Hospital Strength INDEX Study Methodology
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1 2016 Hospital Strength INDEX Study ivantageindex.com
2 1 Hospital Strength INDEX Study Intelligence for the New Healthcare ivantage Health Analytics (ivantage) is a leading provider of healthcare analytic and decision support tools. Health system and hospital leadership teams across the country rely on the company s software and services to deliver customized insights on clinical and financial performance, strategic planning, market assessment and contract optimization. Employing a full array of public, private and proprietary data, ivantage tools and solutions from dashboards and preformatted reports, to industry and custom guided analytics are designed to help its clients move from data to action. In addition, ivantage analytics and tools are the basis of continuing thought leadership and insight in the areas of healthcare policy and research. Rural Leadership ivantage is at the forefront of helping rural and Critical Access Hospitals successfully navigate the transition from volume to value. Today s rural hospital leaders face unprecedented complexity and uncertainty, and ivantage s unique portfolio of solutions and expertise has helped more than 750 rural and Critical Access Hospitals integrate sophisticated analytics into the strategic decision making process. As a result, these hospitals have been able to deliver higher quality care at lower cost and maintain their status as the cornerstone of their communities. The company s Hospital Strength INDEX is the industry standard for assessing and benchmarking rural and Critical Access Hospital performance. INDEX data is the basis of many of rural healthcare s most prominent awards and is used by organizations such as the National Rural Health Association in support of its advocacy and legislative initiatives. To learn more about ivantage s solutions for rural healthcare or for additional information about the INDEX, please call us at or us at inquiry@ivantagehealth.com.
3 2 Hospital Strength INDEX Study INDEX Summary ivantage aggregates hospital-specific data for 71 performance indicator variables across nine pillars of performance, and calculates each hospital s percentile rankings compared to all Rural PPS and Critical Access Hospitals (CAH) in the study group. Aggregate scores across the nine pillars serve as the basis for a single overall rating the Hospital Strength INDEX. Unless otherwise noted, data used to produce the INDEX are available from public sources, primarily the federal government. All available data are included. Statistical sampling and data projection methodologies are employed only when necessary. Each INDEX release is based on the most recently available data for each indicator source. All information included in this release (version 4.0) represents the most recently available data as of December Figure 1 Set Pillars Source Service Area File 2014 HCRIS Q MedPAR 2014 Final 2015 County Health Rankings Hospital Compare SAF IP, OP, Physician 2014 Inpatient Share, Population Risk Cost, Financial Stability Cost, Charge, Outcomes Population Risk Quality, Outcomes, Patient Perspectives Outpatient Share, Population Risk, Cost, Charge CMS CMS CMS Robert Wood Johnson Foundation/University of Wisconsin Population Health Institute CMS CMS Available June 2015 October 19, 2015 September 2015 March 2015 October 8, 2015 November 2015 Dates Contained in File January 2014-December 2014 Most recent cost report provided as of 09/30/15 October 2013-September 2014 Premature Death Rate Mental Health Provider Rate 2014 Preventable Hospital Stays 2012 Diabetic Monitoring Mortality and Readmission 7/1/2011-6/30/2014 Core Measures 1/1/ /31/2014 HCAHPS 1/1/ /31/2014 January 2014 December 2014
4 3 Hospital Strength INDEX Study Summary INDEX is based on a composite measure of nine pillars of hospital strength: Inpatient Share Ranking Outpatient Share Ranking Population Risk Cost Charge Quality Outcomes Patient Perspectives Financial Stability Pillars are made up of individual indicator variables that comprise the indicator level. Indicators are also grouped into three categories (the index level used for reporting purposes): Market, Value and Finance. The following notes apply to the INDEX calculation methodology: Source information comprised of raw indicator variables is compiled; in some instances, as in the case of Medicare market share calculations, weighting and/or standardization are performed. For pillars with multiple composite percentile scores, averages are calculated across all percentile scores to derive a pillar average. Calculated indicator-level scores are derived from raw values. National percentile rankings are calculated for each composite (pillar) score to obtain a percentile ranking. Indicators that cannot be ranked due to missing or excluded data are discarded in pillar-level calculations and only non-missing data are considered in the calculation of the pillar and overall scores. When calculating the overall INDEX score, missing pillars are imputed based on the mean of all the other non-missing pillars. When calculating INDEX values (Market, Value and Finance), missing pillars are imputed based on the mean of the other non-missing pillars within their category.
