The path to cost clarity may require use of a stopwatch

Far too many health providers have no data on the costs of each step in the treatment process, including staff time, patient occupancy length, procedures ordered and conducted, materials, and more.

Indeed, despite uncertainty on the revenue side caused by seismic structural changes in how healthcare is provided and reimbursed, the cost side remains as murky. This lack of clarity makes it difficult to systematically reduce operational costs while increasing quality of care.

That is changing. A growing number of healthcare providers are using software, data analysis and even stopwatches to solve the mystery of healthcare costs, slowly forging potential best practices that can be adopted by other providers.

One of the providers working through these steps is the University of Utah Healthcare. The chief executive, Vivian Lee, said she was frustrated that no one on her staff seemed to know the specific costs of hospital procedures or even supplies. Talking to the New York Times, Lee says she decided to do something about this cost cluelessness a few years ago. "The linchpin of this effort … is a computer program — still a work in progress — with 200 million rows of costs for items like drugs, medical devices, a doctor’s time in the operating room and each member of the staff’s time. The software also tracks such outcomes as days in the hospital and readmissions. A pulldown menu compares each doctor’s costs and outcomes with others’ in the department."

This detailed data enables the hospital to determine the costs per minute for care in different rooms and for different procedures. The full level of transparency has allowed the hospital to reduce unnecessary spending, re-think and streamline processes, and deliver better care more efficiently. And the results are showing up in the bottom line.

"While costs at other academic medical centers in the area have increased an average of 2.9 percent a year over the past few years, the University of Utah’s have declined by 0.5 percent a year," the Times writes.

According to the article, after analyzing a doctor’s time per procedure, the Mayo Clinic has started a pilot program to have scribes assist doctors in entering EHR data while meeting with patients.

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