Intermountain to track costs of procedures, equipment

Intermountain Healthcare, a network of 22 hospitals and 185 clinics based in Utah and Idaho, is building a new data system that will be able to track the actual cost of every procedure and piece of equipment used in its system, according to a Wall Street Journal article.

While commonplace in many industries, this kind of intense tracking is not the standard in the healthcare industry.

In an interview with WSJ, Intermountain Chief Quality Officer Brent C. James, MD, explained that eight management engineers measure how much time it takes a technician to set up a lab test, as well as how much glassware and reagent the test consumes to process, and how much time it takes on the analyzing machine. These will be inputted into its data system.

“We figure we have about 5,000 clinical terms and upward of 25,000 total items in our cost master. Once I get those costs, I can manage them the way I would if I were building an automobile or a washing machine,” he said.

James said that the new data system will cost “several hundred million dollars” but expects to recoup that loss within one year if it succeeds in removing waste from the system. The system is slated for deployment in 27 months at all of Intermountain’s hospitals and clinics.

“If you know the true cost of providing care, you can ask yourself whether doing one thing is really more important than doing something else. Our mission statement is: the best medical result at the lowest necessary cost. We think there is enough waste in healthcare that we can dramatically improve our costs. But to do that, I've got to be able to measure and manage those costs,” James said.

Read the whole interview here.