Whitepaper
Four Things That Keep
Healthcare Executives
Up At Night
Four Things That Keep Healthcare
Executives Up At Night
The American College of Healthcare Executives
(ACHE), an international professional society
of more than 30,000 healthcare executives
who lead hospitals and other healthcare
organizations, has conducted a survey for
the past several years to determine what execs
feel are the top issues affecting healthcare
and causing them the most “pain.”
According to the most recent survey by ACHE, the
C-suite is challenged primarily by financial concerns;
healthcare reform; government mandates driving
that reform; and patient safety and quality. Financial
challenges have traditionally led the list of concerns,
with reimbursement, funding cuts and increasing staff
and supply costs mentioned most often. But with
shifts in the healthcare landscape over the past several
years, healthcare reform and legislation, as well as
patient safety and quality challenges, have come to the
forefront.
While many rules and expectations are set, other
specific impacts have yet to be determined. Here are
several things executives can do to be prepared, stay
ahead of the curve and be able to rest better.
Financial Issues
As stated, financial issues traditionally dominate the
list of concerns for healthcare executives. Within that
category, increasing staff and supply costs have been,
and continue to be, a key obstacle. Supply costs
are second only to labor in facilities. For hospitals to
maintain margins, they need to reduce both variable
(supplies) and semi-fixed (labor) costs by an estimated
15 to 20 percent. (Healthcare Financial Management,
2011)
Executive leadership really needs to understand that
supply chain expenses are a huge part of operating
expenses and improvement can pay big dividends.
The supply chain is a critical component in cost control
and preparing for the realities of the new payment
paradigm.
Leaders who focus on value analysis principles in the
supply chain – emphasizing aligning and collaborating
with physicians, utilizing supply chain analytics, and
committing to data-driven decisions throughout the
organization – will set themselves up for success.
Value analysis and business/lean principles are key to
reducing these costs and helping bring physicians into
alignment with corporate goals. Many surveys rank
physician alignment as most important, but healthcare
providers hesitate to do it because of perceived
difficulties. But there are several steps any organization
can implement to build a value analysis process that
pays dividends.
Impact on Total Spend
Capital and Leases
13%
50%
Salaries
17%
Other
Operating
20% Supplies
Expense Categories
for the Typical Hospital
40% Physician
60% Commodities
Preference
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Four Things That Keep Healthcare
Executives Up At Night
Payment Reform
Building A Value Analysis Project
Senior
Management
Must Be Fully
Committed
Continual commitment from senior management helps keep projects moving and demonstrates the importance
of them to all hospital staff. Even if the project originates in materials management, executives should recognize
the importance of the initiative, support the process before engaging physicians and surgeons, stay with it
through difficult moments, and follow results on an ongoing basis.
Assemble a
Broad-based
Team which
Includes
Physicians
Projects will impact a wide spectrum of employees, from executive leadership to the front lines in nursing. To
ensure that the project meets both cost and quality goals, the project team must include a broad cross section
of representatives such as executives, physicians, materials managers and nurses. Physicians and clinical staff
will support the final cost-savings initiative if they are invited to work with the team through benchmarking and
establishing protocols.
Also, executives should recognize that physicians are less concerned with money than they are with positive
patient outcomes, professional recognition and pride in their work. Any alignment model or project should
include this element.
Data is the
Essential
Foundation
Comprehensive cost and quality data are the key to any successful project. Benchmark data for the facility is
the first step, creating the case for the cost saving initiative and establishing a quality and outcomes baseline for
building rules and objectives.
Because success depends on integrity of the data it is imperative to conduct a thorough audit of logs, process
documents, purchase orders and invoices.
Measure and
Monitor
To ensure cost reduction and quality enhancements, providers need to establish clear, measurable goals and
consistently monitor them. Tracking outcomes and cost data allows for performance assessment relative to
goals, quantifies positive results, builds and establishes credibility for future initiatives and establish a new
baseline for future projects. Establishing and advisory panel to address noncompliance, exceptions and new
technology is also advisory in order to maximize benefits.
