Posted by Bill Sandweg on 21 September 2015.
You would think that hospitals know how much it costs to take care of you and the cost of that care plays some role in creating the bill you and your insurance company receive. Turns out you would be wrong. Not only do the charges for the same procedure vary wildly from hospital to hospital, some of which are almost right next to each other, hospitals don’t know whether they are making money on a procedure or not. Finally, a few hospitals are trying to determine what it actually costs to care for their patients. What they have learned has led to greater efficiency, lower costs and better patient outcomes.
The poster child for this effort is the University of Utah Health Care system. Its chief executive, Dr. Vivien Lee, decided to embark on a project to find out the system’s actual costs for operating room time, medical tests, MRI usage, physician and nurse time and everything else that goes into providing treatment in a sophisticated hospital. No one had ever done this before and the results were a surprise. Here is a link to an excellent piece on the effort and its outcome.
Among the discoveries was that many lab tests were unnecessary. They were being ordered by residents as a matter of course rather than as a matter of medical necessity. Frequently, doctors defend the ordering of unnecessary tests as defensive medicine to protect themselves from subsequent claims of medical malpractice when in fact they may be the result of physician laziness or the fact that they make money reviewing the tests. In any event, the University of Utah system decided to require residents ordering tests to justify the order. The overuse of many tests stopped and the system saved over $200,000.00 per year.
Despite the skepticism of many, costs went down and outcomes improved when the system was able to use its computer programs to discover what care resulted in the fewest days in the hospital and the fewest complications. This level of care became what the hospital referred to as “perfect care” and became a hospital mandate.
It should come as no surprise to anyone who has experience with our health care system that it is inefficient, that it is too costly and that it provides poor patient outcomes in many cases. We spend far more on health care than any other developed nation in the world with poorer outcomes on many measures. We can and should do better. Kudos to the University of Utah Health Care system for showing what can be done. Better care not only benefits the hospital’s bottom line but improves patients’ lives at the same time.