Making the Case for Change Without a Burning Platform
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1 Making the Case for Change Without a Burning Platform Presented By: Rex P. Budde, CPA, MBA President and CEO Southern Illinois Healthcare, Carbondale, IL
2 Region s second largest employer 3,700 total employees Service area encompassing the southernmost 16 Illinois counties Tax-exempt health system with over $100 million in uncompensated government sponsored care and in excess of $9 million in charity care in FY 2015 Region s only dedicated cancer center National acclaim for cancer, cardiac, stroke, bariatric, breast imaging and rehabilitation services Affiliations with The BJC Collaborative, Prairie Heart Institute and Rehabilitation Institute of Chicago. 2
3 Financial History of SIH Financial Ratios YEAR INVESTMENTS DAYS CASH ON HAND CASH TO DEBT DEBT TO CAPITALIZATION 2001 $ 45,822, % 40% 2005 $ 145,580, % 39% 2010 $ 228,349, % 30% 2016 $ 378,903, % 25% 3
4 Financial History of SIH Volumes/Market Share YEAR ADMISSIONS ED SURGERIES OUTPATIENT MARKET SHARE ,666 55,809 7, ,217 46% ,068 59,630 8, ,768 43% ,507 64,836 9, ,558 48% ,804 72,791 11, ,894 54% 4
5 Becoming a Learning Organization Six Sigma Journey 2004 Introduction of Six Sigma, Work-Out, Change Acceleration Process Established the process improvement department Trained 4 Black Belts, 12 Green Belts, and 16 Change Agents 5
6 Becoming a Learning Organization Lean Journey Oct 2011 Rapid Cycle Improvement Events Dec 2011 Lean Daily Management March 2012 Strategy Deployment 6
7 Becoming a Learning Organization X Matrix Process Top Level X Matrix Step 1 : WHAT? Breakthrough Thinking Step 2: HOW FAR? This Year? Step 3: HOW? Which Key Processes? Step 4: WHO? Resource Deployment Step 5: HOW MUCH & WHEN? Measures? 7
8 Becoming a Learning Organization New Goal Emphasis Behaviors observed in an organization indicate what s important to the people of the organization. Modeled behavior drives culture. Culture drives patient experience. 8
9 Physician Involvement Creation of SIH Medical Group Formed in 2006 to employ high end specialists. Created to facilitate physician recruitment to rural market amid the Illinois medical liability insurance crisis of Southern Illinois Medical Services, NFP (SIMS) 501.c.3 not for profit. Wholly owned subsidiary of Southern Illinois Hospital Services. Governed by SIMS Board of Trustees. Initially targeted physicians 9
10 Physician Involvement Creation of SIH Medical Group Today 157 physicians 62 advanced practice providers Over 550 employees at 29 practice locations Over $75 million in net revenue 10
11 Physician Involvement Creation of PHO From 2009 to Today PHO Physician Steering Committee formed Interim Board of Managers formed and Quality Health Partners created Key QHP executives chosen QHP Physician Network closed Clinical performance measures chosen, agreements completed, and negotiations begin with commercial payers Physician and hospital clinical integration Assess Medicare ACO operations and develop population health strategy tactics 11
12 Physician Involvement Creation of Integrated Leadership Teams Multidisciplinary group of physicians collaborating with the CEO, hospital administrator, CMO, nurse executive and IT with a focus on addressing operational issues that impact patient care, patient safety, patient experience and physician workflow Teams formed - MHC 2011 / HH 2012 / System ILT issues addressed since 2014 Benefits of ILT Improves quality of care Improves physician engagement and satisfaction Builds interdisciplinary relationships Improves relationship between administration and physicians 12
13 Upstream Collaborative Relationship Affiliation with BJC HealthCare The BJC Collaborative - to achieve even higher quality care for the patients served by these independent not-for-profit health care organizations The Collaborative members have a footprint of 6,855 staff hospital beds spanning Missouri, Illinois and Kansas, and combined annual revenues of over $9 billion focusing on: Population Health Management, Clinical and Service Quality, Capital Asset Management and Information Systems and Technology.
14 Upstream Collaborative Relationship Affiliation with BJC Healthcare
15 Upstream Collaborative Relationship Participating in the BJC Collaborative Clinical Engineering Operations Committee: Capital Equipment Savings of $104,221,558 (SIH savings of $9 million) IT Operations Committee: CCMR work and Epic Clinical and Service Quality: Reduction in catheter associated infection. Government Relations: Sharing information on various legislative issues, such as Illinois managed care and Missouri telehealth statutes. HR/Lifelong Learning: Sharing of best practices such as retention strategies and voluntary turnover. Legal: Antitrust Training & Evaluating Shared Services Platform options. PR/Communications: Dedicated BJC Communication Team to share success stories.
