Value-driven outcomes: what are a hospital's costs?

• Author: Dicou, Natalie Kaye

If you've ever spent a night in a hospital, you know the drill: In comes a phlebotomist, first thing in the morning, for lab tests. It's early and you're groggy, but you dutifully hold out your arm. It's for your own good, right?

Not necessarily, say University of Utah Health Care doctors.

"Many patients do need labs every morning as a critical part of diagnosing and treating medical conditions," said Peter Yarbrough, M.D., an assistant professor of internal medicine, "but that can create a culture where you're ordering tests without really thinking about what you're going to do with the results."

University hospitalists are rejecting unnecessary lab testing and other that's-just-the-way-we've-always-done-things routines with help from a tool developed at the U., which allows doctors to understand the true costs of health care, calculating everything from bandages and gauze to the electricity bill. The tool, Value-Driven Outcomes or VDO, was featured in a recent New York Times article "What are a Hospital's Costs? Utah System is Trying to Learn"--and doctors are putting it to use.

University of Utah Health Care's Value Equation

VALUE = QUALITY + SERVICE/$

"It's remarkable that more health care systems do not understand their costs at the patient level," said Vivian Lee, M.D., Ph.D., M.B.A., senior vice president for Health Sciences and CEO of University of Utah Health Care. "To improve practices, any business must have a thorough understanding of their costs in relation to their outcomes. Without access to these metrics, how can we expect to improve?"

Using VDO, hospitalists discovered that lab testing for their patients was costing University Hospital about $2 million a year.

"That number was impressive to me because I saw just how much the common routine tests could add up,"...