Reducing Costs of Care Through LOS Management

1. 2008 PPM User Conference Reducing Costs of Care Through LOS Management Suellen Fletcher

2. Background • Sydney West Area Health Service has been trying to reduce our costs of care • One approach is to reduce our patients length of stay, using benchmarking data • There has been a reduction in the LOS in some patient groups • But our costs of care have not shown a similar decline.

3. Current Model • The current model looks at the avg cost by DRG divided by the no of beddays • Eg F17Z $10,000/5 = $2,000/bedday • Created a LOS target based on Health Round Table data • Therefore in theory every bedday saved would produce significant savings

4. Current Model

5. Problems The model does not take into account variations in cost from the beginning to end of a patients episode of care

6. Problems • Presumes that admissions remain constant and beds are closed • Lack of Transparency in data

7. Clinical Costing Approach • SWAHS has only recently implemented Power Performance Manager • Now have daily service level costs available • We can use this data to determine the daily costs of care

8. Methodology Service Code Definition If date of service not available – use episodic on admission

9. Methodology Report Layer Build • include service level data

10. Methodology Create Report in MS Access Project

11. Methodology DRG Grouped Costs Patient Level Costs

12. Methodology • Used Health Round Table (HRT) Benchmarking Data • Excluded Same day admissions • Included episodes where average length of stay > expected length of stay (ELOS) • Using Service Level Data Calculated Costs Pre and Post ELOS

13. Results

14. Results • Casemix Variation • Cost drivers such as prostheses, ICU hours and diagnostic tests are affected by the casemix of the patient

15. Results Cost of Care savings by reducing LOS 2006/07 with Activity Budget Comparison of Current Model v Clinical Costing LOS Cost

16. Results Cost of Care savings by reducing LOS 2006/07Comparing with and without Activity Budget

17. Conclusion • Costs vary throughout a patients stay • Casemix does affect the variation • LOS reductions need be combined with activity budgets to achieve optimal cost reductions.

18. Questions Suellen Fletcher