proven strategies to reduce your operational cost... · •market basket & productivity cuts...
TRANSCRIPT
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Michael Guiry, PA-C, MBA AVP, Cardiovascular Services
North Shore LIJ Health System
New York
Proven Strategies to Reduce
Your Operational Cost
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I, Michael Guiry, DO NOT have a
financial interest/arrangement or
affiliation with one or more
organizations that could be perceived
as a real or apparent conflict of
interest in the context of the subject
of this presentation.
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$2.7 trillion = cost of US Healthcare in 2011
• Equivalent to 17.9% of GDP
($8,680/person, 3.9% increase yoy)
CMS.gov, research/data statistics
US Healthcare: Overview
Total US GDP:
$15 Trillion
18%
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1. U.S. $15.0T
2. China $7.3T
3. Japan $5.9T
4. Germany $3.6T
5. U.S. health care $2.7T
5. France $2.7T
World Gross Domestic Product
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Workplace Health Premiums
Continue to Rise
2012 Health Premiums: Single Coverage = $5,615 Family Coverage = $15,745
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits.
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• 78 million US citizens over the age of 64 by 2017 (~ ⅓ US population & ½ the workforce)
• Medicare Part–A is financed primarily through payroll taxes, yet the worker to Medicare beneficiary ratio is declining. . . .
1970: 4.5 workers to 1 Enrollee 2005: 3.9 Workers to 1 Enrollee 2020: 2.9 Workers to 1 Enrollee
• Medicare trust fund projected to be exhausted by 2024
US Healthcare: Medicare
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• Projected change in Medicare enrollment
US Healthcare: Medicare
2012 Annual Report Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.
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Healthcare Reform Goals
Access
Cost
Quality
Cost
Quality = VALUE
QUALITY
COST
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Health Care Reform Has Raised Many Questions
• How much will we get paid?
• What will we get paid for?
• Who will pay us?
• Where will patients receive care?
…How will new mandates affect us as an employer?
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Medicare
Commercial
Medicaid
U.S. Health Insurance Spend
Other
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2010 2012 - 2013 2014
• Market Basket
& Productivity
Cuts
• Dependent
Coverage to
Age 26
2018
• Individual
Mandate/Health
Exchanges Open
• Medicare &
Medicaid DSH
Cuts
• Insurer Fees
• Full Impact of
Medicaid DSH
Cuts
• Cadillac Tax
• Value Based
Purchasing
• Readmission and
HACs Penalties
• Pharmaceutical
and Medical
Device Fees
Health Care Reform Timeline
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Value Based Purchasing-
Pay For Performance, Just A Sample…
• Time to Cath Lab
• % of Heart Failure Patients given Discharge Instructions
• % of pneumonia Patients whose initial ED Blood Culture was performed
prior to the administration of the first dose of antibiotics
• Antibiotic Received one hour prior to Surgical Incision
• Cardiac Surgery Patients with Controlled 6am Postoperative Serum Glucose
• Patient Experience-How was the Nurse, How was the Doctor, Was the
Hospital Clean etc…
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FY2014
45%
30%
Outcomes (30-day Mortality) 25 %
MEASURE FY2013
Process of Care (Core Measures) 70%
Patient Experience (HCAHPS) 30%
Hospital Value-Based Purchasing
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Financial Impact Readmissions Value
Based
Purchasing
Hospital
Acquired
Conditions
Annual
Payment
Reduction
FY12 - (10/1/2011) --- --- --- ---
FY13 - (10/1/2012) 1% 1% --- 2%
FY14 - (10/1/2013) 2% 1.25% --- 3.25%
FY15 - (10/1/2014) 3% 1.5% 1% 5.5%
FY16 - (10/1/2015) 3% 1.75% 1% 5.75%
FY17 - (10/1/2016) 3% 2% 1% 6%
Percent refers to DRG payment reduction on all Medicare discharges
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Cumulative
Annual
Impact to
NYP:
$4 M
Medicare Payment Withholds Starting FY 2013
Medicare Penalties for Readmissions
Medicare Penalties for Not Reporting
Medicare Penalties for Meaningful Use
Cumulative
Annual
Impact to
NYP:
$8 M
Cumulative
Annual
Impact to
NYP:
$40 M
Value Based Purchasing
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What is Sequestration and
How Will It Influence Healthcare?
