By Sam Wertheimer
My research on cost measurement in health care has shown me that physicians can improve the value of care through better collaboration with financial managers.
Financial managers include business analysts, supply and equipment purchasers, operations specialists, and human resources staff. These personnel plan budgets, monitor spending, hire personnel, and report financial performance to top management and external stakeholders. Despite the vital role these staff members play in supporting clinical operations, financial managers are often disconnected from front-line clinicians.
At the same time, those front-line clinicians are often disconnected from the finances. Evidence of this can be found in a recent study showing that posting prices next to lab test options changes physician behavior. In this study cost-conscious physicians ordered significantly fewer tests.
Bridging this disconnect is critical. Physicians should be able to discuss business decisions, like purchases of the supplies they use or hiring of personnel they work with, with financial managers. During these discussions physicians can provide details regarding the clinical implications of the business decisions while the financial managers can provide further insight regarding revenue and expense implications. This communication facilitates balance between costs and outcomes and optimizes patient value.
An example of this occurred recently at one of the hospitals where I am studying health care cost management. At this hospital, physicians and financial managers teamed to discuss purchases of surgical supplies for total knee replacements. They focused on knee replacement equipment because this component of care was highly variable – both in cost and in clinical practice. The discussions proved fruitful when the group found that standardizing the set of available hardware the hospital could order larger supply batches and no longer needed different sterilization techniques for each different type of equipment. Quality was maintained despite the decreased equipment options because, with fewer choices, clinicians could more readily share advice and best practices, and this increased operating teams’ skill.
Another example of improved communication occurred at a hospital where cost-conscious plastic surgeons discussed hiring clinical support staff with human resources managers. This group compared financial models to clinical outcome predictions and found that hiring one new ancillary provider would likely improve quality, however, this change would result in increased costs per patient. However, the surgeons and financial managers also found that hiring multiple assistants could effectively streamline care processes to facilitate both lower costs per patient and improved quality.
These examples show that motivated physicians in various clinical settings are equipped to communicate and collaborate with financial managers to improve patient care and value. Becoming aware of actual care costs erases the current divide – then it’s just a matter of reaching out.
Sam Wertheimer is a Research Associate at the Harvard Business School. There he focuses on identifying opportunities to improve health care value through accurate cost measurement.