There is a saying, “You get what you pay for”.  It refers to the quality of a product. If you buy a cheap product, it usually will not last or work well.  For example; compare a Audi to a Yugo. The Audi, an expensive luxury car, is known for quality. The Yugo was a low cost unreliable car.  While this comparison applies quite well to cars, how does it work in healthcare?  

In the chart below, a gall bladder surgery is being analyzed.  Thirty six surgical providers, providers were part of the test group.  One of these providers billed $1,591 for the procedure. Another provider bill $13,328 for the same procedure.  (Please note, both of these procedures were rated for acuity, meaning that they were comparable in complexity. In simple terms, this is an apples to apples comparison).   The variance in cost between these two providers is over $11,000. Which procedure is the best?

Procedure High Cost Low Cost Number of Providers
Laparoscopic Cholecystectomy $1,591 $13,328 36

If the saying “You get what you pay for” is true, then it would indicate that the $13,328 procedure would be the best.  But is this true? As we look into the details, the findings are interesting. With the $1,591 surgery, the procedure went something like this.  The patient went to the facility, had the procedure done and the following day was sent home. After six weeks of recovery, the patient was back at work and doing well.  

The $13,328 procedure didn’t go the same way.  In this case, the procedure was done and the patient went home the following day.  Later in the evening, the patient felt like their insides were on fire. They call the doctor and only to get the answering service.  The answering service message stated, “If this is a medical emergency, hang up and dial 911”. After calling 911, the patient was told to go to the hospital ER.  The ER performed a battery of tests. After all test were run, it was determined that the bile duct was not properly sealed. The patient was then rushed into Emergency Surgery.  The additional procedures increased the total cost by over $11,000. To add insult to injury, the patient and insurance company had to pay these extra costs in order to correct the issue.    

There is an inverse relationship between the highest quality care and the cost of a procedure.  The highest quality care is delivered by the lowest cost provider, because the procedure is done right the first time.

Rework is expensive in business.  It is extremely expensive in healthcare. 

Obtaining the highest quality care, results in better outcomes for the patient, lower costs and lower renewal rates.    

Patrick Thornton, a former HCA Hospital CFO, is passionate about healthcare and helping employers find solutions on how to address these skyrocketing costs in their businesses and turn this expense into an asset.  

Connect to Patrick by connecting with him on LinkedIn and by visiting his web page.  You can also reach him via email at: patrick@hrman.net