Cost Reduction

How DCH Health System Tackled Clinical Variation to Reduce Costs

February 6, 2017 3:03 pm

Accounting for one-third of total healthcare spending, acute care is still the leading frontier for cost reduction—and where reducing clinical variation can be especially effective.

Healthcare spending continues to accelerate, accounting for 17.5 percent of our nation’s gross domestic product (GDP) in 2015—the highest it has ever been—according to government data.

In a climate of increased pressure to reduce costs while improving quality, clinical variation—the wide variation in how, where, when, and by whom care is delivered as well as the clinical outcomes achieved for patients—is becoming a focal point for hospitals and health systems seeking new strategies to adapt to the evolving healthcare marketplace.

Accounting for one-third of total healthcare spending, acute care is still the leading frontier for cost reduction—and where reducing clinical variation can be especially effective. Leaders in hospitals and health systems are looking to reduce clinical variation through clinical redesign efforts so they can continue to provide high-quality care while controlling costs.

Case Study: DCH Health System

To illustrate the crucial role of clinical redesign as a strategy to reduce clinical variation and standardize key care processes, we can look at DCH Health System, a Tuscaloosa, Ala.-based regional hospital system with approximately 800 beds across two campuses.

Leaders at DCH Health System set out to transform care management systemwide in partnership with a national healthcare consulting firm. Together, they piloted clinical variation initiatives as part of their broader efforts to maximize sustainable financial and clinical value from the health system’s care management operations.

To reduce clinical variation, they focused on synthesizing and analyzing risk-adjusted data, and then used that data to educate and engage the physicians. By capturing and examining relevant data using their consultant’s data resource, health system leaders were able to quickly identify sources of clinical variation. Findings included variation in length of stay (LOS), discharge time of day, post-acute utilization, readmission rate, and case mix index (CMI). In addition to analyzing risk-adjusted data, they gathered insights from their key physicians, nursing staff, and other clinical leaders to gain multiple perspectives. For example, physicians shared their desire for more refined roles and responsibilities for everyone involved in care transitions, with the goal to enhance interdepartmental partnerships.

Using the data, interviews, and observations, they identified the DRGs with the highest levels of clinical variation and cost, for example, septicemia, heart failure, and joint replacement. Then, over multiple meetings, they met with the physicians to discuss individual and group data, drill down into areas of variance, and understand the reasons for any variance.

Prior to these efforts, physicians received limited data in an inconsistent fashion and in a manner that did not always clearly demonstrate how they were performing and where there were opportunities for improvement. Once physicians understood how to interpret the data and could see their data on a regular basis, they had the information necessary to reduce variation and became committed to the clinical redesign process.

Leaders at DCH Health System also recognized the need for the physicians to track the positive outcomes of their efforts. To that end, they created a scorecard presenting key metrics for each physician and physician group.

These scorecards, which are shared with physicians on a monthly basis, are also distributed among nursing units. In doing so, the nursing and physician staffs can work more collaboratively toward a common goal of delivering the best patient care and ensuring that care is delivered as cost-efficiently as possible. This collaboration has transformed how physicians and other clinical staff work together to hold each other accountable for the care they provide to patients.

Because physicians and other clinicians are scientists, providing them with accurate and risk-adjusted data about their specific patients can help engage them in partnering with the organization to reduce variation. For example, the relevant data encouraged physicians to embrace the new physician advisor roles, which contributed greatly to reductions in LOS as well as improvements in clinical documentation. Ultimately, this involvement enabled DCH Health System to create a best-in-class physician advisor program. In addition, the scorecards and data were shared at monthly committee meetings, sparking discussion and ideas on how they could continue to improve on specific metrics.

The success of this initiative was made possible because physicians were engaged and understood their role and what was expected of them. Today, the metrics and scorecards continue to promote accountability throughout the process and help clinicians focus on their care-management goals.

Thanks to their efforts, leaders at DCH Health System have achieved financial gains through the following outcomes:

  • Reduced LOS
  • Reduced readmissions
  • Improved capacity for admissions during higher census periods
  • Improved post-acute utilization
  • Improved ED case management, transitioning patients to the right venue of care
  • Improved accuracy of clinical documentation

Key Takeaways for Hospital Executives

As healthcare leaders embark on initiatives to reduce clinical variation within their own organizations, they should keep a few key principles in mind.

Don’t underestimate the complexity of reducing clinical variation. Clinical redesign is far more complex than a traditional performance improvement effort. It requires a dynamic interdisciplinary approach involving physicians, nurses, pharmacists, therapists, case management, and—especially—the patient and family. It also entails rigorously reviewing the status quo and embracing a multitude of changes. Finally, it requires a sense of urgency to take on the status quo and make meaningful changes across care delivery.

The changes, however, can be transformational to both clinical practice and the entire organizational culture. This transformation requires engagement by top leaders to support physicians and staff as they change how they deliver patient care.

Ensure accurate and relevant data. Clinicians and the entire improvement team should receive updated analytics on a frequent and predictable basis to support changes in behavior. This risk-adjusted, physician-specific data, which uses a statistical process that takes into account the underlying health status and resource utilization for the patient when looking at their healthcare outcomes and costs, serves as the foundation for engaging physicians to reduce clinical variation.

Although physicians cite patient complexities and co-morbidities as challenges to standardization, risk-adjusted analytics can preempt physician resistance and encourage buy-in because they demonstrate the positive outcomes for both patients and health systems in reducing clinical variation. Sharing this data—initially blinded and eventually unblinded—with physicians, nursing leaders and staff, case managers, and social workers through multiple venues on a consistent basis will provide feedback for ongoing process improvements.

Align with financial and operational goals. The bottom line is that clinical redesign allows organizations to reduce clinical variation and deliver higher-quality care at a lower cost, which vastly improves the value of care delivered to patients. Leaders should align clinical, financial, and operational goals and demonstrate the positive impact of redesigning care and reducing clinical variation by measuring the following quantifiable improvements.

  • Reduced LOS
  • Lower overall costs of patient care by DRG, physician, and service line
  • Improved quality in key metrics, such as readmission rates, time to treatment, and appropriate access
  • Creation of standardized order sets, patient care guidelines, and protocols based on best practices
  • Increased revenue capture and reduced denials resulting from more accurate and appropriate documentation

Focus on quality and safety. Throughout the clinical redesign process, healthcare leaders should remain focused on reducing clinical variation to improve quality of care and patient safety. Standardizing specific elements of care delivery results in more predictable care paths and allows providers and staff to set patient expectations, improve patient satisfaction, and promote safer care. Working with clinicians to implement a care delivery process that eliminates unnecessary care and aligns with best practices often results in improvements to key quality indicators, such as readmission and complication rates.

Creating Benefits Across the Board

Reducing clinical variation is critical not only to ensuring patients receive the safest, highest quality care, but also to reducing the overall cost of health care—on both the national and individual hospital level. As healthcare leaders initiate efforts to tackle clinical variation, they will reap rewards that benefit all involved, creating a win-win scenario for hospitals, providers, patients, and payers.


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