Improvement is Good For Business. Waste is Not.€¦ · • Governments and non profits must generate operating income to maintain and grow infrastructure and keep up with administrative

Improvement is Good For Business.

Waste is Not.P e g B u r n e t t e , C P A , F H F M A , C F O

J a n u a r y 3 0 , 2 0 1 8

Peg Burnette, CPA, FHFMA, CFO

Brad Membel, MBA, MHA, FACHE, ACFO

January 13, 2020

Denver Health

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• Public healthcare organization – political subdivision of the State of Colorado.

• Has existed in some form since 1860.

• Mission includes patient care to all regardless of ability to pay, EMS/Level 1 Trauma services, research, and teaching.

• Hospital with Level 1 Trauma Center licensed for 555 beds/ADC (excluding newborns) of about 300.

• All services provided except transplants, burn care, radiation oncology and cardiac surgery –particular focus on behavior health/substance abuse, IP eating disorder unit.

• Large FQHC network with 10 FQHC clinics and 18 School Based clinics in City and County of Denver.

• Wholly owned subsidiary Denver Health Medical Plan with 85,000 Medicaid managed care members and ~24,000 non- Medicaid members.

Denver Health by the Numbers• 7,575 employees

• payroll - $675M

• budget - $1.04B

• Main hospital

• 555 licensed beds

• 24,000 inpatient admissions

• Community clinics

• 495,000 primary care visits

• 272,000 specialty care visits

• 23,000 behavioral health visits

• 125,000 substance abuse visits

• 73,000 public health visits

• 50,000 dental visits

• EMS and call lines

• 124,119 911 and 79,454 transports• 230,463 poison and drug center calls• 204,601 NurseLine calls

• Health plan

• 24,000 DH Medical Plan members• 85,000 DH Medicaid Choice members

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Denver Health

4

Payer Mix Comparison

5

Safety Net Financing and Financial Viability Equation

6

• Government payors are typically >70% of payor mix.

• Government payors pay at or below cost.

• Supplemental payments (DSH, UPL, City/State funds) fill part of the gap.

• The remaining gap is filled by Commercial insurance cost shift.

• Governments and non profits must generate operating income to maintain and grow infrastructure and keep up with administrative cost mandates.

• Removal of waste and related inefficiency is imperative.

Denver Health Operating Margin Analysis

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-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

OI %

Average OI

Keep Comin’

ACA

ACA

Implemented Billing System

New Medicaid Managed Care

Plan

DSH Audit!!

DSH Audit!!Twice, Really?

Reverse of DSH Audit

What Lean Can Do for You

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Lean Methods and AP Automation Process

Traditional Concept of Waste in Healthcare

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• Underutilized Human Talent

• Waiting

• Inventory

• Transportation

• Defects

• Motion

• Overproduction

• Processing

Denver Health’s Improvement Journey

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1860 – 2005: Nothing or variations on PDSA

2005 – 2012: Transformation through Lean; venturing into population health work

2012- present: Lean Plus Labor productivity

2017 – Present: Building on Lean with Operational Excellence Initiatives AND increasing population health focus; SDoH

“Can You Deal with That?”

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Lean

Waste

http://www.sportsrec.com

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Accomplished With NO Reduction In Patient Services ……..And NO Layoffs!

LEAN Example #1:Clinic Administered Medications

2018 Improvement Projects Journey

Department: Ambulatory Care Services

Reason for Action

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Problem Statement: There is a lack of standard work around how clinic administered medications (CAMs) are ordered and administered that results in:

● Patient safety risks and lost ability to:o Identify if patient received a medication (drug recalls, clinical care)

o Check for drug interactions

●Missed charge capture (FQHC cost report, lost revenue)

● Compliance risks

Key Issues Addressed

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● Lack of Epic standard work in clinics

o Lack of clear process at go-live

o Different clinical teams and workflows

o Not an expectation in the past

● Epic functionality not clear or not guiding towards preferred process

http://thecontextofthings.com

Quantifying the Problem

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CAMs ordered but not administered (December 2017)

