Winning More by Losing Less: Taking a Cue from Baseball

by Tom Robertson

Executive Director, Vizient Research Institute

Major league baseball teams play 162 games in a normal season. Until 1961 and 1962, they played 154 games per year. In spite of such long seasons, there have been 16 times when additional “tie-breaker” games were needed to determine which team would play in the World Series. The first tie-breaker game was played in 1946 between the St. Louis Cardinals and the Brooklyn Dodgers, but it was another game five years later in 1951 — also involving the Dodgers — that created one of the most memorable moments in sports history. In the bottom of the ninth inning, trailing 4-2, Bobby Thomson hit a three run home run that became known as the “shot heard ‘round the world.”

Over the long summer of 1951, the New York Giants and the Brooklyn Dodgers found themselves tied, each with a record of 96 wins and 58 losses. Each team could undoubtedly look back over the season and find missed opportunities, any one of which would have propelled them to the championship. It is the nature of baseball that winning more games is actually harder than losing fewer.

The best batters in the world only get hits about 33% of the time ... no one has reached 40% since Ted Williams in 1941. The most powerful batters hit home runs only once in every ten times at bat. But major league players successfully field 99% of the balls that are hit to them. An error, by definition, is a play that should have been made but was not. One fewer error — on a play that the player was expected to make — is far easier than one more hit, where the best players only succeed one-third of the time, or another home run, the odds of which are quite small. Had either the Giants or the Dodgers managed to lose one fewer game, no one would ever have remembered Bobby Thomson. This lesson from the national pastime — winning more by losing less — has implications for health care providers.

The typical tertiary medical center realizes operating margins of hundreds of millions of dollars on only 5% of its patients. It loses hundreds of millions of dollars on another 5%; the latter group is either covered by Medicare or Medicaid or lacks insurance coverage altogether. This highly unprofitable patient cohort consumes a lot of medical resources while generating revenue well below the provider’s costs. To the extent that a portion of the expenditures by this patient population are avoidable — and it is universally accepted that some are — the medical center could improve its overall financial position by taking steps to help this vulnerable population avoid unnecessary utilization.

Roughly one-fifth of the economic losses arising from the most unprofitable 5% of a medical center’s patient population stem from inter-hospital transfers — patients who come to the medical center directly from another inpatient facility. Two-thirds of tertiary medical centers studied see higher transfer rates among Medicaid or uninsured patients compared to the transfer rates for commercially insured patients. Tertiary medical centers provide an essential societal benefit by accepting transfers when clinical indications dictate, but they are vulnerable to unwarranted financial burdens when transfers occur for economic reasons.

About one-third of a medical center’s net losses among its least profitable cohort involve patients who are admitted multiple times. It turns out that there is a strong correlation between multiple admissions and multiple visits to the emergency department, particularly among Medicaid patients with complex or chronic illnesses. Ninety percent of chronic/complex Medicaid patients ultimately destined for multiple admissions have at least one emergency department visit. Intervening at the first emergency visit would identify almost all patients who would ultimately be admitted multiple times but would also necessitate managing a large number of less acute patients. As it turns out, the greatest yield comes from intervening upon the second emergency department encounter for chronic or complex patients covered by Medicaid or who lack insurance.

By carefully assessing the medical needs of potential transfer patients — and the capabilities of the transferring provider — and by taking steps to more proactively manage the episodes of care related to Medicaid or uninsured patients with complex or chronic illnesses, medical centers can influence over 50% of the operating losses incurred by the most unprofitable 5% of their patients, losses that run into hundreds of millions of dollars.

A great deal of energy and managerial attention is devoted to maintaining or expanding the most profitable 5% patient cohort, on which the organization’s financial well-being has traditionally depended. As that dependence becomes increasingly vulnerable, providers would be wise to devote attention to reducing their losses among the most unprofitable of their patients.

As Bobby Thomson’s home run cleared the left field fence, viewers of the very first major league baseball game ever televised nationally heard Russ Hodges’ iconic call “The Giants win the pennant! The Giants win the pennant! The Giants win the pennant!” It is poignant to watch the grainy black and white video footage and to see the Dodgers dejectedly walk across the outfield grass toward their locker room as the Giants celebrate. It’s not hard to imagine them replaying the 154-game regular season in their minds, and thinking of a game lost here or there that would have made the difference. No one would have been happier to have lost one fewer game that summer than Ralph Branca, the pitcher who gave up the shot heard ‘round the world.

Winning more by losing less — a lesson for us all.