5 4 Hospital Strength INDEX Study Hospitals in the Study Group The INDEX strives to include all eligible U.S. active, short-term, acute care, non-specialty and non-federal rural hospitals in the study group (e.g. Rural PPS and CAHs). Working from a list of rural hospitals supplied by the Federal Office of Rural Health Policy, ivantage then segmented this list based on hospital bed size. The threshold for inclusion in this study was 200 beds or less. The most recently available CMS Hospital Provider of Services (POS) file was also used to determine the initial population of eligible hospitals. The file contains an individual record for each Medicare-approved provider and is updated quarterly. This dataset is cross-checked against other available sources of record, including the AHA Hospital Directory, to confirm hospital identity and status, and to further determine appropriateness for inclusion. Exclusions are based on the following criteria: 1. Specialty Hospitals: 2. Geography: a. Rural PPS Hospitals designated as specialty hospitals in the CMS Hospital Provider of Services file are excluded; these include psychiatric, rehab, longterm care, surgical specialty and other specialty facilities; b. Governmental facilities including Veterans Administration, Indian Health Service hospitals and related federal facilities are excluded; c. Acute hospitals with 80 percent of their MS-DRG inpatient case mix concentrated in three or fewer Major Diagnostic Categories (MDCs) are excluded; and d. Hospitals designated as cancer centers and children s or pediatric hospitals are also excluded. a. Hospitals in outlying U.S. Territories are excluded, e.g., Samoa, Virgin Island, P.R. 3. Exclusions: a. Hospitals with missing or implausible critical financial indicators, including revenue and balance sheet data, in their Medicare Hospital Cost Report Information System (HCRIS) filings are excluded; b. Hospitals missing scores due to lack of supporting data in two or more risk pillars, or three or more value pillars are excluded; and c. Hospitals missing the outcomes pillar are excluded. 4. New or Changed Hospitals: a. New hospitals and facilities that began participating in the Medicare program in 2015, including facilities that changed classification (such as conversion to a Critical Access Hospital), are excluded; b. This process identified a total of 794 Rural PPS and 1,284 CAHs that were included in the final study.
6 5 Hospital Strength INDEX Study 5. General Note: If a hospital does not appear in Hospital Compare, they receive a score of zero for those indicators. If the hospital appears but the data are suppressed by CMS, then those data are counted as missing and no penalization occurs.
7 6 Hospital Strength INDEX Study Market Index Components The following service area definitions are used for all Market category calculations: The list of zip codes is taken from three years worth of data that contain 75% of the total Medicare case count Zips that have less than an average of one (1) case per year are removed Zips that have a center point more than 150 miles from the facility are removed Home zip code is added Figure 2 Indicator Inpatient Share Ranking Market Inpatient Market Share Service Area File The above service area is used to compute a Market Share value on a scale from 1 to 100. Percentile rankings are calculated based on the market share scores. Higher scores receive higher rankings. Pillar scores are then calculated as outlined in the methodology detailed above. Figure 3 Indicator Outpatient Share Ranking Market Target Facility s Outpatient Market Share Non-Cardiac Surgery Target Facility s Outpatient Market Share Emergency Target Facility s Outpatient Market Share Diagnostic and Therapeutic Services Outpatient (OP) Standard Analytical File Each hospital s category specific market share is first calculated based on the three year, 75% county outpatient service area (each category will have separate market definitions). Market share values are then computed based on the most recent year of data for each category. National percentile scores are then calculated and rolled up to get the overall OP Share ranking score. (In order to better focus competition at the market level and reduce the data noise influenced by factors like extremely low case counts or cases from relatively distant Federal Information Processing Standard (FIPS) codes). Notes Percentile rankings are calculated based on the market share scores. Higher scores receive higher rankings. Pillar scores are then calculated as outlined in the methodology detailed above. The OP procedures are rolled up to the highest ranking category by case. The hierarchy goes in the following order: Non-cardiac surgery, emergency, and diagnostic and therapeutic services. Any cases that do not fall into those categories are excluded from analysis.
