Whitepaper. Four Things That Keep Healthcare Executives Up At Night

Whitepaper 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 50 % 13% Salaries Expense Categories for the Typical Hospital Capital and Leases 40 % 17 % 20 % Supplies Physician Preference Other Operating 60 % Commodities 2

Building A Value Analysis Project Senior Management Must Be Fully Committed Assemble a Broad-based Team which Includes Physicians Data is the Essential Foundation Measure and Monitor 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. 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. 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. 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) 3

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 Calculate the reimbursement impact of hospital scores to assess earnback payment Adjust scores on any metric to identify quick wins and corresponding reimbursement change on these measures Compare hospital scores to peer hospitals 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. Area around their room was always quiet at night. They were given information about what to do during their recovery at home. 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. 4

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 5

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. 6

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 7

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: C. difficile Accurate Diagnosis and Prevention Catheter-Associated Urinary Tract Infections (CAUTI) Prevention Central Line Associated Bloodstream Infections (CLABSIs) Prevention Crash Cart Readiness Diabetes Prevention and Management 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 The challenges at many points seem overwhelming, and, with many things still remaining uncertain, healthcare leaders may be asking themselves: 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? 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. Contact Amerinet Customer Service 877-711-5600 info@amerinet-gpo.com 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 8