Engaging Physicians to Be Good Financial Stewards

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hfmaEditor’s Note: This article originally appeared in the July 2016 HFM Magazine.

Getting physicians to become actively engaged in improving value is a critical concern for the nation’s hospitals. In many cases, achieving that goal—where physicians are willing to share in the responsibility for the financial implications of their clinical decisions—is necessary to ensure a hospital’s future survival. Each success story, therefore, serves as a beacon to guide the efforts of organizations that are still finding their way.

For Texas Children’s Hospital in Houston, efforts to engage physicians in the pursuit of value have led to a profound cultural change, in which physicians, administrators, and the finance team are now working collaboratively to facilitate a joint vision and mission for delivering affordable high-quality care. This is the story of how Texas Children’s integrated financial considerations into its physician culture with measurable success, and of the lessons learned along the way.

The Need for a Paradigm Shift

Physicians always have focused on being good stewards of patient health. Delivering high-quality care is and has been their mission, as it should always be. However, in the current climate of skyrocketing costs and declining payments, a mission focused solely on quality of clinical care isn’t enough. A paradigm shift is required in which physicians come to embrace the concept of value in health care, which involves a consideration of both financial and clinical outcomes. This paradigm shift will bring about a cultural transformation predicated on a growing appreciation of the truth that without money, there is no mission, no expansion, and no innovation. Without money, there is no health care.
Recognizing the need for this fundamental paradigm shift, leaders at Texas Children’s Hospital worked diligently on integrating financial considerations into the organization’s physician culture and building physician and financial administrative partnerships. And they have met with measurable success by focusing first on quality.

Quality Comes First

Because many clinicians are as yet unaccustomed to tracking the cost of health care, applying financial metrics to the services that they deliver represents a sea change for them. One of the biggest cultural barriers encountered at Texas Children’s was the longstanding taboo in physician culture regarding discussions of cost. Although the reasons for this aversion are not entirely clear, it’s safe to say that clinicians often regard any push to reduce cost as tantamount to a push to reduce quality. Administrators can help clinicians understand—as burgeoning research on cost of care suggests—that reduced cost is not necessarily associated with lower quality.a

The first step leaders at Texas Children’s took toward integrating finance into its physician culture was to reassure physicians that their motive was not to prioritize money and profits over quality and patient safety. To help allay clinicians’ concerns, Texas Children’s leaders made it a point to approach the question of cost through the lens of the Institute of Medicine’s (IOM) six domains of quality.b

IOM’s quality domains have been influential in guiding measure development initiatives across the United States for more than a decade. These domains aim to create a healthcare system that is:

  • Safe, in that it avoids harm to patients from the care that is intended to help them
  • Effective, in that it provides services based on scientific knowledge to all who could benefit and refrains from providing services to those not likely to benefit
  • Patient-centered, in that it delivers care that is respectful of and responsive to individual patient preferences, needs, and values
  • Timely, in that it reduces waits and sometimes harmful delays for both those who receive and those who give care
  • Efficient, in that it avoids waste, including waste of equipment, supplies, ideas, and energy
  • Equitable, in that it delivers care that is of consistent quality for all patients, regardless of their personal characteristics (e.g., gender, ethnicity, geographic location, and socioeconomic status)

Although it is possible to incorporate a discussion of cost into any of these six domains, the domain that is most pertinent in such a discussion is efficiency. For Texas Children’s Hospital, the ongoing goal is to help physicians recognize that this domain—which includes eliminating waste of financial resources—is an integral aspect of high-quality care. Simply put, cost reductions will follow as a result of improving the efficiency of patient care.

It also is important to remain focused on primary metrics related to patient-related outcomes. The goal isn’t always to choose the lowest-cost option.

This point is aptly illustrated by a best-practice process Texas Children’s implemented related to one of its initial areas of focus for quality improvement: appendectomy care. A review of the clinical evidence clearly showed that one of the more expensive antibiotics for preoperative prophylaxis for patients undergoing appendectomy also produced the best outcomes. The goal was set to increase the use of that antibiotic, without other antibiotic treatment, to account for 90 percent or more of those circumstances. Standardizing the use of this antibiotic resulted in fewer complications and decreased length of stay. In other words, the expensive antibiotic improved clinical outcomes—and generated savings that ultimately exceeded the extra cost. The analytical process that informed this decision was met with support from the physicians.

A Suggested Iterative Approach

Organizations seeking to engage physicians with quality and cost data should plan on allocating time and resources to creating the infrastructure and processes required to accomplish this objective. Such an effort is likely to require new technology systems, new workflows, and a healthy dose of change management. Such change cannot be managed in one fell swoop, so for purely practical purposes, organizations should adopt an iterative approach to building the requisite infrastructure.

