Health systems get on board with cutting the costs of care

  • Article by: REED ABELSON , New York Times
  • Updated: May 23, 2012 - 10:17 PM

Giselle Fernandez is only 17 but she has had more than 50 surgeries since she was born with a rare genetic condition. She regularly sees a host of pediatric specialists, including an ophthalmologist, an endocrinologist and a neurologist at UCLA Health System. Her care has cost hundreds of thousands of dollars so far, and she will need special treatment for the rest of her life.

While UCLA Health System has long prided itself on being at the forefront of treating patients like Giselle, it is now trying to dramatically lower the cost of providing that care. By enrolling young patients with complex and expensive diseases in a program called a medical home, the system tries to ensure that doctors spend more time with patients and work more closely with parents to coordinate care. The program has cut emergency-room visits by slightly more than half.

The effort is part of a much broader ambition by UCLA Health System to reduce its costs by 30 percent, or hundreds of millions of dollars, over the next five years, according to Dr. David T. Feinberg, the system's president.

"We have definitely found religion," Feinberg said.

After years of self-acknowledged profligacy, hospitals, doctors and health insurers say there is an unprecedented effort underway to bring medical costs under control. Their goal is to slash the rate of growth in the nation's $2.7 trillion health care bill by roughly half to keep it more in line with overall inflation.

Private insurers, employers and government officials are providing urgency to these efforts, and the federal health care law passed two years ago helped accelerate them.

Many observers say that even if the Supreme Court decides next month to declare the entire law unconstitutional, the momentum is likely to continue.

"Regardless of what happens to the law, the market will force the system to become more efficient," said Paul Keckley, executive director of the Deloitte Center for Health Solutions, a research arm of the consultant Deloitte.

The drive to lower costs is resulting in numerous initiatives. UCLA Health System is scrutinizing its use of imaging performed on patients in the cardiothoracic intensive care unit. Over the last year, the average number of X-rays per patient each day was reduced to two from 10.

UCLA Health System is not alone. The Cleveland Clinic, another medical powerhouse that has little difficulty attracting patients and demanding high prices, is trying group visits for diabetic patients so more people can be seen at a lower cost. The clinic has started reminding its surgeons about the $400 price of a unit of blood as a way of discouraging unnecessary transfusions, which along with other changes in patient care last year helped save $4 million.

'Driving the value equation'

The clinic's medical residents also can no longer order as many expensive tests as they want.

"What we're talking about is driving the value equation," said Dr. Delos Cosgrove, chief executive for the clinic.

Many of those involved say the impetus should come directly from hospitals and doctors.

"The medical community needs to transform care," said Dr. Thomas Simmer, the chief medical officer of Blue Cross Blue Shield of Michigan, the state's largest insurer.

Blue Cross estimated that by collaborating with Michigan hospitals to share best practices, it achieved savings of $233 million over three years.

Despite the flurry of activity, many caution that these efforts may not succeed in saving money. Many programs that have already been tried failed in the end to reduce costs or improve care. And there are still many people within the industry who are wedded to the status quo, said Dr. Michael Cropp, chief executive of Independent Health, an insurer in Buffalo, N.Y. Cropp has been vocal about the need to address rising costs.

"The mind-set shift is beginning, albeit too slowly," Cropp said.

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