News Feature | July 8, 2014

Hospitals Cut Costs With Data Tracking

Katie Wike

By Katie Wike, contributing writer

HIPAA-Compliant Tool Developed To Help Organize Data

Tracking drugs, supplies, and tests is helping health system analysts find ways for hospitals to cut costs in a time when many providers are tightening their belts.

Hospitals are trying to cut costs any way they can due in part to a push by federal officials and policy experts to transition from fee-for-service payment systems to flat or bundled payments. Insurer and employer demands for cost and quality data and reduced Medicare reimbursements are other factors, according to iHealth Beat.

How can hospitals learn where to cut costs without affecting the quality of care? Data tracking may be the answer. According to a report from PBS Newshour, data tracking of drugs, supplies, and even employee payroll can help hospitals understand the best way to reduce costs.

“To think that health care is this ‘ginormous’ business that doesn’t understand costs is mind-blowing,” said Vivian Lee, SVP for health sciences at the University of Utah, an academic medical center with four hospitals and 1,330 physicians. According to PBS Newshour, in 2012, Lee was stunned when she challenged senior managers and physicians to find ways to reduce spending, and “they said, ‘We don’t know what it costs, so how can we manage it?’”

Analysts used the tracking data to determine the costs of procedures and more. This led to the realization that there was a price variance of $19,000 for implants used in joint replacement surgery. It also showed hospitals the quality of care, measuring a standard for what analysts describe as “perfect care.”  After implementing the data tracking system, the cost of patient care has declined, while the rate of “perfect care” has gone from just 40 percent to more than 80 percent.

The University of Utah Health System has reported savings of more than $2.5 million in just the first year of data tracking. According to iHealth Beat, this includes:

  • $556,300 from reductions in patients' length of stay after kidney and liver transplants
  • $498,700 from creating standard protocols for prescribing costly immune-system boosting drugs
  • $452,000 from reducing lab test costs, particularly unnecessary lower-cost lab tests