The Kindest Cut: How One Hospital Lowered Costs by Making Doctors More Budget Conscious

To lower healthcare costs, it helps for doctors to know what medical services and supplies cost

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Give a surgeon the choice between a $5 silk stitch and a $400 staple to close up an incision, and he’ll choose the $5 stitch, right?

Not necessarily. The problem is, most surgeons never know that the stitch costs $5 and the staple costs $400. Traditionally, knowing the costs of a stitch or a catheter or a bone screw — or any of the thousands of other supplies used during surgeries — hasn’t been part of many doctors’ medical consciousness.

Health care costs, however, have grown too massive — topping $2 trillion a year – to continue doing things the way we’ve always done them. Conscientious medical providers have no choice but to confront cost issues or become guilty bystanders to the slow deterioration of America’s health care system.

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Meaningful change, however, can only come with knowledge. Believe it or not, most hospitals don’t know what it costs them to perform common procedures like removing a prostate.

But at the Cleveland Clinic, we’ve made it a point to know, asking our physicians to deconstruct the costs of their top three procedures — to record the price of sutures, count how many instruments were on the table, tag the devices on the shelf and record how long patients spent in post-anesthesia care. Once the details are in, it’s easy to see where to cut costs.

Three years ago, we challenged ourselves to save $100 million by focusing on how and what we buy to stock the hospital with needed equipment and supplies. The key was to meaningfully engage doctors. Now, as part of the purchasing process, dozens of doctors gather to discuss the merits of certain products: Which ones provide the best outcomes for patients? How many are needed? How much does it cost?

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Take, for example, nitric oxide, a drug commonly used in heart, lung and chest surgeries to keep tissues well-supplied with oxygen during the operation. When it’s effective, it’s very effective, but it doesn’t help all patients. When we realized we were spending $2 million a year on the drug, we drilled down to see who was using it and why. We found that doctors and OR staff did not have a standard protocol to guide them on when and how much to rely on nitric oxide; we had to educate them that if the drug didn’t work within a half hour of being administered, it won’t work at all, so repeated doses were wasteful. The result: nitric oxide use dropped by half, saving $1 million without any adverse effect on patient care.

That was one of the modifications made in the OR. But each hospital department is different. In some, price lists are taped to supply cabinets. In others, posters remind everyone to choose supplies carefully, stressing this message: “Without compromising quality, consider cost-effective alternatives.”

With these interventions, within a year and a half, we had already topped our $100 million goal; after three years we saved $155 million.

This isn’t solely about price, though. It can’t be. If nitric oxide is needed, doctors use it. In any of these discussions, the first determination is what is best for the patient, not the price of a product. And it’s the doctors who are making these decisions.

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Still, doctors showed some initial reservations, worried that price tags would trump their medical judgment. It also wasn’t unusual to hear doctors say, “The machine I’m standing next to in the operating room costs $300,000. Can fewer doses of nitric oxide really make that big of a difference?”

When we are able to show them that conservative usage of nitric oxide saved $1 million, they see that each physician’s decision does indeed make a difference. Medical judgment should be based on best practices, and in many cases, those are also the most cost-effective. As more physicians realize this, they are spurred to join the ongoing discussion. Physicians, after all, are evidence-based decisionmakers. By supplying doctors with supporting data, change will come naturally. And so will the savings.

2 comments
BobbyGvegas
BobbyGvegas

"...after three years we saved $155 million."

__

And how many suppliers subsequently had to lay people off, or go BK?

;)

The whack-a-mole aspect of much of this is problematic, no? As my mentor Brent James observed long ago, "every misspent dollar in our health care system goes into someone's paycheck." 

xzr56g
xzr56g

@BobbyGvegas no layoffs, no BK..  but jsut shave a few dollars off those outrageous multimillion dollar annual CEO/management salaries...  no harm done, and the big shots can still drive their Rolls Royces.