Gary S. Kaplan, MD, Virginia Mason's chairman and CEO, says that the imaging reductions and other measures have improved quality and improved patient safety, and that reduces costs all around.
"Our doctors can do great procedures and have great outcomes with a great patient experience, and we do it efficiently with no waste. But if the patient didn't need it to begin with, there's no quality there," he says.
Mecklenburg says leaders at Virginia Mason were happy to see CMS establish a pay-for performance efficiency measure. "We would say it's about time," he says.
With a score of 0.94 in December 2013, the healthcare system's efficiency was considerably better than the national average ratio of 0.98, although below the state's average of 0.91.
According to CMS data, for example, Virginia Mason's Medicare average spending per beneficiary of $2,343 is much lower for skilled nursing facilities during the period 30 days postdischarge than the state ($2,764) and national Medicare averages ($2,924), perhaps sending more patients home and utilizing home health agencies.
The ability to see with such detail where costs are is key to streamlining the system, Mecklenburg says.
"It's true that medical centers around the country are not accustomed to this, and I think it will take some good analytics and good understanding of how quickly medical centers can improve," Mecklenburg says. Historically, he says, healthcare systems "have spent more than we should have on the wrong stuff, and this will help doctors make good choices about what care is appropriate."
Leora Horwitz, MD, assistant professor of internal medicine at Yale University School of Medicine, acknowledges that hospitals don't think many of these cost and quality issues outside of hospital walls are under hospitals' control.
"CMS is taking the long view, trying to change the underlying incentive structure that enables these changes to take place," she says.
"Remember," she adds, "there was never a business case to be made for reducing readmissions. You could talk until you're blue in the face about how it's the right thing to call the patient up, get their meds right, educate them better, and get discharge summaries to the doctors faster. People said, 'Yes, yes, we know you're right. We should do that.' "
With the 30-day readmissions penalty now in place affecting up to 2% of a hospital's Medicare revenue in fiscal year 2014, "magically, people are working on that and readmissions are dropping. CMS is creating a reason for hospitals to focus on this where they didn't have a reason to before."
This article appears in the March 2014 issue of HealthLeaders magazine.