Delivering On The Vision: Keys To Achieving Breakthrough Operational Performance 2013 Children’s Hospital Association Annual Leadership Conference October 14, 2013 Mark Mullarkey, Senior Vice President, Texas Children’s Hospital Dan May, Managing Director, Huron Healthcare
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Delivering on the Vision: Keys to Achieving Breakthrough Operational Performance at Texas Children’s Hospital
In this presentation, Daniel May, Huron Healthcare managing director, and Mark Mullarkey, Texas Children’s Hospital Senior Vice President, share: insights into tracking the initiative’s progress, strategies for engaging physicians, and real-world lessons learned from the initiative.
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Transcript
Delivering On The Vision:
Keys To Achieving Breakthrough Operational Performance
2013 Children’s Hospital Association
Annual Leadership Conference
October 14, 2013
Mark Mullarkey, Senior Vice President, Texas Children’s Hospital
Dan May, Managing Director, Huron Healthcare
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Agenda
I. Summary
II. Texas Children’s Hospital’s Opportunities & Challenges
III. Governance Approach
IV. Transforming the Organization: Key Initiatives
In late 2012 Texas Children’s Hospital (TCH) identified the need to improve financial performance of the health system by over $50M.
TCH launched a health system wide performance improvement initiative name “Delivering on the Vision.”
Partnering with Huron Healthcare, TCH identified over $60M of improvements in labor, non-labor, clinical operations, clinical documentation, and physician services.
Over the past year, the TCH team worked with Huron to successfully implement the identified improvement.
Texas Children’s Hospital (TCH) identified the need to improve financial performance of the health system by reducing costs, increasing revenue, and improving quality.
• $50 million gap between projected 2013 profitability and target operating margin
• Federal and state funding reductions driving most of this gap • Higher margins crucial for replenishing capital and expanding TCH
facilities• Competitive threats driving expected gap closer to $75M
The TCH leadership team initiated a health system wide performance improvement project named “Delivering on the Vision” in reference to the their “Vision 2010 Initiative”
Project assessed and addressed performance in every key operational area:
Susan MacDonald, EVP, RNRandy Wright, EVP & COO Project Management
TCH: Mark MullarkeyHuron: Robert Donnert
Labor
Huron: Greg BryanTCH: Lori Armstrong
Non-Labor
Huron: Dan MayTCH: John Nickens
Physician Svc
Huron: Chris SmedleyTCH: Mallory Caldwell
Clinical Ops
Huron: Larry BurnettTCH: Tabitha Rice
CDI
Huron: Gerri BergTCH: Dan DiPrisco
Executive Steering Committee
Randy Wright, EVP & COO Susan MacDonald, EVP Ben Melson, EVP & CFO Dr. Mark Kline, MD, Physician in-Chief Dr. Michael Belfort, MD, Ob/Gyn in-Chief Dr. Charles Fraser, MD Surgeon in-Chief Dr. James Versalovic, MD Pathology Dr. George S Bisset, MD Radiology Dr. Dean Andropoulos, MD AnesthesiaDr. Gordon Schutze, MD Peds Dr. Manju Monga, MD OB/Gyn Dr. David Wesson, MD SurgeryLori Armstrong, SVP & CNO Linda Aldred, SVP HR Mallory Caldwell, SVP StrategyMary Jo Andre, VP Quality John Nickens, VP Supply & Hosp Based Tabitha Rice, VPMichelle Riley-Brown, SVP West Cris Daskevich, SVP Women’s Pavilion Alec King, VP FinanceSherry Fultz, AVP Mark Mullarkey, SVP Ambulatory & OR Matt Girotto, AVP Surgical ServicesChanda Cashen, AVP OB/Gyn Diane Scardino, AVP Medical Practice
TCH’s growth in spending had been greater than its growth of revenue over the past year, creating an imperative to reduce spending; early intervention is TCH’s motto.
The following elements have prompted TCH to reduce spending:
Staffing levels had risen faster than what has been budgeted
Annual non-labor /supply chain spending had risen faster than what has been budgeted
Funding of the Baylor College of Medicine had increased faster than what has been budgeted
TCH lacked standardization in key areas of operations, vendor contracting, and clinical processes of care.
TCH lacked a long term plan that integrated physician capacity and recruitment, support staff needs, facility space needs, and required capital expenditures.
