Editor's note: This blog is part of Fiscal Fitness, a regular H&HN series exploring the cost containment strategies hospitals are employing in response to reimbursement pressures and an uncertain economic climate. Read more at our Fiscal Fitness page.
Since its founding in the 1940s, the mission at Carolinas Healthcare System, a safety net provider based in Charlotte, N.C. with 650 care locations, has been to provide care for all, regardless of their ability to pay. At its flagship hospital, Carolinas Medical Center, that means serving a patient base where 17 percent of the patients are self-pay, 18 percent are on Medicaid and 25 percent are on Medicare. And recent reimbursement pressures on all health care systems haven't made that job any easier, Jim Olsen, the system's vice president of materials resource management told me recently.
"If we are going to continue to fulfill our mission, we need to reduce cost," Olsen told me recently, adding that "self-pay is often no-pay."
But while all health care providers are battling difficult financial winds, advancements in data analytics have helped Carolinas do a better job of identifying room for improvement. Earlier this year, the system took an in-depth look at recently developed internal and external data on clinical outcomes and cost-effectiveness for products in four clinical areas: cardiac rhythm management, stents, spinal implants and total joints.
"What we looked at was, how could we use the new information on outcomes and cost-effectiveness that we had for the system?" Olsen says. "In the past we didn't have that. We had to assume [clinical] outcomes would work out for the best."
The system's analysis discovered that while their utilization for stents was effective from both a clinical and financial viewpoint, there was room for improvement in the other areas. From there, the Carolinas team analyzed opportunities for improvement in both pricing and standardization of key products, ultimately approaching its surgeons and cardiologists to develop new best practices and purchasing guidelines. That's never an easy conversation, but Olsen says the system's physicians were on board with the effort, especially as it related back to the fulfillment of the health system's overall mission.
"They didn't necessarily look forward to [the standardization efforts], but as they felt as our mission continued to be provide care for everyone regardless of ability to pay, we had to make changes and make choices," Olsen says.
In some instances, the physicians and the health system decided to standardize products used on all patients receiving a particular procedure. In addition, the system identified other situations where it made more sense to allow potential exceptions for a minority of cases, as long as the physicians documented the clinical reasons for doing so.
"Generally what we're finding is there's good utilization of the products we identified," Olsen says. "And we're also finding there are specific cases where [physicians] identified clinical criteria" for using other products.
In addition, he says, the system's data was enough to convince some physicians that their preferences weren't necessarily backed up by clinical evidence.
"We had some areas where we had individual physicians who were very interested in a particular product," Olsen says. "They looked at the results, and they didn't have an improved outcome. The response we got was, 'That isn't a product I want to use.'"
Starting with the standardization of cardiac rhythm products in February, Carolinas has since completed initiatives for total joints and spinal implants, with more work on the way. So far, through the year to date, Carolinas has saved $4 million, and is on track to realize the full $12 million it identified in initial projected savings by the end of the year. The system now plans to expand the program to other clinical areas, Olsen says.
"We feel our mission is very paramount, and the surgeons and cardiologists agree."