Priorities Conference 2016

7-September-2016

Duncan Campbell Principal Consultant, Craigavon Enterprises Ltd.

Agile Health Systems: Aligning Financial, Operating and

Prioritization Processes in Real-Time to Drive Performance

Today’s Discussion

• Agile Financial Performance

• Testing an Integrated Performance Model

• Predictive And Real-time Analytics

• Integrated Operations Centres & the Air New Zealand Case Study

• Closing Remarks

Agile Financial Performance

Introduction

• How often have you heard how financially stressed are Canadian and other international healthcare systems are? – “If only there was more money, then the healthcare system would

improve”

Yet… • There is no direct correlation between health spending and health

outcomes

• This presentation is going to prove that agile financial performance is a multi-billion dollar opportunity

Siloes Kill…

… Even when painted by world renowned artists

Background

• Canada performs poorly on most international comparisons

– Ranks 10 out of 11 on Commonwealth Fund Index

• Siloes and special interests keep the health system “stuck” and makes it difficult to operate effectively

• Agile Financial Performance Model provides a significant opportunity for Canada - $1.1bn to $1.9bn

– Returns on investment high (10:1 payback observed)

– Model can be used at a hospital site level, a community of care level, a network of care providers, and even at a health authority level

• In times of economic uncertainty, more agile performance management needed

– With volatile commodity prices, it is important to have heightened agility to more quickly adapt to changes in the environment

Background (continued)

• Predictive and real-time analytics are the cornerstone for agile performance management

– In New Zealand revenue increased 0.6% while contracted costs increased by over 2%

– At Vancouver Coastal Health annual staffing growth of 3% reduced to zero growth while activity increased by 1.9%

• Integrated Operations Centre's are key enablers to break down siloes by harnessing predictive analytics, team based trade-off and decision making

• Funding reform is the most effective way break down siloes, and incentivize the right behaviour

– Block funding and rigid annual budgeting processes reinforce historical allocation processes and overly incentivize acute-care services

– A well constructed Pay-for-Performance funding approach is the fuel to accelerate changes

– Funding reform coupled with behavioral economics is the fuel for effective change

• Need a process to make faster disinvest and reinvest decisions – Program Budgeting Marginal Analysis (PBMA) is the leading approach used in Canada and internationally

Testing an Integrated Performance Model

What I Set Out To Test

Project set out to test an integrated performance model: •Predictive analytics and real-time decision support

– Focus of this presentation

•Funding approaches, and commissioning •Financial processes – budgeting and month end close

The Bottom line: Does the model presented improve quality and lower costs?

Funding “Rules of the

game” (“Nudging”)

Strategic imperatives and targets

Predictive Model

Scenario plan

Disinvest/ reinvest

Revenue P4P

Staffing Wait-times

Volumes Quality metrics OR and supplies

Forecast Weekly

Based on real-time Predictive

model

Monthly Financial ME +1

Disinvest/ reinvest

Non Case-Mix Funding

Admin and Overhead

Other Revenue/ Costs/Innovation

Agile Financial Performance (Model Tested by Project)

12

Predictive and Real-Time Analytics

Harnessing the Power of Real-Time Analytics

• Big Blue Matrix

• Big Data SPOR

• Real-time

– Diabetes Monitor

– Poly pharmacy

– Medical alerts

• Becomes valuable when linked to a service

Data Reporting/Analysis Monitoring Predictive Analytics

TIME

Insulin Pump

Continuous Glucose Monitor (CGM)

Real-Time Data Collection

Manual Data Input

Predictive Analytics Model: Type 1 Diabetes Management

Before:

Predictive Analytics Model: Type 1 Diabetes Management

After:

5

5.5

6

6.5

7

7.5

8

8.5

9

18/Jul/11 18/Jul/12 18/Jul/13 18/Jul/14

HbA1C

Began using predictive analytics techniques

Non-diabetic Range

Demand Forecasting in Action Decision in Real-Time

24

1 2 3 4 5 6 7

6

*

Overtime

Day

Open additional beds

7

28

Beds FTEs

24

6

Utilizing Demand Forecasting to Make Decisions 3 Days in Advance

1 2 3 4 5 6 7

*

Straight time

Open additional beds 28

7

Beds FTEs

Day

6

24 * Decision

24

6

Utilizing Demand Forecasting To Create Capacity & Plan Ahead To Exceed Discharge Targets

1 2 3 4 5 6 7

24

6

Baseline staffing

No additional beds 28

7

Beds FTEs

Day

28

7

Predictive Analytics are 98% Accurate & Avoid Over And Under Staffing

waste

Safely issue

The Goal Is To Have The Right Staffing For The Right Census And Acuity… Not Elevated (Waste)

And Not Insufficient (Safety)

20

Vancouver Coastal Health Workforce Efficiency Strategies Have Saved Hiring 600 FTE’s (Cumulative Per Annum) Resulting In Annual Savings Of

$76m In Year 1 And $146m In Year 2 Onward

FTE' Analysis

16000

17000

18000

19000

20000

FT

E's

Actual Projected

Actual 16083 16683 17452 18043 17932 17932

Projected 16083 16683 17452 18063 18695 19349

2005/6 2006/7 2007/8 2008/9 2009/10 2010/11

21

Integrated Operating Centres & the Air New Zealand Case Study

• Financial distress

• Turnaround- Siloes and lack of analytic were killing performance

• “The Hub”

• Visible Real time analytics – Co-locating functions

– All responsible for uptimes and performance

• Mission accomplished – still buying up analytics start-ups

The Air New Zealand Story

Air New Zealand’s IOC

• Integrated Operating Centre (IOC) is the mission control for a hospital, community of care, zone, or health authority with real-time data feeds shown on TV screens around the room

• Predicted demand vs. actual demand

• Emergency department performance and ambulance wait times

• Video feeds from Emergency Department, diagnostics, and other bottleneck areas

• Operating room efficiency, including surgery start and end times

• Staffing and scheduling; over/ understaffing staffing for census and acuity

• Real-time discharge performance

• Quality statistics, including length of stay, falls, readmission rates, staff injuries

• Hospitalist and clinical performance management

• Transition management – homecare, LTC other

How IOC’s Work

Closing Remarks

Closing Remarks

• Multi-Billion Dollar Opportunity

– Potential Impact: Alberta $300m to $600m

– Potential Impact: Canada $1.1bn to $1.9bn

• Implement predictive and real-time analytics first as it is the cornerstone of the agile performance model

• Implement Integrated Operations Centres – Ensure good change management and leadership processes

• Implement Case Mix funding as part of a funding reform program

• Implement Program Budget Marginal Analysis to disinvest and reinvest resources

• Build on lessons learned for Long term care funding in Alberta

• Improve Financial Processes – Month End Close to 1 day, and report to management and board in less than 5 days

– Replace the annual budget process with monthly/ quarterly rolling forecasts

• Funding reform has been a big driver in improving transparency – Stand alone funding agencies in Australia and New Zealand have given government treasuries more insight into what they get from health

spending

– Need to watch for unintended consequences, such as at Veterans Affairs, where wait lists were manipulated to ensure performance targets met, and Mid Staffordshire in England where poor quality and mortality was covered up.

– Health Systems with independent commissioning bodies are more effective than Ministry led commissioning and pay for performance, due to the insulation from political interference

• Behavioural Economics is the “last mile” to make the model work – Understanding behaviour in the context of the organization is key to shaping financial and other incentives

• There is no one organization that has all the elements of the Agile Performance Model

• There is an big opportunity for innovative healthcare organizations to implement and reap the rewards

Questions?