By Kelly M. Pyrek
Estimates of healthcare-acquired infection in the U.S. underscore the need for a renewed focus on sustainable HAI prevention, but resources are required to uphold the viability of these programs. It is therefore necessary for infection preventionists to establish a business case for their programs and present it to their healthcare institution leadership. Murphy and Whiting (2007) define a business case as " A business case addresses at a high level the business need that the project seeks to resolve. It may include the reasons for the project, the expected business benefits, the options considered (with reasons for rejecting or carrying forward each option), and the expected costs of the project, a gap analysis and the expected risks. The option of doing nothing should be included with the costs and risks of inactivity included along with the differences (costs, risks, outcomes etc) between doing nothing and the proposed project."
In a presentation Kerkering (undated) explains that there are three reasons for making the business case for infection prevention:
- Altruism: the desire to prevent suffering and death is a necessary and laudable goal but it does not pay the bills
- Realism: Lifes circumstances do not allow you to work for free
- Pragmatism: You need the resources to carry out an effective infection control program
Kerkering emphasizes, however, that the No. 1 reason for making the business case is needing to respond to market forces in healthcare, specifically the decision by the Centers for Medicare and Medicaid Services ( CMS) not reimburse hospitals for potentially preventable events. He notes that infection prevention has now not only become necessary for the survival of the patient, but also for the survival of the facility. This is underscored by Perencevich, et al. (2007) who note, "While society would benefit from a reduced incidence of nosocomial infections, there is currently no direct reimbursement to hospitals for the purpose of infection control, which forces healthcare institutions to make economic decisions about funding infection control activities. Demonstrating value to administrators is an increasingly important function of the hospital epidemiologist because healthcare executives are faced with many demands and shrinking budgets.
And as Leatherman, et al. (2003) explain, a business case exists if the entity that invests in the intervention realizes a financial return on its investment in a reasonable time frame. The reasonable return can occur through profit, reduction in losses, or cost avoidance."
As Keckering notes, the premise for the business case is as follows:
- Infection control programs are not revenue producers
- Infection control programs cost money
- The basis of an infection control business plan is to demonstrate cost efficiency; that is, an infection control program will save more money than it costs to fund the program.
In a 2010 advisory, the Pennsylvania Patient Safety Authority explained, "An important function of the hospital epidemiologist and the infec-tion preventionist (IP) is to demonstrate the value of infection prevention and control programs to healthcare executives. The most important aspect of a business case for prevention is reduction of harm and loss of life. But from a financial health perspective, boards, executives, and healthcare managers are interested in cutting costs and getting maximum value for expenditures. They may not see the benefit of new infection prevention and control programs if the return on investment is not realized within a certain time frame. An infection control business case analysis of the excess cost of HAIs and of the excessive length of stay can help gain needed resources and physician support. Practical methods are needed to engage healthcare executives in evaluating the true cost of HAIs in their organizations. Hospital leaders awareness that HAIs impact their patients may not always lead to understanding the extent of the financial burden of HAIs or the cost-effectiveness of infection prevention and control programs. Organizations may have inadequate methods to investigate the true cost of HAI in their institutions. Executives and clinicians in hospitals with HAI rates at or below nationally published rates may become complacent, accepting that a certain degree of patient harm from infections is an unavoidable price of caring for older, sicker patients. Common misconceptions about HAIs need to be dispelled. These misperceptions include (1) the fallacy that the incidence of HAI in most institutions is insignificant; (2) the erroneous belief that additional cost of HAIs is largely offset by reimbursement, making cost savings associated with reduction of HAIs not worth the investment, and (3) the misperception that HAIs are an expected outcome of treating an older, sicker patient population with escalating use of invasive procedures.