$107,497

$35,607 $31,525$17,207 $14,996

52.0%

69.2%

84.4%

92.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$0

$50,000

$100,000

$150,000

$200,000

LARCs & IUDs Botox Intra-ocularimplants

Other Vaccines

Po

ten

tial

Mis

sed

Ch

arge

s ($

)

LARC = Long-Acting Reversible Contraception; IUD = Intrauterine Device

CAM Improvement Projects

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Technology

• Epic:• Close encounter validation

• ProcDoc workflows

• Preference Lists

• Barcode scanners

Process

• CAM ordering and administration

• Pharmacy procurement

• Inventory management

People

• ACS leadership engagement

• MA & RN competencies

• Provider education

CAM Project Highlights

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Epic Close Encounter Validation:● Providers unable to sign office visit encounter if CAM orders have not

been documented as administered

LARC & IUD ProcDoc Workflows:● ProcDoc workflow allows one-click ordering, administering and

charging of medications

CAM Project Metrics

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SOURCE: Rx Orders Without Admin Epic reporting workbench report

CAM Project Metrics

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CAM Project Metrics

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LEAN Example #2:Supply Chain and Distribution

Optimization

Department: Materials Management

Problem Statement to Project

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Improve dock flow.

Which parts? How “bad” is it?

What are the causes?

Analyze the Value Stream.

Project A3

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27 Problem Solving A3’s

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Value Stream

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Problem Statement

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Project Level—Accounting Units are tied to Requesting Locations which are tied to Delivery Locations. Over 30% of the locations listed were known by dock staff to be wrong.

Problem Solving Level--Requesting & Delivery Locations are inaccurate leading to confusion, excess processing, and waiting.

Background Measurement

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26.3%

8.0%

24.8%

39.8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Correct Not Found Verify (ErrorProbable)

UPDATE (ErrorFound)

Req Loc/Delivery Loc Validation Outcomes3/18/19

Root Cause Analysis

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• Neither rain, nor sleet, nor wrong delivery address….

• No standard process to update changes in locations

• No active process to select delivery locations

• Req Locs/Delivery Locs are Inputs and Outputs

Target State

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Delivery Locations Updated

(RQC)

Delivery Locations Always Used in Deliveries

(MSCM)

All Packages Delivered to Delivery Location

R² = 0.9639

0

50

100

150

200

250

300

350

400

January February March April May June July

2019 Outstanding Deliveries Report

Problem Statement

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Project Level—Receiving drives inventory accuracy, service provision to patients, and prompt payment.

Problem Solving Level--The PO Receiving Process for parcels, on average, is over 65% variable in procedure leading to high levels of defects, waiting, and motion.

Background Measurement

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• 5 FTE Receive, on Average, 241 Packages in 4:14 (hh:mm).• Each Package Requires, on Average, 88 footsteps to ready and route for Delivery.

• 100% of PO Receipts Pass Through a Singular Staff Member for Lawson Receipt

3:50

4:04

4:19

4:33

January February March April

(hh

:mm

)

2019 Average Receiving Processing Time(Avg Packages/Day=241)

Root Cause Analysis

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• The “way we’ve always done it”

• No Standard Work

• Process responsibilities fluid and irregular

• 1 Lawson Receiving Station is a “Chokepoint” with 2-3 staff feeding 1 staff member

Target State

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• Leverage Scale of Routes• Match Quality and Pace

• Match Cycle Times of Sub-processes to Optimize Flow

• 100% of Packages Scanned Out for Delivery, Delivered (MSCM)

Outcome Metrics

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4:09

1:49R² = 0.7096

0:00

0:43

1:26

2:09

2:52

3:36

4:19

5:02

January February March April May June July

(hh

:mm

)

2019 Average Receiving Processing Time(Avg Volume Up to 265 Packages/Day)

Outcome Metrics

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50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

February March April May June July

Physical Receiving Accuracy

Insights

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Each Problem Solving A3 Resulted in:

