We recently ran a financial model where in an excel spreadsheet we replaced the highly trained and experienced (and relatively expensive) staff of psychiatrists, psychologists and licensed clinical social workers we have here at SCH with lower level but still qualified (and significantly less expensive) staff found at many other IOP programs in our area. In doing so, we would be able to reduce our annual spend by nearly $500,000.00, or about $1600.00/day. We could still operate, in theory, at the same capacity and provide the “same” programming to our patients. In the process we could also increase our gross margin by double digits.
What would we lose? Great question, and an easy answer! We know we would lose a significant amount of the quality of our program. Health outcomes would get worse and patients would suffer as a result. The quality of this kind of program is integrally connected to the quality of its staff. Our team of doctors, nurses, therapists and nutritionists are the ones who do the work with our patients. They need to be trained, highly educated and passionate about the work that they do. The good ones are hard to find. Our therapists are just that, and we have absolutely no interest in replacing them with less expensive and/or lower quality labor. Our commitment to quality is unbreakable. We know our patients deserve the very best that we can provide, and that is what we do.
That said, from a purely business standpoint our model doesn’t hold up. It doesn’t hold up because although we are committed to paying for quality in order to provide high quality care, we don’t get paid for the services we provide based on anything but quantity. If we do the work and we are authorized to do, we get paid the same amount if the outcome is an A+ or a D-. Despite the enormous amount of work we put in to measuring and optimizing quality, this data doesn’t seem to be of much interest to our payers. Of course quality matters to our patients and they know they get it at at SCH. However, it has no meaningful bearing on the amount of money we get paid for the services we provide.
This is why many of our peers in the field question why our CEO and Medical Director, our most valuable and expensive resource, runs a process group every week in our IOP. Many who come to our program are pleasantly surprised to see how much individual time they get with their therapist. This is why we sometimes we wonder why we are running our IOP for nearly 5 hours when most of our payers only require that we run it for 3 hours. We do all of this because we care deeply about quality, and we know that the choices we make have a direct impact on quality of care. Sure, we could make more money by running a shorter program with less talented staff… But we won’t.
The alternative to focusing on quality is worst case scenario for patients. In what is already a true race to the bottom for many, cutting costs at the direct expense of quality is the only way to survive. And because our field doesn’t have any standardized outcome measurements that anyone can make sense of, programs are getting away with it.
The fact of the matter is that it costs more to provide high quality care for patients. It just does. Some need it, and some may not. Some may want to pay for it, and some may not. None of these decisions, however, can be made until we have standardized quality measurements that the whole world can see. For those of us truly committed to quality, even the tiniest shift away from fee for service and toward a reimbursement model that rewards (and penalizes) based on quality cannot come soon enough.
In the meantime the temptation to save money at the expense of quality of care is plain and simply not an option for us. We will hold out for better days ahead. We know this day is coming. We are ready.