Roadmap To Cost Savings By Improving Care Variation

By Susan Kanvik and Mitzi Raaf, Point B Management Consultants

To improve margins, healthcare providers must bend the cost curve to reduce wasteful spending as the industry moves from fee-for-service to value-based payments, while facing the prospect of declining reimbursement. However, many provider organizations do not know or understand where they may be losing money due to deviation from commonly accepted clinical based guidelines.

Care variation costs the industry millions each year. According to Berwick and Hackbarth, the annual cost to the U.S. Health Care System in 2011 of Waste was $558 million to $1.2 billion. Additionally:

• Failures of care coordination is estimated to waste between $25 and $45 million each year, as patients fall through the cracks in fragmented care resulting in complications, readmissions, and decline in functional status.
• Failures of care delivery waste approximately $102 to $154 million each year, due to poor execution, lack of widespread adoption of known best care processes, resulting in poor clinical outcomes and patient injuries.
• Overtreatment costs the industry roughly $158 to $226 million every year, as patients are subjected to treatments such as excessive antibiotics, unnecessary surgery, and unwanted intensive care.

The best way to help reduce waste associated with variation in care is to operationalize concise clinical guidelines and use reporting to drive care team accountability, resource utilization improvements, and targeted patient population care standardization. Yet many healthcare organizations lack consistent, clear clinical analytics and reporting that highlight variation in care between providers for common procedures. A few common challenges include:

• Inadequate clinical analytics and reporting. Many providers do not have consistent clinical reporting or metrics. This results in a lack of understanding and inability to act upon opportunities for cost savings through adherence to evidence based guidelines.
• Adherence to clinically-accepted guidelines. Some organizations do not have standard protocols and order sets that providers are expected to follow or adherence is not systematically measured. This can lead to longer length of stays and more clinical risk for patients.

• Lack of care coordination within care teams, which can lead to siloed care for patients. This can result in additional testing, longer lengths of stay, poor outcomes for the patient, and a culture of working independently instead of collaboratively.

A systematic focus on care variation that leverages data and interactive analytics can help providers reduce waste by improving care coordination, implementing best care practices, and reducing unnecessary overtreatment. Where does a provider start?

• Identify your highest opportunity areas through an analysis of current claims, cost data, quality, and outcomes. Compare internal performance against benchmarks and determine adherence to evidence based protocols or pathways.
• Based on that information, map out the trends by DRG or other procedural roll ups to identify the largest gaps and opportunities for improvement. Identify one to two areas for initial focus.
• Create a team of clinical providers and operations leaders and staff to lead the change process and treat each opportunity as an improvement project. Meet on a regular basis to identify your desired outcomes and the plan to achieve those through process change and change management.
• Create and track metrics that will indicate success. Track and report on those metrics throughout the improvement process.

For any implementation effort to be successful, the following success factors must be in place.

• collaboration among physicians, case management, nursing and ancillary — all care teams willing to work together
• strong executive sponsorship and support
• willingness to hold staff accountable
• physician buy-in, support and involvement in the process — physicians need to drive the change
• use of an interactive analytics tool for reporting
• benchmarking metrics

Focus on reductions in care variation is difficult work, but can lead to improvements in the bottom line and culture of an organization as it works together to optimize care and outcomes.

About The Authors

Susan Kanvik is a healthcare senior director for Point B. Susan has a 30 year plus track record in healthcare—specializing in healthcare informatics and health promotion programs. She has helped numerous healthcare organizations with a wide-breadth of clinical information system selections and implementations, process redesign efforts and has filled interim leadership roles.

Mitzi Raaf is a senior healthcare consultant with Point B. With more than 18 years of experience in healthcare business consulting, Mitzi has worked with clients to achieve operational and financial goals through effective problem solving, negotiation, organization and planning and client relationship management.