– A Tool

– Captured Standard Work

– Communication with Stakeholders

Insights

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– A Tool



Insights

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– A Tool



Vizient Benchmarks

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Vizient Benchmarks

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Vizient Benchmarks

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Vizient Benchmarks

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Lean Benefits/Advice/ Lessons Learned

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• CEO support is imperative – needs to start at the top

• Communicate in a way all employees can understand/rally around, and find champions. Give people opportunity to show what they can do

• Embed in the culture, especially leadership

• Start with outside expertise if possible, then transition to internal coordinating group

• Watch out for “RIE overload” – Events are a means to an end, not the end– Don’t use event scheduling as opportunity to procrastinate solving a problem

• Track metrics, but don’t over-kill

Labor Productivity (non-Provider)

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• Implemented in 2013 – custom system

• Annualized savings of ~$18M in first year – primarily by

setting hours/pt day targets for nursing and other clinical

targets, and reducing agency use

• DH had no productivity targets prior to this project

Labor Productivity (non-Provider)

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Labor Productivity Lessons Learned

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• CEO support is imperative (sound familiar?)

• Targets need to be signed off by leadership

• Needs a leadership governance structure – with challenges you could probably imagine

• Need to triangulate with valid benchmarking data

• Somewhat difficult to do for overhead areas

• Sacred cows inhibit maximum value realization

• Avoid filled job reductions – much can be done through attrition

Evolution of Thinking on Waste in Healthcare

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• Old – reduce the cost of services– reduce supply cost/UOS– reduce Labor cost/UOS– reduce overhead

• New = avoid the service that caused the cost in the first place, if it can be avoided

• (Both old and new are needed)

Waste in the US Healthcare System - 2019

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• Failure of Care Delivery $102 - $166 Billion

• Failure of Care Coordination $27 - $78 Billion

• Overtreatment or Low Value Care $76 - $101 Billion

• Pricing failure $231 - $241 Billion

• Fraud and Abuse $59 - $84 Billion

• Administrative Complexity $266 Billion

Source: JAMA, October 2019

Interventions and Estimated Savings

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Hospital events/HAI interventions Increase physician efficiency

Integration of behavioral/physical health Partnership for patients campaign

Standardized bundled model pathways Prevention /chronic conditions

Total Care Delivery Failure interventions: $44B - $93B

ED based strategies Care coordination/ACO models

Health Information Exchanges Transitional care programs

Care management for complex patients

Total Care Coordination Failure interventions: $30B - $38B

Source: JAMA, October 2019

Interventions and Estimated Savings

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Optimizing medication use ACO strategies to prevent over use

Prior authorization procedures Expanding hospice access

Shared decision making tactics

Total Overtreatment interventions: $13B - $28B

Drug pricing interventions Insurer based pricing interventions

Laboratory/office visit pricing transparency

Total Pricing Failure interventions: $81B - $91BSource: JAMA, October 2019

2020 Operational Excellence Initiatives

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Operational Excellence

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METRIC Period FY 2017 FY 2018 COS Metric Direction MTD Trend Month Goal YTD / YE Goal Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec YTD

FinancialRealization Rate MTD 23.8% 24.9% Yes # 24.3% 24.3% 24.3% 23.5% 24.0% 24.8% 24.8% 24.4% 23.8% 22.8% 24.3% 23.8% 23.8% 24.0%

Rev Cycle Realization Rate MTD 29.8% Yes # 29.0% 29.0% 28.9% 27.9% 28.8% 29.0% 29.6% 28.4% 28.4% 26.9% 29.2% 28.8% 28.3% 28.6%

Commercial Charges as a % of Total Charges MTD 14.0% 15.2% Yes # 15.7% 15.7% 14.6% 16.0% 15.2% 15.9% 14.9% 16.2% 18.5% 15.6% 16.6% 13.8% 14.1% 15.6%

Uninsured Charges as a % of Total Charges MTD 8.9% 8.6% Yes $ 8.1% 8.1% 8.7% 9.8% 7.5% 9.0% 9.4% 10.2% 9.2% 11.0% 10.0% 10.0% 10.1% 9.5%

