Maryland is the only state with an all-payer system, in which all health care purchasers, from private insurers to individuals to Medicare and Medicaid, pay the same amount for the same service in the same hospital. The state also sets and regulates all hospital charges. But 40 years into this model, the Maryland Hospital Association and other state health care stakeholders decided it needed modernization.

So, in January 2014, the MHA helped to develop a unique demonstration with the Centers for Medicare & Medicaid Services: a global budget program based on prioritizing health care quality over quantity. With that guiding principle in mind, Maryland’s hospitals are no longer paid on a fee-for-service basis but, instead, are given an annual fixed budget to treat all patients who come through their doors.

This global budget now places all hospitals’ funding at risk based on performance — more than in any other state in the nation. Although annual budget amounts vary, each hospital is held financially accountable for the aggregate performance of all. The result has been an unprecedented level of collaboration, helping the Maryland Hospital Association become the winner of the American Hospital Association's 2016 Dick Davidson Quality Milestone Award.

“We need to raise all boats, and this payment system keeps us all together,” explains Carmela Coyle, president and CEO of the MHA. Hospitals that spend less than their annual budget by reducing care costs can keep the difference, but the state’s numerous quality metrics “help to ensure that hospitals can’t stint on care — they actually are reinventing care,” she says. “They must reach out to the continuum, from acute care to post-acute care … to keep people healthy in the first place.”

The value-based payment model has led the MHA to chart a new, all-in approach with every quality improvement initiative it undertakes — and the association nearly always achieves unanimous, voluntary hospital engagement. “We are the first state in the country with 100 percent of hospitals participating in our equity of care initiatives,” Coyle says. For each quality initiative in which a hospital chooses to participate, the MHA requires a hospital CEO to sign an agreement confirming the organization’s commitment, sending a powerful top-down message to all staff that every quality improvement initiative will have leadership’s full support.

The MHA’s current efforts revolve around reducing readmissions and preventable complications. Member hospitals’ numerous improvement activities reduced all-payer monthly readmissions by more than 10 percent from 2014 to 2015 and were responsible for a 37 percent quarterly decline in potentially preventable complications over that same period.

A key partner helping hospitals to attain these quality goals is the Maryland Patient Safety Center, co-founded by the MHA. “We are the go-to organization for all state providers working on quality improvement,” says Robert Imhoff, the MPSC’s president and CEO. “We are the convener, we provide education and training, and we look for initiatives that all hospitals can participate in across the provider network.”

Knowing that strong data collection is vital to tracking and improving these efforts, the MHA’s latest innovation has made huge strides in eliminating redundancies in data collection by securing all hospitals’ rights to the quality and safety data they already submit to the Centers for Disease Control and Prevention’s National Healthcare Safety Network. All hospitals, therefore, also have had to confer rights allowing their CDC data to be shared statewide.

Coyle says MHA hospitals realized that “to be successful, we had to rely on each other.” When the association convened its state leaders, “they decided the only way they could make statewide quality improvements was for everyone to see each other’s data.” That decision not only broadened data access for all, it lessened the burden of its collection.

“We are constantly feeding data back to our members. ... We’ve really seen our ability to move the needle on many quality efforts,” Coyle says. “With our data transparency, each hospital can look at who’s doing well on each of our quality indicators and follow their best practices.”

Imhoff adds: “Having that cooperative spirit goes a long way toward success. We all learn from each other.” 

For Coyle, who previously worked at the American Hospital Association, the award, named for the association's late president and CEO, is especially meaningful. “This is a tremendous honor,” she said. “Dick was my mentor for 25 years. And while we are honored to receive this award, at the end of the day, the question is always, can we make a difference at the bedside? This is a lifetime’s work.”

About the award

The Dick Davidson Quality Milestone Award for Allied Association Leadership is presented annually by the American Hospital Association to a state, regional or metropolitan hospital association, which, through its programs and activities, demonstrates exceptional organizational leadership and innovation in quality improvement and has made significant contributions to the measurable improvement of quality within its geographic area. For full criteria and more information, visit