In the effort to improve the quality of care and increase affordability, health systems are acquiring key information by implementing tools ranging from internal cost-accounting systems to population-based measures.

Cost-accounting systems have become fundamental tools for health systems to reduce clinical variation. Key to the success of these initiatives are partnerships with clinicians to improve the quality of care while using resources more effectively, as seen in the initiatives of organizations such as Yale New Haven Health (YNHH) and University of Pittsburgh Medical Center (UPMC).

One of the ways YNHH has used its cost-accounting data is by drawing from the Centers for Medicare & Medicaid Services’ Bundled Payments for Care Improvement (BPCI) internal cost savings program to launch its Shared Value Program (SVP), piloting in hip and knee replacement for Medicare patients. Launched in October 2015 and spanning 18 months, SVP engages surgeons both from Yale School of Medicine and in private practice to decrease spending and improve clinical outcomes. For the hip and knee replacement program, the quality measure is reducing the rate of postoperative blood clots, one of YNHH’s quality variation indicators (QVIs), and surgeons can become eligible for shared savings by complying with the quality process.

YNHH negotiates implant prices with vendors in collaboration with a systemwide surgeon advisory council led by Mary O’Connor, MD, director of the Center for Musculoskeletal Care and a professor in the Department of Orthopaedics & Rehabilitation at Yale School of Medicine. “We’re working to provide our surgeons with the high-quality implants they need for their patients at the lowest cost, to drive value,” says O’Connor.

In addition to number and types of implants, the cost-accounting system tracks every cost per patient incurred by the surgeon. For the hip and knee replacement program, YNHH compares the total actual cost of implants used with the SVP baseline to determine the difference. As of June 30, YNHH had decreased spending by approximately 15 to 17 percent, totaling $1.35 million since October 2015. This sum includes $650,000 in Medicare-related savings, 44 percent of which has been shared with participating surgeons who use the approved vendors and reduce QVIs. YNHH aims to expand the program to non-CMS bundle and non-bundle patient groups, including spine surgery.

“The goal is to create more alignment and more engagement to make it a triple win,” O’Connor notes. “It has to be a win for the patient, the surgeon, and the hospital.”

UPMC has also identified opportunities to reduce variation through its cost-accounting system, partnering with its physicians to examine quality and cost data and identify inefficiencies. “This cost information acts as a proxy for identifying all the points of variation in a system,” says Robert DeMichiei, executive vice president and CFO. “Part of this is understanding what everyone’s doing and how it differs and trying to identify best practices.”

The health system has seen success in areas such as hysterectomies, reviewing data by type of procedure (e.g., open, robotic, vaginal, laparoscopic). Using this information, UPMC’s women’s health department noted that 28 percent of noncancerous hysterectomies were performed as open procedures, costing approximately $2,000 more than minimally invasive hysterectomies and resulting in increased complications, transfusions, infection rates, readmissions, and lengths of stay.

Better understanding of the cost and patient outcomes of the different types of hysterectomies has helped to reduce open surgeries for hysterectomies by 34 percent. This decrease contributed to other improvements for hysterectomies such as a 20 percent reduction in inpatient lengths of stays over three years and a 28 percent reduction in 30-day readmissions.

With these cost-accounting tools in use throughout their organizations, YNHH has partnered with Strata Decision and UPMC has partnered with Health Catalyst to commercialize their quality-driven cost-accounting methodologies for use by other health systems.

Population-Based Measures

In addition to cost-accounting models, healthcare organizations have implemented cost-transparency resources for a range of users, as seen in HealthPartners’ Total Cost of Care and Total Resource Use (TCOC) methodology, a population-based measurement framework that examines the resources and costs of patient care (adjusted for illness burden). The framework, when coupled with healthcare quality and patient experience measures, can be applied on multiple levels, such as for patients to access information about providers and services, for health plans to determine benefits packages, and for providers to estimate their overall costs.

Deploying TCOC methodology throughout its provider network, the Bloomington, Minn.-based HealthPartners’ total cost of care, adjusted for illness burden, has been 17 percent lower than Minnesota costs, 7 percent lower than regional costs, and 2 percent lower than national costs. Since the National Quality Forum endorsed this framework in January 2012, over 190 health systems have licensed it in 35 states, as have a number of national and regional organizations.

“We had stress-tested measures for improvement work in our own delivery system,” says Sue Knudson, senior vice president of health informatics. For instance, after noticing its rate of lab testing exceeded the Twin Cities average, HealthPartners applied changes in areas including genetic testing. Since a genetic counselor has begun reviewing test orders, about 12 percent of orders for genetic tests have been changed, lowering costs and reducing unnecessary tests.

HealthPartners also has developed a protocol at its Regions Hospital to reduce avoidable hospital stays. Patients with low-risk chest pain who meet safety criteria are discharged instead of staying overnight for observation, resulting in patient and hospital savings and improved patient satisfaction. This practice also increases the number of open beds for acute patient needs.

TCOC has helped HealthPartners innovate, as seen in its clinics’ pilot programs. At SmartCare Clinic, patients enroll in virtual care by phone, video, or email, driving down unnecessary care visits. In diabetes care and behavioral health care, Como Clinic connects primary care teams with specialists to discuss the most complex cases and create combined care plans. As primary care clinicians learn treatment approaches, individual specialty visits decrease along with the cost of care, and patients save copay or coinsurance costs.

“We know the measures worked in helping to drive better affordability,” Knudson says. “That’s why we put them out in the public domain for others to use, given the issues of affordability in health care.”

One licensee, Minnesota Community Measurement, produced its first Total Cost of Care report, examining and comparing total cost of care by medical group for Minnesota and neighboring communities. Collaborating with more than 40 stakeholders, the nonprofit organization created broadly agreed-upon data to use in the exploration of improvement options.

November 17, 2016
Written by Elizabeth Barker