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August 3, 2021

How MD Anderson turned its surgeons into 'smart shoppers'—and saved millions

Daily Briefing
    Editor's note: This popular story from the Daily Briefing's archives was republished on Aug. 4, 2022.

    Writing for Harvard Business Review, three experts share how MD Anderson Cancer Center deployed several behavioral "nudges" to help surgeons significantly cut costs—without jeopardizing patient care.

    The authors were Kushal Kadakia, Rhodes Scholar and MD candidate at Harvard Medical School; Nancy Perrier, chief of the section of surgical endocrinology and a professor in the department of surgical oncology at the University of Texas MD Anderson Cancer Center; and Anaeze Offodile, executive director for clinical transformation and an assistant professor in the department of plastic surgery at the University of Texas MD Anderson Cancer Center.

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    'Know Your Costs' campaign

    In 2018, the University of Texas MD Anderson Cancer Center established the "Know Your Costs" (KYC) pilot program, which aimed to help surgeons curb OR costs by introducing several behavioral "nudges" into surgical workflows, the authors write.

    They explain, "Our thesis was that addressing surgeons' tendencies to make decisions without regard to their costs … could encourage better accountability for the costs of care."

    According to Kadakia and colleagues, the program addressed surgeons' preference cards: itemized lists of instruments, equipment, and supplies that doctors select prior to a procedure. The authors explain that while these cards are generally cost-blind and sensitive to doctors' subjective preferences, research demonstrates that there is no proven relationship between higher-cost supplies and better outcomes.

    KYC worked with surgeons to select lower-cost alternatives for intraoperative supplies. Specifically, according to the authors, beginning in January 2018, 26 surgeons in three separate MD Anderson surgical departments began receiving reports from an "intraoperative supply cost" comparison dashboard, which presented surgeons with the costs of the discretionary elements in their preference cards for upcoming procedures.

    Then, KYC generated comparisons of the procedure-specific supply costs of each surgeon within individual departments, the authors write. They also emailed individual surgeons monthly reports showing how their average costs compared with their peers and overall department for various procedures. These reports were color-coded so surgeons could easily see how they ranked compared with their peers, which the authors said provided "an easy-to-understand 'nudge' about costs."

    According to the authors, in addition to making these electronic comparisons visible to physicians via MD Anderson's EHR system, KYC put posters displaying low-cost alternatives for common equipment in dictation rooms and operating suites.


    Over the course of the first year, the program saved the health system nearly $1 million in supply costs. And—when it was scaled across the entire division of surgery, including a total of 159 surgeons across 10 departments—it achieved "savings of nearly 13%," according to the authors, without any "adverse effects on quality of care."

    The authors recommend that professional associations, such as the American College of Surgeons and the American Hospital Association, work with EHR vendors to develop these electronic cost comparisons and reminders for physicians. They also recommend physician leaders initiate "accountability and affordability" tracks to their hospitals' "Morbidity and Mortality" conferences. Additionally, residency programs could include cost-transparency initiatives as part of new physician training.

    "It is indisputable that health care is full of hidden inefficiencies, and within this lies the value proposition of behavioral economics," the authors write. "It offers a toolkit to transform doctors into smart shoppers who consciously try to minimize costs but not at the expense of quality and safety." (Kadakia et al., Harvard Business Review, 7/28)

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