Addressing unwarranted clinical care variation enables organizations to achieve cost savings at scale, reduce length of stay (LOS), improve outcomes, and enhance patient and staff experience. To help medical, operational, and service line leaders identify the biggest opportunities within their organization, Advisory Board developed the Care Variation Reduction Assessment. The tool estimates direct costs per case for every Traditional Medicare admission and compares cost and LOS performance for your selected facility cohort against a national or custom cohort.

This tool equips organizations with actionable data to break the next frontier of cost management and operational efficiency.

• Size cost and length of stay opportunity: The tool quantifies excess costs and excess LOS at the facility, service line, subservice line, Medicare Severity Diagnosis Related Groups (MS-DRGs), and physician level.
• Benchmark performance: Compare your cost and LOS performance against national benchmarks or against a custom cohort of selected hospitals.
• Target outliers: By drilling down to the subservice line and physician levels, organizations can narrow their focus and target interventions toward the sources of variation that have outsized impacts on facility-level cost and quality performance.
• Leverage data to engage clinical teams: The tool quantifies total avoided costs and total avoided LOS to help identify high performing individual physicians and exemplars within your organization.
• Track performance over time: Organizations can track their excess cost and LOS performance over the past five years by using the data visualization features built into the tool.

What the data tells us¹

• Hospitals can save up to $780 million and 80,000 bed days annually. According to our analysis, providers across all regions and bed sizes with excess costs can save between $9,700 and $780 million annually. The same analysis for excess LOS reveals that providers can reduce LOS by anywhere from 298 to 80,000 bed days annually.

• The bigger the hospitals, the bigger the average cost savings and length-of-stay reduction opportunity. When comparing cohorts of hospitals by bed size across all regions, hospitals with over 1,000 beds have the greatest average excess costs and greatest average excess LOS. Average excess cost for hospitals with over 1,000 beds is $58.9 million and average excess length of stay is 20,000 bed days. Conversely, hospitals with fewer than 200 beds have the lowest average cost savings and LOS reduction opportunity, standing to save an average of $4 million and 2,000 bed days annually.
• Hospitals in the Northeast have the biggest length-of-stay reduction opportunity on average. Compared across the Northeast, Midwest, South, and West, hospitals in the Northeast — which includes 333 hospitals across New England and the Midatlantic — collectively have an average excess LOS of 6,900 bed days annually. Hospitals in the Midwest, South, and West have an average LOS opportunity of 4,100, 5,000, and 4,400 days, respectively.
• Hospitals in the West, on average, have the biggest cost savings opportunity. Compared across the same four regions, hospitals in the West — which includes 371 hospitals across Mountain and Pacific regions — collectively have an average cost savings opportunity of $19.8 million.  Hospitals in the Northeast, Midwest, and South have an average cost savings opportunity of $16.4 million, $7.5 million, and $7.9 million, respectively.