Gatekeepers Hold Key to Lower Costs in Health Care

by Vishal Ahuja|

The U.S. healthcare system is the most expensive system in the world. Identifying ways to lower costs and have better health outcomes is a primary goal for health care managers and providers, policymakers and consumers. In new research, ITOM Professor Vishal Ahuja of SMU Cox and co-authors show that better continuity of care lowers costs and wasted effort, reduces time to see specialists, and produces significant savings in hospital system resources. They identify how "gatekeepers" are key to a more optimal and healthier system.

With scientific advances, doctors have grown more specialized. The number of recognized sub-specialties in medicine in the U.S. has grown from ten in 1970, to over 145 by 2015. Life expectancy has grown from 70.8 years to 77.9 years over the same time period. According to Ahuja, the healthcare industry is an exemplar in the potential gains from specialization. "What's been happening over the last decades is that physicians are becoming more specialized, in disciplines such as anesthesiology, cardiology, gastroenterology, surgery, etc. But we know that primary care physicians (PCPs) are important. We need PCPs because they refer patients to specialists and help coordinate care. They are the gatekeepers."

"A main goal of this paper was to quantify the effects of coordinating care, says Ahuja. "We call it 'care continuity' versus ‘coordinated care ‘ to highlight the fact that we cannot observe whether deliberate coordination is taking place in repeated PCP-patient interactions. This is an important distinction. Continuity of care is a continuum of care and, hopefully, coordinated care." In ongoing operations, where customers arrive for service, a gatekeeper solution can be very effective, says Ahuja. In healthcare, primary care physicians, who are on the front line of medical care, serve in the gatekeeper role, providing access to specialists and coordinating patient care.

The gatekeepers
The use of gatekeepers can be seen in an emergency department triage, where a caregiver assesses the severity of a patient and routes her appropriately. However, often individuals may need repeated interactions with an operational system. It is a gatekeeper’s job to not only route or serve individuals, but also to coordinate the ongoing service.  An example of this includes a patient with a chronic disease working with her primary care physician to receive care from multiple specialists. It could also be an IT specialist interacting with a vendor’s help desk to address her firm’s repetitive, technical difficulties.

Building on the research on gatekeepers, coordination, and healthcare operations, Ahuja and co-authors investigate how continuity of care affects the quality and efficiency of health outcomes for patients. Two service configuration decisions that are important in a system are efficiency of effort and time. In this study, less duplication of effort is measured by fewer diagnostic tests. Also considered is whether patients with greater continuity of care are likely to see specialists faster and more efficiently, a key role for a gatekeeper. "We were interested in how continuity of care affects hospital care," says Ahuja. "If there is continuity of care, a patient ends up hospitalized less, which directly affects the number of hospital beds needed and less chance to return in a thirty-day period (for which Medicare penalizes)."

The authors utilized a comprehensive dataset from the Veterans Health Administration (VHA), the largest integrated healthcare delivery system in the United States with over 1,700 sites of care. They analyzed over half a million patients over six years that suffer from diabetes, a chronic disease, requiring care coordination and access to specialists. "The diabetic patients we consider in our study are veterans," notes Ahuja. "They require greater care coordination such as seeing a doctor several times a year for lab tests, ongoing monitoring, and managing multiple complexities that arise because of the nature of the disease."

Study findings
The authors find that continuity of care, captured by their index, leads to fewer hospital inpatient visits, shorter length of stays on those visits, and lower readmission rates. Continuity of care provides even more operational value for sicker patients, resulting in savings of over hundreds of millions of dollars annually. Continuity of care also leads to less waste in the use of resources and in time as both diagnostic tests ordered and time to see a specialist decreases. This is an important contribution to the operations and healthcare management literatures. Additionally, continuity of care results in lower costs and improved clinical quality.

The potential for cost savings is tremendous, say the authors. The study finds that decreasing the care continuity index by one standard deviation (22%) is equivalent to increasing the inpatient hospitalizations five-fold, doubling the average length of stay, and increasing the average thirty-day readmissions 8.7 times. One standard deviation in the care continuity index is the equivalent of the difference between a patient seeing two PCP’s — one five times and the other once versus the same patient seeing both PCPs three times each. Based on 6,855,243 observations in the study, a one standard deviation decrease in the care continuity index implies an annual increase of 381,842 inpatient visits, or equivalently 116,364 inpatient days. According to recent estimates, the average cost per inpatient day in the U.S. is $2,212. This translates into an increased cost burden of $257.4 million annually, on average.

Similarly, increasing care the continuity index by one standard deviation (22%) decreases the number of diagnostic tests by 58% and shortens the average time to see a specialist by 55%, on average. This results in an average annual savings ranging from $83.9 million to $385.6 million.

Ahuja surmises, "With continuity of care, there is less resource waste through fewer hospitalizations. It directly affects hospital operations, planning, and capacity, for example, in terms of patient visits and number of beds needed. With care continuity, because I know my patient in an ongoing relationship, I do not need to order extra tests and x-rays." Some doctors are risk averse and order new tests; knowing one's doctor saves on costs and outcomes. Additionally, sicker patients use more resources. "Thus, for patients that are more sick, continuity of care is even more important," explains Ahuja. "Continuity of care is also very important in mental health care. "

In summary
Continuity of care results in significant benefits, with substantial improvement in patient outcomes. Specifically, it leads to fewer inpatient visits, shorter length of stays on those visits, and lower readmission rate. These are important metrics from both operational and clinical standpoints. The value offered by continuity of care increases as tasks become more complex since a transfer of knowledge is harder and costlier for complex tasks.

"This [care continuity concept] applies to virtually any facet of healthcare," Ahuja offers. "It also applies where there is a gatekeeper function like in an IT project or at an advertising agency, where there is a client-facing person."  Imagine Toyota working with people at SMU for recruitment, he adds. "A one-person gatekeeper is better than the Toyota contact having to deal with multiple people or worse, a different person at each interaction." The study offers guidance to managers in a resource-constrained operation who desire the optimal allocation of a firm’s limited capital and labor resources.

The paper "Continuity in Gatekeepers: Quantifying the Impact of Care Fragmentation" by Vishal Ahuja of Cox School of Business, Southern Methodist University and co-authors is a working paper.

 Written and summarized by Jennifer Warren.

Vishal Ahuja SMU Cox B/W Discussion
Vishal Ahuja, SMU Cox Assistant Professor leads graduate courses in Operations Management and Managing Service Operation.