Graduate Case Presentation - Tufts NEMC

Ford ConsultingTufts New England Medical Center

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Belinda Degboe, Shawn Dilmore, Caitlin Motley, Kara Vass

• Internal and External Environment• Key Issues• Strategic Alternatives• Recommendation• Implementation• Conclusion

2

Overview

Current Strategy

Ellen Zane

3

4

• Threats

• Competition

• Third Party Payers

• Uninsured

• Opportunities

• Expansion

• Name Recognition

External Environment

5

• Weakness

• Sale of Assets

• Poor Margin

• Strengths

• Leadership

• New England Quality Care Alliance (NEQCA)

Internal Characteristics

6

Select Indicators

7

-54%

+16%

89.489.45.795.79 1.681.68

1.725.55.5 110.7110.7

Mass.gov 2008

Mission“We strive to heal, to comfort, to teach, to learn, and to seek the knowledge to promote health and prevent disease. Our patients and their families are at the center of everything we do. We dedicate ourselves to furthering our rich tradition of health care innovation, leadership, charity and the highest standard of care and service to all in our community.”

Tufts New England Medical Center

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Strategic Alternative 1:Suburban Expansion

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•Partner with New England Baptist for 190 Bed Expansion•500,000 square feet•$3,000,000 investment

•Advantages•Provides care conveniently to patients in community•Opportunity for increased market share

•Disadvantages•Other area hospitals planning suburban expansions, which increases competition•Requires a large capital investment

Rowland 2006

Strategic Alternative 2:Alignment with Tufts

University

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•Strengthen the relationship with Tufts University•Standard meetings between marketing departments of NEMC and Tufts University•Strengthen brand to differentiate

•Advantages•Leverage position in market with name recognition

•Disadvantages•Loss of individual identity•Shared reputation•Difficult to quantify results•Cost

Strategic Alternative 3: Hospitalist Program

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•Begin a hospitalist program•Hire 2 full time and 2 part time hospitalists•$666,000 for salaries, benefits, and malpractice

•Advantages•Improve efficiency•Improve quality•Cost savings•Incentive for PCPs and other academic physician staff

•Disadvantages•Employment resistance•Resistance from current physician staff•Difficulty recruiting physicians for employed model

Lurie and Wacher 1999. Tufts Medical Center 2008.

Recommendation:Two Pronged Approach

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Hospitalists

• 1997 Study at Tufts

• Reimbursement structures

• Impact on patient care

• Financial effects

13

Operating Margin

Gregory, Baigelman, and Wilson 2003.

• $1.62 million added profits

• $185,000 plus benefits

• $90,000 added profit per hospitalist

Hospitalist Impact

14Gregory, Baigelman, and Wilson 2003. Laury and Wacher 1999. Merritt Hawkins 2005.

Marketing• Current marketing efforts

• Strengthen brand identity

• Positive association with Tufts Medical School

• Leverage marketing and differentiate

• Annual Costs of $475,000 over 2 years

15Anonymous 2009

Implementation Plan

Responsible parties: Administration, NEMC and Tufts University Marketing & Public Relations Departments, Human Resources, Physician Board, NEQCA, & Quality Reporting

Year 1: Base Year

Year 2

Year 3

Year 4

Year 5

Communication

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Communication Channels: town meetings, weekly staff meetings, physician board meetings, various media

Conclusions• Alignment with values

• Financial benefit

• Competitive advantage

• Risk

23

Questions

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ReferencesTufts Medical Center Website (2010). Our mission. Retrieved February 20, 2010 from http://www.tuftsmedicalce

nter.org/AboutUs/OurMission  Patrick, D., Murray, T., Bigby, J., & Auerbach, J. (2007). Regional Health Status Indicators Boston Massachusetts. The

Commonwealth of Massachusetts Department of Public Health. Retrieved February 24, 2010 from http://www.mass.gov/?pageID=eohhs2searchlanding&sidEeohhs2&q=Regional+Health+Status+Indicators+Boston+Massachusetts&collectorName=EOHHSx

 Pearson Education, Inc. (2008). Per Capita Personal Income by State. Retrieved February 23, 2010 from

http://www.infoplease.com/ipa/A0104652.html U.S. Department of Labor. (2006). Bureau of Labor Statistics: States with highest unemployment rates in 2005.

Retrieved February 23, 2010 from http://www.bls.gov/opub/ted/2006/mar/wk1/art01.htm  Division of Health Care Finance and Policy (2005). Massachusetts Uncompensated Care Pool. Retrieved February 24,

2010 from http://www.umassmed.edu/uploadedFiles/ocp/MTF/12-01-05_ucp_101.pdf Moseley, G. (2009). Managing Health Care Business Strategy.  Jones and Bartlett Publishers.  Sudbury, MA Patrick, D., Murray, T., Bigby, J., & Iselin, S. (2008). Health Care in Massachusetts Key Indicators. Retrieved February

24, 2010 from http://www.mass.gov/?pageID=eohhs2searchlanding&sidEeohhs2&q=Regional+Health+Status+Indicators+Boston+Massachusetts&collectorName=EOHHSx

 National Conference of State Legislatures [NCSL]. (2010). Certificate of Need:  State Laws and Programs. State

Certificate of Need Laws 2006.  Retrieved February 24, 2010 from http://www.ncsl.org/IssuesResearch/Health/CONCertificateofNeedStateLaws/tabid/14373/Default.aspx

