Case Study: StrataJazz Continuous Cost Improvement to Reduce Clinical
Variation
Kay Greenlee, MSN, RN, CNS, CPHQ
Director, Performance Improvement, Value & Analytics
CentraCare Health
Today’s Learning Objectives
• Learn how to gain organizational buy-in for cost reduction projects
from clinical and operations leadership
• Learn how to create teams and organizational structures to facilitate
cost reduction efforts
• Learn how to establish processes and share best practices that help
ensure meaningful savings
• Learn how to build and grow a team of effective cost reduction
leaders
• Understand critical success factors necessary for a successful
implementation
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About CentraCare Health
Who we are:
• CentraCare Health is a not-for-profit health care system that provides
comprehensive, high-quality care to people throughout Central Minnesota
The network includes:
• 6 hospitals (St. Cloud, Long Prairie, Melrose,
Monticello, Paynesville and Sauk Centre)
• 6 nursing homes
• Senior housing in 6 communities
• 18 clinics
• 4 pharmacies
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St. Cloud Hospital
Value Analysis – What is it?
• A structured, standardized, interdisciplinary process/program of
resource allocation and expense management to achieve safe, highquality, and cost-effective patient care.
• A performance improvement process directed at reducing the cost of
care in support of the Triple Aim
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The Journey to Value Analysis
• Stage 1: Supply Cost Savings (2001 – 2003)
• Stage 2: Clinical Utilization (2004 – 2006)
• Stage 3: Value Analysis (2007 – 2015)
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The road to Value Analysis is a cumulative journey: WE NEED TO DO IT ALL!
FY 2003 - 2007
FY 2001 - 2002
Acquisition
Commitment
Standardization
Clinically Driven
Materials Management Driven
Decrease
price
Increase
compliance with:
Contracts,
committed programs
Novaplus TM
Utilization
Decrease
product
and
vendor
variation
Optimize use and cost
of all non-labor
resources
5 – 7%
Savings
8-14% Savings
Complexity, Commitment, and Value
VALUE
ANALYSIS
Organizationally Driven
Optimize all
decisions
Mandate
Measure outcomes
-
0-6%
Savings
FY 2008 - Present
8-14% Savings
Engage physicians
Unlimited!
The Journey to Value Analysis
• Stage 1: Supply Cost Savings (2001 – 2003)
• Target: $5.2 Million
• Achieved: $6.9 Million
• Stage 2: Clinical Utilization (2004 – 2006)
• Target: $7.3 Million
• Achieved: $14.6 Million
• Stage 3: Value Analysis (2007 – 2015)
• Target: $30.2 Million
• Achieved: $57.5 Million
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Focus of Clinical Utilization: DRG
Analysis
• Achieve 100% performance for all CMS clinical quality indicators
• Reduce Practice Variation
• Implementation of best practice as defined by SCH and/or research to achieve desired
outcomes
• Achieve Length of Stay at or below VHA 50th Percentile
• Achieve Average Direct Cost/Case at or below VHA 50th Percentile
• Eliminate negative margin at Direct Cost
• Eliminate negative margin considering controllable Indirect Cost
Every Employee has a Role
• Orientation Checklist Competency
• Value Analysis (Including resource allocation decision making, supply
utilization)
• Halogen Job Knowledge Competency
• Is able to verbalize their active involvement in promoting quality, safety and
performance improvement.
• Demonstrates an understanding of what impacts revenue and expenses and
works to meet those goals.
