The linchpin of Utah effort is a computer program with 200 million rows of costs for items like drugs, medical devices, a doctor’s time in the operating room and each member of the staff’s time. The hospital has been able to calculate, for instance, the cost per minute in the emergency room (82 cents), the surgical intensive care unit ($1.43), and the operating room for an orthopedic surgery case ($12). With such information, as well as data on the cost of labor, supplies and labs, the hospital has pared excess expenses and revised numerous practices for more efficient care. Harvard’s Michael Porter called the accomplishments “epic progress.”
The hospital began by looking at how much supplies cost — bandages, sutures, medications. Then it started tracing use of those items to individual patients. It added in labor costs, a more complicated question. Porter told the hospital to go into rooms with a stopwatch and time how long each staff member spends on each procedure and with each patient.
With its software, the hospital is also finding simple ways to improve outcomes and reduce costs. When doctors looked at their costs per day, they were stunned to see how much they were spending on lab tests. Each was cheap, $10-$20, but the total bill came to about $2 million a year. It turned out that 20-50% of lab tests were completely unnecessary, ordered by residents with no questions asked.
Classroom discussion questions:
- How can stopwatch studies be used in hospitals?
- Why is it so difficult to control costs in hospitals?