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Controlling Cost

Controlling Cost While Improving Quality

Throughout the health care industry, there is increased demand for providing value, which is determined by quality of care and cost control. MUSC Health is in the process of improving this value equation by enhancing the numerator (quality) and controlling the denominator (cost). The Center for Evidence-Based Practice and Value Institute (CEBP/VI) ensures the effective integration of these factors into clinical operations at the medical center.

Health Outcomes

The CEBP/VI supports clinicians in providing high-quality care by developing evidence-based guidelines and orders sets, known as MUSC Ideal Care Plans. In 2015, ten MUSC Ideal Care Plans were developed, resulting in the completion of nine evidence-based clinical guidelines and 13 order sets for use in Epic electronic medical records. Ideal Care Plans were developed for adult urinary tract infections, colorectal surgery site infections, pediatric Kawasaki disease, and status epilepticus, among others. The CEBP/VI staff also worked closely with nursing and clinical informatics managers to analyze best practice evidence for use in decision-making processes for nine topics, such as time restriction of laboratory orders, integration of IV infusion pumps, and establishment of a cardiac early warning system in the Children’s Hospital.

Cost Control

How much does it cost MUSC Health to deliver care for a patient who receives a mammogram or an organ transplant? A team of analysts led by Barton L. Sachs, M.D., MBA, Chief of Staff, Special Assistant to CEO, MUSC Health, has introduced a time-driven activity-based cost accounting methodology from the business world. Initial team members were Meredith Alger, MS, RD; J. Butler Stoudenmire, BS; Marcelo S. Guimaraes, M.D.; Scott Brady, BA; Kelly Howard, BHA, RT; John L. Waller, M.D.; and Brian Whitsitt, MHA. The methodology measures the actual cost of delivering care. The process begins with the identification of a medical condition and patient population, obtains cost estimates for almost all required resources (personnel, space and equipment, consumables, etc.), and ends with a total cost for the continuum of care cycle.

The team’s pilot project (PDF) was launched in Vascular Interventional Radiology to discover the cost of port placement. The answer: $1,556. In 2015, the methodology was completed for five more services or procedures.

“The goal is not to make everything we do profitable,” explains Patrick J. Cawley, M.D., MHM, Chief Executive Officer, MUSC Health and Vice President for Health Affairs, MUSC. “In health care, as in every business, there are loss leaders you continue because they benefit the organization in other ways. The goal is improved knowledge. Knowing promotes innovation. Knowing eliminates unnecessary variation. Knowing provokes the team to re-examine basic processes and come up with new ways of doing things.”

MUSC Health will now examine not only best clinical practice for, say, hip replacement, but also its cost to be able to base the whole picture—quality and cost—on evidence.

MUSC Health is one of ten academic hospitals selected in the summer of 2015 to participate in the University of Utah’s “Becoming a Value- Driven Organization” Collaborative Training Program, funded by a grant from the Robert Wood Johnson Foundation. MUSC Health’s project is focused on implementing an evidence-based protocol for the management of pediatric patients with appendicitis in an effort to reduce unnecessary imaging, length of stay, direct variable cost, the negative appendectomy rate, and readmissions.

Overview of an Accounting Process That Measures The Cost of Delivering Care

  1. Identify medical condition and patient population to examine
  2. Define scope of the “patient care cycle,” including time period and services provided
  3. Develop process maps for each activity in care cycle; identify resources utilized in each step
  4. Obtain time estimates for each process step using electronic health record time stamps and observation
  5. Estimate cost of each resource
  6. Determine the practical capacity of each resource and calculate capacity cost rate (CCR)
  7. Multiply resource CCR by process time to compute total costs over care cycle