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Efficiency and Quality in Health Care

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Title: Efficiency and Quality in Health Care


1
Efficiency and Quality in Health Care
  • Harvey V. Fineberg, M.D., Ph.D.
  • University of Wisconsin
  • 20 November 2006

2
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3
Efficiency and Quality
  • Meaning and measurement of efficiency
  • Relationship between efficiency and quality
  • Examples and reasons for inefficiency in health
    care
  • Strategies and examples to improve efficiency and
    quality

4
Meanings of Efficiency
  • Technical
  • Production
  • Allocative
  • Market
  • Health

5
Technical Efficiency
  • When no greater output can be achieved for a
    given level of resource input. Production occurs
    on the technical production possibility
    frontier.

6
Technical Efficiency
  • When no greater output can be achieved for a
    given level of resource input. Production occurs
    on the technical production possibility
    frontier.

Input A
Input B
7
Technical Efficiency
  • When no greater output can be achieved for a
    given level of resource input. Production occurs
    on the technical production possibility
    frontier.

Input A
Input B
8
Technical Efficiency
  • When no greater output can be achieved for a
    given level of resource input. Production occurs
    on the technical production possibility
    frontier.

9
Production Efficiency
  • Optimal combination of resource inputs (labor,
    equipment, supplies, etc.) to achieve a given
    output. Production is efficient if a given level
    of output is achieved at the lowest resource
    cost.

10
Production Efficiency
  • Optimal combination of resource inputs (labor,
    equipment, supplies, etc.) to achieve a given
    output. Production is efficient if a given level
    of output is achieved at the lowest resource
    cost.

Input A
Input B
11
Production Efficiency
  • Optimal combination of resource inputs (labor,
    equipment, supplies, etc.) to achieve a given
    output. Production is efficient if a given level
    of output is achieved at the lowest resource
    cost.

Ratio of Input Costs
Input A
Input B
12
Allocative Efficiency
  • Resources are allocated so as to optimize
    benefit to a population
  • Market Efficiency
  • Distribution of goods according to individual
    preferences
  • Competitive market marginal cost marginal
    price
  • Health Efficiency
  • Distribution of health resources to maximize the
    level of health in the population

13
Allocative Efficiency
  • When would market efficiency equal health
    efficiency? Among the assumptions
  • Complete and accurate information
  • No barriers to market access and exchange
  • Personal preferences (utilities) for health
    expenditures coincide with health improvements
  • Equivalent purchasing power across purchasers

14
Measuring Efficiency
  • Identifying all inputs
  • Pricing (resource cost) of each input
  • Identifying relevant outputs
  • Valuing the outputs (outcomes)

15
Outputs of Interest in Health
  • Element of service
  • Episode of illness or health condition
  • Overall health of an individual
  • Health of a community or society

16
Efficiency is not about
  • Just cutting costs
  • Enhancing revenues
  • Making the doctors life easier (rather than the
    patients life better)
  • Achieving justice

17
Quality and Efficiency
  • Efficiency, in terms of eliminating waste, is one
    dimension of quality in health care.
  • Quality, in terms of net benefits to health, is
    half of the equation for health efficiency.

18
Efficiency in Health
  • Efficiency is a relationship of value how much
    output of value (health benefit) per input of
    value (resource cost)
  • Focus on efficiency forces consideration of both
    sides of the value proposition benefits and
    costs
  • EFFICIENCY

19
An estimated thirty to forty cents of every
dollar spent on health care a half trillion
dollars a year is spent on costs associated
with overuse, underuse, misuse, duplication,
system failures and inefficiency.
2005
20
Expected Quality and Costs
Quality
Cost
21
Expected Quality and Costs
Quality
Cost
22
Why is Health Care Inefficient?
  • Payment for wrong outputs (units of service
    rather than care of illness or health outcome)
  • Financial incentives reward inefficiency
    (complications or re-admission)
  • Lack of price incentives to patients
  • Providers indifferent to induced costs

23
Why is Health Care Inefficient?
  • Insufficient attention to prevention and
    long-term results
  • Fragmented and uncoordinated delivery system
  • Lack of information on performance and quality
  • Dysfunctional competition rather than value-based
    competition

24
Making Anesthesia Better
  • Deaths from anesthesia decline
  • Early 1980s 1 per 10,000
  • Today 1 per 200,000
  • Malpractice claims, judgments, and fees decline
  • Proportion of malpractice claims targeting
    anesthesiologists 19727.9 20013.8
  • Proportion of malpractice claims closed with
    payment 1970s64 1990s45

25
Making Anesthesia Better
  • 1985 Anesthesia Patient Safety Foundation
  • Forum for health professionals, device
    manufacturers, regulatory bodies, and others
  • Patient safety newsletter
  • Seed grants in safety research
  • New technology
  • Pulse oximeter and capnometer
  • Redesigned machines, standardized practice
    guidelines, improved training programs, hospital
    safety committees

26
St. Johns Hospital
  • 866-bed, not-for-profit hospital and trauma
    center in Springfield, Missouri
  • 32 operating rooms and 45-room trauma center
  • 29,000 surgical procedures in 2005
  • 74,000 emergency department visits in 2005, 22
    of whom are admitted and comprise 20 of the
    surgical load

27
St. Johns Hospital
  • Problems (2002 analysis by E. Litvak)
  • Lack of flexibility in scheduling elective
    surgeries that produced unpredictable and
    excessive use of overtime
  • Mid-week peaks in surgery and resulting backup in
    admissions that often made it impossible for
    patients to have a bed on the appropriate floor
    and receive optimal post-surgical care

