Finding Bottom Line Improvement Opportunities in Healthcare

St. Francis Lean Six Sigma Belt Training 2010

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Finding Bottom Line Finding Bottom Line Finding Bottom Line Finding Bottom Line Improvement Improvement Improvement Improvement Opportunities in Opportunities in Opportunities in Opportunities in HealthcareHealthcareHealthcareHealthcare

A Lean 6σσσσ

production

Introducing…

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St. FrancisSt. FrancisSt. FrancisSt. FrancisA Division of the Sisters of St. Francis Health ServicesA Division of the Sisters of St. Francis Health ServicesA Division of the Sisters of St. Francis Health ServicesA Division of the Sisters of St. Francis Health Services

• A non-profit, full-service, tertiary care, 3 hospital system.• 520-bed system with 4,400 employees (3,200 FTE’s).• Medical staff of 700 in 48 specialties and sub-specialties. • HealthGrades Award for Clinical ExcellenceTM in 2006,

2005 and 2004, ranking it among the top 5 percent of all hospitals in the country for overall clinical performance.

• Launched Lean Six Sigma program in 2006.• Recognized as one of the nation's 100 Top Hospitals® by

Solucient in 2007.• Named one of the nation's 100 Top Hospitals® by

Thomson Reuters for 2008 and 2009.

Beech GroveIndianapolisMooresville

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Your PresenterYour PresenterYour PresenterYour Presenter

• Joe Swartz– Director, Business Transformation

– St. Francis Hospital and Health Centers

– Education• Electrical Engineering, Cleveland State U.

• MS, Management, Purdue U.– Krannert Scholar for academic excellence

– Experience• Six Sigma Black Belt, Honeywell

• Continuous Improvement Guide for 16 years

• 150+ continuous improvement (CI) projects

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This Program Will HighlightThis Program Will HighlightThis Program Will HighlightThis Program Will Highlight

• Identification of high margin services.

• Identification of cost drivers in healthcare.

• Identification of the value delivered.

• Ideas on enhancing value.

• A simple primer on quantifying cost savings and bottom line improvements.

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National Drivers National Drivers National Drivers National Drivers –––– Healthcare Costs Healthcare Costs Healthcare Costs Healthcare Costs Increasing Faster Than InflationIncreasing Faster Than InflationIncreasing Faster Than InflationIncreasing Faster Than Inflation

Source: CMS

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Drivers Drivers Drivers Drivers ---- National Healthcare PolicyNational Healthcare PolicyNational Healthcare PolicyNational Healthcare Policy

• Increased transparency.• Insurance reform.• Universal coverage.• Medical errors not paid for –

never events, returns within xx days.

• Pay for Performance (P4P)– Medicare Hospital Value-Based

Purchasing (VBP) Program.

• Bundled payments.

Picture Source: www.barackobama.com


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Drivers Drivers Drivers Drivers –––– The Situation We Find Ourselves In:The Situation We Find Ourselves In:The Situation We Find Ourselves In:The Situation We Find Ourselves In:

• Hospital costs increasing.

• Payments decreasing.

• Patients asking for better service, nicer facilities, longer hours, higher quality, lower prices, and greater value.

• Economy in downturn.

• Capital markets tightening up.

• Increased competition – outpatient centers taking large chunks of the high margin business.

• On the horizon? A devastating blow – all payments at Medicare levels or lower. D

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Added Situation at St. Francis:Added Situation at St. Francis:Added Situation at St. Francis:Added Situation at St. Francis:

• Physician incentives different than hospital.

• Must accept all patients, including indigent – morally obligated – our mission.

• Medicare represents ~ 50% of our business.

– If all our payers paid at Medicare rates we would be losing > $1M/month.

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2010 Strategic Plan2010 Strategic Plan2010 Strategic Plan2010 Strategic Plan

Maintain Financial Health• GOAL 1: Develop additional revenue to

ensure at least a 5% margin each year.

• GOAL 2: Focus on cost reduction to ensure at least a 5% margin each year.

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Typical Cost Reduction Target Areas:Typical Cost Reduction Target Areas:Typical Cost Reduction Target Areas:Typical Cost Reduction Target Areas:

• Clinical Quality / Safety.

• Staffing Productivity.

• Human Resources.

• Supply Chain.

• Clinical Resource Utilization.

– i.e., “National Priorities Partnership.”

• Growth.

• Capital.

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Internal Cost DriversInternal Cost DriversInternal Cost DriversInternal Cost Drivers

Insert a bar chart of costs

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TriTriTriTri----Level Focus AreasLevel Focus AreasLevel Focus AreasLevel Focus Areas

• Insert Tri-level chart.