Economic Burden of HAIs
As the Pennsylvania Patient Safety Authority (2010) summarizes, "HAIs consume resources, prolong patients hospital stays, and are only partially reimbursed at best." As an example, an economic analysis of central line-associated bloodstream infections (CLABSIs) at Allegheny General Hospital in Pennsylvania from 2002 to 2005 examined hospital revenues and expenses in 54 cases of patients with CLABSIs in two intensive care units (ICUs). The average payment for a case complicated by CLABSI was $64,894, and the average expense was $91,733 with a gross margin of minus $26,839 per case and a total operating loss of nearly $1.5 million from the 54 cases. In addition to revenue loss, there are hidden costs and lost financial opportunities associated with HAIs. For example, when patients are brought back to the operating room (OR) for an incision and drainage of a postsurgical site infection, both the surgical suite and the OR team are tied up, and new cases cannot be scheduled. Primary procedures are often reimbursed at a higher rate than follow-up procedures. The 2007 Pennsylvania Health Care Cost Containment Council (PHC4) report on HAIs in Pennsylvania hospitals shows that the average charge for care grew from $35,168, with an average length of stay of 4.4 days, for cases without an HAI to $191,872 for those cases with an HAI, with an average length of stay of 19.7 days. PHC4 reported that in almost all cases, hospitals do not receive full reimbursement of charges; on average, in 2006 and 2007, hospitals statewide were paid approximately 27 percent of established charges.
The right data can be hard to come by, but researchers are addressing this. Scott (2009) outlines the misconceptions regarding the financial significance of HAIs in a report on the direct medical costs of care related to secondary infection diagnosis, increased length of stay and expensive HAI outbreaks. The report also describes additional cost components, which reflect the socioeconomic consequences of HAIs such as indirect and intangible costs of HAIs related to diminished quality of life such as permanent disability or lost wages.
The Centers for Disease Control and Prevention (CDC) reports that the cost of HAIs per patient (based on the 2007 consumer price index) ranges from approximately $20,000 to $25,000. Diagnosis-related group (DRG) based reimbursement is not increased when a patient develops an HAI, as there are no specific DRG codes available for HAIs. Hospitalized patients may be covered by Medicare and Medicaid, which in most cases reimburse fixed amounts based on diagnosis. The hospital then has to absorb the additional costs associated with HAIs, while the HAIs simultaneously prevent the hospital from taking new admissions with reimbursable conditions. The Centers for Medicare and Medicaid Services (CMS) regulations, effective in 2008, now refuse reimbursement to hospitals for the excess costs of certain types of infections (as outlined in the HHS Action Plan to Prevent Healthcare-Associated Infections). As the Pennsylvania Patient Safety Authority notes, "The current legal and regulatory landscape has changed in a large part due to the success of hospitals across the country with HAI prevention programs. HAIs that were previously thought of as defensible are now considered to be preventable adverse events. IPs will play a larger role in protecting their hospitals against liability in the future."
A recent study in JAMA Internal Medicine has helped to better define HAI costs that infection preventionists can use in their proposals. The study by Eyal Zimlichman, MD, MSc, of Brigham and Women's Hospital and the Harvard Medical School, Boston, and colleagues, estimates that total annual costs for five major HAIs were $9.8 billion, with surgical site infections contributing the most to overall costs. Researchers reviewed published medical literature for the years 1986 through April 2013. For HAI incidence estimates, researchers used the CDC's National Healthcare Safety Network (NHSN).
"As one of the most common sources of preventable harm, HAIs represent a major threat to patient safety," the authors note. "The purpose of this study was to generate estimates of the costs associated with the most significant and targetable HAIs."
According to the results, on a per-case basis, central line-associated bloodstream infections were found to be the most costly HAIs at $45,814, followed by ventilator-associated pneumonia at $40,144, surgical site infections at $20,785, Clostridium difficile infection at $11,285 and catheter-associated urinary tract infections at $896.
"While quality improvement initiatives have decreased HAI incidence and costs, much more remains to be done," Zimlichman, et al. write. "As hospitals realize savings from prevention of these complications under payment reforms, they may be more likely to invest in such strate-gies."
How to Make an Effective Business Case
Perencevich, et al. (2007) and Murphy and Whiting (2007) say that a business case exists if the intervention realizes a financial return on investment through hospital profit, loss reduction, or cost avoidance in a reasonable time frame. Comparing the cost of an infection prevention and control program or intervention to the benefitslowering rates of HAI and preventing harm and deathis the best method for justifying the investment in prevention efforts.
