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The Truven Health Blog


The latest healthcare topics from a trusted, proven, and unbiased source.


Three steps this hospital used to get the right healthcare supply item, in the right place, at the right time — at the lowest possible cost


By Truven Staff/Friday, October 20, 2017

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.


Results:


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.



Faced with a health system or hospital budget shortfall?

Peer benchmarking could lead to the answer.


By Truven Staff/Wednesday, September 13, 2017

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 usYou can also read the full case study here.

 

 


Penalties for Avoidable Medicaid Readmissions….And the Gang Piles On


By Jean Chenoweth/Friday, September 12, 2014
Jean Chenoweth imageThe release of the list of Illinois hospitals penalized for avoidable readmission of Medicaid patients in a recent Chicago Sun Times article was interesting reading! While the list was led by two brand name hospitals, Ann and Robert H. Lurie Children’s Hospital of Chicago and Rush University Medical Center, the list also included John H. Stroger, Jr. Hospital of Cook County, University of Illinois, University of Chicago, St. Mary, St. Catherine, and others with long histories of treating the poor and disadvantaged.

Policy wonks argue that the only way to reduce delivery system fragmentation, which is known to cause quality gaps, is by creating penalties that force changes in the structure of the delivery system. Development of metrics that force hospitals to be responsible for care beyond their current control has become much more common. Why? Because it’s the hospital that has the staff and financial resources to make changes in the delivery system across the community. If the penalty is high enough, the hospitals will innovate to avoid the penalties, ultimately transforming the healthcare system.

Transformation requires innovation, trial, and error, and the ability to rapidly correct error. Setting policies that attempt to drive innovation in the delivery system via stiff penalties is innovative itself! This approach might be reasonable if government could act fast enough to adjust for error inherent in the innovation process. However, in a democracy, government is deliberative by definition, and therefore slow to act. It is especially unfortunate that states are piling on to extend avoidable readmission penalties without taking into account socio-economic conditions of patients. Both state and federal government could simply exempt or reduce the impact of the penalties on safety net hospitals now. There are existing socio-economic adjustment methodologies that have been used for over a decade by health systems like Dignity Health. Neither solution is perfect, but fast action is necessary to reduce safety net hospital financial harm that is being exacerbated by the state “pile on.”
There is no doubt that the government is trying to innovate, and I applaud those efforts. Using hospital penalties to drive innovation and delivery system structural change might even work well in some cases.  But the risk of government’s inadvertent commission of “avoidable error” is too great, given its slowness to act. It would be better to run a few small pilots first to get the kinks out. Then, when the piling on occurs, it will not hurt those that are already hurting.

To read more about the connection between socio-economic factors and readmissions, download our white paper, Community Need Association with 30-Day Readmissions.

Jean Chenoweth
Senior Vice President, Performance Improvement and 100 Top Hospitals

Walmart’s Move into Primary Care


By Michael L. Taylor/Friday, September 5, 2014
Mike Taylor imageLast year, Walmart announced a plan to provide full primary care services to consumers nationwide within five to seven years. With its latest announcement, as reported by The New York Times, it now intends to start fulfilling its promise. Starting with six clinics in South Carolina and Texas, Walmart announced its intention to open six more clinics by the end of 2014. Walmart stores are often in rural areas that are medically under served, and they may be leveraging their locations to provide medical services in these under served areas. A big winner in this new development may be QuadMed, the service provider who won the contract to partner with Walmart in this effort.

How Walmart intends to use these primary care clinics isn’t completely clear. The traditional QuadMed model has been to provide comprehensive primary care services and to be the patient’s sole primary care provider. Their clinics typically use primary care doctors, with nurse practitioners supplementing the care. Specialty care is typically referred to the specialists in the community, but QuadMed doctors provide all the primary care, even in the care of complex cases.

But in the Walmart deal, there’s a subtle difference. Nurse practitioners will be providing the care with oversight of physicians, but the physicians won’t actually see patients – just providing oversight. This is a different model that may have implications for Walmart. As reported in The New York Times, the QuadMed Medical Director, Dr. David Severance said, “In that circumstance (complex care patients), it’s our desire to get those individuals established with a primary care provider, preferably a physician within the community.”

