ExecutiveInsight July 2014 - Supply Chain cover story

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Features

Clinical, Peer-Reviewed28 Gearing Up for the Flu Season

What hospital executives need to know to keep staff safeBy Steven Russell, MD

31 6 Questions to Ask a Medical HomeIf your practice is considering adopting this model or in transition, critical issues must be addressed By Margaret E. O’Kane

34 Lab Business in an ACO Environment A growth strategy to capture more clinical laboratory work and execute with greater efficiency is revealedBy Megan Schmidt and David J. Molusis

36 Surviving Value-Based Purchasing in Healthcare

Connect your clinical and financial data for the best ROI By Bobbi Brown

16 CEO: An Optimized Supply Chain Achieving true value requires day-to-day accountability to process, patientsBy Ed Hisscock

18 COO: An Automated Supply Chain Process improvements for better materials management are identified By Paul Grenaldo and Paul Feicht

22 CFO: A Fiscally Sound Supply Chain Use analytics to strategically cut costsBy David Whitaker, Ken Hopkins and David Janothan

24 CIO: A Collaborative Supply ChainIntegrating systems for enterprise management is key By Ed Hardin

12 Cover Story A Streamlined Supply Chain Supply chain activities can be restructured to coordinate all facets of vendor management By Dennis Kikuno and Gary Johnson

CONTENTS EXECUTIVE INSIGHT I 2014 I JULY

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CONTENTS continued EXECUTIVE INSIGHT I 2014 I JULY

7 Editorial Supply Chain Strategies

9 Healthcare IT Health Systems Integration via an Enterprise Architecture ContextBy Kelly Summers

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38 Inpatient Fall Prevention A robust approach leads to significant reduction of inpatient falls with injuryBy Erin S. DuPree, MD

41 The Lab as a High Reliability Organization

Embrace 5 key concepts and embed them across your operationsBy Sam C. Terese

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www.advanceweb.com/executiveinsight I E X E C U T I V E I N S I G H T I 7

Consider this: Health reform is driving providers to seek savings in supply and purchased services costs, which,

depending on the perspective, could influ-ence as much as 50% of the total cost-of-care budget.

As the second largest area of expense for hospitals, supply chain is the new frontier for cost savings, but not in the traditional sense of purchasing products from suppli-ers at the lowest price.

In this issue of Executive Insight, we present expert opinion, advice and strate-gies designed to reveal:

An Optimized Supply Chain Notes CEO Ed Hisscock: “There is a grow-ing understanding that simply relying on GPOs for better pricing is yesterday’s strat-egy. Most health systems are at least start-ing to look at variability of costs, utilization and quality. Many are employing data ana-lytics at the hospital, service line, unit and clinician levels. Some are elevating the val-ue analysis process, utilizing comparative effectiveness research to ensure new prod-ucts are really more cost effective.

“All of these strategies and many others have begun to have an impact, but my in-teractions with health systems tell me they often aren’t enough to achieve true value from the supply chain. Fully optimizing sup-ply chain management across a health sys-tem requires accountability to the work of change and, mostly importantly, to the ulti-mate end-user of services—our patients.”

A Fiscally Sound Supply Chain “Cutting or controlling costs is a top initiative for nearly every hospital CEO

and CFO,” write authors David Whitaker, Ken Hopkins and David Janotha. “While nearly all healthcare organizations will continue to look for ways to cut cost of care for years to come, agile organizations will also look for ways to cut administra-tive and operational costs. Performance management solutions serve as a great way to bring efficiency and reduce costs associated with budgeting, planning, and reporting, in addition to forecasting and more strategic activities.”

An Automated Supply Chain “Healthcare executives are now turning to a greater area of potential savings – waste within their supply chain processes and business transactions, specifically those re-lated to materials management,” reveal Paul Grenaldo and Paul Feicht. “When one com-pares healthcare materials management operations to those in other industries, such as the retail and automotive sectors, it is immediately apparent that healthcare’s processes are generally immature and very costly. Much of the cost and waste is direct-ly attributed to lack of automation, visibility and data accuracy throughout the procure-to-pay process.”

Employing new strategies should ultimately reveal a streamlined supply chain—one that is struc-tured to coordinate all facets of vendor management.

