The IHI Leadership Alliance was formed in 2013 but it only began its focus on waste about two years ago. The alliance is intended to be a opportunity for healthcare organizations to come together and share ideas.
“It’s a member-driven network,” said Jill Duncan, IHI executive director. The organizations determine the goals, and the IHI acts more like a facilitator, she added.
Although the alliance is mostly made up of providers, Humana and Scan Health Plan, a Medicare Advantage insurer based in California, are also members.
Macfie and Leo came up with the idea for the group to begin addressing waste after hearing a talk from economist David Cutler during one of the alliance’s biannual meetings.
The group has since laid out seven primary and 15 secondary drivers of waste that organizations can tackle. That involves a systemwide approach to reducing waste and includes decreasing harm and safety events, actively soliciting staff and clinician ideas, engaging leadership and redesigning care to achieve the triple aim.
A 53-page analysis, called Trillion Dollar Checkbook, lays out how addressing each of the drivers can cut nearly $900 billion in waste per year. Macfie and Leo were co-authors of the report.
Not everyone agrees with the report’s ranking of the causes of waste in healthcare. Prices and administrative costs, which are recognized among the biggest drivers of waste, are included but are “not focused on,” said Dr. Karen Joynt Maddox, an assistant professor of medicine at Washington University School of Medicine in St. Louis. “Because this is a provider group, they have the least control there, so that decision is understandable, but those are obviously huge sources of waste.”
Maddox added that the alliance is also “incredibly optimistic” in its calculation about how much focusing on certain areas can reduce costs. She pointed to the estimated savings from alternative payment models as an example. The checkbook estimates $49.7 billion to $82.9 billion annually in savings by extrapolating the experience at MemorialCare with alternative payment models.
“The savings projections they use for alternative payment models, for example, have not been seen in any current” alternative payment models, she said.
Macfie said the figures in the checkbook aren’t meant to be optimistic but conservative. “We weren’t trying to go big, that’s why we had ranges,” she said. “In the beginning (of the checkbook) it says these are all estimates. Until you start saving, it’s a prediction.”
Health system executives who are participating in the alliance like its broad approach to waste, saying that’s needed to tackle the problem.
Waste “is not just one thing. It’s clinical variation; it’s operational waste,” said Cara Hull, chief quality officer at HealthPartners, an IHI alliance member. “I think sometimes the word waste has been difficult for people to accept. Calling it waste but having such a broad scope is very helpful. It encompasses all of the things we are looking at in terms of total cost of care and accountability and the Triple Aim.”
Hull and her colleague Kelly Logue, senior director of care affordability, went through the checklist from IHI and found other areas they could focus on such as waste tied to billing systems. Logue said she doesn’t think HealthPartners has too much administrative waste, but it’s an area they’ll be focusing on more closely for opportunities to improve. A recent JAMA study found administrative services was the main culprit of waste, but there wasn’t much understanding of how to address it.