Michael Alkire“If airline travel were like health care, each pilot would be free to design his or her own preflight safety check, or not to perform one at all.”

This quote was taken from a recent Institute of Medicine (IOM) report detailing the inefficiencies of the U.S. healthcare system. The report pegs the cost of waste in health care at $765 billion annually, nearly a third of what we spend on health care, due to everything from excess administrative costs to missed prevention opportunities to inefficiently delivered services.

The Details Are in the Data 

The IOM cites a number of ways to help curb waste. But before we can reduce it, we need to define it, and therein lies the problem: Because of the lack of detailed data, we haven’t been able to compare the effectiveness of different products and processes to identify waste. We are changing this situation.

Earlier this year, Premier set out to define and benchmark waste and inefficiency for the 2,700 hospitals and 90,000 other care sites that are members of the alliance. This effort began with combing through data amassed as a result of the organization’s work with its members, and resulted in identification of 15 common causes of waste, which were placed into four buckets: 

  • Inefficient labor management
  • Product overutilization or misuse
  • Failure to leverage appropriate supply contracts for best pricing
  • Harm related to excessive complications, length-of-stay, and readmissions

A closer look at just one example, blood management, demonstrates the possible opportunities for savings. 

Inefficient use of blood represented a significant opportunity in this “waste report”—evidence suggests that inefficient use of blood in large part due to unnecessary transfusions may account for as much $1.06 million per hospital, per year. Blood is used every two to three seconds to treat up to 4.5 million Americans a year with conditions ranging from cancer to organ transplants to accidents and trauma. 

So it comes as no surprise that blood has become a scarce commodity: The national blood supply is at its lowest level in 15 years, due in part to an increase in the number of complex therapies requiring larger amounts of blood. 

Knowing these big categories of waste and the dollars at stake is a good start, but it’s not enough. Hospitals need to implement practices to tackle waste in these areas while maintaining care quality. And some are already doing just that. 

Using evidence. With its campaign to safely reduce unnecessary blood transfusions during heart surgery, Marriottsville, Md.-based Bon Secours Health System, Inc., is demonstrating that it is possible to efficiently and effectively manage blood supplies without sacrificing quality or safety. 

Bon Secours has benchmarked its blood use, and associated costs, against that of other hospitals in the Premier database to identify areas for improvement. The health system then investigated the transfusion practices of 12 heart surgeons practicing at five of its hospitals in Virginia, New York, and South Carolina. 

It found wide variations in the use of blood from surgeon to surgeon, due in part to the lack of strong evidence to support a specific best-practice approach. This finding raised a number of questions. For instance, why would a 35-year old heart surgery patient with no preexisting conditions need the same amount of blood as a patient who is 65 and suffers from hypertension and diabetes? And would that 35-year old in good health even need a transfusion at all? 

Surgeons were instructed to study their practices and the outcomes they achieved to develop data-driven, evidence-based blood-transfusion guidelines. Four years after implementing these guidelines, the hospitals have reduced blood utilization by 65 percent, adverse events by 14 percent, and length of stay by 20 percent—and saved nearly $2 million.

Marlon Priest, MD, Bon Secours executive vice president and chief medical officer, summed it up well: “Judgment without the use of sound evidence becomes opinion. We have far too much information to allow (opinion) to carry the day.”

Identifying ICU waste. Florence, S.C.-based McLeod Health also used comparative data to identify overuse of intensive or critical care services and excessive length of stay in these units as significant sources of waste. McLeod took a proactive approach to avoid the added costs and potential complications posed by this area of waste. 

The organization focused on identifying and managing patients who might be at risk for complications due to unplanned or critical care transfers. It enacted a “rover program,” in which ICU nurses rove throughout the hospital 24/7 seeking opportunities for early interventions to manage use of the ICU. 

By working with the patients’ standard nurses, reviewing clinical data, providing critical care perspectives, and coordinating transfers to the ICU, the nurses’ work has helped McLeod to avoid an average of 75 unplanned critical care transfers a month, for annualized savings of $1.4 million.

These are just two examples of opportunities to achieve significant savings in health care by reducing waste. There are many more to find, and the road to improvement begins with detailed data and measurement. The industry needs to define benchmarks and measures that take both cost and quality into account to identify and act on opportunities. 


Mike Alkire is COO, Premier healthcare alliance,  Charlotte, N.C. 

Publication Date: Tuesday, January 29, 2013