Control the costs with physicians
By Shelley Burns
For many years, finance people have accepted steadily increasing clinical costs as “the way healthcare is.” Talking to physicians and nurses about costs resulted in glazed eyes. This was due mostly to the fact that the care processes were so complex that they couldn’t even begin to think where to start on a cost improvement project for a specific nursing unit or patient. The daunting task of gathering up all the data and then plowing through it made most nurses cringe and most physicians frustrated.
Now with severity-adjusted DRGs, hospitals have tools at their disposal to see slight and nuanced variations in cost across similar groups of patients. They can benchmark costs/DRGs with other hospitals and see whether they are more or less expensive. External cost comparisons are a powerful tool and can help hospitals see where opportunities lie.
In the past, it was easy to dismiss external cost comparisons to other hospitals as being patient driven – “We are a tertiary referral hospital and our patients are sicker.” Nowadays, it’s harder to dismiss the external comparisons, especially with severity-adjusted DRGs. True, the more detailed coding and severity adjustments make comparing external costs easy. But, it’s still hard to convince clinicians that an external benchmark is achievable. It’s hard to “know” what the practices are at the other hospitals and requires a lot of hard work to identify which practices impact cost and quality.
So where to start? Start with a look at your own internal cost variances across DRGs. Why? Because cost variance is the explicit manifestation of an underlying variance in practice. Who drives the variation in practice? Physicians. Identifying and analyzing cost variances at the DRG level within your hospital’s four walls will enable you to uncover your own internal best practices – the best outcomes at the lowest prices. And it’s much easier to do than external benchmarks because all the players know each other. It’s a lot easier for physicians to talk to one another about their practices when they are sitting together in a room, reviewing internal cost comparisons.
Make sure you have compelling, actionable, and accurate data. Then sit your physicians around a conference table and walk through the data. You’ll be surprised how much everyone will learn and you’ll pave the way for truly understanding cost variation, improving clinical utilization, and the better stewardship of our healthcare resources.
Shelley Burns is head of knowledge management for HMC
