BOSTON — March 22, 2000 — Since the wide acceptance of managed care in the early 1990s, a conflict has existed between managed care companies and health care providers. Both claim the same two priorities: ensuring quality health care while minimizing cost. However, companies are seen as placing an emphasis on cost-containment at the expense of quality health care, while providers are thought to insist on autonomous health care decision-making without regard to cost. According to the authors of "Cost and Quality Under Managed Care: Irreconcilable Differences?," published in the March issue of the American Journal of Managed Care, the answers lie in the application of a novel management methodology to reduce inefficiency.
The authors apply tools from operations management to health care and find that there are variabilities in two categories that must be identified and controlled. One set, termed "natural" variabilities, includes numbers of patients, types of diseases, and level of professional services needed. The other set of variabilities are "artificial" and hold great potential for savings without risk of reducing quality of care and for potentially improving quality.
Eugene Litvak, lecturer in the Department of Health Policy and Management at HSPH, uses the example of a hospital operating room. An operating room is an expensive, but necessary, resource for a hospital. Ideally, it would be in use 24 hours a day. However there must be flexibility for emergency patients. Using variability analysis, Litvak and Long discovered that, as expected, a large source of variability was from emergencies. However, they found an approximately equal source of variability from scheduled elective surgery. "In some operating rooms, we are as likely to predict when someone will break their leg as when a surgeon will do a scheduled surgery," said Litvak.
"What we found is that operating rooms are poorly scheduled and frequently unused," said Litvak. "The expensive inefficiency of operating rooms is as much a result of the artificial variability of scheduling as from natural variabilities of patient emergencies. If a hospital would schedule elective surgeries in a more rational manner, then the operating rooms could be used more efficiently – cheaper – without compromising – and possibly even improving – quality."
Cost-saving opportunities such as inefficiently used operating rooms abound in the health care system. Litvak and Long call for the application of variability-based methodology "to distinguish effective cost-control interventions in health care from those that would only waste money or even damage the health care system."
Michael Long is an assistant professor of anesthesiology and deputy director of operating room services at Massachusetts General Hospital.
Harvard School of Public Health is dedicated to advancing the public's health through learning, discovery, and communication. More than 300 faculty members are engaged in teaching and training the 800-plus student body in a broad spectrum of disciplines crucial to the health and well being of individuals and populations around the world. Programs and projects range from the molecular biology of AIDS vaccines to the epidemiology of cancer; from risk analysis to violence prevention; from maternal and children's health to quality of care measurement; from health care management to international health and human rights.
The Massachusetts General Hospital, established in 1811, is the original and largest teaching hospital of Harvard Medical School. The MGH conducts the largest hospital-based research program in the United States, with an annual research budget of more than $200 million and major research centers in AIDS, the neurosciences, cardiovascular research, cancer, cutaneous biology, transplantation biology and photomedicine. In 1994, the MGH joined with Brigham and Women’s Hospital to form Partners HealthCare System, an integrated health care delivery system comprising the two academic medical centers, specialty and community hospitals, a network of physician groups and nonacute and home health services.
Note: This release originally was issued by the Harvard School of Public Health. Contact Bob Brustman, assistant director of Communications.
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