The Healthcare Imperative Lowering Costs and Improving Outcomes: Workshop Series Summary (2010) / Chapter Skim
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3 Inefficiently Delivered Services
3 Inefficiently Delivered Services
Pages 109-140
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From page 109... ...
Building on the study's report that at least 44,000 people, and perhaps as many as 98,000 people, die in hospitals each year as a result of medical errors that could have been prevented, Ashish Jha from Harvard University discusses reducing the prevalence of adverse events and duplication in testing in the inpatient setting. Calculating that over 3 million preventable adverse events occur in hospitals annually, with over half of these attributable to hospital-acquired infections and adverse drug events, 09
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From page 110... ...
. Jha concludes by suggesting that improving quality of care while saving costs will require additional efforts to systematically measure and publicly report adverse event rates in U.S.
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From page 111... ...
Other estimates are derived from administrative data, which are well known for undercounting many types of adverse events, such as healthcare-associated infections and adverse drug events. One such study used National Inpatient Sample (NIS)
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From page 112... ...
We also examined the prevalence of redundant laboratory and radiologic tests. Based on our results from the literature review, we selected 10 adverse events commonly described in over 3,000 studies: adverse drug events, falls, pressure ulcers, pneumothorax, thromboembolic disease, surgical site infection, catheter-related blood stream infection, urinary tract infection, pneumonia, and hematoma.
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From page 113... ...
. Of these 3.9 million events, 46 percent were preventable adverse events (389,000 adverse drug events and 1.4 million hospital-acquired infections)
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From page 114... ...
Thromboembolic disease 828 511 Hospital-acquired infections 1,725 1,449 Adverse drug events 2,169 589 Decubitus ulcers 226 184 Other adverse events 783 290 Total adverse events 5,731 3,023 for some of the weaknesses in the data from our review. Even so, some of the study data were several years old, and therefore our estimates may not be current.
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From page 115... ...
Lastly, and quite significant for public policy, we chose not to examine what kind of financial impact hospitals might face in implementing solutions to decrease adverse events and redundant tests. Yet, the cost of such interventions and its relationship to the potential savings of eliminating adverse care will be important considerations for policy makers who wish to target these sources of potential cost savings.
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From page 116... ...
and others around the "no-pay" rules are meant to begin to capture some of these savings, most of the early data from other similar efforts suggest that the rules are unlikely to have a major impact. More salient will be efforts to systematically measure and publicly report adverse event rates in U.S.
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From page 117... ...
The first category of major savings realized by the collaboratives was in the area of reducing unnecessary visits and services. Fewer Unnecessary Office Visits Outpatient visits were reduced by using an evidence-based scheduling tool that matched a patient's condition with an appointment that integrated evaluation, education, and therapy into a single same-day visit.
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From page 118... ...
Our model eliminated at least 50 percent of office visits for these conditions, including "new visits" to multiple providers. Applying VMMC's experience to the national level, reduction of unnecessary office visits related to such common conditions as back pain, headache, and breast nodules can generate savings of up to $5.1 billion annually (Table 3-3)
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From page 119... ...
outpatient visits 96.8 million Potential reduction in number U.S. office visits 48.4 million Medicare Commercial Health Health Insurance Insurance Mean reimbursement rate per visit $69 $152 Potential savings in dollars $0.77 billion $4.3 billion NOTE: VMMC = Virginia Mason Medical Center.
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From page 120... ...
imaging 2.7M 5.1M examinations 0.31M 0.58M Reduction in number of lumbosacral examinations 0.22M 0.41M Reduction in number of brain imaging examinations Reimbursement rate per visit $500 $1000 Potential savings in dollars $1.4B $5.1B $153M $580M From reduction in lumbosacral examinations $109M $411M From reduction in brain imaging examinations NOTE: B = billion; M = million; MRI = magnetic resonance imaging; VMMC = Virginia Mason Medical Center. Improving Efficiency of Office Visits Applying the reforms detailed above to reduce non-value-added office visits and extending a similar approach to additional prevalent, high-cost conditions such as shoulder, knee, and hip pain, routine exams, and irritable bowel syndrome, we believe a minimum of 5 percent of office visits could be eliminated.
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From page 121... ...
5 Based on CMS and commercial reimbursement rates for VMMC, savings at a national level can be estimated by applying these data to the 1.05 billion annual "necessary" outpatient visits. Of these 1.05 billion visits, 23 percent are by patients in the CMS population aged 65 and older (242 million)
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From page 122... ...
If half of these (37.5 million) were managed by an ARNP or PA, and half of these visits could be managed by telephone or e-mail, and if reimbursement were reduced an additional 50 percent from ARNP and PA reimbursement rates for office visits, additional savings for CMS would be $0.33 billion (37.5 million × 23 percent CMS patients × $39 savings vs.
