Phoebe Putney Memorial Hospital Lowers and Maintains Medical Costs for Five Fiscal Years

Lauren D. Collins

Tuesday, July 28th, 2015

Recent data has shown that a number of hospitals across the country are continuing to struggle with procedure and production costs as the health care system continues to rapidly change under President Obama’s leadership. Reports reveal that these changes have particularly affected rural hospitals and in many instances has forced them to close their doors. Procedure costs affect not only patients, but the hospitals as well, and it is no easy task to actively lower or maintain those costs on a consistent basis. Nevertheless, upon reflecting on the past five fiscal years, Phoebe has recently shown that they have managed to do just that.

During their Editorial Board Meeting this June, Phoebe was able to illustrate the solid grasp their hospital has maintained on medical costs. Within their slide show, they presented a Historic Pricing Data Graph which compares their own price rate increases against the Consumer Price Index’s Annual Inflation data for Hospital and Related Services. Each graph covers a ten year span and reveals that Phoebe has managed to keep prices from increasing for the past five fiscal years, whereas the Consumer Price Index shows a continuous rise of inflation.

In the Cumulative 2004-2014 graph, Phoebe ends 2014 without an increase in price since 2009. On the other hand, the Consumer Price Index shows a steady rise with a 44.0% increase in 2009 to an 86.5% increase in 2014.

As Joel Wernick, Phoebe Putney Health System President and CEO explained, “Over the past five fiscal years, we have been able to keep our costs down; however, this has required redesign of processes and workflows. Due to decreasing Medicare and Medicaid reimbursements, the lack of Medicaid expansion in Georgia as part of the Affordable Care Act, and the ongoing cost increases in labor, supplies and pharmaceuticals, Phoebe has had to implement many cost-reduction strategies in order to keep procedure costs down.”

However, one benefit of the Affordable Care Act is that it requires the government to be forthcoming about health care prices and costs by compelling them to report cost data on a wider scale, effectively removing the veil between patient and practice knowledge. With this data readily available, BetterDoctor, a website dedicated to helping patients find quality healthcare, compiled the statistics from 2011 to 2013 in order to reveal the cities in which medical costs have risen the most, and cities where medical costs have actually decreased. As stated in their report, “Because your medical provider decisions are made locally, we want to show consumers where prices are increasing the most—and the least. People generally use health care facilities around where they live, so living in a city where hospital costs are under control is extremely important.”

 In their article, BetterDoctor stated that, “the numbers we used to calculate the fastest rising costs comes from the hospital’s procedure prices…We took these average cost changes by procedure…and grouped each city’s procedure cost changes together. Then we averaged those changes for each city so each city had its own number.” The list of cities in which medical prices have risen the most span across the entire United States. However, not a single city from Georgia fell in this category. On the other hand, Albany, Georgia is listed as number five on the list of cities where medical costs have decreased, at a negative 3.39% rate of price increase for a span of three years. Augusta, Georgia is also listed at number 19 with a negative 1.11% rate of price increase.

As BetterDoctor explained, “making this list is a major accomplishment for a city’s hospitals…Hospitals with lower cost changes are better at controlling costs, perhaps due to becoming more efficient at providing the same quality care.”

Without a doubt, those hospitals that managed a decrease in procedure costs actively made this issue their priority. When Phoebe’s rate of increase is compared with other hospitals across the nation, the data provided from the last five fiscal years becomes all the more impressive. BetterDoctor listed Canton, Ohio as the number one city where medical costs have risen the most. Over the three year span of reported data, Canton had a massive 39.29% rate of increase in procedure costs. Compared to Phoebe, this percentage is staggering. Even Wilmington, Delaware, which is listed last as number twenty-five on the list, had a 6.22% rate of price increase which is a far cry from Phoebe’s negative 3.39%.

Wernick affirmed that Phoebe in particular has made a point to develop many cost-reduction strategies over the years. “Phoebe has multiple financial improvement teams working on productivity, patient flow, supply chain, revenue cycle, and pharmaceutical utilization which have all yielded significant expense reductions,” said Wernick. He expounded on Phoebe’s strategies by stating that the hospital also placed an emphasis on, “…educating employees and implementing the use of LEAN methodologies with the goal of streamlining processes and reducing waste,” Despite these successful efforts, Wernick explained that, “There are expenses, such as drug costs, that are beyond our control and often get passed down to our patients. However, in an effort to mitigate these increasing drug costs, our medical staff, through physician led committees, are addressing these concerns.”

Despite this, and the reality of the current health care industry, Phoebe Putney Memorial Hospital has managed to actively reduce and maintain their prices, which provides a cost-effective and patient-centered service to the surrounding area. “Currently, Phoebe is operating at a productivity level that is nine percent more productive than five years ago,” said Wernick. “We will continue to look for ways to keep costs down without compromising high standards of patient care.” With this bright promise to their patients, Phoebe continues to remain the benchmark of health care in the Albany community.