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How to improve healthcare quality to create better patient outcomes and reduce costs.

Did Your Investment In Quality Improvement & Infection Control Pay Off?

By John Shepard

Improving the quality of healthcare while reducing costs is paramount to US healthcare facilities. Through additional regulations spearheaded by the Centers for Medicare & Medicaid Services (CMS)[i] and the demand for quality transparency to customers; healthcare facilities are being driven to improve care while reducing cost. This has left healthcare facilities in demand to find ways to meet the regulatory requirements and not ruin their financial stability. To the rescue, the free-market with thousands of different medical devices or technology that promises to improve quality while reducing cost. However, according to a study out of 4 Johns Hopkins Hospitals, “hospitals have a financial incentive to reduce SSIs [infections], but hospitals should expect to see an increase in both cost and revenue.” While healthcare facilities are spending billions in IT and analytics, are they seeing the return on investment that they think they are?

Before starting a new or renewing an existing QI program, healthcare administrators want to see a business plan. Healthcare facilities tend to operate on narrow margins, and they can ill afford to invest millions in a losing proposition. However, the method utilized to calculate the financial impact of any QI program must be consistent with the perspective you are taking. For example, if a patient is discharged from a hospital 1 day earlier due to a QI intervention that reduces SSIs, then the insurance company will save one day worth of cost as they don’t have to pay the hospital. The hospital will also spend less on that patient (i.e. not incur additional cost) but the hospital will also eliminate the revenue that patient would provide for the 1 additional day. In this example, hopefully, it is clear that when evaluating the financial impact of a QI program, the calculation you need to make from an insurance or US government perspective is much different that the calculation you need to make from a hospital management or administrator perspective.

In the previously mentioned article from Johns Hopkins, the authors identified “An [e]quation to determine a change in profit due to an [SSI], assuming that payers will not reimburse for related 30-day readmissions the equation is used for all “i” SSIs. The results must be summed for all “i” SSIs to derive the total change in profit for the health system or hospital due to SSIs. ICU indicates intensive care unit and LOS indicates the length of stay.”[ii]