Ongoing discussions with large employers including Disney have led Florida Hospital to examine granular surgical data in an attempt to wring out unnecessary costs.
Editor's note: This story was updated on August 19, 2016 to better reflect the nature of Florida Hospital's ongoing long-term collaboration with Disney on cost of care issues.
Neil Finkler, MD, understands the burning platform facing healthcare organizations: Payers and employers insist on reduced cost and improved outcomes.
How you get there is your problem, but clearly, payers are increasingly getting serious about driving volumes to organizations that can demonstrate better outcomes at lower costs.
That means hospitals have to get equally serious about the issue.
Finkler, senior vice president and chief medical officer at Florida Hospital Orlando, the 1,289-licensed-bed flagship hospital of a seven-hospital system, has been working with granular surgical data in an attempt to understand how to effectively reduce costs and improve quality by standardizing surgical practices.
Florida Hospital's annual margin of about 10%—$380 million on revenues of $3.8 billion—puts it in an enviable position, but employers are increasingly pushing it and other healthcare organizations to cut healthcare cost growth that far outpaces inflation.
This is a national problem that calls for multiple solutions that must be customized to the organization. Finkler says that's one reason why the health system has been so rigorous in the development of its clinically integrated network, and, more specifically, in removing variation in the practice of medicine.
Finkler says Disney and other large employers in the Orlando area have been discussing the issue of cost and seeking solutions in tandem with local healthcare organizations for years, and those partnerships are starting to yield real results.
Disney is number 57 on the Fortune 500 list, and the top employer in the Orlando area, but other employers have similarly large footprints, such as the Orange County Public Schools and, interestingly, Adventist Healthcare, the parent company of nonprofit Florida Hospital.
The Challenge: Do Better
"The way we've done business in the past is broken," says Finkler. Costs are too high and the outcomes are not good enough.
Hospitals have to be willing to do things differently to bend the cost curve, he says. If not, employers will move patients to other states where costs are lower and outcomes are better. It's a simple business decision that large employers have been increasingly willing to take in recent years.
Florida Hospital had already been working on eliminating variation and looking at how to drive costs down through evidence and data on what led to certain outcomes. 'It started with colorectal surgery, but Finkler has a mandate to work with other surgeons to instill those principles across the organization.
"In a new world where we'll be responsible for populations, including Disney's, how could we do it where we provide best outcomes at lowest cost?" asks the Harvard-trained gynecologic oncologist. "It's really the physicians who have to be responsible for that."
So why start with colorectal surgery?
Essentially, because that group of doctors came to Finkler first, eager for data that would prove how well they care for patients and how cost-effectively they do it compared to, say, general surgeons.
"It's a relatively small group, and very interested in data," he says. "I've known them all for years and I knew they would act upon the data and that they were interested in what the impact would be in world where we were all at risk."
Using Data to Analyze Cost and Quality
Florida Hospital aggregated the data it needed with the help of Ethicon, a Johnson & Johnson company that develops surgical products, but which can also crunch data on outcomes.
Finkler says Ethicon helped the health system figure out where the increased costs were coming from. The bottom line: there was wide variation in both cost and outcomes among the surgeons.
Focusing only on colon surgeries, the biggest disparity in cost and quality was whether the surgeon did the procedure in an open setting or in a minimally invasive one. Those who used the latter had costs per procedure that were substantially lower, and so were their complication rates.
Surgical Specialization May Trump Volume as Measure of Quality
Another determinant of lower costs, which in this case relate directly to outcomes, was in the volume of such procedures the surgeons did.
Comparing surgeons who did more than two of a list of eight common colorectal procedures per month versus those who did fewer yielded data that showed those who did more tended to do them better and less expensively, says Finkler.
Also, with help of that data, Finkler has persuaded colorectal surgeons to agree to use a single source for supplies based on the procedure. They've also agreed to help train surgeons on minimally invasive techniques.
"All that will save big money per case and determine whether we've moved the cost curve while maintaining quality outcomes," he says.
The plan is to quickly ramp up such analysis to other services and service lines in the health system in anticipation of strengthening its CIN and its attractiveness to payers and employers.
"We anticipate millions of dollars of savings, says Finkler. "Millions. We're all responsible for dollars and soon, the Disneys of the world will be paying a per member, per month fee to someone. If we can save $2,500 per case by converting to minimally invasive, that goes directly to the CIN. And all of sudden everyone in that network has an interest in what everyone else is doing and what their outcomes are."
Philip Betbeze is the senior leadership editor at HealthLeaders.