Jun 23, 2017

Interview Transcript

Interviewer: Healthcare, knowing the costs. That's next on The Scope.

Announcer: These are the conversations happening inside health care that are going to transform health care. The Health Care Insider is on The Scope.

Interviewer: Dr. Ken Kawamoto is the Associate Chief Medical Information Officer at University of Utah Health, and Dr. Kawamoto, I would like you to tell me to what extent this statement I'm about to make is true.

Dr. Kawamoto: Okay.

Interviewer: Because that's going to dictate kind of where we go from here. It hasn't been until recently that health care organizations have looked at and really understood what their costs of providing care are.

Dr. Kawamoto: I think that's true.

Interviewer: That is true.

Dr. Kawamoto: On the global level, we of course know what our costs are and what our revenues are. This year really has been that there hasn't been that much incentive or need to know how much it costs to do something very specific for a particular type of surgery or a particular type of office visit. It's been sufficient to really know what your costs are at that general level.

Interviewer: What needed to be done in order to start understanding costs of these specific procedures?

Dr. Kawamoto: I think what's changing is organizations such as University of Utah Health are recognizing that we really need to understand and manage these costs so that we can be good stewards of resources and the incentives are there to do so. So I think that's what's changed.

What's also changed is that there has been a lot more use and availability of electronic data because as you can imagine, there's a lot of data on these kinds of items, what's been ordered, what kind of medications patients have taken. And if that was all on paper like it had been in the past, this kind of exercise would be very difficult to do.

But now that we generally have electronic health record systems throughout the United States, we have the ability to run computer programs that can analyze this in terms of millions and millions of rows of data to arrive at these kinds of data points.

Interviewer: So really health care, understanding costs is, would you say it's more difficult than in traditional industry that produces, like say, a product?

Dr. Kawamoto: I would say so primarily . . .

Interviewer: Because so many different things come into play.

Dr. Kawamoto: What we're basically trying to do is manage and understand humans and that's a lot more complex than managing even something fairly complex as building a television set for example.

Interviewer: Because you know the set costs of the parts and pieces that go in but people are all very different, respond to treatments in different ways . . .

Dr. Kawamoto: That's exactly right.

Interviewer: And as a result, that's a variable that other industries don't have to account for.

Dr. Kawamoto: That's right.

Interviewer: So what have we discovered as we start to understand the costs of providing care beyond just knowing the dollars and cents that go into a specific procedure?

Dr. Kawamoto: I think one of the things that our providers have found and other supportive personnel have found is that the costs aren't necessarily what you might expect. So we've certainly had this experience where when we look at the actual costs, we have aha moments where we say, "Wow, we didn't realize that costs so much," and it does change your behavior and allows you to become better stewards of that money.

Interviewer: What about the quality of care as a result of knowing the costs, has that changed?

Dr. Kawamoto: It might seem that when you try to reduce costs, what you end up doing might be reducing quality. What we and others have found though is that in general, they're the same thing because what we're essentially doing is when we work on reducing cost is reducing unnecessary resource utilization, reducing unjustified variation and how we care for patients.

And you realize, let's standardize this, come up with more efficient ways of doing things. And what you would expect and what you do find in health care as well is that you get both lower cost and better quality.

Interviewer: Where are we at in this process and I'm not talking just about us at University of Utah Health but health care industry in general?

Dr. Kawamoto: The health care industry as a whole is still adjusting to the notion of having to understand and manage their costs. I would say most health care systems in this country still don't have a very good grasp of what it costs to provide care. I'd say University of Utah Health is fairly unusual in that regard.

I do think it's going to start changing because we and others have shown that this is possible, especially as reimbursement schemes and payment incentives start changing to incentivize providing not only high-quality care but highly efficient care. I think this trend is going to continue so I would say we're early but it's likely to continue on fairly rapidly towards better understanding and managing our costs.

Interviewer: And then at some point, will we live in a world where right now this is almost nearly impossible, where I could call a hospital or go online and look at how much they were going to charge me for a procedure? Are we going to see care more like the grocery store with the price tags on the different things?

Dr. Kawamoto: I think that's true and our health system tries to do that as much as we can as well. Absolutely, I think once we can start understanding what care costs and what the drivers of variability are, then I think we can definitely do that.

And by variability, I mean, for example, there's differences between say coming in for a hip replacement surgery as a healthy patient who's doing it for the first time or let's say a patient who has a bleeding disorder who comes in and needs special management even for the same kind of surgery. But as we can get more sophisticated and we can start honing down on for your type of patient, your type of encounter that we're expecting, we can use the data to identify this is what we expect in the range of uncertainty that exists based on past experience.

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