Table 3. Cost Analysis of Investments and Estimated Savings From 3 Fiscal Perspectivesa.
| Investments and Savings | LAC-USC (Actual) | Fee-for-Service Health System (Simulation) | Societal (Simulation)b | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Price, $ | Changes in Quantityc | Costs, $d | Price, $ | Changes in Quantityc | Costs, $d | Price, $ | Changes in Quantityc | Costs, $d | |
| Training costs of QI, 10 mo before year 1 | |||||||||
| IHI quality advisor course | 16 200 | 1 | (16 200) | 16 200 | 1 | (16 200) | 16 200 | 1 | (16 200) |
| 30% FTE of QI nursee | 46 613 | 1 | (46 613) | 25 560 | 1 | (25 560) | 25 560 | 1 | (25 560) |
| Year 1 intervention costs | |||||||||
| Registered nurse quality officer, 20% FTE | 38 308 | 1 | (38 308) | 20 448 | 1 | (20 448) | 20 448 | 1 | (20 448) |
| Preoperative savings | |||||||||
| Medical visits | 18.10 | −710 | 12 842 | 7.75 | −710 | (2750) | 25.84 | −710 | 18 334 |
| Chest x-rays | 25.98 | −754 | 19 586 | 8.51 | −754 | (3206) | 28.35 | −754 | 21 372 |
| Laboratory testing | 9.28 | −557 | 5171 | 4.31 | −557 | (1916) | 14.37 | −557 | 8007 |
| Electrocardiograms | 28.70 | −742 | 21 282 | 5.17 | −742 | (1201) | 17.23 | −742 | 12 776 |
| Total estimated savings | NA | NA | 58 880 | NA | NA | (9073) | NA | NA | 60 490 |
| Estimated avoided lost work because of visits and testing | NA | NA | NA | NA | NA | NA | 72.00 | 518 | 37 268 |
| Total observed costs through end of year 1 | NA | NA | (42 241) | NA | NA | (71 281) | NA | NA | 35 550 |
| Total estimated projected 3-y costs (estimated) | NA | NA | 67 241 | NA | NA | (88 151) | NA | NA | 217 322 |
Abbreviations: EHR, electronic health record; FTE, full-time employee; IHI, Institute for Healthcare Improvement; LAC-USC, Los Angeles County and University of Southern California; QI, quality improvement.
Costs = price × changes in quantity. Cost analysis was performed from 3 fiscal perspectives: (1) LAC-USC (capitated safety-net health system), (2) hypothetical fee-for-service private health system, and (3) societal (US society including patients, payers, and tax payers).
Three-year projections were extrapolated from 1 year before and after intervention data, not including the uptick in visits during the follow-up period. Three-year projections also assumed that costs would be discounted by 5% per year (2% for inflation and 3% in interest rate returns) based on standard cost-effectiveness analysis guidelines.44
The 2 sites had slightly different denominators, and 1 year of continuous data was not available because of the EHR upgrade. The denominator (n = 1002 patients) was used based on the extra 1 year of follow-up data at LAC-USC. Accordingly, changes in the percentage of testing at LAC-USC vs Harbor-UCLA before and after the intervention are given in Figure 1. We calculated changes in quantity at LAC-USC vs Harbor-UCLA before and after the intervention as follows: –71% × 1002 = –710 for preoperative medical visits; –75% × 1002 = –754 for preoperative chest x-rays; –74% × 1002 patients = –742 for preoperative electrocardiograms; and –55 × 1002 patients = –557 for preoperative laboratory testing.
Losses are in parentheses.
The FTE calculation for QI nurse included actual salary plus benefits to reflect how much the health system actually paid. The simulations used an FTE estimate based on the national average annual salary for a QI nurse ($78 645 plus 30% for benefits) to maximize generalizability.