Utah System One of Few in Nation Tracking Specific Costs

FierceHealthFinance

July 2, 2014

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How much does it cost for a hospital to treat a single patient and apply that experience elsewhere? That is a mystery a Utah hospital system wants to crack.

University of Utah Health System is among the very few in the U.S. that can track and report on costs and quality of care delivered for every single patient that is hospitalized, Kaiser Health News reports.

"To think that healthcare is this 'ginormous' business that doesn't understand costs is mind-blowing," Vivian Lee, senior vice president for health sciences at the University of Utah, told KHN. She and her colleagues were able to formulate a tracking system to try and fill this void. It has charted 26,000 patients so far. Physicians and nurses engage in data sharing in order to provide feedback about cutting costs.

Many industry observers believe such cost accountability will become more widely used in the coming years.

Just about any input associated with the cost of treating a patient is tracked, including compensation for the doctors, nurses and support staff, as well as the cost of drugs, lab tests and supplies. As a result, the University of Utah system cut about $2.5 million in costs during the first year of implementation, or about a 2.5% reduction of its $1 billion annual operating budget.

Several cost-saving protocols were developed as a result of comparing expenditures between one patient versus another. For example, the system saved more than $556,000 by reducing the average length of stay after a kidney transplant. Reducing unnecessary laboratory testing cut another $452,000.

"Some organizations are now trying to do what they do in other industries, such as manufacturing, where they know how much it takes to make the widget, in terms of time and materials," Cynthia Ambres, a principal at consulting firm KPMG, told the publication.

Such financial benchmarking was touted at last week's Healthcare Financial Management Association annual conference, where tracking every cost tied to treating a patient can help lower expenses while raising margins.

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