Premier puts analytics to work on waste

By Bernie Monegain
11:19 AM

New dashboard tracks data to cut waste, improve care

CHARLOTTE, NC – There are myriad ways to cut costs in hospitals, even while improving patient care.
The Premier healthcare alliance is working to do one better, by targeting some of the top opportunities for creating efficiencies. To that end, it’s created a dashboard to help identify and track savings. Waste, Premier notes in a recent report, takes its toll on patient care. More care does not necessarily equal better care.

The alliance, which has more than 2,500 hospitals as members, has put the dashboard, which Premier President and CEO Susan DeVore describes as the first of its kind business intelligence tool, to the test.

Premier used the dashboard to calculate the average amount of savings that could be generated each year by a typical 200- to 300-bed community hospital. The dashboard identified five areas with the biggest opportunity for average annual savings per hospital:

1. Unnecessary labor expense, such as inefficient processes that take too long or require too many employees to complete: $6.18 million per hospital per year, and up to 5.1 percent of a hospital’s total labor budget;

2. Excess readmissions: $3.83 million per hospital, per year, and up to 9.6 percent of a hospital’s budget;

3. Inappropriate length of stay: $2.63 million per hospital per year, and up to 5.4 percent of the hospital’s budget;

4. Skill mix dollar variance that occurs when higher paid employees do work that less expensive or less experienced staff could do equally well: $2.38 million per hospital per year, and up to 6.2 percent of a hospital’s total labor budget; and

5. Unnecessary lab testing such as blood, urine or hemoglobin tests: $2.23 million per hospital per year, and up to 1.6 percent of a hospital’s total lab budget.
Premier conducted a follow-up analysis to determine certain drivers. Focused first on readmissions, an analysis of 5.8 million discharges found that the following diagnoses have the highest average percent of readmitted cases and additional costs per case (July 2010 to June 2011):

• Circulatory system (heart attack/heart failure) – 17 percent readmission rate, $15,517 additional cost per case;

• Respiratory system (pneumonia, asthma, chronic bronchitis) – 12 percent readmission rate, $12,146 additional cost per case;

• Musculoskeletal system (major joint replacement, spinal fusion) – 9 percent readmission rate, $17,730 additional cost per case.

“There’s a saying that you can only change what you can measure,” says DeVore. “We all know that there is opportunity for big savings in healthcare, but we have lacked specific measures to effectively go after these opportunities. We created this dashboard and the analysis to give hospital leaders a road map to leverage in ongoing work to enhance efficiencies and wring as much savings as possible out of the system.”

Dennis Dolan, CFO at Phoenix-based Banner Health, which operates 23 hospitals in seven states, says Banner is on a mission to reduce variation in clinical practice, and to create standard practices in all aspects of the hospital operations.

Measuring that against the amount of data the Premier dashboard can mine and analyze is a boon, he says – much more telling than using data from Banner Health hospitals alone.

What Premier wants to achieve, says DeVore, is a focused way of dealing with efficiency and waste. She likens the approach to a runner training for a marathon – setting goals, achieving them, and setting new ones.

The end goal, of course, is to transform healthcare.

Banner Health is saving $1 million a year by abandoning the use of a surgical adhesion barriers post surgery. No other hospitals were using it, Banner discovered from Premier, and there was no difference in patient outcome.

“We didn’t know what we didn’t know, Dolan says. “That one success led to many others.”

Nicholas Walters, CEO of the Billings Clinic in Montana, which operates a 272-bed hospital and multi-specialty practice, appreciates the data he can glean from Premier’s dashboard.

“These types of initiatives are really critical,” he says. As he sees it, looking at measurable data related to safety, harm and other factors makes it easier to improve care as well as save money.

The Premier efficiency dashboard was developed by a cross-functional team of internal and external subject matter experts. The team sought to pinpoint the common opportunities for savings using existing literature, Premier data assets and lessons learned from alliance cost reduction efforts. Participants in Premier’s QUEST High Performing Hospitals collaborative then assessed measures to ensure they were useful and able to achieve quantifiable cost reductions.

During assessment, Premier found that QUEST hospitals had opportunities for further savings in all 15 measures, even though these hospitals already have reduced costs by more than $4.5 billion in three years and have lower per-patient costs than others.

To Mike Alkire, Premier’s chief operating officer, this indicates that even the highest performing hospitals have opportunities to pinpoint and eliminate inefficiencies, unnecessary tests and errors that can contribute to higher spending.

“Our research demonstrates that even the best performing hospitals in the nation have an opportunity to improve efficiency,” he says. “Considering the magnitude of improvements possible with a group of hospitals already performing at a high level, the national implications of Premier’s efficiency dashboard are likely to be far more significant.”

The dashboard is customized by hospital to give the most information possible, Alkire explains. Using hospital data pulled from Premier’s comparative clinical, operations and purchasing database, a benchmark is set based on top quartile performance. The hospitals receive quarterly reports showing areas where their organization falls below the benchmark, and the magnitude of potential savings. Measures are tracked over time to show where progress has been made quarter-to-quarter. The measures are being continually assessed and expanded to help zero in on further opportunities for savings.