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Value-based Health Care

Lessons for the Anesthesiologist

Martin, Jacob A., MD*; Potter, Brandon L., MD; Flanagan, Timothy F., MD; Feeley, Thomas W., MD§

International Anesthesiology Clinics: January 2019 - Volume 57 - Issue 1 - p 63–80
doi: 10.1097/AIA.0000000000000209
Review Articles

*Department of Anesthesiology, Larner College of Medicine, University of Vermont, Burlington, Vermont

Department of Anesthesiology, University of Wisconsin Hospital and Clinics, Madison, Wisconsin

Department of Anesthesiology, Lahey Hospital & Medical Center, Burlington, Massachusetts

§Harvard Business School, Boston, Massachusetts

The authors declare that they have nothing to disclose.

Address Correspondence to: Jacob A. Martin, MD, Department of Anesthesiology, University of Vermont Medical Center, Mail Stop 122, WP2, 111 Colchester Avenue, Burlington, VT 05401. E-mail:

At one point or another in our life, we all become consumers of the health care industry. Indeed, health care affects everyone and encompasses a diverse set of services from childbirth, to illness prevention, to the management of chronic disease and end-of-life care. Health care in the United States is executed through a complex set of interrelationships between 3 distinct parties: payers, providers, and consumers. Each group has its own perspective accompanied by a set of unique incentives, which complicate the adoption of a value-based health care system. To transform the American health care delivery system, all participants including patients, physicians, employers, insurance companies, and the government need to recognize that value is best defined as “a given health outcome per dollar of cost expended.”1 In this article, we examine some of the challenges to creating and implementing a value-based health care system against the backdrop of a turbulent industry and consider the implications for the anesthesiologist.

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Health Insurance

The origin of health insurance policies can be traced back to the 1920s when individual hospitals began to offer services to patients on a prepaid basis.2 The first employee-sponsored hospitalization plan was established by a group of teachers in Dallas, TX, in 1929.3 Despite very different beginnings, all health plans today share common limitations. For example, the ability to choose a particular physician, hospital, or pharmacy depends on one’s insurance company and “in-network” offerings. When a patient ultimately “chooses” or enrolls in a given plan, he or she is selecting from a very limited number of options that have grouped the coverage of certain services. This system of enrollment in a health benefit plan mirrors a subscription to cable television services. Insurance companies pick and choose which services are covered and determine the deductible allocated to a given plan. In addition, companies can choose to deny coverage for the treatment of certain preexisting conditions.

In many respects, patients are forced to conform to this one size fits all insurance coverage, which gives very little consideration to their individual needs. Although insurance companies can be a great source of frustration for the patient, they provide a critical service. Public and private insurers (payers) allow individual patients to pool the financial risks associated with contracting an illness and act as agents on the patient’s behalf in the provision of medical care. By averaging the risk of falling ill and its associated cost across a group of individuals, payers should be able to provide coverage for those with the greatest need.

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A Health Subscription

The concept of health insurance is, in many ways, a misnomer. A more reflective term for health insurance may be called a health “subscription.” Insurance implies the pooling of capital compensating against a catastrophic, yet rare, event much as a community would pool premiums to insure against a house fire. The misnomer of health insurance occurs with the use of the pooled capital for primary and secondary prevention. Insurance against a house fire does not pay for smoke detectors, fire extinguishers, and a fire department in close proximity to the house. These secondary prevention measures require a separate funding stream. From this perspective, lumping all costs associated with health care utilization under the umbrella of the term “health insurance” is misleading.

At the point of consumption (care), “insured” patients are required to pay a deductible that represents a small fraction of the total cost of service. Most plans have an annual maximum deductible, meaning that no patient contribution is required for all subsequent care received thereafter. If an individual’s goal is to avoid illness, then removing the relationship between the cost of care and consumption will encourage utilization (eg, unnecessary testing and the inappropriate use of antibiotics). For example, Baumann et al4 showed that patients presenting to the emergency department with acute abdominal pain were increasingly more confident in the diagnosis when additional testing was performed. Patients who were offered a computed tomographic scan as part of the workup expressed a higher level of confidence in the care that they received. Similarly, patients with low back pain were found to be increasingly satisfied with their care after they received magnetic resonance imaging despite the absence of clinical indication to obtain imaging.5 In the end, higher utilization rates contribute toward the overall cost of the current system.

