Cost Containment

1. Cost Containment Kelli Erb Ferris State University NURS 450

2. Objectives -To understand why healthcare costs are so high -To understand how high costs effect the nursing profession -To identify strategies the healthcare community can do to help contain costs

3. Introduction • Cost containment is defined as “the process of controlling the expenses required to operate an organization or perform a project within a pre-planned budgetary constraint. The cost containment process is an important management function that helps keep costs down to only necessary and intended expenses in order to satisfy financial targets” (businessdictionary.com)

4. Why is healthcare cost so high? • Aging Population • Chronic disease • The cost of pharmaceuticals • Cost of technology (Rundio & Wilson, 2010) • Rising expectations of the public about the capabilities of the healthcare system • Lifestyle choices

5. Cost Containment Effects: • The medical community including insurance companies, nursing staff, physicians, hospitals, and drug companies. • Patients

6. Why do Nurses care? • Nurses make up the largest percentage of healthcare team in acute care setting (Beard & Sharkey, 2013) • Nurses can provide strategies and support cost-effective quality improvements if organizations engage nurses in this process

7. Why do Nurses Care? • “Nurses have historically been targeted when hospitals need to cut costs and sadly they have come to expect that as normal practice” (Urban, 2014 p. 74). • “Nurses are targets for cost-containing measures because they accept this as part of their work” (Urban, 2014 p. 75).

8. Nursing Research Study • Research study done in Italy • Identifies if there is a relationship between cost containment and economical crisis and the effect on Italian nurses. (Palese, Vianelli, De Maino& Bortoluzzi, 2012)

9. Result? • The result of the study was due to cost containment efforts like hiring specialized nursing assistants instead of RNs, the RNs felt higher stress. The RNs also stated they had to take care of more patients which could lead to negative patient outcomes. (Palese, Vianelli, De Maino & Bortoluzzi, 2012)

10. Nursing Theory • Nola Pender’s Health Promotion Model (HPM) demonstrates an increase in patient’s well being. Patients will promote healthy behavior when there is an incentive. • This HPM relates to cost containment because if patients are being rewarded they will actively try and prevent illness and disease. It makes patients more accountable. (nursingplanet.com)

11. Pender’s HPM

12. HPM- Propositions “Positive affect toward a behavior results in greater perceived self-efficacy, which can in turn, result in increased positive affect” (nursingplanet.com) “When positive emotions or affect are associated with a behavior, the probability of commitment and action is increased”

13. Sociology Theory • Structural-Functionalism theory “sees society as a complex system whose parts work together to promote solidarity and stability” • If all disciplines work cohesively, we can help control costs in all areas of healthcare as well as providing quality care. (educationportal.com)

14. Assessment of Cost Containment • Politicians • Economic Forces • The medical profession • The legal system • The public • The mass media (Blank, 2012)

15. Assessment of Healthcare Environment RCA

16. Case Study • Patient Alice was admitted for a routine surgery. Alice was unable to be weaned from the vent in PACU and was sent to the ICU after her surgery. In the ICU she has bath supplies, compression sleeves and an incentive spirometer at her bedside. Alice also had a central line placed due to poor IV access. Two days later Alice was able to transfer to a med-surg floor. Her bath supplies, incentive spirometer and compression sleeves were left in the ICU and eventually thrown out. She developed a central line infection and had to be treated and increased her length of stay. During her stay she refused to take some of the medications she was unfamiliar with and her IV fluids were changed four times in the course of a week. How much did this cost? What could have been done to prevent some of the waste?

17. Case Study Product Prices • Incentive Spirometer-$2.13 x2 • Compression Sleeves-$9.13 x2 • Aloe Bath wipes-$2.28 x2 • Shampoo cap- $1.79 x2 • Disposable BP cuff-$2.87x2 • Central line kit- $9.73 • Alcohol impreg. Caps(10)- $3.01

18. Case Study Med Prices • Protonix- $4.85 • Lisinopril-$4.56 • Oxy IR-$5.36 • Subq Heparin- $19.39 • Lovenox-$89.50 • Norco- $5.79 • 1000ml LR- $90.42

19. Case Study • CLABSI- $6,000-$29,000!!!! -Supplies $49.14 -Medications $219.87 (vdh.virginia.gov)

20. Inferences and Implications • What does all of this mean? -National spending is estimated to increase from 25% to 40%over the next 20 years. -Without applying some cost containment strategies, healthcare costs will not be improved. (DiPersio, 2013)

21. Inferences (con’t) • “Per capita spending on health care in the US is more than double that in most other high-income, highly industrialized countries, yet performance on indicators of health status is often worse” • “The IOM reports there is a strikingly persistent and pervasive pattern of higher mortality and inferior death” (Anderson, Willink, & Osborn, 2013, para 1).

