The challenges hospitals and health systems face in providing patient care with consistently high levels of safety and quality have never been more complicated, or more important. Inpatient admission data from hospital and health system members of Advisory Board’s technology programs consistently show patient severity levels increasing over the past three years—indicating that hospital inpatients are sicker and that managing their outcomes is more difficult. At the same time, public awareness of safety failures—together with increased attention to quality metrics by consumers and payers—means that performance shortfalls are under greater scrutiny. Furthermore, publicly reported metrics such as rates of hospital-acquired conditions (HACs) and readmissions carry the potential for payment penalties imposed by health plans and government payers alike.
The science of high reliability has been embraced by other high-risk industries, such as aviation, to great success. A similar approach for health systems offers a compelling opportunity to move beyond a reactive posture toward safety and quality to proactively and systematically seeking out and preventing failures. The Agency for Healthcare Research and Quality (AHRQ) recently updated its Patient Safety Primer to provide an overview of the characteristics of high reliability and their applicability to health care. AHRQ emphasizes that high reliability is “an ongoing process or an organizational frame of mind, not a specific structure.” It goes on to describe high reliability as a condition of “persistent mindfulness” toward quality and safety.
Developing a high-reliability culture requires strong leadership commitment; a mandate for quality and safety improvement; and rigorous, ongoing, and data-driven process improvement. Finance leaders have an important role to play in each of these areas, because gaining insight into the relationships among cost, quality, and safety can provide an important basis for funding these efforts and expanding their impact. The cost of poor safety, clinical variation, and unreliable quality remains high, and finance leaders in many organizations are now contributing analytics expertise and leadership to support strategic improvements and drive a culture of high reliability.
Reconciling High Reliability with Financial Improvement
A critical ingredient for improving quality and eliminating patient safety failures is the development of—and consistent adherence to—optimized care standards and processes. Such an effort offers a largely untapped opportunity for cost savings for the organization. In a recent survey of CFOs, 40 percent of respondents said they consider reducing care variation to be the greatest source of potential savings, putting it ahead of improving labor productivity, supply chain processes, and revenue cycle performance. Thus, although it is undoubtedly complicated, reducing unwarranted variation in care delivery can have a material impact on margin.
Consider this example: Two patients of the same age, with the same comorbidities, present at the same hospital emergency department (ED) and receive the same diagnosis of heart failure. In one case, the ED team follows a care pathway developed by a multidisciplinary team of physicians, so the patient receives a standardized treatment regimen. The patient’s care plan progresses methodically over the course of a three-day stay. No complications occur, and the patient is discharged to home after three days. In the other case, the clinical staff fail to follow the care pathway. The patient receives more medications along with a blood transfusion, is admitted to the intensive care unit for four days, and stays in the hospital for 12 days, only to be readmitted two weeks later. This deviation from best practice costs the hospital more than $13,000 for this patient.
A culture of high reliability constantly seeks out opportunities to establish better care processes that embrace evidence-based care pathways, target early identification to overcome misdiagnoses, and make variance identification and reporting easy for the hospital team. When scaled across numerous disease states and patient groups, reductions in care variation can have a significant impact on outcomes—and on margin. Finance should play a role in sharing insights into the ROI from efforts to improve care processes.
The Importance of Documentation
Finance also has a special role to play in helping clinicians understand the impact of accurate coding and documentation in ensuring that the organization captures all necessary clinical diagnosis and intervention data. Accurate, complete documentation and coding produces revenue benefits from improvements in multiple areas, including case-mix-index calculations, clean billing claims, and accurate quality metrics. However, many clinicians struggle to reconcile the differences between information captured in a patient chart and information summarized on a patient bill, making it critical to provide clinicians with ongoing support and education. Finance leaders are in the best position to identify potential coding and documentation gaps, dedicate the appropriate education and training resources to support improvement, and track accuracy metrics to ensure sustainability.
Partnering Across the Aisle
Historically, finance executives and clinical executives have not always collaborated well. The tension between clinical investment and limited financial resources often results in opposing viewpoints regarding priorities and how to address ongoing challenges. Ultimately, finance leaders have to believe that improving quality and patient safety is a worthy investment of limited resources. Finance leaders have an opportunity to be true champions of high reliability, to reach across the aisle to their clinical counterparts and work together. High reliability is first and foremost about quality; however, there are clear financial benefits that accrue to the bottom line when quality is improved.
Just as it is important for finance leaders to understand and communicate the benefits of high reliability, it also is essential that they recognize the ways in which they can support and accelerate the impact. Practically speaking, laying the foundation for a culture of high reliability requires dedicating specific resources for enhancing and sustaining process improvement in key areas of care delivery and the core operations related to it. This effort can include implementing tools to monitor and manage the process improvement, establishing selective physician incentives, and establishing analytic and engineering resources.
John Johnston, CPA, MHA is senior vice president at Advisory Board, Washington, D.C.