– Small improvements – a few of the 2,800 last year.

– Medium sized improvement projects – a few of the hundred.

– Large improvement projects – a few of the dozen.


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Lean and Lean and Lean and Lean and KaizenKaizenKaizenKaizen

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Kaizen GrowthKaizen GrowthKaizen GrowthKaizen Growth

• Over 2,800 Kaizens in 2009.

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ValueValueValueValue

Costs

BenefitsValue =

Handout page 9

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Adding ValueAdding ValueAdding ValueAdding Value

Delivering Refrigerated Meds

Before After

Night shift sending up IV’s before doses are

due via tube system. RN’s calling for missing

doses. Meds that need to be refrigerated are

not always put in the refrigerator.

Night shift now hand delivers

IV’s for the shift directly to

nursing unit refrigerators at

the beginning of their shift.

The Effect

Meds that need refrigerated are put in nursing unit refrigerators. Less missing

doses, lowers the cost. Pharmacy not running out of tubes.

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What is Waste?What is Waste?What is Waste?What is Waste?

• Any activity that consumes resources but creates no value for the customer.

Handout page 16

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Supplies & Equipment ProjectSupplies & Equipment ProjectSupplies & Equipment ProjectSupplies & Equipment ProjectSpaghetti Diagram of PCA Pump SetupSpaghetti Diagram of PCA Pump SetupSpaghetti Diagram of PCA Pump SetupSpaghetti Diagram of PCA Pump Setup


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Daily Lab Summary Report Elimination

Before After

Every night a cumulative lab report for every inpatient would print on two different printers in the Beech Grove lab. An office assistant would assimilate these paper reports and then deliver them to each unit at Beech Grove. A courier would deliver them to the Indianapolis and Mooresville campuses. The unit secretary (or nurse) on every unit would file the reports into each patient’s chart. Most of the lab result that were on the cumulative lab report were already available in the computer.

The printing and distribution of the cumulative lab report has ceased, except for those reports that are not available electronic. Those ‘special reports’ that are not available electronically will continue to be available in a

paper version.

The Effect

Financial – 96,000 pieces of paper a month X 12 month @ .05¢ = $57,600/year. Safety – There is a decrease risk that reports will be placed in the wrong chart (decreased risk that patient will be treated based on the incorrect filing of the report). Soft savings – Saves time for the lab office assistant. Saves time for the unit secretary on each nursing unit.

Name Date Estimated Cost Savings

$57,600/year

Pre-op Bed

Before After

Pre-op beds made with top sheet

and bead spread. Had to be

unmade when bed taken to OR.

Bed made without bed spread and

top sheet ready for OR.

The Effect

Time saved making and unmaking the bed for housekeeping, decreased

linen waste and cost.

Waste of Processing More Than NeededWaste of Processing More Than NeededWaste of Processing More Than NeededWaste of Processing More Than Needed

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Patient ThroughputPatient ThroughputPatient ThroughputPatient Throughput

• A national problem – Emergency Department (ED) throughput and overcrowding.

• A patient safety issue.

• Need a streamlined process – door to door, starting in the ED.

• A hospital-wide system issue.

ED

Surgery

Doctor’sOffice

Critical Care Unit

Med/SurgUnit

DischargeHome, Rehab,ECF, Morgue

Start

End

Direct

HospitalHospitalHospitalHospital----wide Patient Flow (HWPF) Initiatives wide Patient Flow (HWPF) Initiatives wide Patient Flow (HWPF) Initiatives wide Patient Flow (HWPF) Initiatives 2010 Roadmap2010 Roadmap2010 Roadmap2010 Roadmap

EDDoor to Doc

EDDoc to Dispo

InpatientDepart to Admit

ED-CPEC Transfer (Dr. Shaikh,

Peck)

Bedside Reg.

(Thomas, Livelsberger)

Frequent Users

Program (Bagg)

Predictive Admitting

(Thompson, Carnagua)

Rapid Triage(UM)

(Heffner)

Report Cards(Kaufman,

Pease)

ED Compass

(Kaufman, Pearson)

Bedding in Hallways

(Holmes)

Bridging Orders

(Dr. G, Dr. Todd)

Bed Mgmt Team

(Moore, Jaynie)

SBARHandoff

(Pierce)

Pt PlacemtCoord.

