I was recently attending a hospital association breakout session listening to two reputable healthcare systems present how they aligned their respective medical staffs to achieve quality outcomes. They demonstrated how they achieved reduced unnecessary admissions, reduced lengths of stay and the reduction of clinical testing and procedures. They specifically portrayed how they worked with their medical staffs to strive for best practice outcomes. Clearly the outcomes were impressive, but they neglected a key component of the Triple Aim: Reducing the per capita cost of healthcare.
Never once did they present actual cost reductions that their efforts rendered. When I posed the question about cost savings, the response I received from the two presenters was like it was the proverbial elephant in the room. They told me that they didn’t discuss cost to align their physicians “unless it was absolutely necessary”. They implied that they avoid it at all costs.
I disagree. My experience is that the cost of healthcare, or namely the waste in healthcare, needs to be shared with this key group of decision makers – our medical staff. Estimates of the money wasted on overuse each year range from around $200 billion to over $800 billion – between 10 percent and 30 percent of US health care spending. In 2010, the Institute of Medicine issued a report stating that waste accounted for thirty per cent of health-care spending, or some seven hundred and fifty billion dollars a year. The report found that higher prices, administrative expenses, and fraud accounted for almost half of this waste. Bigger than any of those, however, was the amount spent on tests that are overused, unnecessary or potentially harmful to patients.
Although it’s the “right thing to do”, I guess I can understand the presenters’ obvious trepidation to relate the cost savings to their physician partners. Sometimes it can be potentially career ending. For instance, I had a pulmonologist on staff that was a nightmare for our Case Management department. By himself, he accounted for 29% of all Medicare admissions and had a variance of the geometric mean length of stay for his patients of 2.5 days. His estimated uncompensated cost to the hospital was $1,818,300. Furthermore, we haven’t even touched on the cost of bad outcomes and malpractice cases, but I also had another surgeon on staff that was on the “watch list” for our Medical Malpractice carrier.
Sadly, both of these physicians were on the hospital’s Board of Directors and I paid the ultimate price for “doing the right thing”. They continue their ways unaddressed and I moved on.
Working with physician partners isn’t always negative, though. In the same institution the price being paid for physician preference items by my stand-alone hospital I had just become the CEO at was shockingly high. When I insisted that this egregious price difference for such things as cardiac stents and orthopedic implants be shared with the respective interventional cardiologists and orthopedic surgeons, the alignment towards the hospital point of view was overwhelming. Despite the fact that these physicians had close ties and relationships to the individual companies and/or the representatives, since they were astounded at the price difference they worked with the hospital to leverage an $8M annual savings for the same implants! It was the “right thing to do”.
My message is that reducing the cost of healthcare goes hand-in-glove with the other two prongs of the Triple Aim: improving the patient experience and improving the health of populations. You can be selective in how you share the cost information, but it must be shared with all decision makers in order to achieve the ultimate value.