For Stephen Wallenhaupt, M.D., chief medical officer of 13-hospital Novant Health, the hospital business is similar to mowing the lawn. When leaders make sure the field is completely level and free of variation among costs and procedures, it's much easier to see when a weed pops up.
He and other health care leaders are seeking out those pesky discrepancies as a way to boost not only quality, but also the bottom line. In one example, Novant consolidated its pharmacy formularies across the system to save $4 million initially, and $5 million every year thereafter.
"If the grass were 8 to 12 inches long, you couldn't see where the weeds were because it's just all over the place," Wallenhaupt says. "So, as you get more consistent and more reliable in the way you apply the standards, then variation or issues that may not have been contemplated or a unique patient circumstance may be more apparent."
Targeting variation whether in clinical practice or business operations likely will gain even more traction, especially in the C-suite, as value becomes the new mantra in health care.
At Catholic Health Initiatives a Colorado-based nonprofit system with 76 hospitals in 18 states variation has been on the radar since its inception 16 years ago, says Stephen Moore, M.D., senior vice president and chief medical officer. It first targeted the supply chain, after seeing 100 percent cost variations for certain items. By finding differences in areas such as hip, knee and spine implants, as well as cardiac products, CHI has saved upward of $90 million over the last four years.
Now, the system is turning the microscope toward clinical variation, looking for those care pathways that differ from hospital to hospital, resulting in more complications, worse quality outcomes and higher costs, Moore says. It's done so by building a robust data system that compares physicians with one another.
"In many instances, when physicians are put into a structure where they are em-powered and asked to be responsible for addressing costs, they actually do it better than we do as administrators," Moore says.
That's resulted in a 60 percent reduction in hospital-acquired conditions the last couple of years, saving CHI $3 million to $4 million each year. All told, the system expects to save $100 million to $150 million the next five years by reducing variations in clinical operations.
At Novant, Wallenhaupt also emphasizes the importance of bringing physicians to the table. They've convened clinical councils, which meet every other month to pore over data in certain areas and weed out differences, with physicians speaking on behalf of their facilities. The successes have been numerous, including a 70 percent reduction in serious safety events, and $325,000 in annual savings by targeting clinical variations in spinal fusion surgery.
"It can't be done without the physicians at the table helping [to] make the decisions," he says. "They know more about how to take care of the patients than anybody, and we need their expertise. They've got to be able to help encourage their colleagues to move to a different mode of care so that we can be more uniform about it."