• Sequestration is a government mechanism that involves a series
of spending cuts required by the Budget Control Act of 2011,
which are aimed at reducing the Federal Deficit
• Sequestration automatically began March 1, 2013 after Congress
failed to enact an alternate deficit reduction program
• The required cuts will decrease spending by 1.2 trillion dollars by
2021
• Medicare cuts for Hospitals and other Health Care providers is
2% ($11 Billion in 2013, $123 Billion from 2013-2021)
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Health Insurance Exchange
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Medicaid
TODAY
Payor Mix Changes in NYC
Uninsured Uninsured
Medicaid
Medicare
Commercial
Medicare
Commercial
FUTURE
Exchanges NEW
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Pay-for-
Performance
Bundled
Payments
Penalties
ACO
Capitation
Delivery Model Risk Continuum
Fee-for-
Service
Key Driver Volume Value
Low High Degree of Risk
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Bundled Payments
• Single payment covering a range of service
• CMS testing bundled payments through a pilot program in
which 500 different providers are participating
• There are 4 different bundling models:
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Projected Impact of Reform on NYP
(2010-2019)
Projected Impact
Expanded Medicaid Coverage $ - slightly +
Medicare Market Basket/
Productivity Adjustments ($)
Medicare DSH Payments ($)
Medicaid DSH Payments ($)
Quality and Service
Excellence ($) - $
Employee Benefits Costs ($)
Projected Total ($943M)
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$(1.9) $(14.9) $(30.5)$(46.2)
$(89.9)$(111.6)
$(134.6)
$(165.0)
$(216.4)
$(252.7)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Plus Additional
State Cuts
Total: $1.1B
Projected Impact of Reform on NYP
(2010-2019)
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Revised Proj. Financial Impact on NYP
(2013-2020)
2013 2014 2015 2016 2017 2018 2019 2020
GME/IME
Elimination-Medicaid Trend Factor
Employee Benefit Costs
VBP/Readmissions
Fiscal Cliff/Sequestration
DSH Reductions
Market Basket/Productivity Adjustments
Expanded Medicaid Coverage
2013 2014 2015 2016 2017 2018 2019 2020
GME/IME
Elimination-Medicaid Trend Factor
Employee Benefit Costs
VBP/Readmissions
Fiscal Cliff/Sequestration
DSH Reductions
Market Basket/Productivity Adjustments
Expanded Medicaid Coverage
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
GME/IME
Elimination-Medicaid Trend Factor
Employee Benefit Costs
VBP/Readmissions
Fiscal Cliff/Sequestration
DSH Reductions
Market Basket/Productivity Adjustments
Expanded Medicaid Coverage
Total: $2.6B
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• Patient Experience
• Advocacy
• Physician Alignment
• Focus on Quality, Safety, & Service
• Operational Efficiency*
Future Success
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U.S. Health-Care System Wastes
$750 Billion Annually
IOM 2012 Report
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H ospital E fficiency R evenue Cycle C linical U tilization L ength of Stay E nhanced S ourcing
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Length of Stay
Clinical Resource Utilization
Indirect Cost
Structure
NYP System and Ambulatory Care
Revenue Cycle Supply Utilization
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Clinical Resource Utilization • Goal: Monitor practice patterns to ensure
standardization whenever possible
• Choice Awareness
• Price Transparency
• Standardize Practices
• Physician Metrics
• Reprocessing
• Bulk Opportunities
• Standardize Packs/Kits
• Eliminate Waste/Overuse
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Boston Scientific MEDTRONIC ST. JUDE Biotronik
Type Product
Description
Product
Code
Product
Description
Product
Code
Product
Description
Product
Code
Product
Description
Product
code
DU
AL
CH
AM
BE
R
Teligen RF
HE DR
E110 Secura DR D224DRG Fortify ICD
- VR
CD1231-
40Q
Lumax 540
DR-T
360346
Confient
DR HE
E030 Virtuoso
DR
D154AWG Current
Plus DR
SJ4
CD2211-
36Q
Lumax 540
DR-T
w/Mobile
GSM
368769
Choice Awareness – Price Transparency
Clinical Resource Utilization
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Clinical Resource Utilization
Time Period Contrast % Case Volume (cc) Case Use
June 2012 Omnipaque 16% (10,561) 13% (81) June 2012 Visipaque 84% (69,278) 87% (535)
7.24-10.15.12 Omnipaque 90% (183,984) 89% (1,372) 7.24-10.15.12 Visipaque 10% (20,452) 11% (167)
Change in Contrast Utilization and Subsequent Cost Impact
Cost Savings: $150K/yr
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• Case costs are only reflective of supplies and
devices (i.e. balloons, stents, catheters, etc.)
• Other direct/indirect costs have been excluded
(i.e. medications, labor, equipment, etc.)
