A clinical protocol is proving that it can make a positive impact in the operating room and on the bottom line.
Financial executives at health systems and hospitals often look in familiar places to cut waste from their systems, but sometimes there are opportunities outside of the usual suspects.
Beyond negotiations with payers, internal operations, and revenue cycle management, savings can be found in the operating room and boost the organization's bottom line.
In recent years, it has become apparent that certain proactive clinical initiatives have helped patients recover more quickly and reduced healthcare costs overall.
Randy Moore, DNP, MBA, CRNA, who serves as CEO of the American Association of Nurse Anesthetists (AANA), told HealthLeaders that moving treatment to alternative settings outside of hospitals and standardizing clinical care can contribute to savings on the back-end.
Moore says that through his prior experience as the director of perioperative and anesthesia services at Passavant Area Hospital in Jacksonville, Illinois, one of the most important ways to cut costs in healthcare processes is to decrease clinical variation.
This sentiment is shared by Lance Robinson, managing director of performance improvement at Kaufman Hall in Chicago. To make your organization more efficient, Robinson says, it is crucial to address clinical variation by controlling unnecessary variation as well as examining length of stay and care transitions to improve turnaround times for patients.
A foreign concept
Moore recommends that system leaders implement a foreign concept into their hospitals—quite literally—by using enhanced recovery after surgery (ERAS) protocols. This surgical process has been popular in Europe since the mid-1990s, as national health insurance programs prompted hospitals to conserve limited resources.
According to a 2011 study published in Canadian Urological Association Journal, ERAS protocols seek to "achieve early recovery after surgical procedures by maintaining preoperative organ function and reducing the profound stress response following surgery." The study lists the key elements of the protocols as "preoperative counselling," "standardized analgesic regimens," and "early mobilization," all of which are reliant on surgeons, anesthesiologists, and nurses working closely together.
Simply put, ERAS modifies the standard orders for patients prior to surgery as well as the approach used by surgeons and anesthesiologists during the procedure.
According to Moore, patients no longer need to abide by prolonged fasting periods prior to surgery, opioids are used sparingly during the procedure, and "multiple methods" are used to control pain, including the use of regional anesthesia.
But ERAS has not enjoyed as much widespread adoption in the U.S. healthcare system. This is partly due to high up-front costs that cause sticker shock as well as the need for instituting a multidisciplinary model reliant on a sizable leadership structure, says Moore. According to the study, ERAS protocols challenge the "traditional surgical doctrine," so implementation thus far has been slow in the U.S.
However, with the proper scale and clinical leaders overseeing the protocols, length of stay rates are reduced considerably and cost savings improve in the long term, says Moore.
A case for ERAS
Moore cites Johns Hopkins Hospital (JHH) in Baltimore as one organization that has implemented ERAS effectively, debuting the protocols in 2013.
"The ERAS protocol is a great example of an initiative we pursued at JHH that was intended to achieve the triple aim: improve health, reduce per capita cost, and improve the experience of care," says Claro M. Pio Roda, DrPH, who has served as CFO of Howard County General Hospital in Columbia, Maryland, since January 2018.
According to a 2015 Johns Hopkins School of Medicine doctoral thesis authored by Pio Roda, initial startup costs for the colorectal ERAS program at JHH totaled more than $175,000. The thesis study found that the "moderate scenario," based on average inpatient cost savings of $1,240 per case, produced a return on investment of 67% and an internal rate of return of 93%.
Pio Roda says the study calculated an incremental margin as a result of the additional cases JHH was able to treat by implementing ERAS. However, he also notes that the margin was partially offset by new operating costs associated with the program, including staffing, education materials, and supplies.
A follow-up study published in the Journal of the American College of Surgeons (JACS) in 2016, to which Pio Roda contributed, found U.S. hospitals that implemented ERAS protocols experienced a reduction in length of stay by 1.4 days.
Pio Roda says "the average cost savings per day tend to vary depending upon whether staffing costs are included," adding that the assumption is staffing costs will go away if length of stay decreases. He also mentions cost reductions "do not automatically happen," citing the fact that nursing staffing is not "perfectly variable with patient days."
In the JACS study, patient satisfaction rose from the 37th to 97th percentile as a result of ERAS implementation. First-year costs attributable to ERAS totaled $552,783 while savings reached $948,500, for a net savings of $395,717, according to the JACS study.
Pio Roda says JHH has continued to track the cost reductions associated with its colorectal ERAS program, reporting an average variable direct cost savings of $1,864 per case in the current fiscal year, 50% higher than the savings in his 2015 calculations. He says that for about 500 cases per year, this amounts to approximately $945,000 in annual savings, close to those calculated in the JACS study.
"Even before the ERAS project was identified, the philosophy of our executive leadership that led to the collaborative was that if we focused on improving clinical quality, the financial benefits would follow," Pio Roda says. "This was another important factor in engaging the support and enthusiasm of the frontline clinical staff. It was much easier to engage them in a quality initiative than a cost-savings initiative."
Based on the program's internal success, the Johns Hopkins Armstrong Institute for Patient Safety and Quality rolled out the ERAS protocols to more than 750 hospitals nationwide in 2017. The effort was also supported by the American College of Surgeons, which pledged to provide a toolkit and senior executive to help trainees "overcome any barriers they may face."
While JHH has expanded its ERAS protocols to apply to different surgical pathways, Pio Roda says interested hospital leaders should start using ERAS with the colorectal surgery track based on its proven record of success. He also emphasizes the need for a collaborative approach to ERAS based off a multidisciplinary team led by "influential physician champions," with engaged frontline clinicians and supportive executives in the hospital administration.
For Moore, the results produced at JHH speak to the potential of the protocols.
"That moves the needle, that is real money, and that is a huge impact," Moore says. "I would go as far as to say that regardless of whether you're Johns Hopkins or a community hospital in central Illinois, you can make a pretty compelling financial case that ERAS, if done well and sustained, will result in better patient outcomes and lower costs."
Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.
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