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Assessment: Key Findings
TCH lacked an integrated care management program, consistent coordinated interdisciplinary meetings, and regular adherence to evidence based standards of care for length of stay management.
TCH lacked a productivity management tool to help department leaders and providers to manage their labor costs and flex their staffing to changes in volume.
TCH lacked an effective position control process to manage the hiring decisions across the organization and an effective process for monitoring and managing premium labor.
TCH’s management to staff ratio was inconsistent across different areas.
TCH lacked a clinical documentation management process for optimizing coding and reimbursement of future Medicaid APR-DRG patients.
Strengths GPO Compliance Clinical practice and product choices are strongly influenced by evidence based literature and
research Texas Children’s Hospital performs innovative, cutting-edge procedures. These procedures often
require extensive supply resources
Opportunities Majority of savings are related to standardization and utilization of supplies and services Some of the cost savings opportunities may require administrative support and leadership
Nursing $2,326,000 $3,757,500 $5,189,000Clinical Ancillary $2,720,000 $4,025,500 $5,331,000Non-Clinical Support $1,825,000 $2,727,000 $3,629,000Administrative/Financial $1,541,000 $1,787,000 $2,033,000Annualized Total $8,412,000 $12,297,000 $16,182,000
Labor Opportunity Identified
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Strengths Management is open and supportive of change and improvement Quality of talent is strong Passionate about Texas Children’s HospitalOpportunities Implement discipline and tools for successful productivity management Design an organizational structure, span of control and accountability process to support strategic plans Review/revise/support system-wide position requisition and control process
CLINICAL OPERATIONS - TOTAL ANNUALIZED ASSESSMENT OPPORTUNITY
Area Low Midpoint High
Annual Length of Stay Benefit $5,900,000 $9,350,000 $12,800,000
Clinical Operations Assessment Opportunity
Strengths Organization has been primed for change by the current leadership Leaders at all levels expressed interest in obtaining data to support decision making and increase
accountability Case Management leadership has outlined an appropriate vision for the future of their department
Opportunities Patients are staying longer than medically necessary and are not transitioning to a lower level of care
in a timely manner Without operational process improvement and a bed allocation analysis, TCH will not have the ability
to serve additional inpatients without operating above 85% utilization, which hinders patient throughput
No centralized tool is being used to track key throughput metrics. These metrics should be used daily/weekly to support comprehensive patient flow improvement.
Benefit model incorporates lost revenue associated with reducing length of stay of patients with payers who reimburse based on percent of charges (except Medicaid given the upcoming reimbursement change), which includes 70% of the total patient days
Alec King, Vice President of Finance, reviewed and approved the benefit model methodology
50% backfill estimate is based on conversations with several TCH senior executives
Includes Medical/Surgical patients (excludes NICU, newborns, chemical dependency, psychiatry, rehabilitation and ungroupable) who discharged 6/1/ 2011 – 5/31/2012
Clinical Operations Financial Benefit Low High
Length of Stay Benefit• Reduction in 4,800 to 9,700 patient days results in the following benefit:
• Capacity created to serve an additional 450 to 930 patients annually (50% backfill)• Cost savings associated with reducing 2,400 to 9,700 patient days (50% cost savings)
Annualized Total $15,433,000 $20,651,150 $25,869,300
Physician Services Opportunity
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Opportunities Continue support of the TCH/Baylor mission through process improvements including, but not limited to:
Increase provider throughput and revenue Improve patient flow and access in clinics by improving scheduling templates, utilization of support staff
and standardizing staffing models where appropriate Refine CART model to tie revenue to expenses Align labor costs, revenue and production to directly correlate with appropriate cost centers
(1) Non Provider Labor does not include Baylor staff as they were not accounted for in the Labor Analysis
Physician leaders should be involved from the beginning Transparency is important when working with the physicians Accurate data presentation and interpretation is key to get the physicians
engage Inclusion of medical staff at all levels and particularly in all work teams Communicate, communicate, communicate
Successfully implementing enterprise-wide performance projects requires:• Executive engagement and support • Physician engagement and support• Transparency and accountability • Setting realistic improvement goals for each solution• Communicating savings targets per initiative to all affected parties• Communication and early buy-in from all stakeholders to ensure timely
implementation• Effective benefit realization monitoring and presentation – measure,
Once redesign efforts are completed the organization must invest in resources to continue monitoring to hold the gains- Ongoing (although maybe modified) governance structures- Hardwired reporting mechanisms