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Putting a price on healthcare

Kai Ryssdal Oct 5, 2015
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A recent New York Times article chronicled one Utah hospital’s attempts to measure the costs of the treatment it provides to the community. Dr. Vivian Lee is the CEO of University of Utah Healthcare, and Marketplace host Kai Ryssdal talked to her about the initiative. 

 

On figuring out costs: 

 

We didn’t do so much intense stopwatch work, but we did cost out pretty much everything. So things like Band-Aids, supplies, we more or less know those costs. Pharmacy, we knew those costs. But some of the things we really did need to cost out in, in some detail, like what does it cost for every minute in the operating room, every minute in the ER, every minute in the MRI scanner, for example. And yes, we have been able to cost that out now. 

On how doctors reacted:

 

Well, you know, the doctors have been the most receptive, and the most curious, and the most eager to have access to the data. So unfortunately, we’ve never had the information to be able to be part of that solution. And so for example, the first set of data that rolled out for us here at the University of Utah was for total joint replacements: total hip replacements, total knee replacements. And our orthopedic surgeons got a hold of the data, and they were fascinated by it. They never knew, for example, that the different hip prostheses cost us about a 3-1 ratio from the most expensive to the least expensive. And then when we looked at patient outcomes, lo and behold, the patients had similarly great outcomes regardless of the cost of the prosthesis. So they could start to take that data and really figure out how to improve our practice. 

On going with the lowest price:

 

One of the concerns I have with all the attention that is being placed on cost is that we’re forgetting the most important part of the value equation, which is the quality and the outcomes. So what you really want to be talking about in this country in terms of health care is really delivering value. Just like in any other business, we need to deliver value in health care. 

On changes to medical payments mandated by the Affordable Care Act:

 

There’s no question that we have to think about changes in the way in which our payment structure rewards us, and we feel just as responsible as everyone for the rising healthcare costs. And so we wanna be part of that solution, and so in order to manage our business in that new way, we have to know our costs.  

 

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