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EDITORIAL ADVISORY BOARD

JOSHUA ADLER, MD

CMO, UCSF Medical CenterSan Francisco, CA

ALLEN BUTCHERCFO, Camden Clark Memorial HospitalParkersburg, WV

EDMUND E. COLLINS, MBA, CPHIMSVice President and CIOMartin Memorial Health SystemsStuart, FL

FRANK CORVINOPresident and CEOGreenwich HospitalGreenwich, CT

SUSAN L. DAVIS, EDD, RNPresident and CEO, St. Vincent’s Medical Center/St. Vincent’s Health ServicesBridgeport, CT

COLE EDMONSON, DNP, RN, FACHE, NEA-BCVice President, Patient Care Services and CNOTexas Health Presbyterian HospitalDallas, TX

NEAL GANGULY, CHCIO, FHIMSSVice President and CIOJFK Health SystemEdison, NJ

JOHNNY KUOCOO, Gracie Square HospitalNew York, NY

ED MARXSenior Vice President and CIOTexas Health Resources Arlington, TX

DAN MORISSETTECFO, Stanford Hospital & ClinicsPalo Alto, CA

LYNNE MYERSPresident and CEO, Agrace HospiceCareMadison, WI

LISA ROWEN, DNSC, RN, FAANCNO and Senior Vice President of Patient Care Services, University of Maryland Medical CenterBaltimore, MD

AMIR DAN RUBINPresident and CEO, Stanford Hospitals and ClinicsStanford, CA

SUE SCHADE, FCHIME, FHIMSSCIO, University of Michigan Hospitals and Health CentersAnn Arbor, MI

CHRISTINE SCHUSTER, MBA, RNPresident and CEO, Emerson Health SystemConcord, MA

NANCY TEMPLIN, CPACFO, All Children’s Hospital, St. Petersburg, FL

DEBORAH ZASTOCKI, EDM, DNP, CNAA, NEA-BC, FACHEPresident and CEO, Chilton Memorial HospitalPompton Plains, NJ

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Although relatively new to the provider side of healthcare, I have been actively engaged in life sciences for over 20 years leading information technology organizations within the med-ical device and pharmaceutical industries. The most significant difference I have witnessed is the lack of a formalization of good IT practices across all technology domains.

Over the last five years or so, the hospital and care delivery industry has been thrust into a much more sophisticated tech-nology landscape. With the fed-eral mandates and incentives offered by the ONC with Mean-ingful Use dollars, many of our colleagues aggressively pursued sophisticated EMR, patient/bed management and technically complex bio-med solutions.

This rush for technology deployments in many cases has not considered the aging and antiquat-ed existing hospital infrastructure. Without a comprehensive enterprise wide architecture and engineering function, organizations are set up for disappointment in their solutions.

The biggest challenge this industry faces is en-gineering without an end state in mind. If one applies that premise to an EMR selection process and ultimate deployment, is one looking out 1-3 years asking:

n What information is required?n How will this EMR ultimately integrate with

other technologies? n What is the level of systems interoperability

required?

To illustrate the issue of a lack of architecture and engineering rigor, consider the evolution of the Winchester House, an analogy for failed sys-tem implementations. The Winchester Mystery House is a building that began construction in 1884. Under the owner’s day-to-day guidance, its “from-the-ground-up” construction proceed-ed around the clock, without interruption, until her death on Sept. 5, 1922, at which time work immediately ceased.

This is the house that has stairways to no-where; there are doors that are too small or lead

Healthcare IT is sponsored by the College of Health Informa-tion Management Executives (CHIME). Contact CHIME at www.cio-chime.comKelly Summers, CHCIO, is CIO, Maricopa Integrated Health System in Phoenix, Ariz.

HEALTHCARE ITBy Kelly Summers

Health Systems Integration via an Enterprise Architecture Context

ArchitectureDomains

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FIG. 1 - ARCHITECTURE INTEGRATION

The biggest challenge this industry faces is engineering without an end state in mind.


method for managing require-ments; and guidelines on tools for architecture development.

If you continue to apply these principles against an integration landscape, that vision looks like that shown in Fig. 1.