The most compelling aspect of quality-based initiatives is their potential to have a long-term effect on the quality
of healthcare delivery. It is sustainable within an individual hospital or health system. There is always room to
improve outcomes. More importantly, this model puts quality first, aligning all incentives with the true mission of
each healthcare provider – caring for patients.
Healthcare Reform
With the advent of the Affordable Care Act (ACA),
volume based payment will be replaced with a
reimbursement model geared toward value. The
new metrics of value-based purchasing will be cost,
clinical outcomes and patient experience.
Reimbursement and funding cuts are happening.
No longer will facilities be paid on volume, but rather
on quality of care. Starting this year, The Centers for
Medicare & Medicaid Services (CMS) will withhold
1 percent of its payments for approximately 5,000
acute care hospitals, increasing to 2 percent by
2017. In the first year alone, this 1 percent equates to
approximately $850 million dollars for all U.S. hospitals.
In order to gain back a portion of the 1 percent funds
withheld, a hospital will need to earn points for either
achieving high performer results on Clinical Process of
Care and Patient Experience of Care measures against
national competitors or by demonstrating improvement
over its baseline score. (CMS 2011)
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Four Things That Keep Healthcare
Executives Up At Night
Payment Reform
Publicly reported data is now readily available to help
facilities know where they stand on timely and effective
care, readmissions rates, use of medical imaging, and
surveys of patient experience. Medicare has made
this hospital data transparent through its Hospital
Compare Website.
To help interpret the data and allow facilities to
understand what their scores mean, healthcare
solutions providers like Amerinet are developing
easy-to-access web-based tools. For example, the
Amerinet Value-Based Purchasing Analyzer
provides users with access to their hospital’s Clinical
Process of Care and Patient Experience of Care
performance, allowing them to measure themselves
against the national thresholds and benchmarks.
In addition to assessing the financial impact of
these scores, the tool utilizes the most recent four
quarters of Medicare/Medicaid inpatient discharge
data available from CMS, as well as its linear
calculation methodology, to capture value-based
purchasing scores.
Specifically, these tools can help:
• Compare a hospital’s scores to national
benchmarks and thresholds on each of the
Clinical Process of Care and Patient Experience
of Care Measures
For smaller facilities and non-acute care providers
who are not yet under the mandates of the ACA,
understanding the quality measures and the types of
things that will drive payments going forward will be
essential in helping anticipate and stay ahead of the
curve in making process adjustments.
Patient Experience of Care Measures
(Get These Right)
Patients report that:
Nurses always communicated well.
Doctors always communicated well.
Always received help as soon as they wanted.
Pain was always well controlled.
Staff always explained about medicines before
giving it to them.
Their room and bathroom were always clean.
• Calculate the reimbursement impact of hospital
scores to assess earnback payment
Area around their room was always quiet at night.
• Adjust scores on any metric to identify quick
wins and corresponding reimbursement change
on these measures
They were given information about what to do
during their recovery at home.
• Compare hospital scores to peer hospitals
They gave their hospital a rating of 9 or 10 on
a scale from 0 (lowest) to 10 (highest).
They would definitely recommend the hospital.
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Four Things That Keep Healthcare
Executives Up At Night
Payment Reform
Government Mandates
Reform has created a litany of new regulations and
requirements that providers must understand and
implement in order to maintain compliance and take
advantage of opportunities.
Providing top quality care with fewer dollars requires
organizations to have prescriptive actions and tools
in place to help accelerate the rate of improvement
and efficiency in their clinical care and maximize
reimbursement.
For example, the implementation of Electronic
Health Records (EHR) and the data and transparency
they can provide will be of paramount importance
to healthcare providers of all sizes moving forward
to track care of patients and to support optimal
patient care performance, patient education and
enhanced communication.
