Managing Cost of Care: Lessons from Successful Organizations

By Suzanne Hansen, Diane Stewart

Changes driven by implementation of the ACA, including the influx of newly insured Californians through the public exchange and the expansion of Medi-Cal (California’s Medicaid program), have renewed efforts by health care organizations to manage the cost and quality of patient care. The California Quality Collaborative (CQC) interviewed top-performing health care organizations to identify best practices for managing total cost of care. This project sought to identify replicable patient management strategies that effectively reduce unnecessary services while improving the quality of patient care.

The health care organizations interviewed offered valuable insights into how they managed the cost of care. In summary, a road map emerged for provider organizations interested in sharpening their own focus on the cost side of the value equation:

  • Assess the cultural and leadership foundation of your health care organization. Successful organizations shared common cultural attributes driven by the organization leadership.
  • Pick a strategy: primary care-based or organizationally based. Organizations face a major strategic decision about whether to organize programs and resources within primary care practices and assign accountability at the local level (primary care-based) or to collaborate with primary care practices and assign accountability centrally or regionally for program execution (organizationally based).
  • Initially, target inpatient and facility costs. Successful programs provided many examples aimed at reducing per-member costs, often measured by surrogate measures of cost, such as hospital days per 1,000 enrollees.
  • Make sure the organizational foundation for this work is sound. Based on the diversity of provider organizations reporting success, any organization appears capable of addressing cost of care, as long as the foundation is strong. The common element appears to be the foundation from which an organization begins the work — whether the leadership is committed, and the culture supports, a shift from volume to value.

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