Cost effectiveness

Unraveling the IT Productivity Paradox — Lessons for Health Care

June 25, 2012

Debates about the productivity yield of IT are new to health care but not to other sectors of the economy. During the 1970s and 1980s, the computing capacity of the U.S. economy increased more than a hundredfold while the rate of productivity growth fell dramatically to less than half the rate of the preceding 25 years.1 The relationship between the rapid increase in IT use and the simultaneous slowdown in productivity became widely known as the “IT productivity paradox,” and economists debated whether investing billions of dollars in IT was worthwhile. The Nobel laureate economist Robert Solow observed in 1987 that “you can see the computer age everywhere but in the productivity statistics.”

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Modelling the Costs and Effects of Selective and Universal Hospital Admission Screening for Methicillin-Resistant Staphylococcus aureus

June 15, 2012

Background:

Screening at hospital admission for carriage of methicillin-resistant Staphylococcus aureus (MRSA) has been proposed as a strategy to reduce nosocomial infections. The objective of this study was to determine the long-term costs and health benefits of selective and universal screening for MRSA at hospital admission, using both PCR-based and chromogenic media-based tests in various settings.

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The Long-Term Effect of Premier Pay for Performance on Patient Outcomes

May 21, 2012

“Background: Pay for performance has become a central strategy in the drive to improve health care. We assessed the long-term effect of the Medicare Premier Hospital Quality Incentive Demonstration (HQID) on patient outcomes.

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Eliminating Waste in US Health Care

April 4, 2012

While focused on the American hospital situation, the waste reduction strategies in this article are applicable to the Canadian experience. “The need is urgent to bring US health care costs into a sustainable range for both public and private payers. Commonly, programs to contain costs use cuts, such as reductions in payment levels, benefit structures, and eligibility. A less harmful strategy would reduce waste, not value-added care. The opportunity is immense. In just 6 categories of waste—overtreatment, failures of care coordination, failures in execution of care processes, administrative complexity, pricing failures, and fraud and abuse—the sum of the lowest available estimates exceeds 20% of total health care expenditures. The actual total may be far greater. The savings potentially achievable from systematic, comprehensive, and cooperative pursuit of even a fractional reduction in waste are far higher than from more direct and blunter cuts in care and coverage. The potential economic dislocations, however, are severe and require mitigation through careful transition strategies.”

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Higher-spending hospitals provide better care: study

March 27, 2012

‘Canadian hospitals that spent the most on patient care may be getting a bigger bang for the buck than their U.S. counterparts, researchers suggested. Study results reported in the Journal of the American Medical Association compared patient outcomes at Canadian hospitals that spent more on care, and those that spent less. It found patients in the first category had lower death rates and were less likely to be admitted to intensive care.

Research on the U.S. healthcare system, however, has shown that higher spending at hospital systems doesn’t guarantee better results, according to the study’s author, Thérèse Stukel.

“When we spend more, and when we place these specialized resources, we’re doing it in an efficient way,” Stukel, a senior scientist at the Institute for Clinical Evaluative Sciences in Toronto, told Bloomberg News. “That’s in contrast to the U.S.”’

The original study (citation follows) is available from JAMA. As this is a subscription resource you will need to contact your institutions librarian for access.

Stukel, T.A., Fisher, E.S., Alter, D.A., Guttmann, A., Ko, D.T., Fung, K., Wodchis, W.P., Baxter, N.N., Earle, C.C., & Lee, D.S. (2012). Association of Hospital Spending Intensity With Mortality and Readmission Rates in Ontario Hospitals. Journal of the American Medical Association, 307(10):1037-1045. doi: 10.1001/jama.2012.265.

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Appropriate Use of Screening and Diagnostic Tests to Foster High-Value, Cost-Conscious Care

March 15, 2012

“Abstract: Unsustainable rising health care costs in the United States have made reducing costs while maintaining high-quality health care a national priority. The overuse of some screening and diagnostic tests is an important component of unnecessary health care costs. More judicious use of such tests will improve quality and reflect responsible awareness of costs. Efforts to control expenditures should focus not only on benefits, harms, and costs but on the value of diagnostic tests—meaning an assessment of whether a test provides health benefits that are worth its costs or harms. To begin to identify ways that practicing clinicians can contribute to the delivery of high-value, cost-conscious health care, the American College of Physicians convened a workgroup of physicians to identify, using a consensus-based process, common clinical situations in which screening and diagnostic tests are used in ways that do not reflect high-value care. The intent of this exercise is to promote thoughtful discussions about these tests and other health care interventions to promote high-value, cost-conscious care.”

