Not even a week removed from the release of a study from Thomson Reuters (New York) that deemed hospital profit margins nonexistent (Medical Device Daily, March 11, 2009), another study shows that poor communication in hospitals is collectively costing the institutions a whopping $12 billion a year.

This new study is commissioned from the Center for Health Information and Decision Systems (CHIDS) at the University of Maryland's (College Park, Maryland) Robert H. Smith School of Business and was released last week.

The research is said to be the first to quantify the economic impact of a healthcare system rife with communication delays and failures. Among key findings was that unnecessarily long hospital stays such as the time and resources patients squandered waiting to be discharged account for 54% of total losses.

To put the $12 billion amount into perspective, the loss equals nearly 2% of hospital revenue nationwide, a figure that is more than half of the average hospital margin of 3.6%.

CHIDS researchers say the solution to these inefficiencies rests largely in investment in information technology that would help streamline communication among hospital caregivers. Theirs is a timely observation, following the $787 billion economic stimulus bill recently signed into law by President Barack Obama that includes more than $140 billion earmarked for healthcare, $19 billion of it to modernize health information technology systems.

"You really need to have location-based technolgies," Kenyon Crowley, associate director at CHIDS, told Medical Device Daily. "You have to know where patients are where nurses are. Sometimes with some institutions the nurse might have to make two or three different phone calls to find out where the patients are within their treatment regiment. "

These technologies would be investments that would significantly reduce the amount of time and resources wasted identifying and locating attending caregivers, as well as the likelihood of hospital error. The study also suggests telecommunications systems to facilitate remote consultations with specialists, thereby reducing patient travel and waiting time.

Future CHIDS papers and studies will look at how process changes and applications of technology at the hospital level can alleviate these inefficiencies.

Crowley said he and Jorge Diaz Schneider, CHIDS graduate research fellow, developed models for quantifying the economic burden of poor communication among physicians and nurses in U.S. hospitals.

They conducted a comprehensive review of the literature and interviewed senior hospital administrators and clinical staff from seven U.S. hospitals of different types and sizes. Using this information, they were able to develop a scenario of possible outcomes and create conceptual and quantitative models to estimate inefficiency.

While the situation at individual hospitals varies depending on size and staffing, they found that the typical 500-bed facility stands to recoup an astounding $4 million with improved caregiver communication.

It's a "staggering figure" considering that hospitals across the country are in a dire state, Crowley said.

According to last week's Thomson Reuters study, the median profit margin of hospitals in this country has fallen to 0%, largely fueled by a decline in non-operating revenues, and mounting financial strains. The study tracked 24 key financial indicators, using proprietary and public data to analyze the balance sheets of more than 400 hospitals nationwide.

In doing so, the study goes over trends in revenue and profit, employment levels, closures, inpatient volume, reimbursement rates, and frequency of elective medical treatments to gauge the fiscal health of the nation's hospitals.

These included revenue and profit, or total margin for non-profit hospitals, employment levels, closures, inpatient volume, reimbursement rates, and frequency of elective medical treatments.

But there is some saving grace. To stop the downward spiral in hospitals, an investment in IT is needed, according to CHIDS researchers.

"An infusion of IT investment in the U.S. healthcare system is sorely needed as a step toward ensuring long-term sustainability," said Ritu Agarwal, director of CHIDS and the study's lead researcher.

"This research quantifies and supports what we've intuitively known for some time: Information technology is a critical component in creating the cost efficiencies that will enable us to revamp and repair our beleaguered healthcare system, efficiencies that will be passed along to the consumer to significantly improve patient quality of care and access."

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