Dr. Brent James has spent the better part of the last three decades looking for ways to make health care better and cheaper. Today, he is chief quality officer and executive director at the Intermountain Institute for Healthcare Leadership, and he has lots of examples of how he has done just that.
“Health care falls short of its theoretic potential,” James said as he opened the 2015 Mark McKenna Health Care Management Lecture, which is hosted by the Health Sector Supply Chain Research Consortium at the W. P. Carey School of Business. One way that it is manifested, James said, is in “massive” variation in clinical practices, meaning doctors doing the same procedure differently, even when patient circumstances are the same.
What causes variation in clinical practices? James explained two reasons. “One reason for variation is the continued reliance on the ‘craft of medicine’ notion that clinicians are stand-alone experts.”
Another reason for variation in clinical practices is complexity. “Complexity is the fruit of 100 years of clinical discovery,” James explained. “But as Dr. David Eddy said, ‘The complexity of modern medicine exceeds the capacity of the unaided expert mind.’” In other words, we have discovered so much about medicine that its practice has become too complicated for even the smartest clinician.
The problem is not, James explained, a lack of answers; we have lots of answers. It’s about executing on them. “We have a striking inability to do what we know works,” James said. “Systems that rely on human memory do what works 55 percent of the time.” Statistically, that’s just a little better than blind luck. That means, “there’s good left on the table because of the inability to execute.”
The answer to the problem of variation is mass customization — the same answer that put a Ford Model T in so many American driveways in the early 1900s. In the health care context, mass customization, James explained, means a “shared baseline.” That is best practice-based protocol that allows clinicians to “focus on that relatively small subset of factors that are unique for each individual patient, concentrating their most important resource — the trained human mind — where it can have the greatest impact.”
Just as mass customization allowed the Ford Motor Company to make a better car at a lower price, mass customization in health care allows clinicians to deliver higher quality care — and improved health outcomes — at a lower cost. “Nearly always, better care is cheaper care,” James said. “The Dartmouth Atlas (of Health Care) white paper concludes that the nation could reduce health care spending by 40 percent if Intermountain Healthcare was used as a benchmark.”
Better care is cheaper care
James ran his first test of mass customization in health care in 1991, in a randomized control trial assessing an Italian “artificial lung” versus a standard ventilator for acute respiratory distress syndrome. What James found was “significant variation in how doctors chose settings for a patient’s ventilator, even given the same patient circumstances. Different doctors set the ventilator differently; even the same doctor chose different settings for the same patient in the afternoon than in the morning.”
Research shows that the best human mind can consider at most about nine factors when making a decision, but there are some 40 different physiological variables that affect a ventilator setting, citing just one example. So mass customization, James said, “takes our most important resource — the doctor’s trained expert mind — and focuses it on a manageable subset of decision factors that have the greatest impact on the patient’s health.”
James and his team looked to the research for consensus on optimal ventilator settings to set a standard; they couldn’t find any. So by observing doctors in practice, James created a shared-basis protocol and built it into clinical workflows so settings were automatic unless the doctor changed them. That way, there was a feedback loop so the protocol could be continuously improved based on real-world application — and thereby reflect true best practices.
Doctors were not only encouraged to change the ventilator settings, but actually required to do so. “I cannot write a guideline that perfectly fits every patient, so we not only encourage but actually demand that clinicians vary their practices based on patient need,” James explained. Indeed, as it was used, the ventilator setting protocol changed dramatically — that’s the feedback loop.
The results were significant: the survival rate of patients on ventilators rose from 9.5 percent to more than 44 percent. At the same time, costs fell by 25 percent and physician time fell by 50 percent. Higher quality, lower costs, greater efficiency.
To survive the fiscal reality — reduce waste
A conservative estimate of the total value of unfunded federal Medicare obligations is $38.7 trillion. Given that fiscal reality, increasing efficiency — put another way, reducing waste — is imperative.
“There are broadly two approaches to surviving as a care provider in this environment,” James said. “One approach is to increase top-line revenue. Providers have been overheard talking about ‘riding the fee-for-service horse until it drops.’”
Another approach is to decrease bottom line costs — in other words, eliminate waste. “There are huge amounts of waste in the health care system,” James said, “which leads to spiraling prices that limit access to care. Over 50 percent of all hospital resource expenditure is quality-associated waste — recovering from preventable foul-ups, building unusable products, providing unnecessary treatments and simple inefficiency.”
But the opportunity to eliminate waste is significant. In terms of a health care provider’s fiscal stability, the key metric, James said, is net operating income — that is, margin. Reducing waste affects net operating income much more significantly than adding revenue. Adding one case increases net operating income five to nine percent on the revenue side, James said. But eliminating one case reduces net operating income by 100 percent on the cost side.
That is only true, however, in a fee-for-value model in which providers are paid for delivering positive health outcomes (including helping people stay healthy and out of the hospital). The benefits of reducing waste are not the same in a fee-for-service model in which providers are paid for every service they perform. “Fee-for-value is a dramatically strong system,” James said, “because the benefits of reducing waste accrue to the provider. Financial incentives drive efficiency.”
James shared several examples of how Intermountain Healthcare has reduced costs and improved care. In one, Intermountain aimed to move patients “upstream” in the care delivery chain — to reduce the number of patients in the hospital and emergency room and increase the number of patients in primary care. That lowers costs for the provider because a primary care visit is less costly than a hospital visit. And it improves patient health: the greatest single contributor to total health is personal behavior, and a primary care doctor is far better positioned to help a patient change behavior than an ER doctor is. Intermountain invested $22 per member per year to facilitate the new strategy, and saved $115.
In another example, Intermountain Healthcare aimed to reduce cost per case. In particular, Intermountain sought to reduce the use of post-operation antibiotics. Before the change, almost every patient who underwent surgery for a non-ruptured appendicitis received post-op antibiotics. Understanding that use of antibiotics was unnecessary in most cases, Intermountain implemented a protocol for non-ruptured appendicitis operations that did not include post-op antibiotics. Now, almost no patients receive antibiotics after that particular operation.
At the same time, Intermountain sought to standardize the use of tools during the non-ruptured appendicitis operation, using less expensive tools where possible. Before, the average operative supply cost per case was $760; today, it is $180. All told, Intermountain reduced the cost per non-ruptured appendicitis patient by $2,454. Add the savings generated by similarly changing protocol for other appendicitis surgeries, and the result is $1.3 million in savings for the hospital. “And it freed up beds for other patients,” James said. “Without reducing patient outcomes.”
The link between the quality and the cost of care is not just a financial benefit for health care providers like Intermountain; it’s essential for the health care system as a whole. “Without access, quality is meaningless,” James said. ”Accessible means affordable. Our mission is to deliver the best medical result at the lowest necessary cost.”
Doing that is decidedly not rocket science. Delivering higher quality care at a lower cost, James said, is not about the latest advances in genomics or biosensors or artificial intelligence. “We could get as much benefit as the next 30 years of biomedical research,” he said, “if we could just execute on the solutions we have today.”