22. Inferences and Implications -Something has to change -nurses will have to take more patients -poor patient outcomes -decrease in morale and job satisfaction -bankrupt health systems

23. Nursing StrategiesQuality & Safety recommendations • CLABSIs • CAUTIs • Falls • Pressure Ulcers

24. Nursing Strategies • Education on cost of supplies • Going Green on linen changes • Reducing incidental overtime • Encouraging engagement -Magnet Recognition

25. Nursing Strategies • Reduce waste of materials and medications http://youtu.be/BB8QYveucJY http://youtu.be/aPA0vnVpqGc http://youtu.be/MxdsKVy4Izs

26. Recommendations • Managed Care -Optimize use of resources -Increase accountability -focus on disease prevention and health maintenance instead of crisis intervention (Rundio & Wilson, 2010) • Value-Based Purchasing -No additional charge for patient or insurance company if patient develops an infection after surgery.

27. Recommendations • Accountable Care Organizations This is one bill across all settings. • Cost-Benefit Analysis “Process of examining scenarios to determine relative value of an intervention when measured against predetermined criteria” ( Rundio & Wilson, 2010, p. 174)

28. Recommendations • Medicare reimbursement • Exchange Admin Data • Pay scale for Physicians (Dipersio, 2013). • Corporate wellness programs • Health plan consolidation • Non-subsidization of hospital infection moral hazard

29. QSEN Competencies • Quality Improvement- “Use data to monitor the outcomes of care processes and use improvement methods to design and test changes to continuously improve the quality and safety of health care systems” (qsen.org)

30. QSEN Competencies • Safety-”minimizes risk of harm to patients and providers through both system effectiveness and individual performance” (qsen.org).

31. ANA Standards • Quality of Practice- “the registered nurse contributes to quality nursing practice” (ANA, 2010). • Collaboration-”the registered nurse collaborates with the healthcare consumer, family, and others in the conduct of nursing practice” (ANA. 2010).

32. ANA Standards • Resource Utilization-”the registered nurse utilizes appropriate resources to plan and provide nursing services that are safe, effective, and financially responsible” (ANA, 2010).

33. Summary Nurses can do it!

34. References • American Nurse Association. (2010). Nursing scope and standards of practice (2nd ed.) Silver Spring, MD • Anderson, G., Willink, A., & Osborn, R. (2013). Reevaluating “Made in America” – Two Cost- • Containment Ideas from Abroad. The New England Journal of Medicine.doi:10.1056/NEJMp1302140 • Beard Jr, E., & Sharkey, K. (2013). Innovation amidst radical cost containment in health care. Nursing Administration Quarterly, 37(2), 116-121. doi:10.1097/NAQ.0b013e3182869e67

35. Blank, R. (2012). Transformation of the US Healthcare System: Why is change so difficult? Current Sociology,60 (4). 415-426. doi:10.1177/0011392112438327 Central line-Associated Bloodstream Infections. (2014). Retrieved from https://www.vdh.virginia.gov/Epidemiology/Surveillan ce/HAI/clabsi.htm Cost containment. (n.d.). In Business Dictionary. Retrieved from http://www.businessdictionary.com/definition/cost- containment.html DiPersio, L. (2013). Strategies for health care cost containment in 2013. Journal of Communication in Healthcare, 6(1). doi:10.1179/1753806813Z.00000000042 Nursing Theories. (January, 2012). Health Promotion Model. Retrieved from http://nursingplanet.com/health_promotion_model.html Palese, A., Vianelli, C., De Maino, R., & Bortoluzzi, G. (2012). Measures of Cost Containment, Impact of The Economical Crisis, and the Effects Perceived in Nursing Daily Practice: An Italian Crossover Study. Nursing Economics, 30(2). 86-93.

36. Quality & Safety Education for Nurses. (2005). Competencies. Retrieved http://qsen.org/compentencies/ • Rundio, A., & Wilson, V. (2010). The Business of Healthcare. Nurse Executive Review and Resource Manual (pp. 172-177). Silver Spring, MD: American Nurses Credentialing Center. • Structural-Functional Theory in Sociology: Definition, Examples & Quiz. (n.d.). In Education Portal. Retrieved from http://education- portal.com/academy/lesson/structural-functional- • theory-in-sociology-definition-examples-quiz.html#lesson • Urban, A. (2014). Taken for granted: normalizing nurses’ work in hospitals. Nursing Inquiry, 21(1) 69-78.