How to Reduce Costs While Delivering Ideal Outcomes and Experiences
Achieving value in today’s healthcare environment requires improving outcomes and experiences while lowering costs. This is a significant challenge for providers who have only worked in a healthcare environment where payment has been based on the volume of services.
At the same time, charges for these services have long been based on providers’ or organizations’ more global health care costs, often as a ratio of cost-to-charges. A new tool, however, is making it possible for all healthcare constituencies (providers, hospitals, insurers, and policy makers) to identify true cost to deliver care (e.g., total joint replacement surgery, hysterectomy, diabetes care, etc.).
This is a significant shift that will allow us to understand cost drivers and move from volume to value throughout the healthcare continuum.
A collaboration between Dr. Anthony DiGioia and teams at the University of Pittsburgh Medical Center and Dr. Robert Kaplan from the Harvard Business School has resulted in the development of a patient centered value tool that identifies true cost at the level of the clinical condition and provides a mechanism to drive down those costs while improving clinical outcomes and patient experiences. This grassroots approach – TDABC + PFCC (Time-Driven Activity Based Costing coupled with the Patient and Family Centered Care Methodology) — is the first tool that includes value as defined by patients and families and directly links clinical and financial performance.
Both are necessary elements for successful participation in new payment platforms such as bundling and reference-based pricing in which payment is based on financial and performance accountability for episodes of care over a defined time frame. These new payment models view episodes of care from the patient’s perspective as they move between inpatient and community care settings; for example, a Total Joint Replacement bundle is defined to include all services provided 30-days prior to surgery through the return office visit 90 days after surgery, or 4 months in total.
TDABC + PFCC is a simple 6-step process to deliver value by viewing all care through the eyes of patients and families. We developed a tool called Shadowing that is the direct real-time observation of segments of care delivery. Shadowing is used to accurately and efficiently determine the true current state – the care process maps and resources (personnel, space, equipment and consumables) used to deliver care as well as the end user experience.
One strength of this combined approach is that cross-functional care teams are then empowered to identify and implement thoughtful cost reductions and efficiencies while protecting and even improving experiences and outcomes. This approach also develops the necessary partnerships between patients, families, and care providers to co-design ideal care delivery. At UPMC, this approach complements and supports the “top-down” patient centric ABC costing method currently being disseminated system-wide.
We must remember that patients and families are the connector and the common denominator through all silos over the full cycle of care. It is only with the patient at the center of our focus that can we achieve the goal of transforming care delivery from volume to value. This new patient centered value tool will improve clinical, experiential and financial outcomes and can be easily implemented in any healthcare setting at little to no incremental cost.
Learn about this approach from the experts: The Business Case for Improving Value in Health Care: How to Reduce Cost While Delivering Ideal Outcomes and Experiences on September 19, 2014 in Pittsburgh, PA (http://delivervalue.eventbrite.com).
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