Yale New Haven Health in New Haven, Connecticut, is a 2,409-bed health system that includes Yale-New Haven Hospital, the primary teaching hospital for Yale School of Medicine that regularly ranks among the best hospitals in the country. As the business model for all healthcare organizations continues to shift into a value-based model and operating margins…
How merging financial and clinical data saved Yale New Haven Health $150 million
The massive undertaking, based around a new cost accounting system, is all part of a strategy to prepare for value-based reimbursement.
Yale New Haven Health in New Haven, Connecticut, is a 2,409-bed health system that includes Yale-New Haven Hospital, the primary teaching hospital for Yale School of Medicine that regularly ranks among the best hospitals in the country.
As the business model for all healthcare organizations continues to shift into a value-based model and operating margins continue to shrink, understanding the true cost of care has become mission critical for the organization.
One challenge for a majority of healthcare providers is that they have little to no access to accurate, comprehensive and actionable information on the cost of care, stated Vincent Tammaro, executive vice president and CFO at Yale New Haven Health and CFO at Yale New Haven Hospital.
“It is a challenge to reduce variation, waste and inefficiency in order to invest in and improve care without any access to trusted data on the cost of care,” he explained. “As part of the health system’s $150 million Value Improvement Initiative, creating a user-friendly, accessible ‘source of truth’ on the cost of care was essential. Ultimately, the organization needed the right data platform to bring together cost and clinical data in order to understand and improve value.”
The health system had a cost accounting system in place for decades, but as it continued to grow, it became clear that the legacy mainframe-based system was inadequate to the organization’s current needs.
Data processing time requirements became prohibitive, and the archaic report-writing module needed updating to make it more user-friendly to a wider audience of potential analysts and health system leaders.
“Yale New Haven Health sought a new, improved system to help guide clinical and finance leaders at the health system toward speaking the same language, using data to partner, and together making an impact on cost and quality,” Tammaro said. “Yale New Haven Health needed the ability to track specific patients and their patient populations across the care continuum, driving quality of care and better outcomes.”
Leaders and analysts needed to be able to monitor these patients and populations over time, and integrate that data with necessary financial and operational data in order to get a more complete picture of their care and lay the foundation for value-based improvements, he added.
Yale New Haven Health sought a platform that would marry cost accounting with clinical quality data to produce quickly accessible, actionable information for clinical and administrative leaders.
The health system turned to IT called StrataJazz from vendor Strata Decision Technology to better understand the true cost of care across episodes of care, service lines and patient populations throughout Yale New Haven Health’s entire delivery network.
“While understanding the cost of care is complex, this application helped leaders at Yale New Haven Health to better address those complexities and make more strategic, informed decisions,” Tammaro said. “This has involved integrating information on cost and patient data, bringing important information to physicians and finance leaders.”
In order to bring that information to providers at the point of care, staff have embedded cost data from StrataJazz into order sets in the provider organization’s Epic EHR.
This has allowed a better understanding of patient care across the continuum as a quantification of harm events using a metric called quality variation indicators. Quality variation indicators are Yale New Haven Health proprietary algorithms to identify potentially preventable adverse clinical outcomes among hospitalized patients, indicating variation.
“Combining cost and clinical data provided a common language around clinical quality and variation, making it easier for finance and clinical leaders to understand one another,” Tammaro explained.
“To identify common quality variation indicators, a team of physicians and decision support nurses spent three months reviewing a comprehensive list of hospital-acquired conditions, patient safety indicators, and other negative outcomes associated with significant variation in quality across the organization.”
Identifying quality variation indicators has given the Yale New Haven Health finance and clinical leaders a language for discussing how quality and waste affect both utilization of services and overall cost per case, he said.
“Leveraging clinical and financial data has helped Yale New Haven Health quantify that harm events cost the organization on average five times more,” he explained. “It has been an important initiative for Yale New Haven Health to identify and reduce them, via their Value Innovation and Shared Value Partnerships.”
Leveraging cost accounting data, physician billing data and the EHR, Yale New Haven Health has been able to study their patients in certain populations across several years and leverage longitudinal insights that have helped them to redesign care delivery and reduce harm events, he added.
“In one such case spanning the years 2010-2017, Yale New Haven Health was able to drive more consistent, comprehensive care for adults with sickle cell disease, reducing ALOS from 11.5 days to 5 and cutting readmission rate by more than 40%,” Tammaro noted. “This resulted in cumulative financial savings of $12.4 million, which later freed up beds for other patients.”
