using variation analysis to lower costs while improving ...€¦ · supplies 1-2 boxes plain bone...

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Using Variation Analysis to Lower

Costs While Improving OutcomesCaleb Stowell, MD

Kevin Fleming, MBA

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Welcome and Introductions

Venkat BhamidipatiExecutive Vice President, CFO

Caleb Stowell, MDVP, Value Analytics

Providence St. Joseph Health

Caleb Stowell is VP, Value Analytics at Providence St. Joseph Health. He brings cost

and outcomes data together to engage physicians in optimizing the value of their care.

Prior to Providence, he helped found and lead the International Consortium for Health

Outcomes Measurement (ICHOM), focusing on outcome standard development and

stakeholder engagement. He received his medical degree at Harvard Medical School

and was Senior Researcher at Harvard Business School for 6 years.

Kevin Fleming serves within Providence St. Joseph Health (PSJH) as the Chief

Operating Officer for Clinical Program Services. In this role, he works collaboratively

with clinicians, caregivers, and administrative leaders across all service lines on

strategic projects that impact clinical quality, cost, value, and growth across the health

system. These projects include initiatives designed to increase the value of care

provided to patients and communities, the development of bundled payment

strategies, implementation of care pathways and protocols, negotiation of physician

preference items, and the development and execution of alignment strategies with

independent clinicians. He has presented the collaborative work of PSJH at

conferences held by AAOS, ICHOM, Becker’s Healthcare, HFMA, and others. Kevin

has worked in integrated healthcare delivery systems in both system-level and local

operational roles, and he has also held leadership roles in independent physician

practice settings as well as in the post-acute environment.

Kevin Fleming, MBAChief Operating Officer, Clinical Program Services

Providence St. Joseph Health

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Agenda for today

❑ Context for our discussion today

• Broad healthcare environment

• Within Providence St. Joseph Health (PSJH)

❑ The Value Improvement Journey at PSJH

• Bridging the Data Divide

• Developing Credibility and Transparency

• Supporting Change

❑ Discussion/Q&A

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Learning objectives

❑ Attendees will learn strategies utilized in a large health system to develop data

tools that visualize financial and clinical information

❑ Attendees will discuss clinician engagement methods that can be leveraged to

gain clinician participation and ownership of an organizational strategy to

improve the value of care

❑ Attendees will review data highlighting typical practice variations and will practice

developing improvement plans that capture the opportunity

❑ Attendees will learn the value of ongoing performance monitoring during

transformative projects and will be able to identify leading indicators of

resistance to change efforts

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An introduction to

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As expressions of God’s healing love,

witnessed through the ministry of Jesus,

we are steadfast in serving all,

especially those who are poor and vulnerable.

Mission

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The organization

builds on a deep

history and legacy,

tracing its roots to

the mid-1800s.

Both Catholic and

non-faith-based

traditions are

included in the

enterprise.

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We care for patients in a variety of settings across communities

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CONTEXT FOR TODAY’S DISCUSSION

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Source: Harvard Business Review; https://hbr.org/2017/10/how-u-s-hospitals-and-health-systems-can-reverse-their-sliding-financial-

performance

“On the Pacific Coast,

Providence St.

Joseph Health, the

nation’s second

largest Catholic

health system,

suffered a $512

million drop in

operating income and

a $252 million

operating loss in FY

2016.”

https://hbr.org/2017/10/how-u-s-hospitals-and-health-systems-can-reverse-their-sliding-financial-performance

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PSJH collaborates across geography in key clinical areas

Clinicians within PSJH,

aligned around common

groups of clinical conditions,

work together with

administrative, financial,

nursing, rehab, and data-

driven stakeholders within

Clinical Institutes. These

groups are charged with

delivering better care at a

lower cost, with an eye for

future opportunities for

responsible growth.

