Healthcare consumes 18% of the U.S. gross domestic product—$2.7 trillion. According to Ameed Ali, PharmD, you’d have to run a ribbon of $100 bills from Earth to the moon and back five times to reach $2.7 trillion. That’s a lot of Benjamins. Even more startling is that 30% of that cost—$800 billion—is waste.
Ali, Assistant Professor of Pharmacy and Therapeutics, University of Pittsburgh School of Pharmacy, spoke last month at the American College of Healthcare Architects/AIA Academy of Architecture for Health Summer Leadership Summit, in Chicago. The annual ACHA/AAH Summit focuses on the business of healthcare—how economic factors can impact the design and construction of hospitals, clinics, and other medical facilities.
That $800 billion in waste (based on a 2012 estimate by the Institute of Medicine) includes $210 billion in unnecessary services (for example, unneeded lab tests), $190 billion in excessive administrative costs, $130 billion in inefficiently delivered services, $105 billion from “too-high prices,” and $55 billion from missed prevention opportunities. Fraud, the traditional whipping boy, accounts for less than one-tenth of waste, $75 billion, said Ali.
ALSO SEE: Healthcare designers get an earful about controlling medical costs. Read the article.
At the current pace, in 2020 the U.S. will spend $4.2 trillion a year on healthcare; unchecked, waste would hit $1.2 trillion. Yet “waste” is keeping a lot of poorly performing hospitals in business, said Ali. Currently, one in five Medicare patients has to go back to the hospital within 30 days because the original procedure failed. Hospitals make 20% of their revenues on readmissions, but when the Affordable Care Act kicks in next year, Medicare will start cutting payments for readmissions. “The 30-day readmission rate is very high on a hospital CEO’s mind,” Ali told ACHA/AAH members.
'Zero defects' in healthcare
Taking the “defect rate” in healthcare down to zero was the theme of a riveting talk by Gary S. Kaplan, MD, Chair/CEO of Virginia Mason Medical Center, a nonprofit healthcare system in Seattle with nine facilities (including a 336-bed teaching hospital), 500 physicians, and 5,000 employees.
12 healthcare projects honored at ACHA/AAH Leadership Summit
Recipients of the AIA Academy of Architecture for Health’s AIA National Healthcare Design Awards were honored at the ACHA/AAH Summer Leadership Summit. The awards program showcases the best of healthcare building design and healthcare design-oriented research. Projects exhibited conceptual strengths that solve aesthetic, civic, urban, and social concerns as well as the requisite functional and sustainability concerns of a hospital.
Recipients were selected in five categories: 1) Built, <$25 million in construction cost; 2) Built, >$25 million in construction cost; 3) Unbuilt; 4) Innovations in Planning and Design Research; and 5) Master Planning Urban Design for Healthcare Settings.
Jurors for the 2013 National Healthcare Design Awards: Joan Saba, AIA, Chair, NBBJ; Orlando T. Maione, AIA, Maione Associates; Mike Mense, FAIA, mmenseArchitects; Kathy Reno, Joint Commission Resources, Inc.; Bill Rostenberg, FAIA, Stantec; Bryan Shiles, AIA, WRNS; and Ron Smith, AIA, Design At The Intersection.
In 2000, the hospital, founded in 1920 on the Mayo Clinic group practice model, was losing millions. Morale was at a low point; employee retention was slipping. “We realized that our processes were designed around us—the doctors, nurses, and administrators—not around the patient,” said Kaplan. At a meeting of the entire professional staff, he issued a terse directive: “We change, or we die.”
Since then, Kaplan has led 13 research missions to Toyota manufacturing facilities in Japan to learn how to apply the automaker’s “lean” principles to healthcare. These trips, each involving 25 to 30 physicians, nurses, and staff, have resulted in 1,300 “improvement events” in VMMC processes.
Through its Value Stream Development system, VMMC found that nurses were spending 60-70% of their time searching for supplies or tracking down patients. Process improvements led to changes that enable nurses to spend 90% of their time with patients. The 5S process—for “sort, simplify, standardize, sweep, self-discipline”—replaced multiple anesthesia “shadow boards” (the tray that holds the anesthesiologist’s supplies) with a single standard board, improving safety and efficiency while cutting costs.
One controversial change involved adopting the Toyota procedure that allows any worker to “stop the line” without fear of retribution if he or she spots a problem. “Some of our people complained that cars aren’t people,” said Kaplan. True, said Kaplan, but patient safety had to come first.
In 2002, VMMC adopted its trademarked Patient Safety Alert Process, which empowers any employee to report a patient safety alert 24 hours a day, with a management commitment to “drop and run” to address the question immediately. Since then, 32,380 alerts—about eight or nine a day—have been issued. Only a small number have been serious in nature, but many have led to improvements. In fact, VMMC’s “obsession with safety” has resulted in its physician liability costs being cut in half, in a state with no medical tort reform.
VMMC has also cut the cost of care for Seattle-area employers. Since 2007, Boeing has referred employees with chronic diseases like diabetes and back, shoulder, and hip pain to Virginia Mason. The target: cut medical costs by 15%. In fact, Boeing’s costs went down by 33%. No wonder Costco, Microsoft, Starbucks, and King County have asked for similar programs for their workers. And last January, Walmart designated VMMC as one of only six medical centers in the U.S. to serve as a “Walmart Center of Excellence”—in VMMC’s case, for heart and complex spine care.