8 7 Hospital Strength INDEX Study Figure 4 Indicators Notes POPULATION RISK Market Weighted Average of Ambulatory care-sensitive conditions rate per 1000 Medicare enrollees (based on county level information) Weighted Average of Medicare spend per beneficiary grand rate (based on county level information) Weighted Average of % of Diabetics receiving Diabetic Monitoring (based on county level information) Weighted Average of years of potential life lost below age 75 per 100k Pop (based on county level information) Weighted Average Behavioral health provider rate per 100,000 (based on county level information) Service Area File, Standard Analytical File I/P, O/P, Physician, County Health Rankings An aggregate score for each facility is calculated by multiplying Years of Potential Life Lost (YPLL), Ambulatory Care Sensitive Conditions (ACSC), Population to Behavioral Health Provider Ratio, and Diabetic monitoring rankings by a weight factor based on the county level market share for each FIPS code in a hospital s service area. An aggregate Medicare per Beneficiary Grand Rate value is calculated for the hospital s market service area using the Medicare Standard Analytical file. The Grand Rate value consists of total annual Medicare payments for Inpatient, Outpatient and Physician services excluding Medicare advantage patients. Percentile rankings are calculated based on the indicators above. Lower scores for Grand Rate, YPLL and ACSC are better, while higher scores are better for Behavioral Health and Diabetic Monitoring. Pillar scores are then calculated as outlined in the methodology above. FIPS codes missing data for any of the four health factor measures are excluded and FIPS codes missing data for Medicare Grand Rate are excluded.
9 8 Hospital Strength INDEX Study Value Index Components Figure 5 Indicators COST Value Medicare Case-Mix Adjusted Average Costs Inpatient Medicare Case-Mix Adjusted Average Costs Outpatient MedPAR, Outpatient Standard Analytical File, HCRIS An overall average cost-to-charge ratio is computed for each hospital based on total charges and costs as reported in the Medicare Hospital Cost Report Information System. To calculate inpatient average costs, a hospital s cost-to-charge ratio is applied to MedPAR inpatient charge data at the claim/patient level and adjusted based on the CMS-assigned case weight for that claim s MS-DRG code. A hospital s costs are aggregated for all inpatients to derive overall averages. To calculate outpatient average costs, a hospital s cost-to-charge ratio is applied to Medicare Outpatient Standard Analytical File charge data at the claim/hcpcs level and adjusted based on the CMS-assigned case weight for that claim s APC (Ambulatory Payment Classification) code. A hospital s costs are aggregated for all outpatients to derive overall averages. Percentile rankings are calculated based on the cost indicator. Lower scores receive higher rankings. Pillar scores are then calculated as outlined in the methodology detailed above. Figure 6 Indicator CHARGE Value Medicare Case-Mix Adjusted Average Charges Inpatient Medicare Case-Mix Adjusted Average Charges Outpatient MedPAR, Outpatient Standard Analytical File To calculate a hospital s average inpatient charge score, claims data from MedPAR are adjusted for case mix and wage index to derive an average charge per Inpatient admission. A hospital s charges are aggregated for all inpatients to derive overall averages. To calculate a hospital s average outpatient charge score, claims data from the Medicare Outpatient Standard Analytical File are adjusted for case mix and wage index to derive an average charge per outpatient visit or procedure. A hospital s charges are aggregated for all Outpatients to derive overall averages. Percentile rankings are calculated based on the charge indicator. Lower scores receive higher rankings. Pillar scores are then calculated as applicable per the methodology detailed above.
