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.
Change is rapidly occurring in most aspects of the delivery of healthcare in this country. One of the most promising developments is the understanding that healthcare should strive to achieve the “Triple Aim” – better care for individuals, improved overall health of our communities, and lowered costs. The Triple Aim goals are about delivering better value in healthcare, not just delivering more care. The implications for our healthcare providers are enormous and may represent a fundamental change in the way care is delivered and paid. And the data needs are far greater than before – this represents a major challenge.
Many experts are advocating for new data steams to help find people at risk for diseases, even using non-traditional types of data, such as credit card purchases or use of social media, to define risk levels. Privacy advocates are adamantly opposed, and these debates will continue. Many employers have used medical claims data to understand population risk, but even using these data is worrisome to privacy advocates. Recent federal government revelations about NSA data probes into personal lives have generated much criticism, and I think the outcome will be more controls over the use of data. I think the “new data streams” will be narrowly defined. But the good news is new healthcare delivery models are finding ways to effectively use data to improve patient care.
In the new models of delivery, as seen in the patient centered medical home concept (PCMH), a healthcare team, captained by the physician, now has the responsibility to care for a defined population, not just the patients who show up for an appointment. Physicians are financially incented to provide better care. This drives the need for data, and health records need to find “gaps in care,” such as overdue cancer screening exams and missing lab tests. A PCMH team member is empowered to reach out to patients to help them get the care that is needed. The team is responsible for (and incented to provide) the healthcare needed in all phases of a person’s life. This requires integrated data from all settings – all outpatient encounters, hospital data, and follow-up care, including rehabilitation and nursing home and hospice care. Integrating all these data together will have tremendous potential to improve care. As an HIE contractor, we have constructed platforms that are delivering this kind of integrated data, so we know it’s possible today, and we’re working with hospitals toward the same end. Data integration will be necessary in order to understand when high value care is being delivered by hospitals, physicians, and all healthcare providers.
But more than finding gaps in care; the new model incents better care. Take a simple example of diabetes: the medical evidence shows lower mortality and morbidity in those who achieve blood pressure, lipid, and glucose control compared to those who are not well-controlled. New payment methods will pay physicians at a higher rate when their patients achieve better control of their diabetes. In this scenario, payment is more complicated, and now lab data must be analyzed to determine payment.
Paying more for better value has promise, but also many challenges. Defining better care for diabetes can be done, but what metrics should be used in other conditions? Physicians see literally hundreds of different conditions in the course of their work with patients; how should higher value be defined in other medical and surgical conditions? Is there value is ordering appropriate radiology exams and forgoing inappropriate tests? How can that be measured and compensated?
Medicare policy is driving much of the change in payment mechanisms, but large employers are also asking about value. Employers are tired of paying for medical treatments that don’t work or are unnecessary, and are looking for cooperative relationships with providers to incent better care. Hospitals are adjusting to focusing on providing better care, not more care. The transition is turbulent, but the result has the potential of achieving the Triple Aim. We will not achieve these results in a fee-for-service system. The changes we’ve seen in healthcare over the last decade are the start of real reform that is badly needed, and we need to continue driving change toward a higher value system. Innovative use of new data streams is vital to this effort.
Michael L. Taylor, MD, FACP
Chief Medical Officer
It’s not naïve to posit that physicians genuinely want the best for their patients. Historically, this was validated by reputation within the community, peer referral patterns, and personal achievement standards. The advent of technology and commensurate analytics enabled the collection of both process and outcome metrics. With the transition from volume- to value-based reimbursement physicians are in a unique position to define the metrics used to characterize high-value best practice.
It has been suggested that few physicians are actively participating in value-based reimbursement. Yet, the very high adherence to inpatient medical and surgical core measure sets illustrates the effective collaboration between hospital staff and physician community. It also highlights the adage “we manage what we measure.” When physicians understood the importance and visibility tied to core measures, they readily engaged in work flow solutions likely to benefit their patients.
Physicians know better than most what defines meaningful care for their patients. Today, especially in the outpatient arena, value is typically determined by adherence to preventive care guidelines. With the tsunami of process and outcome metrics likely to be available in the coming years, physician insight and perspective will be critical in both selecting relevant outcome measures and establishing bold but realistic benchmarks. In the meantime, thoughtful collaboration with CIOs, CMIOs, and CMOs in the successful development, implementation and use of clinical pathways across the continuum can ensure best practice and set the standard for true value-based care.