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PSJH Clinical Program Services 2018 Accomplishments

Only 1

maternal death

experienced during

over 71,000

deliveries

Over 15,000

high risk patients

screened for lung

cancer

88% increase

in patients receiving

tPA for stroke

10% lower

mortality than

expected in CABG

procedures

220 fewer readmissions

than expected for the

elective Total Joint

population

Over 6,000

patients enrolled in

cancer clinical trials

Over 40,000

patients treated for

malnutrition

Over 770

fewer deaths

from Sepsis

than expected

>$84M savings

in supply chain

>$13M cost per case

savings (VOA)

7 states

Participating in

APM’s with CPS

2 commercial

contracts

for value-based

payment arrangements

$4M

Received from CMS

for Bundle

performance

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Despite the early successes for these teams,

the most pressing work is still ahead…

Value = Outcomes

Cost

x Appropriateness

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2

3

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Drive down unit cost in areas

without outcome impact

Measure and demonstrate excellent

outcomes (at competitive prices)

Broaden measurement scheme to

capture and optimize appropriateness of

care

Win commercial contracts while still

operating profitably at government rates

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A. Lack of executive sponsorship

B. Lack of clinician engagement in improvement efforts

C. Lack of data/tools to review, select, and monitor improvement

opportunities

D. Other

Audience question:

Within your organization, what is your biggest challenge

related to value improvement?

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PSJH Value Aim

Together, we willdeliver nation-leading health outcomes

at Medicare ratesby 2022,

starting with the top 20 diagnoses

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THE VALUE IMPROVEMENT JOURNEY AT PSJH

1. Bridging the data divide

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Bridging the data divide

Patient-reported

Outcomes

Patient Experience

Readmissions

Mortality/Complications

Purchased Services

Labor

Pharmacy

Supplies

Quality Cost

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To optimize value, we had to bring together its two

components

Purchased

Services

Labor

Pharmacy

Supplies

Improve value = lower this while maintaining or improving this

Patient-

reported

Outcomes

Patient

Experience

Readmissions

Mortality/

Complications

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▪ 1. Cost normalization

▪ What is the right way to visualize cost data for clinicians?

Simple in principle but challenging in practice

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Isolated CABG

2017

Each shape is one facility

Each mark is one case

Direct variable cost only

Blue = Non-normalized

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A. Show them direct variable cost straight out of your cost accounting

system

B. Try to normalize cost across facilities for comparisons

C. Don’t show them cost; only show utilization

Audience question:

How would you approach representing cost to clinicians?

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Our approach to normalizing cost

Cost Category Sub-CategoryNormalization

Method

Room and BoardICU, ICU Intermediate, Routine

Room and Board, Observation

Standardized unit cost per bed

day per sub-category

Operating Room OR, PACUStandardized unit cost per

minute per acuity level

Pharmacy and Supply Many Pull through acquisition cost

CPT-basedLabs, Blood Products, Therapy

Visits, ImagingStandardized unit cost per CPT

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Isolated CABG

2017

Each shape is one facility

Each mark is one case


Blue = Non-normalized

Orange = Normalized

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▪ 1. Cost normalization

▪ Normalization has been central for clinicians to understand the “typical”

cost impact of their practice pattern variation

▪ However, it is not without its challenges – more than half of our team’s

time is spent on updating and optimizing the cost normalization logic

▪ Translating between “normalized” savings and “true” savings often not

straightforward


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▪ 2. Outcomes that matter

▪ We built standard outcome variables for all patients (mortality,

readmission, and patient experience) but those are crude indicators

▪ We want to build outcomes that truly matter

▪ The “give a darn” test

▪ Current additions include patient-reported functional improvements,

revisions, specialty specific complications


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Outcomes included now and in the near future

Total Joints

▪ Complications

▪ Surgical site infections

▪ DVT/PE

▪ CAUTI

▪ Hip dislocation

▪ Peri-prosthetic fracture

▪ Patient experience

▪ Patient reported outcomes

▪ Operative mortality O:E

▪ Any reoperation O:E

▪ Deep sternal wound

infection O:E

▪ Permanent stroke O:E

▪ Post-op length of stay O:E

▪ Prolonged ventilation O:E

▪ Acute renal failure O:E

▪ Hours in ICU

▪ Hours in OR

▪ Hours on ventilation



▪ In-hospital mortality O:E

▪ Acute kidney injury rate

▪ Non-elective CABG rate

▪ Post-PCI bleed rate

▪ Revascularization rate

▪ Stroke rate



CABG PCIAll Patients

▪ Readmission O:E*

▪ Mortality O:E

▪ Length of stay O:E

*O:E observed to expected ratio; indicates use of risk model

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▪ 3. Appropriate comparisons

▪ DRGs are not the way clinicians view the world

▪ Desire to stratify in a more clinically intuitive way

▪ We started with administrative data (DRGs, ICD Procedure and

Diagnostic Codes, CPTs) but went deeper as necessary


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Sample cohorting enhancements

