Strategies for …

Removing Millions in Unnecessary Costs

John Byrnes, MD

Clinical Associate Professor MSU, College of Human Medicine

Founder & Sr. PartnerByrnes Healthcare Group

What’s Going On in Our Hospitals?

Findings supported by Classen and Leape. PAE: Preventable Adverse Events

440,000 Deaths per Year“PAEs account for “roughly

one-sixth of all deaths that

occur in the U.S. each year.”

Sources:))James,)J,)“New,)Evidence6Based)Estimate)

of)Patient)Harms)Associated)with)Hospital)Care,”)

Journal(of(Patient(Safety,)September)2013.H

H

–The Advisory Board Company, Sept. 24, 2013

“Medical Errors May Be the Country’s Third Leading Cause of Death”

Answer: High Reliability Organizations

A Culture of SAFETY

Used with permission, HDVCH, Spectrum Health

Errors Resulting in Patient Harm

Safety Culture Transformation + HRD

76%  reduction  at  2  years

Over  90%  reduction  at    

4  years

High

Safety Culture

Ignites Hospital TurnaroundBefore – mired in controversy and almost closed by the community

No harm events in over 835 days

Top 100 Hospital last three years in a row

–Joseph J. Fifer, FHFMA, CPA President & CEO, HFMA

“Quality and Safety (and their related process improvements) is the next frontier of cost

management.”

PROCESS IMPROVEMENTLean, Toyota, Six Sigma

Lean QI Initiative - CV Service Line

Cardiac Cath Lab

Savings = $6.7 million

On time startsThroughput & room turnoverOpen and unused supplies ($3M)Preference card variationNon indicated add-on proceduresNumber of stentsAppropriateness

Medication Administration Process

125 Process Steps Before < 25 Steps After

Disclaimer, AKA The Fine Print

All calculations performed by the Director of Decision Support, assorted financial analysts, and verified by a Chief Financial Officer.

No calculations performed by this doctor person.

$68,000,000

Clinical QI Can Remove $MILLIONS in Unnecessary Costs

IMPACT at One Hospital

Revenue$32 Million

Savings$36 Million

Total = $68 Million Hospital Margin $74 Million

Study  on  select  conditions  through  November,  2008;  Pediatrics,  ICUs,  Trauma  not  included.  

$32 Million Revenue Impact

❖ ABC Health P4P Plan $ 4,274,211

❖ XYZ P4P Plan 19,663,131

❖ CMS Market Basket Update* 8,107,477

❖ TOTAL $ 32,044,819

*Now  VBP  +  >50%  upside  

Eliminating ComplicationsSaved $36 M

Study  on  select  conditions  through  November,  2008;  Pediatrics,  ICUs,  Trauma  not  included.  

Average Costs of Common Complications

❖ Decubitus Ulcer $28,272

❖ Post-op Deep Wound Infection $27,814

❖ Clostridium Difficile Colitis $25,401

❖ Sepsis $23,451

❖ Reopen Surgical Site $19,442

❖ Venous Thrombosis $15,976

❖ Pulmonary Embolism $16,331

❖ UTI $ 9,637Richard  Fuller,  Elizabeth  McCullough,  Mona  Bao,  Richard  Averill,  Estimating  the  Costs  of    

Potentially  Preventable  Hospital  Acquired  Complications,  Health  Care  Finance  Review,  Summer,  2009,  30:17-­‐‑32

PCI Cost Opportunity ReportOver 50

Templates

The Role Finance Can Play in Saving $$$ on Reporting Systems

How you can help your clinical partners

❖ Use internal cost accounting system❖ Internal analysts build clinical profiles❖ Design model to quantitate savings❖ Perform cost opportunity analysis❖ Co-present results with CMO/CQO❖ Do it yourself with existing internal

resources

Strengthen your clinical reporting program by tossing your clinical reporting vendor

DVT $180,000

ARF $820,000

Abcess $75,000

Int. Obstruction $545,000

Acc. Op. Laceration $203,000

Resp. Failure $971,000

Wound Infection $260,000

TOTAL $3,054,000

Physician Leaders Save Money

A Quarter Time Physician Leader• Episode of Care: Colon Surgery

• 7 Preventable Complications

A small group of physician leaders can remove $ Millions in unnecessary costs

Hospital Acquired Infection RatesAdult Critical Care - 2008 to 2009

MRSA, Acinetobacter, Pseud/Sten/Serratia, and C. diff Infections

0

5

10

15

20

Jan 08 - Dec 08 Jan 09 - Dec 09

Infection Rate per 1000 Pt. Days

42% Decrease 126 Fewer Patients

126 x $14,000 = $1.8 M

Hospital Acquired Infection Rates - 2008 to 2009 Children’s Hospital

HDVCH HA MRSA, VRE, ESBL/Amp C, C. diff, and RSV

0

0.5

1

1.5

2

Jan 08 - Dec 08 Jan 09 - Dec 09

Infection Rate per 1000 Pt. Days

46% Decrease 40 Fewer Patients

Combined Results166 x $14,000 = $2.3 M

The Intervention Was ___________________

Preventing Readmissions - Total Cost of Care

Hysterectomy 6.7% to 3.8% $ 42,000

Hysterectomy CA 4.5% to 10.6% $ 153,000

Lumbar fusion 5.4% to 4.2% $ 830,000

Peds Chemo 9.9% to 8.3% $ 685,000

AMI 12.7% to 8.3% $2,085,000

PCI 8.2% to 5.3% $ 618,000

EP Ablation 4.1% to 3.3% $ 56,000

Cholecystectomy 6.9% to 3.9% $ 50,000

TOTAL $4,519,000

Clinical QI Can Remove $MILLIONS in Unnecessary Costs

Prevent Readmissions

Majority of Readmissions:1. Didn’t fill prescriptions2. Didn’t get timely follow-up3. Care coordination

Opportunity Analysis - 10 Years LaterClinical QI Can Remove $MILLIONS in Unnecessary Costs

$45,000,000 Remaining Opportunity

Opportunity Analysis

How Much Potential Savings (Waste)?❖ Small Multi-Hospital System❖ Observed to Expected Complication Rate❖ >2,000 Complications❖ >$60,000,000

Clinical QI Can Remove $MILLIONS in Unnecessary Costs

3 High-Impact Tools

Save LivesSave $

SAFETY - High-Reliability

Clinical QI Performance Improvement

$68,000,000

$60,000,000

$45,000,000

$4,500,000

$66,800,000

$3,054,000

$2,300,000

$6,700,000

Summary of Savings:

$ MillionsOne hospital: cost + additional revenueSmall hospital system - complicationsOpportunity after 10 years - one hospitalReadmissions preventedMalpractice claim impact of HRO programColon Surgery - 7 ComplicationsHospital Acquired Infections - one hospitalCath LabTOTAL $256,354,000

Key Points

❖ Part time physician leader ROI is +

❖ Data - you already have everything you need

❖ Copy the finance process

❖ One program - Cost, Quality, Safety, Efficiency

❖ Take a leadership position

❖ Biggest returns - Variation, complications, errors

Ask Your CMO/CQO

❖ Which complications have your targeted ?

❖ Have a list of high-volume complications (and their associated cost impact) in your pocket to start the conversation …

Everyday, Remember Why You’re There …They Entrust Us With Their Lives, Let’s Not Let Them Down !

Improving Quality & Safety Together

Resource Page: www.johnbyrnesmd.org/hrtcfos

John Byrnes MDTrainer, Consultant & Keynote Speaker

Founder, Sr. PartnerByrnes Healthcare Group

Phone 616-240-9686john@johnbyrnesmd.orgwww.johnbyrnesmd.org