The Pennsylvania Patient Safety Authority (2010) emphasizes that "Possibly the greatest opportunity to demonstrate a positive return on investment in infection prevention and control is by decreasing patients hospital length of stay and releasing those beds to new patients, consequently increasing volume, revenue, and reimbursement. This opportunity reinforces the evidence that financial investments in infection prevention and control programs offer good value and that resources to implement best practice strategies at the bedside should be made available. In assessing the extent to which HAIs are preventable, CDC estimates that effective infection control programs could prevent up to 70 percent of infections. This can translate into potential savings nationwide of up to $31.5 billion of the $45 billion expenditures attributed to HAIs."
Making the business case for the continued viability of an infection prevention program is one of the most common strategies. The compo-nents of a high-quality infection prevention and control program, according to the Pennsylvania Patient Safety Authority (2010), include sufficient staff with time to conduct risk-adjusted surveillance; staff education; isolation and outbreak management; report review and development; employee health activities; tasks intended to meet regulatory requirements, including public reporting tasks; clinical implementation of evidence-based best practices; and process improvement activities. Program-resource needs include trained IPs, clerical support, at least a part-time epidemiologist, physician champion and clinical nurse liaison hours, supplies, data mining support, and education. The average cost for staffing that includes two IPs, one member of clerical support staff, and a part-time medical director is estimated at $300,000. According to the Pennsylvania Patient Safety Authority (2010), this cost could be financed by avoiding fewer than nine surgical-site infections (SSI), based on the CDC 2009 direct cost estimates of $34,670 per SSI. Another study of 28 U.S. hospitals estimated that the hospitals financial loss due to HAIs was 4.3 times greater than the amount the hospitals invested in prevention in 2005.
The Pennsylvania Patient Safety Authority (2010) explains that examples of cost savings associated with a well-resourced, quality infection control program include the expertise of an IP to eliminate supply waste through the appropriate selection of products and expensive technology, avoidance of regulatory citations and fines for lack of progress in decreasing infection rates, and enhancement of the organizations image by minimizing the threat of outbreaks, resistant pathogens, employee injuries from bloodborne pathogens, HAI disclosures, sentinel events, and malpractice claims. Many infection prevention practices can improve quality without much of a financial investment. These include nurse-driven catheter removal protocols, proper equipment disinfection, hand hygiene, process and outcome measurement, and accountability standards for compliance.
Key to making an effective business case is understanding the point of view of your institution's leadership. As the Pennsylvania Patient Safety Authority (2010) explains, hospital administrators see infection prevention and control programs as cost centers because the costs cannot be passed onto anyone else. C-suite leadership is focused on slim profit margins, evidenced by a survey of senior hospital executives across the United States found that, despite current severe financial constraints, hospitals of all sizes are employing sophisticated budget strategies in a commitment to reduce infection rates. Surveyed hospital executives anticipate that focus on patient safety is a key component of an organizations strategy to enhance its reputation in select specialties. Infection prevention and control was identified as one of the top five categories with the highest budget growth potential; however, the report also found that just one-third of respondents are willing to increase spending to reduce errors and infection rates. (L.E.K. Consulting, 2010)
The Pennsylvania Patient Safety Authority (2010) emphasizes that "Infection preventions value to the organization is based on how well HAIs are prevented and controlled. There are a number of ways in which that value is added; for example, reducing HAI damage to the hospitals operating budget can also reduce legal liability. The publics demand for accountability for public safety has increased, giving IPs the advantage of more leverage as they represent best practices. The primary cost of HAIs to the hospital is the loss of bed days due to prolonged length of stay. The loss of higher paying, new admissions represents the gross costs of HAIs and the value of prevention. For example, an intervention that shortens a patients stay in intensive care or lessens the need for surgery is a plus because the hospital gets more productivity out of the existing facility. Administrators want to know what comprises an effective infection prevention and control program, the costs and savings to the hospital, how much to invest, and what else could be done with the resources released through HAI prevention. They want the information in a timely fashion for budget considerationat that time, there will be competition with every other department in the hospital. Administrators can be greatly influenced by a physician championphysicians control 85 percent of healthcare spending in the United States, and they control the number of patients coming into the institution."