Clinical Resource Utilization
Interventionist Average June
Case Cost I20
Diagnostic $515 Intervention $4,925
I26 Diagnostic $220 Intervention $2,778
I5 Diagnostic $608 Intervention $6,245
I13 Diagnostic $335 Intervention $3,816
Procedure June Median Cost
June Average Cost
Sample Size
Diagnostic $314 $386 357
Intervention $3,167 $4,027 211
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Length of Stay • Goal: Streamline patient care
processes to ensure optimum care
and timely discharge
• Teams assembled and categorized
as follows:
• Care Coordination
• Early Intervention
• Throughput/24 hrs Hospital
• Post-Acute Care
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0
5
10
15
20
25
J F M A M J J A S O N D
2012
2013
*Average number of requisitions not fulfilled at end of working day
Length of Stay – Reduce Echo Carryovers
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Targets Excess Days Removed
Campus YTD Sept. Annualized YTD Sept. Annualized
Weill Cornell 1,735 2,689 2,313 3,585
Milstein 2,057 2,469 2,742 3,292
NYP Overall 3,370 5,158 5,055 6,877
Length of Stay – Early ICU Mobilization
-5500
-5000
-4500
-4000
-3500
-3000
-2500
-2000
-1500
-1000
-500
0
WCMC Milstein NYP Overall
Excess
Day R
educt
ions
2012SeptemberYTD
Target
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Reduction in Sedatives (MICU: 2011 vs 2012)
0
10
20
30
40
50
60
70
80
90
Midazolam 2011 Midazolam 2012 Lorazepam 2011 Lorazepam 2012
35
** Boxes represent the Interquartile Range (mg per patient)
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Reduction in Vent Days/Patient
3
Average Number of Ventilator Days per Vent Set-up
(Baseline 2011 vs January - June 2012)
2.0
3.0
4.0
5.0
6.0
7.0
8.0
WCMC ICUs Milstein ICUs TOTAL
Aver
age
Vent
Day
s/Se
t-up
Q1 andQ2 2011
Q1 andQ2 2012
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Program Successes
• Extraordinary cross-campus multidisciplinary collaboration
• Variance decreased by 2.79 days as compared to baseline 2011
- Reduction of 3.04 – 4.30 days in MICUs
• 15x more Rehab treatments per patient day
• 90-95% of patients medically cleared receiving active treatment
• Project Coordinators for Early Mobilization started early September
• Decrease in percentage of continuous infusions (2011 vs 2012)
3
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Operational Excellence (OE)
• Goal: Set targets and optimize cost
structure in the system while
keeping patients first
• Target specific system solutions (i.e.
LOA, OT)
• Develop implementation plans
• Implement changes and rebase
budgets
• Define/Implement labor analytic tools
& metrics
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Cost per Adj discharge (CMI Adj) $ 11,717 $ 10,462 $ 10,308 $ 9,787 $ 9,748 $ 9,680 $ 9,629 $ 9,391 $ 9,289 $ 8,401 $ 8,189
Discharges 42,079 58,986 113,033 50,422 50,264 41,595 52,647 59,123 92,903 46,871 31,581
Medicare CMI 1.41 1.70 1.99 1.62 1.51 1.96 1.70 1.87 1.59 1.85 1.83
$11,717 $10,462 $10,308 $9,787 $9,748 $9,680 $9,629 $9,391 $9,289 $8,401 $8,189 $-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
BI NSUH NYPH LIJ SLR NYU NY METRO Avg
MT SINAI Montefiore Hackensack Lenox Hill
2009 Total Expenses per Adjusted Discharge (adjusted for outpatient and CMI)
} $679 difference per adjusted
discharge or $204M
OE - Comparison of Local Hospitals
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Reducing maintenance costs does not require a sacrifice in the quality of service, the
patient experience, or readiness for the uncertain healthcare environment.
NYP Today ~ $44+ MM NYP Opportunity ~$39+ MM or less
Current State Desired State
T&M
Contracts
Biomed Department
T&M
Contracts
Biomed Department
OE – Biomed Department
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4
OE – Workforce Opportunities
Payroll Leakage Contracts / Policies Leave Management
Cancelled Meals On Call Paid Time Off
Configuration Design – Hours
Counting
Call Back Disability
On Call / Call Back Overtime Extended Illness Bank
Overtime Shift Differential Perfect Attendance
Pay Code Edits On Call Leaves (FMLA, Medical)
Pay Code Moves Scheduling Leave Process
Punch Edits Holiday Worked
Rounding Abuse FLSA Overtime Calculations
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• Note these numbers are preliminary and do not currently include Overtime
• We have completed our two weeks of second level interviews and incorporating
into the analysis
43
Low Savings High Savings
Payroll Leakage $5M $10M
Leave Management TBD TBD
Total
OE – Workforce Opportunities
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Hercules Project Status 2013 (in thousands)
$4.2 $9.8 $11.6
$5.3 $6.5
$37.4 $31.7
$16.4
$22.1
$6.2 $6.2
$8.5
$12.2 $13.3
$4.4
$12.6
$8.8
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
Clinical Resource
Optimization
Corporate & Support Services
Length of Stay Operational Excellence
Service Delivery &
System
Supply Utilization
Grand Total Prior Total 2013 Projects
Planned
Underway
Done
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Moving Forward
Quality
Preparedness
People
Performance
Investment
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How Will Your Healthcare
Institution Meet the Challenge?
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Thank You