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EHR-Based Care Coordination Performance Measures in Ambulatory Care

February 3, 2012

“Good coordination of care in the ambulatory setting has the potential to reduce unnecessary or duplicative use of health services, prevent hospitalizations for ambulatory care–sensitive conditions, improve patient safety, and potentially reduce costs. Unfortunately, coordination failures are common across the health care system. Using performance measures can drive practice improvement, particularly if reimbursement aligns with measurement. However, there are few well-developed, standardized measures of care coordination. This study sought to develop electronic health record–based measures to assess the quality of coordination during the primary care physician-to-specialist referral process, one of the most common transitions across providers in health care. Using input from interviews with primary care physicians and experts, the authors developed a core set of five electronic measures for use in primary care and specialist settings. Through a preliminary evaluation, they determined that the measures are valid with practicing physicians and two are ready for implementation.”

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Cost-effectiveness of the use of low- and high-potency statins in people at low cardiovascular risk

November 8, 2011

“Background: Although statins have been shown to reduce the risk of cardiovascular events in patients at low cardiovascular risk, their absolute benefit is small in the short term, which may adversely affect cost-effectiveness. We sought to determine the long-term cost-effectiveness (beyond the duration of clinical trials) of low- and high-potency statins in patients at low cardiovascular risk and to estimate the impact on Canada’s publicly funded health care system.

Results: Over a lifetime horizon, the cost of managing a patient at low cardiovascular risk was estimated to be about $10 100 without statins, $15 200 with low-potency statins and $16 400 with high-potency statins. The cost per QALY gained with high-potency statins (v. no statins) was $21 300; the use of lowpotency statins was not considered economically attractive. These results were robust to sensitivity analyses, although their use became economically unattractive when the duration of benefit from statin use was assumed to be less than 10 years.

Interpretation: Use of high-potency statins in patients at low cardiovascular risk was associated with a cost per QALY gained that was economically attractive by current standards, assuming that the benefit from statin use would continue for at least 10 years. However, the overall expenditure on statins would be substantial, and the ramifications of this practice should be carefully considered by policy-makers.”

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Cutting Hospital Costs Without Cutting Staff

October 12, 2011

“Virtually every industry is still feeling the pain of the recession—still cutting costs and making workforce reductions. Yet these cuts often fail to generate real bottom-line results. This situation is all too familiar to the healthcare industry—and to hospitals, in particular. In fact, the Bureau of Labor Statistics (BLS) recently recorded the second highest number of mass-layoffs in hospitals since 2000. Such a trend cannot continue without serious repercussions on quality of care.

The story is the same for hospitals around the country. When finding themselves in financially dire straits, they often yield to their first impulse, which is to lay off staff. On the surface, this solution makes sense. After all, labor is a hospital’s number one expense—reflecting 40 to 50 percent of incurred costs. But more often than not, after just a few months, the hospitals pay for the staff layoffs with an epidemic of inefficiency. Remaining staff cannot keep up with key functions, services deteriorate, and patient complaints begin to rise. Then, to overcome dissatisfaction among patients, physicians, and employees alike, hospital managers are compelled to bring in costly temporary or interim help.

Moreover, an organization that goes too far in reducing the work force ignores future costs of “restarting” after economic conditions change, in terms of recruiting, rehiring, and training costs. As economic conditions improve, this organization will have added costs for rebuilding capacity that could leave it behind its competition.”

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Shared Services in Health Care

September 14, 2011

“Shared service practices involve the integration of service activities across various areas of an organization, or across different organizations, into a single entity. The main purpose of shared services is to improve efficiencies and help manage costs. A shared service can be defined as “the concentration or consolidation of functions, activities, services or resources into one stand-alone unit. The one unit then becomes the provider to several other client units within the organization.”

Shared service practices are used in both the public and private sectors, and are more commonly seen in larger and more complex organizations. There are various shared service models that can be adopted, with each offering its own benefits and concerns. Governments in the United States, Australia, the United Kingdom, and Ireland have successfully implemented shared service initiatives. In response to the increasing demands placed on health care funding, several Canadian jurisdictions, namely Ontario, British Columbia with Alberta as a partner, and New Brunswick, have introduced new approaches to coordinate and integrate the procurement of services and supplies required by their health care systems.

The intent of these “health shared service” models is to maximize the value of expenditures in health care through more efficient practices in the management of resources. The goal is to generate savings that can be reinvested into respective provincial health care systems.”

The UBC Centre for Health Care Management has offered two seminars on Shared Services. Visit Creating Value Through Shared Services or Patient Services Consolidation to learn more.

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