Bending the cost curve: time series analysis of a value transformation programme at an academic medical centre

Abstract

Background: Reducing costs while increasing or maintaining quality is crucial to delivering high value care.

Objective: To assess the impact of a hospital value-based management programme on cost and quality.

Design: Time series analysis of non-psychiatric, non-rehabilitation, non-newborn patients discharged between 1 September 2011 and 31 December 2017 from a US urban, academic medical centre.

Intervention: NYU Langone Health instituted an institution-wide programme in April 2014 to increase value of healthcare, defined as health outcomes achieved per dollar spent. Key features included joint clinical and operational leadership; granular and transparent cost accounting; dedicated project support staff; information technology support; and a departmental shared savings programme.

Measurements: Change in variable direct costs; secondary outcomes included changes in length of stay, readmission and in-hospital mortality.

Results: The programme chartered 74 projects targeting opportunities in supply chain management (eg, surgical trays), operational efficiency (eg, discharge optimisation), care of outlier patients (eg, those at end of life) and resource utilisation (eg, blood management). The study cohort included 160 434 hospitalisations. Adjusted variable costs decreased 7.7% over the study period. Admissions with medical diagnosis related groups (DRG) declined an average 0.20% per month relative to baseline. Admissions with surgical DRGs had an early increase in costs of 2.7% followed by 0.37% decrease in costs per month. Mean expense per hospitalisation improved from 13% above median for teaching hospitals to 2% above median. Length of stay decreased by 0.25% per month relative to prior trends (95% CI -0.34 to 0.17): approximately half a day by the end of the study period. There were no significant changes in 30-day same-hospital readmission or in-hospital mortality. Estimated institutional savings after intervention costs were approximately $53.9 million.

Limitations: Observational analysis.

Conclusion: A systematic programme to increase healthcare value by lowering the cost of care without compromising quality is achievable and sustainable over several years.

Keywords: cost-effectiveness; health services research; hospital medicine; management.