10 9 Hospital Strength INDEX Study Figure 7 Indicator QUALITY Value Hospital Compare Process of Care Measures Hospital Compare Process of Care Measures: AMI 2 - Aspirin Prescribed at Discharge AMI 8a - Primary PCI Received Within 90 min of hospital arrival AMI 10 - Statin Prescribed at Discharge ED 1b - Median Time from ED Arrival to ED Departure for Admitted ED Patients HF 1 - Discharge Instructions HF 2 - Evaluation of LVS Function HF 3 - ACEI or ARB for LVSD OP 4 - Aspirin at Arrival OP 5 - Median Time to ECG OP 6 - Timing of Antibiotic Prophylaxis OP 7 - Prophylactic Antibiotic Selection for Surgical Patients OP 18b - Median Time from ED Arrival to ED Departure for Discharged ED Patients OP 20 - Median Time from ED Arrival to Provider Contact for ED patients OP 21 - Median Time to Pain Management for Long Bone Fracture OP 22 - Patient left without being seen PC 1 - Elective Delivery PN 6 - Initial Antibiotic Selection for CAP in Immunocompetent Patient SCIP CARD 2 - Surgery Patients on Beta-Blocker Therapy Prior to Arrival Who Received a Beta-Blocker During the Perioperative Period SCIP VTE 2 - Surgery Patients Who Received Appropriate Venous Thromboembolism Prophylaxis Within 24 Hours Prior to Surgery to 24 Hours After Surgery SCIP INF 1 - Prophylactic Antibiotic Received Within 1 Hour Prior to Surgical Incision SCIP INF 2 - Prophylactic Antibiotic Selection for Surgical Patients SCIP INF 3 - Prophylactic Antibiotics Discontinued Within 24 hours After Surgery End Time SCIP INF 9 - Urinary Catheter Removed on Postoperative Day 1 (POD 1) or Postoperative Day 2 (POD 2) with Day of Surgery being Day Zero SCIP INF 10 - Surgery Patients with Perioperative Temperature Management Averages of indicator measures (percentages) are calculated to produce pillar composite scores. All available data are used in the calculation of averages. Missing data within measure sets are ignored unless a footnote in the data denotes that a hospital chose not to submit data for all measures used in the pillar. Percentile rankings are calculated based on each CMS Process of Care indicator. Higher scores receive higher rankings. Pillar scores are then calculated as outlined in the methodology detailed above.