EHR systems within your organization and any
purchases already planned. Next, look at what
competitors are doing so you can identify opportunities
for differentiation. Finally, talk to your medical staff
regarding their attitude toward IT services and the
value of EHR implementation. The rate of physician and
medical staff adoption determines whether an EHR
installation and the corresponding process changes
succeed. In general, physicians are becoming more
receptive to hospital IT support. Organizations across
the continuum are seeing that there is an improved
opportunity to coordinate care through technology,
reduce duplication of data entry, reduce errors and
potentially improve pay for performance.
Providers need to understand what is expected of
them and move towards meaningful use, the set of
standards defined by CMS that governs the use of
EHR and allows eligible providers and hospitals to earn
incentive payments by meeting specific criteria. These
criteria vary for hospitals, professionals and critical
access hospitals and are staged in three steps with
increasing requirements for participation. (CMS 2013)
The process of launching EHR in a system or facility
extends well beyond selecting a vendor and system.
In order for digital healthcare environments to work,
healthcare providers have to put significant energy into
the people, process and politics of change.
To know what your organization needs to do to qualify
for the incentive payments, you first need to evaluate
where you are. Start by taking an inventory of existing
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Four Things That Keep Healthcare
Executives Up At Night
Payment Reform
Several dimensions or focus areas have been identified
for facilities to utilize when evaluating an organization’s
readiness to comply with incentive requirements.
Amerinet partner Maestro Strategies, an industry
leader in health information technology, identifies
seven (Maestro Strategies 2010):
•Strategic alignment – Do all parties (the medical
staff, hospital executives, board of directors, etc.)
have a shared vision for the role of EHR? Is IT
leadership connected to the board of directors
to ensure continued alignment? Do senior
management and the board of directors fully
understand the benefits, challenges and process of
EHR deployment?
•Investment management – Is this investment
viewed as a strategic asset or just a cost of doing
business? Are you focused on the enterprise or
process-level change that yields true value?
•Clinician readiness – Where do your physicians,
hospital and community fall in terms of rolling out
technology?
•Culture – Know how well your organization
understands the technology’s value, how willing it
is to accept risk and how much planning it needs to
feel comfortable.
•Process/change management – How
much training does your team have in change
management processes such as Six Sigma or
Lean? How will you bring process and change
management together with technology deployment
to make sure you get value out of your investment?
•Vendor management – Do you have the right
vendor and the right kind of vendor relationship?
Are you both committed over the long term? Also,
is your vendor certified? Is the software release your
organization has selected certified, or will you need
to upgrade?
•Technology infrastructure and resources –
Do you have the right infrastructure in place
to support EHR deployment, for example new
functions like clinical informatics, program
management or change management?
Beyond these dimensions, healthcare facilities must
also stay focused on ROI and conduct a thorough
economic analysis of the investment required and
potential returns. A review of the capital outlay, the
resources required and the bandwidth needed vs. the
stimulus money to be gained, factoring in all costs,
must be completed.
Providers, particularly large health systems, will need
to adjust their IT plans and develop new strategies for
adoption and meaningful use. To start, the strategies
should probably be phased in and drive toward quality
measurement and reporting, interoperability, physician
support, coordination of care across the continuum
and upcoming HIPAA changes.
Significant effort is required to balance the risks
and rewards and get your organization on the right
path. Done properly, full EHR utilization promises
tremendous benefits for healthcare organizations
of all sizes. In addition to the stimulus payments
offered through legislation, proper implementation
can yield significant long-term ROI sustained through
process change.
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Four Things That Keep Healthcare
Executives Up At Night
Payment Reform
Patient Safety and Quality
Providers need to achieve improvements in clinical
outcomes, patient safety, operational quality and
regulatory compliance, all while making sure to match
cost reduction and quality improvements.
Programs will need to be built to provide the
following outcomes:
• Decreased length of stay
• Reduced mortality rates
• Reduced readmission rates
• Decreased infection rates
overly complicated with any performance improvement
methodology. People just need to have a fundamental
understanding of the concepts. For instance, if
someone says ’most of the time,’ what does that
mean? Does it mean 51 percent or 98 percent?
