Last month I spoke with Vivian Lee, a woman with a movie star name and rock star performance. The CEO of University of Utah Health Care, her accomplishments should serve as a model for Vermont.
When Dr. Lee became CEO, she asked her executive team a basic question: do we know what it actually costs to provide services? This simple question elicited shrugs from her staff. The “sticker price” for medical procedures in Utah, like in Vermont, bore virtually no relationship to the actual costs to perform them.
Dr. Lee articulated a simple directive to her staff: determine the true costs of everything we do. Rolling up their sleeves in what she described as “the Utah way,” her staff sifted through the swamp of medical costs and emerged five months later with the true expenditures for every procedure at their medical center.
Was it worth it? Boy was it! Armed with true costs, physicians were, for the first time, able to see who the high spenders were and why. Actual expenditures were matched up to patient outcomes, reforming the way many physicians treated patients, improving public health while saving money.
Importantly, Dr. Lee was motivated by pressures just like those Vermont’s facing. Limited Medicaid funding, coupled with a move away from “fee-for-service,” required transparent cost data in order to smartly manage her hospital budget moving forward.
Here in Vermont, we’re rightly nurturing payment reforms to move us away from fee-for-service. But unless we know the true costs throughout the system, our hospital leaders will fly blindly as they make decisions on where and how to restrain spending. It’s my goal in the coming year to ensure payment reform and transparent pricing work in tandem to lower costs for Vermonters. Perhaps this once, as goes Utah, so should go Vermont!
State Senator Tim Ashe