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Tuesday, July 16, 2013
In an editorial published in the New York Times entitled Why Medical Bills Are a Mystery", Robert Kaplan and Michael Porter of the Harvard Business School point out that efforts to combat rising health care costs are failing largely because we do not know what it costs to deliver an episode of care. Understanding the costs to deliver care is vital to controlling costs and preparing for the future as a health care system. At the University of Utah we have developed analytic tools to better understand costs. Using activity-based costing principles we have developed a system that utilizes clinical and financial information to allocate actual costs (our inputs) to the patient visit level (our outputs). Costs come in many forms within a hospital (labor, supplies, pharmaceuticals, imaging, labs, etc.) and developing the most accurate method to allocate each cost is a challenge which requires access to data from all existing information systems and a highly skilled cross-functional team to analyze the data and make decisions. To make this information consumable we have implemented a business intelligence tool and created a series of interactive web-based reports that allow physicians and administrators to quickly and easily analyze costs and outcomes information.