Trimming waste and unnecessary costs through improved processes while keeping patient needs first will carry over to better facility design, provided design teams “engage the people who do the work,” Kaplan told ACHA/AAH attendees. “It’s not ‘Form follows function.’ It’s ‘Better form follows improved function,’” he said.
Putting Building Teams to work to help control medical costs
The key takeaway from the ACHA/AAH Summit is that Building Teams that specialize in healthcare facilities need to do their part to control costs. George R. Tingwald, MD, AIA, Director of Medical Planning at Stanford Hospital and Clinics, told how only three change orders were issued in the completion of SHC’s Byers Eye Institute, in Redwood City, Calif., thanks to the use of BIM. “We used to get a thousand change orders on a project like that,” said the physician/architect.
With the Affordable Care Act about to kick in on January 1, healthcare providers—and their design and construction partners—will need to address what Kevin Vigilante, MD, Senior Vice President, Booz Allen Hamilton, called the “triple aim” of 1) improving the quality and experience of care, 2) reducing cost per patient, and 3) improving health at the “population” level.
“Heart disease, stroke, diabetes, cancer, arthritis—these have become population health issues,” he told ACHA/AAH attendees. In the future, improving care for those with chronic conditions may depend much more heavily on technology, such as mobile phones and social networking. “A diabetic has the condition every minute of the year, but may only connect with healthcare providers for a few hours a year,” he said.
There will still be a need for brick-and-mortar facilities, said Vigilante, but “we’re going to need a new paradigm, ‘connected care,’ to provide continuous healing relationships.”
Related Stories
Urban Planning | Jan 18, 2023
David Adjaye unveils master plan for Cleveland’s Cuyahoga Riverfront
Real estate developer Bedrock and the city of Cleveland recently unveiled a comprehensive Cuyahoga Riverfront master plan that will transform the riverfront. The 15-to-20-year vision will redevelop Tower City Center, and prioritize accessibility, equity, sustainability, and resilience.
Museums | Jan 18, 2023
Building memory: Why interpretive centers matter in an era of social change
The last few years have borne witness to some of the most rapid cultural shifts in our nation’s long history. If the experience has taught us anything, it is that we must find a way to keep our history in view, while also putting it in perspective.
ProConnect Events | Jan 17, 2023
3 ProConnect Single Family events for Home Builders and Product Manufacturers set for 2023
SGC Horizon, parent company of ProBuilder, will present 3 ProConnect Single Family Events this year. At ProConnect Single Family, Home Builders meet in confidential 20-minute sessions with Building Product Manufacturers to discuss upcoming projects, learn about new products, and discover practical solutions to technical problems.
University Buildings | Jan 17, 2023
Texas Christian University breaks ground on medical school for Dallas-Fort Worth region
Texas Christian University (TCU) has broken ground on the Anne Burnett Marion School of Medicine, which aims to help meet the expanding medical needs of the growing Dallas-Fort Worth region.
Green | Jan 17, 2023
Top 10 U.S. states for green building in 2022
The U.S. Green Building Council (USGBC) released its annual ranking of U.S. states leading the way on green building, with Massachusetts topping the list. The USGBC ranking is based on LEED-certified gross square footage per capita over the past year.
Libraries | Jan 13, 2023
One of the world’s largest new libraries opens in Shanghai
Designed by Schmidt Hammer Lassen Architects, Shanghai Library East covers more than 1.2 million sf, 80% of it dedicated to community activity.
Religious Facilities | Jan 9, 2023
Santiago Calatrava-designed St. Nicholas Greek Orthodox Church opens in New York
In December, New York saw the reopening of the new St. Nicholas Greek Orthodox Church and National Shrine—the only religious structure destroyed on 9/11. Renowned architect and engineer Santiago Calatrava designed St. Nicholas Church to address the traditional Greek Orthodox liturgy while honoring the Church’s connection with the World Trade Center Memorial site.
Government Buildings | Jan 9, 2023
Blackstone, Starwood among real estate giants urging President Biden to repurpose unused federal office space for housing
The Real Estate Roundtable, a group including major real estate firms such as Brookfield Properties, Blackstone, Empire State Realty Trust, Starwood Capital, as well as multiple major banks and CRE professional organizations, recently sent a letter to President Joe Biden on the implications of remote work within the federal government.
Sustainability | Jan 9, 2023
Innovative solutions emerge to address New York’s new greenhouse gas law
New York City’s Local Law 97, an ambitious climate plan that includes fines for owners of large buildings that don’t significantly reduce carbon emissions, has spawned innovations to address the law’s provisions.
Fire and Life Safety | Jan 9, 2023
Why lithium-ion batteries pose fire safety concerns for buildings
Lithium-ion batteries have become the dominant technology in phones, laptops, scooters, electric bikes, electric vehicles, and large-scale battery energy storage facilities. Here’s what you need to know about the fire safety concerns they pose for building owners and occupants.