DHMP Medicaid Members YTD 86,641 77,446 No # 81,000 81,000 76,187 76,377 74,255 70,775 71,379 71,622 81,928 86,732 86,108 86,002 85,917 85,917

Medicaid Choice (PMPM OON Leakage Expense) 3 MO $52.17 $53.03 No $ $55.70 $55.08 $54.49 $55.86 $59.09 $63.69 $61.26 $59.71 $55.25 $54.95 $53.97 $55.93 $56.08 $57.30

CMI (Case Mix Index)3 MTD 1.48833 1.52866 No # 1.52835 1.52835 1.48118 1.51101 1.52364 1.64365 1.58474 1.58404 1.57440 1.57965 1.58863 1.52612 1.58405 1.56067

SWB /% Total Operating Revenue MTD 64.5% 63.2% Yes $ 64.8% 64.0% 65.0% 64.7% 66.1% 64.5% 62.6% 66.3% 66.7% 63.2% 62.3% 62.2% 64.9% 64.4%

Cost/AD (Adjusted Discharge) MTD $ 16,797 $ 16,898 Yes $ $20,236 $19,584 $15,999 $16,967 $16,520 $17,620 $17,669 $17,846 $17,211 $16,937 $16,091 $16,627 $17,151 $16,944


Flow

LOS Index (Adjusted Mean)3, 4 MTD 1.07 1.15 No $ 1.09 1.09 1.23 1.26 1.16 1.30 1.09 1.25 1.14 1.04 1.00 1.01 1.08 1.14

ED LOS - Overall (Median in minutes) MTD 182 174 Yes $ 166 166 156 168 170 161 161 169 172 176 167 177 171 168

Boarding Adult Floor Admits (Median in minutes) MTD n/a 202 Yes $ 160 182 213 230 140 112 126 132 131 136 146 145 151 145

OBS Daily Census (ADC Equivalent) MTD 24 28 No $ N/A N/A 29.40 28.11 27.78 25.22 28.94 26.23 26.74 24.32 26.51 25.29 23.28 26.53

% admissions from ED MTD 60.1% 60.2% No Varies N/A N/A 62.87% 58.26% 59.93% 53.99% 58.52% 56.34% 52.44% 54.19% 54.59% 53.02% 52.50% 56.09%

Appointment Lag - New (days) - Primary Care1,2 MTD 19 20 Yes $ 21 21 20 20 20 20 24 24 22 22 21 22 20 21

Appointment Lag - New (days) - Specialty Care1,2 MTD 32 36 No $ 21 21 35 34 30 32 30 32 35 36 33 35 32 33


Operations

Average Daily Census MTD 288.5 293.0 Yes # 291.7 292.4 297.3 310.9 289.7 278.6 284.8 283.0 276.5 287.3 296.3 289.7 299.6 290.2

Average Daily Census - Boarders MTD 28.4 30.9 No $ N/A N/A 36.0 28.8 21.0 17.1 23.9 25.4 21.3 25.7 28.7 31.3 28.5 26.1

Admissions MTD 21,205 21,284 Yes # 1,799 20,383 / 22,194 1,835 1,710 1,733 1,591 1,655 1,533 1,663 1,762 1,875 1,834 1,732 18,923

Outpatient Visits (KIR) 4 MTD 768,916 815,594 Yes # 71,829 796,544 / 862,635 70,016 67,601 66,753 75,813 72,717 62,434 68,211 73,763 70,782 74,653 66,259 769,001

OR Surgical Cases MTD 12,702 Yes # 1,012 12,925 / 13,914 1,060 1,007 1,048 1,160 1,159 1,098 1,192 1,183 1,131 1,209 1,078 12,325

Births MTD 3,319 3,335 Yes # 294 3,340 / 3,650 284 280 260 254 278 304 323 322 308 330 297 3,240

FTE/AOB (Adjusted Occupied Bed)3 MTD 7.61 7.22 Yes $ 7.37 7.34 7.12 6.81 7.53 7.39 7.22 7.52 7.93 7.62 7.82 7.62 7.71 7.48

