Description
This presentation explain financial operations track health system turnaround.
Financial Operations Track:
Health System Turnaround
Redesign and Data Analytic Strategies to Drive Cost Reductions
Lance Robinson, MBA
Managing Director
Berkeley Research Group
Nick Morros, MSM, RT-R, OT-C,OPA-C
Senior Managing Consultant
Berkeley Research Group
BRG Overview
• Formed in 2009 by senior leaders
from leading national consultancies
• Headquartered in Emeryville CA
• Managed by practicing consultants
• Healthcare is the largest practice
• Ranked 16
th
largest healthcare
consulting firm by Modern Healthcare
BRG employees over 650 professionals in 25 offices
2
Bottom line improvements equal to 7% to 10% of annual net revenues (e.g., a hospital with
$300M in annual net revenue would expect to achieve $21M – $30M improvement)
• Comprehensive Approach
• Deep Subject Matter Experts
• Implementation Focused
• Leading Edge Analytics
• Protect/Enhance Quality
• Physician Engagement
• Collaborative Partnership
• Results Focused
• Sustainability
BRG brings a collaborative approach with rapid proven results
BRG Overview
3
BRG Overview
4
Traditional performance
improvement, while still
important, is incomplete in
today’s dynamic environment.
5
Cost pressures, reimbursement challenges, health care
reform, and a struggling economy make it more difficult for
hospitals to maintain healthy margins.
Current Environment
6
So how do we identify and
implement the opportunities that
might exist in a facility?
7
Traditional
Performance Improvement
Avoid Layoffs
When Possible
Develop Appropriate
Departmental Targets
Develop Labor Management
Infrastructure
Control Hiring Process =
Maintain Staffing Targets
Redesign Operations to
Achieve Lower Staffing Targets
Implement Productivity
Management Tools
Data driven hiring decisions
More productive workforce
Efficient work processes
Accountability to performance
Decreased premium pay costs
Alignment of staffing to volume
Improve management span of
control
Workforce – Staffing & Productivity
Typical labor cost reduction is 3-15%
9
Workforce – Benefits/Compensation
Typical human resource reduction is 1-2%
Compensation Management
• Premium Pay
• Base Pay
• Performance Management
• Agency Management
Leave Programs
• PTO
• FMLA
• Short/Long Term Disability
• Absence Management
Health Plan Design
• Copays
• Contribution Strategies
• Type (HMO, PPO, POS, Indemnity)
Retirement
• Defined Benefit
• Defined Contribution
Total
Reward
Leave
Premium
Pay
Retirement Compensation
Health &
Welfare
Alignment of all Total Rewards Components
10
Physician Preference Items
(40%)
Total Joints
Cardiology Rhythm Management
(ICD’s, Pacemakers)
Stents
Spine Implants
Clinically Sensitive
(20%)
Custom Packs
Gloves
Patient Care/Plastics
Closure Devices
Non-Clinical/Purchase
Services
(40%)
Environmental & Dietary Services
Laundry Linen
Fleet Management
IT and Maintenance Services
This is an
example text
Phase 1
Cost
Management
Utilization
Reducing
Variation
Data Driven &
Evidence
Based
Decisions
Operational Efficiency
Inventory Management
Purchasing/ Requisition
Sourcing/Contracting
Product Management Structure
Clinical Redesign
Physician lead Committees
Cost by APR-DRG
Drill downs to specific cost variables
Benchmark Driven
Leveraging Partners
GPO’s
Distributors
Outsourced Vendors
Non-Labor Expenses
More than just getting a better price; a comprehensive approach is needed
Typical non-labor cost reduction is 5-8%
11
Cash Acceleration
• Vendor / EBO
management
• Staffing
analyses
• Work
prioritization
tools
• Point of Service
Collection
training
• Financial
Counseling
process review
Denial Mgmt.
