Cost Repositioning – an Institutional Case StudyCost Repositioning – an Institutional Case Study

Kandice Kottke-Marchant, MD, PhD

Chair, Robert J. Tomsich Pathology & Laboratory Medicine Institute

Cleveland Clinic

Cleveland Clinic’s Cost Repositioning ApproachCleveland Clinic’s Cost Repositioning Approach

Cost Repositioning Objectives

Cost Repositioning Objectives

• Provide value and ensure affordable care for patients

• Leading innovation in changing industry

• Transformational cost structure changes

• Balancing the shift: volume to value

Cost Repositioning2014 - 2016 Goals

* Implemented Savings(in millions)

$0

$200

$400

$600

$800

$1,000

100

270

200

75

35 10 10

140TBD

560

Clinical

Programs & Assets

Indirect

Non-Staff

Staff

Stewardship

Research

Education

Value Based Care

20% Overla

pTotal

Org ChartOrg ChartExecutive Check In

CEO, Chief of Staff, Chief Strategy Officer

Task ForcePhysician-Led with Members Representing:

• Physician Leadership• Administration• Nursing• Marketing & Human Resources

Workstreams

Project Management

OfficeFinance Human

ResourcesMarketing /

Communications

Structure

Full engagement & sponsorship

of CEO / Chief of StaffExecutive Leadership

Physician-Led Task Force

Workstreams

Cross-functional physician, nursing and administrative leadership team

Intentionally not aligned with org. structure to encourage transformative change

Workstreams• Clinical

• Indirect

• Non-Staff

• Staff

• Stewardship

• Research

• Education

• Value Based Care

Project PipelineProject PipelineIdea /

In-Process Approval Implemented

Clinical 35 17 4

Education 4 0 5

Indirect 23 teams* 18 0

Non-Staff 10 5 4

Research 33 1 0

Staff 2 0 2

Stewardship 27 18 8

VBC TBD 0 0

Total 134* 59 22

*Each Indirect team will present numerous ideas As of 4/15/14

Specific Pathology and Laboratory Medicine Drivers

for Cost Reduction

Specific Pathology and Laboratory Medicine Drivers

for Cost Reduction

LabCorp Quest Aetna Anthem Cigna MMO UHC

100% Medicare

45-80% of CMS

45-80% of CMS

200% of CMS

406% of CMS

147% of CMS

285% of CMS

452% of CMS*

* Reflects new lab pricing; UHC’s current price is 537% of CMS

Transparency and Decreased ReimbursementPathology & Lab Med

Cleveland Clinic

Additional DriversAdditional Drivers

• Devaluation- Biopsy codes- Cytopathology codes

• Revaluation- IHC codes

• Other changes - Molecular diagnostic billing codes

Robert J. Tomsich Pathology & Laboratory

Medicine Institute Approach

Robert J. Tomsich Pathology & Laboratory

Medicine Institute Approach

RT-PLM Cost Repositioning Summary

RT-PLM Cost Repositioning Summary

• Reduce cost per test by 30%• How?

- Assess current operations- Develop enterprise-wide transformational

strategies: optimize laboratory resources- Implement

201412%*

201510%

20168%

*2.6% from 2014 budget + 9.4% new in 2014

Major Projects Major Projects

• Department Reorganization • Administrative Reorganization • Lab consolidation • Pathology sub specialty consolidation• Allogen: transplant lab reorganization• Preanalytics optimization

Big Picture: How We Are Saving Big Picture: How We Are Saving Restructuring

16%

Test Consol-idation

13%

Allogen 11%

Sendouts12%

PathologySubspecialty

Consolidation14%

CCL 5%

Attrition 9%

Preanalytics 11%

IT 3%

Other 6%

Department and Administrative Reorganization

Department and Administrative Reorganization

Clinical Pathology

Dr. Hsi

Anatomic PathologyDr. Goldblum

MolecularPathology

Regional Pathology

Cleveland Clinic

Laboratories

Florida Dept. of

Pathology

Departments

Cen

ters

Robert J. Tomsich Pathology & Laboratory Medicine Institute 2013

Dr. Marchant, Inst. Chair/J Seestadt,

AdminD Helmick,

Finance Director

Laboratory Medicine

Dr. Hsi

MolecularPathology

PathologyDr. Goldblum

Preanalytic Services

Family Health Centers

Pathology Informatics

Biorepository

Research

Education

Internal Assessment & Compliance

Continuous Improvement

Test Development

Regional Pathology

Cleveland Clinic LaboratoriesDr. Bosler, Head

Dr. StagnoVice Chair of Operations

Enterprise Test Utilization/Consultation (NEW) Dr. Procop

Administrative RestructuringAdministrative Restructuring

1

1st Tier: Clinical

Operations

FORMER: 41 FTEREVISED: 23 FTE*

REDUCTIONS: 13 FTE

2nd Tier: Lab Med and

Preanalytics

FORMER: 45 FTEREVISED: 34 FTE

REDUCTIONS: 12 FTE

• Align management (regional hospitals)• Accountability• Supervisor + team

leader/coordinator

Non-Clinical Operations

FORMER: 25 FTEREVISED: 23 FTE

REDUCTIONS: 2 FTE

CP

AP

MP

RP

FHC

PreA

Lab Med

PreA

Path

• Lab Admin• Quality• Informatics• Finance• Education

Lab Consolidation Lab Consolidation

Lab Medicine Consolidation – Why?

