Are You Truly Committed to Driving Financial Benefit from Clinical Standardization?

May 4, 2017 3:29 pm

If one issue is keeping health system leaders up at night, it’s the challenge of care variation. It’s their No. 1 priority: Surveys of chief executives have found that enfranchising physicians in care variation reduction has occupied the top spot for the past two years. Senior finance executives in particular recognize its importance; by their estimate, fully 40 percent of future cost savings opportunities will come from care standardization.

But with those opportunities comes great challenge, because despite a year or more of concerted effort aimed at achieving standardization, many organizations are either not seeing measurable results or not realizing the large-scale financial impact.

There is a critical need for leaders to work diligently to effect more systemic reductions in care variation and achieve significant and sustainable savings. It’s important for organizations to acknowledge just how complicated operationalizing clinical standardization is, and then ask whether their leadership teams are ready to take on the complex task of leading successful implementations.

If an organization’s care standardization efforts are still not yielding measurable and meaningful quality and cost improvements, it may be time for the organization’s leaders to pressure-test their approach—as well as their level of commitment—by asking these questions:

  • Are we targeting the right opportunities?
  • Do we have a place at the leadership table for all key stakeholders?
  • Are all stakeholders truly committed the effort?
  • Are we tracking improvements to the bottom line?

Identifying the Right Targets

It is important to focus on opportunities that will have a widespread impact on both clinical outcomes and cost. Hospital executives often report very successful initiatives aimed at areas with high variability (e.g., reducing antibiotic selection alternatives or reducing avoidable blood utilization), but they also often lament underwhelming financial impacts from these initiatives. Although such endeavors certainly are worthwhile, and a good way to flex and organization’s care standardization muscles, they are too narrow to generate truly significant savings.

In our experience, the only way to realize meaningful financial results is to tackle high-cost, high-volume DRGs (e.g., sepsis, congestive heart failure, hip and knee replacement) and high- impact operational infrastructure areas, such as inpatient care management.

Including All Stakeholders

When an organization begins to take on broader challenges, the leadership imperative necessarily expands as well. To illustrate, let’s say an organization decides to focus on reducing avoidable days in patients with sepsis. This initiative requires participation from stakeholders across the organization. When physicians develop a new care path in line with the new payment reality, nurses need to modify how they monitor these patients. Pharmacy must devise a new drug protocol, care management has to accelerate their planning for post-discharge, and IT needs to identify and build all the necessary tracking tools in the electronic health record. Although the chief medical officer and the CFO may be setting the strategy and direction, the COO, CIO, and chief nursing officer all have important roles to play in implementation.

Ensuring Stakeholder Commitment

Once an organization has the right C-suite players at the table, it’s essential to take steps to ensure they will work together effectively—and are on board for the long haul. The journey to care standardization takes time and effort, and leaders should be individually accountable and ready to collaborate. Hospitals that are moving the needle on cost devote at least one hour per week—often more—to bringing the C-level team together just to focus on the care standardization work. The team spends this time reviewing progress, measuring results, and uncovering and removing barriers.

In addition, the C-level executive who owns this initiative should meet weekly with the frontline teams to understand both their approach to care variation reduction and the actual details of what is being addressed. If C-suite executives consider these weekly meetings overkill, or even say they are just too busy to schedule time for them each week, the organization may have an underlying commitment issue.

Tracking Improvements

Taking stock of improvements is where organizations likely need the most guidance from their finance leaders. Improvement teams need to know how their effort and accomplishments are measured, and they need to see the impact of their work. But the reality is, there is no industry standard for measuring the financial impact of reducing care variation. Most organizations use proxy measures, such as an average savings estimate for reducing length of stay by an avoidable day. Others are tracking measures such as before-and-after utilization of pharmaceuticals and the numbers of imaging and lab tests. All of these measures have merit. It is important for finance leaders to take a stand on how the organization will measure the financial impact of improvement efforts and then help each improvement team put the key metrics in place and track progress.

Successful clinical standardization requires focus and true collaboration from the finance executive and the rest of the executive team, but it also begins with leadership’s commitment to the journey together.

John Johnston, CPA, MHA, is senior vice president and national partner at Advisory Board, Washington, D.C.


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