By leveraging this synchronized data using the platform to measure these gaps in care across time, Yale New Haven Health was able to better understand utilization of services across the continuum (including the post-acute care setting) and drive better value for patients, he added.
By transforming clinical, billing and cost accounting data into information and insights, Yale New Haven Health has begun working to unravel how care is delivered and managed throughout a patient’s journey and across episodes of care, as well as to identify how and where the organization can have maximum impact on that care delivery.
“This platform has allowed them to track opportunities to drive value in patient populations over time, resulting in better, more innovative ways to improve care and prepare for value-based care in the future,” Tammaro said.
“Now, Yale New Haven Health finance leaders can have meaningful conversations with leaders across the organization – clinical, operational and more – about quality and its impact on cost, even leading clinical redesign efforts in areas such as major joint surgery and sickle cell anemia care to provide strategies to reduce inappropriate variation.”
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MEETING THE CHALLENGE
“Yale New Haven Health has leveraged Strata’s advanced cost accounting system and the data within it to demonstrate that cases with potentially avoidable variation can stay in the hospital up to three times longer and cost up to five times more than uncomplicated cases, particularly within the congestive heart failure cohort they studied,” Tammaro said.
“Further, Yale New Haven Health has used this cost accounting system to facilitate improved communication between clinical and finance leaders, driving clinical redesigns, reduced harm events and a systemwide focus on finding opportunities to improve the experience, outcome and finances for a particular patient group.”
When trying to build a value-based care model, many healthcare providers and administrators struggle to identify specific patient populations and the avoidable variation across those patients’ care systems. Yale New Haven Health began by looking at quality variation indicators and readmissions to identify one patient in a congestive heart failure cohort for a specific medical group.
This individual had experienced a quality variation indicator and had care costs three times higher than average, as validated by the cost accounting application. Further, more than 30 physician- and nursing-led clinical redesign projects at the three hospitals centered on improving care related to abdominal surgery, hip fractures and emergency department admissions.
As a result of Yale New Haven Health’s initiative to improve outcomes for patients with sickle cell disease, the organization achieved $12.4 million in cumulative savings over five years, said Dr. Keith B. Churchwell, senior vice president of operations and executive director of the Heart and Vascular Center and Transplantation Center at Yale New Haven Hospital and clinical service coordinator for the Department of Medicine at the hospital.
“As another example, one of the health system’s hospitals has had significant success in reducing ventilator-associated pneumonia through a new protocol implemented in 2013,” Churchwell recalled. “Clinical leaders changed the order set in the EHR to include different sedative medications and early mobilization to get patients moving more quickly, resulting in a drop in ventilator-associated pneumonia cases from 11 to 4 in the surgical ICU and a savings of approximately $200,000 in labor and $500,000 in non-labor costs, including respiratory therapy costs.”
In addition, Yale New Haven Health was able to drive more consistent, comprehensive care for adults with sickle cell disease, reducing ALOS from 11.5 days to 5, which allowed for cumulative financial savings of $12.4 million and later freed up beds for other patients, he said. Yale New Haven Health was also able to cut readmission rate by more than 40%, which reduced inpatient and outpatient annual direct spend by 49%, generating $11.3 million in cumulative savings over five years, he added.
The Yale New Haven Health team brought together the patient’s cost accounting data with physician billing and EHR data to gain insights. This unraveled the patient’s care utilization across multiple facilities, diagnoses and clinicians, revealing gaps in care and important clinical decisions and procedures that were performed outside of the health system.
“This also surfaced potential missed opportunities for communication and care coordination that may have contributed to the variation that often leads to adverse clinical outcomes and higher cost,” Tammaro said.
Yale New Haven Health’s ability to merge clinical and financial data with resource utilization information facilitated productive and collaborative conversations about linking quality and cost between physicians and colleagues in operations and finance, reducing overall cost of care and improving the value equation, Tammaro explained.
“The team has become empowered to build better relationships with a more powerful data set that has become the source of truth,” he said. “The information that comes from merging data sources such as the EHR and StrataJazz can drive real, longitudinal improvements while monitoring patients in real time.”
It can lead to huge insights. For example, Yale New Haven Health found that patients with quality variation indicators often had direct costs significantly higher than their peers. This alignment can also lead to clinical redesigns, reductions in variation and cost reductions, Tammaro said.
“Yale New Haven Health’s goal was initially to reduce our cost per case by about 20%, saving $125 million over 3 years – but we were able to find $150 million using our customized quality metrics, a sophisticated cost accounting system and other tools, and alignment between clinical and financial leaders.”