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Care in the Era of Consolidation

On March 23, 2010, President Barack Obama signed the Affordable Care Act (ACA) into law. The ACA, through a variety of measures, attempted to improve access to care (decrease the number of Americans who lack protection against the cost of illness), control the cost of care, and improve overall quality. Central to this effort was the formation of Accountable Care Organizations (ACOs), a network of health care providers that coordinate care across a variety of services in an attempt to constrain escalating costs and improve quality. Not surprisingly, the number of hospital mergers increased markedly after the passage of the ACA; studies examining the cost reduction associated with hospital mergers have yielded mixed results.6,7 Today, the debate remains on whether or not the cost savings are passed on to the consumer.

Concomitantly, health care insurance companies merged in an effort to achieve economies of scale and to leverage themselves in negotiations with other members of the health care system. Today, the top 2 insurance companies have market shares of >50% in all but 5 states and >75% in 18 states.8 Several studies suggest that those economies of scale achieved through insurance company mergers are not passed on to patients and insurance industry consolidation actually increases costs to patients by decreasing competition. For example, insurance premiums increased the most in areas with the greatest premerger market overlap after the Aetna-Prudential merger.7 It is noteworthy that the postmerger increase in premiums was also documented in remaining rival insurers.9 In 2008, after the merger of Sierra Health and United Health, small group premiums were noted to increase by 13.7%.10 Consistent with these findings, other studies have documented lower insurance premiums in those geographic areas with a greater number of insurers.11,12 Dafny et al13 calculated that insurance premiums would be reduced by 11.1% if all insurers of a given state participated in all ratings areas of that state’s Health Insurance Marketplace. This trend has also been documented in Health Insurance Marketplaces established by the ACA.

Lawmakers framed the ACA to make ACOs responsible for a growing menagerie of regulations. As a result, ACOs were challenged by the need to provide outcomes measurement, to standardize protocols across disparate clinical pathways, and to reign in physician practice patterns. Consequently, administrative costs increased from 3% (1980) to 7% (2011) of the total expenditure on care.8 Hospital-specific administrative costs were 25.3% of the total hospital costs in 2011, representing 1.43% of the gross domestic product of the United States.14 Further, fostering communication throughout increasingly large health care organizations has required substantial investment in information technology (IT). Although the goal of implementing an IT platform is to increase efficiency and improve information sharing among providers, upfront costs and ongoing maintenance are expensive. In 2011, hospital spending on IT reached $33 billion or 3% of the total hospital and facility expenditures.8 The question remains whether or not any return on investment is realized in terms of higher quality and lower costs.

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Cost Accounting: Top-down or Bottom-up?

The uncertainty of future health care funding necessitates accurate cost assessments, especially as alternative payment models increasingly replace fee-for-service.15 Once the actual costs to deliver clinical care are known, one can presumably determine how to maximize care per dollar spent.16 Value-based care depends on understanding health care costs. In general, the 2 most commonly used costing models are top-down and bottom-up. Top-down costs are calculated by each encounter as a proportion of annual expenses. Bottom-up costs are calculated by totaling each provider-level expense with their associated activity.17

Two top-down methods of cost accounting commonly utilized by health care institutions are relative value unit (RVU) costing and the ratio of cost to charges (RCC). The RVU method represents the relative work and expertise involved in any given patient service. The American Medical Association (AMA) generates RVUs for each of their Current Procedural Terminology (CPT) codes. The process for generating RVUs takes into account the level of service, practice expenses, and malpractice, all 3 of which are weighted by geographic location. CPT codes exist for any interaction between a patient and a health care provider. The Centers for Medicare and Medicaid Services (CMS) reimburse health care institutions and providers on the basis of the CPT code generated for services rendered and its corresponding RVU cost. The RCC method looks at year-end revenues and expenses, the ratio of which is used to approximate the cost of patient care. If a hospital’s revenue-to-expense ratio is 0.80 and the charges for a patient visit were $300, the costs for that visit are calculated as $240. This 80% is used as the RCC.