(Thompson, Taylor)

Admission Nurses (McRoberts,

Holmes)

Inpatient Stay

D/C & Aftercare

Top 10 Protocols

(Eads)

ED-ECFTransfer

(Kolthoff,Dr. Chuck)

Physician Workflow

Chronic Care Mgmt (Dr.G, Dr.Larosa)

Concurrent Clinical

Care (Kolthoff, et al)

HWPF Steering

Committee

StrategicRoomTOT(TBD)

Hospitality Centers

(Bennett, Moore)

HWPF Team (Holmes)

PatientSatisfaction

(Frank, Walker)

PsychCare

(McRoberts)

ConsultTAT/Order

Sets(Byers, Atchison)

ProcessMapping

(Holmes)

End of Life Care

(Walthall, Quade)

ED Simulation

(Pearson)

Radiology TAT

(Mershon,Montgomery)

PainMgmt

(Montgomery.Ansel, Crane)

Discharge Teams (Bennett, Lobsiger)

VentMgmt

(Little,Paskins)

Admission Status (Kolthoff,Swift, Via)

OverallInitiatives

ATBSteward-

Ship(Roembke, Cox)

iCare forMedSurg(Thompson,

Pierce, Douhitt)

Team ER (Searles)

Inter-CampusPtTransport (Kolthoff, Dr. G.)

ED 2010 Projects HWPF Projects

Intra-CampusPtTransport

(Hunter)

Charting 4 Reimb.

(Tocco, Bohling, Bickel, Lewis)

Hip Fracture

(Linville, Moore, Taylor, Normal)

ATBTimeliness

(May, Baldwin, Taylor)

ED POSCollections

(Carnagua,Storm)

Obs.Unit

(McRoberts)

2010 Lab TAT(Montgomery,

Berner)

HWPF Dashboard

(Pearson)

EDDispo to Depart

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ED ALOS for All PatientsED ALOS for All PatientsED ALOS for All PatientsED ALOS for All PatientsFor the Indianapolis CampusFor the Indianapolis CampusFor the Indianapolis CampusFor the Indianapolis Campus

Month

IN ED All Visits LOS (minutes)

Jan-10Sep-09May-09Jan-09Sep-08May-08Jan-08

250

225

200

175

150

S 13.0256

R-Sq 41.1%

R-Sq(adj) 38.5%

Regression

95% CI

95% PI

IN ED All Visits Monthly Average LOS in Minutes

Correlation Coefficient:

r = 0.64. The

downward trend is

statistically significant

(p=0.001), accounting

for 41% of the total

variation in LOS.


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2009 ED2010 & HWPF ROI2009 ED2010 & HWPF ROI2009 ED2010 & HWPF ROI2009 ED2010 & HWPF ROI

Initiative / Project

Year 2009 Bottom Line Savings

Simplified Calculation

ED2010 & HWPF

2009 $ 720,000 Productivity improvement:

= (hrs saved * ave. hr. rate * 1.25)

3.16 hrs/pt-visit � 2.75 hrs/pt-visit, or a 14% reduction.

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Supply ChainSupply ChainSupply ChainSupply ChainManagementManagementManagementManagement

Waste of InventoryWaste of InventoryWaste of InventoryWaste of Inventory

Less Medication Waste

Before After

Low usage meds expiring in

pyxis. Sometimes max is #2 and

pocket is filled with #10 that will

most likely never be used.

Lower max amounts of low usage

meds in pyxis to 2 or 3. let tech’s

know not to overfill on meds

unless they know it’s a high usage

med.

The Effect

Hospital saves money with fewer meds in pyxis. Especially, low usage

drugs.

Lowered Albumin Usage

Before After

Albumin usage for CVSA for the period totaled 1552 units of 25% 100mL and 674 units of 5% 250mL for an average of 6.9 units per open heart case based on 323 surgeries during the same period.

Albumin usage for the period totaled 595 units of 25% 100mL and 350 units of 5% 250mL for an average of 2.4 units per open heart case based on 387 surgeries during the same period.

The Effect

A change in philosophy and approach was introduced. Volume replacement orders were changed on the post operative orders and the result has been dramatic with regard to cost savings. The overall effect on blood product savings for the healthcare system, although not measurable, per se, is thought to be great, as well.

Name Supervisor Date Cost Savings

$90,843 during this time. About $250-300 per open heart case.

Cardiology Cost ReductionCardiology Cost ReductionCardiology Cost ReductionCardiology Cost Reduction

Surgery Waste ReductionSurgery Waste ReductionSurgery Waste ReductionSurgery Waste ReductionBeech Grove Endoscopy Waste Savings

Before After

Bronchoscopy kits contained supplies that were

frequently not used and were discarded.

