How Hospitals Can Shape Sustainable Cost Control

Karen Minich-Pourshadi, for HealthLeaders Media , June 13, 2012

In 2007 Beaumont conducted a remapping exercise for patient experience, with an eye on efficiency. For instance, project teams looked at the Beaumont Breast Care Center from the patient's perspective. The team learned that a patient may come in three to four times over several weeks or months based on a single mammogram test. The old process entailed a patient coming in for a routine mammogram, then going home without results. Then the patient would be called back in for a separate ultrasound visit if there was a question regarding the results. After that test, the patient would go home and wait for those results. If there were questions on that test, the patient would be asked back for a third visit for a biopsy, and again go home and wait for results.

The number of steps in the cycle and the time used for caregivers and patients was unnecessary, says Michalski. The process was revamped so the patient waits and gets the mammogram results during the first visit and proceeds as needed for other care that same day. "We eliminated the wasted time waiting for the patient and the clinicians. We can provide faster service and better quality, and that drives out cost and waste," he says. In this instance, Michalski says, patient satisfaction scores were already very high, averaging 4.8 out of 5.0, prior to the steps taken to expedite the breast care program. Though they changed the process for patients, these high scores were maintained.

"For patients receiving expedited care, the team was able to produce an 18% reduction in screening to diagnostic mammogram cycle time and a 40% reduction in duration from diagnostic mammogram to biopsy. In addition, we were able to expand capacity and capture additional volume in the form of downstream business related to additional imaging biopsies, surgeries, and oncology referrals," Michalski says.

Beaumont used this patient-focused process improvement approach on numerous departments, including heart and vascular, orthopedics, women and children, neurosciences, and digestive diseases. Smoothing out these processes to eliminate unnecessary steps was only the first phase, however; Beaumont wanted to make sure the changes stuck, which requires accountability, Michalski says.

Teams targeting individual areas report data to an enterprisewide data management tool that uses dashboards for easy tracking by the executive team. The dashboards show comparative quality metrics offered by the Centers for Medicare & Medicaid Services, the Agency for Healthcare Research and Quality, and when applicable, by commercial payer. It tracks cost and provides benchmark data to compare that information. Also, so everyone rows in the same direction, the top leadership team's incentive is tied directly to the key performance measures. Michalski explains that while the management incentive plan is developed around team goals (quality, safety, service, financial success, growth), incentives are individually based. Unfortunately, he notes, the incentives have not been paid on this plan in the past several years while the organization recovers financially from the 2008 economic downturn.

"We have team metrics, too, so we rise and fall as a team. And as the organization does well in three or four key measures, those are the ones we use across the health system and at each individual hospital," Michalski explains.

The organization is also using data and comparative benchmarks to analyze its clinical resource management in an effort to spot practice patterns for successful disease management. "We are looking for overuse or misuse of imaging and how it affects the patient's length of stay. For instance, did the patient get an MRI on the last day in the hospital prior to discharge, when they could've gotten it as an outpatient?" explains Michalski.

Beaumont also uses the clinical data to show physicians their individual cost per case based on disease state and by resources. Michalski says the metrics are tracked quarterly including cases, average charges, average net revenue, average direct cost, average total cost, and average net income; data is sorted by physician, by department, and by specialty or subspecialty. 

It's the combination of all of these efforts, Michalski says, that led to a 9.4% decrease in the organization's inpatient patient care costs from 2009 to 2011, and the numbers continue to decline; average total inpatient cost is now $9,415, and inpatient length of stay has gone from a high of 5.03 days in 2008 to 4.81 in December 2011. Additionally, the overall direct patient care costs also declined on a case mix–adjusted admissions basis (which factors in both inpatient and outpatient activity and patient acuity).

Targeting the top
Neighboring St. John Hospital and Medical Center in Detroit also has been making strides in cutting its average patient care expense—reducing it by 8.6% from 2007 to 2009, according to CMS Hospital Compare data. The 772-licensed-bed teaching hospital is a member of St. John Providence Health System, one of the largest providers of inpatient care in southeast Michigan with more than 125 medical centers and five hospitals spanning five counties. St. John Providence Health System is also part of Ascension Health.

To bring patient care costs down through sustainable change, the system took a Lean process improvement approach, and it started at the top. St. John Providence's journey began by taking the scissors to nonclinical corporate and administrative expenses. Patricia Maryland, DrPH, president and CEO of St. John Providence Health System and the Michigan ministry market leader for Ascension Health, says doing so was a test to demonstrate how the organization could be more efficient from the top down.

To reduce the financial burden the hospitals faced from escalating costs, St. John Providence began using best practice benchmarks at the corporate level. The organization created 20 transformation teams to identify opportunities to take nonclinical costs out of the system with minimal impact on patient care. More than an effort to find low-hanging fruit, Maryland says they analyzed data and consolidated facilities.

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