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July/August 2014 St@teside

Exactly How Much DOES That Appendectomy Cost?

While we know how much the country spends on care each year, we have little understanding of what it actually costs to provide care.

Think, for example, about an appendectomy. What does it really “cost” the health care system to perform that procedure? The answer is complex, and of course it includes everyone’s time—from the surgeon to housekeeping staff—and it also includes the drugs, equipment, space, and overhead associated with your stay.

The cost of your visit also will depend on who is delivering your care , how much your carrier pays, and the actual cost for the hospital. Moreover, health care providers are currently not trained to think about the costs of the care they provide—and often have no incentive or means to even consider those costs.

These complexities have made it difficult to reform the way we purchase and pay for health care. In a Robert Wood Johnson Foundation blogpost, Vivian Lee, senior vice president for health sciences, dean of the School of Medicine, and CEO of University of Utah Health Care, discusses the impressive effort that the University of Utah health system undertook to develop a comprehensive costing tool they call “Value-Driven Outcomes.”

What’s unique about the tool is not only the detailed level at which the health system is able to understand its costs, but also that the tool was rolled out with substantial physician support and engagement—rather than being perceived as a tool that was intended to punish high-cost performance.

For more information about the University of Utah’s Value-Driven Outcomes tool, check out this blogpost and view a recording of a webinar featuring a presentation by Vivian Lee. The webinar was conducted under the auspices of a Robert Wood Johnson Foundation project through which AcademyHealth is helping the Foundation manage and learn from a small group of grantees who are engaged in various health care payment reform efforts.