The advantages of top-down costing are its simplicity to derive, the low expense to facilitate, and the ease of inputting data. Disadvantages lie in not understanding the changes in costs as conditions change, the inability to differentiate costs between individual components of the system, unknown incremental costs, the risk of averaging effects across services, and force-fitting costs on the basis of historical pricing. These shortcomings may create a zero-sum game for stakeholders with the lurking potential to undermine interdisciplinary collegiality and patient safety.14 One striking example of a top-down costing approach failure is the per diem reimbursements for hospital stays. Several authors have pointed out that health care costs, especially surgical care, are more chronologically front-loaded than commonly thought.15,18,19 In other words, the opportunities to decrease health care costs associated with a surgical episode of care may be limited.

Health care institutions have a high fixed-to-variable cost ratio. This requires that hospital administrators fully understand the overhead costs for particular activities (eg, being able to appropriate wages, rents, and administrative costs into the clinical interviews, physical examinations, and procedures of patients). Given the substantial fixed costs of many hospitals, optimizing current systems may be a more cost-effective way to increase revenue than simply emphasizing increased throughput as the means to an end.14 For most institutions, the revenue generated per patient is constrained to bottlenecks in the system. If the costs are unknown, then simply increasing production volume may paradoxically increase fixed costs and amplify inefficiencies. Also, there is little consideration for clinical outcomes that may or may not follow from lowering total care costs.20 Again, the value of any accounting efforts lies in understanding the costs.

A bottom-up costing approach has been offered as the way to demystify costs.21 Bottom-up costing tallies the resources used to produce an individual activity or service and aggregates costs for a given clinical pathway.22 Bottom-up costing increases accuracy because it identifies individual cost contributors and accounts for indirect costs required to support patient care.23 Furthermore, it allows for differentiation of variable and fixed costs. Its disadvantages lie in the resources and expertise needed to execute the numerous costing steps.

Bottom-up costing provides in-depth insights, making it particularly useful in industry for complex processes such as the configuration and operation of inter-firm supply chain management.24 However, its application in health care processes is typically narrow in focus, executed by a few individuals at a single point in time.25 In the bottom-up approach, the cost of an employee’s share of real estate expense, the square footage of hospital space attributable to a single staff member, must be calculated and repeated for each employee’s contribution to health care costs.21 Even with a clearly defined transition plan from current reimbursement models, bottom-up accounting would require repeated reallocation of costs among procedures, employees, and hospital staff as health care delivery models evolve. The ongoing management burden of implementing this accounting practice is an important consideration that needs to be quantified. As an example, accounting standards for Sarbanes-Oxley cost publicly traded health care provider companies an average of $1.2 million per year.26 A new bottom-up cost accounting standard for all hospitals could place a huge financial burden on already constrained hospital budgets.

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Negotiated Indirect Cost Rate Agreements (NICRA): A Potential Solution

Medicare spending grew 3.6% to $672.1 billion in 2016. Medicaid spending grew 3.9% to $565.5 billion, with a combined total of $1.2 trillion in 2016.21 Medicare and Medicaid spending is spread across thousands of hospitals and health care practices. Meanwhile, the top 10 US government contractors for 2016 represented almost $140 billion of government obligations.27 While contracting mechanisms vary, many of these government contracts use a cost accounting method to allocate a certain percentage of the contract dollars for overhead costs. Companies may work with government budgeting offices to create a NICRA.28 The NICRA may include provisions for general and administrative costs, and overhead. These government contracts often include line items for individual full-time equivalents. However, accounting for overhead and administrative costs is accomplished in an aggregate manner rather than painstakingly allocating the square footage of real estate that an office employee requires. Hospitals typically respond to additional regulations by adding health care administrators. If price costing knowledge is essential to appropriate cost control and oversight, then arguably it should be applied across all industries that function with government money.

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The Application of Bundled Payment Systems

In 2009, CMS sponsored the bundled payment model under the Acute Care Episode (ACE) Demonstration Project in Colorado, New Mexico, Oklahoma, and Texas. Episodic bundled payment models were created to improve patient outcomes and control costs in an environment filled with large clinical variability and poorly understood resource allocation patterns.29 Bundled payments originated as a compromise between the global capitation for all enrolled patients and the fee-for-service model that dominated our health care system for decades.

