he estimates that eliminating clearly preventable adverse events and redundant tests could save hospitals a potential $25 billion, or 8.2 percent of all inpatient costs. In describing the limitations of his analysis, he highlights in particular that the estimates were based on data that were several years old, and therefore may not reflect current costs, and that data were not available for all patient populations (e.g., women admitted to the hospital for labor and delivery). Jha concludes by suggesting that improving quality of care while saving costs will require additional efforts to systematically measure and publicly report adverse event rates in U.S. hospitals.

Gary S. Kaplan’s discussion of the recent work at Virginia Mason Medical Center (VMMC) demonstrates that coordinated systems can dramatically cut costs for high-cost conditions, such as the treatment of back pain. However, coordinated systems can also address other quality issues, such as patient satisfaction with services. By focusing on back pain, migraines, and breast nodules and by applying a systems-based healthcare model to these common, high-cost conditions, Kaplan describes how healthcare spending at VMMC fell between 5 and 9 percent relative to industry peers. Furthermore, waiting time for appointments decreased from 1 month to less than 2 days, patient satisfaction grew to 96 percent of maximum, and 95 percent of patients suffered no loss of work time. Kaplan attributes these savings and improved outcomes to reductions in unnecessary imaging and provider visits, as well as eliminating the overuse of physician providers in favor of nurse practitioners when appropriate, and the often concomitant poor coordination of care. Mapping this analysis to the national healthcare landscape, he suggests that more efficient use of mid-level practitioners for common conditions could reduce national expenditures by $13 billion annually. In closing, he outlines key factors to affordable health care, including: accountability; efficient use of labor; use of effective care pathways for high-cost conditions; alignment of reimbursement with value; and electronic health records embedded with evidence-based decision rules.

Framing clinical and administrative waste in terms of intra- and interorganizational contexts, William F. Jessee of the Medical Group Management Association focuses on inefficiencies within medical practices. He describes considerable unexplained variation among medical practices in the cost of producing care, and identifies almost $26 billion in possible cost reductions from increasing the efficiency of delivering care in physician offices. While Jessee suggests that this estimate is provocative, he also cautions that it is preliminary in nature, as it was based on limited cross-sectional survey data. Arnold Milstein of Pacific Business Group on Health continues this discussion by addressing inefficiencies in hospitals. Referencing the analyses of the Medicare Payment Advisory Commission, he explains that if all hospitals replicated the attainment of the top 12 percent in terms of



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