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From page 123... ...
to Providers Physician $152 $69 $50 ARNP/PA $129 $59 $25 Percentage difference between costs 15% 14% 50% Commercial Medicare Providers Purchasers National savings if half of total $7.1 billion $1.2 billion $13.1 billion annual office visits seen by mid-level practitioners NOTE: ARNP = advance registered nurse practitioner; PA = physician's assistant.
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From page 124... ...
In addition, contracted reimbursement rates between health plans and providers escalate healthcare cost unrelated to value. For provider groups in the Seattle market in 2007 (Washington State Department of Health)
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From page 125... ...
Clinical waste is associated with the processes of delivering healthcare services to patients, and administrative waste is associated with the systems and processes for financing and payment for care. In addition, waste may occur entirely within a healthcare delivery or financing organization (intraorganizational waste)
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From page 126... ...
Accordingly, both sets of figures -- production costs and operating costs -- understate the total cost of production through the omission of the cost of providing inpatient care. Savings Potential in Physicians' Offices The distribution of production costs per RVU produced for all practices varies (Tables 3-9 and 3-10)
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From page 127... ...
The standard TABLE 3-10 Total Operating Cost (Excluding Physician Compensation) , per Total RVU Produced, for Selected Practice Types (2007)
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From page 128... ...
electronic health record (EHR) systems (total cost per RVU for practices with no EHR = $56.58 compared with $53.20 in practices using an EHR)
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From page 129... ...
In summary, there is considerable unexplained variation among medical practices in the cost of producing an RVU of care, and additional research is sorely needed to understand the drivers of that variation. However, inefficiency is likely one of those drivers, and reducing clinical and administrative inefficiency might reduce national healthcare expenditures by about 0.2 percent annually.
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From page 130... ...
healthcare spending by nearly 2 percent, since inpatient spending comprises approximately 60 percent of hospital spending, and hospital spending comprises approximately 30 percent of total healthcare spending. Failure to collect comprehensive nationally standardized information on hospital structural features and processes in the United States prevents full understanding of what accounts for better performance by the highest ranking 12 percent.
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From page 131... ...
Though MedPAC has not yet completed similar analyses for other provider types, there is no a priori reason to expect that the size of the efficiency gap or the best closure method would substantially differ. COSTS OF UNCOORDINATED CARE Mary Kay Owens, R.Ph., C.Ph.
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From page 132... ...
These analyses included use and expenditure analyses of drugs and medical services, a disease profile of the population, and the identification of access and care patterns indicative of uncoordinated care in a subset of the population. SEC examined drug and medical use and costs attributed to these extremely uncoordinated care patients in an effort to supply policy makers addressing healthcare reform at the state and federal levels with compelling new data as to the importance of improving the coordination of care.
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From page 133... ...
Figure 3-2.eps total cost observed for the most extreme uncoordinated care patients were $15,100 compared to $3,116 for those with better coordinated care observed in the remaining population (Figure 3-3)
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From page 134... ...
One very significant characteristic observed in the population studied was inappropriate medication usage, including both overuse and low adherence, which highlights an important opportunity for pharmacists to provide medication therapy management and monitoring services to patients and the entire healthcare team in a collaborative effort to improve outcomes and reduce costs. Once these uncoordinated care patients were identified, we could begin to compare their care histories with those of similar patients in order to estimate the cost or the opportunity for savings should these uncoordinated care scenarios shift to a more continuous and coherent care plan.
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From page 135... ...
The Opportunity Patients with extreme uncoordinated care clearly account for a disproportionate share of costs. In fact, the costs of uncoordinated care averages approximately 30 percent of total plan costs studied.
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From page 136... ...
Assuming that national health reform efforts aimed at these uncoordinated care patients are developed and phased in over 3 years (realizing savings at 25, 50, and then 75 percent levels) , the average savings in the period 2010-2018 are estimated at $240.1 billion per year or an average of 8.8 percent of total annual expenditures.
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From page 137... ...
So available data would suggest that in public and private payer contexts, chronically ill patients and patients with uncoordinated care are certainly common and likely occur at comparable rates. Mental Health Does Not Drive the Observed Cost Variance Even though it may be a contributing factor, patients with serious mental health conditions such as psychosis or bipolar disorder accounted for only 20 percent of the patients and 34 percent of the total cost for the entire group of extreme uncoordinated care patients.
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From page 138... ...
Therefore the estimates are very conservative since moderately uncoordinated care patients were not included in the cost-saving estimates and certainly represent additional savings opportunities. Fourth, the cost-saving estimates do not include future cost avoidance in nursing home and long-term care costs that can reasonably be expected to occur due to improved coordination of care and enhanced clinical outcomes of patients who receive appropriate treatment earlier in the course of their disease and extend their physical and mental functionality and independence.
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From page 139... ...
2007. The boomers are coming: A total cost of care model of the impact of population aging on health care costs in the United States by major practice category.
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From page 140... ...
2002. Prevalence, expenditures, and compli cations of multiple chronic conditions in the elderly.
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