Results from the San Antonio ACE program focusing on orthopedic total hip and knee arthroplasties showed an overall hospital cost savings of 12%. These savings were achieved through an analysis of 3 main cost centers involved in the operations. Supply costs (18% of the total cost) were reduced by standardization and review of supplies before each case. Implant costs (47% of the total cost) were reduced with more physician involvement in vendor price negotiations. Personnel costs (24% of the total cost) were reduced through reassessment of staffing models, increasing case volumes, and reducing hospital lengths of stay. The study noted the difficulty of accurately calculating personnel costs because of the complexity and number of services involved in a patient’s care.

CMS also championed bundled payment incentives as part of the ACA through their Bundled Payments for Care Improvement (BPCI) initiative. The BPCI initiative solicits applications from health care providers to 1 of 4 bundled payment model options. Model 1 relates to inpatient services setting a minimum retrospective CMS discount of 2% in the third year. Model 2 relates to both inpatient and postdischarge services setting a minimum retrospective CMS discount of 3% <90 days after discharge and 2% 90+days after discharge. Model 3 relates only to postdischarge services with discounts set entirely by the institution. Finally, model 4 relates to inpatient services setting a minimum CMS discount of 3%, but prospectively as an upfront payment, in contrast to model 1 (Table 1). Savings from bundled payment systems beyond the stated discounts are realized by the health care provider or institution as essentially a bonus, but stipulate that this margin is tied to changes in care that improve overall value. It is noteworthy that all providers must comply with the Anti-Kickback Law, Stark Law, and False Claims Act, among others. Finally, the awardee of the CMS model also assumes all financial risk of costs beyond the bundled payment.

Table 1

Table 1

In all, the physician and institutional collaborations spurred by the ACE program have proven advantageous in both clinical and fiscal outcomes. As Froimson et al30 eloquently stated, “the essence of this new approach does not rest in how we get paid for the product but rather in how we define the product for which we expect to get paid.” To define the product, health care administrators must identify the costs. If bottom-up costing is excessively laborious, perhaps the first step is to identify major cost contributors (eg, implants) and potential alternatives. In summary, bundled payments will require health care institutions to move beyond the vagaries of top-down costing.

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Outcomes Measurement

On the other side of the value equation, health care systems need to improve outcomes to increase value. There are several reasons why measurement of outcomes in health care has been so difficult: first, the adherence to evidence-based processes rather than clinically driven results, second, the specialty-specific outcomes measured sometimes do not incorporate a holistic view of the patient, creating silos of medical practice, And third, the majority of current outcome measurements consist of poorly validated, easily accessible, and objective data. They may not address critically important “soft” measures such as patient suffering, treatment delays, and the dissatisfaction associated with a consuming patient process. Finally, many health care organizations are reluctant to evaluate subjectively the clinical care provided by physicians.31

Using an ethnographic approach, Schupbach et al32 propose that the best way to measure outcomes is to simply ask patients. Most industries outside of health care understand that measurement of outcomes is a quintessential part of improving value.26 These industries have instituted metrics to obtain quality outcome measures, such as the Net Promoter Score, and found it to be an effective binary measure for value.21 It asks consumers whether they would recommend a product or a service to a friend (promote) or not (detractors). Although the use of a patient’s subjective experience as a measure of clinical success is controversial, multiple studies suggest that positive patient satisfaction scores do correlate with improved clinical outcomes.33,34 Schupbach et al clarify that the information is “meaningful not because it causes quality, but because it may indicate that quality was delivered.”21

The need to further define performance metrics is vital to measuring outcomes. There are many existing metrics that can be utilized such as the compliance with Surgical Care Improvement Project (SCIP) measures, standard adverse event outcomes such as re-operation, surgical site infections, readmission rates, and 30-day mortality rates. Although these measures convey useful information, process improvement necessitates subscription to a national database (eg, Society of Thoracic Surgery Adult Cardiac Surgery Database). Like other national databases, factors such as patient demographics, comorbidities, and previous interventions are taken into account to provide risk-adjusted morbidity and mortality. These data are reviewed by members of the designated team on an annual basis and relevant regional and national comparisons are made. To close the quality assessment/quality improvement loop, high-ranking institutions should be queried on best practices and improvements implemented to the care delivery process.

