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It’s complicated: Using quality indicators to drive out cost

Posted Nov 14 2013 10:24am

We interviewed Dr. David Cutler, a renowned Harvard economist back in spring 2013 for our Economic Outlook , “Beyond the Hospital Walls.” For decades, Cutler has stated that our focus is too narrow in lowering healthcare costs. For decades, Cutler has been a voice standing out among many stating that our focus on lower costs in healthcare was narrow.

During President Clinton’s healthcare reform push and now President Obama’s, people have focused solely on the cost aspect of changing our healthcare system. And as I mentioned in my last post , they’re not wrong to recognize the cost imperative we have.

However, Cutler has championed a focus on quality; he suggests that quality is, in fact, a driver of lower cost care.

So how can this be? How can you provide better service at a lower cost?

In a fee-for-service model, more care = better care. But that’s not always the case. In a number of articles published in previous editions of the Outlook , overutilization in products or services, such as lab tests, result in higher-cost care without better outcomes.

In new pay-for-performance models, providers are asked to use evidence-based research to determine what care is most appropriate for a patient with a certain illness or issue. Beyond that, providers are asked to determine what the most appropriate care is to keep people healthy and help them stay well outside of the hospital system.
Both work to drive down overall utilization and costs.

Dr. Richard Bankowitz, Premier’s chief medical officer, wrote an article for our first Quality Outlook published this summer on “The High Cost of Low-Reliability Healthcare.” Using data on 500,000 patient discharges from the Premier Analytic Database, the research team identified outcomes that would be considered complications of care, such as hospital-acquired infections.

They found:

  • 16% of patients in this cohort had one or more potential inpatient complications, resulting in length of stay of a total 200,000 days
  • 5 excess deaths per 1,000 people associated with these conditions
  • Average excess cost of nearly $1,000 per patient – and considerably more for certain conditions, such as pneumonia

 

EconomicOutlook

Source: Premier’s 2013 Quality Outlook

 

Another example of this is shown in an article in our most recent Economic Outlook identifying the cost of complications in obstetrics. As care for mothers and babies evolved, we drastically improved maternal mortality rates from approximately 800 per 100,000 in the 1930s to 50 per 100,000 in 1960s, and 21 per 100,000 in 2010 .  The infant mortality rate has declined from 55.7 per 1,000 live births in 1935 to 6.9 per 1,000 in 2000 .

These are huge wins.

However, maternal mortality actually doubled in the U.S. from 1990 to its current rate, despite a 34% decrease in maternal mortality across the globe during the same time frame.

Despite the progress we’ve made in maternal and child healthcare in the last few decades, maternal complications from labor and delivery can lengthen stay and add cost. Labor and delivery is one of the largest patient populations at an average hospital, accounting for 1,360 per 100,000 patient discharges. So even small complications can result in significant excess costs multiplied out across a large patient population. While the vast majority of observed avoidable complications were mild, they make care more expensive and can erode other quality outcomes like patient satisfaction.

For instance, among 442 acute care hospitals, avoidable complications resulted in length of stay of 16,938 additional days in a year. Though the rate of complication is low and the complications are largely mild, they result in longer length of stay, added procedure costs and increased patient discomfort.

Pay-for-performance models are emphasizing the need to improve outcomes and reduce avoidable complications through reform incentives. And in a time when providers are facing significant reimbursement cuts, an influx of both Medicare and Medicaid patients, and the need to manage patient populations with high rates of chronic disease, it’s crucial that providers find cost savings anywhere they can.

Labor and delivery is just an example of an area that has a low complication rate, but because of the large patient population, may be worth delving into to determine individual hospitals’ opportunities to improve care and reduce cost.

We can get at improving quality from a variety of angles, and we can do the same with reducing cost.

What’s clear from the research, though, is that providing the right care to the right patient at the right time reduces overall healthcare costs – not increases it.

This means that creating clinical guidelines and best practices where they don’t exist, and following evidence-based care recommendations will be an ongoing aspect of health systems’ and providers’ efforts in the future.

From what the numbers are showing us, high-quality, uncomplicated care has the added benefit of being higher-efficiency, lower-cost care, too.

The post It’s complicated: Using quality indicators to drive out cost appeared first on Action For Better Healthcare .

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