11 10 Hospital Strength INDEX Study Notes The initial quality indicators incorporated in the HOSPITAL STRENGTH INDEX represent the most generally established and accepted public measure sets in the industry. Newer, more controversial measures and measures that are not broadly representative have been purposefully omitted. The incorporation of additional measures in future methodology will be considered based on industry consensus and acceptance. Figure 8 OUTCOMES Value 30-Day Readmission Rates for AMI 30-Day Readmission Rates for HF 30-Day Readmission Rates for PN 30-Day All-cause Mortality Rates for PN Indicators 30-Day All-cause Mortality Rates for AMI 30-Day All-cause Mortality Rates for HF Rate of readmission after discharge from hospital (hospital-wide) Deaths among Patients with Serious Treatable Complications after Surgery Proprietary Risk Adjusted In Hospital All Condition - Lives Saved/Standard Deviation Composite PSI Notes Hospital Compare Mortality and Readmission, MedPAR For the Hospital Compare Mortality and Readmission indicators, raw scores are percentile ranked to get indicator level ranks. For the proprietary calculation of in-hospital mortality from any cause, data were first stratified by DRG cluster. In clusters with lower mortality rates, contingency tables were used to stratify according to age category and number of comorbidities. National per-stratum rates were used to calculate expected rates for each hospital. In clusters with higher mortality rates, logistic regression models were fit, adjusting for age, gender, cluster-specific comorbidities, and admission source. Expected rates from the contingency table and logistic models were applied to each hospital s patient base by running patient characteristics through the contingency tables/ models (risk adjustment). An overall expected mortality rate was derived for each hospital and compared to the actual number of deaths reported for that hospital in the MedPAR dataset. Finally, the number of positive or negative standard deviations from the expected rate was calculated for each hospital. The AHRQ QI SAS v5.0.1 software is applied to 2014 MedPAR Final data to generate the PSI Composite Score for each hospital. For Hospital Compare Mortality and Readmission, lower scores receive higher rankings. For the proprietary mortality indicator, percentile rankings are calculated based on the number of standard deviations from the expected rate, and a higher number of positive standard deviations receives a higher ranking; a higher number of negative standard deviations receives a lower ranking. Percentile rankings are calculated based on the PSI Composite scores. Lower scores receive higher rankings. Index scores are then calculated as outlined in the methodology detailed above. All metrics are equally weighted. For the proprietary mortality indicator, among inpatients age 65 or older at critical access and acute care hospitals, specific reasons for the exclusion were as follows: stayed less than two days (unless died), left against medical advice, transferred out, or assigned DRGs For more information on AHRQ PSI, see
12 11 Hospital Strength INDEX Study Figure 9 Indicator PATIENT PERSPECTIVES Value % Respondents Who Would Definitely Recommend Patients who gave their hospital a rating of 9 or 10 on a scale from 0 (lowest) to 10 (highest) Patients who reported that their room and bathroom were "Always" clean Patients who reported that their nurses "Always" communicated well Patients who reported that their doctors "Always" communicated well Patients who reported that they "Always" received help as soon as they wanted Patients who reported that their pain was "Always" well controlled Patients who reported that staff "Always" explained about medicines before giving it to them Patients who reported that YES they were given information about what to do during their recovery at home Patients who reported that the area around their room was "Always" quiet at night HCAHPS Percentile rankings are calculated for each of the raw indicator scores. Scores are then compiled based on the above methodology for computing Pillar scores. Percentile rankings are calculated based on the survey scores. Higher scores receive higher rankings. Pillar scores are then calculated as outlined in the methodology detailed above.
13 12 Hospital Strength INDEX Study Finance Index Component Figure 10 Indicators FINANCIAL STABILITY Finance Total Liability/Total Assets, Total Current Assets/Total Current Liabilities, Net Income/Total Revenue, Total Assets/Total Expenses CMS Hospital Cost Report Information Systems (HCRIS) The above ratios are calculated for each hospital based on the most recent available HCRIS Hospital Cost Report data, except for large national hospital systems as noted below. The capital efficiency ratio is weighted at 40 percent of the Financial Stability Index. The other three indicators are equally weighted to calculate the remaining 60 percent. This weighting adjusts for a number of factors, most notably that the capital efficiency ratio is the single best predictor of hospital solvency as indicated in the research study cited below. It also balances the use of a single income statement to multiple balance sheet ratios. Percentile rankings are calculated based on each financial indicator. Higher scores receive higher rankings for all indicators except leverage, where lower scores receive higher rankings. Index scores are then calculated as outlined in the methodology detailed above. Notes The Financial Stability Index is adapted from academic research that identified the financial ratios most correlated to long-term fiscal viability. See: Lynn, M., & Wetheim, P. (1993). Key Financial Ratios Can Foretell Hospital Closures. HFMA Journal, 47(11), The use of consolidated ratios for large systems is necessary in order to produce comparable metrics across the broadest hospital sample, as the accounting and cash flow management practices of these systems impacts HCRIS balance sheet reporting.
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