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by Lynn McVey
I love a new year. I especially love a new even-numbered year so Happy New Year, 2014. I love writing my new year's resolutions. To make sure I accomplish this year's goals, I've resolved to gain 10 pounds and to start smoking. Joking!
If I was making resolutions for the healthcare industry, I would resolve to, "Act like an industry," "Operate like an industry" and "Work like an industry."
Most non-healthcare industries, like manufacturing, for example, follow those resolutions every year. Most other industries follow ISO (International Organization for Standardization) standards. DNV Healthcare, the new Joint Commission on Accreditation of Healthcare competitor, offers an ISO certification to hospitals that is very promising. Imagine if hospitals shared data, best practices and actually standardized this industry?
The statement "Every hospital is unique" has mislead us for years. The only uniqueness hospitals share is their unwillingness to believe they are not unique.
I recently sat on a panel of C-suite leaders and the person to my right introduced herself as the chief resource officer yet she didn't work in Materials Management/Purchasing. I used this as a real-time example of why we're in so much trouble today. Why don't hospitals standardize the names of job titles? Why don't hospitals standardize the annual performance evaluation? Why don't we all share the same policies and procedures? In fact, why don't we all share the same chargemaster, especially when charges are so illusory?
As an evidence-based CEO, I use external benchmarks for every metric. I particularly like to look outside the United States for external benchmarks. By international standards, the U.S. approach to healthcare is astronomically complex. Research suggests a sizable expense is traced to the higher administrative overhead required of such a complex system.
American economist Henry Aaron said, "Like many other observers, I look at U.S. healthcare and see an administrative monstrosity, a truly bizarre mélange of thousands of payers with payment systems that differ for no socially beneficial reason, as well as a staggeringly complex public system with mind-boggling administered prices and other rules expressing distinctions that can only be regarded as weird."
Gotta love that Henry's flair with adjectives!
An estimate for our unique payment practices is about 24 percent of the total healthcare cost. As if one could forget, Americans spent $1.2 trillion for healthcare last year, meaning we wasted about $288 billion because we insist on being unique.
As a self-proclaimed data diva, on my summer vacation, I love analyzing Medicare's annual healthcare expenditures by state. This summer, I found of all the categories, medical imaging has the highest spending variation. Here's a fun fact: In medical imaging, 10 states spend as much as all remaining 40 states, yet utilization remains steady at 70 percent. This means approximately 70 percent of the Medicare population in all states utilize medical imaging. However, 10 states are spending way more per Medicare beneficiary.
Ten of 50 U.S. states account for 36 percent (9,958,111) of Medicare beneficiaries, yet they spend 50 percent ($3.6 billion of the $7.2 billion) of the total Medicare imaging spending. We could reduce Medicare spending by an estimated $1 billion if this spending was reigned in. The obvious response should be, "Hurry up, let's make that happen!" But it's not. The response sounds more like, "cricket ... cricket."
I'll be surprised if anybody even asks me which 10 states are our excessive spenders. Sigh.
Lynn McVey serves as CEO and president of Meadowlands Hospital Medical Center, an acute care, 230-bed hospital in New Jersey
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