• Article
  • March 22, 2017

How This Hospital Saved $5 million in Direct Costs by Standardizing Care

Children's Hospital Los Angeles implemented strategies to reduce clinical care variation for four patient populations: appendectomy, pneumonia, fever and cystic fibrosis, and saved a substantial amount in direct costs.

While Children's Hospital of Los Angeles (CHLA) was moving toward APR-DRG-based reimbursements, internal and benchmarking data showed there was an opportunity to improve patient experience and reduce variation. In 2013, the organization implemented clinical care variation management strategies to eliminate waste and non-value added activities that could lead to varying patient experiences and outcomes.

At the 2017 Quality and Safety in Children's Health Conference, James Stein, M.D., chief quality officer, and Becca McKnight, M.H.A., performance improvement program manager, CHLA, talked about clinical care variation management as a strategy to investigate the care process of a patient across the continuum. This strategy uses an interdisciplinary workgroup to dissect processes for waste and variation, reviews evidence for—and gains consensus on—developing multidisciplinary action plans, and implements solutions to leverage information systems.

Identifying the conditions

To begin the process, a team at CHLA used data to identify four patient populations—appendicitis, pneumonia, fever and neutropenia, and cystic fibrosis—that had the greatest opportunity for improvement based on volume, cost and variation. The hospital identified these conditions by examining readmission rates, severity of illness, average length of stay (LOS), volume, payer and charges. An internal data pull, and benchmarking information from the Pediatric Health Information System (PHIS), revealed variability in clinical care among these conditions.

Getting teams on board

The next step was to facilitate workshops with key leaders and representatives from the four clinical areas to develop a framework and a methodology for improvement. "We knew when it came to inviting participants to the workshops, we needed to begin with committed leaders," McKnight says. "You have to have people who are respected by their division colleagues and want to make a real commitment to change." Also, a mix of experienced and new staff members ensured the work captured diverse viewpoints.

Implementation and results

Ideas from the workshop led to changes implemented within two to four months. For example, with appendectomies, the hospital standardized its antibiotic protocols, reduced antibiotic therapy time, and reexamined its ultrasound and CT use. With these efforts, the hospital had a 4 percent decrease in LOS for simple appendectomies; a 27 percent decrease in LOS days for ruptured appendectomies; and a 41 percent decrease in LOS days for gangrenous appendectomies.

When it comes to direct costs, for simple appendectomies, the hospital had a 9 percent increase in average direct costs per case. Leadership attributes this to a higher use of disposables in the operating room, and they are continuing to examine this cost. But for ruptured appendectomies, the hospital had a 7 percent decrease in costs, and a 12 percent decrease in costs for gangrenous appendectomies.

Overall, the clinical care variation work across appendectomy, pneumonia, fever and cystic fibrosis has saved the hospital $5 million to date in pharmacy and direct costs. The team will continue examining data and dashboards to ensure it continues to stay up to date on clinical practices and look for other areas of improvement.

Lessons learned

McKnight says one of the biggest lessons learned during this project was to be flexible. "All of the groups involved are different, so it's important to be accommodating of different personalities and help people manage change," she says. "And in the future, the teams know we will continue to support them and they've continued to stay on top of this work."

Learn more about this work and view the slides from the presentation.

Send questions or comments to magazine@childrenshospitals.org.