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Quality and Cost: Healthcare Leaders Learn How to Redefine Value

August 21, 2014
by John DeGaspari
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Provider organizations take on difficult initiatives to change the value equation in care delivery

Is the healthcare industry at a tipping point, where the clinical and financial sides of the industry are beginning to come together to work toward the common goal of value-based care?

In a compelling keynote presentation at the Healthcare Financial Management Association’s 2014 ANI Conference in Las Vegas in June, Atul Gawande, M.D., a surgeon at Brigham and Women’s Hospital in Boston and professor of the Department of Health Policy and Management at the Harvard School of Public Health and the Department of Surgery at Harvard Medical School, said that the emerging lesson in healthcare today is that the system is broken. “We are not sure that we are seeing the value and quality you would expect from the money we are putting in,” he said.

Gawande, the noted author of several books, including The Checklist Manifesto: How to Get Things Right, told his audience that while it has long been known that 5 percent of the sickest patients account for 50 percent of the costs, many in the industry have miscalculated what it meant. The reason for that miscalculation, in his view, is that the financial professionals who know about the largest share of healthcare spending are different than the clinicians who care for the sickest patients who account for those costs—and the two groups historically have not talked to each other.

That is now changing: “We are just starting to discover what happens when you put the ‘you’ and ‘I’ together,” he told the audience of financial professionals. “When they do communicate, it’s a pretty stunning thing.”

He offered an example of changes in hospital practices that are resulting in dramatic improvements in patient care, along with major potential cost savings.  His team at Ariadne Labs, a joint center for health systems innovation at Brigham and Women’s Hospital and Harvard School of Public Health, has worked with the World Health Organization (WHO) to develop a checklist that would be used for procedures in the OR to help prevent complications from surgery. “We know that major issues that affect quality and cost of care occur in the OR,” he said.

Where it was deployed in eight hospitals globally in 2009, every hospital saw a reduction in complications and deaths—an average 35 percent reduction in complications and 47 percent reduction in deaths. He also noted that the checklist was rolled out across 74 hospitals in the Veterans Administration hospital system, which has seen an 18 percent reduction in deaths. Commenting on that result, Gawande said, “every complication is an $80,000 increase in costs, and those costs were also eliminated.”

Data and Transparency at Texas Health Resources

Yet the task of implementing such cost-saving initiatives can be challenging. One major hospital system that has adopted the surgical checklist to its operating rooms is Arlington-based Texas Health Resources (THR). The results of its initiative were published in the Journal of the American Medical Association (JAMA) in April 2013.

Mark Lester, M.D., executive vice president and Southeast Zone clinical leader at THR, says the study grew out of a larger effort by the health system to improve quality and safety. “We had an opportunity to work with Dr. Gawande and a team of the School of Public Health at Harvard and members of the Boston Consulting Group, on work that would take a look at how we could take a surgical checklist, with it’s demonstrated ability to improve safety, combine it with collaborative team training, and how we could implement that in all of our active operating rooms,” he says.

Mark Lester, M.D.

Lester says the preparation for the project took an entire year of work that involved going into the ORs of the system’s wholly owned hospitals, and speaking with the doctors, nurses and anesthesiologists.  “The idea was to customize the WHO checklist to their environment and to their workflows,” he says.

The team then stepped back, and gathered a baseline of 2010 data, the year that preceded the work of implementing the checklist. “The baseline was a look at the economics of its surgical patients and the complication rates,” Lester says. The complication rates were gathered from examining the health system’s coded data used for billing purposes. From that information it developed 10 categories of complications that followed surgery. “We saw in that year what our complication rates were, and that it was within the range of published complication rates,” he says, adding that the complication rates were correlated with economic data.

The study findings that were published in JAMA were eye-opening: hospital revenue was roughly 330 percent higher when patients who had private insurance coverage had at least one complication following surgery ($56,000) versus patients with no complications ($17,000). For patients with Medicare coverage, the difference was lower but still significant: a 190-percent up-charge for patients with at least one complication ($3,600) versus patients with no complications ($1,880).

Lester says that Texas Health has now implemented the checklist in the ORs of all of the system’s wholly owned hospitals. It plans to do a detailed analysis of the data it has obtained since the checklists and surgical teamwork training were put into effect.