• Shadowing the Money Trail: A Patient-Centered Tool Identifies True Joint Replacement Costs

    Maggie Van Dyke Jan 27, 2014

    A Pittsburgh hospital-within-a-hospital is identifying the costs of joint replacements by shadowing patients across the full cycle of care—an important step in providing value to all healthcare stakeholders and developing performance-based payment models.  


    Magee-Womens Hospital of UPMCIt took a unique type of sleuthing, called patient and family shadowing, to uncover a problem that was delaying surgery start times and impacting patient satisfaction at the Bone and Joint Center at Magee-Womens Hospital of UPMC.  

    Patients scheduled for the first and second surgery of the day used to be told to arrive at the hospital by 5:15 a.m., said Anthony M. DiGioia III, MD, medical director. Then shadowers— such as caregivers, student interns, and volunteers—followed patients through the day of surgery and discovered that this seemingly harmless instruction was highly problematic. “It created a huge amount of anxiety among patients on a day that is already extremely anxiety ridden,” said DiGioia during his presentation at the Institute for Healthcare Improvement’s 2013 annual conference in December.  

    For one, patients were directed to enter through the main lobby only to find the door locked, which meant they had to find their way to the emergency entrance. Many patients also had trouble getting from the parking lot to the unit. These were joint replacement patients, after all. Many of them struggle to walk that distance. 

    Thanks to information conveyed through shadowing, the Bone and Joint Center was able to change the hours that the main entrance was open to accommodate early morning surgical patients. Also, the hospital now provides scooters in the main lobby for patients who have difficulty walking to the day-of-surgery unit on the third floor. In addition to being a major patient and family pleaser, these changes have significantly reduced delays in first surgery start times. 

    DiGioia believes shadowing is a driving force behind the success of his organization’s process improvement efforts, which have positioned the Bone and Joint Center as a leader in clinical outcomes as well as patient satisfaction. See the sidebar: A Patient-Centered Process Improvement Approach

    The Center is now positioning itself to take advantage of value-based contracting options, such as bundled payment and reference-based pricing, by using shadowing along with an activity-based costing method to identify and reduce the costs of care. “The weakest link in delivering value is knowing the true costs for the whole care experience,” said DiGioia.  

    Shadowing ABCs

    The Bone and Joint Center uses shadowing to develop care pathways (what the Center calls care experience flow maps), of the patient experience. “When you ask caregivers to determine the current workflow, they never get it right—they don’t know where the patient and family go before and after they see each care giver (i.e., the full cycle of care),” said DiGioia. “Shadowing the patient/family can very quickly and accurately determine your current state.”

    As detailed in a free online guide, shadowing involves six steps:

    • Define the care experience to be shadowed (e.g., the preoperative visit, the day of surgery). 
    • Select a shadower, such as a caregiver, student, volunteer, or other person who is a good listener, a keen observer, open-minded, and not heavily involved in the process being shadowed.   
    • Gather information about the care experience (e.g., the type of patient, the perceived steps in the care pathway) with the goal of creating a flow map that details the current state of the care experience.  
    • Connect and coordinate with the patient and family, which includes asking permission to shadow. 
    • Observe and record the care experience through the eyes of the patient and family, noting each step in the care pathway, the caregivers with whom the patient/family comes in contact, the duration of each step in the care pathway, and first-hand comments and questions raised by caregivers and the patient/family. 
    • Report your findings to the working group and project teams with the goal of improving the patient experience. 

    “Shadowing generates a sense of urgency unlike any other tool we’ve seen. You present the shadowing experience to your care team and they want to change, they want to improve, because it’s providing the opportunity for everyone to see the experience from the patient’s point of view and giving the care team the tools to provide ideal care experiences.” 

    The TDABC Link 

    Last fall, the Bone and Joint Center coupled shadowing with an activity-based costing method called Time-Driven Activity Based Costing (TDABC) to determine the true cost of a total hip and total knee replacement surgery. As detailed by Harvard professors Robert S. Kaplan and Michael E. Porter in a 2011 Harvard Business Review article, TDABC requires healthcare providers to:

    • Trace the path of a patient through the care experience.
    • Identify the actual cost of each resource (i.e., personnel, space, consumables, equipment) that the patient uses through the full cycle of care, including outpatient and inpatient. 
    • Document the amount of time the patient spends with each resource. 

