I read a great article today on improving healthcare quality — not in a clinical journal, but rather in The Journal of Healthcare Finance. The article, entitled “The Economics of Healthcare Quality and Medical Errors,” provides compelling evidence of what quality experts across industries have known for years: Quality lowers costs. That goes against what many have come to believe: that you get what you pay for, and if it costs more, it must be better quality. The data tells a different story and may be the impetus we need to reduce variation in healthcare.
First, consider this: The article says the cost of medical errors in the U.S. in 2008 approached $20 billion. The majority of those costs were associated with additional medical expenditures needed to treat the consequences of medical errors. The authors believe the total economic impact may be as high as $1 trillion annually — when you consider the costs associated with the loss of quality-adjusted life years (QALYs), a measure economists use to put a dollar value on one year of life lived in perfect health. Of course, the exact dollar amount is subject to debate, but regardless, it’s still a big number, not to mention the toll on human life. The estimates of people who die from medical errors (200,000 to 400,000 annually) and those seriously harmed (10 to 20 times that amount) has only risen since the To Err is Human report cast the nation’s attention on the problem nearly 20 years ago.
Johns Hopkins surgeon Marty Makary, M.D., says the problem of variation is not a new topic. He says one of the physicians who signed the Declaration of Independence, Josiah Bartlett, complained about the problem more than 200 years ago. Dr. Makary argues that greater transparency and more standardization around known best practices are key to improving how we deliver healthcare. During the McKenna Foundation lecture and symposium at Arizona State University (ASU) in April, Dr. Makary and a number of other physician executives who participated believe the problem is that many physicians do not view variation as a bad thing. One of the biggest technical and cultural challenges in healthcare is recognizing when variation is in the best interest of the patient, and when variation is unnecessary, and even lethal.
Dr. Makary shared a firsthand account that depicts the cultural challenge perfectly. He was assisting with a routine colonoscopy during which the attending physician discovered a polyp in the patient’s colon. The physician was not comfortable taking it out surgically and called upon a more experienced colleague for his opinion. The second doctor recommended removing the polyp endoscopically, which they could do immediately and in a minimally invasive manner. When the patient awoke, he was told that a precancerous polyp was removed and nothing more needed to be done.
The next day, Dr. Makary experienced almost the exactly same scenario, but this time, the attending physician chose not to seek a second opinion and preferred handling these cases surgically. The patient underwent surgery, had part of his colon removed, was treated for a healthcare-acquired infection and eventually sent home after enduring the more invasive, time consuming and expensive experience. Not knowing anything differently, the patient was satisfied. He was cancer free.
According to Dr. Makary, the chances of a patient experiencing the first or second scenario is just that — chance. Medicine is based on science, but decisions are often a matter of preference or opinion.
That’s not to say that there is not an art to medicine. One of the surgeons participating in the ASU event explained that he makes decisions every day based on the best studies he can find, but that he rarely treats a patient that matches the exact profile of the patients featured in the studies. He must base his decisions on both science and experience. That’s the value of training. But Dr. Makary and the other physicians contend that’s very different than personal preference.
Many of the physicians participating in the ASU event are working to bring similar thinking about necessary vs. unwarranted variation to supply chain. They want supply chain and IT professionals to help them link supply chain data on the products used in patient care with outcomes data that exists in electronic health records (EHRs) and product and patient registries. The problem is most hospitals and healthcare systems are not yet able to unlock that data. For example, the data challenges are hampering efforts by drug manufacturers Roche and Novartis to introduce outcomes-based pricing that links the cost of drugs to their ability to reduce hospital stays or prevent readmissions.
These kinds of ideas are just what the doctor ordered for those seeking to tie the cost of healthcare to the quality achieved. The technological challenges are not trivial, but they are also not insurmountable. What may prove much harder is changing a culture of autonomy and unwarranted variation that has plagued patients for centuries.
Karen Conway | CEO, Value Works
Karen Conway, CEO, ValueWorks
Karen Conway applies her knowledge of supply chain operations and systems thinking to align data and processes to improve health outcomes and the performance of organizations upon which an effective healthcare system depends. After retiring in 2024 from GHX, where she served as Vice President of Healthcare Value, Conway established ValueWorks to advance the role of supply chain to achieve a value-based healthcare system that optimizes the cost and quality of care, while improving both equity and sustainability in care delivery. Conway is former national chair of AHRMM, the supply chain association for the American Hospital Association, and an honorary member of the Health Care Supplies Association in the UK.
