The Journey to the Cost Per Unit of Care

Jan 21, 2020

Kate Othus is the Founder and President of DataDx and DataDx Consulting. Prior to launching DataDx, Kate worked side by side with physicians as a practice CEO and Administrator for various specialty groups. Kate then transitioned to healthcare business consulting, where she developed a high performing consulting team to help serve the private practice market. As both a Practice Administrator and a Healthcare Consultant, Kate has witnessed first-hand the struggles clinics are up against when it comes to data management. She has seen time and again the challenges of making smart decisions with disconnected and often outdated and error prone data. It was this need that drove Kate to launch a software company, DataDx, with a group of other healthcare and engineering experts.

Kate spent five years as an adjunct professor at Oregon Health Science University (OHSU). During her time at OHSU, Kate taught Strategic Planning and Organizational Development courses within the Healthcare Certificate and MBA program. Kate completed her MHA at Portland State University.

Most people will not purchase a product or service without knowing its cost upfront. Imagine walking into an Apple Store to purchase the latest iPhone only to be greeted by a salesperson who proceeds to ask a series of questions that have nothing to do with its features or price. Increasingly frustrated with the barrage of questions you finally respond, “I just want to buy an iPhone, can you just tell me how much it is?”

The above scenario isn’t far from how our healthcare system in the United States works. How many people can tell you how much they will pay when they walk into a doctor’s office with a broken foot? What about a hip replacement, or an annual preventative procedure that we shall not name? How is it possible that in an industry which constitutes almost 18% of the nation’s Gross Domestic Product we don’t have the data to tell us basic cost information (referred to as “cost per unit of care”). It’s no wonder the US healthcare system is the most expensive in the world and yet doesn’t deliver corresponding outcomes.

In order to understand the “why” of how we got here we would have to take a deep dive into the convoluted history of the creation of the U.S. healthcare system. Suffice it to say, it is a mix of the interplay between hospitals, physicians, insurance companies, the federal government, and, shockingly, the lack of input by the ultimate consumer of healthcare, the patient.

The question remains, how do we fix this? How do we truly drill down into the cost per unit of care? In an influential article titled “The Strategy That Can Fix Healthcare” published by the Harvard Business Review in 2013, authors Michael Porter and Thomas Lee presented a five-prong strategy that had the potential to revolutionize the way we think about healthcare in the United States. This article inspired deep conversations as to how physicians could truly embrace this strategy to the benefit of their patients and their own quality of life as they wrestled with how to practice in an increasingly complex regulatory and economic environment. Yet seven years after the article was published very little has changed, except that, shockingly, healthcare spending grew by another half percentage of GDP.

While I knew I couldn’t solve everything presented in the article, I believed there was something I could do to help. One of the 5 parts of the strategy Porter and Lee presented was to “Measure Outcomes and Costs for Every Patient.” Having spent my career working with physicians to help them build a sustainable business that enables them to focus on patient care and quality outcomes, I know that the data is often fragmented into different silos and not easily accessible. Not to mention, the data is messy, old, and not actionable.

After spending years and years and hours upon hours trying to build meaningful reports that paint a picture of where the business side of medicine is going, we discovered that the gap in the market was the lack of data specific to physicians. Today there are over 1 million physicians in the United States providing patient care. That’s an incredible amount of data not captured and understood. Going back to how Apple leverages their data to drive positive margins to their shareholders by simply predicting what the consumer can and will pay, we should be able to do the same with healthcare.

The big goal here is to dive into this under-served market and build data driven strategies related to the cost per unit of care. We can help disrupt the system in which we are all so frustrated with today. DataDx is working to solve the conundrum of determining the cost of a unit of care. Over the next several weeks the DataDx team will dive further into the various topics that drive the cost per unit of care and ways that practices can use data to define and control costs.

Your practice and your patients deserve DataDx!

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