Within the Maricopa Inte-grated Health System, we’re applying formalized practices to accelerate our integration capabilities in the areas of:

n Connectivity and Adaptersn Transformationn Orchestration (routing/flow)n Data Quality (validation)n Metadata Managementn Messaging Warehousen Security (authentication, authorization, integrity, availability)n Quality of Servicen Manage File Transfern Master Data Management n Infrastructure consolidation

with the ultimate objective of accelerating our Integration

Maturity Curve (Fig. 2).In support of these objectives, we’ve devel-

oped IT architectural and engineering guiding principles, including technology life cycle man-agement forecasts. Simplification of a complex environment is a priority.

We must begin to employ proven IT indus-try architecture, engineering, and integration techniques that heretofore may not have been utilized within the majority of the healthcare industry space. The overall costs of implemen-tations, the imperative need for high ROIs, and most importantly the “mission critical” nature of these systems and their impact on the future of improving patient care and increasing oper-ational efficiencies make the use of these tech-niques absolutely mandatory in the future of healthcare IT.

nowhere and windows that look into other parts of the house. How many of us can apply this analogy to an ERP or EMR project?

To contain and prevent such obvious disasters from occurring, we must educate and inform our constituents that IT has an obligation to en-sure that the solution being deployed will meet the needs of enterprise. This is accomplished via formalized IT practices, specifically IT architec-ture, engineering, software development life cy-cles (SDLCs) and ITIL (Information Technology Infrastructure Library) techniques.

The application of established frameworks has been used successfully in other industries. The TOGAF®1 (The Open Group Architecture Framework) Architecture Development Meth-od or (ADM) offers a great method to align the various architecture components, ensuring a robust and enduring solution. It is one ap-proach to develop an enterprise architecture. It is designed to address an enterprise’s business and IT needs by providing a set of architecture views (business, data, application, and tech-nology); a set of recommended deliverables; a

ON THE WEBBe sure to review all of our Healthcare IT columns at www.advanceweb.com/execu-tiveinsight.

HEALTHCARE IT

We must begin to employ proven IT industry architec-ture, engineering, and integration techniques that heretofore may not have been utilized within the majority of the healthcare indus-try space.

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Having just learned about the final HIPAA Om-nibus Rule, the compliance team at Torrance Memorial Medical Center (Torrance Memori-

al) was looking for ways to achieve business associate (BA) compliance by the September 2013 and 2014 milestone dates. The new rule expanded the defini-tion of a BA and mandated that hospitals provide oversight and retain signed business associate agree-ments (BAAs) for every vendor that creates, receives, maintains, or transmits protected health information on the providers’ behalf.

The compliance team immediately recognized the magnitude. Those hospitals that fail to comply

COVER STORY


with the Omnibus Rule could face significant civil and criminal penalties if audited by the U.S. Department of Health & Human Services Of-fice for Civil Rights (OCR). Furthermore, OCR announced that provider audits would begin as early as fall of 2013, with a mere 20-day window for hospitals to respond. Although the OCR audits did not occur in 2013 and were resched-uled to commence in fall 2014, the urgency and importance of preparing the organization to be in compliance to the new requirements and to keep their patients’ health information secure re-mained a great priority.

Complying with the expanded BA require-ment in the Omnibus Rule is a formidable un-dertaking for any hospital, including Torrance Memorial, a 400-bed independent hospital in the Los Angeles area. The three-person com-pliance team quickly realized that part of the

COVER STORY

An enterprise-wide approach to collecting and storing vendor data provides a best practice in en-suring small teams can streamline multiple supply chain processes to accomplish multiple tasks.

challenge at Torrance Memorial, as with many other hospitals, was the sheer amount of work to be completed by the small team to successful-ly identify and classify vendors as BA vendors.

TAKING STEPS TO STREAMLINEFor the Torrance Memorial compliance team, the first step toward BA compliance was to supplement the team by adding a partner with technology and the knowledge to do the unusu-al one-time work and build the ongoing process and workflows for a scaled up compliance man-agement process. The work included reformat-ting their AP vendor file for compliance pur-poses. This required vetting all current vendors using in-depth knowledge of BA definitions and completing initial evaluations of all vendors for BA risk. The vendors were then categorized into three groups: definitely not BAs, potential BAs, or need more information.