• Denials
taskforce team
creation
• Denial and
write-off trend
reporting
• Clinical
involvement for
effective change
• Bad Debt write-
off process
review
Charge Capture
• IP and OP
documentation
training
• New charge
structure best
practice
• Revenue
Reconciliation
and monitoring
tools
Managed Care
Contracting
• Contract
Negotiation
support
• Sources of Net
Revenue
comparison
• Inpatient
through ER
analysis
• CMI / new
service line rate
support
Strategic Pricing
• Chart reviews
and
documentation
training
• Market based
price
comparison
• Sensitivity to
price change
analysis
• Benefit tracking
and Monitoring
Transactional Revenue Strategic Revenue
Skill Set Advancement Enabling Tools Measure to Improve
Revenue Cycle
Typical incremental net revenue improvement is 1-3%
12
Physician Practice Management
• Financial performance
• Physician productivity and
compensation
• Organizational structure and
staffing
• Patient access
• Capacity management
• Integration
• Physician alignment strategies
• Growth strategies
• Referral management
Strategy
Infrastructure
Operations
Clinical
Effectiveness
Productivity
and
Compensation
Revenue
Cycle
Integration
and Alignment
13
These methods are what we
consider traditional performance
improvement techniques.
But, is there a better way?
14
Comprehensive
Clinical Redesign
• External benchmarking to identify
specific areas of focus and
understand systemic breakdowns
• Internal benchmarking to identify
variation in care patterns
• Real-time drill down to identify specific
opportunities
• Physician led Redesign Teams to
implement changes
Clinical Comprehensive Clinical Redesign
Data driven. Physician led. Implementation Focused.
16
? Cost of Care
• ?Clinical Variation
• ? LOS
• ? Unnecessary Tests
• Improve Patient Throughput
• Improve Clinical
Documentation
• Improve Models of Care
Future
State
Lower Cost
Higher
Quality
Current
State
Clinical Redesign
The next 10 - 20% Improvement
Data driven approach that engages physicians
Clinical Comprehensive Clinical Redesign
17
Internal vs External Analysis
•External analysis helps lead us in the direction of “where
the opportunity exists” while internal analysis focuses on the
why
•Physicians are practicing in the same physical infrastructure
with the same staff supporting them
•Deficiencies in cost accounting systems are somewhat
neutralized through an internal benchmarking analysis
•Trending and predictive analytic analysis is most applicable only
to internal data
18
Severity-adjusted benchmarking at the APR-DRG level
Clinical Variation: External Benchmarking
Clinical External Analysis
19
Cost Categories within each APR-DRG
20
(APR-DRG 174 & 175)*
*PCI w & w/o AMI
Clinical External Analysis
IP cost per APR-DRG and OP cost per APC shows internal variation patterns
Clinical Variation: Internal Variation
(APR-DRG 174 & 175)
Clinical Internal Analysis
21
Moving physician to
the internal target
represents ~$20K in
cost reduction
What can we learn
from physician’s
cost structure?
Moving physician to
the internal target
represents ~$174K
in cost reduction.
Clinical Variation: Internal Variation
Average cost per case of physicians shows significant variance
(APR-DRG 174 & 175)
Clinical Internal Analysis
22
Variation by cost category helps to identify the opportunity
Clinical Variation: Internal Variation
(APR-DRG 174 & 175)
Clinical Internal Analysis
23
Overall Stent Usage
Clinical Variation: Detail Analysis
(APR-DRG 174 & 175)
Clinical Internal Analysis
24
Bare Metal versus Drug Eluting Stent Usage
Clinical Variation: Detail Analysis
(APR-DRG 174 & 175)
Clinical Internal Analysis
25
Angiomax and Integrilin Variation by Physician Group
Clinical Variation: Internal Variation
(APR-DRG 174 & 175)
Clinical Internal Analysis
26
Detailed interrogation of margin at any level desired
Clinical Variation: Margin Implications
Margin by Cardiology APR-DRG
While APR-DRG 175 is profitable;
by drilling down you can see that
almost all the margin is made from
Blue Cross and other commercial
payers.
Clinical Internal Analysis
27
In What Other Areas
Have We Found Opportunity?
?Cardiology: IVUS catheter usage
?Emergency: Standard workups for chest and abdominal pain
?Orthopedics: Gender specific knee implant reduction
?General Surgery: High cost suture substitution
?General Surgery: Fibrin sealant usage reduction
?Obstetrics: Admission and discharge policy changes for LOS
?ICU: Vent weaning protocols for LOS
?Overall: Blood usage reduction
?Overall: LOS reduction through multidisciplinary rounds
28
In summary, while traditional
initiatives are important,
just focusing on those areas
leaves between 10% and 15% of
potential opportunity
on the table….
29
So, our challenge to you….
Is your organization ready to
innovate and lead by embracing
a new way of looking at
performance improvement
to drive incremental value?
30
“Innovation distinguishes
between a leader and follower.”
- Steve Jobs
31
Additional Questions?