In an attempt to address the shortcomings of outcome measurement, Michael E. Porter and Elizabeth O. Teisberg created the International Consortium for Health Outcomes Measurement (ICHOM). The ICHOM facilitates a forum for patients, providers, researchers, and policy makers to focus on one common medical condition at a time by setting a globally agreed upon cache of measures defining successful treatment. The 12 standard sets of outcomes cover ∼35% of the global disease burden and these standardized holistic outcome measures allow for a valid, reliable, and timely assessment in deriving our health care value equation.35 As a result, this consortium spurred many medical specialty societies to better incorporate similar outcomes into their quality measures.

Once costs and quality outcome measures are established, an incremental cost-effectiveness ratio (ICER) can be used to effectively compare the economic value of our health care efforts across specialties and disease processes. ICER is derived by dividing the difference in costs of interventions over the difference in outcomes from those interventions. In essence, it provides a means to quantify value and allows for the prioritization of economic resources in rank order from most cost-effective to least cost-effective. It is critically important to keep in mind that many health care interventions are not mutually exclusive. Therefore, the ICER allows researchers to better compare the benefits and costs of additional interventions relative to existing practices.

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Patient-centered Care

In Crossing the Quality Chasm: A New Health System For the 21st Century, patient-centered care was identified as 1 of 6 specific aims for improvement.36 Clearly, providing care that is respectful and responsive to individual patient preferences, needs, and values should be the goal of all health care services. Health care delivery is after all a service industry. So where do anesthesiologists begin?

If health care delivery is going to be patient-centered, then patients need to be informed and providers need to listen. Educational pamphlets and periprocedural instructions are beneficial, and yet may not provide the in-depth information (eg, risks, benefits, and alternative treatments) needed to make an informed choice. Decision aids are tools developed to help patients clarify their values, understand how those values affect their decisions, provide information about all treatment options, and use evidence to communicate the likelihood of achieving the treatment goal with a given intervention.37 A Cochrane review of 95 studies showed that patients who used decision aids had higher levels of understanding, had more accurate risk perceptions, reduced their internal conflict about decisions, and had a greater likelihood of receiving care aligning with their values.38 Most importantly, fewer people were passive in the decision-making process, which promotes adherence to selected treatment plans.

In 2012, a Group Health Study in Washington state showed that utilizing decision aids for patients with hip and knee osteoarthritis reduced replacement surgeries by 26% and 38%, respectively, providing a cost savings of 12% to 21% over 6 months.39 In 2016, the National Quality Forum developed certification standards for patient decision aids in an attempt to pick the best tools to support conversations between patients and their physicians.40 The meaningful incorporation of individuals’ goals, values, and preferences into care planning requires respectful and compassionate conversations between providers and patients. This is not a novel concept to anesthesiologists. Nearly 20 years ago, Bader41 stressed the importance of “patient centered interaction, competence, caring and compassion” from all members of the preoperative admission testing clinic at Brigham and Women’s Hospital. Brigham and Women’s preoperative assessment process included the patient and their family members in an open and honest dialogue, all of which translated into high ratings on patient satisfaction surveys.35

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Multidisciplinary Teams

One way to align patient goals with planned care is to organize care delivery with physician-led multidisciplinary teams. Anesthesiologists are well suited for this transition because team-based care has been central to our practice model for >70 years. Each care plan should focus on an entire episode of an individual patient’s care. In doing so, best practice protocols should be adopted and clinical pathways developed that empower all members of the team to provide feedback and implement efficiencies. Enhanced Recovery After Surgery (ERAS) protocols, which attempt to standardize perioperative pain, nausea, vomiting, and fluid administration, provide excellent, albeit focused, examples. Multiple meta-analyses of ERAS have documented reduced length of stay and reduced complication rates after elective colorectal surgery.42,43 Clinical pathways create a standardized framework that allows providers to anticipate and respond to the needs of the individual as they move along a care process.