16 Upstream Collaborative Relationship Participating in the BJC Affiliation Case Management: A SIH nurse navigator has been placed at BJH to coordinate transfers to/from SIH & BJC Neurosciences: SIH neuro team access to ClinDesk with Washington University for shared patients Telemedicine/ICU: SIH and surrounding hospitals provide telemedicine services with WUSM specialists Oncology: Second Opinion Clinics for SIH patients with WUSM Trauma: BJH and WUSM proving recruitment assistance and consulting services to SIH in development of a Trauma Center Pediatrics/OB: SIH Outreach Clinic with BJH for remote EEG and high risk pregnancy ultrasound 16
17 Future Vision Financial Projections That Spurred Concern Fiscal 2013 to 2023 (Dollars in $000) Expense Growth Rate Average Base Case 7.0% Controlled Cost Growth 5.5% Income from Operations Base Case $ (224,340) Controlled Cost Growth 252,730 Operating Margin Target Base Case 4.0% -3.53% Controlled Cost Growth 4.0% 3.98% Days Cash on Hand Target Base Case 300 Controlled Cost Growth
18 Future Vision Financial Projections That Spurred Concern Healthcare Reform Effect Fiscal 2011through 2022 MEMORIAL IP Rate Reductions $ (53,664,958) OP Rate Reductions $ (22,152,071) Disp Share Reductions $ (36,492,348) Healthcare Reform $ (112,309,377) Coding $ (34,729,001) Wage Index Reductions $ (4,804,831) Total $ (39,533,832) TOTAL MEMORIAL $ (151,843,209) HERRIN IP Rate Reductions $ (22,321,587) OP Rate Reductions $ (9,381,621) Rehab Unit Rate Reductions $ (10,485,780) Rehab Unit Disp Share $ (3,159,590) Reductions Healthcare Reform $ (45,348,578) Coding $ (14,554,963) TOTAL HERRIN $ (59,903,541) GRAND TOTAL $ (211,746,750) Herrin s Medicare Dependent Status Ended in FY
19 Vision SIH Need for Change The Environment Has Changed Reduced reimbursements Reduced overall demand Increasing competition Margin Dilution is Real $45 million of cost reductions or operating income from new revenue is needed over the next 3 years Efforts Underway Lean teams and initiatives BJC Collaborative Waste elimination The significant challenge will be accelerated with the help of a partner Huron Consulting Group Proven ability to identify and achieve millions of dollars of cost savings and revenue improvement Multi-disciplinary Teams System-wide initiative Goal: To Maximize efficiencies while enhancing our commitment to providing the highest quality patient-centered care. 19
20 Vision SIH Guiding Principles Initiative is owned, led and managed by Southern Illinois Healthcare, The Initiative goal is to improve our operational and financial performance by transforming how we do our work and establishing new ways of defining success. Our fiscal responsibility as stewards of a limited resource is as important as delivering high-quality care. We need to anticipate and prepare for inevitable changes in our operating environment. We are not looking for business as usual. We have to challenge what we are going and now, and look for ways to capitalize on our individual and collective strengths while improving our financial health while maintaining or enhancing service, quality, and safety. We will leverage best practices and strive to achieve standardization. The SIH leadership team needs to share equally in accountability and actions, and be supportive of decisions and consistent in communications. The strategy deployment, daily management, and rapid cycle improvement processes will be leveraged to support the Vision SIH efforts. 20
21 Vision SIH Communications Plan Principles: Communicate transparently Advance communication to management team to catalyze meaningful conversations Create a means to gain employee input/buy-in Be mindful that anything shared with employees may be shared with local media 21
22 Vision SIH Communications Plan Communicating Work Through Teams There were nine Vision SIH teams represented on an SBAR template that was utilized for all system-wide communications. 22
23 Vision SIH Communications Plan Communication Coordination The Marketing & Communications team logged all past, present and anticipated communications with a goal of limiting Vision SIH communications to one per day. Not always possible. 23
24 Vision SIH Communications Plan Celebrating Progress On multiple occasions when fatigue was beginning to show, infographics were used to celebrate progress and to motivate EEs. 24
25 Vision SIH Communications Plan Lessons Learned Communication key to successful change management. Plan and execution strong, line-of-sight communication from managers seen as improvement opportunity. Voice-of-customer sought but not sufficient to gauge Employees readiness for change Readiness for change within organizational context key to success. 25
26 Vision SIH Results 26
27 Next Steps Conversion to Epic Multiple EHR systems Single, totally integrated, IT solution Optimize clinical and revenue cycle Information Real-time course corrections Prerequisite to the analytics required to manage Population Health Other Next Steps Address gaps (PAC and nurse coordinator s roles) Build CCMR with BJC Collaborative project Pursue relationship with present ACO or establish an ACO Create a Behavioral Health program strategy Create a diabetes management program 27
28 The Learning Journey No sacred cows Emphasize local data in making HR decisions Underestimated the anxiety level, both managers and staff Communication techniques 28
29 Slide 29
30 Thank You! Insert Your Photo Here Rex Budde, CPA, MBA President and CEO , ext
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