Cleveland Clinic’s CEO Dr. Delos “Toby” Cosgrove speaking July 20th at a luncheon at the National Press Club, said “The key to reducing healthcare costs is employing physicians. All of the physicians at the Cleveland Clinic are employed and get a straight salary.” According to reports, today, 60 percent of the doctors in the U.S are employed and 75 percent of the medical graduates are now going to be employed instead of being self-employed.
The Dartmouth Atlas looked at top organizations in the U.S. and concluded that the two with the lowest Medicare costs were Mayo Clinic and the Cleveland Clinic where both employ physicians. Dr. Cosgrove pointed out that employed physicians at the Cleveland Clinic, are involved in decision-making as it relates to purchasing and utilization decisions resulting in purchasing costs being lowered by about $125 million.
Dr. Cosgrove also mentioned that one of the other important ways to lower costs is to integrate healthcare systems as this helps to reduce the duplication of services. At the Cleveland Clinic, pediatrics, trauma, rehabilitation, heart surgery, and obstetrics systems have been consolidated. enabling the medical center to become more efficient.
Many hospitals across the U.S are changing and coming together in terms of systems that are capable of talking to each other. Sixty percent of the hospitals in the U.S are now part of a system and as systems are brought together, the thinking is that more standardization of care, more efficiency, and more collaboration will result.
The Cleveland Clinic is working very hard to reduce the staggering toll of patients dying each year from infections contracted in hospitals and doctors’ offices. Dr Cosgrove is happy to report that actually the country has seen a 50 percent reduction in the incidents of central line infections across the country simply by bundling and using standard procedures.
The question Dr Cosgrove hears most often is how will the Affordable Care Act affect innovation? He is concerned that in developing a new drug or device it takes such a long time to get products through the system and into the marketplace.
For example, if a heart valve is developed, it can take about ten years of work in animals, and then a long time to get through the regulatory process and be approved by FDA. Plus the fact, if you need to establish if one heart valve is better than another heart valve, then that may take another ten years to come to a conclusion.
As a result, there aren’t too many venture capitalists willing to invest in a twenty year project so as a result, much of the innovation is being driven out of the U.S. As Dr. Cosgrove commented, “It’s important to emphasize the fact that healthcare products developed here are sold all over the world resulting in pharmaceuticals and devices being major exports from the U.S.”
Dr Cosgrove explained how the Cleveland Clinic ended up having a hospital in Abu Dhabi. After 9/11 happened, the Cleveland Clinic was operating on about 35 patients a month particularly on patients from the Middle East. Hospital officials then began to look in the Middle East to see if they could establish a hospital offshore. The Cleveland Clinic had offers from many countries to provide care but by far the most attractive offer was from Abu Dhabi.
He pointed out that the Cleveland Clinic in establishing their presence in the country is working with the government of Abu Dhabi. The government built the hospital facility and at the same time, the government is paying the Cleveland Clinic doctors their salaries plus management and consulting fees. As Dr. Cosgrove proudly pointed out, “The Cleveland Clinic is the first facility in the U.S that has gone overseas and helped design a healthcare delivery system for a country.”