The American Society of Anesthesiologists (ASA) defines the perioperative surgical home (PSH) as a patient-centered, physician-led, multidisciplinary team-based system of coordinated care that guides the patient throughout the entire surgical experience.44,45 The goal of the PSH is to improve clinical outcomes, enhance patient experience, and decrease cost. To advance perioperative care and re-engineer clinical processes, Duke University developed the Perioperative Enhancement Team (POET).46 The POET consists of physicians from anesthesiology, surgery, and internal medicine and advanced practitioners, nurses, support staff, and administrators. The POET established 15 disease-specific programs that evaluate perioperative risk, identify modifiable risk factors, coordinate risk reduction management, and provide patient education.40 Like the PSH, the POET enables health care providers to better coordinate patient care across the continuum of surgical care, beginning with surgical contemplation and continuing postdischarge from the hospital or rehabilitation facility.

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Integrated Electronic Health Records (EHRs)

Today, effective clinical care coordination is not feasible without an investment in IT. In 2009, the Health Information Technology for Economic and Clinical Health (HITECH) Act created the EHR Incentive Program to increase the adoption and use of EHRs by hospitals and physicians. A total of 29 billion dollars in incentives were set aside to assist physician groups implement EHRs with “meaningful use,” defined as those EHRs having the capability to track and improve specific patient outcomes.47 Not surprisingly, this law led to a marked increase in EHR use by hospitals and ambulatory care providers. The purported benefits of EHR implementation include immediate access to patient information including an up-to-date problem list, availability of inpatient and outpatient data, clinical decision supports, computerized ordering, and the development of standardized order sets associated with clinical pathways.

Data showing improved quality as a result of EHR use are of mixed result, hospital focused, and frequently include data collected before the onset of the HITECH act.48 A study by Hsiao et al,49 in 2012, found that only 65% of office-based physician practices with an EHR capable of data sharing reported receiving results from a consultation for their patients referred outside of the practice. The issue of data sharing does not seem to be specific to isolated practices. A Pharmacy Benefit Management survey of 101 ACO providers covering over 6.5 million patients found that only 27% reported using a single EHR and highlighted the supposition that it is not the EHR itself that is going to revolutionize health care.50 Instead, it is the widespread adoption of a thoughtful, user-friendly, well-designed clinical interface that improves clinical workflows for both physicians and patients. Once a functionally integrated EHR is implemented, it must be interrogated to ensure that it provides quality measurement, an essential component of quality improvement. Addressing suboptimal outcomes and comparing costing data for treatment options will facilitate process improvement and value.

The sharing of medical records, which provides detailed up-to-date patient information throughout ACOs, is a requirement. The Direct Project, launched in March 2010, established the technical standards and services necessary to securely push content over the internet from a sender to a receiver. The ultimate goal is to create a nationwide health information network whereby patient information can move seamlessly across health care systems. For now, the best example of an established nationwide health IT system comes from the Veterans Health Administration. Each Veterans Health Administration medical center, irrespective of geographical location, shares an integrated medical records system where all patient information is readily available.

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Value-based Anesthesiology: Does it Exist?

From an economic perspective, the value of a good or service is equal to what an individual is willing to pay or give up in terms of time and resources to receive it. The capitalize first word of the sentence goal of any successful service industry is to meet the needs and desires of its customers. Health care is no different. Value in health care should always be defined in relationship to the patient. The US health care system has evolved to become a complex 3.3 trillion dollar (USD) industry, which includes many impediments to adopting a value-based system.51 Realizing the importance of quality improvement and cost control, physicians need to be the leaders of disruptive change.

As mentioned previously, the ASA endorsed the PSH with its team-based care approach in an attempt to increase quality, patient safety, shared decision-making, and decrease cost.52 Irrespective of the cost accounting methodology used, there are some areas of focus where anesthesiologists can achieve cost reduction. First, redundant or unwarranted preoperative tests are a known source of unnecessary cost.53 There is no evidence to support routine laboratory screening in healthy patients presenting for elective surgery.54 Katz et al55 showed that anesthesiologists are less likely to order unnecessary preoperative testing compared with their surgical colleagues. Critical evaluation of preoperative order sets and monitoring of unnecessary interventions provides anesthesiologists with an opportunity for further cost reduction.

