Do more with less. It’s a phrase we’ve all heard throughout our careers, whatever the business sector. In addition to normal market and economic pressures, the healthcare sector also must move large “rocks” like Meaningful Use and ICD-10, plus other regulatory and health reform requirements, all in the face of clinician shortages and declining reimbursements. Experts, like those from the Advisory Board, believe health systems that run at 2.5% operating margin will experience a loss of up to nearly (17%) in 10 years. To counter that shortfall and target profitability, they will need cost saving measures and growth strategies of 20% to get to a run rate of 4% operating margin.
This issue of Performance Strategies is the first in a series that tackles the topic of achieving better outcomes through improvements in financial, clinical and operational performance. As healthcare evolves, organizations must address all three dimensions even as they assume greater risk for the health of their patients. Technology is a strategic enabler by helping to automate, integrate, and hard-wire optimized processes and procedures.
Improvements must start with strong enterprise intelligence. Intelligence goes beyond data collection and analytics. It encompasses actionable, reliable healthcare-specific data and analysis to target areas for improvement, measure progress and make adjustments, as needed. For mission-critical performance improvement efforts, predictive modeling enables organizations to predict the results of contemplated changes so they can move even more quickly and decisively.
As you’ll read in this issue, operational improvements know no boundaries – organizations of all sizes, shapes and complexities are capable of driving better outcomes through the strategic use of information and process change supported by technology. Good places to look for improvements in operations include the supply chain, capacity and patient flow, staffing management, the pharmacy and service lines. For example:
Supply sourcing control is helping Wheaton Franciscan take cost out of its supply chain. Using a cloud-based solution, it defined a virtual formulary, which has enabled the health system to more easily manage its enterprise-wide supply spend. In just the first phase of implementation, the health system identified more than $3.6 million in annualized savings. Read the article by Joe Volpe, Wheaton’s vice president of Supply Chain.
Pharmacy automation has helped Slidell Memorial to automate dispensing, distribution and inventory management. The hospital has reduced medication errors to zero since go-live, and it has streamlined operations from the loading dock to the bedside. Automating these activities has freed up pharmacists to provide medication management and collaborate with nursing staff. Read the article by Bruce Clement, COO.
Workforce management tools are being used by Cambridge Health Alliance (CHA) to address one of the budget’s biggest line items by aligning staffing to patient demand. CHA now can match the skills and number of staff to the patient acuity on their units. The tools also have enabled hospital staff to automate the application of 16 complex union contracts to payroll and staff assignments. Read the article by Gitta Gilyan, senior director for Patient Care Finance.
Enterprise intelligence tools support a culture of continuous improvement at Regions Health. The organization uses analytics to create a holistic view of business, clinical and financial operations so that managers can continuously improve performance, including in Regions’ service lines. The tools put patient-level information in the hands of physicians and other decision makers to drill down and identify trends and outliers. Read the article by Heidi Conrad, CFO.
Capacity management and patient visibility tools can help manage patient flow from pre-admission to post-discharge. Using a visibility system, a hospital can broadcast near real-time information about patient status and location against its floor plan. By driving efficient hand-offs and care transitions, the tools can help prevent unnecessary delays and enable faster discharge times. Read how three organizations are using patient visibility tools in another issue of Performance Strategies.
In his article, “A New Mindset Needed,” Rich Umbdenstock, CEO and President of the American Hospital Association, takes operational improvement to the next level by looking at the premise of acute-care and a future where “doing less with less” will be a key marker of successful organizations. As our industry moves toward fixed payments and shared risk, hospitals must invest in upstream processes to support care – or better yet, to invest in proactive wellness efforts and population management that reduce the number of patients that require hospital treatment.
Leaning Forward to Succeed Over the Next Decade
Organizations will continue to need to be aggressive in their efforts to address cost and quality pressures as health reform unfolds. In less than a decade, we expect a healthcare landscape of accountability for care that is coordinated, delivered and paid for in the most clinically appropriate and financially viable setting.
Based on our deep and broad experience working with healthcare providers, payers and others involved in healthcare, McKesson has identified four critical success factors in our Better Health 2020™ strategy that we believe are fundamental to any healthcare organization’s ability to succeed and thrive in the future:
- Optimizing clinical, financial and operational performance
- Coordinating care across settings and stakeholders
- Navigating new payments models
Managing technology assets to provide a foundation for growth beyond the traditional walls of the hospital
Organizations that deliver on these challenges are positioned to thrive and lead in their markets. Drawing on our solutions and expertise across the various segments of healthcare, McKesson partners with healthcare organizations to help them meet the challenges of the future and provide better health to their communities.
12 Strategies to Improve Operations
Below are just a few of the strategies for improving operations that have been recommended by experts and peers in Performance Strategies.
- Leverage enterprise intelligence – Use real-time and retrospective analytics along with prospective modeling. The intelligence can point the way to gains in efficiency and increases in quality.
- Partner with area organizations – Identify the most viable organizations in your area and establish accountable care arrangements with them, such as improved care transitions.
- Evaluate your service lines – Understand how each service line is contributing to care quality and the bottom line. Focus on what you do best.
- Share performance with physicians – Evaluate physician performance and outcomes on an ongoing basis. Share data-driven reports with them.
- Focus your improvement efforts – Initiatives should support at least two of the following: improved outcomes, increased revenue, reduced costs, or better patient and employee satisfaction.
- Share the vision – Develop a visual roadmap that can be shared across the organization, and use it to show progress and garner support.
- Ask the people that do the work – Ask frontline staff where improvements can be made to reduce costs and improve processes. Leverage their experience to implement the best suggestions.
- Share successes and best practices with peers – In addition to networking with peers, benchmark against top organizations to point the way to improvements.
- Know whether you’re maximizing your bed capacity – Understand how your diversions, bottlenecks and discharge delays impact patient care and satisfaction, and fix them.
- Enlist change agents – Enlist enthusiastic physician, clinician and staff champions to mobilize their peers around key initiatives.
- Offer adequate training for staff. Often staff fall into workaround processes that can inhibit care quality or efficiency. Mandate refresher training as needed and make sure new hires are adequately trained on systems or processes.
- Optimize workforce usage - Analyze actual needs by shift based on patient population and acuity. Match the need with the number and skills required.