Because all organizations have different strengths and needs, no single iterative approach will work for every organization. The overall approach will be essentially the same for most organizations because all organizations must address certain fundamental domains—such as gathering data and implementing improvement projects. But the approaches also will necessarily differ, based on each organization’s readiness and unique requirements, in the exact sequence of the elements and the interventions required for each one.

The approach Texas Children’s used involved several facets, which are described below. After board approval for a data and quality plan, Texas Children’s assembled an executive team to guide the performance initiative with clinical, operational, and finance leaders.

Establish analytics and transparency of data. To successfully transform its culture, Texas Children’s required an integrated technology infrastructure that would make good data available to drive decision making. As the foundation for this technology infrastructure, Texas Children’s implemented an electronic data warehouse (EDW) that blends financial, operational, and clinical data. The EDW provides the flexibility to deliver integrated information in near-real-time visualizations and dashboards that meet the needs of clinicians and other key stakeholders.

Study integrated data to identify opportunities. The aggregation of clinical and financial data gave the leaders charged with implementing the change the means for pinpointing the clinical and operational processes within the organization where the greatest opportunities for improvement lay. That effort would require a partnership among operations, finance, and clinical domains looking at several types of waste to identify quality and cost problems. The use of analytical tools would then help hospital leadership to understand the organization’s financial, operational, and clinical data and determine which problems to tackle first. Asthma, the most chronic disease of childhood, represented a large number of patients, a large variable direct cost for care, and a wide variability when measured either by cost of care or by length of stay, even when adjusting for severity of illness. It then became one of the first targets for quality improvement using this strategy.

Create multidisciplinary teams charged with identifying and implementing improvements. The task of ascertaining how best to improve quality and cost was assigned to teams composed of diverse stakeholders, including clinicians, data analysts, electronic medical record architects, finance, and operations. By designing these teams to cross traditional boundaries, Texas Children’s aimed to promote collaboration between the clinicians and the other key stakeholders. The permanent, integrated teams would combine their members’ expertise to identify specific areas for care improvement and to build evidence-based standards and best practices into the care delivery workflow. Teams would work with clinicians and staff on the front lines of care to evaluate and develop clinician training, nursing plans, electronic health record tools, and patient education materials, ensuring effective systemwide implementation of best practices.

Fine-tune the analytics approach. As finance leaders and staff became more adept at working with the data in the hospital’s EDW, they became more sophisticated in their ability to pinpoint—and even predict—opportunities for cost reduction. Working with the finance department, the team also undertook an ongoing analysis to predict the likely impact of changing payment models on Texas Children’s bottom line and to determine how the organization could best respond to achieve financial success.

Through this analysis, for example, the finance department was able to identify a principle for reducing costs in a partially capitated environment specific to the management of a disease process: The objective can be achieved by reducing the average length of stay (LOS), given that empty beds need to be filled with new patients eligible for first-day reimbursement—a task that often is replete with intensive management strategies. Targeting diseases with consistently long risk-adjusted LOS has allowed Texas Children’s to translate this principle into action.

The organization also is developing models for cost savings for different disease states that show how changing the model of care will affect the bottom line. It’s important to note that developing ROI models for quality improvement work is, in many ways, uncharted territory full of potential pitfalls. For example, how does one quantify improvements in quality of life, functional outcomes, or satisfaction that may extend well beyond the hospital’s encounter with a patient? Efforts to incorporate such factors into ROI models face confounding complexities. Focusing instead on simpler approaches—such as contribution-to-margin models—is more realistic and practical at this time, if not ideal. Such an approach enables financial staff to trend care with time series charts that allow them to annotate and determine the potential impact of each intervention undertaken.

Engage clinicians with financial data. Once the quality improvement teams could demonstrate improvements in clinical outcomes, the teams were then engaged with more robust financial data—a process that is described below in more detail. Establishing clinician buy-in for new best-practice processes, team structures, and quality-improvement dashboards required immense cultural change and served as an important precursor to engaging clinicians with financial data.

Lessons Learned about Engaging Physicians with Financial Data

Integrating financial data into the clinician-facing dashboards and exposing it to frontline staff also was an iterative process that required—and continues to require—frequent refinement. Here are some of the key strategies that have helped Texas Children’s—within its team-based approach—engage the organization effectively with financial data.