• Increased efficiency and decreased cost/test• Enterprise subspecialty lab oversight • Standardize enterprise quality and

compliance • Enterprise-wide oversight of laboratory

operations and preanalytics• Consolidated pre-analytics will improve

quality and decrease errors

HHFairview Hospital

Lakewood Hospital

HH

Lutheran Hospital

HH

Ashtabula CMC

HH

Euclid Hospital

HH

Hillcrest Hospital

HH

South PointeHospital

HH

Marymount Hospital

HH

ClevelandClinic

HHMedina Hospital

Following the completion of lab and pathology consolidation, main campus will ultimately see about a

32% increase in billable tests.

Lab Consolidation Process Highlights

Lab Consolidation Process Highlights

• Enterprise Optimization Committee- Members from across the enterprise –

• Hospital presidents/COO• pathology and laboratory medicine (SME)• Nursing• IT, logistics, preanalytics, finance, quality

- Defining required service levels between main campus and regional hospitals.

- Scope: Daily draw times, standardization, TAT, couriers (q2hr), billing, communication

Lab Test Consolidation PlanLab Test Consolidation Plan

Chem/Heme Routine IPChem/Heme Daily DrawsBlood bank OP / Routine IP

FTEs Absorbed Savings

Sep 2013 - May 2014 46 $2.8M

Consolidation Plan Reductions 60 $3.6M

Total 106 $6.4M

Hospitals Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6

Marymount

Lutheran

Euclid

Medina

Lakewood

South Pointe

Hillcrest

Fairview*Marymount includes Marymount South facility for chemistry

FTEs (Sep 2013) - 375

FTEs (May 2014) - 328 313 292 274 268

Stage savings (in millions) 0.9$ 1.3$ 1.1$ 0.3$

Operational Stages

PILOT

NON

PILOT

BUSIEST

AFB / Mycology / Parasit (IP/OP)Chemistry OPHematology OPMicro OP / IP (Non-stat)

Pathology Consolidation - Why?

• All enterprise pathology specimens with subspecialty signout

• Improve histology and cytopathology processing efficiency: decrease cost/test

• Pathologist RVUs 80th percentile target• Standardize frozen section & cytology

rapid reads - ePathology

Pathology ConsolidationPathology Consolidation• Professional Subspecialty Service Model

- Frozen Section Coverage- Surgical Pathology & Cytopathology subspecialty plan - Credentialing

• Consolidate Technical Operations - Accessioning, specimen tracking, courier deliveries,

histology, cytology, billing, etc.

• Facility & Equipment Prerequisites- Main campus office space- Biopsy cell - Digital scanners and web cams- Scheduling system

AP Consolidation (Regional to Main)2013 Workload by Subspecialty

AP Consolidation (Regional to Main)2013 Workload by Subspecialty

• Subspec. Wt. FTE Need^• GYN 2.82• GI 2.06• Breast 1.06• SFT 0.92• Ortho 0.90• GU 0.77• HPB 0.66• ENT 0.44 • Derm 0.30• PUL 0.27• 10.20

• Cyto 2.15

• BM/Lymph 1.25 (EH)

Pilot Metrics• Lost specimen rate by site of origin • Critical Value Performance for test that are moving• # calls to AP pathologists for coverage (New for AP)• Clients Service performance metrics• % or # of STAT orders for tests that are moving• Length of stay metrics by hospital• TAT for top 10 tests by volume• AP Bx TAT • Logistics Measures

- % on time pick ups and % of scheduled pickups complete- Duration of routes and time spent at each site for pickup

• % that short notice Pathologists arrive within 60 minutes (New to Pathology)

• Revenue - Denial Rate performance

• Productivity Impact- Earned FTE vs. Actual FTE at pilot sites (Productivity Report)

RT-PLMI Cost Repositioning 2014 Timeline

Au

gu

st

May

Jun

e

July

Approvals granted

Dept + AdminRestructure First Pilot

Meetings with

Lutheran and

Marymount

First RT-PLMI Ent.

Opt. Meeting

Sep

tem

ber

Oct

ob

er

New Managers

Hired

2nd Tier Reorg

Pilots Begin

Dec

emb

er

PathologyConsoli-dation

Percentage of Savings = 9.4%Percentage of Savings = 9.4%

Education

Finance

Internal Audit & Control

Test Development

Informatics

CCL

Allogen

Pathology

PreAnalytics

Lab Medicine

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50%

0.04%

0.07%

0.11%

0.31%

0.34%

0.70%

1.01%

1.44%

1.46%

3.88%

Percentage of OpEx Savings by Area

Total 2014: 9.4% new in 2014 + 2.6% from 2014 budget

Challenges• Long-term, multi-year transformation

• Change throughout organization

• Aligning annual planning timeline / process

• Organizational engagement

• Communication to all stakeholders

• Setting service level expectations

“….the pathway to improving quality and safety is the same pathway to lowering cost, and that involves relentlessly taking waste and unnecessary variability out of our processes.”

Questions? Questions?