Nursing Productivity1,3,4 MTD 101.81% 101.57% Yes # 100.00% 100.00% 101.02% 104.54% 102.96% 101.00% 100.98% 101.51% 100.40% 101.34% 102.05% 102.93% 103.15% 102.07%

Supply expense/APD (Adjusted Patient Day) MTD $990 $945 Yes $ $970 $981 $887 $899 $898 $981 $1,029 $955 $893 $1,023 $934 $1,083 $946 $958

UDS Users YTD 164,868 170,484 Yes # N/A 166,360 166,360 / 173,000 37,980 61,497 79,908 96,187 109,134 119,635 130,303 142,122 151,972 160,940 168,861 168,861


Quality/Safety/Service

Target Zero (Adverse events)3 MTD 172 158 No $ 11 131 / 142 13 6 15 16 9 7 12 14 18 18 9 137

Inpatient Falls per 1000 patient days3 MTD 2.82 2.13 No $ 1.92 1.92 2.18 1.91 2.35 2.96 2.77 2.63 3.77 2.68 2.50 2.98 2.61 2.67

OP Experience - Overall Provider Top Box (Primary Care) 1,3,4 3 MO 79.6 81.1 No # N/A 82.4 82.6 82.9 (prelim) 84.3 (prelim) 78.1 76.9 74.8 74.2 74.6 73.6 73.6 73.1 (prelim) 72.6 (prelim) 72.6 (prelim)

OP Experience - Overall Provider Top Box (Specialty Care) 1,3,4 3 MO 79.7 79.5 No # N/A 81.9 82.1 79.2 (prelim) 79.3 (prelim) 76.1 76.6 76.6 76.7 76.3 75.6 74.6 73.8 (prelim) 75.3 (prelim) 75.3 (prelim)

IP Experience - Overall Top Box 1,3 3 MO 77.6 81.5 No # N/A 80.0 80.1 82.4 83.1 80.7 78.1 78.0 79.4 76.6 77.8 76.9 79.4 (prelim) 78.8 (prelim) 78.8 (prelim)

Ambulatory Bundle Points YTD N/A 15 No # N/A 13.2 13 / 14 1 1 3 4 5 8 12 12 12 7 10 10

Operational Excellence

54

Social Determinants of Health

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Social Determinants of Health – 655 Broadway

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Social Determinants of Health – 655 Broadway

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655 Broadway Project

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• Shuttered former admin building on corner of DH Campus

• Sought developers for a project

• Tough parcel – parking, slope, etc

• Identified partnership with Denver Housing Authority (DHA)

• Low income senior housing

• DH will lease a floor from DHA – 14 units


59

• Interdisciplinary team evaluated appropriate population for placement

• Medically stable for discharge but significant barriers to discharge, e.g. homeless, precariously housed

• Need extra layer of support and sometimes home care services

• DH to cover cost of space and provide full time care manager


60

• Cost annually of leased space plus full time care manager ~ $160K/year

• Cost of hospitalization = $2,700 per day. ALOS could be 50 days = $1.8M (assuming we only place 14 in the first year)

• Note: what are potential problems with this calculation? What would skeptics say?


61

• This project eliminates waste while improving care

• Wastes: • Unnecessary utilization of inpatient services• Wasted vacant building space• Wasted/extended time to recovery for patient• Wasted staff time and talent

• Ties in with Operational Excellence initiatives: Patient Flow/Stewardship

• Whether for profit, government, or non-profit – this model is good for business

How to Start and What to do

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• Train a small cadre in PI method (lean six sigma etc)

• Organize around key initiatives – buy in from CEO and top exec leadership

• Regular metrics and review, steering team

• Detailed action plans

• Tie-in with performance review and/or comp

• Becomes part of the culture

Thank You!

Thank You!

Documents

Improvement is Good For Business. Waste is Not.€¦ · • Governments and non profits must generate operating income to maintain and grow infrastructure and keep up with administrative