Healthcare: A patient in search of cure

Nicos Savva uses mathematics and economics to build models that help companies manage strategic challenges. He recently shared his thoughts about the complex issues involved in trying to reform health care with eBSR.

I know that you have been doing a lot of work examining some of the problems facing health care systems in the developed world. What makes these kinds of studies so important?

In recent years, hospitals have been faced with ever-increasing pressure from their major payers — federal and state governments, managed care organisations and large employers — to cut costs. This is an extremely difficult task at any time, since ensuring quality care for patients remains the major goal of caregivers. Now, however, as the population of the developed world is aging, what makes it even more difficult is that the demographic shift taking place results in an even higher demand on hospital resources, most notably a substantial and sustained increase in the daily workload of health care providers. This increased workload has created problems that affect costs, efficiency and quality of care.

Did the ‘symptoms’ resulting from increased workloads provide you with specific areas to examine?

Yes. The literature and empirical observation indicated that increased workloads create the most trouble when it comes to those who believe that their primary function is patient care. As a result, the focus of my work has been on physicians and nurses, the two groups that provide the most sophisticated and expensive caregiving. In the case of physicians, everybody agrees that spending time with patients is their most important job. Payment for patient care, however, is a result of the paperwork that quantifies the type of care given and that paperwork is time consuming. In fact, one study found that the level of paperwork-related stress today is so great that two-thirds of physicians would be willing to give up 10 per cent of their income for a substantial reduction in paperwork.

In the case of nurses, nursing services constitute the single largest item in most hospital budgets. As a result, in many instances, the response of those desperate to cut costs has been reductions of the nursing staff. However, reductions in nurse-to-patient ratios — as well as shorter hospital lengths-of-stay and the use of outpatient procedures — have resulted in sicker hospitalised patients who require more nursing care. The stress induced by all this has increased absenteeism among nurses dramatically, which has both monetary and quality of care costs.

Can you briefly explain the analytical work you and your colleagues did?

I was involved in two specific studies in hospitals in the US.  The first was a comprehensive examination of a detailed data set from the trauma department of a major urban hospital to explore the discharge forms filled out by physicians that lead to the assignment of codes for reimbursement for care. The second was an analysis of the link between nurse absenteeism and workload using data from the emergency department of a large New York City hospital.

Diagnosis

What did your studies find?

When it comes to physicians, we found that the more discharge summaries they had to compile in a given day, the less likely it was to provide all the necessary documentation for their patients to be classified as high severity for reimbursement  purposes. In fact, because patients classified as high severity result, on average, in a 47.8 per cent higher reimbursement payment, correct coding could bring in about an extra 1.1. per cent of annual revenue to the trauma department. In addition, incomplete discharge summaries result in less adequate follow-up care. Filling out those discharge forms correctly, however, takes time from patient care.

When it comes to nurses, according to the US Bureau of Labor Statistics, in 2008 they exhibited 12.5 incidents of illness or occupational injury per 100 full-time employees, second only to construction workers, as well as the highest number of cases involving days away from work. Our main finding was that absenteeism increases when there is an increase in stress levels as a result of a higher anticipated workload. The effects of these high absentee levels include increases in medical errors, delays for patients waiting for beds in emergency rooms and ambulance diversions — as well as increased financial costs. The additional costs are a result of having to bring in nurses from agencies and pay them as well as the nurses who are using mandated sick days or of asking nurses finishing their shifts to stay on and pay them overtime rates.

Prognosis

What can be done to correct these specific problems?

When it comes to physicians, one solution frequently put forth is to change operational procedures to free physicians from their current paperwork burden, perhaps by placing independent personnel in charge of generating such reports. Unfortunately, the people who could take over such a role, such as nurses, are themselves overworked. The answer could lie in using the additional revenue from correct coding to hire such personnel.

When it comes to nurses, we find that with an average absenteeism rate of 7.3 per cent, an extra scheduled nurse is associated with an average reduction in the absenteeism rate of 0.6 per cent. But again, there is a cost to this; after all, patient loads cannot be anticipated at the time schedules are drawn up, which could result in more nurses than needed for a given shift.

In other words, there are no easy solutions that would bring about the kinds of cost reductions that are deemed critical to the survival of affordable, quality health care. New treatments for the problems facing health care will have to be found, but finding them will take more detailed research into all aspects of health care.

For more information about these studies, see Adam Powell, Sergei Savin and Nicos Savva, ‘Physician workload and hospital reimbursement: Overworked servers generate lower income’, Working Paper, August 2011.