Learning the language of economics is critical for communicating with C-suite leadership, says Murphy (2009). Chief among terms used by hospital finance professionals is cost, and infection preventionists must know the components of total costs
- Direct costs: Direct payment for healthcare goods and services
- Indirect costs: An example is lost work productivity
- Intangible costs: Cannot easily assign a monetary value
- Opportunity costs: What you give up when you use a resource
- Fixed costs: Costs incurred for fixed inputs that cannot easily be eliminated in the short run
- Variable costs: Costs incurred for variable inputs that can easily be eliminated in the short run
According to Murphy (2009). estimation methods include comparing costs for patients with infections to patients without infections (matched comparison; like case- control study). As an example of where to begin, Murphy (2009) suggests using an HAI such as surgical site infection (SSI) and take the following steps:
- Work with your institution's accounting department to obtain individual costs and LOS for patients undergoing specific surgical procedures
- List patients who developed SSI.
- Work with your institution's accounting department to calculate additional costs: readmission, return to OR, ICU stay, antibiotics, etc.
- Compare cost of patients without SSI to patients with SSI who had procedure during same time period
- Compare LOS , including readmission for SSI, for those with infection
Murphy and Whiting (2007) suggest the following methodologies for calculating the estimated value (excess cost or impact on margin) of eliminating HAIs in a healthcare organization:
1. Select one of the following options for the population to be analyzed.
a. Option 1 select a number such as 10 patients who acquired an HAI
b. Option 2 select a class of HAIs for the last year. (Include any case where a payer was billed for any service related to a healthcare-associated infection. Do not include a case if the primary cause of admission was for an infection; do include readmissions for HAI.)
2. Identify the actual or estimated reimbursement for each case
3. Identify the total costs associated with the case, based upon activity-based cost accounting, if available
4. Identify the costs attributable to the HAI
a. This step requires clinical and financial expertise to identify which services provided were attributable to the infection AND the cost of these services
5. Calculate the gross margin for the case by subtracting the expenses (3) from the reimbursement (2)
6. Compare the gross margin for the case to the gross margin of similar cases without a healthcare-associated infection, matched for age,
principal diagnosis, and admission severity
When you have your data in hand, Murphy (2009) suggest taking the following actions to then communicate this financial impact to your institution's leadership:
- Display cost and LOS data graphically
- Approach clinical leadership and senior executives to demonstrate financial impact of HAI
- Use the literature to show the cost-benefit of infection prevention and impact of interventions to reduce HAI, all to demonstrate the value of the infection prevention program.
- Then argue for a larger institutional investment in infection prevention.
Stone, et al. (2005) suggest that "before asking for more support and presenting infection control programs to management, it is important to accurately and comprehensively identify the key issues in the organization and where best to direct efforts. For example, focus on which types of infections are more prevalent, locations where endemic infection rates are particularly high, or locations where surveillance and prevention efforts have been sporadic or lacking."
The Pennsylvania Patient Safety Authority (2010) advises that infection preventionists "Focus the hospital executive teams attention on the number of infections avoided and the dollars saved by infection control interventions that have been successful in the past. Identify a patient group (e.g., intensive care patients), the infection prevented, and all reasonable strategies that might prevent that type of infection. Develop clinical practice priorities based on the Department of Health and Human Services (HHS) action plan, which have the potential to decrease HAIs based on: (1) supporting scientific evidence that the recommended practice is effective, practical, and urgent; (2) recognized gaps in current implementation of the practice (full versus partial implementation); and (3) the bundling or implementation of several practices at the same time to ensure the effectiveness of the action plan. Assessment of adequate resources for an infection prevention and control program includes identification of the scope of patient populations being served, the number of trained and certified IPs in the facility, the types of programs in which the IP is involved, and a practice analysis. This analysis describes the frequency and estimated hours required each week for infection prevention and control activities and identifies areas of the program that may be under-resourced."
Perencevich, et al. (2007) and Murphy and Whiting (2007) recommend the following strategies to calculate the estimated value (i.e., excess cost) of eliminating HAIs in the organization:
- Prepare an executive summary. Start with a statement of purpose. Describe the intervention requested, explain why it should be pursued, and review the financial implications of not pursuing it.