Torrance Memorial had a BAA on file for many of its known BA vendors; however, an ad-ditional 700 of the hospital’s vendors were iden-tified as having BA characteristics per the Omni-bus Rule, and therefore required further review by Torrance Memorial. Those vendors were sent a survey to confirm their BA status. The sur-veying and the task of managing responses was handled by their partner, allowing the hospital’s compliance team to focus on the key work of de-termining BA status and manage the work with speed and scale.

Torrance Memorial’s goal was nothing less than to have 100 percent compliance by the September 2014 deadline set by HHS to fully comply with the updated Omnibus Rule. Yet the compliance team did not stop there. They also worked with their BA partner and their IT department to add a vendor portal to the hospital’s website, so that all new ven-dors would be registered and the company infor-mation captured and screened for OIG and state sanctions, diversity status, and BA risk. Existing vendors would be registered in the same way.

The vendor portal also ensured that all new vendors could be quickly on-boarded with a minimum amount of effort from the compli-ance and supply chain departments. The entire process takes place online through a dedicated application and includes the ability to check for vendor exclusions. If the vendor confirms the BA status as part of the registration, then a signed BAA is requested as per the Omnibus Rule.

Lastly, Torrance Memorial adopted a contract


COVER STORY

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management solution to ensure vendor contracts were stored in a central reposi-tory and were accessible and visible to the compliance team. Previously vendor con-tracts were archived in multiple locations and departments, which made it difficult for the compliance team to review con-tracts to determine if they were current and that terms and conditions were imple-mented per the contract.

This enterprise-wide approach to col-lecting and storing vendor data provides a best practice in ensuring small teams can streamline multiple supply chain process-es to accomplish multiple tasks.

REAPING THE BENEFITSWith a compliance staff of only three, it is not surprising that one of the main benefits of automating Torrance Memorial’s BA, contracting and on-boarding processes is that the team is now free to concentrate on other mission-critical tasks, including re-imbursement initiatives. In addition, Tor-rance Memorial has realized several other benefits related to risk management.

First, because the compliance team has vetted and identified BA status across the entire vendor population, it is assured that every BA vendor has a current BAA on file while they simultaneously pursue non-compliant vendors.

Second, the team feels confident all guidelines for BA compliance have been met, so it is prepared for any future audits of its compliance status.

The final HIPAA Omnibus Rule is viewed by many as a way to hold health-care organizations accountable for their vendors’ actions in regard to protected health information. As such, BA non-com-pliance holds consequences for hospitals ranging from hefty fines to possible crimi-nal prosecution, and of course sizable pub-lic image problems should a HIPAA data breach occur. Although compliance with the expanded HIPAA data security and BA vendor requirements is a challenge for any hospital, Torrance Memorial illustrates how a proactive and centralized vendor management strategy can achieve regula-tory compliance, streamline work process-es and do it with speed and scale.

ON THE WEBWant to learn 3 keys to unlocking true value in vendor contracts? Read “Supply Chain Strategies” at www.advanceweb.com/executiveinsight.



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R

A ll across the country, health reform is driving providers to seek savings in sup-ply and purchased services costs, which,

depending on the perspective, influence 20-50% of the total cost-of-care budget. There is a grow-ing understanding that simply relying on GPOs for better pricing is yesterday’s strategy. Most health systems are at least starting to look at vari-ability of costs, utilization and quality. Many are employing data analytics at the hospital, service line, unit and clinician levels. Some are elevating the value analysis process, utilizing comparative effectiveness research to ensure new products are really more cost effective.


Ed Hisscock is the co-founder and CEO of Optimé Supply Chain, Inc.

CEO PERSPECTIVE

An OptimizedSupply Chain Achieving true value requires day-to-day accountability to process, patients By Ed Hisscock

PROCESS RIGOR All of these strategies and many oth-ers have begun to have an impact, but my interactions with health sys-tems tell me they often aren’t enough

to achieve true value from the supply chain. Fully optimizing supply chain man-

agement across a health system requires ac-countability to the work of change and, mostly

importantly, to the ultimate end-user of services—our patients. This is really an issue of what I call process rigor – the day-to-day follow-through with the systems we employ to ensure we achieve efficiencies across a system of care.

