TDABC in Action at the University of Utah

Updated: Nov 5, 2018

What do the goods and services provided by the hospital system actually cost? The New York Times took a look into the University of Utah Health Care's journey to find the cost that goes into providing their product -- a care visit.

Hospital finance is a complex field. In nearly every industry, entities providing a product know what in great detail the cost incurred to provide a good. The cost data is used to identify inefficiencies that can be improved upon and plan "what if" analysis on future redesign efforts. The U.S. healthcare industry is different.

"Most businesses know the cost of everything that goes into producing what they sell — essential information for setting prices. Medicine is different. Hospitals know what they are paid by insurers, but it bears little relationship to their costs.

No one on Dr. Lee’s staff at the University of Utah Health Care could say what a minute in an M.R.I. machine or an hour in the operating room actually costs. They chuckled when she asked."

To find answers to their question, Dr. Vivian Lee and her team used a computer program to account for the detailed cost of items from drugs to medical devices, including the cost of a the medical staff's time involved in an operating room. In addition to the costs, the software recorded the patient outcomes as days in the hospital annd readmissions.

Using this cost and outcomes recording, the staff can see and compare each provider's cost and resulting outcomes with others in the department.

"The hospital has been able to calculate, for instance, the cost per minute in the emergency room (82 cents), in the surgical intensive care unit ($1.43), and in the operating room for an orthopedic surgery case ($12)."

Whats the point of knowing your costs and outcomes? The Univeristy used this information to revise their practices for more efficient and effective care. As hospitals continue to evolve to incorporate information technology, new tools and patient populations will ask for tools and care that fits their lifestyle.

"Dr. David A. Bull, chief of cardiothoracic surgery at the University of Utah. He and his colleagues asked what variables made a difference in costs and outcomes, hoping to improve both.

That led them to nine measures they called “perfect care,” the primary determinants of how long a patient stays in the hospital after surgery, which is a major contributor to costs and a harbinger of poorer outcomes."

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