Academic medical centers (AMCs) play a prominent role in America’s healthcare system. They provide a disproportionate share of charity care, medical research and medical education when compared to non-academic medical centers. It has been assumed for a long time that AMCs also provide higher quality care than comparable non-academic medical centers, however there has been little research on the topic.
A new study released by Navigant Consulting concludes that AMCs trail non-academic medical centers when it comes to certain cost and quality measures. The study pinpointed some key data points that support this conclusion including:
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“Cost per case was 5.8% higher at AMCs (2017), equating to $3.1 million in average added annual operating expense per AMC.
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Cost per case disparity between high and low performers of 22% for AMCs, 19.8% for non-AMCs, equating to $12 million per AMC and $9.2 million per non-AMC in added annual operating expense.
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AMCs received more Medicare value-based program penalties (2016-2018) — 40% got 7+ of 9 possible penalties vs. 23% of non-AMCs.”
Download a copy of the case study here: Study: Despite Improvements, Academic Medical Centers Trail Non-Academics on Cost and Quality Metrics
Looking at the data shows that despite higher costs at AMCs for procedures, they are not experiencing proportionately better outcomes, as many would have assumed. The data doesn’t identify the culprits for the lack of control of costs per case at AMCs, but it is reasonable to assume that running the business side of operations at AMCs is proving more challenging than at non-academic medical centers, which may be able to keep tighter control of their operations. With smaller staffs, less attending and rotating physicians and higher levels of accountability, they may be able to keep costs per case under control better than at AMCs, which have more resources and more volume to manage. This can be seen in the disparity between high performing and low performing AMCs, which have a 22% variance in their cost per case, versus a 19.8% variance for high and low performing non-academic medical centers.
Many AMCs are learning to adapt to the new value-based care environment in real-time and adjusting on the fly. Utilizing the vast amounts of data that they are gathering around their procedures will allow them to identify areas of improvement and make adjustments that should yield immediate returns. One place that AMCs (and non-AMCs) may find immediate opportunities for reducing their cost per case is by better managing their implants and supplies, which make up the second biggest component of procedure costs after labor. If your organization lacks the proper tools to provide powerful data around your supply chain spend, consider systems such as iRISupply which can collect real-time data around supply and implant usage using RFID technology and provide actionable insights to help with vendor negotiations, on-hand inventory levels and owned-consigned item mix. Powerful data analytics included with the software will give specific recommendations on which items to reduce or eliminate, and which items should be owned vs. consigned, leading to millions of dollars in cost-savings opportunities. These cost-savings opportunities can help AMCs close the cost gap with non-AMCs in a big way.