New Elevate the Data to Reach Resource, Revenue, and Cost … · 2016. 7. 21. · Beckman Coulter...
Transcript of New Elevate the Data to Reach Resource, Revenue, and Cost … · 2016. 7. 21. · Beckman Coulter...
Elevate the Data to Reach Resource,
Revenue, and Cost Reduction Goals
in the Clinical Laboratory
Jeff Myers, CPA
Vice President, Consulting
Chi Solutions, Inc. – An Accumen Company
Denise Irons, MT (ASCP)
Director of Laboratory Information Systems
Baystate Medical Center
July 28, 2016
Key Hospital Statistics
Key Hospital Statistics (Overall U.S)
Source: Moody's Investors Service, “U.S. Not-for-Profit Hospital 2014 ” report, September 2015.
4.6%
5.2%
9.6%
2.6%
Annual Operating Expense Growth Rate (Median)
Annual Operating Revenue Growth Rate (Median)
Operating Cash Flow Margin (Median)
Operating Margin (Median)
KEY RATIOS
Source: Kaiser State Health Facts, accessed in 2015 and based on 2013 data.
Note: Adjusted expenses per inpatient day included expenses incurred for both inpatient and outpatient care; inpatient days are
adjusted higher to reflect an estimate of the volume of outpatient services.
$2,289
$1,878
$1,791
Nonprofit Hospitals
State/Local Government Hospitals
For-Profit Hospitals
HOSPITAL ADJUSTED EXPENSES PER INPATIENT DAY – Average
Impact of Hospital Management System
Laboratory Industry Background
Medical Laboratory Industry – Overview
• The medical laboratory market is estimated at $73 billion today.
– The market peaked in 2012 at $76.1 billion.
• Laboratory testing is “mission critical.”
– 75% of all healthcare intervention requires lab data or
information.
– 80% of a hospital EMR is composed of lab data and
information.
Utilization of testing will be critical to the healthcare
delivery system in the U.S. in the future—focus on
redundant testing, appropriate testing, and earlier
diagnosis and treatment.
Source: G2 U.S. Clinical Laboratory and Pathology Testing 2013-2015: Market Analysis, Trends and Forecasts, Figures 1.1; Truven
Health Analytics; CMS Hospital Directory.
Test Volume by Laboratory Type
Source: G2 U.S. Clinical Laboratory and Pathology Testing 2013-2015: Market Analysis, Trends and Forecasts, Figure 1.4; Truven
Health Analytics; CMS CLIA Oscar Database.
Hospital 53.1%Independent
34.2%
POL7.4%
Other5.2%
LABORATORY INDUSTRY TEST VOLUME BY FACILITY TYPE 2012
Hospitals control the majority of the market.
Inpatient
51%
Outreach/
Outpatient
49%
$6.91 $2.80 $1.41 $0.82
$0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00
DIRECT COST/TOTAL TEST (AVERAGE)
Labor and Benefits/Total Test Supply Cost/Total Test
Reference Cost/Total Test Other Cost/Total Test
Direct Cost/Total Test = $11.94
Trend: Costs are increasing; reimbursement is decreasing!!
Benchmarking Metrics – Overall U.S. Average
Productivity and Supply Chain
$1
.50
$2.2
3
$4.3
7
$6.1
6
$6.4
5
$10
.80
$28
.2019.2
14.0
10.5
5.0 6.8
1.9 1.8
0.0
5.0
10.0
15.0
20.0
25.0
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00T
ests
/Ho
ur
Su
pp
ly C
ost
SUPPLY COST AND TESTS/HOUR BY LAB SECTION
Supply Cost Tests/Hour
Performance improvement occurs at the
department level!
Department Benchmarking Metrics
• Labor Expense – Payroll data for budget reconciliation:
– Payroll by job code.
– General ledger by cost center.
• Productivity – Tracked at the department (cost center) level:
– Payroll.
– LIS volume.
• Budget tracked bi-weekly with employee name and pay type
detail in order to increase visibility.
Data Outcome: Productivity metrics tracked at entity and
department level and compared to similar entities and prior
year performance!
