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Is Comparative Effectiveness Cost-Effective?

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The benefits will come, but an investment in EHR and standardization of protocols are needed.

There are more than a few challenges for hospitals that come with the $1.1 billion in federal funding for comparative effectiveness. Both the Institute of Medicine and the Federal Coordinating Council for Comparative Effectiveness Research issued reports last June on their priorities (after the funding was released as part of the American Recovery and Reinvestment Act of 2009), and they made it clear that they see hospitals playing a key role in doing this research and ensuring the findings make their way into clinical practice.

The idea of cost-effectiveness being a part of medical research makes a lot of providers nervous. They worry that such research will be used to dictate the type of treatment that is provided solely based on cost. Those that have begun to apply comparative effectiveness at their facilities, however, say that if it is applied correctly that isn't the case.

A delayed ROI
Comparative effectiveness may well prove to be a highly cost-effective measure for hospitals to put into place, but it is far from being a quick approach to cost savings; indeed, an up-front investment in EHR is essential. Nevertheless, the ROI does stand to arrive if facilities can give this program time to root.

"Most of the organizations today that are doing this won't save money right away due to the cost of the information technology infrastructure," says Jeffrey C. Bauer, PhD, a Chicago-based medical economist who heads the health future practice for ACS Solutions. "But you can't do this without the numbers, and the only way to get valid, meaningful numbers is to get a structure in place to track the data. In the long run, it absolutely pays for itself, but the learning curve is longer."

Bauer, who taught at University of Colorado Health Science Center in Denver and the Medical School of the University of Wisconsin-Madison and has written several articles on comparative effectiveness, says that not unlike any other large capital project, CFOs shouldn't expect an immediate return on investment; they should look for savings to begin as late as two to three years into the program.

However, hospitals that have EHRs already in place and are equipped to gather this type of cost-effectiveness comparison data could see results sooner. For example, at Marshfield Clinic, one of the larger private, multispecialty group practices in the United States with 775 physicians in 80 medical specialties and subspecialties located in 50 centers throughout northern, central, and western Wisconsin, began tracking comparative data for blood thinners, such as Coumadin, about four years ago.

Karl J. Ulrich, MD, MMM, president and CEO of the Marshfield (WI) Clinic, says the facility started using its previously gathered data to assess the high cost of chronic disease care. Having developed its own EHR system 20 years earlier, Ulrich says the clinic was quickly able to cull four years of preexisting data to see how the delivery system was providing care to patients who needed to continually use blood thinners. This comparative effectiveness analysis provided two outcomes. First, Marshfield determined that patients could be more quickly assisted if it created clinics to distribute blood thinners rather than have them check in at the physicians' office three times a week and wait more than 20 minutes in some cases to see a physician for a quick assessment.

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