Caldwell Memorial Hospital’s supply chain was struggling, as many hospital operations do, with multiple stock locations, excess and often incorrect inventory, and low accountability for what was on the shelves.
So the hospital’s leaders took action, and their successful initiative provides several steps that other providers may want to consider, too.
#1 Use Lean thinking
Caldwell leaders looked to their prior experience with Lean management tools to guide their efforts in the supply chain. A value stream assessment helped them pinpoint specific challenges, while data collection and analysis helped them develop a strategic plan for tackling them. This critical prep work revealed several key areas of focus: inventory visibility, demand flow optimization and management of physician preference items.
#2 Get visual
First up: inventory visibility and demand flow optimization. By introducing a new, Lean-based visual replenishment system, Caldwell gained the transparency needed to consolidate supplies, eliminate excess inventory and lower distribution costs. Plus, clinicians no longer had to spend valuable time managing supplies when they should be with patients. The combined annual savings from these initial activities totaled more than $3 million.
#3 Reign in requests
Next on the list: physician preference items. From supplies to lab resources to room and board, no two Caldwell physicians seemed to utilize assets in quite the same way. And these variations were adding up.
Digging into and analyzing resource usage data allowed Caldwell to break down the costs by clinician, case and location. This revealed just how much the inconsistency was costing the hospital — more than $4 million — and what Caldwell needed to do to convert those costs into cost-saving opportunities.
If you’d like more information on how this hospital achieved its remarkable result, please reach out to us.You can also read the full case study here.
An efficient revenue cycle has always been an important factor in the success of a healthcare organization. But in today’s complex and dynamic industry, where value-based reimbursement models are becoming the norm, streamlining the flow of money from payers to providers may be more important than ever.
That streamlining is just what Mountain States Health Alliance (MSHA) accomplished. Faced with looming financial challenges, leaders at this Tennessee health system sought a way to reduce expenses, and withstand financial pitfalls for the long term.
By implementing a Lean revenue cycle management (RCM) process, MSHA:
How did do they do it?
MHSA leaders did it through improved communication, transparency and consistency among departments, and the adoption of Lean tools for continuous process improvement.
Since RCM affects every patient in every department, MSHA had to tear down the walls separating the front end (scheduling, registration, financial counseling), the middle (medical records, coding, billing) and the back end (claim drop, liability, accounts receivable).
Daily huddles brought staff members together to discuss key metrics and share information. Progress was tracked on daily improvement boards that were visible to anyone. And Rapid Improvement Events helped staff members get a handle on the interconnectedness of their work, which in turn helped them identify redundancies, reduce variation and waste, and create standards of work.
And the results speak for themselves.
If you’d like more information on how the health system achieved this remarkable result, please reach out to us via our value-based care resource page.
Peer benchmarking could lead to the answer.
Tell us if this health system’s challenge sounds familiar: CHRISTUS Trinity Mother Frances Health System, located in Northeast Texas, was facing a staggering potential setback when a number of payer contracts changed. The difference amounted to a $25 million shortfall in their budget’s revenue.
The system’s first reaction might have been to issue an across-the-board expense reduction mandate to make up the budget difference. We all know that can happen a lot in the industry, but it doesn’t always produce the results healthcare organizations need, and quality of care can be impacted.
Instead, this system chose a data-driven, strategic savings approach as the path forward, with an eye on long-term financial independence from these types of shortfalls.
A look at the targeted expenses
Using a comprehensive comparative database, the system was able to benchmark costs, productivity and resource utilization against best-in-class facilities of similar size and demographics.
Leaders identified cost improvement opportunities in areas such as supply, labor costs, length of stay and purchased services — areas where the system was not at the same level as high-performing peers in terms of expenditures.
The benchmarking information from the database was also used as a call to action for staff to find methods of improving processes and cost management. CHRISTUS Trinity Mother Frances leaders formed teams and assigned financial targets. Teams then used the database to answer the question, “If another health system is able to keep supply costs at this level, what can we do to bring our costs to that level with no bearing on our patient care or satisfaction?” The health system also created a dedicated project management office to help guide the process. The results of these efforts (in box below) speak for themselves.
If you’d like more information on how the health system achieved this result, please reach out to us. You can also read the full case study here.
Reducing cost while preserving effective care requires real-time coordination and analytic reflection – and as the healthcare system changes, the need for both is becoming ever more apparent. Walgreen’s announcement of retail healthcare services for the chronically ill opens a discussion of the impact of new innovation.
Truven Health research shows over $4b savings potential when 20% of the ED visits are redirected to other sites, and 63% of ED visits are urgent but not emergent, there is room for change. This journey is not new; nearly 5 years ago, 73% of national ED visits were urgent (not emergent). Between more time conscious consumers, the rise of market driven urgent care centers and hospitals placing new walk-in programs on campus – the needle has moved. Shifting care from the most expensive resource calls for consumer driven self assessment and provider recommendation.
Based on our 2012 consumer studies, 89% of retail service users are not replacing their primary care provider, as they report having one. They are supplementing the services offered by their PCP, and generally for a lower cost. We see there is room and demand less costly care, but we recognize that this calls for coordination at the point of care, and reflectively and realistically reviewing the rearview mirror in consolidated datastreams. One of our clients moved $1.5M of business to lower cost settings, just by direct messaging to frequent fliers to save their funds and go to another source. Consumers hearing the trusted provider voice can take action on coordination. Providers knowing the truth of analytic reflection can take action to ‘prescribe’ right site of care for the right reason. And our healthcare system will be the better for coordination, cost and care.
The expansion of Medicaid will bring opportunities for strong enrollment growth to health plans with managed Medicaid businesses. To optimize this membership growth, health plans need to create products with care management strategies that can effectively and efficiently manage this population’s unique healthcare needs.
Our studies show their health and utilization patterns are different from those of existing Medicaid beneficiaries and from those who have employment-based insurance. Health plans must carefully evaluate their plan design and program impacts to best manage costs and care. Plans operating in multiple states will have the further complexity of targeting their strategies to align with the Medicaid expansion decisions.
Vice President, Market Planning and Strategy