Efficiently prioritize care variation reduction opportunities

The first prioritization option is to use Advisory Board’s national-level cost savings data to identify CVR opportunities. If you struggle to access good cost data, or just want national prescriptive advice, this is the “easy button” approach.

By analyzing more than 20 million patient discharges (from over 450 hospitals), Advisory Board has quantified the potential of care variation reduction (CVR) to generate critically needed cost savings—while also improving care quality. What makes our analysis unique is that we based our cost benchmarks on top quality performers. (We have additional information on our methodology on pg. 8, but the key takeaway is that we measured quality based on an index of mortality, complications, readmissions, and length of stay).

The rank-ordered list of the top 30 CVR cost savings opportunities nationally is shown on the following page. The third column shows the cost savings that can be achieved if an average performing hospital improves to top-quartile quality performance.1 The final column shows the savings opportunity per patient—so you can adjust your estimated savings according to your facility’s volumes.

As you decided where to invest first, keep in mind that it’s not necessary to work down the list in rank order. Most organizations will end up tackling almost all of these conditions eventually. We recommend starting with conditions where you have the greatest provider buy-in and relevant expertise—even if they are at the bottom of this list. It’s important to earn some early “CVR wins” to generate goodwill, prove the potential of CVR, and build organizational muscle for CVR.

Our methodology for sizing CVR opportunity

Here is additional information on the methodology for our cost savings projections.

The analysis hinged on a comparison of quality and cost performance of “top-quality” hospitals to typical hospitals. Top quality hospitals were defined as those in the top quartile on a quality index score that included: mortality, complications, readmissions, and length of stay. Charge data was used to generate cost benchmarks. Proprietary Advisory Board algorithms were used to define charge-to-cost ratios at the individual cost-center level for every facility.

We compared cost and quality performance at the APR-DRG level, with each APR-DRG divided into four severity groupings. Hospitals needed to have at least 8 cases to be included in the analysis for a given APR-DRG severity combination. The final analysis included 983 APR-DRG severity-specific groups, since not all hospitals met minimum case volume requirements.

This analysis determined the potential cost savings generated from improving quality, and also examined whether a correlation exists between high quality, low costs, and low variation in care.

CVR opportunity analysis highlights

Principal cohort:

• 468 general hospitals
• 20.2M patients
• Min. of 100 licensed beds
• At least 8 cases in each APR-DRG severity group

Key strengths:

• Benchmark group determined by quality outcomes not cost
• Comparison conducted at the APR-DRG severity level
• All-payer data rather than Medicare-only population

Limitations:

• Costs estimated using hospital-specific cost-to-charge ratios
• Data adjustments cannot account for all clinical, demographic, and operational differences between organizations

The second prioritization approach is to use a custom list of balanced criteria that gives meaningful weight to both cost and quality. While this option is slightly more time- and resource-intensive than the “easy button” approach, it won’t overextend your organization’s bandwidth if you approach it strategically.

Select a set of criteria to filter CVR opportunities

First, you need the right set of criteria that collectively factor in cost, quality, and ease of execution. The goal is to choose opportunities that will: net significant cost savings, be at worst be quality neutral and at best improve quality, and have the ‘do-ability’ factor (e.g., clinician engagement, available capacity, etc.).

Below are some sample prioritization criteria. We recommend picking at least one option in each category to meet the triple aim.

Cost

 Cost per case

 Variation in cost per case

 Gap to benchmark (e.g. for utilization, cost per case)

Quality

 Number/volume of patients impacted

 Gap to benchmark (for readmissions, mortality, complications, or other quality metric)

Ease of execution

 Physician engagement level

 Availability of physician champion(s)

 Level of effort/change required to standardize

Weigh cost criteria against other prioritization criteria

The second step is appropriately weighting the chosen prioritization criteria.

Some organizations introduce cost criteria by modestly weighing it between 10% and 30% of the overall criteria. Other organizations that have more aggressive cost savings targets weigh cost as high as 50%. There’s no right or wrong answer—it largely depends on your organization’s CVR ambition and cost savings goals. The key is to have a weighting that the entire executive team can get behind.

Apply cost criteria as your first filter

The final—and perhaps most important—consideration for this approach is the order in which you apply the criteria you’ve selected. We highly recommend using the cost criteria as the first filter for an initial cut of CVR opportunities. Then, further narrow the list with the quality and ease of execution filters you’ve chosen.

There are two main benefits of using cost as the first filter of CVR opportunities. First, it guarantees that your final list of conditions will net significant cost savings. Second, screening by cost opportunity before engaging clinicians sets clinicians up well to focus on the quality opportunity.

While some organizations have the analytic capabilities to do the initial cost cut of CVR opportunities themselves, many tell us it is the most time-consuming step of prioritization. It can be challenging to gather consistent cost data across every facility and every service line. To help, we’ve created a tool that does the initial cost cut for you in seconds: The CVR Opportunity Assessment.

Using your organization’s Medicare Fee for Service data, The CVR Opportunity Assessment will:

• Identify excess costs and excess days at your selected hospital(s), which translates to the potential cost savings and LOS reduction opportunity from reducing care variation.
• Identify the primary service lines, MS-DRGs, and cost centers that are driving those opportunities—and rank order them.
• Compare your organizations’ costs to custom benchmarking groups—including national performance, your own internal performance, a custom benchmarking group that you create yourself within the tool, and top-quality performers.

To size your organization’s CVR cost savings opportunity, access the CVR Opportunity Assessment.

The final prioritization approach is setting hard cost savings targets for clinicians to achieve within their designated service area. This method is worth considering if your clinicians won’t respond positively to system leaders setting CVR priorities based on costs.

For example, Atrium Health’s system leaders don’t dictate the conditions each service line must standardize. Instead, they review cost opportunity analyses with service line leaders to set a global CVR cost-reduction goal. The service line leaders then decide on the specific CVR initiatives best suited to achieve the cost goal.