This is a different approach for QuadMed. The Walmart clinics won’t be a primary care center, but will employ a nurse practitioner model that uses physician in the community for primary care, in some cases. This model has similarities to the Walgreens and CVS approach of “retail clinics” that provide a limited scope of services and don’t deliver primary care. QuadMed has provided more comprehensive services, that of a patient-centered medical home led by a strong primary care physician. Their clinics have an excellent track record of providing cost-efficient, high-quality care in a timely manner. This new model of care will need to be delivered with a mid-level approach and a partnership with a physician in the community. That may be tricky.

The Walmart approach to delivering outpatient care could fill an important void, especially in under served areas. I was surprised to learn the Walmart clinics will only be open 8:00 a.m. – 5:00 p.m. Monday through Saturday, and 10:00 a.m. – 6:00 p.m. on Sunday. I imagine the hours will expand over time to offer more evening hours to better compete with urgent care centers—especially in Texas, which doesn’t restrict free-standing emergency and urgent care centers. To be successful over time, the clinics will also need to accept their patient’s private insurance; this will be another change in the QuadMed model.

Medical care can be fragmented, with multiple physicians treating the same patients, but not communicating well. This fragmentation can lead to medical errors, inefficiencies and increased cost. The physicians overseeing the Walmart clinics should have a clear method of communicating with other physicians caring for these patients, ensuring all involved are aware of any diagnoses and treatments resulting from the clinic visit. There should also be a method to avoid duplicate lab tests and x-rays – a common problem in today’s medical care community. Well-run centers generally do a better job of using generic prescriptions, managing referrals to specialists, and avoiding unnecessary tests, especially CT and MRI exams. Since the actual care will be delivered by nurse practitioners, not by physicians, close oversight will be important to avoid these pitfalls.

This is a big step for Walmart, and I’m hopeful these clinics perform well. Will Walmart one day be the largest provider of primary care in the U.S.? Don’t be surprised to see that happen.

Michael L. Taylor, MD, FACP
Chief Medical Officer

Care Coordination Under Medicare


By Michael L. Taylor/Wednesday, September 3, 2014
Mike Taylor imageThe recent announcement by the Centers for Medicare and Medicaid (CMS) concerning payment for care coordination is a step in the right direction.

Dr. Matthew Press, an internist in academic medicine, aptly described how demanding excellent care coordination can be. In the August 13, 2014 edition of the New England Journal of Medicine, Dr. Press wrote of his work with a patient (Mr. K.) who had recently been diagnosed with a mass in his liver:

“Over the 80 days between when I informed Mr. K. about the MRI result and when his tumor was resected, 11 other clinicians became involved in his care, and he had 5 procedures and 11 office visits (none of them with me). As the complexity of his care increased, the tasks involved in coordinating it multiplied. I kept a running list and, at the end, created an “instant replay” of Mr. K.'s care (see diagram; also see animation, available with the full text of this article at NEJM.org). In total, I communicated with the other clinicians 40 times (32 e-mails and 8 phone calls) and with Mr. K. or his wife 12 times. At least 1 communication occurred on 26 of the 80 days, and on the busiest day (day 32), 6 communications occurred.”

Dr. Press went on to comment he doesn’t have a full-time practice, but splits his time between teaching and caring for patients, and acknowledged how difficult care coordination can be for a physician practicing medicine full-time.

Many primary care physicians have provided care coordination without compensation, but it’s hoped this policy change by CMS will drive improved outcomes. I should point out that care coordination is an integral part of the patient-centered medical home concept. It’s generally a process used by most organizations that provide care using a team-based concept that is value-based, not based on traditional fee-for–service reimbursement.

There will be challenges.  Most physicians are highly ethical, but there’s a potential for abuse and perhaps even fraud. I can imagine a physician hiring a nurse practitioner to do nothing but make telephone calls to elderly patients with several chronic diseases. The CMS requirement for the patient to agree, in writing, beforehand and the patient footing 20% of the bill should drive accountability, but this new program will require oversight. Is the $42 per month proposed by CMS enough compensation to make this worthwhile? I would expect that smaller practices won’t find this feasible at that rate of pay. The requirement that someone from the medical practice be accessible 24/7 may also give physicians some pause.

Even with the inevitable uncertainties of any new program, I think larger, well-organized practices will find this new policy helpful in caring for some of their most complex patients, and I’m hopeful many practices will integrate care coordination into their management of the care of these patients.

Michael L. Taylor, MD, FACP
Chief Medical Officer

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