ReferencesDelmarva Foundation (2003) “Healthcare Quality Improvement and Organizational Culture” Retrieved February 23, 2010 from

http://www.delmarvafoundation.org/newsAnd Publications/reports/documents/Organizational Culture. Shortell, S.M., Kaluzny, A.D.(2006) ‘Health Care Management Organizational’ Design and Behavior (5th ed) Thomas Delmore

learning, 5 Maxwell Drive, Clifton Park, NY. Nissan, J. (2007). NEMC, NEBH will build joint suburban facility. The Tufts Daily. Retrieved February 27, 2010 from

http://www.tuftsdaily.com/2.5511/nemc-nebh-will-build-joint-suburban-facility-1.593827 Anonymous. (2006). Boston Teaching Hospitals Expand Reach into Surrounding Areas Prompting Concerns About Competition,

Costs. Medical News Today. Retrieved February 21, 2010 from http://www.medicalnewstoday.com/articles/52798.php

 Rowland, C. (2006). 2 Tufts affiliates plan hospital in suburbs.  Retrieved February 23, 2010 from  http://www.

boston.com/yourlife/health/diseases/articles/2006/09/08/2_tufts_affiliates_plan_hospital_in_the_suburbs/ Mass.gov. (2005) FY05 filing based on hospital's audited financial statements. Mass.gov pdf. Retrieved February

14, 2010.

MedPharma Partners, LLC. (2008). Impact of Tertiary Hospital Growth and Expansion. Massachusetts Medical Society. Retrieved on February 20, 2010 from http://www.massmed.org/AM/ Template.cfm?Section=Home6&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=21922

MerrittHawkins(2005). Modern Healthcare Physician Compensation Review 2005 PDF. Retrieved from http://www.merritthawkins.com/pdf/2005_Modern_Healthcare_Physician_Compensation_Review.pdf

 ECG (2009) “AMC Financial Arrangements and Affiliations” Retrieved February 20, 2010 from http://www.

ecgmc.com/services/financial_arrangements.asp

Tuft University, School of medicine (2007) Retrieved on February 22, 2010 from http://www.tufts.edu/med

U.S. News and World Report (2007) Retrieved on February 22, 2010 from http://gradschools.usnews.rankings andreviews.com/best-graduate-schools/top-medicalschools/items/04048

 Hamilton, M. Samuel, O. (2005) “Why have AMC’s Survived?” JAMA. 2005; 293:1495-1500. Retrieved February 22, 2010 from

http://jama.amaassn.org/cgi/content/abstract/293/12/1495  

ReferencesGregory, D., Baigelman, W., & Wilson, I. (2003). Hospital economics of the hospitalist. Health Services Research; 38(3):

905-918. Retrieved February 22, 2010 from http://www.ncbi.nlm.nih.gov/pmc/articles /PMC1360922/

Wachter, R. (1999). An Introduction to the Hospitalist Model. Annals of Internal Medicine; 130(4): 338-342. Retrieved February 20, 2010 from http://www.ncbi.nlm.nih.gov/pubmed/10068402

 Hauer, K., Wachter, R., McCulloch, C., Woo, G., & Auerbach, A. (2004). Effects of hospitalist attending physicians on

trainee satisfaction with teaching and with internal medicine rotations. Archives of Internal Medicine; 164(17): 1866-71. Retrieved February 21, 2010 from http://www.ncbi.nlm.nih.gov/pubmed/15451761

KruResearch. (2010). Social Media ROI for Hospitals and Health Marketers. Retrieved February 27, 2010 from http://blog.kruresearch.com/category/hospital-marketing/

 Maguire, P. (2009). What's the ideal number of patients to see? Today's Hospitalist. Retrieved February 26, 2010 from

http://www.todayshospitalist.com/index.php?b=articles_read&cnt=824 Tufts Medical Center. (2008). Tufts Medical Center Department of Medicine Annual Report 2008. Retrieved February

26, 2010 from http://www.tuftsmedicalcenter.org/ForHealthCareProfessionals/GraduateMedical Education/InternalMedicineResidency/DeptofMedicine/default/Tufts_Medical_Center_Dept_of_Medicine_2008_Annual_Report.pdf

 Lurie, J. & Wachter, R. (1999). Hospitalist Staffing Requirements. Retrieved February 26, 2010 from

http://www.ncbi.nlm.nih.gov/pubmed/10538261

Appendix I: Exhibit of Major Systems

Appendix II: 5 Year Pro Forma

Appendix III: Key Financial Ratios

Appendix IV: Key Demographic Factors

Appendix V: Hospitalist to Patient Ratio & Salary Calculations

• Hospitalist to Patient RatioAverage Daily Census =Annual admissions x LOS / 365= 17,000 x 5.79/365 = 269.67

• Number of hospitalists =Average Daily Census / Patients per Hospitalist + 1 to cover night shift = 269.67/10 + (1) = 28 or=269.67/15 + (1) = 18

A low estimate of 10 patients per hospitalist is used to account for the extra manpower needed for coverage during vacations and other time off. The initial recommendation for Tufts-NEMC is to average 15 patients per hospitalist. As the program progresses, Tufts-NEMC can move toward a ratio of 1:10. Therefore, Tufts-NEMC would need 18 hospitalists to cover all admissions, however, the initial recommendation is to pilot this in the Department of Medicine, which has roughly 6000 inpatient admissions, and therefore, yields the need for 7 hospitalists.

• Number of hospitalists =6000 X 5.79/365 = 95.18= 95.18/10 +1 = 10.5= 95.18/15 + 1 = 7

• Hospitalist SalaryIndustry research indicates the hospitalist salary at $185,000. With this as the base salary plus 20% for benefits, Tufts-NEMC will make the following investments:Year 2 – 3 hospitalist FTEs - $185,000 x 3 + ($185,000 x .20) x 3 = $666,000Year 3 – using same formula with 4 additional hospitals FTEs = $1.5 millionYear 4-5 – if disseminated throughout organization, using same formula for 18 total hospitalist FTEs = $3.9 million

Data derived from xxiv, xxiii, xxv