The value proposition receives incredible attention these days, but do we truly know where the opportunities lie to decrease our costs? Or where dollars are hidden?
For me, it's a daily surprise where more money can be saved. During a recent presentation at a board retreat, I was showing a variety of quality and safety dashboards and discussing the financial impact of our quality program when it hit me: Every measure on every dashboard represented a money-saving opportunity. Not just a few of the measures, but every measure had both a cost and quality impact. The most obvious measures were complications.
To this end, a study published in Health Care Finance Review estimates the incremental cost associated with 64 categories of potentially preventable hospital-acquired complications (Fuller, R. L., McCullough, E. C., Bao, M. Z., and others, "Estimating the Costs of Potentially Preventable Hospital Acquired Complications," Health Care Financing Review, Summer 2009, pp. 17-32). Using Maryland and California data, the authors found that the estimated incremental cost was consistent across both databases and accounted for an increase in hospital cost of approximately 9.5 percent.
The authors make an important point: Not all hospital-acquired complications are preventable, because they may be the result of the natural progression of underlying disease. But high complication rates, after adjusting for patient characteristics and severity of illness, indicate low-quality care, waste, and, therefore, potential cost savings. In fact, the estimated incremental increase in cost per potentially preventable complication is approximately $10,000.
So for every complication that's eliminated, $10,000 on average is saved and profit margin improves.
According to the study, savings generated by many of our national improvement priorities can be substantial. For each catheter-related bloodstream infection avoided, savings average $18,000 to $22,000 per case. For every decubitus ulcer avoided, $17,500 to $28,000 is saved. Postoperative infections with deep wound disruption costs an additional $14,400, and venous thrombosis costs approximately $11,000 to $16,000.
The implications for our hospitals are staggering. Potentially preventable complications add approximately 9.5 percent to our inpatient costs, or $88 billion per year to our national healthcare expense, according to the study.
So how do we leverage this opportunity to improve the cost structure in our organizations? Here are some practical steps we can all take.
Step One: Quantify the Cost-Savings Opportunity
Using information available from hospital finance and coding systems, organizations can conduct an opportunity analysis for the most prevalent complications. A recent analysis at Spectrum Health found a $40 million potential opportunity at one of our 900-bed hospitals.
Complications related to kidney failure, respiratory failure, urinary tract infections, and ventilator management are most common. For these four groups, the cost-savings opportunity is $14.9 million. But because a good percentage of complications are caused by a natural progression of the underlying disease, only a portion of the $14.9 million will be realized.
Step Two: Mobilize Your Leaders and Make Assignments
Armed with this information, your physician and nursing leaders can take the lead in reducing targeted complications by ensuring that risk assessments are completed on appropriate patients, initiating prevention protocols for patients at risk, and completing postprocedure testing to detect the complication.
In some cases, the prevention protocols will apply to large inpatient populations. Such is the case with VTE prophylaxis. In others, the protocols are directed at specific patient populations, such as the prevention of contrast-induced nephropathy (CIN), or kidney injury, in patients undergoing percutaneous coronary intervention (PCI), or angioplasty.
Next, the leaders should assign each complication to a responsible medical director and nursing director. Working together, they will lead efforts to reduce the complication in their area of responsibility. For instance, the leaders for the cath lab will focus on CIN, a $1.85 million opportunity in our organization.
It's also reasonable that each leadership pair can tackle three to five different complications each year. Our cath lab leaders are working on CIN, hemorrhage, hematomas, and cardiac perforation, which together create a $2.9 million opportunity.
From an organizational standpoint, we can reasonably target all 40 complications on our list this year. With more than 20 paid medical directors in our organization, that's two complications per physician leader per year.
Step Three: Yearly Reduction Targets
How much each complication can be reduced is uncertain. We don't know where the floor is for most common complications. It wasn't until recently that catheter-related infections were completely eliminated in some U.S. hospitals. Previously, a certain number of infections were considered acceptable. I now challenge our teams to set targets to eliminate complications completely―to strive for theoretical perfection. In some instances, theoretical wasn't theoretical at all. They actually eliminated what had been commonly occurring events, often for months or even years. But if I can't sell that target, then at the very least, I can use internal examples to convince our leaders that a 50 percent reduction each year is possible.
Step Four: Ensure that Progress Is Made―Leverage Your Board
During the year, accountable executives and medical and nursing leaders should report their progress in a variety of organizational forums. Lead executives should provide quarterly reports to the board quality committee and board of directors. Medical and nursing leaders should provide monthly reports to their executive quality council and a quality council of their peers.
The reports review interventions completed, performance data trended over time, barriers encountered and eliminated, and action plans for the next quarter. Human nature being what it is, everyone will work diligently to ensure that progress is made before making an appearance at one of these forums. However, some teams will make good progress, while others will face significant challenges.
When more motivation is required, some organizations include a portion of the targeted savings in their budget. In organizations where meeting budget targets reigns supreme, this could be just the encouragement needed to achieve breakthrough performance.
I hope these practical tips prove useful. If we can substantially reduce our patients' complications, then pain and suffering will be reduced, mortality rates will improve, the cost of health care will decline, and our organizations will enjoy improved financial performance.
John Byrnes, MD, is senior vice president and chief quality officer, Spectrum Health System, Grand Rapids, Mich.; clinical associate professor, MSU College of Human Medicine, Grand Rapids; and a member of HFMA's Western Michigan Chapter.
Publication Date: Friday, June 01, 2012