For example, we spend tens of millions of dollars on information technology, but barely scratch the surface of its potential. Many infor-mation systems don’t communicate with one another; an integrated delivery network may have multiple patient records systems. Materials management information systems are not linked to financial systems. Contract management of-ten involves paper records housed in a dozen different file cabinets and desk drawers. Inven-tory expires unused due to lack of visibility to the product dating, which often times exists in the


were quickly documented and the machine was purchased.

The supply chain leader was stunned. What he did not know was that for several months Carla’s family had been taking turns driving their grand-mother to her bone scan appointment at a hospital 60 miles away. The challenge changed Carla’s re-lationship — not to a fictional patient, but to her own grandmother. That relationship having been established, the resulting benefits to the organiza-tion were swift and lasting, as was the way in which Carla framed her work. She no longer viewed her job as transactional. She was serving the commu-nity of patients who received care at “her” IDN.

THE END GOAL The healthcare supply chain differs from every other supply chain in one fundamental way: It is not always centered on relevance for the cus-tomer, the patient. And if this isn’t corrected, we will not come through reform unscathed. It can’t just be about cost savings; we have to see our end goal as safer, higher quality and, yes, more cost-effective care.

We strive, for example, to increase electron-ic transactions (efficiency), but ignore taxono-my standards that make the supply chain safer for the customer. We motivate improvements in systems and technology so we can purchase more products at a faster rate (effectiveness), but we can’t determine if medical devices have been recalled.

I like this quote from Vince Lombardi: “The only place success comes before work is in the dictionary.” Accountability to the patient and to process rigor requires the right systems, hard work and personal commitment.

In a reformed health system, supply chain can no longer just be about products and price. Like all other departments, it needs to bust out of its silo and become a strategic lead-er of the much-needed transformation to val-ue-based care.

product bar code. Rigor requires leadership. My company built a

strategic sourcing workflow application for Hen-ry Ford Health System in Detroit that enabled better oversight of project status and savings. In addition to allowing the health system a full view of the entire contract cycle, the solution facilitates individual accountability for savings. Naturally, we think it is a great app, but it took a strong leader in James O’Connor, Henry Ford’s vice president of Supply Chain Management, to drive its highest use within the organization. Henry Ford achieves over 4% savings in annual supply and purchased services spending and a

15:1 return per labor dollar spent. We’ve sold the same application to others and,

sadly, several are collecting dust. Maybe this was good for us from a profit perspective, but wrong in terms of a health system’s accountability to stakeholders and patients.

ATTITUDE, PERFORMANCE Process rigor extends down to the individual, often with spectacular results. I once observed a supply chain staffer named Carla, who was an 18-year employee for an IDN in the Midwest. While Carla performed her task in a workwom-an-like fashion, she was not truly engaged with the organization’s mission. In an effort to boost her performance, her supply chain leader chal-lenged her to deliver enough documented sav-ings so the organization could purchase a bone densitometry unit, which at the moment was outside of the budget for that fiscal year. After being given the challenge, Carla’s work ethic and focus changed drastically, the necessary savings

In a reformed health system, supply chain can no longer just be about prod-ucts and price. It needs to bust out of its silo and become a strategic leader of the much-needed transformation to value-based care.

ON THE WEBMore information on optimizing the medication supply chain to reduce costs can be found at www.advanceweb.com/executiveinsight. Search “Perpetual Inventory Strategies Take Center Stage.”



on patient experience and care.As the second largest area of ex-

pense for hospitals, supply chain is the new frontier for cost savings, but not in the traditional sense of pur-

chasing products from suppliers at the lowest price. There is only limited savings

that can be achieved through this strategy. Healthcare executives are now turning to a

greater area of potential savings – waste within their supply chain processes and business trans-actions, specifically those related to materials management.

When one compares healthcare materials management operations to those in other indus-tries, such as the retail and automotive sectors, it is immediately apparent that healthcare’s pro-cesses are generally immature and very costly. Much of the cost and waste is directly attributed to lack of automation, visibility and data accura-cy throughout the procure-to-pay process.

