Value-driven outcomes can cut hospital costs by double digits

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Money

Arming physicians with specific cost and quality data for each patient can lead to a significant reduction in costs for some procedures.

That's the findings of researchers at the University of of Utah, which studied the University of Utah Health Care's value-driven outcomes program, better known as VDO. The study was recently published in the Journal of the American Medical Association.

The deployment of the VDO system cut the costs of joint replacement surgeries by between 7 percent and 11 percent, and laboratory testing by 11 percent, researchers found.

The VDO system pins down every source of cost in a patient's care, including all expenses in the operation of the hospital and its individual units, up to and including supplies, staff time and even non-clinical costs, such as utilities. Costs are then assigned to patients based on the amount of time they spent in a unit, the therapy or medications they consumed and work-relative value units that showed up in physician billing.

Providing such cost data to doctors while they are practicing can lead to cost reductions, but the UUHC's VDO deployment went further than that, by allowing it to define specific cost centers for each patients.

On average, inpatient total direct care costs accounted for 46 percent of total direct care costs, with the biggest factors being facility utilization (37.7 percent of the total) and professional services (24.3 percent). Outpatient direct costs accounted for 54 percent of total direct costs. Postoperative infections and sepsis were the greatest contributors to cost variability among individual patients. Previous studies have indicated that cost variations in identical medical procedures drives up costs for all patients.

By being able to break down such information, the healthcare system could introduce specific programs that could improve quality while focusing on the cost drivers and keeping them in check. That paved the way for a significant reduction in sepsis and postoperative infections and lengths of stay.

"We were able to get a macro-level view of where the opportunities for improvement were," study senior author Robert Pendleton, M.D. and the UUHC's chief medical quality officer, said in a study announcement. "Then, we could drill down even further to see what we needed to change."

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