Accreditation Council for Surgical Quality | Healthcare Waste Reduction: Improving Quality and Reducing Costs

Healthcare Waste Reduction: Improving Quality and Reducing Costs

Pejman P. Samouha, MD, Shawn M. Haqqani, BA
Los Angeles, California

The motivation behind health care providers undertaking surgical quality improvement initiatives is largely based on the notion of doing what is right. The financial benefits attained through these initiatives are considered as an appealing afterthought.

A modification in the economic climate and rising evidence that improved care can be achieved without increasing costs provide additional motivations. New schools of thought have prioritized the theory of cost savings, shifting from the benefits of theoretical cost savings that cannot be accurately traced to the actual bottom line. Theoretical cost savings have constantly presented the problem of the inability to decipher actual savings and allow them to be traced to specific budget items.

With recent US economic downturns, there exist intense pressures on the health care systems to run at optimal levels. Health care costs are multiplying while reimbursements are stagnant, and the ability to spread costs among payers has become severely limited. Employers are attempting to lower costs by passing as much responsibility for healthcare benefits to their employees, government organizations are decreasing benefits for their members. Such economic pressures on alternatives are being sought by patients while simultaneously delaying care due to high costs. The repercussion of these realities on hospitals has already begun to surface. A 2008 survey noted that 37 percent of hospitals saw decreases in admissions, while 50 percent of hospitals saw a compelling increase in uncompensated care. Additionally, in 2009 the United States federal government under the new administration placed health care reform at the top of the agenda, with the basic outline of cost reduction as a major tenant. Their goals are bolstered by hard evidence that optimal quality health care and low cost can coincide. However, one often overlooked ideology that has not been focused on is the element of waste reduction as a method of cost reduction. This particular theory of targeting waste reduction is becoming a major tenant in the health care plans of the future.

Intermountain Healthcare, a nonprofit health care system the greater Utah area is recognized for its breakthroughs in overall health care improvement. In the effort to reduce waste, Intermountain Healthcare attempted to lower the amount of time patients were on ventilators. Interestingly, ventilator time was reduced by 60 percent without a reduction in the health of the patients or any increase in potential future complications. The cutback also led to a 33 percent reduction in patient stays in the thoracic intensive care unit, with savings arising directly from reducing the number of needless days in hospital for both patients and hospital staff. The benefit from this reduction was also felt in the surgical department, with the total cost of open heart surgery being reduced by 15 percent. The numbers are staggering, easy to implement reductions were carried out on around 2,800 patients with a savings of approximately $5.4 million annually.

Another example of a successful waste reduction initiative was carried out at Washington Hospital Center, which aids approximately a quarter million patients annually. Washington Hospital Center has an Automated Laboratory which processes thousands tubes of blood each day. Their estimated completion time for blood work results was considered a 60 minute maximum, however the reality was physicians were waiting upwards of 80 minutes for results. A coalition gathered to examine and interpret the existing process and isolate which factors were likely contributing to the extended wait times such as clotted blood samples, incorrect labeling and equipment issues. The group created a list of modifications in order to change or eliminate the factors that were extending wait times such as eliminating clotting by switching to plasma, decreasing centrifuge time, relying less on paper forms, utilizing more auto verification and running sample situations in order to demonstrate that the modifications would be an improvement across the board. The end result was a reduction in average wait times by 45 minutes. The reduction in wait times and a reduction in staff requirements allowed Washington Hospital Center to eliminate two technical positions along with reduce printing and storage costs, resulting in an annual savings of $80,000 annually. These examples show that when hospitals take the time to assess various processes, a more efficient system can be developed by cutting out waste.

Although there are a multitude of examples of health care organizations utilizing the waste reduction method with successful results, the United States health care industry contrary to other large industries, has concentrated efforts almost solely on eliminating quality problems due to the unmet expectations of patients, and expanding patient expectations by providing services perceived as very high in value. The avoidance of hospitals to pursue waste reduction as an avenue to lower costs emanates from a hesitation to address cost reduction directly, instead hoping that improvements in quality will turn out to be an effective method for cost reduction, or developing brand new services that will spike revenues. While it can be argued that various improvement initiatives concentrated on reducing issues in quality do in fact reduce waste due to the fact that many errors arise from inefficient clinical systems, there are much larger opportunities for cost reduction that simply do not materialize themselves in the form of quality defects. Thus it appears prudent to pursue the opportunities that waste reduction provides. Transitioning using this approach will result in a major change, a new ideology and a new way of thinking.

Waste reduction is not traditional cost cutting by any means, with traditional cost cutting considered by hospitals as detrimental to care. Rather, this new ideology is a methodical focus on waste reduction, and when carried out correctly yields cost savings while also maintaining or improving quality. Ideally, if all waste were eliminated from the health care system and it became exceptionally efficient, the cost to deliver a similar level of care would be drastically reduced, which would reasonably mean a reduction in total health care spending and the ability to spread the saved funds on other initiatives aimed to improve health care via alternative avenues. One caveat to waste reduction is the inevitability of a decrease in profits due to complete efficiency. Although this cannot be denied, the amount of waste currently in the system signifies that it will take a very long time before we as a nation reach this level of efficiency. Hospitals in the meantime undertake the waste reduction initiative without worries of reaching these contradictory motivations to further improvement.