- Identify a financial partner. Infection prevention and control specialists need to work with the financial specialists in the organization to identify which services provided were attributable to the infection and the cost of that service.
- Frame the problem. Select an HAI or a population within the last year to be analyzed. Select a number of cases (e.g., 10) of patients who acquired a CLABSI or select a class of HAI for the last year. Develop potential solutions based on these cases.
- Meet with key administrators or physician leaders. Before the start of the analysis, obtain agreement that the issue is of institutional concern and has the support of leadership. Administrators can help to identify individuals or departments that may be affected by the proposal and also help identify the critical costs and factors that should be included.
- Determine the costs associated with the infection of interest. Emphasize the complications that would not have occurred during a hospital stay without the HAI. With the financial advisor, identify actual or estimated costs and reimbursement, and calculate the difference between profits with and without an HAI. Use available hospital administrative data for the amount of costs that are reimbursed, or use estimates from literature. An alternative method of calculating the attributed cost of an HAI is to multiply the mean increase in length of stay for HAI cases by the mean daily cost for a hospital stay. For example, if the average daily cost for a patient intubated in ICU was $3,000 a day and the average increase in the length of stay was seven days due to a VAP, the increased cost would be $21,000. Estimate additional revenue gained by filling the additional bed days available.
- Determine which costs can be avoided through reduced infection rates. Use proposed or actual past reduced infection rates or published data. Calculate the gross margin for the case by subtracting the expenses from the reimbursement. Compare the gross margin for the case to the gross margin of similar cases without an HAI. Analysis of your organizations costs is more credible than general estimates from studies.
- Calculate the financial impact. Subtract the upfront and future outlay costs from the estimated cost savings. Determine the annual cost of an infection prevention and control program, as well as the salary and benefits of the IP. When looking at a specific project or intervention, estimate the percent of IP time needed to support the project based on his or her hourly rate. Include the additional reduced costs and benefits expected from impact of the infection control intervention on other processes or other types of preventable infections
- Make the business case. Once the analysis of the HAIs in the organization is completed, use this information to target an area that has significant opportunity for improvement and then set the target for elimination of this HAI. Develop an implementation plan, determine current support for the initiative, and answer anticipated questions before presenting the initial findings to critical stakeholders.
- Identify process defects and institute changes. Institute necessary systems or practice strategies where indicated.
- Measure results. Collecting outcomes, costs, and implementation data allows comparison with units where the intervention has not yet been implemented. Prospectively collecting cost and outcome data once programs are in effect can illustrate stable outcome rates or continued improvement associated with the intervention.
Instruction is also available from the Institute for Healthcare Improvement (IHI), which suggests the following steps:
- Define the program/service/product that you wish to provide in the facility, including describing how it advances the institution's mission and strategic plan, and how it relates to what the facility does best.
- Prove that there is a need for the requested program/service/product by outlining some of the history that has made this a viable concept. Provide validity by supplying giving market figures and growth projections if applicable. Present a SWOT analysis (strengths, weakness, opportunities and threats) as well as a plan for associated costs related to this proposed business venture.
- Discuss how the program/service/product generates revenue, reduces expenses and/or gains efficiencies.
- Address any staffing implications such as additional FTEs needed as well as training issues and how they will be resolved. Provide an organizational chart and accountability chain to demonstrate how things will be organized and operated. Address any potential
hurdles that may be encountered and how they will be addressed.
- Consult with finance leadership at your institution early in the process so they can provide maximum assistance as the proposal progresses. Address the return on investment (ROI) that this program/service/product will generate. Plan to provide a six-month report demonstrating that any financial assumptions have been met. Establish a baseline metric that will allow you to effectively demonstrate how the project has performed.
- Making the business case often requires teamwork. Identify team members instrumental in developing the proposal; highlight relevant background of your team members to build credibility, demonstrate proper research and emphasize inter-disciplinary approach.
- Address physician collaboration, if appropriate.
