Activity-Based Costing and Clinical Service Lines Team up to Improve Financial and Clinical Outcomes
Healthcare costs continue to increase at a disproportionate rate relative to gross domestic product, and Americans are becoming increasingly aware that they aren’t getting their money’s worth. To build a sustainable healthcare system, healthcare organizations must identify and address waste and reduce the total cost of care.
UPMC recognized that the common denominator to addressing threats to sustainability is to fully understand and effectively manage costs. It implemented activity-based costing (ABC), facilitated by the Health Catalyst CORUS™ Suite, to deliver detailed and actionable cost data across the analytics environment, and support service line reporting, contract modeling, and clinical process improvement. UPMC has used this approach to effectively drive cost savings and improve clinical outcomes in many of its service lines, including Surgical Services, Women’s Health, Orthopedics, and Cardiovascular. For example:
- $3M cost savings/avoidance over 2 years through the implementation of the ERAS program.
- Increased insight into cost variation and drivers of inefficiency in the operating room setting.
- Improved patient outcomes and quality (readmissions, complications, patient reported outcomes, patient satisfaction, etc.) for patients undergoing joint replacement.