What Healthcare Leaders Should Know About Clinical Variation Management
Clinical variation refers to any differences (warranted or unwarranted) in practices and outcomes among patients with similar conditions. Unwarranted clinical variation results in more than $760B of avoidable healthcare costs, a number that’s still growing.
Lack of standardization also affects a health system’s ability to provide consistent care at scale. About 80% of patients can be cared for through standard evidence-based practices.
Clinical variation management (CVM) involves controlling and tracking compliance results with established practices and contracts, especially for medical devices. This article covers areas of guidance for healthcare leaders around the business opportunity in solving unwarranted clinical variation.
What Causes Unwarranted Clinical Variations?
Situations like these can lead to unwarranted variations:
- Delay implementing evidence-based practices and updates
- Misaligned incentives in fee-for-service situations
- Established workflows
- Training and practices of individual clinicians and technicians
Whatever the cause, providers miss financial and quality goals — and often leave money on the table when chronic unwarranted clinical variations are ignored. It takes consistent leadership to keep clinical variation reduction on track. Human behavior varies, and compliance with best practices isn’t automatic.
Controlling Variation an Imperative for Financially Sustainable Healthcare
Managing clinical variation isn’t just a medical imperative, but an integral component of reducing the overall cost of healthcare. Unnecessary variation leads to increased costs and less predictable finances, and can skew towards poor operating performance.
“We have to be financially sustainable to continue providing quality care. It’s a common misconception that quality of care and financial sustainability are mutually exclusive to each other. The truth is exactly opposite. Reducing variation serves both objectives well,” noted Monument Health Executive Medical Director, Dr. Deepak Manmohan Goyal.
How Monument Health Benefits from Reducing Unwarranted Clinical Variation
Strategic contracting and product standardization help hospitals manage device suppliers, while accruing savings and reducing clinical variations. When Monument Health Supply Chain received the Curvo 2023 Customer Performance Excellence Award for sourcing performance, it noted their achievements in “Reduced Product and Clinical Variation.”
Monument Health cut clinical variation and increased product standardization via committed contracts in total joints, spine, sports medicine, drug-eluting stents, cardiac resynchronization devices, and peripheral vascular devices.
“This has opened a whole new world of possibilities for us,” explained Brad Haupt, Monument Health Supply Chain VP. “In one case, we found that we might have an opportunity between $600,000 to $800,000 or more, just by reducing our clinical variation.”
Reduce Clinical Variations with These Four Recommendations
1 - Create a Multidisciplinary Team
The first step in the journey to reducing unwarranted variations is raising awareness. Who has a stake in the outcome?
Don’t stop with physicians. The C-suite, finance, IT, operations and clinical areas should participate, too. Success requires teamwork among executives, clinicians, hospital administration and staff.
2 - Use a Data-Driven Solution for Clinical Variation Reduction
Systemwide clinician and leadership engagement requires a data-driven approach that showcases connections between clinical variation and performance in both finance and patient care.
Hospitals already have much of the data they need for clinical variation management in their own financial and electronic health records. However, it’s not always easy for healthcare executives to access actionable analysis and prescriptive advice about their own complex and costly clinical supply chains. They just don’t always have the tools or skills to easily extract spend data.
The challenge for healthcare organizations is that when it comes to complex medical devices, CVM requires mining data at scale, then aligning with product details and classifications, and practice procedure data. During the initial discovery phase, data must be integrated from multiple sources.
Analytics and quality data form the backbone of strong CVM. Digital solutions using machine learning (ML) and artificial intelligence (AI) mine complex data at scale and pair it with industry standards and evidence-based conclusions.
As a solution, data-as-a-service (DaaS) and software-as-a-service (SaaS) partners help supply chains provide stakeholders with good data and trusted education on compliance and rebates performance. Hospitals often seek experienced outside support to accelerate contract cycles and track ongoing results.
3 - Get Physician Buy-In Early to Reduce Variation Downstream
A key step in reducing clinical variation is establishing trust with your physicians. A clinically integrated supply chain is better prepared to tackle unwarranted variation. (Read Curvo’s blog post on tactics and strategies to build trust with your surgeons.)
With big medical device contracts like total hip, total spine, cardiology or orthopedics, look at how to earn physician buy-in early in the process. Although it’s not yet common practice, clinicians must be part of the medical device contract process and product standardization.
Leaders like Haupt play an important coaching role to champion these positive changes.
“My thought was, let's get the physicians involved on the front end,” explained Haupt. “Rather than waiting until we're ready to see prices or sign an agreement, let's meet with physicians who are going to use the product. Let's get their thoughts and take in their knowledge of the industry.”
Data Gives Physicians Good Reasons to Comply with Clinical Practices
Include physicians in your data and analytics, and give them reasons not to change or deviate from committed product volume. Providing physicians with credible insights helps them understand the impact of their clinical practice patterns and preference cards. Most are unlikely to change the way they practice medicine without seeing credible data on their performance and outcomes.
Let clinicians know a contract is coming and provide trusted information on compliance and rebates. Engage and educate physicians regarding these incentives and make sure they understand the benefit of controlling variations.
Take analysis, benchmarks and other visualizations to section meetings. Good insights make clinicians more inclined to adhere to clinical practices that reduce variation and standardize care. At Monument Health for example, the medical director and the supply chain leader come together to engage physicians by gathering with medical staff and attending section meetings. Physicians vote based on data analysis with multiple data points.
“The providers basically make the call, and everyone is held accountable for following that contract,” said Supply Chain VP Haupt. See this blog on other clinician-centric PPI Sourcing Strategies to Reduce Clinical Variation.
4 - Make Clinical Variation Management an Ongoing Initiative
Getting physician support is only part of the CVM process. Once signed contracts are in place, the supply chain needs a continuous, objective way to monitor compliance.
Maintaining strong governance requires both hospital leadership and a supply chain well equipped with DaaS and SaaS. Objective, timely reporting is the best means to track adoption and compliance, and today’s spend management solutions are up to the task.
A modern data platform and sourcing analytics tools provide essential support for ongoing tracking. Outliers can be spotted and reined in before eroding financial outcomes. Put processes and tools like these in place to make your CVM an ongoing, data-informed effort.
How’s the CVM Strategy Working Across Your Hospital System?
As a strategic business topic, clinical variations might not have been on your radar before. Now, CVM may have moved up the priority list.
With a foundation of data, analytics and personal relationships, healthcare organizations can manage clinical variation – a major cost driver – while safeguarding financial and patient health.
Reducing clinical variation is a big topic, and Curvo is well positioned to help. Reach out if you have any questions about a solution.