Adding clarity to the cost-quality debate in healthcare

One of the recurring themes throughout our work with hospitals worldwide, is how to provide practical and measurable insight into the cost and quality debate. This is because much greater clarity is needed when it comes the discussions about how to improve quality of care for patients and at the same time reduce costs.

Intuitively we know - and many commentators have expressed the view - that the path to lower cost is also the path to safer care. However, the link between quality and cost has been notoriously difficult to prove with hard numbers. In the past we have had to rely on anecdotal evidence to justify a change in clinical practice or treatment in the belief that cost savings will follow. 

At the same time, in a world where finance directors are under constant pressure to make savings, the clear choice is often simply to cut services and staff. This can mean a head-on collision with the founding principles of healthcare and the clinicians who deliver it.

In the UK, the Care Quality Commission challenged us to develop a standardised system for demonstrating the immediate impact on daily operating costs. After many months of research, we have created a new, ground-breaking model called the  Harris Unit. This provides a sophisticated but accessible ‘profit and loss’ for any hospital: a single page which shows the economic impact (positive and negative) of the quality of care across a hospital. This is designed to profile the whole organisation - not just cherry-pick specific procedures or diagnostic groups.

For the first time we can establish the level of a possible cost-saving from investment in quality improvement and monitor this over time. The Harris Unit helps quantify not only the overall achievable cost saving but also which area and intervention to target to get the most impactful cost saving. In addition, it allows cost-benefit tracking of remedial interventions and enables executives to work out return on investment to better allocate scarce resources and interventions.

In the UK, a Harris Unit is equivalent to £100,000 and it enables executives to isolate service lines within the organisation which are causing operational pressures from poor quality and target remedial action - as well as those that may be saving cost (to replicate best practice).

We know there are certain areas in clinical care where avoidable costs and therefore (in)efficiency can be identified. The Harris Unit analyses the driving factors behind these, including for example: clinically risk-adjusted surgical mortality and complications (broken down by specialty); specific surgical complication rates against established clinical norms - notably those which significantly impact upon length of stay; and specific medical and nursing-based performance triggers indicative of avoidable harm.

By using the Harris Unit, targeted interventions in specific service areas are far more manageable compared to organisation-wide strategies, and yield significant and immediate savings. Providers that have reinvested a proportion of cost savings from improved quality back into frontline services have reinforced a cultural shift towards quality improvement and sustainable cost savings - this time with the support and engagement of the clinical professionals delivering the care.

Analysis at one hospital has shown that although the clinical cost-effectiveness of its orthopaedic department has been very good over time, performance was less good when active monitoring was not taking place. The Harris Unit has therefore proved that continuous monitoring is necessary if relative cost savings are to be made.