How we have managed to add some clarity to the cost quality debate
One of the recurring themes throughout our work with hospitals worldwide, is how to provide practical and measurable insight into the cost and quality debate. This is because much greater clarity is needed when it comes the discussions about how to improve quality of care and at the same time reduce costs.
In the past, we have relied on anecdotal evidence to justify a changing clinical practice or treatment in the belief that cost savings will follow. The link between quality and cost has been notoriously difficult to prove.
At the same time, finance directors are under pressure to make savings the clear often leading them to cut services and staff. This can often mean a head-on collision with the founding principles of healthcare and the clinicians who deliver it.
In the UK, the Care Quality Commission challenged us to develop a standardised system for demonstrating the immediate impact on daily operating costs. After months of research, we have created a new, ground-breaking model called the Harris Unit. This provides a sophisticated but accessible ‘profit and loss’ a single page which shows the economic impact (positive and negative) of the quality of care across a hospital.
For the first time we can establish the level of a possible cost saving from investment in quality improvement and allows monitoring over time. The Harris Unit helps quantify not only the overall achievable cost saving but also which area and intervention to target to get the most impactful cost saving. In addition, it allows cost benefit tracking of remedial interventions and enables executives to work out return on investment to better allocate scarce resources and interventions.
In the UK, a Harris Unit is equivalent to £100,000 and it enables executives to isolate service lines within the organisation which are causing operational pressures from poor quality and target remedial action – as well as those that may be saving cost (to replicate best practice).
We know there are certain areas in clinical care where avoidable costs and therefore (in)efficiency can be identified. The Harris Unit analyses the driving factors behind these, including for example: clinically risk-adjusted surgical mortality and complications (broken down by specialty); specific surgical complication rates against established clinical norms -notably those which significantly impact upon length of stay; and specific medical and nursing-based performance triggers indicative of avoidable harm.
By using the Harris Unit targeted interventions in specific service areas are more manageable than organisation-wide strategies and yield significant and immediate savings. Providers who have reinvested a proportion of cost savings from improved quality outcomes back into frontline services have reinforced a cultural shift towards quality improvement and sustainable cost savings.
Analysis at one hospital has shown that although the clinical cost-effectiveness of it orthopaedic department has been very good over time, performance was less good when active monitoring was not taking place. The Harris Unit has therefore proved that continuous monitoring is necessary if relative cost savings are to be made.