As Murphy and Whiting (2007) advise, " In an effort to enhance the attention and resources dedicated to the culture of zero tolerance toward HAIs, it is critical that organizations commit to the following actions:
1. Identify a financial partner to work with Infection Prevention and Control Specialists in your organization.
2. Quantify the economic impact of HAIs in your organization by using the methodology described above.
3. Based on the results of this economic analysis, target a high risk, high volume procedure or patient population and lead efforts to eliminate HAIs using a zero tolerance (or pursue perfection mentality).
4. Ensure that Specialists are educating healthcare workers about infection prevention and driving applicable evidence-based best
5. Identify process defects and institute necessary systems or practice changes where indicated.
6. Measure the results of the efforts and repeat the process.
Creating a culture of safety is the ultimate goal of infection preventionists and hospital leadership alike, and making the business case is just one critical component according to the Pennsylvania Patient Safety Authority (2010): "Application of practical guidelines to develop an infection prevention and control business case will assist hospital IPs and epidemiologists to justify and expand much-needed programs. The true investment is the organizational commitment from healthcare leaders and clinicians to engage in a fresh approach to providing patient care in a culture of safety and to set the goal number of HAIs at zero. This requires acknowledging the high-risk nature of the organizations activities, as well as investing in infection prevention programs, allocating resources needed for optimal programs, and making infection prevention an institution-wide priority."
References and recommended reading:
Anderson DJ, Kirkland KB, Kayre KS. Underresourced hospital infection control and prevention programs: penny wise,pound foolish? Infect Control Hosp Epidemiol 2007 Jul;28(7):767-73.
Centers for Medicare and Medicaid Services. Hospital-acquired conditions (HAC). October 2008.
Graves N. Economics and preventing hospital-acquired infection. Emerg Infect Dis 2004 Apr;10(4):561-6.
Kerkering T. Undated Powerpoint presentation: Building a Business Case for Infection Prevention. Accessible at: www.vdh.virginia.gov
Leatherman S, Berwick D, Iles D, et al. The business case for quality: case studies and an analysis. Health Aff (Millwood) 2003; 22:17-30.
L.E.K. Consulting. Hospitals apply surgical precision to budgets, brace to support healthcare reform. L.E.K. Consult Exec Insights. January 2010.Accessible at: http://www.lek.com/UserFiles/File/Executive_Insights/Volume_XII_Issue_4_LEK_Hospital_Purchasing_Survey_Executive_Insights.pdf.
Murphy D. Powerpoint presentation: The Economics of Infection Prevention and Making the RIGHT Business Case. October 2008.
Murphy DM and Whiting J. Association for Professionals in Infection Control and Epidemiology (APIC). Dispelling the myths: the true cost of healthcare-associated infections. [briefing online]. 2007 Feb 9 [cited 2010 April 21]
Pennsylvania Patient Safety Authority. Demonstrating Return on Investment for Infection Prevention and Control. Pennsylvania Patient Safety Advisory 2010 Sep;7(3):102-7.
Pennsylvania Health Care Cost Containment Council (PHC4). Hospital-acquired infections in Pennsylvania [online]. 2009 Jan [cited 2010 Apr 21]. Available from Internet: http://www.phc4.org/reports/hai/07/default.htm.
Perencevich EN, Stone PW, Wright SB, Carmeli Y, Fisman DN and Cosgrove SE. Raising Standards While Watching the Bottom Line: Making a Business Case for Infection Control. Infect Control Hosp Epidemiol 2007; 28:1121-1133.
Scott RD. The direct medical costs of healthcare-associated infections in U.S. hospitals and the benefits of prevention [report online]. 2009 Mar [cited 2010 Apr 21]. Available from Internet: http://www.cdc.gov/ncidod/dhqp/pdf/Scott_CostPaper.pdf.
Stone PW, Hedblom EC, Murphy DM. The economic impact of infection control: making the business case for increased infection control measures. Am J Infect Control 2005 Nov;33(9):542-7.
U.S. Department of Health and Human Services. HHS action plan to prevent healthcare-associated infections.
Yokoe DS and Classen D. Improving Patient Safety Through Infection Control: A New Healthcare Imperative. Infect Control Hosp Epidemiol. October 2008; 29:S3-S11.
Zimlichman E, et al. JAMA Intern Med. Published online September 2, 2013. doi:10.1001/jamainternmed.2013.9763.