Thank You
32
doc_307928446.pdf
This presentation explain financial operations track health system turnaround.
Financial Operations Track:
Health System Turnaround
Redesign and Data Analytic Strategies to Drive Cost Reductions
Lance Robinson, MBA
Managing Director
Berkeley Research Group
Nick Morros, MSM, RT-R, OT-C,OPA-C
Senior Managing Consultant
Berkeley Research Group
BRG Overview
• Formed in 2009 by senior leaders
from leading national consultancies
• Headquartered in Emeryville CA
• Managed by practicing consultants
• Healthcare is the largest practice
• Ranked 16
th
largest healthcare
consulting firm by Modern Healthcare
BRG employees over 650 professionals in 25 offices
2
Bottom line improvements equal to 7% to 10% of annual net revenues (e.g., a hospital with
$300M in annual net revenue would expect to achieve $21M – $30M improvement)
• Comprehensive Approach
• Deep Subject Matter Experts
• Implementation Focused
• Leading Edge Analytics
• Protect/Enhance Quality
• Physician Engagement
• Collaborative Partnership
• Results Focused
• Sustainability
BRG brings a collaborative approach with rapid proven results
BRG Overview
3
BRG Overview
4
Traditional performance
improvement, while still
important, is incomplete in
today’s dynamic environment.
5
Cost pressures, reimbursement challenges, health care
reform, and a struggling economy make it more difficult for
hospitals to maintain healthy margins.
Current Environment
6
So how do we identify and
implement the opportunities that
might exist in a facility?
7
Traditional
Performance Improvement
Avoid Layoffs
When Possible
Develop Appropriate
Departmental Targets
Develop Labor Management
Infrastructure
Control Hiring Process =
Maintain Staffing Targets
Redesign Operations to
Achieve Lower Staffing Targets
Implement Productivity
Management Tools
Data driven hiring decisions
More productive workforce
Efficient work processes
Accountability to performance
Decreased premium pay costs
Alignment of staffing to volume
Improve management span of
control
Workforce – Staffing & Productivity
Typical labor cost reduction is 3-15%
9
Workforce – Benefits/Compensation
Typical human resource reduction is 1-2%
Compensation Management
• Premium Pay
• Base Pay
• Performance Management
• Agency Management
Leave Programs
• PTO
• FMLA
• Short/Long Term Disability
• Absence Management
Health Plan Design
• Copays
• Contribution Strategies
• Type (HMO, PPO, POS, Indemnity)
Retirement
• Defined Benefit
• Defined Contribution
Total
Reward
Leave
Premium
Pay
Retirement Compensation
Health &
Welfare
Alignment of all Total Rewards Components
10
Physician Preference Items
(40%)
Total Joints
Cardiology Rhythm Management
(ICD’s, Pacemakers)
Stents
Spine Implants
Clinically Sensitive
(20%)
Custom Packs
Gloves
Patient Care/Plastics
Closure Devices
Non-Clinical/Purchase
Services
(40%)
Environmental & Dietary Services
Laundry Linen
Fleet Management
IT and Maintenance Services
This is an
example text
Phase 1
Cost
Management
Utilization
Reducing
Variation
Data Driven &
Evidence
Based
Decisions
Operational Efficiency
Inventory Management
Purchasing/ Requisition
Sourcing/Contracting
Product Management Structure
Clinical Redesign
Physician lead Committees
Cost by APR-DRG
Drill downs to specific cost variables
Benchmark Driven
Leveraging Partners
GPO’s
Distributors
Outsourced Vendors
Non-Labor Expenses
More than just getting a better price; a comprehensive approach is needed
Typical non-labor cost reduction is 5-8%
11
Cash Acceleration
• Vendor / EBO
management
• Staffing
analyses
• Work
prioritization
tools
• Point of Service
Collection
training
• Financial
Counseling
process review
Denial Mgmt.