Second, cost containment can also be achieved in the intraoperative setting through provider feedback. This requires the interrogation of an anesthesia information management system (AIMS). Studies have shown that ongoing feedback detailing a provider’s use of expensive drugs relative to their peers can decrease anesthetic drug costs.56,57 Real-time alerts have also been shown to be beneficial in reducing anesthetic gas wastage.58,59 Although the savings may be difficult to quantify, AIMS data should be leveraged to promote adherence to best practice protocols for antibiotic prophylaxis, postoperative nausea and vomiting, analgesic administration, and red cell transfusion. These interventions minimize patient complications, decrease recovery time, and shorten length of stay. As alternative payment models gain acceptance, more hospitals will assume the financial responsibility for patient complications. This is a stark contrast to the fee-for-service environment, where complications are associated with recoding into higher paying diagnosis-related groups and an increased contribution margin per patient.60

Third, clinical directors and practice managers can reduce costs by optimizing the operating room (OR) scheduling and staff assignments. Tiwari et al61 reported that the final OR case volumes can be predicted reliably 1 to 2 weeks in advance. In those hospitals with >8.5 hours of cases and marked variation between services and days of the week, the redistribution of cases can result in reduced labor costs.55 OR medical directors can work with individual surgeons to adjust their schedules in an attempt to level capacity throughout the week. Further, ensuring that similar numbers of elective admissions (or level loading) occur across hospital wards each day helps decrease the likelihood that a hospital will oscillate between excessive and low patient volumes.62 Periods of excessive patient volume have been shown to correlate with an increased likelihood of adverse events,63 whereas low utilization rates are associated with inefficient deployment of labor resources.

Finally, anesthesiologists can alter staffing models to decrease personnel costs. French et al64 identified personnel costs as the major contributor to the overall cost of anesthesia care. By changing the supervision ratios of certified registered nurse anesthetists to anesthesiologists from 2:1 to 3:1, a 13% reduction in personnel cost was projected.58 Clearly, anesthesia staffing models must consider patient comorbidities and case acuity when scheduling personnel. Ongoing analysis of clinical outcomes will assist with the selection of patients, procedures, and optimal anesthesia staffing ratios. Cost-effective anesthesia care will require a team-based care model, incorporating mid-level providers delivering increasingly standardized care.

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Anesthesiologists are uniquely positioned to incorporate and integrate the necessary care components that increase value in the perioperative setting. They must embrace the opportunity to develop and continuously improve care delivery pathways. This is not possible without the establishment of teams where all participants have clearly defined roles and work to the maximum scope of their practice. Working at the front-line in perioperative services, anesthesiologists have the ability to identify bottlenecks, reduce waste, and critically evaluate cost contributors. As health care transitions from fee-for-service to alternative methods of reimbursement, physicians will become cost generators. Orders to obtain laboratory work, imaging and invasive procedures that were previously incentivized will become expenses in this cost sharing environment. Administrators need to understand that significant improvement in health care value cannot occur without physician buy-in and they need to establish a culture where information is shared, feedback is desired, and physicians are both informed and incentivized.

Anesthesiologists can no longer afford to think as individuals or even groups of individuals on the basis of their subspecialty. Anesthesiologists must work with IT vendors, administrators, and other health care providers to develop integrated clinical processes. Our focus on identifiable risk factors and risk reduction management is central to the continued improvement of perioperative care delivery pathways. We must intensify our efforts to engage patients in a meaningful dialogue that aligns patient desires with objective outcomes. At Duke University, Aronson and colleagues have started to reframe the discussion of the perioperative assessment through a population health lens.40 Ultimately, instead of asking the question when surgery should be scheduled, perhaps there will be a more challenging question: is surgery necessary?65 If value in health care is patient centered, then the physician with the tripartite role of educator, advisor, and care provider should be uniquely positioned to further the reform effort. Perioperative care redesign has begun. Anesthesiologists can either contribute to the cause, justifying our seat at the table, or long for the “good old days.”

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