• Total joint replacements

• Hips, knees separate

• Fracture separate

• Appendectomy

• Peritonitis separate

• CABG, PCI

• Risk of mortality from

clinical registries

• Vaginal Delivery

• Para count

• Spine Fusion

• Number of levels fused

Administrative Data Only Supplementary Data

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▪ 4. Practice pattern drillability

▪ To simplify explorations of total cost per case differences down to

component practice drivers, we developed a multi-layered taxonomy


Level 2

Level 1 (Major Activity Group)

Level 3

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Surgeon 1 Surgeon 2 Surgeon 3 Surgeon 4 Surgeon 5 Surgeon 6

Taxonomy exampleProvider’s avg

cost/case for this

item

System avg

cost/case for this

item

Avg cost/case of a

low-cost group of

physicians (“reference

group”) for this item

The greater a surgeon’s cost for an item than

the reference group, the darker the blue

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▪ 5. Volume of data

▪ 1 row per chargeable activity per patient stay = ~100M rows for 2 years

▪ 1 column per quality metric per patient plus additional identifying

information (surgeon, facility, etc.) = ~50 columns

▪ Total data size around 25GB; not something for excel!


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2. Developing credibility and transparency

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Better

What did we find when we put it all together?

Unilateral Total Knee Replacement

2016-2017

Surgeons with >75 cases/yr


Composite Outcome Score includes:

Readmissions

Complications

Patient experience

Patient reported outcomes

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The link to our financial challenges

Unilateral Total Knee Replacement

2016-2017

Surgeons with >75 cases/yr


System average across all surgeons

Estimated Medicare direct cost

coverage

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A. Visible down to the surgeon level across the organization

B. Visible at the surgeon level within a department but not across the

entire organization

C. Visible at the surgeon level only to an individual surgeon

Audience question:

How transparent would you make the value analysis

information just described?

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• Unilateral Total

Knee

Replacement

• 2017-2018

• Surgeons with

>75 cases

• Direct variable

cost only

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3. Supporting change

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Cumulative impact of practice variation –

Total Knee Replacements

Major Activity

Group

Low Cost Practice Cost/Case High Cost Practice Cost/Case

Implant Vendor A $3,118-3,472 Vendor B $4,300

Supplies 1-2 boxes plain bone

cement

$130-190 Multiple boxes of

antibiotic cement

Up to $900

OR/Anes Average OR time 82

minutes

$1,525 Average OR time 160

minutes

$2,534

Room/board Median LOS 1.3 days $500 Median LOS 3.2 days $1,337

Pharmacy NSAID, TXA, ABX $100 Tisseel + Exparel Up to $800

Therapy 1 session, PT only $150 Mult sessions, PT+OT $450

Imaging No inpatient imaging 0 X-ray and ultrasound $150

Total ~$5,600-5,900 ~$10,700-11,000

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Service

Line Admin

Leader

Practice

Change

Content

Support

(Various)

Project

Support

(PI/OE)

Data

Clinical

Champions

Guidance (i.e.,

pharmacy, supply

chain, finance, etc.)

Design new care

processes for

complex initiatives

Own improvement

work & lead

engagement with

caregivers locally

Champion initiatives,

lead by example &

dialogue with reluctant

adopters

Executive Leadership Develop culture of

improvement,

allocate resources

Clinical Champions

Inform & guide data

definitions, identify

meaningful outcomes,

validate data

From data to change

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Impact Example: Primary Total Knee Replacement

Cost

Outcome:

Readmissions

43 Trends in cost index for ALL VOA cohorts over time by region

PSJH

System

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❑ Collaborate with physicians on meaningful cohorts and metrics

❑ Incorporate shoulder to shoulder chart reviews to supplement data tools

❑ Understand areas of clinical judgment

❑ Socialize the work and approach until it is a part of your organizational vocabulary

❑ Accept feedback

Keys to success in accelerating value improvement

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❑ Data availability, reliability, and action-ability• The hardest questions require deeper dives, which require resources and time

• Changes in financial systems sometimes hinder year-to-year comparisons

❑ Alignment and accountability• How can local medical directors become skilled at value improvement work?

• How can a local hospital get its clinicians to agree that cost of care is also their problem?

❑ Operational support• How to make sure all local teams have visibility to best practice

• Complex interventions require broad teamwork from operations leaders

• Competing priorities for local PM/PI work

Barriers remain that PSJH continues to address

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Questions?

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