Cost-benefit analysis can help you choose treatment
Formula shows the benefits of case management
A cost-benefit analysis can help case managers face the daily challenge of getting their patients the most cost-effective care with the best outcomes.
"With the way health care is going, the bottom line is finance. You have to financially justify what you are doing and why you are doing it," says Ann H. White, RN, PhD, MBA, CNA, associate professor of nursing at the University of Southern Indiana in Evansville.
By comparing the cost of treatment with the benefits of various plans of care, you can help the treatment team come up with the best treatment plan for that particular patient.
It’s a technique use to demonstrate what a case manager can do and to retrospectively demonstrate the cost of savings in the plan you chose, White says.
Here’s a simple example of how to use a cost-benefit analysis.
You have an elderly patient with a hip fracture, diabetes, and a family member who lives in the same city. Your treatment options following hospitalization are:
Plan A: Transfer the patient to a skilled facility for four weeks and then send him home with four weeks of home health.
Plan B: Keep the patient in the skilled facility until he is able to function independently.
Plan C: Send the patient straight home from the hospital with more intensive home health and physical therapy.
"If you can demonstrate that the outcome will be the same, then you have a persuasive argument to implement that plan that is more efficient and most effective," White says.
But there are "ifs" involved, White points out.
For instance, if you can do only what the physician tells you to do, and he or she won’t listen to an alternative plan, you are wasting your time.
"If a doctor says a patient’s going to be in the skilled facility for four weeks and then go home, there’s not a lot that cost-benefit analysis can do," she adds.
You have your best chance to influence the plan of care when you have a good relationship with the treatment team.
"If you have a relationship with the physician and the treatment team, you can show them the options and what is the most appropriate way to go for this particular individual," he says.
It’s a simple technique, but it’s not an easy solution to all your problems.
Intangibles are what make cost-benefit analysis so hard, White points out.
"The formula itself is easy, but getting the numbers is extremely difficult, and that’s the huge challenge," she adds.
Another challenge, she points out, is putting the numbers together so they look realistic.
"If the chief financial officer doesn’t believe your numbers, it doesn’t make a big difference whether you saved $2,000 or $20,000. It’s always a challenge to be realistic and demonstrate that you are really doing something," White says.
One problem that arises is that when case managers are called in to do a cost-benefit analysis, the cost of case management is seen as going on the negative side of the financial page.
"But if by doing a cost-benefit analysis, the insurance company or whomever can save $20,000, they’re going to be interested in looking at the option, despite the fees," White adds.
You don’t want to be in a position where your fees cost your client money but there’s not a real change in the bottom line, she says.
"A lot of people equate case management with saving money. These are the people who say whether you can do it because of the bottom line. The intent of a cost-benefit analysis is to look at the outcome and the client as well as the bottom line," she says.
"You don’t want people to think they have to do Plan C because it saves money. That’s not the intent of a cost-benefit analysis," she adds.
The cost benefit analysis is just one piece of information that should be brought to the table when the treatment team decides how a particular client’s case should be handled.
Choose your cases carefully. For instance, you might not do a cost-benefit analysis on a patient with a fractured hip who has family support. But you might choose to do one on a patient with a fractured hip who has diabetes and no support at home.
"Collecting data and weighing it can take a phenomenal amount of time. You need to look at the advantages and disadvantages of doing it on every single case. It has to be a call by the institution in most cases," White says.
For instance, a patient between 65 and 75 years old with a fractured hip and no co-morbidities probably would be a lot like other, similar patients. It would not be good use of your time to do an analysis on every single one. What you should do instead is trend the data over time and perform a cost-benefit analysis on a few cases every six months.
"Once we know what is typical, we need to do an analysis only on those who fall out of the norm," White says.
On the other hand, care of patients with a high-risk pregnancy or babies in the neonatal intensive care unit is so expensive that every case is unique and you might want to do a cost-benefit analysis for each case.
Five steps to performing a cost-benefit analysis
- Start with a summary of the individual case.
- Add documentation about anticipated outcomes and what the ultimate goal is.
- Identify the treatment options. Look at how they fit into the patient’s particular situation and how they will help achieve the goals.
- Come up with the cost of each option. Be sure that you obtain the costs for each plan of care, not the charges, so you won’t be comparing apples to oranges.
- Compare the various options and their cost and outcome.
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