    With its history of using flow maps in process improvement, the Bone and Joint Center already had a lot of the TDABC structure in place. It just needed to factor in costs. To do that, the Center first defined the joint replacement care cycle as beginning 30 days before surgery and ending 90 days after surgery. Then Center staff re-shadowed the care pathway in segments—for a total of three patients per segment undergoing total hip and total knee replacements—taking note of all the resources used in each step through the full cycle of care. 

    “This allowed us to identify the true costs of delivering care,” said DiGioia. “It allowed us to know the exact cost impact of specific steps in the clinical pathway and of resources utilized.” 

    Not surprisingly, the operating room accounts for the highest percentage (57 percent for total hip and 48 percent for total knee replacements) of costs across the entire care cycle (see the exhibit below). Other costly steps include the first and second inpatient post-op days.  

    Cost of Total Joint Replacement

    A deeper dive into the cost data reveals how much is being spent on consumables, personnel, and space/equipment during the joint replacement experience. As shown in the exhibit below, consumables accounted for 45 percent to 54 percent of total joint replacement costs. Hands down, the costliest consumable was the implant, which makes up 20 percent to 30 percent of the cost of care, said DiGioia. 

    Cost of Joint Replacement Surgery

    “TDABC has turned out to be a very powerful tool to couple with our clinical process improvement work,” said DiGioia. “It is a thoughtful way to handle cost reductions. Instead of having to implement a top-down, across-the-board 5 percentage budget cut, we can now pinpoint the best places to reduce costs and then measure to make sure that we do not worsen (or that we improve) clinical outcomes or patient experience when we reduce costs.” 

    Collaborative Tools

    Identifying the true costs of care is creating a common platform for value-oriented conversations between finance and clinical leaders at the Bone and Joint Center and UPMC. “In accountable care, we are absolutely going to have to work with our financial people to develop bundled and reference-based pricing,” said DiGioia. “This is a disruptive or transformational process. We are having to cross silos that have been there for many, many years.” 

    TDABC, shadowing, and process improvement have helped establish a common platform for these discussions to take place, he said. TDABC and process improvement provide the framework and give caregivers a single tool for capturing needed information (e.g., the resources being used) about costs, experience and outcomes. 

    “As care providers we sometimes rein against cutting costs, but this is an opportunity to take the lead in changing the way we think about value and to work more closely with finance and administration in ways we haven’t before.” 

    Maggie Van Dyke is HFMA’s managing editor of Leadership, newsletters, and Forums. 

    Quoted in this article: Anthony M. DiGioia III, MD, medical director, Bone and Joint Center at Magee-Womens Hospital of UPMC, Pittsburgh. Follow DiGioia on Twitter at @PFCC_.  

    This article is based on material that DiGioia presented at the Institute for Healthcare Improvements’ 25th Annual National Forum on Quality Improvement in Health Care. 



    A Patient-Centered Process Improvement Approach

    Trained as an engineer as well as an orthopedic surgeon, Anthony M. DiGioia III, MD, admired process improvement approaches like Lean management and Six Sigma. But when he set out to optimize patient outcomes for the Bone and Joint Center at Magee-Womens Hospital of UPMC, he opted to create a patient-centered methodology specifically for health care, called the Patient and Family Centered Care (PFCC) Methodology and Practice.  

    The six-step PFCC process requires staff to envision an ideal patient experience and then determine how to deliver that experience:

    • Select a care experience to improve and define the beginning and end points of that experience.
    • Assign a care experience guiding council.
    • Evaluate the current state by shadowing patients and families as they travel through the healthcare system. Chart the patient’s and family’s care experience in a flow map.
    • Recruit members to serve on a care experience working group based on  “touch points” identified during shadowing—or points in the care experience where patients or family members have an interaction with any caregiver.
    • Create a shared vision by writing the ideal care experience as defined by patients and their families.
    • Redesign the care experience by developing PFCC project teams that close the gap between the current and ideal care experience every time, all the time. 

    For example, one of the Center’s first improvement projects involved envisioning and then creating a one-stop preoperative visit for all joint replacement patients. During the two-hour visit, patients complete all their clinical testing and screenings, meet the Center staff, receive patient and family education, and tour the hospital unit.

    Today, the program’s clinical outcomes, readmission rates, and patient satisfaction scores outperform national averages. Meanwhile, 99.8 percent of patients in 2012 said they would recommend The Bone and Joint Center to family and friends. 

    PFCC has spread organically to many clinical conditions across the 20-hospital UPMC Health System, which is based in Pittsburgh, as well as nationally and even internationally through collaborations with the Institute for Healthcare Improvement, the PFCC VisionQuest Conference Series, and various speaking engagements.