Market Forces Will Reduce Hospital Margin
Margin Change (by 2022) if no remedial action is initiated –
Source: HealthCare Advisory Board
Cost Reduction in Healthcare
LABOR INTENSIVE TO FIND SAVINGS
AND MAKE IT ACTIONABLE
LACK OF DEPTH AND VALIDITY
OF COST SAVINGS OPPORTUNITIES
NO END TO END, ORGANIZATIONAL SOLUTION
FOR COST IMPROVEMENT
DIFFICULT TO MANAGE MANY INITIATIVES
& TRACK SAVINGS
DISCONNECT BETWEEN FINANCE, OPERATIONS
& CLINICIANS
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Executive Engagement & Alignment
St. Cloud Hospital
Executive
Value Analysis Steering
Committee
(SCH)
Pharma
LOS
Supply
Utilization
Labs
Imaging
VASC identified top 10 DRGs
for focused improvement
Ortho
Care Center
Board
Care Center
Board
Care Center
Board
Care Center
Board
Value Analysis Steering Committee
• Director PI, Value & Analytics
• Chief Operating Officer
• Chief Finance Officer
• Vice President Medical Affairs
• Director Finance
• Care Center Directors
• Support Service Directors
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Executive Engagement & Alignment
CCH Strategic Plan FY15 – 17 (FY16 Plan)
Strategy 1.1
• Improve the value of CentraCare Health services
Tactic
• Establish a value based culture through ongoing commitment to “We
Envision Value” along with other reimbursement and cost management
efforts
• Achieve cost reduction targets in selected clinical
conditions at St Cloud Hospital ($6M value delivered)
• Meet “We Envision Value” Goal: $15 million
Organizational Structure Around Value
System Executive
St. Cloud Hospital
Executive
Value
Analysis
Workgroup
Nursing
Staffing
Practices &
Resource
Management
We Envision Value
Committee
Quality Steering
Committee
Quality
Oversight Group
Work
Group
Work
Group
Work
Group
Integration
Supply Chain &
Contracting
Value Analysis Steering
Committee
(SCH)
Pharma
LOS
Supply
Utilization
Labs
Work
Group
Imaging
VASC identified top 10 DRGs
for focused improvement
Ortho
Care Center
Board
Care Center
Board
Care Center
Board
Care Center
Board
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Proposed Restructure
Value Analysis
Workgroup
Value Analysis
Steering
Committee SCH
Quality
Steering
Committee
CI
Supply Chain &
Contracting
Integration
We Envision
Value
Committee
Nursing Staffing
Practices &
Resource
Management
Denotes coordination/communication channels
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Dedicated Team
Director, Performance Improvement, Value and Analytics
Clinical Improvement Focus
Consultant RN
Consultant RN
Consultant RN
Consultant RN
Lean/Six Sigma Focus
Consultant
2 person Project Management Team
5 person Analytics Team
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Roles & Responsibilities of the Team
• Primary Cost Leader(s)
• Director level position, runs the cost focused committee meetings, holistic view of
CCI tool and targets, is the go-to resource for sr. leadership
• Cost Leader(s)
• lead a group of initiatives, collaborate with clinical and operational leaders to drive
change
• Executive Sponsors
• approve initiatives, ramp up plans, get summary dashboards, variances and
explanations are escalated
• Initiative Owners (Clinical & Operational leaders)
• will receive cost saving opportunities from cost leaders; need to validate savings,
define a target, and outline a ramp up plan, will be accountable for results and
explaining varianc
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Engaging and Influencing Clinicians to Change
Utilization Practices
• Use of data to demonstrate opportunity
• Conversations to understand – asking How and What instead of Why?
• Recognizing the value of each discipline
• Understanding technical and adaptive work
• Identification of polarities
• autonomy and standardization;
• improved quality and reduced cost
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The Cycle of Value Improvement
• Setting Aims
– Time specific and measureable
• Establishing Measures
– Quantitative measures to determine if change leads to
improvement
• Selecting Changes
– Insights, change concepts, innovation & creativity, borrow
from others success
• Testing Changes
– Planning it (including prediction), trying it, observing it and
acting on what was learned
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Change Concepts
• Eliminate Quality Problems
• Eliminate mistakes
• Manage variation
• Reduce Costs While Maintaining or Improving quality
• Improve workflow
• Eliminate waste
• Decrease cycle time
• Expand Customer Expectations to Increase Demand
• Manage People
• Give access to information
• Focus on core processes and purpose
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The value of tools
Core Cost Improvement Functions
Process with CI
Identify clinical variation and quantify cost
savings
• Configure case types
• Review CCI output to select most impactful opportunities
• <5 hours for all cases
Gain care center leader and physician buy in
to opportunities
• Look at case type opportunities by individual, specialty group, or
clinic
Track on-going savings and determine root
causes for not hitting targets
• Overview performance dashboard at fingertips
• Review project-specific performance easily and visually
Validate and track savings for employee
identified initiatives
• Build organization defined initiatives in tool
• All projects must be metric driven and therefore measurable
Provide updates on projects to cost
improvement committees
• Utilize in-tool tracking dashboard to share results and self-service
tool to assess progress
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CCH Strategic Plan FY15 – 17 (FY15 Plan)
Tactic 1.1.2
• Deliver quantifiable results in value commitments.
• Attain cost reduction targets in 10 clinical conditions ($1.5 million value delivered)
• Cost in the current period PMPM is less than the target in any Total Cost of Care contract.