• Denials
taskforce team
creation
• Denial and
write-off trend
reporting
• Clinical
involvement for
effective change
• Bad Debt write-
off process
review
Charge Capture
• IP and OP
documentation
training
• New charge
structure best
practice
• Revenue
Reconciliation
and monitoring
tools
Managed Care
Contracting
• Contract
Negotiation
support
• Sources of Net
Revenue
comparison
• Inpatient
through ER
analysis
• CMI / new
service line rate
support
Strategic Pricing
• Chart reviews
and
documentation
training
• Market based
price
comparison
• Sensitivity to
price change
analysis
• Benefit tracking
and Monitoring
Transactional Revenue Strategic Revenue
Skill Set Advancement Enabling Tools Measure to Improve
Revenue Cycle
Typical incremental net revenue improvement is 1-3%
12
Physician Practice Management
• Financial performance
• Physician productivity and
compensation
• Organizational structure and
staffing
• Patient access
• Capacity management
• Integration
• Physician alignment strategies
• Growth strategies
• Referral management
Strategy
Infrastructure
Operations
Clinical
Effectiveness
Productivity
and
Compensation
Revenue
Cycle
Integration
and Alignment
13
These methods are what we
consider traditional performance
improvement techniques.
But, is there a better way?
14
Comprehensive
Clinical Redesign
• External benchmarking to identify
specific areas of focus and
understand systemic breakdowns
• Internal benchmarking to identify
variation in care patterns
• Real-time drill down to identify specific
opportunities
• Physician led Redesign Teams to
implement changes
Clinical Comprehensive Clinical Redesign
Data driven. Physician led. Implementation Focused.
16
? Cost of Care
• ?Clinical Variation
• ? LOS
• ? Unnecessary Tests
• Improve Patient Throughput
• Improve Clinical
Documentation
• Improve Models of Care
Future
State
Lower Cost
Higher
Quality
Current
State
Clinical Redesign
The next 10 - 20% Improvement
Data driven approach that engages physicians
Clinical Comprehensive Clinical Redesign
17
Internal vs External Analysis
•External analysis helps lead us in the direction of “where
the opportunity exists” while internal analysis focuses on the
why
•Physicians are practicing in the same physical infrastructure
with the same staff supporting them
•Deficiencies in cost accounting systems are somewhat
neutralized through an internal benchmarking analysis
•Trending and predictive analytic analysis is most applicable only
to internal data
18
Severity-adjusted benchmarking at the APR-DRG level
Clinical Variation: External Benchmarking
Clinical External Analysis
19
Cost Categories within each APR-DRG
20
(APR-DRG 174 & 175)*
*PCI w & w/o AMI
Clinical External Analysis
IP cost per APR-DRG and OP cost per APC shows internal variation patterns
Clinical Variation: Internal Variation
(APR-DRG 174 & 175)
Clinical Internal Analysis
21
Moving physician to
the internal target
represents ~$20K in
cost reduction
What can we learn
from physician’s
cost structure?
Moving physician to
the internal target
represents ~$174K
in cost reduction.
Clinical Variation: Internal Variation
Average cost per case of physicians shows significant variance
(APR-DRG 174 & 175)
Clinical Internal Analysis
22
Variation by cost category helps to identify the opportunity
Clinical Variation: Internal Variation
(APR-DRG 174 & 175)
Clinical Internal Analysis
23
Overall Stent Usage
Clinical Variation: Detail Analysis
(APR-DRG 174 & 175)
Clinical Internal Analysis
24
Bare Metal versus Drug Eluting Stent Usage
Clinical Variation: Detail Analysis
(APR-DRG 174 & 175)
Clinical Internal Analysis
25
Angiomax and Integrilin Variation by Physician Group
Clinical Variation: Internal Variation
(APR-DRG 174 & 175)
Clinical Internal Analysis
26
Detailed interrogation of margin at any level desired
Clinical Variation: Margin Implications
Margin by Cardiology APR-DRG
While APR-DRG 175 is profitable;
by drilling down you can see that
almost all the margin is made from
Blue Cross and other commercial
payers.
Clinical Internal Analysis
27
In What Other Areas
Have We Found Opportunity?
?Cardiology: IVUS catheter usage
?Emergency: Standard workups for chest and abdominal pain
?Orthopedics: Gender specific knee implant reduction
?General Surgery: High cost suture substitution
?General Surgery: Fibrin sealant usage reduction
?Obstetrics: Admission and discharge policy changes for LOS
?ICU: Vent weaning protocols for LOS
?Overall: Blood usage reduction
?Overall: LOS reduction through multidisciplinary rounds
28
In summary, while traditional
initiatives are important,
just focusing on those areas
leaves between 10% and 15% of
potential opportunity
on the table….
29
So, our challenge to you….
Is your organization ready to
innovate and lead by embracing
a new way of looking at
performance improvement
to drive incremental value?
30
“Innovation distinguishes
between a leader and follower.”
- Steve Jobs
31
Additional Questions?
Thank You
32
doc_307928446.pdf