As part of the plan for targeting cost savings with clinical redesigns to reduce variation and improve quality of care, Yale New Haven Health discovered and attained these cost savings opportunities by improving outcomes in several patient populations, including those with sickle cell disease, those who contract ventilator-associated pneumonia and joint replacement patients.
Yale New Haven Health leveraged cost data from StataJazz coupled with clinical data from Epic to identify variations in cost and quality within these “poster projects” – allowing the organization to save more than $150 million.
“Identifying, tracking and realizing savings as part of these projects allowed Yale New Haven Health to set the foundation for episodes of care – or “bundles” – and the value-based model that is becoming more prominent in healthcare today and in the future,” Tammaro said.
Using the advanced cost accounting tool, Yale New Haven Health has been able to routinely monitor variation across disciplines at the patient level and in aggregate.
As an organization, it has fostered consensus about critical improvement opportunities and generated the following improvements: decreased time spent tracking patient population with congestive heart failure and new process measures in several populations that could potentially avert future clinical variation, Tammaro said.
“Access to real-time patient data within StrataJazz allowed Yale New Haven Health to decrease the amount of time ambulatory care coordinators spent tracking patients and increase time available for care coordination, resulting in care plan alignment for individual patients,” he explained. “Yale New Haven Health could reduce this time spent because of the accessibility of clinical and financial data in the process of coordinating and reassessing care plans.”
Yale New Haven Health was able to identify process measures that would help reduce the potential for future harm events and quality variation. More than 90% of the pilot’s congestive heart failure patients’ medication and problem lists have been regularly updated by either the patient’s cardiologist or primary care physician, based on findings from the pilot.
“Further, 100% of pilot patients with an acute congestive heart failure inpatient stay saw their cardiologist within seven days post discharge,” Tammaro said. “Yale New Haven Health was also able to review patient-specific QUALITY VARIATION INDICATORs, allowing for interdisciplinary clinical education in identifying process measures to potentially avert future clinical variation.”
Key program insights incorporated into the second year of this program’s journey will build upon transparency, collaboration, data integration and continued patient-centeredness to drive the refinement of clinical process, outcomes and financial goals, he added.
“Over the course of its multi-year cost savings plan, Yale New Haven Health has been able to redesign its care delivery in several key patient populations, resulting in $12.4 million in cumulative savings over five years for patients with sickle cell disease; savings of $200,000 in labor and $500,000 in non-labor costs in patients with ventilator-associated pneumonia; and other savings opportunities that came out of working closely with clinicians to improve quality and care,” Tammaro stated.
ADVICE FOR OTHERS
In order to identify and better understand variation in a specific patient population, bringing data from disparate systems together produced a much more comprehensive image of patients’ care utilization patterns for individuals and populations, Tammaro related.
“Determining when and how to do better through analysis of patient clinical and financial outcomes can drive better overall care with decreases in both clinical and cost variation for patient populations, and requires the synchronization of leaders across the organization to do so,” he advised. “We were fortunate to have created that buy-in and driven that collaboration, as this program has become widely accepted and used by all senior leaders.”
Developing a value-based care system can significantly reduce costs while improving quality for hospitals and consumers, he added.
“Using standardized, longitudinal quality variation indicators and tracking utilization of patient populations will increase patient engagement by facilitating care continuity,” he explained. “To establish an effective value-based care model, health systems need to develop trust and manage relationships, establish longitudinal patient-specific cost accounting methods and quality data measurement, and examine clinical process measures that will drive integrated reporting models.”
Merging operational and clinical data that is relevant for physicians and patients is complex, Tammaro said.
“It requires clinical advocates who are willing to champion patient care and data analytics methods targeted at identifying quality variation within specific patient populations,” he advised. “Hospitals and healthcare providers cannot do the heavy lifting required to drive better patient care without help from clinicians, just as clinicians cannot drive better care without input and leadership from finance executives.”
Yale New Haven Health has leveraged this advanced cost accounting system to marry Epic’s clinical data and financial data, but it takes more than that, Tammaro cautioned.
“We as an industry need to address the needs and the stories of individual patients to begin to address variation,” he said. “We need to lead with the patient in mind. This will produce the realignment of funds flows to reward necessary behavior changes. We are not completely there yet, but data tells us this is possible.”
Ultimately, all care providers have a responsibility to create the future standards for value-based and high-quality patient care, he said. By redesigning the patient care delivery with the patient in mind, all organizations can leverage data and automation to improve outcomes – driving cost savings initiatives through the lens of quality improvement, he concluded.