Michael R. Udwin, MD, FACOG
National Medical Director
As other have pointed out repeatedly, our healthcare system is badly broken. In fact, we don’t have a healthcare system in this country – it’s a series of independent businesses, often competing with each other in the goal of making more profit. The three constituencies in the healthcare business are the customers (patients), the providers (doctors and hospitals), and the payers (health plans, employers and the government). These three groups all have perfectly misaligned incentives. Patients want care at minimal cost, providers make more money by providing more care (whether it is needed or not), and payers want to minimize payments. The payment mechanism drives more care at higher cost, and the result is the U.S. pays 18% of its GDP for healthcare – more than twice as much as any other country on the planet.
How does smarter use of data help this picture? In my opinion, more intelligent use of data is an important part of the answer. Data is a powerful tool to help physicians make better decisions. In the hospital setting, physicians should have access to ALL of a patient’s medical record, not just information gathered during a single hospital stay. In most Emergency Departments, doctors often don’t have unfettered access to outpatient medical records that may provide important clues to making correct diagnoses. Tests are needlessly repeated, incorrect medications are given and diagnostic errors are made all too often. Electronic medical records (EMRs) should be helping this problem, but unfortunately most EMRs are simply digitized versions of the old paper record. We need EMRs to be longitudinal electronic health records, aggregating all of a person’s health information into a single record to be used by all providers of care. A unified health record then needs analytic tools to be able to use the comprehensive record to improve care, provide guidelines for evidence-based medical care, prevent incorrect medication use, stop dosing errors, and have prompts in the analytic tool to stop repeat tests and x-rays- in sum, improve the care.
A unified, single, health record for a patient would be a great tool to help improve care, but in the U.S., we have more fundamental problems than a lack of accessible data. In today’s residency training programs, physicians should be taught how to use the data and EMRs to make better decisions. An evaluation of a patient should always start with the physician sitting with the patient, taking a probing history by knowing what questions to ask, and how to elicit symptoms. This information is supplemented by knowing how to properly examine a patient and understand how to put all the information together to formulate a diagnosis. We cannot rely on an EMR or CT scans to do this job – it must start with a thorough history and a proper physical. One of the most impactful lessons I was taught in residency was that if I finished taking a patient’s medical history and yet still didn’t have a series of probable diagnoses to consider, I needed to take more history. Unfortunately, in today’s hospitals, finding a diagnosis is all too often done by ordering more testing, and in a fee-for-service payment environment, more testing means more revenue. More procedures mean more revenue. Hospitals and physicians should be paid for providing a higher level of quality, not by volume.
I am a strong advocate of using medical data and providing better analytic tools to help physicians and patients, but tools are just tools. Physicians and other caregivers need these tools to improve care, but providers of care also need to listen to patients, think critically in making diagnostic assessments, care passionately about improving care, and use sound judgment at all times. They cannot be effective in a fee-for-service world. Providers do need to improve the care they provide, but the U.S. needs a sound healthcare strategy to solve our issues. Technology is part of that solution.
Michael L. Taylor, MD, FACP
Chief Medical Officer
The recent Crain’s New York Business article “Birthing biz booms for hospitals,” captures the complex dynamic of balancing hospital service lines to support revenue, manage costs, and ensure the well-being of a community – in this case mothers and babies. Successfully managing these three objectives requires strong leadership and evolving business intelligence resources. As negotiated reimbursement rates shift from volume to value, it won’t be enough to merely focus on high-margin procedures.
The best hospitals and health systems recognize the importance of integrating clinical pathways that invite evidence-based practice from both primary care and specialty providers. Maternity care is an ideal setting for such collaboration, since the stakes are so high. Rapid identification of high-risk mothers can not only ensure the health of the mother, but also the well-being of the newborn, with a reduced likelihood of needing to use neonatal intensive care resources.
Effective care coordination for any service line depends on timely, accurate and actionable data across the care continuum. Accomplished leaders leverage such intelligence to identify gaps in care, quality below expectations and costs attributable to inefficiencies. As negotiated reimbursement rates shrink, penalties for avoidable events expand and transparency to consumers evolves, healthcare data will be the medium by which we not just measure our achievements, but ensure the health and well-being of our collective mothers, babies, and families.
Michael R. Udwin, MD, FACOG
National Medical Director