Yale New Haven Health System has reduced its operating costs by $125 million dollars in just two years by reducing variations in quality of care.

Roughly four years ago, YNHHS officials decided to zero in on decreasing costs. With the introduction of the electronic medical record system, Epic, across YNHHS’s three hospitals in 2013, YNHHS was able to use targeted statistical algorithms to predict the severity of patients’ conditions and make strategic decisions based on those calculations. Physicians and administrators interviewed were optimistic about the potential benefits of these analytical applications for patients. With a 20 percent reduction in cost per patient case, they said, they thought those benefits were being realized already.

“At Yale right now, we’re at a good equilibrium,” said Howard Forman, professor of diagnostic radiology, economics and public health, explaining that though Epic could still be improved, it has both decreased costs and improved patient care, creating a win-win situation.

The YNHHS value initiative involved bringing financial and clinical decision makers together to identify areas in a patient’s journey through the health care system that are more expensive and less beneficial than they should be. The hospital system’s plans were aided by integrating data analysis software into the Epic system, giving physicians more sophisticated data to use in decision making.


According to Vice President for Performance Management and Yale-New Haven Hospital Associate Chief of Staff Thomas Balcezak, Epic has given administrators with a platform with which to apply analysis gleaned from data studies to everyday patient care questions. The program that YNHHS uses to evaluate patients during their hospital stay, allows nurses to use statistical information to guide their discussions with patients about whether care should be curative or palliative.

Balcezak added that analytics can be built into electronic medical records to advise physicians on the best treatment course in real time. Alan Kliger, professor at the School of Medicine, senior vice president of medical affairs and chief quality officer at YNHHS, offered as an example blood transfusions that occur during heart surgery. Studies have shown that too many blood transfusions can increase the likelihood of unwanted complications; the EMR now monitors how many blood transfusions doctors perform.

“Clinical practice guidelines were adapted and placed in our electronic medical record where doctors order blood and blood use was carefully monitored,” Kliger said. “Transfusions fell by 80 to 90 percent.”

Balcezak added that the EMR can also be used to recommend pre-operative antibiotic courses to prevent surgical infections. By storing trends across patient populations and over time, the EMR can advise the physician on which types of antibiotics to use and what dosage is needed.

According to Balcezak, the EMR’s information sharing capacities are poised to expand.

“One of our goals is to make interconnected networks of EMR,” he said. “We want all our patients on the same system, so we can share information.”

Balcezak noted that it is important for all health care providers in YNHHS to have access to the same amount of patient information, so that transitions between hospitals and treatment facilities are well managed. He said there are plans to install Electronic Intensive Care Units across YNHHS. When nurses have questions about a patient’s conditions at night, Balcezak said, it is inefficient for them to have to search for an on-call physician. But installing two-way video and audio capabilities in the ICU, with a physician monitoring patients’ conditions remotely, would increase efficiency. That physician would have access to patients’ vitals and documents and would evaluate and make recommendations about the patient’s care from their remote location.

The electronic ICU was piloted last year to ensure the concept worked. It will be rolled out to a small number of ICU beds over the coming summer, Balcezak said. He added that if it is successful, it will be rolled out to all adult ICU beds in YNHHS over the next year.


YNHHS vice president of analytic strategy and financial planning Stephen Allegretto said that emphasizing how the cost-saving changes improve patient care was vital to getting physician and nurse buy-in. Physicians prefer patient-centered care — in which they craft their care plans around the patients’ wishes, Kliger said, noting that emphasizing quality of care as opposed to cost effectiveness was more convincing to him and other physicians.

The algorithms that are used to decrease YNHHS’s cost of care by $125 million were designed to recommend treatment options that have been proven to be both cost effective and high quality. Prior to implementation of the software, physicians were tasked with making trade-offs between cost and quality themselves. But now, those decisions are driven by the results of these statistics, so there is less variation in decision making across the hospital system.

“They used to say the most expensive tool in all of health care is the physician’s pen,” Balcezak said, explaining that YNHHS strategies aim to discourage physicians from ordering unnecessarily expensive interventions that have kept costs unsustainably high in the past.

He added that convincing physicians that these algorithms also make their patients’ experiences better is central to ensuring they are motivated to comply with the system’s cost-saving suggestions. Chief Medical Officer of the Yale Medical Group Ronald Vender MED ’77 agreed, adding that cost-effectiveness and high quality health care are not divergent aims.

While Forman agreed that physician altruism is an effective way to ensure buy-in to these cost-saving plans, he said that evolving economic incentive structures are also encouraging physicians to emphasize value of care over volume of care.

Historically, physicians have been paid on a fee-for-service basis that rewards physicians who perform as many medical interventions as possible. But hospitals are beginning to modify salary structures to reward physians in accordance with quality and not quantity metrics.

“Like other human beings, physicians respond to financial incentives,” Forman said. “If you want to change behaviors, you need to stop financial incentives being all about volume.”

According to Balcezak, the EMR also can be beneficial by simply preventing physicians from ordering duplicate scans, tests and exams. When physicians are able to view the same data and communicate with one another, the value of care for all patients in that health system increases.

Forman agreed, noting that EPpic increases uniformity in calculating how much to bill for specific interventions, something he said could also have contributed to the $125 million YNHHS has saved.

He added that a decrease in overpayments to Medicare might further decrease system costs in the future. In 2010–11, Yale-New Haven Hospital overpaid $1.7 million to Medicare.

In fiscal year 2013, YNHHS’s revenue was $3.3 billion.