Cost Effectiveness of Health

Information is key to improving health of Americans while reducing healthcare costs

July 21, 2022 9:42 pm

If there’s one principle that U.S. hospitals and health systems can embrace that will move the nation forward to improving cost effectiveness of health (CEoH), it’s that success depends on the effective use of information. We as an industry have all the data we need to provide the information necessary to address this challenge and shift away from the incentives that impede our progress; we just have to learn how best to harness it, says Daniel Marino, managing partner of Lumina Health Partners in Chicago.


How can U.S. hospitals and health systems best support and even take the lead in our nation’s efforts to address issues of health equity, including social determinants of health (SDoH) and the larger issue of CEoH?


I think  hospitals and health systems can have a greater impact by using data that allows them to be more proactive in addressing these issues.

Healthcare in the United States still tends to be very reactive. I would love to see healthcare organizations do a better job of looking at data and integrating it to become better informed on the direction things are going as opposed to just reacting to issues.

We have a big opportunity in healthcare because we have so much data that is out there — clinical data, financial data, research data and so forth. But what we don’t have is strong information. And I think it’s the lack of insight into what the data is telling us that forces us into the position as an industry of reacting to events rather than  anticipating or  preparing to manage them.

We’ve seen that all along with how we managed the initial COVID cases. Our response — even with delta and omicron — was very reactionary.

I think we could have been more proactive by focusing at the very start on better understanding COVID-19 and its effects. When you look at COVID-19 and how it affects an individual, the virus in and of itself isn’t really the primary issue. It’s more about how it affects the body and how it affects the immune system.  Research has shown that there are many contributing factors that really elevate the risk factor of an individual if they get COVID-19. Most individuals will  have a couple of bad days, but they are not adversely affected. It’s the patients who are considered high risk or have immune-compromising issues who are really the ones who are most susceptible to COVID-19.

So in retrospect, I would have loved to see our industry work harder sooner to create profiles of certain risk cohorts that would have helped us better understand who is most susceptible to the virus and start early on providing more targeted messaging to those folks on how they should conduct themselves.

So raising that awareness and better communicating the risks and who’s most vulnerable could have helped lay the groundwork for getting everyone more receptive to doing what’s needed to protect those folks, without the need to take such a blanket approach.


How does this idea —using data to be more proactive rather than reactive — apply to efforts to improve CEoH ?


In my mind, it comes down to four things.

First, there’s still a lot of redundancy in healthcare, which creates a lot of waste and creates challenges and strain for patients, and for the whole healthcare industry. For example, a specialist who may be treating the patient for a particular condition might refer the patient to a subspecialist who is not within the patient’s direct network. Then, instead of having all the patient’s prior testing, scans and results follow the patient through their care, the subspecialist may end up repeating tests and scans.

This is an issue that feeds patients’ dissatisfaction from not having care that’s coordinated more longitudinally.

The second issue that I see affecting cost effectiveness is around unwarranted clinical variation. There’s a lot of waste in healthcare — within hospitals and health systems, within medical groups and even within the transition to post-acute care — stemming from variations that occur because of a lack of coordination in  how the care is being delivered..

The third issue is the impact of the social determinant factors. Research has shown that, when it comes to managing things like chronic diseases, the social factors can have a greater impact in determining outcomes than our efforts to deliver care.

And fourth, I see  a misalignment of incentives that are occurring on the economic aspects of what drives reimbursement and the financial components within healthcare. It’s the misalignment of incentives between the payers and the providers. We still very much live in a fee-for-service world. And until that changes, I think that will contribute to a lot of inefficiencies and continue to drive up costs.

We have the data to be able to address these issues. What we don’t have is the aggregation of the data to provide the right level of insights. As with our response to COVID-19, we need to be able to look at those data elements and to create that right level of insights.


What about the issue of misaligned incentives and how that affects our nation’s ability to improve CEoH, including addressing SDoH? How are we doing with efforts to meaningfully address this challenge?


To improve cost effectiveness of health, you need information to understand the social determinants. And then you have to use that information to create programs, whether it’s social work programs or wellness programs or whatever will drive the healthiness in populations. And the problem gets back to the economic model. You’re investing now in something to prevent something from occurring down the road, which contradicts our current predominantly fee-for-service model in healthcare. It’s hard for us to justify investing resources there because we need to make money based on the patients and their conditions we are seeing now. So that’s really impeding our ability to achieve cost effectiveness goals.

And while know that social determinants of health contribute a lot toward costs, and that they affect the healthiness of populations and our ability to manage long-term chronic issues and eventual acute issues, we’re still struggling with how to get there. A big challenge is that, even though there’s a lot of good public health data out there measuring social determinant issues, it’s not being integrated very well with the clinical data that hospitals have or the economic data that is out there.

But we are making strides in that area. Diabetes, for instance, is a recognized public challenge in rural areas, so many hospitals are working closely with their communities to raise awareness of wellness issues around obesity to help people understand how they can begin to have better diets.

For example, there’s a hospital in North Platte, Nebraska, that has invested heavily into social worker programs because that’s where the data indicated they could have an important impact. They are doing outreach by partnering with the community to provide education. They integrated themselves into food shelters, and the shelters revamped their menu to be able to provide healthier food to people who are homeless or economically challenged. So, for example, instead of giving fried chicken they’re giving grilled chicken, and they’re trying to inform folks on the value of having salads as opposed to having French fries. It’s taken some time, but people actually have started to change their diets, and the communities are seeing issues around diabetes begin to decrease.


Where does the money come from for such efforts?


The fact is there’s always a greater need for social workers than either the hospital or the community can afford. So the hospital and community in this case applied for grants to make this happen.

That’s possible in cities, too. Rush University Medical Center in Chicago, for instance, has a fantastic social worker program, called the Office of Community Health Equity and Engagement, and they have been able to receive some grants to create more community-based funding.

That kind of work can make inroads, but without that collaboration of the healthcare industry with the public sector, you’re never going to achieve it. It has to be a partnership. And to get out into the community, providers have to find community-based funding, because the misalignment of incentives means there’s no revenue for it.


What  concluding advice do you have for finance leaders on how they can best begin address the larger issue of CEoH?


It will take years. So we have to be pragmatic in our approach. You don’t have to boil the ocean. The thing to do is to start small, but make sure it’s impactful. So that’s where an idea like incorporating social workers to promote wellness around diabetes comes in. It’s also why we should focus on using data to give us the information we need to understand the challenges and determine where to focus our efforts.

I think if we can take little strides now, we eventually will see some big changes.



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