Yale New Haven Saves $125 Million from Clinical Integration

June 26, 2015

The Yale New Haven Health System said it saved $125 million, and all they needed to do was engage physicians in cost control.

Yale created a process that linked financial and clinical data, giving physicians access to information they didn’t have before without looking at a complete chart review, said Strata CEO Dan Michelson at the Healthcare Financial Management Association 2015 National Institute in Orlando Wednesday.

Physicians control about 80 percent of the spending in healthcare but don’t know the cost because they have no access to accurate data, he said. A recent survey found only 20 percent of doctors could estimate the cost for common orthopedic devices, he said. However, more than 80 percent of physicians consider cost as a key criteria in the selection of a medical device, Michelson said.

When given this information, costs come down, he said.

There’s an absence of cost information in healthcare systems the size of Fortune 500 companies, and that’s astounding, he said.

With average hospital margins of 2.2 percent due to declining and changing reimbursements, hospitals are citing cost reduction as the number one priority, said Michelson, citing a HIMSS survey.

And while 88 percent of providers are trying to cut $50 million to $400 million through cost savings programs, only 17 percent are hitting their targets. That’s because savings are hard to quantify, Michelson said.

For Yale, goal was to reduce the health system’s cost per case by about 20 percent, relying on quality metrics coupled with a sophisticated  cost-accounting system, and partnering with clinical leaders. The system focused on labor, non-labor, human resources and clinical redesign.

They realized $125 million in savings without layoffs.

Clinical redesign is targeted to save $60.8 million annually.

The $3.3 billion organization saved $1.9 million by cutting lengths of stay by 25 percent for patients with sickle cell disease. They gave recently discharged patients around-the-clock phone access to a physician and two mid-level providers with expertise in sickle cell conditions.

Cardiac clinical redesign teams also improved the appropriate use of bivalirudin, a drug that reduces the risk of bleeding after surgery for high-risk patients. It’s also often given to low-risk patients. Yale New Haven increased overall appropriate use of bivalirudin by close to 30 percent, contributing to a reduction in direct cost per case, according to Steve Allegretto, vice president of analytic strategy and financial planning for Yale New Haven Health System.

The team focused on reducing clinical variation in three main areas: blood utilization management; palliative care; and care in and outside of the intensive care unit.

They focused on QVIs, or potentially preventable complications that on average, cost three to four times as much as a case without a QVI. They centered on improving care related to abdominal surgery, hip fractures, emergency department admissions and more. They looked at reducing ventilator associated pneumonia through new protocols, and are now looking at joint replacement, Allegretto said.