What is the most important focus for healthcare providers – reduce costs or improve quality outcomes?

The conundrum healthcare providers are facing is how do they financially succeed in an era of growing patient demand and shrinking reimbursement. Additionally, the financial model is changing where healthcare providers are being pushed towards assuming a higher level of financial risk based upon patient outcomes, and financial penalties for not improving their quality performance (e.g. Value Based Purchasing).

Therefore, where should healthcare providers focus their energy, reducing costs or improving quality outcomes? To most organizations, these two concepts are in direct conflict. If you reduce costs, there is the risk of quality being compromised. If you improve the quality of outcomes, there is an associated premium cost. For healthcare providers, there is a fallacy in this logic. Healthcare providers have the opportunity to reduce costs and derive the benefit of improved quality outcomes.

Some organizations have taken the approach of looking for peer reviewed best practices data and trying to indoctrinate it within their organization’s practices. Any organization that has taken this approach has found the progress slow and difficult as they encounter pushback from the physicians and clinical staff. The common challenge to this approach is that physicians will say their patients are sicker or different from those profiled within the published best practice. The best way to overcome this hurdle, and implement change at a faster and more effective manner is by making the clinical staff part of the solution.

The approach to developing this solution is collecting the clinical practice data of physicians by the highest cost DRGs detailing patient services, associated costs, and outcome. This data includes products used (e.g. knee replacement) and associated technology, unit cost and quantity of supplies (e.g. Bone morphogenetic protein (BMP)), treatment care path and stay duration within various medical units (e.g. ICU), and outcomes. Therefore, comparable patients are compared showing cost comparison, physician practice patterns, and outcomes. When this data is presented to the physicians and clinical staff with their identities blinded, they are able to view objectively the lowest cost and highest quality outcomes across peers. This type of information enables physicians to discuss with their peers clinical practices, outcomes and associated costs. By empowering physicians with this information, they are open to consideration of changing their practice patterns and supplies used.

A healthcare organization can help facilitate the transition of physician adoption of best practices by implementing a Gainsharing model. This is an approach where physicians and the healthcare provider organization share in the financial benefit of reducing costs while improving the clinical outcomes. This approach and associated shared financial incentive creates and alignment of cost reduction, improved quality outcomes and greater alignment of physician practice patterns towards internally agreed upon best practices.

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