Or when looking at variation, people need to
understand what variation is normal in a process and
when intervention is required. The bottom line is that
a common language that it easy to understand must
be used throughout an organization. Whether it is
lean or six sigma, total quality management, Kaizen or
re-engineering, a common language throughout the
organization is essential. In addition, leadership must
communicate a clear strategic framework, with explicit
goals, timetables and accountability/ownership.
Providers should also consider an on-site quality
assessment focused on providing a proactive
evaluation of operational quality, patient safety,
regulatory compliance and improvements in clinical
outcomes. As a core objective, it should help all
areas of the organization – administration, medical
staff, patient safety, quality, risk management and
materials management professionals – to establish the
relationship between quality and cost efficiency.
Finding time to improve care can be difficult, but
the only way to improve and maintain quality, safety,
efficiency and flexibility is by blending analysis, change,
measurement, and redesign into the regular patterns
and the daily habits of front-line clinicians and staff.
Absent the intelligent and dedicated improvement work
by all staff in all units, the quality, efficiency and pride in
work will not be made nor sustained.
For those who think implementing scientific
methodology or process improvement principles
has to be extremely involved or difficult to adapt,
that’s not necessarily the case. You don’t have to get
The assessment report should include
areas such as:
• Document review
• Policy and procedure review
•Patient safety and quality assessment in
clinical areas
•Environmental assessments throughout the facility
•Interactions with staff regarding patient safety
and quality
•Assessment of product selection and
outcomes achieved
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Four Things That Keep Healthcare
Executives Up At Night
Payment Reform
Knowing facilities face challenges like cost, limited
resources, and staff dedication, organizations like
Amerinet provide resources and education adaptable
to any size organization. Amerinet Quality and
Patient Safety toolkits contain clinical education,
best practices, supplier solutions, educational
podcasts and much more on specific Serious
Reportable Events and other patient safety topics that
are sure to improve quality of care. Below is just a small
sample of what you can find with the click of a mouse:
The challenges at many points seem overwhelming,
and, with many things still remaining uncertain,
healthcare leaders may be asking themselves:
•C. difficile Accurate Diagnosis and Prevention
The answers to these questions may be difficult and
are many times not completely under an executive’s
control. But by focusing on the “knowns” of this new
era of healthcare and taking steps to understand,
stay current and move towards performance based
benefits, healthcare leaders can stay ahead of the
curve, keep priorities focused and be positioned for
success and a more restful future.
•Catheter-Associated Urinary Tract Infections (CAUTI)
Prevention
•Central Line Associated Bloodstream Infections
(CLABSIs) Prevention
• Crash Cart Readiness
• Diabetes Prevention and Management
•How will cuts in government funding really affect us?
•What will my Medicaid reimbursement finally be?
•How can we avoid readmisisons?
•How do I make sure we are in compliance with
accrediting organizations?
• Drug Shortages and Sterile Compounding
• Emergency Preparedness
• Healthcare-Associated Infections (HAIs) Prevention
• ICD -10 Preparation
• Patient Falls Prevention
• Pressure Ulcer Prevention and Management
• Surgical Site Infection Prevention
Contact
Amerinet Customer Service
877-711-5600
[email protected]
About Amerinet Inc.
As a leading national healthcare solutions organization, Amerinet collaborates
with acute and non-acute care providers to create and deliver unique
solutions through performance improvement resources, guidance and
ongoing support. With better product standardization and utilization, new
financial tools beyond contracting and alliances that help lower costs, raise
revenue and champion quality, Amerinet enriches healthcare delivery for
its members and the communities they serve. To learn more about how
Amerinet can help you successfully navigate the future of healthcare reform,
visit www.amerinet-gpo.com.
Amerinet Inc.
Two CityPlace Drive, Suite 400
St. Louis, MO 63141
877-711-5700
www.amerinet-gpo.com
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