The Endoscopy staff unit reviewed the

contents of pre-packaged bronchoscopy

kits we receive from a local company.

The Effect

We were able to eliminate approximately 65% of the products, including a very large amount

of plastic. Therefore, in addition to some cost savings, we were able to make a significant

reduction in non-biodegradeable waste.

Name Supervisor Date Savings

65% less waste.

~$300/year.

Surgery Cost SavingsSurgery Cost SavingsSurgery Cost SavingsSurgery Cost Savings

Surgical Services Mooresville

Before After

Cases are usually pulled by the surgeons

preference card. Staff decided for all cases that

minimal suture would be opened on the field until

called for.

All preference cards updated but

still suture held until needed.

The Effect

Huge cost savings for department.

Name Supervisor Date Savings

$57,000


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Supply Chain ManagementSupply Chain ManagementSupply Chain ManagementSupply Chain ManagementOrthopedicsOrthopedicsOrthopedicsOrthopedics

• Business Case:

– We spend $11.6M/year in implantable orthopedic devices, plus $500K/yr in antibiotics / cements related to implantation.

– We intend to improve the management of the supply chain process.

– Targeting ~9%/yr savings, or ~$1M/yr in implant savings, $50K/yr in antibiotic / cement savings, and $20K/yr in reduced waste (out dates, wrong selections, open packs, wrong sizes, etc.).

– We also plan to begin preparing for upcoming Federal requirements for pricing transparency.

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• Only 2 of 20 hospitals are profitable in orthopedics.

– From a 2005 Bear Stearns Survey

Statistic Source: Sg2 and “Waldstreicher, Jonathen, Materials Management in Health Care, May 2005.

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CostsOrthopedic Total Hip Replacement

Non-OR

1%Direct cost minus

supplies

24%

OR Pref Card

Supply Costs

2%

Implant costs

43%

Indirect / Case

30%

In 5 years:

•Hips � 71%.

•Knees � 83%

35% rule of thumb.

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Opportunity (Dollars)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Sys

tem

Opportunity = $1,652,628

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Implant Wastes at MV (9-15-05 to 10-5-06)

$625.00$701.00$776.80$1,642.95$1,669.00$2,881.00

$8,153.80$10,346.50

$40,164.00

99%98%97%94%

92%88%

75%

60%

$-

$8,370

$16,740

$25,110

$33,480

$41,850

$50,220

$58,590

$66,960

Patient fit Wrong part

picked

Didn't trial Femur

cracked

Bleeding Cement

hardened

Overworked Dropped Box found

opened

Waste Category

Imp

lan

t C

ost

s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

n=29

Controllable

Waste Category

Imp

lan

t C

os

ts

Supply Chain ManagementSupply Chain ManagementSupply Chain ManagementSupply Chain ManagementOrthopedicsOrthopedicsOrthopedicsOrthopedics Implant WastesImplant WastesImplant WastesImplant Wastes(9/15/05 (9/15/05 (9/15/05 (9/15/05 –––– 10/5/06, 1 year & 3 weeks)10/5/06, 1 year & 3 weeks)10/5/06, 1 year & 3 weeks)10/5/06, 1 year & 3 weeks)

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New Product Introduction (NPI) process.New Product Introduction (NPI) process.New Product Introduction (NPI) process.New Product Introduction (NPI) process.

• Complete education with surgeons and staff.

• Policy.

• Vendor Packets.

• 72 hour notice prior to using a product rule.

• No charge code, no payments.

• Restart OR Value Analysis Committee.


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Vendor PolicyVendor PolicyVendor PolicyVendor Policy

• Enforce the sign in process.

• Enforce wearing the name badge.

• Enforce compliance with completing the vendor packet.

• Working on having a shared drive vendor file where you can look up information/safety fair completion on every vendor that has been to our system.

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HospitalHospitalHospitalHospital----wide Supply Chain Initiativeswide Supply Chain Initiativeswide Supply Chain Initiativeswide Supply Chain Initiatives

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Insert initiatives list here.

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GrowthGrowthGrowthGrowthD

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High Margin Services:High Margin Services:High Margin Services:High Margin Services:

• Cardiology

• Surgery

• Oncology

Ancillaries:

• Radiology

• Labs

• Pharmacy

Due to reduction in payments across all services, there will be increased competition for the higher margin services.