Data Elements for Productivity Improvement
$21.3M Cumulative Volume Adjusted Savings; 31% Productivity Improvement
$9.48 $9.06 $8.85
$8.26 $7.75
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
2011 2012 2013 2014 2015
Labor & Benefits 3% Merit
Volume 4,619 4,317 4,797 5,230 5,839
Cost/Test Savings
vs. Baseline$0.42 $0.63 $1.22 $1.73
Annual Savings(4,317 x $0.42)
= $1.8M
(4,797 x $0.63)
= $3.0M
(5,230 x $1.22)
= $6.4M
(5,839 x $1.73)
= $10.1M$21.3M
Tests/Paid Hr 4.19 4.31 4.65 5.08 5.50
Productivity
Improvement3% 11% 21% 31% 31%
Case Study – Productivity
• Invoices and contract compendium for negotiation and
cost/benefit analysis.
– Volume tracked in order to monitor optimal performing
location (reference lab, central lab, or in-house).
– Cost per test tracked in order to monitor contract negotiation
efforts.
Supply Chain Management
$4.90
$4.19 $4.07 $3.80 $3.77
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
2011 2012 2013 2014 2015
SUPPLY CHAIN COST PER TEST
Supply Chain Cost per Test Inflation + Complexity
Volume 4,619 4,317 4,797 5,230 5,839
Cost/Test
Savings vs.
Baseline
$0.71 $0.83 $1.10 $1.13
**Annual
Savings
(4,317 x $0.71)
= $3.0M
(4,797 x $0.83)
= $4.0M
(5,230 x $1.10)
= $5.8M
(5,839 x $1.13)
= $6.6M$19.4M
% Reduction
(from baseline)15% 17% 22% 23% 23%
*11 month partnership fiscal year
**Savings inclusive of 2% - 4% inflation & complexity per year (14.7% cumulative)
Baseline• $19.4M Cumulative Volume
Adjusted Savings
• 23% Reduction from Baseline
• 88 Total Contracts Negotiated
• 24 Tests Repatriated
Key Successes
Case Study Supply Chain (Supplies and
Reference)
Supplier Project Scope Savings $ % Savings
Beckman Coulter DxH Hematology Annual Reagents & Service $212,000 48.8%
Siemens Siemens Advia Hematology contract extension $170,000 28.1%
Roche Molecular - New Cobas 4800 for MRSA (Cobas#1) $163,403 23.0%
Abbott Abbott iSTAT POC Agreement $155,470 43.2%
Instrumentation Labs Coagulation (contract includes SRS) $145,000 23.2%
Ortho Clinical Johnson & Johnson Health Care System: OCD Provue $142,794 22.4%
Cardinal Health 2014 Lab Distribution Agreement $130,000 5.4%
Cardinal Health 2012 Lab Distribution Agreement $125,000 5.0%
Siemens Siemens Centaur for Immuno @ SPL $115,000 33.8%
Roche Molecular - New kit pricing for MRSA/SA (Cobas #2) $107,500 19.6%
Diasorin Diasorin Liasion + Vitamin D (ALAB20130214-1) $83,450 37.8%
BD - Becton Dickson BD Safety Needles & Tubes $80,000 11.9%
Diasorin Renegotiation on Vitamin D & other tests $77,000 64.2%
Beckman Coulter Microbiology (ID & Sensitivity) $60,000 28.9%
Roche Inform II POC Meters, upgrade. Glucose testing $35,000 5.0%
Siemens Siemens Centaur XP (LB00054) $34,000 9.2%
Bio-Rad Bio-Rad go direct initiative $33,573 13.7%
Quidel Sofia Influenza Rapid Flu Testing kits $33,090 20.0%
BD - Becton Dickson Switch from Hardy to BD on Micro Loops $32,000 66.7%
Quidel Quidel go direct initiative (Sofia + all other products) $30,000 22.7%
BD - Becton Dickson Manual Micro $25,456 7.7%
Owens & Minor 2014 Lab Distribution Agreement $25,000 1.5%
Clinical Geonomics Enterix InSure Stool Test $20,863 24.1%
Beckman Coulter Beckman Immage (SPALA046-1) $20,000 22.5%
Beckman Coulter Beckman Coulter Urinalysis $17,000 14.2%
Roche Molecular - New Cobas 4800 for CTNG (Cobas#1) $16,592 20.6%
Abbott Abbott Diagnostics Architect @ SMH $9,168 4.0%
INOVA Contract extension DSX: Immunology Testing for SPL $8,150 5.0%
Hologic Hologic - FFN Cassettes: ALAB20140114-1 $7,500 3.0%
BD - Becton Dickson MGIT $7,255 20.5%
Alere Alere Roche Glucose informatics license $6,000 9.9%
Alere Alere Hemocron RALS POC software upgrade $4,530 32.9%
Beckman Coulter Roller 20 ESR (Sed Rate) $3,800 17.0%
BD - Becton Dickson Transition from Universal Viral Transport (UVT) to Cobas PCR Urine Kit$3,225 41.3%
Siemens MicroScan WalkAway for MicroBiology $3,054 1.5%
Case Study – Supply Contracts Negotiated