Data availability dates and targets will be listed on a separate table:
•
•
•
•
BCBS
HealthPartners
Medica
HCDS
• Receipts under CMS Value Based Purchasing will be equal to or greater than the
sum withheld. Goal> 100%
• Achieve 79% of performance measures for CCH BCBS award opportunity for
2014.
• Meet “We Envision Value” Goal: $10 million
FY15 VASC Workplan
Clinical Conditions
Continued work
• COPD
• Heart Failure
• Percutaneous Cardiovascular Intervention
• Hip Fracture
• Major Joints
• Pneumonia
• Septicemia
• Stroke
Global work
• Chest Pain
• Readmission
• Bariatric Surgery
• Other Vascular Procedures
• Complications
• Patient Safety Indicators
• Prematurity with Major Problems
• Mortality
• Renal Failure
• Clinical Documentation Improvement
• Supply Cost and Utilization
• Diabetes
• Depression
Example: Septicemia
Opportunity
Strategy
• Practice Variation
• Cost
• Length of Stay
• Mortality
• Palliative Care Bundle
• Consideration for LTAC transfer
• One-on-one physician
conversations
Results
•LOS stay reduced from 6.26 to 5.88 days (6% reduction)
•Average Cost per Case reduced from $11,694 to $10,922
•Annualized savings of $759,549
Example - Prematurity
Opportunity
Strategy
• Practice Variation
• Cost
• Length of Stay
• Supply cost analysis
• Discharge Planning/Case
Management
• Daily Team Rounds
• Passport to Home
• Thermoregulation policy
Results
•LOS stay reduced from 7.12 to 5.91 days (17% reduction)
•Average Cost per Case reduction of $1542
•Annualized savings of $246,663
Example: Pneumonia
Opportunity
Strategy
• Practice Variation
• Standardize Order Set and imbed into
Admission Orders
• Cost
• Concurrent abstraction and physician query
• Length of Stay
• Appropriate Care Measures less than 100%
• Discharge Instructions/Medication
Mismatch
• Readmission
• Team/Subgroup
• Clinical Utilization
• Core Measures
• Readmission
Results
•LOS stay reduced from 5.48 to 4.61 days (2% reduction)
•Average Cost per Case reduced from $8,739 to $7,293
•Annualized savings of $270,332
Example: Heart Failure
Results
• LOS stay reduced from 5.89 to 5.53 days (6% reduction)
• Average Cost per Case reduction of $1,072
• Annualized savings of $199,467
• Patient Safety Indicator Complications reduced to zero
• Appropriate Care Measures at 95.2%, Discharge Instructions at all time
high 96% Q1 2012
We exceeded our goal!
$9,358,868
$10,000,000
$9,000,000
$8,000,000
$7,000,000
$5,718,718
$6,000,000
$5,000,000
$3,868,977
$4,000,000
$3,000,000
$2,000,000
$2,222,146
$1,560,881
$2,000,000
$1,418,004
$308,096
$1,000,000
$Focused WorkTotal
Ongoing Work Total
Other Total
Target
Success
Total
FY16 Focus – Reduce Variation
• $22.47 Million Identified Savings
• 473 Opportunities
• 47 Case Families/79 Case Types
• 64 Initiatives Built
•
•
•
•
•
LOS (38)
Supplies (3)
Pharmacy (14)
Laboratory (7)
Blood (2)
• $2.64M Committed Savings to
date
Identified Savings by Cost Driver
LOS
$10.20
Pharmacy
$3.15
Supplies
$2.80
Therapeutic Services
$1.65
Laboratory
$1.24
Imaging
$0.84
Dialysis
$0.82
Blood
$0.56
Cardiovascular
$0.49
OR Time
$0.47
L&D
$0.17
Other Diagnostic Services
$0.06
$0
$5
$10
$15
Millions
Success over time
Joints
Pneumonia
13000
4800
4600
12000
4400
11000
4200
10000
4000
3800
9000
3600
8000
3400
3200
7000
3000
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
6000
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
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Lessons Learned & Success Factors
• Administrative Support including the Physician Leader
• Collaboration between Supply Chain and Clinical Utilization
• Data Analytics
• Part of the Strategic Plan and Initiatives
• Physician Engagement
• Performance Improvement team with significant time devoted to
continuous cost improvement
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Questions & Contact Information
Speaker Contact Information:
Kay Greenlee, MSN, RN, CNS, CPHQ
Director, Performance Improvement, Value & Analytics
CentraCare Health
[email protected]
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