Found Money Case Studies

Found Money Case Studies
How Lean Practices Helped Hospital Leaders Reduce Controllable Expenses by More Than $5 Million
Faye L. Deich, RN, MS, NEA‐BC
Chief Operating Officer, Sacred Heart Hospital
Sr. VP for Hospital Operations, HSHS Division (Western Wisconsin)
Presentation Objective
Learn specific strategies used to proactively & substantially reduce operating expenses while maintaining excellence in:
quality
safety satisfaction
Overview of Sacred Heart Hospital
• Member of Hospital Sisters Health System
– 13 Hospital Catholic Heath System
• $200M Net Revenue
• 344 Licensed Beds
• 1,350 Employees
• Medical Staff
– Marshfield Clinic (Large Multi‐Specialty Clinic)
– OakLeaf/Independent Physicians
• Other Regional Healthcare Providers
– Mayo Health System
• 4‐5 Critical Access Hospitals
– OakLeaf Surgical Hospital
• Surgical Specialty Hospital
– Minneapolis/St. Paul
Organizational Structure
Pillars of Focus
Service
• Top Decile ER & Inpatient, Top Quartile Outpatient Satisfaction (Press Ganey)
• Top Quartile HCAHPS
Congruency
• Extensive Community Involvement
• Paragon Award
People
• Colleagues: 82% Engaged/Content (Advisory Board)
Finance
• Strong Operating Margin
• Expense and FTE Management
• Educated Colleagues
Quality
• 2009 Governor’s Award of Excellence Wisconsin Forward Award
• Primary Stroke Center Certification: Gold Level (TJC)
Growth
• Gained and Held Market Share
• Tertiary Service Line Expansion
System of Evidenced‐Based Leadership
ship
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e
d
Lea
Team
Patient
Alignment & Accountability Engagement
Experience
ent
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op
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e
Dev
Strategic Performance Improvement (SPI) 2007
What
– Strategic Cost Reduction with Leadership Development
Why
– Significant moving of ancillary volume to physician practices with an anticipated loss of $7M (almost entire bottom line)
– Community Businesses Concerned about the Cost of Healthcare
– Growing Number of Indigent and Medicaid Patients
– Advancing Medical Technology and Patient Facilities
Overall Goal
– Decrease costs without compromising quality of patient care and develop extraordinary relationships with physicians
Advisor
• Michael Rindler was an advisor in the achievements of Sacred Heart Hospital’s Strategic Performance Improvement Initiative
• “Green Dollar Savings”
Process
SPI: Overall Goals
y Overall Financial Goal: $5M of Controllable Costs (Accountability)
yLeadership Goal: Extraordinary Physician Relationships (Team Engagement)
SPI: Teams
Identified Seven
Taskforces (Leadership Development)
Level of Fiscal Responsibility
Years in Management
Personality Profile
(MBTI)
Distribution of Responsibility
Team
Budget Responsibility
Savings Target
(% of Total)
Projected Savings
Team 1
$16,564,589
$755,800 (15.1%)
$778,424
Team 2
$16,830,449
$767,900 (15.3%)
$741,661
Team 3
$17,819,697
$813,100 (16.3 %)
$ 1,043,858
Team 4
$18,975,960
$865,800 (17.3%)
$ 1,046,711
Team 5
$14,416,246
$657,800 (13.2%)
$663,833
Team 6
$14,683,483
$670,000 (13.4%)
$ 835,220
Team 7
$10,290,006 $469,600 (9.4%)
$588,600
Total Saving Goal:
$5,000,000
Total Projected Savings:
$5,698,307
SPI: Desired Outcomes
y No Negative Impact on Quality Patient Care (Patient Experience)
y Solicited Frontline Colleague Input (Team Engagement)
y Preference to Not Layoff Colleagues (Team Engagement)
SPI: Communication Plan
The key was standardized communication
Consistent message to:
– Colleagues
– Physicians
– Board Members
– Community
SPI: Q&A speaking points for our leaders
• Will this affect patient satisfaction?
• Will this affect quality of patient care?
• Will there be layoffs?
• Can these changes be sustained?