Supplier Project Scope Savings $ % Savings
San Diego Blood Bank SDBB contract extension $247,352 3.0%
ARUP ARUP Lab Services Agreement $247,000 20.2%
Ambry Genetics Ambry Genetics for SCMG (third party billing) $175,000 21.2%
San Diego Blood Bank SDBB contract extension $92,000 1.4%
VPL Transition from Clarient / ADJ Corp to Vantage Point Lab $88,000 11.0%
ARUP ARUP negotiations for SCMG volume increase $76,000 6.2%
ARUP ARUP negotiations for SCMG volume increase (round 2) $72,000 6.3%
ARUP ARUP negotiations on Micro PCR tests vs ACL Micro bid $71,500 5.5%
Stericycle Stericycle Service Contract $26,904 68.3%
VPL BCR/ABL testing; transition from ARUP to VPL $12,911 20.0%
Leica Purchase of x2 Leica Tissue Peloris processors $10,000 9.9%
Reference Lab and Blood Contracts Negotiated
• Patient Blood Management – Transfusion detail for physician
scorecards (LIS, HIS). Spend reduction and utilization (GL,
Patient Census). Outcomes data for DRG benchmarking (HIS).
• Transfusion detail tracked at unit and chart level with
responsible physician included. Data distilled into physician
scorecards and benchmarked by physician specialty.
• Spend and utilization tracked at specialty level in order to hone
in on areas of opportunity/improvement. Data is normalized for
swings in patient volume.
• Discharges DRGS used to benchmark and compare physicians
transfusing like patients.
Blood Utilization
Percent of RBC Units Transfused w/HgB <7
Percent of RBC Units Transfused / Adjusted Patient Discharges
Patient Blood Management (Patient Quality)
• 40% reduction in number of
patients transfused
(~1,000/mo. to ~600/mo.)
• 31% reduction in blood
products transfused
• 46% improvement in red blood
cells transfused with a Hgb
less than 7
Key Successes
$8.9 $8.0
$6.8 $6.2 $6.5
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
2011 2012 2013 2014 2015
BLOOD SPEND BY FY (IN $M)
Annual Blood Spend
$8.2M Cumulative Savings; 34% Savings per APD from Established Baseline
Year 2011 2012 2013 2014 2015 Total
Annual
Savings vs.
Baseline
$900K $2.1M $2.7M $2.5M $8.2M
Blood
Spend per
APD
$74.54 $65.49 $54.22 $49.02 $49.66 34%
Baseline
Patient Blood Management (Financial Savings)
• Quality and Service – Ordered test detail for TATs and quality
metrics (LIS).
• Ordered tests tracked with order, collect, in-lab, and result
timestamps in order to monitor all tests at accession level.
• Quality results ingested into data warehouse and normalized
across all hospitals within system.
• TU – Ordered test detail and supply costs for test reduction
analysis (LIS, GL, Purchasing).
• Test monitored by ordering physician, location, and specialty in
order to increase accountability and identify areas for education.
Quality and Service
The Cost of Quality$
C
OS
T
$$$
LOW QUALITY OF CONFORMANCE HIGH
Failure Cost
Prevention
and Appraisal
Cost
Total Quality Cost
Most labs are here
Where labs should be
1. Failure costs:
– The earlier it is detected, the less it costs to correct.
– With significant non-labor expense, when corrected, costs
will reduce.
– With significant labor expense, when corrected, productivity
will increase.
– Are commonly “hidden” costs in a laboratory’s budget—costs
are rarely quantified, especially on the quality report.
2. When cutting 10% from budget, not all departments are created
equal!
3. Increase in prevention and appraisal costs should result in
decreased failure costs.
Key Insights from Quality/Service
Revenue Cycle
Denise Irons – Baystate
Revenue Cycle
• Connectivity
• Front End
• Back End
• Keys to Growth
Elevate the Data to Reach Resource, Revenue, and Cost
Reduction Goals in the Clinical Laboratory
Jeff Myers, CPA
Vice President, Consulting
Chi Solutions, Inc.
(734) 662-6363, ext. 503
Denise Irons, MT (ASCP)
Director of Laboratory Information Systems
Baystate Medical Center
(413) 794-0980
Q&A
Thank you for attending!