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The Cost Containment Struggle

HealthLeaders magazine, November 13, 2011

HEALTHLEADERS: At the end of the day, though, one of the bigger problems leaders face is figuring out the true cost of providing a service and all of the testing, labor costs, and other costs that are all bundled into it because there are so many variables involved. How do you begin to make sense of it?

HART: I just wish I knew for sure the cost to provide a service. Revenue is a little bit easier. That's dollars in the bank.

KRONENBERG: It goes back to determining what kind of data is really actionable. People say information technology will give you accuracy, but it won't necessarily because something has to be entered by a person. So just because it's electronic doesn't mean it's accurate.

LIMBOCKER: Business intelligence is defined differently by different people, but to me it's being able to put together three or four source data systems in our institutions where data from all the platforms can be seen together in a succinct format. About 10 years ago, I was very proud of creating a senior-level dashboard and departmental dashboard for all leaders across the institution, where before they were getting a stack of paper several inches thick. Well, it was still too much data for most.

WAITER: The healthcare industry now has some excellent business intelligence systems that enable exception reporting where you can start with high-level metrics and then drill down to a very granular level of detail to understand the drivers of variances. Hopefully managers and executives will get more comfortable with business intelligence systems over time.

KRONENBERG: The thing that scares me is whenever you see someone demonstrating how to do it; it's always the person who has worked a lot with the system. The capacity is there, but maybe what it's telling us is that if you really want to use it, you really have to have a lot of people dedicated to it to drill down into the activity and then share it with the people who actually need to use it. For the managers on units, I don't know if I want them doing that level of drill-down when they have people to manage and patients to take care of.

WAITER: Cost management certainly can't be the only focus for a manager, but if we can get cost management to become an important part of their day-to-day job, that's an enormous step in the right direction. Several years ago I was working on a cost reduction program with one client for nine to 12 months. Consultants quite often are brought in to be change enablers and to help an organization focus and successfully implement difficult initiatives. I had a final steering committee meeting where one of the executives, who I had a good relationship with, needled me and said, "Boy, I'm glad this is the last meeting and we're not going to have to do this anymore." And I was thrilled because before I could even respond, one of his colleagues said, "The consultant's work is wrapping up, but we have to make this process part of our normal routine." That was a gratifying end to the project.

KRONENBERG: It's a cultural issue, but that culture is from a group of people in the healthcare delivery side who went into that field with completely different skill sets and completely different motivation. It was on the personal "do well for people" side, not "cost management or efficiency" side. And that's a challenge that we're all going to face. What do you want them to do, what can they do, and can they blend it all? Why we're in this crisis is because we haven't focused as much on this as an industry for a long period of time.

HEALTHLEADERS: We talk about using information technology to guide cost efficiency programs. How do you marry clinical and financial systems?

LIMBOCKER: Much of the data, even on the clinical side, that we rely on is often charge-based data, and so a charge entry has to take place and then someone will pull data and rely on it, which creates obvious problems. The clinical data that many of us also use consists of chart reviews. Chart reviews are still a fairly standard way to review data as opposed to having a clinical data field in a clinical information system. What you want to do is be able to compare high-quality outcomes with financial outcomes so you can see whether the things you're doing to improve clinical quality or reduce cost are having a positive or negative impact on the other.

KRONENBERG: Doing chart reviews or charge reviews are very difficult and tedious. The answer for me, conceptually, is that you have to marry groups of people together because not one person has the entire skill set that is needed to do all of this work. Our finance department has the decision support. I think you need a decision support person. You need a clinical person and you need a methodological person, maybe a management engineer. You have to get them working as a team rather than do it on a case-by-case basis.

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