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Of the many policy battles being fought in the United States, few are as important to the long term future of the country as that over healthcare.Simply put, if we don’t find a way to slow down the growth of healthcare costs, we’re eventually going to drown in debt. Increasingly expensive treatments, longer lifespans, chronic illnesses, and demographic trends all but guarantee it.
The passage of the Affordable Care Act was the first big effort in many years, and turned the issue into a political live wire, making progress even more difficult. Part of the effect has been a movement towards hospital consolidation as small practices are pressured and bigger systems hope to gain efficiency through scale.
But bigger hospitals are only the beginning. For costs to come down, hospitals need to embrace innovation in how they do business, and start to change some of the behaviours that have made healthcare more and more expensive without making it any better for patients.
We spoke to Dr. Delos Cosgrove, the CEO of the Cleveland Clinic. In the Presidential debates, both Barack Obama and Mitt Romney mentioned the hospital as a model of innovation and of how to bring healthcare costs down.
“You’ve seen by the recent shout-outs we got in the Presidential debates that we’re being looked at a model of how to go forward,” Dr. Cosgrove said, “And I really think our model is our secret sauce.”
98 per cent of the people that request a same day appointment at the Cleveland Clinic get one, and there were over one million such appointments last year. Focusing on costs doesn’t have to come at the expense of the patient.
Changing the incentives
So what exactly do they do? One of the biggest issues in healthcare in the United States has been an emphasis on quantity of care rather than quality, as insurance companies and doctors often get paid more for expensive tests and procedures. That’s led to a great deal of inefficient, expensive treatment.
The Cleveland Clinic’s solution? All doctors are salaried and on one year contracts. “We have no financial incentives to do more or less. We just try to look after what the needs are for a patient because it doesn’t make a difference to us personally,” Dr. Cosgrove said. “We all have one year contracts, there’s no tenure, and we have annual professional reviews. I don’t know of another institution that has annual professional reviews and one year contracts. In the annual professional review we go over all individual contributions to the organisation, and that contributes to our decisions about what we do about salary or whether we reappoint or don’t.”
Doctors focus on what’s best for the patient, rather than what gets them paid, leading to fewer unneeded tests and surgeries. They’re evaluated on the quality of care rather than earnings. When you can have cheaper care that’s also better for the patient, it’s clear that there needs to be some change in the industry.
Those one year contracts go all the way to the top level. Dr. Cosgrove’s had 37 one year contracts in his time at the hospital. “You stop and think, almost every major business I can think of has annual reviews. And healthcare traditionally has not,” Dr. Cosgrove said. “You got privileges at a hospital and they were yours for life unless you committed murder or something. So it’s very seldom that people look at the qualities and the outcomes for each individual.”
The data revolution
Part of changing the focus and how people are evaluated is actually having the data to do so. That’s an area where hospitals can improve on cost and quality. “The more we measured, the more we found problems,” Dr. Cosgrove said. “And when you found a problem you could really sort of screw down into it and find out what the root of it was and begin to deal with that particular issue. And what resulted is that we got better and better as we went along.”
Now, every part of the hospital system transparently publishes its outcomes, adds more data every year, and continually works to get better. Cost is even easier to measure, and it needs to start to be a part of every decision. “Cost has been looked at what you get paid to do something, not what it costs to do it,” Dr. Cosgrove said.” So what we’ve done, over the years we’ve begun to understand how much it costs to do each one of our procedures. We’ve asked each of our institutes to go and look at the cost of their number one or two or three things they do. The urologists looked at prostatectomies, they looked at the cost of the sutures, how many instruments they had on the table, how long the patients stay in the recovery room, etc. and they were able to take 25 per cent out of the actual cost of what they did.”
Ending the Departments of Surgery and Medicine
One of the keys to what the Cleveland Clinic’s done is not being afraid to change structures that have been around forever. Just because something’s persisted, doesn’t mean it’s good, especially in an industry that’s slow to change.
“Most hospitals are organised around the department of surgery, the department of medicine, the department of pediatrics. There’s essentially a guild system for whatever your profession is. And what we said was, wouldn’t it be nice to organise a hospital around what a patient needs? Novel idea, right?” Dr. Cosgrove said. “If you’ve got a headache, you don’t know whether you need to see a psychologist, a neurologist, or a neurosurgeon. So let’s put everybody who deals with a neurologic system in a neurologic institute, and we’ll have one head. So if you go in for your headache you can see, there in one location, everybody who you could potentially need to see. And they talk to each other, they’re physically proximate to each other.”
It’s more efficient and less costly because patients spend less time in the hospital bouncing around between departments. It was a huge change. Hospitals have been organised around departments of surgery and medicine for years, and people were nervous at first. Rather than slow down, Dr. Cosgrove sped it up.
“The whole organisation was anxious. We started one by one to move people to various locations, and finally everybody was so nervous that we said we’re going to do the whole thing at once. In one year we changed the whole organisation, so there’s no more department of surgery, no more department of medicine, it’s all by institutes,” Dr. Cosgrove said. “It wasn’t beating guys over the head. Nobody came to me and said that’s a terrible idea, not one person, but everybody was anxious. And nobody has come to me and said we have to go back. So everybody could see the value of doing it.”
Cutting costs is also about doing little things, and being physician led has helped the Cleveland Clinic do that. “We also put a price tag on supplies in the operating room,” Dr. Cosgrove said. “In the past, if a doctor thought he needed a suture he would just grab it, open it, and throw it away. Now, they see the price.”
As a former surgeon, Dr. Cosgrove knows how they behave. “We didn’t know what things cost, so we’d just say, ‘give me one of those.'”
Where are the copycats?
So if this has all been so successful at the Cleveland Clinic, why haven’t other hospitals emulated it? Dr. Cosgrove told this story to illustrate how entrenched certain habits are.
“Two years ago, I was invited to the White House and I’m there with 9 other CEOs of hospital systems, you know there’s the New York Hospital System, Columbia, Penn, Hospital CEOs from all over the place. Everybody’s given three or four minutes to tell their story about what they can do to improve healthcare delivery. I’m the last guy to talk and I described our system, how we’re integrated and how we’re all employed. And everybody says, ‘Oh we couldn’t do that.’ I said, ‘Wait a minute, guys. How many of you would like to have that system?’ Everybody raised their hand. So the point is, that we’re entrenched in a different system. We’re going from an individual sport ot a team sport, and getting everybody to change their headspace is a big deal.”
We’re only at the beginning of what’s going to be a long period of change for the healthcare industry. The Affordable Care Act hasn’t even been fully implemented yet. Hospitals either need to be proactive about changing, or they’re going to be forced to.
“I think the pendulum is moving fast,” Dr. Cosgrove said, “it’s really amazing how fast things are changing.”