Impact of Socioeconomic Factors on Hospital Quality

New report shows CMS star ratings skew lower for hospitals serving Michigan’s poor

Service areas of one-star hospitals have 72.2 percent more African-American population than five-star hospitals

The Economic Alliance for Michigan (EAM) released a new report demonstrating how Center for Medicare and Medicaid Services (CMS) star ratings skew considerably lower for hospitals serving in Michigan’s impoverished areas. In July, 2016, CMS issued star ratings for hospital quality. The ratings are measured using 64 of the more than 100 CMS monitored factors. Some of these factors help determine which hospitals may receive less federal money in 2017. In September 2016, Bloomberg News BNS published a report suggesting CMS star ratings skew lower for hospitals servicing poorer areas. EAM decided to investigate whether or not this phenomena was happening in Michigan.

When comparing socioeconomic factors of service areas between the average of all one-star hospitals versus the average of all five-star hospitals, the results indicate inequality. For example, the difference in household median income is $20,697 and there is a 28.3 percent difference in the level of poverty. The most staggering statistic was the difference within the percentage of people who identify themselves as African-Americans. The average of all one-star hospitals have 72.2 percent more African-American population in their immediate services areas than five-star hospitals.

Factor within Hospital Service Area Average of all one-star hospitals Average of all five-star hospitals Difference
Average household median income $25,741 $46,438 -$20,697
% people in poverty past 12-months 40.3% 12.0% 28.3%
% unemployed 14.1% 4.7% 9.4%
% identify as African-American 74.4% 2.2% 72.2%
% high school graduate 79.0% 91.8% -12.8%
% with private insured 39.0% 75.0% -36.0%

“The report raises a good point,” said Bret Jackson, president, EAM. “Is CMS potentially punishing hospitals in areas that need the most help? We are champions for transparency in health care and like the idea of awarding hospitals who exceed expectations but the thought of these one-star hospitals potentially losing federal dollars does not help in our cause of providing high quality of care and patient safety to all Michigan residents.”

Other initial research discovered that patient-payer mix may be an additional factor. The average of all one-star hospitals received 9.4 percent more in uncompensated care to net expenses than the five-star hospitals.

“More research is needed to fully understand how we can have all hospitals in Michigan be five-stars,” stated Jackson.

To read the full report CLICK HERE.

For information regarding CMS star ratings go to Hospital Compare.

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