Results
SPI: Key Savings
Clinical
y Knees/Hip Implants
y Blood
y Thrombin Waste
$120,000
y PCA Syringe Preservative Change
y Disposable to Reusable Pulse Ox Probe
$500,000
$226,000
$ 60,000
$ 30,000
Pharmacy Opportunities
• Pharmacy director met with team of pharmacists to methodically review utilization of the highest‐cost pharmaceuticals dispensed to patients
• Pharmacy front‐line team found opportunities in:
– Quantities & Usage
– Shelf Life/Preservatives
– Proposed alternatives (certain meds)
Top 5 Drug Expenditures
SPI: Key Savings
Non‐Clinical
y Renegotiated Phone Contracts
y Journals to Online Subscriptions
y Office Supplies
y Move Dialysis Billing In‐House
$106,000
$ 46,000
$ 42,000
$ 33,000
SPI: Key Savings
• Decrease of 3 FTEs in laboratory
Morning Draw‐Change to Sweep
• Housekeeping decrease of 3 FTEs through Cross‐training
• Nurse Staffing – Adjusted “Grids”
Goal: Decrease costs without compromising quality of patient care…
June 2007 Report Out of Proposed Reduction
– $2.4M (Salaries = 56 FTEs)
– $3.3M (Non‐Salary)
January 2008 Audit
Salary Cost
Expenses
Total
Projected
$2,393,342
3,304,965
$5,698,307
Goal $5 Million
Achieved
$2,168,940
2,950,965
$5,119,905
Reduced 44 FTE’s while adding positions for CV Surgery
(Only 17 employees actually impacted)
Goal: …develop extraordinary relationships with physicians
• Surgical Services
– Turnover Time
– 1st Case Starts
– Room Flipping
Result – 2% Growth in Orthopedic Cases
• For all physicians, we implemented a standardized telephone prefix to ease MD communications with nursing units
Challenges Along the Way
y Joint Commission Preparations
Rounding
Mock Surveys with Consultants
3 Stand‐up Meetings per week with Clinical Directors along with Internal Tracers
Weekly Report Outs
y Joint Commission Stroke Survey Preparations
Survey in June
y Colleague Opinion Survey
y Patient Tower Construction
Two Middle Floors with Subsequent Drop in Patient Satisfaction
y Baldrige Application
y Change in Nursing Model
To Be Announced at Same Time as Cost Reductions
y Implementing CV Surgery
y Preparation of Next Annual Budget
y Prefer Not to Layoff Colleagues
Lessons Learned
SPI: Lessons Learned
Teams
• Teambuilding through Constructive Challenging and Questioning
• Thoughtful selection of team members and cost reduction goals – Balanced member selection by MBTI type and by green dollar‐reduction potential (PI Define phase done well)
• Active senior leader support – failure was not an option (critical success factor)
SPI: Lessons Learned
Process
• Administrative Team meet with Taskforces Earlier Rather than Later
• Weekly task force leader meetings to share progress & opportunities (knowledge sharing)
• Weekly written progress reports with opportunities explored that week and total green dollar savings identified to date (pushed progress)
• Fiscal verified all planned green dollar savings
identified by the teams – tracked using a spreadsheet per department, per task force
SPI: Lessons Learned
Financial
• Directors learned how to scrutinize expenses
on an ongoing basis
• Position control education and requirements
to sustain FTE reductions
• Shared department financial and staffing levels at a more consistent and more detailed level with front line staff to engage them in supporting change and generating idea
• Fiscal Services tracked actual green dollar savings post‐implementation (ensured planned cost reductions were realized)
SPI 2.0
January 2009 –
We conducted another process improvement initiative similar to 2007’s
Another $1.4M needed in revenue enhancement & supply management by June 30, 2009
$700k in supplies
$777k in revenue
SPI 2.0: Annual Key Savings
Clinical Supplies
y
y
y
y
y
Joint Implants
IV Piggybacks
Re‐evaluation of existing contracts
Cancer Drug Protocol
Contrast
$482,000
$141,500
$120,000
$ 55,000
$ 36,000
Non‐Clinical Supplies
y Soft Drinks
y Electronic Paycheck Notifications
y Trash Can Liners
$ 24,000
$ 16,800
$ 15,459
Revenue
y Blood Transfusion Charges
y ER Charging/Coding
$100,000
$ 60,000
Goal: $700k in supplies, $777k in revenue
Supplies
Revenue
Total
Goal
$700,000
777,000
$1,477,000
Achieved
$937,588
882,905
$1,820,493
LEAN Example
LEAN project example – Core Lab
BEFORE
Core Lab – “Pre” Lean
Core Lab – “Post” Lean
AFTER
Core Lab – “Post” Lean
Benefits Realized
• Spent $186K on capital and had a 14‐month payback
• Turn Around Time for all tests have improved
• Volumes increased in the Core by 13% this year with no
extra staff needed (even more, in FY11, Core hours were reduced by 3 FTEs)
• Core Lab saved thousands of extra steps
• Instrument printouts turned off, saving 9,600 lbs of
paper each year that would have gone in landfills
• Overall project helped Lab save $500,000 in reagents
Sustainability
• Fiscal discipline is a part of every day life in the organization
• Focus on Quality will help drive out costs
• Leadership Development is critical to aligning goals and behaviors and assuring focus on the key priorities
• Accountability with very clear, measurable results
Start by doing what’s Necessary;
then do what’s Possible; and suddenly you are doing the Impossible.
St. Francis of Assisi