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RadiologyRadiologyRadiologyRadiology

Competing for Radiology Customers:

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Radiology Image PrintingRadiology Image PrintingRadiology Image PrintingRadiology Image Printing

• Before

–$1.39 per image.

• After

–$0.08 per image.


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Time Losers at the MR & CT ScannersTime Losers at the MR & CT ScannersTime Losers at the MR & CT ScannersTime Losers at the MR & CT Scanners

• Transportation delays

• Claustrophobic patients in MR– Meds

• Poor communication pathways– Registration errors

– Poor scheduling

– Incorrect procedure expectations

– Poor patient communication

• RT distracting activities

• Low staffing

• Coverage during evening hours and lunches

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RadiologyRadiologyRadiologyRadiology

Sch

ed

uli

ng

Refe

rrin

g p

hysic

ian

id

en

tifi

es n

eed

Pati

en

t arr

ives

Beg

in p

roced

ure

En

d p

roced

ure

Read

im

ag

e a

nd

dia

gn

ose

Tra

nscri

be r

ep

ort

Sig

n-o

ff r

ep

ort

Refe

rrin

g p

hysic

ian

receiv

es r

ep

ort

& im

ag

es

36 hrs 0.5 hrs CT=5 minMR=30 min

2 hrs 2 hrs 2 hrs 72 hrs

To

tal

Sy

ste

m C

ycle

Tim

e =

5.5

da

ys o

n a

ve

rag

e

Legend:Value-add timeBusiness NVANVA

Images Availablevia Internet-basedPACS

Report AvailableVia Internet &Via AutoFax

Montage of key images

STAT TAT 2-4 hrs(1-2/day/site)

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Massachusetts General HospitalMassachusetts General HospitalMassachusetts General HospitalMassachusetts General HospitalCT StudyCT StudyCT StudyCT Study

• Multiple technologists on a CT Scanner can improve patient throughput and profits.

Model Exams per

Hour

Exams per

Year

Annual Revenue

($ Millions)

Annual Cost

($ Millions)

Annual Profit

($ Millions)

1 Tech 2.3 10,750 3.225 0.538 2.687

2 Techs 4.3 20,212 6.063 1.011 5.052

3 Techs 5.5 26,000 7.800 1.300 6.500

Source: Journal of the American College of Radiology, Volume 5, Issue 2, Pages 119-125 (February 2008)

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IN-MR Machine Idle Times (Before & During Pre-Pilot)

0

5

10

15

20

25

30

35

40

Number of Back to Back Tests Observed

Min

ute

s o

f Id

le T

ime

Radiology PilotRadiology PilotRadiology PilotRadiology PilotTime Study Time Study Time Study Time Study –––– MR (IN)MR (IN)MR (IN)MR (IN)

Average Machine Idle Time Between Consecutive Tests

Without Radiology Assistant 15.04 Minutes

With Radiology Assistant 2.88 Minutes

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EHARTEHARTEHARTEHART

Competing for Cardiology Customers:

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Door to Balloon TimeDoor to Balloon TimeDoor to Balloon TimeDoor to Balloon Time

Patient A

rriv

es

at Hospita

l

Patie

nt Mov

ed

to R

ecove

ry

After:

Before:

(

(

Pain

Patient

Discharg

ed

(

(

Angio

plast

y

Proce

dure

0 Median = 113.5 minutes79 min during regular hours.

Angio

plast

y

Proce

dure

Patient A

rriv

es

at Hospita

l

Patie

nt Mov

ed

to R

ecove

ry

Patient

Discharg

ed

(

(

0

(

(

Pain

Median = 75.5 minutes45 minutes during regular hours


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EHARTEHARTEHARTEHART 2009 Lean Six Sigma Program ROI2009 Lean Six Sigma Program ROI2009 Lean Six Sigma Program ROI2009 Lean Six Sigma Program ROI

2007

2007

2008

2008

2009

2009

Year

$ 667,2382008 Kaizen

$ 428,132Surgery SCM

$ 1,600,000Ortho SCM

$ 160,000Radiology printing

$ 5,025,600Total

$ 1,510,2402009 Kaizen

Productivity improvement:

= (hrs saved * ave. hr. rate * 1.25)

3.16 hrs/pt-visit � 2.75 hrs/pt-visit, or a 14% reduction.

$ 720,000ED2010 & HWPF

Simplified Calculation2009 Savings

Initiative / Project

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Questions???Questions???Questions???Questions???

• Joe Swartz

Finding Bottom Line Improvement Opportunities in Healthcare

Documents

Transcript of Finding Bottom Line Improvement Opportunities in Healthcare