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From the November 2001 Issue The Overdue Promise of E-procurement Just What the Health Plan Ordered |
Viewpoint
Care-based Management of Cost
Facing continued economic pressure, many healthcare organizations have implemented traditional cost-cutting measures to protect their financial viability. These cuts have generated an increased level of concern about quality of care, and many cost-reduction efforts have not produced the desired results. Healthcare organizations have internalized the managed care industry’s approach to cost containment. They have pursued a strategy based on the premise that providing fewer services is cheaper. Ironically, as this strategy is being adopted by individual providers, managed care organizations are realizing that the strategy ultimately doesn’t work, because under-treating illnesses doesn’t always cost less. It may result in inappropriate treatment of patients and hence, in illnesses which, ultimately and dramatically, cost more. Shortcuts in care can lead to huge downstream expenses. For example, when a large regional healthcare system cut back on its nursing staff, it selected a new type of catheter for patients with incontinence. The catheters reduced the time required to help the patients walk or move around the room. This saved on nursing costs in the short term, but the total cost of treating these patients rose substantially because of an increase in urinary tract infections due to overextended use of the catheters. On average, this cost the system an extra $2,700 per patient for the additional care necessary to treat the infections. Focusing on the management of costs without considering the management of care does not improve care and doesn’t even control costs. This lesson has been seen so many times that it should be self-evident: Decisions based on reducing the expense of products and procedures too often lead to improper clinical care and bad financial results. Too often, saving money in the short term by utilizing less expensive products results in more complications and longer patient stays. A critical challenge lies in knowing which patients should be given which treatments so the overall treatment process is optimized. A Different Model Adopting a care-based management strategy allows healthcare organizations to control costs and improve quality by addressing the overall process of treatment and effectiveness of the components of treatment. This strategy addresses three major challenges in the healthcare industry: optimizing treatments, reducing medical errors and complications, and decreasing duplicative testing and treatment procedures. Treatment optimization. Most organizations cannot optimize the process of care because they lack adequate information about care process and results. Specifically, most current information tools cannot track the process adequately enough to identify the most efficient and effective form of treatment. Organizations that can relate treatment decisions to clinical and financial outcomes can manage care and improve their operating efficiency. By analyzing clinical data and identifying treatment processes that result in poor clinical outcomes, increased length of stay or high costs, healthcare leaders can customize the care delivery process to individual physicians and patients. Medical error reduction. Medical errors, most notably drug errors, are only one form of complication. Despite the attention that recently and publicly has been on these grievous problems, drug errors are a small subset when compared to all medical and surgical complications. Many complications arise from a breakdown in processes such as lack of coordination among the many different members of the healthcare team, lack of coordinated preparation for a procedure or from poorly coordinated hand-offs among caregivers. While point-of-care order entry will help eliminate many drug-prescribing errors, these systems will not address the costly and potentially lethal complications that result from failed process control not involving the physician. Reducing complication results from having the ability to know when a patient is at risk for a complication, to identify when a complication occurs, and to relate treatments and process steps to the complications. Duplicate Tests. One in 10 tests ordered by a physician is a duplicate. The major reason for this is that physicians cannot get easy access to the tests ordered by other physicians, or even those they ordered in the past themselves. Missing information also results in medical errors—for example, when drug interactions occur because physicians don’t know all of the drugs a patient is taking. The economic burden associated with drug interactions and redundant prescribing seems nearly impossible to measure. Many hospital admissions occur for an important safety reason—for observation until results of prior testing can be located. However, many of those admissions will ultimately be revealed as unnecessary. Redundant testing adds considerably to the cost of treatment and, in many cases, poses risks to the quality of care. Information that is truly patient-centric, that accumulates all of a patient’s information regardless of who ordered it, can reduce the rate of duplicate testing. Conclusion There is clearly a need for analytical tools that detect and help to improve clinical processes in an effective, actionable way. The traditional methods of cost management—the essential approach of managed care—have not achieved sustainable results. Cost-based management of care does not address physician decision-making, nor does it tackle medical complications and errors, which have a profound effect on the quality of and cost of care. The financial pressure on healthcare organizations will increase because, at its root, society demands more efficiency and better quality from hospitals and physicians. Today’s most advanced healthcare organizations have abandoned their efforts to implement top-down cost-cutting and are focusing their efforts on a new approach that has actually come full circle: managing the care delivery process. Focusing on improving care is a win-win for both healthcare providers and the patients they serve. The time has come for administrators to re-evaluate their approach to cost management in a way that benefits the entire healthcare community. © 2001 Nelson Publishing, Inc |
By
David J. Brailer, M.D., Ph.D., chairman and chief executive officer of CareScience, Philadelphia. Contact him at