The document discusses how benchmarking can help hospitals solve the increasing cost crisis in healthcare by improving their understanding of the true costs of patient care delivery and continuously improving processes that are below benchmarks, using the example of the Dutch hospital system which widely utilizes benchmarking through uniform cost accounting and public reporting of quality and cost metrics. Benchmarking is presented as key to managing hospital costs, outcomes, processes and quality in a balanced way.

1. Solving the cost crisis through Benchmarking
The Irish National Healthcare Conference 2012
22nd March, 2012
Steven Lugard CEO

2. About Tragpi
• Our main activity is to deliver integrated solutions for cost and quality
management in hospitals
• Tragpi works “From and for hospitals” to help hospitals to deliver the
best healthcare for the money spent
• Creating internal transparency for 150 hospitals worldwide with 50
staff
• Opened up Dublin office in 2012 to help Irish hospitals get stronger in
the cost crisis

3. The cost crisis in healthcare
Healthcare costs and budgets (2004=100)
160
Technology
150 Ageing population
Information
140
130
€
120
110
100
90
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Demand Demand with higher costs of capital
Budgets (estimated GDP+2yrs) GDP

4. Effects on the individual hospital
• Hospitals face rigorous budget and income cuts
• … have limited information on true costs and where they can improve
• … but possibly know where they earn money
• … thus focus on areas where improved standardisation / technology result in
profitability
- E.g. Orthopedics
- Cardiology
- Diagnostics
• … or focus on patient groups generating better revenue
- Private insured / self pay
- Check-up
- Corporate contracts
• But in general, this (justifiable) „cherry picking‟,
does not solve the cost crisis!

5. How to really solve the cost crisis?
Kaplan & Porter, Sept 2011:
• “Improve understanding of how much it
actually costs to deliver patient care”
• “Better cost management”
- Costing by tracking the full patient cycle (PLICS)
- Time Driven based Costing
- Uniform/comparable
• “Partake in annual benchmarking as part of
the strategic plan”
Kaplan & Porter, HBR Sept’11 issue
• “Continuously improve processes which are
below benchmark”

6. Kaplan & Porter…
• Healthcare is being redefined on a constant basis (technology/IT)
• Competition is the most powerful force for driving improvements in the quality
and cost of products and services.
• Care delivery will migrate to the best providers in terms of costs and quality
• Results measurement and other comparative information will expand
dramatically, both on supplier, payer and patient side
• Kaplan & Porter specifically name the Dutch system as a good example

7. Transparency in Dutch hospitals
• Netherlands heads many European rankings
• Universal Health Insurance since 2003, transparency enforced by government
as part of the system change
• Money follows the patient, pay per case
- Hospitals do full cost per patient analysis
- Uniform Time driven costing model introduced by Tragpi in 2001
- Currently in use at over 80% of Dutch hospitals
• Quality reporting mandatory
- Since 2008 mandatory reporting on around 200 indicators
- By end 2011: 450 mandatory indicators
- Public listing of quality indicators
• Payers only contract hospitals delivering good results at a good price
- Too expensive or low quality hospitals are excluded

8. Trends in the Netherlands
• New quality measures come up daily
• Increase of number of diagnoses in “competition segment”
• Almost all Dutch hospitals participate in Benchmarking through Tragpi
- Resource utilization benchmarking
- Cost per patient benchmarks
- Quality Benchmarks
As a result, Hospital Management and doctors are ahead in
information and can steer in stead of panic
• Results in strong improvement in efficiency and quality

9. Managing hospital care
Cost per case
Cost per activity
Costs
Readmission %
Reoperation %
Outcome
Access time
Processes Quality
Workflow (H)SMR
Average case profile
- Theatre time
- Lab order set
- ALOS

10. Benchmarking is about the balance
Costs
Outcome
Processes Quality

11. Hospital manager‟s opportunity
• Use benchmarking information for your strategic positioning
- There is no future for substandard processes, mitigate them
- Select your peers carefully (locally, national or international)
• Allow timely intervention, make sure you are the first to know
• Errors, complications, overuse and underuse of care will fall
• Costs will be contained

12. Trag Performance Intelligence Group BV
Sweelincklaan 1 5 Fitzwilliam Square
3712 JA Bilthoven Dublin 2
The Netherlands Ireland
+31 30 233 3872 +353 1 662 8280
www.tragpi.com
info@tragpi.com