28
St. Johns Hospital
  • Solution (peak-flow management techniques
    operations research)
  • Set aside a single OR for overflowboth elective
    and unplannedsurgeries
  • Smooth the scheduling of elective surgeries
    across the five weekdays

29
St. Johns Hospital
  • Results
  • After smoothing elective surgery, the capacity
    for ED admissions rose from 647 (October 2004) to
    1100 (October 2005)
  • Excluding ICU, a 59 increase in inpatient
    capacity was realized without adding additional
    inpatient nursing beds
  • The number of OR rooms needed after 3 p.m.
    dropped by 45, and OR overtime declined to a
    record low level of 2.9

30
St. Johns Hospital
  • Results (continued)
  • Since 2003, surgical volume has increased by 33,
    and trauma surgeons experienced a 4.6 increase
    in revenue
  • Waiting time for emergent and urgent surgical
    cases after 3 p.m. was reduced by 45
  • Prior to smoothing, the rate of patient placement
    into the appropriate bed for orthopedic patients
    was 83 after smoothing, the rate of appropriate
    placement rose to 96

31
Strategies to Increase Efficiency
  • Improve outcomes (health benefits) without
    raising costs (i.e., without consuming more
    resources) or while saving resources

32
Strategies to Increase Efficiency
  • Improve outcomes (health benefits) without
    raising costs (i.e., without consuming more
    resources) or while saving resources
  • OR
  • Reduce costs without reducing benefits (health
    outcomes) or while improving health outcomes

33
Strategies to Increase Efficiency
  • Improve outcomes (health benefits) without
    raising costs (i.e., without consuming more
    resources) or while saving resources
  • OR
  • Reduce costs without reducing benefits (health
    outcomes) or while improving health outcomes
  • Get more value from every health care dollar

34
Strategies to Increase Efficiency
InnovationEvaluationDiffusionPerformance
35
Strategies to Increase Efficiency
  • Discover, design and invent technologies that
    provide more efficient solutions (direct savings
    and induced savings improved results)
  • Incentives for research and development of
    efficient technology and program design
  • Institutional innovation to bridge academic
    centers and technology creators and speed
    transition from research through prototype
    development and product availability
  • Payment for efficient solutions

36
Strategies to Increase Efficiency
  • Evaluate health outcomes and costs of
    technologies, care strategies, and providers
  • Assess resource costs and health outcomes as a
    routine part of care
  • Design information systems that serve patient
    records and can be used to evaluate patient
    outcomes and performance
  • Devise, test, and deploy evaluation alternatives
    to RCTs that are cheaper, faster and more
    directly relevant to different patient
    populations

37
Strategies to Increase Efficiency
  • Use evidence more effectively in decisions by
    care givers and patients (increase appropriate
    use decrease misuse and overuse)
  • Make information technology and decision-support
    systems more widely available
  • Develop uniform standards for health IT, provide
    financial resources to introduce and support IT
    systems, and mandate their use
  • Measure and make available to the public
    information on results and cost by physicians,
    hospitals, nursing homes, and health plans

38
Strategies to Increase Efficiency
  • Redesign care processes to reduce avoidable
    errors in care
  • Follow recommendations in series of IOM reports,
    from To Err is Human (1999) and Crossing the
    Quality Chasm (2001) to Preventing Medication
    Errors (2006)
  • Systems approach, with many interacting parts
  • Safer design, bar coding and labeling

39
Strategies to Increase Efficiency
  • Train health professionals to improve quality and
    practice efficiently
  • Educate jointly across the several health
    professions to provide comprehensive care to
    patients
  • Regard as core professional competencies the
    ability to evaluate evidence and develop and use
    practice guidelines
  • Increase use of simulation training

40
Strategies to Increase Efficiency
  • Enhance value-based competition for health care
    dollars
  • Reduce barriers to inter-state health insurance
    competition among health insurers
  • Pay for episodes of illness or periods of
    managing patients rather than for procedures
  • Provide feedback on performance to providers and
    to patients

41
Strategies to Increase Efficiency
  • Give providers financial incentives to increase
    value
  • Pay for performance and reward high-value
    providers
  • Pay for prevention
  • Pay for management of chronic conditions and
    coordination across hospital, nursing home, and
    community-based care
  • Couple payment to evaluation
  • Stop paying for hospital-acquired infection

42
Strategies to Increase Efficiency
  • Give patients financial incentives to increase
    value
  • Income-related co-payment and deductible
  • Reduce insurance premiums for healthy lifestyle
    choices
  • No deductible for preventive services
  • Lower co-payment and deductible for use of
    high-value providers

43
Strategies to Increase Efficiency
  • Use systems engineering methods to improve
    performance
  • Reduce variability
  • Optimize workflow
  • Enhance use of resources

44
Strategies to Increase Efficiency
  • Streamline administrative systems
  • Uniform insurance forms and procedures
  • Bulk purchasing cooperatives and competitive
    bidding
  • Reliance on information technology

45
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The Culture of Medicine
  • Professionalism Quality and Efficiency
  • From Autonomy to Responsibility
  • From Institution-centered to Patient-centered
    care
  • From My patients to All patients

48
Toward Improved Health Care
Efficiency Outcome per Cost Value
Quality and Safety Performance
Use and Non-Use Practice
Standards Guidelines
Evidence Clinical Research
Opinion Personal experience
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