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LANSING, Mich.-When benefit managers representing the three largest employers in the Lansing, Mich., area set out to compare local hospitals nea rly two years ago, few could have suspected that it would spark a controversy that still is smoldering.

The three benefit plan sponsors-General Motors Corp., the State of Michigan and Michigan State University- had hoped that analyz ing the cost and quality of health care would help the region's employers make informed health care decisions and help deflate their health care budgets.

But sometimes the best-laid plans lead to loggerheads. The hospitals under scr utiny and the employers that paid for the study have stopped discussing a proposed second study.

The debate over the "hospital performance profile" commissioned by the three large employers centered on data. Because it was the sou rce of information most easily available to them, the employers pooled their own Blue Cross & Blue Shield of Michigan claims-payable data and hired a consultant to analyze it for six area hospitals. The employers forged ahead knowi ng it wasn't a perfect approach.

"We wanted better data, (but) frankly, getting good data is almost impossible," said Keith Groty, assistant vp for human resources of Michigan State and chairman of the Capital Area Health Alliance . The Okemos, Mich.-based buyers coalition helped the three leading employers plan the study.

"I think all three of us felt it was a good study," said Kevin D. Anderson, director of health care initiatives at Detroit-based GM. "I f the goal is to have perfect information, it will never exist."

In March 1996, when the employers provided the hospitals the results of the study, some of the hospitals were displeased. In particular, the largest facility, Sparrow Hospital, argued that the findings should be withheld from the public because they are useless. Sparrow ranked as the second-best value based on quality and cost, behind its chief competitor, Michigan Capital Medical Center.

"We asked for a second study, one that was not as severely flawed," said Howard Campbell, director of health information management for Sparrow.

The other hospitals involved in the study did not either strongly oppose or support it, ex cept for Michigan Capital, which wanted the study released.

Sparrow executives argued that relying on claims data tends to overlook differences in case severity, socioeconomic factors and underlying medical conditions. In this case, it also excluded all patient data except Blue Cross patients. Actual patient charts, not claims data, should be used for such studies, because they represent a much richer ve in of information, Mr. Campbell said.

The study indicated Blue Cross was paying about 20% more for comparable care at Sparrow than it was at Michigan Capital, Mr. Groty said. Blue Cross has since reduced the rates it pays Sparrow by an undisclosed amount.

Kathy Kendall, director of managed care contracting at Michigan Capital, said, "We agree that the patient record is always more accurate than claims data." Nonetheless, she praised the study for symbolizing a growing awareness among buyers. "The employers are finally standing up and saying we have to be accountable-the physicians have to be accountable; the hospitals have to be accountable," she said.

Sparrow and Michigan Capital vi ewed the contents of the study cautiously, considering delicate market conditions, sources said. Sparrow was in discussions last year to merge with a third local hospital, St. Lawrence Hospital and Health Care Systems. It has since agreed to the merger, which is expected to be completed this year. Moreover, Michigan Capital is in discussion with Nashville-based Columbia/HCA Healthcare Corp. to be acquired.

Primarily due to objections from Sparrow last spring, the employer coalition kept the report from the public's view for most of 1996. The employers agreed to shelve the study and embark on a second attempt, incorporating more reliable patient chart data, but months of haggling over d etails and delays ensued.

In December, a local newspaper, the Lansing State Journal, requested the study under the Freedom of Information Act, which allows the media access to documents of public interest. The paper splashed the stu dy's findings across the front page, the headline declaring Michigan Capital "offers (the) best deal."

A lesson employer coalitions can learn from Lansing is that hospital studies, to be accurate enough to satisfy everyone, must i nvolve the full cooperation of the hospitals involved, said Michigan State's Mr. Groty. This can create a Catch-22 situation, because hospitals are by nature selfish about their data, he said.

"Simply saying data is good and people have a right to data doesn't mean (hospitals) will open their doors to you," he said. "It's really a power issue."

Hospitals will resist the release of a comparative study about them "until they know exactly what it represents and that they can put their spin on it," he said.

A different lesson, Ms. Kendall said, is that coalitions should consult hospitals on their research plans early in the process.

The employers, which reportedly spent more than $75,00 0 on the first study, are willing to fund a second study using chart data, but sore feelings between them and the hospitals continue. An agreement on a second study has not been reached, and the two sides have not been able to sche dule a meeting, said Frank Webster, executive director of the Capital Area Health Alliance.

"At this point, I would probably say stalemate is a good word," Sparrow's Mr. Campbell said.