How three health systems are tackling waste

For Bellin Health, a member of the Institute for Healthcare Improvement Leadership Alliance since its inception six years ago, the checklist woke up leaders to the issue of diagnostic errors, said Jim Dietsche, chief operating and financial officer of the Green Bay, Wis.-based system.

Eliminating diagnostic errors can save the healthcare system about $100 billion a year through avoiding unneeded testing, wrong treatments and litigation costs, according to the alliance.

Each year, Bellin sets a goal of spending about $6 million to $8 million less than the previous year through waste reduction. The goal is maintaining Bellin’s operating margin at around 4%.

Frontline staff are encouraged to come up with solutions where waste can be reduced in their departments. Once physicians became a part of alternative payment models that showed them their cost and quality data regularly, they got more interested.

Frontline staff are also driving the battle against waste at Northwell Health. For instance, the 12-bed surgical intensive-care unit at Lenox Hill Hospital in New York is working on cutting spending broadly across the unit by being transparent about how much services and supplies cost. Now, the 20 most-expensive supplies in the supply closet are labeled with their price. The idea is to encourage staff to be more conscious about how many supplies they take at a time, perhaps taking just one catheter instead of three now that they see the price, said Dr. Daniel Baker, medical director of Lenox Hill. They are still acquiring data to calculate the initiative’s impact.

The work on the unit regarding Tylenol is leading to cost savings. After laying out the price differences between intravenous Tylenol, which averages about $30 per use, compared with 5 cents to 30 cents for the pill form, staff educated themselves about appropriate use of IV Tylenol. They found they were using it when it wasn’t necessary, such as when a patient has a fever. Since September, they have decreased the use of IV Tylenol, leading to roughly $730 in savings each week.

Baker said he’s working on how Lenox Hill can spread the lessons the surgical ICU has learned to other units.

Northwell typically starts small on new initiatives to see how well they work before using them broadly, said Dr. Mark Jarrett, chief quality officer for the system.

Scaling practices that work is the hardest part about working on waste, said Dr. Joanne Roberts, chief value officer at Renton, Wash.-based Providence, which has 51 hospitals.

Rather than calling it waste, Providence calls it variation. The work involves finding ways to standardize care more. One way is by having centers of excellence perform highly complex procedures instead of at sites across the system.

Roberts said there is evidence that patient outcomes will be better, and it will also bring down costs because all the resources for those services can be centrally located. It may also show perhaps too many doctors have been hired for a procedure, she said.

Providence didn’t estimate what the cost savings would be for the work, but Roberts said the system is starting with heart surgeries to see how it goes.

“Ten to 15 years ago the most lucrative thing a hospital could do was heart surgery. It’s not true anymore,” she said. “Many of our heart programs actually lose money just because reimbursement has slowly changed and care models have changed.”