When I teach graduate students in health administration, I pose the following question to them: “What is the most expensive device at your hospital?” Invariably, they reply the MRI scanner, CT scanner, or PET scanner. They look at me dumbfounded when I tell them that the physician’s pen dictates the majority of their hospital’s expenses.

Yet, if physicians can be viewed as the problem, they also can become the solution, as seen in the following examples:

1) Ask a physician advisory panel for help

A CEO at a Rocky Mountain tertiary care facility asked the Medical Advisory Panel formed at his hospital for advice on how to cut supply costs. The panel responded affirmatively to his request stating, “Only physicians have the clinical knowledge to identify cost savings that do not compromise patient care.” They have worked together with an interdisciplinary supply cost reduction group to achieve over $500,000 in ongoing supply cost savings in the purchase and utilization of orthopedic implants, heart valves, radioisotopes, and anesthetic and cardiovascular medications.

This story shows that if one treats physicians as adults, one can obtain adult behavior. If you want more information, please ask me for my article, published in HFM.

2) Take advantage of healthy competition among physicians to decrease variability and expense

The medical director of a Northeastern cardiac catheterization laboratory faced an ongoing problem. The proliferation of supplies was creating storage problems as well as limiting the lab’s profitability. He knew that closing down a procedure room to add storage space would limit opportunities for future expansion of programs and services. Now that the new information system was coming online, he was being questioned not only about supply costs but also about procedure times and outcomes of his staff of six invasive cardiologists.

Not certain what to do but convinced that ignoring the challenges was not an acceptable solution, he turned to his cardiology colleagues at a staff meeting and asked for their input. He showed simple bar graphs of procedure times for balloon dilatation and stenting by anatomic location and number of stents for each of the cardiologists who were identified by number rather than name. Only he knew which name corresponded to each number.

The cardiologists agreed that they could see widespread differences. Supply use also was dissimilar among physicians. Data on simple outcomes like myocardial infarction and death according to American Heart Association category and elective vs. emergent status, revealed substantial variation. He encouraged the group to share their thoughts in subsequent group meetings on how they might limit variation, improve outcomes, and cut supply costs, telling them that they would re-examine the data in another four months, hoping to see progress. If they could not come to consensus on how to limit variation and improve outcomes and profitability in six months, he would put names above the individual physicians’ numbers and post the data on a bulletin board in the catheterization laboratory in full view of the entire staff.

The medical director’s clinical credibility, integrity, and sincerity were unchallengeable. Within four months, procedure times and outcomes for the entire six-person group were within one standard deviation, and the staff had decreased their vendors to two and cut costs substantially, all while improving outcomes. As one of the cardiologists explained, “None of us wanted to be an outlier, except on the positive side.”

Reprinted with permission from “Engaging Physicians in Hospital Operations,” in Cohn KH. 2005. Better Communication for Better Care: Mastering Physician-Administrator Collaboration. Chicago: Health Administration Press, 46-51, http://www.ache.org/pubs/redesign/productcatalog.cfm?pc=WWW1-2038.

3) Use a palliative care team to decrease suffering and expense

A Connecticut community teaching hospital has found that by making a palliative care consultation standard on all admissions to their ICU that they can assuage family members’ needs to have everything done for their loved ones and cut unnecessary costs and length of stay. This service has also been a wonderful morale booster for nurses who otherwise might feel uncomfortable responding to families’ questions.

©2008 Kenneth H. Cohn, M.D., MBA, FACS