Cost Data Needs Context To Be Meaningful

June 27, 2016

According to a Health Affairs article, when orthopedic surgeons at six major health systems were asked to identify the cost of 13 commonly used orthopedic devices, fewer than one in five could estimate the actual cost within 20 percent accuracy. Further, despite a common narrative that doctors are only concerned about outcomes, more than 80 percent of those same doctors said if they had access to the information, they would consider cost as one of the key criteria in choosing a device.

“Presenting cost data without a quality or clinical context doesn’t go very far,” said Dan Michelson, CEO of Strata Decision Technology. “In the past, either cost data wasn’t presented, or it was presented without context, and that is a really big deal.” Michelson commented on the intersection of cost and quality data during a presentation Monday at ANI: The 2016 HFMA National Institute. Other presenters included Stephen Allegretto, vice president of financial planning, Yale New Haven Hospital; Keith Churchwell, MD, vice president of cardiovascular services, Yale New Haven Health System; and Mary O’Connor, MD, director of the Musculoskeletal Center at Yale School of Medicine and Yale New Haven Hospital.

Delivering Relevant Cost Data

Cost can mean many different things to different people. For some, it might mean price, and to others the amount reimbursed, and for yet others the actual hard cost of an item along with the allocated hard labor that goes with it. To make cost information useful among clinical staff, healthcare organizations should develop a method for delivering cost information that is consistent and provides context for clinicians.

Health systems also should not take a one-size-fits-all approach to the method of delivering cost data. There are several methods to provide these data to doctors, including via reports, contained in order sets, as a tool clinicians can use to look up data, and as part of the review process when the care team is conducting cost studies on specific procedures.

“It is no different than how quality data are presented,” Michelson said. “It should be incorporated in many different ways throughout the organization.”

Combining Cost And Clinical Data

Leveraging cost data with clinical data in a hospital’s electronic medical record is how health systems can gain a true and accurate measure of value. Value is mathematically defined as quality—which is a combination of clinical quality and patient experience—over cost. The bottom part of the equation, the cost, allows hospitals to look at variations in quality and marry the cost data to see the financial effect of poor-quality care.

“This is not information that would have interested people just a couple of years ago,” Michelson said. “But now that they understand this intersection of quality and cost is what defines value, people in finance recognize they need to understand this and also be the ones driving out this information.”

Implementing The Move To Value

As Michelson described, moving to this model of creating value takes three elements. First, to get doctors on board, the staff at Yale shared information about topline revenue about the declining revenue per discharge—a trend that is occurring across the industry. Second, most health systems will likely need to add dedicated staff with the specific skill set to collect and manage these data while leveraging it across the organization. Third, is an investment in IT that will allow staff to manage the workflow for generating the data. This includes automating the generation of variation data that can be tracked and acted upon quickly.

“People have made the statement in the past that quality care is lower cost, but there was never data to back that up,” Michelson said. “Now, with the work Yale has done, there is.”