Fee-for-service, bad. Value-based payment, good. That is the new mantra. What the heck is “value” anyway? Sometimes it seems like it is just code for cheaper. Anyway, research at the University of Utah health system describes a program designed to identify variability in treatment and costs of various conditions and then see if eliminating that variability could improve quality and cost outcomes. (JAMA Article) The key to the health system’s initiative was a tool that analyzed and gave information to clinicians and managers about treatment variability and costs, as well as guidance on how to get better outcomes. A cost-accounting effort was undertaken to assign all costs to every patient encounter. Then for every MS-DRG, variability and total cost were assessed, with the highest cost, most variable conditions being targeted as the greatest opportunity to reduce costs and improve quality by limiting variability and standardizing care. Quality outcomes included mortality, patient safety, process measures, unplanned readmissions, ER use and patient satisfaction. A team was assigned to design and collect data on the outcomes measures and to work toward eliminating variation from “ideal” care. Five conditions were identified for the first phase of the program, and three are covered in the article–joint replacement, lab use and sepsis.
The studied conditions had large variation in costs per episode. For joint replacement, a team created a new ideal clinical pathway and composite quality measure. Costs declined 7% in the first year and 11% the next year, while performance on the composite quality measure improved by 15 percentage points. Another quality improvement effort surrounded hospital lab use, and it too showed significant improvement, largely in regard to cost reductions, which saved the system over $250,000 per year. Sepsis also had a new quality initiative and similarly resulted in better process quality outcomes. The research did not report on the cost of the initiatives. But the report suggests that there is room for improvement through a very thoughtful effort to identify departures from optimal care and that those efforts may reduce costs.