Hardwire Your Hospital for Sustainable Success: 4 Areas Where Hospitals Can Improve Performance Now
Razor-thin operating margins, rising costs and declining reimbursement have left hospitals with a critical need to improve quality and financial performance to achieve lasting success.
Four key areas present the greatest room for process improvement, according to Jeff Tennant, national director of revenue solutions for Leidos Health, and Steve Furry, founder and CEO of Catalyst Healthcare Advisors. During a June 12 webinar sponsored by Leidos Health and hosted by Becker's Hospital Review, Mr. Tennant and Mr. Furry named the four targets: workforce productivity, nonlabor supply chain efficiency, revenue cycle optimization and clinical effectiveness.
1. Workforce productivity
Workforce productivity is particularly difficult in the hospital industry, according to Mr. Tennant and Mr. Furry. Organizations can facilitate better productivity by scheduling staff to demand, or reassessing skill mix and workload volumes on a worker-by-worker basis.
"We don't think there's necessarily always reductions in all areas of the hospital or the health system," Mr. Furry clarified. "In fact, quite often we choose to improve productivity because we have high volume mixed with low staffing levels. It's not a matter of saying we need to reduce, reduce, reduce. We think you should validate the benchmarks against the reality of your organization's challenges, and only after that, target areas you think should be improved."
2. Nonlabor supply chain efficiency
Hospitals and health systems will likely find opportunities to improve operations by analyzing the cost and use of supplies and purchased services. Pharmaceutical, biomedical and telecommunication use — in addition to employee benefits and compensation processes — should be optimized to generate efficiencies.
Mr. Furry said one five-hospital academic health system in New England wanted to improve performance in its supply chain. His firm asked the health system to break down its primary areas of focus — such as clinical, pharmacy, and a one-time inventory reduction — and pair them with specific cost reduction targets. In doing so, the system drove highly directed change.
3. Revenue cycle optimization
Effective revenue cycle processes ensure hospitals and health systems dealing with dwindling reimbursement from government and commercial payers capture maximum reimbursement at the lowest possible cost.
Avoiding and managing claims denials is key to optimizing efficiency, Mr. Tennant told webinar attendees.
"Every denial, every write-off you can reverse and turn into a collection, you get two-fold that number back. You can turn $1 million worth of write-offs into $1 million worth of collection. That's a $2 million change in your bottom line," he said. "There's nowhere else within the healthcare continuum that you can make a change where you get double the impact."
Mr. Tennant shared how Leidos Health helped improve revenue cycle performance for one 900-bed public hospital in the Southeast. By narrowing key metrics like coding days and accounts receivables, Leidos Health helped the system improve revenue cycle by a value of more than $21 million.
4. Clinical Effectiveness
Clinical effectiveness reduces an organization's cost of clinical services, improves quality scores and creates more efficient workflows, all of which are necessary for a hospital's longevity.
Mr. Furry said organizations facing challenges providing effective clinical services, or challenges in any of the aforementioned areas, should approach it in two steps. The first step is an assessment of current operations to answer questions like, "What outcomes need improvement?" and, "How is referral management affecting clinical services?" Once an organization completes its assessment, Mr. Furry said it must develop a roadmap that prioritizes highest opportunity gains to build momentum.
"We coach people to tackle these four key areas simultaneously because of their interdependencies," he said. A holistic approach that changes processes, empowers staff and implements innovations will hardwire hospitals and health systems for sustainable success.