Want Better Health Care? Make Sure It Costs Less!

March 2, 2010 - PRLog -- ATLANTA, GA – As the debate over how to reform America’s health care system continues, one expert says that the political efforts miss the point.    “Neither the Democratic nor the Republican proposals are really looking at increasing efficiency”, notes Frederick W. Croft, speaking at the Society For Health Systems/American Society for Quality Joint National Conference on Health Care in Atlanta.    “Until we can make our hospitals and physician groups work cost-effectively, the cost and quality problems in health care will keep growing.    Passing laws won’t solve the problems.”

Mr. Croft, Managing Partner for Los Angeles-based consulting firm PVM Partners LLC, claims that activity-based costing (a method of determining what operations – facilities, doctors, diagnoses, etc. - in a health care facility make or lose money) can guide efforts to identify the most efficient practices.    And, since efficiency is generally related to reducing poor processing and confusion (which, in turn, are primary causes of medical mistakes), the effort to find low cost methods can also improve the quality of patient care.    “North Mississippi Medical Center increased patient satisfaction by 10% while saving $11 million using this type of data-driven approach”, states Croft, who has implemented similar programs in hospitals and clinics throughout the United States and whose book, A World Without A Safety Net: Walking the Tightrope to Business Performance (iUniverse, 2009) includes case histories showing the relation between costs, efficiency and profits.
 
This approach moves in the direction of evidence-based medicine, a method that lessens the substitution of higher-cost for lower-cost treatments if their value isn’t proven.     Evidence-based medicine is widely supported by health care management experts, but has proven difficult to take from concept to usage.    This is partly due to data: since many hospitals and physicians aren’t using electronic medical records (“EMR”), it’s difficult to gather the data to evaluate different treatments.    “It’s a major problem”, admits Croft.    “We’re working with a couple of clients using natural language processing [a programming technique] to associate key words in physician notes with the accounting data for particular treatments, but most of our clients still don’t have EMR systems.”

Is there an alternative?    Mr. Croft says the evidence is against it.  “There hasn’t been a nation that’s maintained wide access to health care without strict cost controls.    Throughout Europe, Australia, Canada – the successful plans always have global cost limits and financially-driven restrictions on what procedures are covered.    You’re either going to have performance goals and review – the ‘death panels’ that politicians love to hate – or you’ll have limited access to care.   There isn’t enough money to give everyone every treatment they want.”

But efficiency programs, including Mr. Croft’s activity-based costing approaches, can produce savings that increase care to underserved populations.    “Many hospitals – and doctors – already care for people who can’t afford it.    The only way they can afford to do this is by finding money in other parts of the business.    Cost analysis and efficiency are one way to do this.”

Does cost control and efficiency produce better care?     If more findings support Croft’s costing findings, one of the most important members of your surgical team may turn out to be the accountant.

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PVM Partners LLC is a Los Angeles-based operations consulting and performance improvement firm serving corporations and private equity firms in building business value.