Keeping a Tight Rein on Unnecessary Expenditures in Oncology Practice

Meir Rinde
Published: Saturday, Jan 27, 2018
Jay T. Bishoff, MD
Jay T. Bishoff, MD
When Intermountain Healthcare in Salt Lake City, Utah, was preparing to spend upward of $3 million on new ventilators in its intensive care unit (ICU) 14 years ago, a few doctors decided to first see if they could improve outcomes of patients placed on the expensive machines. Ventilator settings and blood gas testing protocols, which each physician had been handling differently, were standardized and then periodically adjusted as they observed what worked best.

The doctors soon found they were doing far fewer tests and their patients were leaving the ICU 3 days earlier compared with before, said Jay T. Bishoff, MD, director of the Intermountain Urological Institute. In the long term, the changes led to reductions in ventilator-associated pneumonia and per-patient costs. The work to standardize protocols ultimately allowed Intermountain to avoid spending large sums of money.

“We dropped the cost by focusing on improving our outcomes,” Bishoff said. “How did we focus on improving our outcomes? By doing it the ‘same way’ for a while, until we figured out what the ‘right way’ was. And guess what—we didn’t buy those expensive ventilators.”

Bishoff, an enthusiastic and outspoken advocate for medical efficiency, has many stories about waste and successful improvement efforts. He was frustrated about unused supplies that are thrown out after surgery, so he started rewarding nurses with gift cards for not opening packaged equipment until it was needed. The nurses soon averaged $1400 in monthly savings, with one avoiding $7800 in costs in a single month. Bishoff primarily focuses on improving outcomes through process standardization, but he’s fanatical about eliminating wasteful spending.

“I’ve been on a crusade to get our cleaning people to turn the lights off,” he said. “I’m usually here first, about 5:30 in the morning, and the lights are all on in the whole clinic! They’ve been on all night long. It’s just waste—pure waste and inefficiency. I’m looking at even the cost of electricity. So, let’s do it the ‘same way’: Let’s have all the cleaning people, when they clean a room, turn the light off. You just want to focus on every area where you can cut unnecessary waste.”

Avoiding wasteful spending has never been more important, considering the intense pressures to keep costs down and the ever-present risk of having to close down or merge with a larger system. “You want to be as efficient as possible. When you’re facing everdeclining reimbursement from payers, you’ve got to find a way to work smarter and control costs,” said Kari A. Young, who was the executive administrator at Hematology Oncology Associates of Albuquerque, New Mexico, until the practice merged with a hospital last year.

Billing and Ordering Strategies

A natural place to start is drug handling and billing. Kathy Oubre, MS, chief operating officer of Pontchartrain Cancer Center in Louisiana, which has 2 oncologists at 2 offices, said she regularly audits her practice’s billing for discrepancies between the electronic record of drugs pulled from cabinets and the amounts actually billed by nurses.

“Every 90 days I probably find $10,000, $15,000, $20,000 of errors,” she said. Correcting those mistakes could put “an extra $20,000 in a practice’s pocket, which is essentially a lower employee’s salary,” she said. Practices that fill out itemized forms by hand are at even higher risk of making expensive errors—for example if they write a charge on the wrong line or write 2s that look like 7s, she said. Pontchartrain handles billing internally, as Oubre finds that billing contractors charge too much and lack expertise in chemotherapy, but she does use an external auditor. That firm keeps a percentage of any overlooked revenues it finds, but Oubre reasons that it’s worth it for the practice to recover a portion of the money that it otherwise would have lost.

To avoid wasting expensive pharmaceuticals, savvy practices use just-in-time ordering, backup generators for refrigerators, and electronic storage cabinets that monitor expiration dates, and they transfer unused medicine to other offices. “We’re ordering drugs based on patients we expect to see 4 days out,” said Brad Prechtl, chief executive officer of Florida Cancer Specialists (FCS), a mega-group with 220 physicians. “We’ve got to have some excess inventory, but our inventory level is typically at 2 days or less, because the cost of carrying the inventory is exorbitant when you’re talking IV and infusion drugs.”

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