A Question of Economics

A Question of Economics –Healthcare economics is an interesting science. Healthcare economists start by placing a value, even dollar values, on things that the lay person would consider beyond value, like a year of your life or the ability to feed yourself. In my opinion, healthcare economists make a number of large assumptions to reach their conclusions, but they do provide analytical rigor to healthcare debates that often lack objectivity.

A case in point is the value of new technology. The American healthcare system takes great pride in offering the latest and most technologically advanced care. But is new technology worth the cost? Is it saving lives (probably) or just increasing the cost of care for everyone (probably).

Earlier this month, Siemens announced that it was releasing a new kind of CT scanner, the Somatom Definition (hereafter “SD”). Instead of adding slices to the new model, as we are all used to, Siemens has added a second x-ray tube. Siemens claims that this will increase the speed of imaging, thus increasing the speed of diagnosis, reduce the patient’s radiation exposure, and increase the quality of images of moving parts, like the heart. This added capability also comes with a $3 million price tag.

So is the SD really worth it? Should hospitals mothball their $2 million 64 slice scanners for a new SD scanner? A health economist might begin to answer that question by evaluating the claims of the SD. If the SD produces higher-quality images and diagnoses are more accurate as a result and treatments are thus more effective, then there is incremental value to the patient. That value is multiplied, essentially, by the number of patients that will use that scanner in its lifetime to create the total value of the SD. That total value may or may not be greater than the $1 million dollar premium over the 64 slice.

This may seem like an esoteric way of looking at things. Indeed, we are accustomed to and typically accept arguments like, “If it saves one life, then it is worth it.” But the fact is that we have a healthcare system that must be designed for more than the individual patient and when it comes to adding cost and capability to the system, the economics matter.

Just Like Reading the Paper

Just Like Reading the Paper – Most everyone seems to agree that an electronic health record (EHR) will be “better” than paper records, though, as a few have pointed out, there has not been significant research demonstrating the benefits. As I think about the national effort to create an EHR, another paper-gone-digital medium, the newspaper, can serve as an example of how going digital can “improve the system.”

In “ye olden days,” reading the paper was a full-fledged ritual that involved shaking, folding, scanning, and skimming. While some people would read the paper cover to cover, I assume that most would go to their favorite sections (e.g. – the sports pages) and skip entirely their least favorite sections (e.g. – the sports pages). This was a completely manual process that took time, and I don’t think it is too much of a leap to liken it to reading a medical record.

So what has changed now that newspapers have gone digital? Alot. On the internet, you can customize which news stories come up on your screen, based on category or on keywords. You can also have news emailed right to your inbox on a regular basis. Even further, a new technology called RSS can go out and find particular news or headlines as they get published on the internet and bring them back to your computer for you to view. For more information on RSS, click here. These are all ways that make your information consumption more efficient and more effective. Indeed, I use all of these methods to keep a daily tab on local and national healthcare and business news. This is something I could never do looking through newsprint. In one sense, these technologies have multiplied my productivity.

Taking cues from newspapers’ migration to the internet, how might EHRs benefit the healthcare system? Very simply, computers are tools that can sort through data thousands of times faster than humans. If we tell computers what we want to see – the last blood pressure reading, drug allergies, a physician’s order – then the computer can find it virtually instantly. Gone will be the days of flipping through the chart or calling the lab for a critical value. If some of the same technology described above is used in EHRs, information could be “pushed” to nurses and doctors when it gets generated and put into the system. This would essentially eliminate an entire process step from patient care.

In making diagnoses, forming treatment plans, and documenting treatment, doctors, nurses, and other caregivers are trafficking in information. This information is needed by other caregivers to coordinate treatment and for a whole host of other functions (billing, quality control, etc.). Part of understanding how EHRs will change healthcare involves understanding how healthcare personnel are information workers as well as care givers. There is no doubt that "going digital" has changed and improved the life and productivity of the information worker. It can do the same for care givers.

A Man Without a Hospital

A Man Without a Hospital - When I wrote my last post, In Good Times and Bad, I had no idea how personal our hospital’s financial turn around would become. The very next day I was told that I would be let go. This came as quite a shock and, as one would imagine, has caused some significant soul-searching.

One of the most difficult parts of this process is realizing how much of yourself you pour into your organization. It is only when we pull up and start to remove ourselves that we realize just how much of our mental and emotional energy went into the organization. Suddenly laying down your work “mid-run” is quite a shock to the system.

I have been comforted, however, through the realization that my passion for hospitals and my concern for what happens to them has not diminished. I know that I am still a hospital administrator at heart, even if I am, for a time, without a hospital.

Now this is not a personal blog, and I don’t want to dwell too much on my personal experience. While my posts reflect the issues that I think are salient, I have never wanted this endeavor to be about me. My purpose with Healthcare Tomorrow is to discuss issues that are relevant to hospitals and healthcare today with an eye to the future. I am writing this post, in the spirit of disclosure and out of a respect for my readers.

So given all of this, I would ask Healthcare Tomorrow readers to bear with me as I find a new hospital into which I can pour myself. I will continue to post and it is my hope that you will continue to read.

In Good Times and Bad

In Good Times and Bad – Recently, my friend Tony over at Hospital Impact wrote a post on hospitals that have gone through hard financial times and the strategies they used to make the turnaround. In a time when my own organization is going through its own financial difficulties, I found his post both timely and encouraging. Among its stressors, financial turnarounds involve difficult decisions about people and services where the impact on the organization and the community is uncertain. With many hospitals (I believe the figure is near 50%) running in the red, due to low reimbursement, uncompensated care, or costly government mandates, I am sure that many hospital administrators can sympathize.

I spoke with a mentor about the changes we are making at our hospital and he told me about a CEO he had worked with in the past. Every few years, regardless of financial performance, this CEO would ask every department director to redesign their department. He would ask them to clean the slate and design a department from scratch that would offer the same level of service with fewer people. This process was difficult for the organization, but the CEO was convinced that it was necessary for the organization’s long-term health.

I think my greatest lesson during this time is that an organization must always stay fit. Even in the good times, an organization needs to stretch itself and create a resilience that avoids dips in performance all together or else makes them much smaller. There are lots of reasons for a hospital to stay fit – improved quality, expanded services, etc. – unfortunately I am discovering yet another.