Educating physicians on key financial principles. Unless they are running their own office practice or group practice, many physicians aren’t trained to understand the business of health care, so educating them about healthcare finance is key. One example of an educational tactic employed by Texas Children’s is offering a Finance 101 course to physicians who have leadership roles in quality improvement. The 12-month curriculum consists of an in-depth but straightforward explanation of concepts such as margin and variable direct cost. The course also explains current value-based care payment issues and their financial implications. The regulatory impact of ICD-10 coding on the health system, for example, is one of many topics included in the educational series. This basic educational foundation helps clinician leaders better interpret combined clinical and financial data.
Linking advanced quality improvement training with elements of financial accountability. Texas Children’s has systematized training in quality improvement, so that the initial discussions with new team members—including clinicians—address the concept of integrating finance into the quality improvement process. These discussions include explanations of the relevance of the financial data, how the data support a patient-centric model, and why the solvency of the health system is so critical to driving the organization’s mission. Scorecards featuring built-in financial metrics for various measures reinforce these concepts.

As the teams roll out their process improvements, the scorecards and other tools demonstrate the effect of the changes on financial outcomes as part of a regular performance update, ensuring that team members see both the quality and cost components of their improvement efforts. As clinician team members begin to understand the full value equation, they predictably begin asking questions like, “If we saved that amount of money here, can we add this resource over here?” In other words, clinicians begin to understand the effect they can have by being better stewards of the health system’s dollars.

Accompanying financial choices with clinical choices. Most clinicians are unaccustomed to seeing financial analytics integrated directly into their dashboards, and the clinicians at Texas Children’s were no exception. Today these clinicians have a range of information available that they had been unaccustomed to seeing, such as test ordering utilization and guidelines compliance rates, length of stay, variable direct cost, comparative costs of different procedures, and other relevant metrics. But even with this information at hand and an organizational culture in which clinicians are beginning to embrace cost data, Texas Children’s clinicians are understandably unwilling to make decisions based on cost alone. Therefore, cost of care summaries can be provided to the clinicians to help them understand the bigger picture for the cost of delivering care to populations of children with specific diseases.

For example, the organization found it had a high rate of ordering unnecessary chest X-rays for asthmatics—a case of overutilization that resulted in high costs and unnecessary risk to the patients. Now in addition to describing the cost of X-ray utilization, Texas Children’s has incorporated information about the health risk of unnecessary X-rays into its educational sessions, reminding clinicians to make sound decisions based on cost and on the well-being of their patients.

Using data to prove outcomes are not sacrificed. The ultimate aim of any improvement effort is to improve outcomes of care for the patient. It therefore is important to use data to back up that claim—especially when working with physicians. One area where such use of data has been important at Texas Children’s is in encouraging clinicians to use the lowest-cost resource appropriate to produce the desired outcomes. For example, when appropriate, ancillary staff can be effective in educating patients and in helping patients navigate the care process for specific diseases. By sharing data with clinicians that show how and where staff can deliver outcomes equal to those delivered by more highly trained clinical staff, it is possible to persuade physicians and nurses that they needn’t bear the entire burden of improvement, but would better serve their patients by focusing their clinical skill where it is most needed and delegating other tasks to more appropriate resources.

Integrating finance more fully into the governance structure. Establishing a robust data governance was critical to integrating the operational and financial components into all of Texas Children’s improvement efforts. From the beginning, clinical, operational, and financial decision makers were included in the governance structure; however, the role of finance has increased significantly over time.

In the beginning, finance from to time to time was asked to help out on specific projects. Now finance leaders and executives are on the governance of Texas Children’s Clinical Systems Integration Committee and assist in its data analytics, evidence based practice, and multi-disciplinary improvement teams. Finance is very engaged in all of the organization’s improvement conversations, because payment strategies have a huge impact on what Texas Children’s does.

The Need for a Committed Partnership

As Texas Children’s builds financial metrics into its clinical improvement strategies, its executive leaders continue to emphasize to its clinicians that changing the culture of care to acknowledge the cost implications of clinician decisions is both good and necessary. This is a message directed at improving value.

However, it is essential to remember that success in this significant endeavor requires a committed partnership among clinicians, operations leaders, and finance. Finance staff should invest equally in the change, providing support to clinicians and taking on accountability for understanding the clinical obligation to quality. Health care cannot be transformed successfully without operations, finance, and clinicians equally engaged and sitting side by side.


  1. For an example, see Kharbanda, A.B., Macias, C.G., et al., “Variation in Resource Utilization Across a National Sample of Pediatric Emergency Departments.The Journal of Pediatrics. July 2013.
  2. Institute of Medicine (IOM), Crossing the Quality Chasm: A New Health System for the 21st Century, Washington, D.C.: National Academy Press, 2001.

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