Tracking the Elusive Cost Per Unit of Care
By Jessica McBurney, RN
While scrolling through your news feed it’s likely you’re running into articles discussing the issues facing healthcare today. Quite often people are debating healthcare costs; why they are so high and how it’s impacting healthcare delivery in today’s market. Articles such as “U.S. Health Care Gone Wrong- A Pictorial Guide Part Three: How Is the Cost of Health Care Driven Up?” provide excellent insight into the plethora of reasons for the ever-increasing cost of healthcare in the US. However, few are focusing on a very important and elusive metric for solving the problem, and that is the “Cost Per Unit of Care.”
While there is disagreement regarding how to solve the problem, government and health industry leaders agree with consumers that the rising costs of healthcare pose a problem that will be a challenge to correct. The answers seem to lie within value-based care and understanding the cost per unit of care. How can we begin to tackle the issue around cost of care when no one can tell you what it actually costs to treat a patient for a given condition in our current system?
VALUE-BASED CARE AND THE SHIFT AWAY FROM FEE-FOR-SERVICE
It’s important to understand why the cost per unit of care is so integral to the changes we’re seeing. As our healthcare system shifts away from the fee-for-service model and towards value-based care, providers and health systems find themselves tasked with providing high quality care within the constraints of a pre-determined price. Gone are the days of volume equals revenue. A recent study notes adoption of value-based models is increasing and more than one third of healthcare payments are now tied to value-based care. (1)
Providers must demonstrate they are maintaining or increasing the quality of care provided while reducing costs. So how does the cost per unit of care play into this? When you know how much it costs to provide care to a patient it empowers you to make more qualified decisions about your practice and revenue management. Understanding the cost per unit of care can be highly useful when determining budgets, setting fees, planning for contract negotiations, staffing decisions, and more. Having this information accessible to you and your practice can also help you identify redundancies, gaps in care, and bottlenecks. This information can tell you where pain points are that you may not have been aware of.
HOW DO WE GET THERE?
How can we deliver quality care with the least financial impact to both the patient and the health system? The first step is to determine your cost per unit of care. Easier said than done for most, but it is possible. There are a couple of different metrics you can use to determine your cost per unit of care, you can read more about that here.
When focusing on cost per unit of care, one can easily apply the direct cost of care – our overhead, however, understanding the true cost of care goes deeper than that. We know that at a minimum for an office visit to Primary Care there will be a front office staff checking the patient in, an MA or RN taking the patient’s vitals, rooming the patient and gathering health history and relevant information, a visit from the provider, some charting and documentation time, and then checking the patient out before they leave their visit. This is fairly standard for an office visit. However, once you determine the cost per unit of care, what it costs for each individual involved, and the processes to complete a patient visit, you can then break that information down further using Activity-Based Accounting and parlay that into staffing decisions.
INFRASTRUCTURE AND SETTING YOURSELF UP FOR SUCCESS
Are you staffing for success with value-based care?
Historically it was more cost effective to staff medical assistants under the fee for service model. With the shift to value-based care, staffing models have changed and a more diverse skill set among staff will encourage better coordination between care providers and better serve the patient. Now more than ever industry leaders are stressing the importance of taking social determinants into account. According to a recent study by Kaiser Permanente “a third of patients in the US frequently or occasionally struggle with social determinants of health, particularly housing, food, and transportation security.”(2) Providers are now being tasked with tracking even more data about their patients than ever before.
Which quality metrics are best for your practice?
Having appropriately trained professionals on staff who are equipped to manage and coordinate care with community organizations and other care providers across the care continuum will help to control patient outcomes and total cost. This positions your practice to receive incentivized earnings for meeting quality metrics. Understanding the cost per unit of care will guide you on which metrics best fit your patient population and practice. If you determine certain visit types or procedures are not cost effective you might consider focusing on other areas and collaborate with payors to develop a value-based agreement around those metrics.
Communication and Collaboration
Meeting quality metrics is more than just ensuring maximum revenue, it’s about the impetus behind the change to value-based in the first place; coordinated quality care for patients. And let’s not forget the ultimate goal in healthcare, keeping people healthy and, when they inevitably become ill, nurse them back to health as quickly as possible. The goal is to improve quality outcomes for patients while reducing costs along the way. In order to be successful your practice must adopt a collaborative mindset. Communication among care providers throughout the care process is key to ensuring patients receive high quality care while containing costs. Communication across departments and systems can be challenging. How can we achieve this when we live in a world of multiple disparate systems?
Standardization and Identifying Bottlenecks
One way to foster better communication and coordination is to standardize processes. When everyone follows the same repeatable process, delivering a similar outcome, it increases efficiency and reduces administrative waste. Standardization can improve patient care and free up providers to be more effective and focus on quality metrics by eliminating the noise from redundancies, ineffective processes, and bottlenecks. It also guarantees consistency, among other benefits which you can read more about in my other article here. Reviewing processes and identifying bottlenecks can also help you improve practice performance and reduce costs. For example, are the most appropriate staff members performing the right processes at the best time within the time span of a patient visit? Are there areas for improvement that will help reduce the cost per unit of care and maintain quality? Determining where bottlenecks may lay can also help identify areas that increase patient risk. Are there risk factors that increase between the transition from the completion of a procedure to follow up care? Are there social determinants that could increase the risk for complications, patients not adhering to medication guidelines, potential for readmission? All of which can increase the total cost.
WHY DATA MATTERS
By now you’re probably asking yourself how can we transition to a value-based system if we are unable to track and report true clinical outcomes? To get there, we need to be able to track the cost per unit of care that provides the outcome which leads to highest value. The key to achieve this is data. Until we can access and integrate data from disparate systems, we won’t be able to transform it into actionable information (at least not without a lot of time and manual data entry). Currently the challenge facing the healthcare system is how do we take Big Data, which is the ”abundant health data amassed from numerous sources including electronic health records (EHRs), medical imaging, genomic sequencing, payor records, pharmaceutical research, wearables, and medical devices”(3) and convert it into traditional databases that can be accessed easily and across different systems. Until we can integrate this data and truly begin to break down the cost per unit of care, and better understand how our interventions impact health outcomes, can we truly move to a value-based system?
DataDx is at the forefront of mastering this technology, merging accounting and EHR databases to create a real-time reporting that provides the insight needed to succeed within the framework of value-based care. With the power of data, practices can track costs, identify disparities in revenue cycle and their cause, breakdowns in process, opportunities for improvement, and have the leverage needed to work with payors to develop value-based models that work for their practice. Data is the access point to transitioning from fee-for-service to value-based care and doing it well.
Jessica has nearly a decade of diverse experience in the healthcare industry. As a registered nurse, Jessica knows firsthand the crucial elements to providing excellent patient care. In addition to her direct care experience, Jessica served as an administrator for an independent review organization where she received extensive training in LEAN methodology and operational efficiency. Jessica’s broad range of experience as a clinician, administrator, and LEAN practitioner has cultivated a unique firsthand understanding of the challenges that patients, providers, and payors face in healthcare today. Jessica received her Bachelor of Science in Biology from the University of Nevada, Reno, and her Associates Degree in Nursing from Columbia Gorge Community College. Contact Jessica at: firstname.lastname@example.org