MIT Sloan Professor Finds Higher Healthcare Spending Results in Better Outcomes

CAMBRIDGE, Mass., July 8, 2008 — If you have a heart attack while on vacation, your chances for a positive outcome are better if you seek treatment in a hospital that tends to spend more. While previous research comparing high and low-spending areas in the U.S. suggests that higher healthcare spending does not improve health outcomes, a professor at MIT Sloan School of Management found in a recent study that tourists who become ill and receive emergency care at “high-spending” hospitals have significantly lower mortality rates compared to tourists who end up in “lower-spending” hospitals.

MIT Sloan Professor Joseph Doyle's new research contradicts the common argument that higher healthcare spending does not result in better health outcomes and sometimes even results in worse health outcomes. Instead, Doyle found that “when patients who have a serious health emergency far from home are exposed to different healthcare systems, high-spending areas are associated with significantly lower mortality.”

Doyle's study compared outcomes of heart attack patients in Florida who were exposed to different health care systems that were not designed for them: tourists on vacation when a health emergency struck. Since most people don't choose their vacation destinations based on the budgets of local hospitals, he was able to compare the results from both high and low-spending areas.

He noted that it is very difficult to show returns to healthcare spending because hospitals in general tend to spend more on sicker patients. That is why he focused on a group of patients with similar health conditions (heart attacks) and who were visiting similar destinations, but who sought treatment at hospitals which varied widely by spending levels. “I wanted to compare apples to apples, and I found that the patients in high-spending areas have higher survival rates than the ones in lower-spending areas.”

According to the paper, a “typical comparison of a high-spending area and a low-spending one would represent a 50% difference in healthcare spending intensity. Such a disparity is associated with a 1.5 percentage-point lower mortality rate among heart-related emergency patients compared to a mortality of 6%.”

Doyle added that his research also addressed the issue of whether teaching hospitals, which cost more to run than nonteaching hospitals, tend to have better healthcare outcomes. “I found that among local populations, going to a teaching hospital was not associated with mortality, possibly because these hospitals tend to treat sicker people. However, among tourists in an emergency situation, going to a teaching hospital resulted in lower mortality.”

In contrast to findings in previous literature, which have been cited in support of limits on Medicare growth, Doyle said, “It looks like spending has an impact in terms of saving lives in emergency situations.” He noted that the U.S. spends over $2 trillion per year or 16% of GDP, with increases expected as the population ages. “There is a presumption that much of our healthcare spending is wasted” he said, “but high levels of spending may be justified because it also seems to increase survival rates in emergency situations.”

Related Links

For Media Inquiries

Paul Denning
Director of Media Relations
Tel: 617-253-0576
Fax: 617-253-5875
E-mail: denning@mit.edu

Patricia Favreau
Associate Director of Media Relations
Tel: 617-253-3492
Fax: 617-253-5875
E-mail: pfavreau@mit.edu