HealthGrades opening up methodology to review

Company will explain numbers behind ratings

Lakewood, CO-based HealthGrades, whose web site ( is a leading consumer destination for nationwide quality ratings of hospitals, physicians, and nursing homes, has opened for review its methodology for comparing the nation’s hospitals in terms of quality. HealthGrades claims 1 million consumers log on to its site each month.

The company ran one methodology workshop at its Colorado headquarters on June 18, with another planned for Sept. 17. Workshop topics include:

  • HealthGrades’ hospital risk-adjustment methodology;
  • review of specific statistical models as a group and individually;
  • HealthGrades’ new Patient Safety Awards, scheduled for release on July 27, 2004.

"Over time, we’ve gotten a lot of questions from the industry as to how we risk adjust, how our models look, and so on," says Sarah Loughran, HealthGrades senior vice president.

"The workshops provide an opportunity to not only hear this information in-depth, but to sit down and ask questions and go into our models." Attendees include industry, hospital executives, and business groups on health, she points out.

"Attendees will glean a much better understanding of the methodology, including how we put together specific risk-adjustment models by procedure and diagnoses," Loughran explains.

Each year, HealthGrades rates nearly every hospital in the country with "star ratings" for each of 26 procedures and diagnoses.

Five stars indicates superior care, meaning that the hospital’s mortality or complication rates for that procedure are among the lowest in the nation. Three stars indicates average performance, and one star indicates poor performance.

The company assigns star ratings to each procedure and diagnosis, providing consumers with the specific information they need for selecting the best provider of care for their situation. The ratings are based on three years of data provided by Medicare, the only data source to which virtually every hospital in the country contributes information.

Apples-to-apples comparison

As part of its analysis of that information, HealthGrades risk-adjusts the data, so hospitals that receive sicker patients — such as regional trauma centers — are compared on equal footing with community hospitals and academic medical centers. Risk-adjusting the data, allows for apples-to-apples comparisons of all hospitals, HealthGrades contends.

As another part of this initiative, HealthGrades is seeking to expand its work with hospitals, academics, and research organizations to provide its models for studies of hospital quality as well as studies on the advancement of hospital risk-adjustment methodologies.

"As you know, we rate every hospital in the country on our web site," Loughran says. "We have 180 to 190 hospital clients; they either work with us to take the ratings and use them to promote themselves, or they have QI initiatives in place, and we offer consulting. The information tools we use in this consulting are based on the HealthGrades methodology."

HealthGrades welcomes having researchers and hospitals work with them to find ways to evaluate its methods and improve them wherever possible.

"We are open to and are looking for people who are academically inclined — whether based in hospitals or universities — to work with us to evaluate our risk-adjustment methodologies and advance the science behind risk-adjusted health care data," she notes.

That science is still in its nascent stage, according to Loughran. "The whole science of risk-adjusting health care information is an evolving science," she asserts.

Leading to higher quality

All of these efforts will lead to higher quality in the nation’s hospitals, Loughran says. "The use of our ratings has expanded dramatically," she notes.

"We have relationships with 80 of the Fortune 500 companies, who distribute our information to their employees. Plus, there has been a rapid expansion of consumerism. So, to the extent the information reported is accurate and usable by employees and consumers, it ultimately will drive quality improvement as consumers choose more quality providers and more pressure is put on providers to provide more quality."

Loughran says a number of hospital CEOs have become much more attuned to how their quality is being used. "What’s driving that is consumers," she says. "We have lots of stories of consumers walking into a hospital office and saying, Why are you not five-star rated?’"

Need More Information?

For more information, contact:

• Sarah Loughran, Senior Vice President, HealthGrades, Lakewood, CO. Phone: (303) 716-6502. E-mail: sloughran@healthgrades. com. Web: