself and the lack of coordinated care for people with multiple health problems. Giving people more care, whether they need it or not, has a lot of negative consequences.

The Dartmouth research is particularly relevant to older Americans because it is based to a large extent on Medicare data, involving patients ages 65 and older. The 2008 atlas, in particular, paints a devastating portrait of Medicare treatments based on an extensive study of Medicare recipients who died from one or more of nine chronic illnesses. Not only are chronic illnesses very expensive to treat, but they're also the cause of most deaths in the United States. According to the 2008 atlas:

More than 90 million Americans live with at least one chronic illness, and 7 out of 10 Americans die from chronic disease. Among the population that receives Medicare, the toll is even greater: About 9 out of 10 deaths are associated with just nine chronic illnesses: congestive heart failure, chronic lung disease, cancer, coronary artery disease, renal failure, peripheral vascular disease, diabetes, chronic liver disease, and dementia.

The prices charged by hospitals, physicians, and other healthcare providers are only one measure of what makes a healthcare market expensive. The volume of such services is another crucial component. Dartmouth created a hospital care intensity (HCI) index that uses a single number to represent the volume of care that patients receive. Factors used to measure volume include the number of days a chronically ill patient spent in the hospital during the last two years of his or her life and how many times that patient was seen by a physician during this period. Dartmouth tracks overall Medicare spending per patient, which is primarily of interest to people who make and oversee Medicare rules. It also tracks consumer out-of-pocket Medicare copayments.

Here are three ways to measure expensive hospitals for Medicare-covered services. The lists reflect not only the hospitals' care but also the decisions of the doctors and service firms that served chronically ill patients who were treated there. These hospital comparisons were all based on the same set of chronic illnesses for patients who died from their illnesses between 2001 and 2005. Today's fees for these services would be higher. Dartmouth says the most important measure of current expenses will be the volume of care, which hasn't changed that much in recent years.

The 10 hospitals with the highest out-of-pocket Medicare copays per patient for hospital and physician services:

• Cedars Medical Center, Miami ($6,937)
• South Beach Community Hospital, Miami Beach, Fla. ($6,929)
• Larkin Community Hospital, South Miami ($6,873)
• Westchester General Hospital, Miami ($6,661)
• Cedars-Sinai Medical Center, Los Angeles ($6,524)
• Fountain Valley Regional Hospital, Fountain Valley, Calif. ($6,377)
• White Memorial Medical Center, Los Angeles ($6,252)
• Pan American Hospital, Miami ($6,201)
• Hialeah Hospital, Hialeah, Fla. ($6,172)
• St. Mary Medical Center, Long Beach, Calif. ($6,099)

The 10 hospitals with the highest Medicare spending per chronically ill patients in the last two years of life:

• White Memorial Medical Center, Los Angeles ($130,992)
• Kingsbrook Jewish Medical Center, Brooklyn, N.Y. ($121,014)
• Alhambra Hospital Medical Center, Alhambra, Calif. ($120,756)
• Hahnemann University Hospital, Philadelphia ($117,998)
• Bronx-Lebanon Hospital Center, Bronx, N.Y. ($115,211)
• Hollywood Presbyterian Med Center, Los Angeles ($115,097)
• St. Michael's Medical Center, Newark, N.J. ($112,508)
• North Philadelphia Health System, Philadelphia ($112,032)
• Wyckoff Heights Medical Center, Brooklyn, N.Y. ($109,893)
• Interfaith Medical Center, Brooklyn, N.Y. ($108,812)

The 10 hospitals with the highest volume of care, as measured by their HCIs (the U.S. average is 1.00):

• Alhambra Hospital Medical Center, Alhambra, Calif. (3.54)
• South Beach Community Hospital, Miami Beach, Fla. (2.86)
• Raritan Bay Medical Center, Perth Amboy, N.J. (2.66)
• Pacific Alliance Medical Center, Los Angeles (2.62)
• East Orange General Hospital, East Orange, N.J. (2.53)
• Brotman Medical Center, Culver City, Calif. (2.48)
• St. Mary Medical Center, Long Beach, Calif. (2.46)
• St. Michael's Medical Center, Newark, N.J. (2.45)
• New York University Medical Center, New York (2.45)
• Columbus Hospital, Newark, N.J. (2.42)

Consumers can find the HCI and expenses of hospitals in their area by using Dartmouth's hospital care intensity index tool. Click on your state, then on your area, then on the individual hospitals in your area. Once you select the hospitals of interest, you can generate reports with detailed information on how they cared for chronically ill Medicare patients. Dartmouth says this is its most useful tool to help consumers make important medical choices.