PROCESS AUTOMATIONThe gold standard in healthcare materials man-agement is to achieve the so-called “perfect order,” which describes when a purchase SC

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An AutomatedSupply Chain Process improvements for better materials management are identified By Paul Grenaldo and Paul Feicht

Paul Grenaldo is COO, Doc-tors Community Hospital.

Paul Feicht is senior vice president, Customer Opera-tions, GHX.

COO PERSPECTIVE

W ith the signing of the Patient Protec-tion and Affordable Care Act, hospital and healthcare system executives face

the reality of reduced reimbursements, and, as a result, are trying to find ways to deliver high quality patient care in a more efficient, cost-ef-fective manner.

A healthcare organization’s largest expense is its people. Labor costs consume, on average, 50% of revenue. For years healthcare executives have found ways to bring down the expense of labor, from consolidation of practices to streamlining processes, but there is only so much trimming that can be done before it has a negative impact

Full risk capitation contracting is an arrangement based on

an agreed upon percentage of the healthcare premium for a designated payer population.

In 2013 Stryker Sustainability Solutions helped hospitals and ambulatory surgery centers save more than $255M in supply expenses and divert approximately 8.9M lbs. of waste from landfi lls. Is your facility realizing the dramatic savings reprocessing can offer? Contact a Stryker Sustainability Solutions representative today.

sustainability.stryker.com1.888.888.3433

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order (PO) is processed electronically (from order to payment) without human intervention and without errors on the first attempt. But the perfect order has remained elusive for most healthcare organizations because many still rely on manual processes, such as manual data entry and orders placed with suppliers via phone, fax or email. In turn, providers with manual process-es cannot receive electronic, automated trans-actions from their suppliers, such as purchase order acknowledgements (POAs), backorder notifications and invoices.

A fully automated, electronic procure-to-pay process enables a healthcare organization to achieve hard and soft dollar savings by stream-lining processes, minimizing order discrepancies and invoice exceptions, and the rework required to address them. It also facilitates timely supplier payments to capitalize on early pay discounts, and increases accuracy to ensure the right prod-ucts are purchased at the right times at the right prices. Consider that the processing costs for an order sent electronically costs 70-80% less than a manual order.1

Recognizing the value of automation, the materials management team at Doctors Com-munity Hospital, a 219-bed facility located in Lanham, Maryland, partnered with GHX to increase the number of suppliers with which it transacts electronic POs by 123% (from 43 to 96 suppliers) from Q2 2012 to Q1 2014. During that same time period, the organization significantly improved invoice automation as well, increasing the number of suppliers with which it transacts electronic invoices by 388% (from eight to 39 suppliers).

INCREASING VISIBILITY, CONTROL OVER CONTRACTSHealthcare organizations work hard to negoti-ate contracts with their suppliers but many do not have the capability to ensure they are paying the negotiated product pricing during the pro-cure-to-pay process. One major issue is that ma-terials management teams cannot keep up with the ongoing and frequent changes to contract data in the healthcare marketplace. Each GPO is estimated to make as many as 30,000 changes to contract data each month, with larger GPOs making more than 1 million changes to con-tract data each year. It is virtually impossible for

a healthcare organization to manually keep up with this high volume of data churn.

Furthermore, when contract price discrepan-cies occur during the procure-to-pay process, such as a misalignment between the product price in a PO versus an invoice, most organiza-tions must still manually research and reconcile the correct contract price, searching through contracts stored as electronic documents or pa-per files, or visiting their GPO or supplier web-sites in an attempt to confirm a price.

Doctors Community Hospital has auto-mated its contract management process using a GHX solution that enables it to store all of its contracts (both GPO and local) in a single electronic repository. The solution performs a three-way price match between the PO, POA and contract price at the time an order is placed to help ensure the right product is purchased at the right price.

In just two months, Doctors Community Hospital achieved close to $100,000 in hard-dol-lar savings by ensuring it was paying the negoti-ated price for items on contract. Furthermore, because the materials management team has vis-ibility into all of its contracts in a central location, the team spends less time manually researching contract status and price information. This time has been reallocated to value-added activities, such as evaluating contracts for tier discounts, rebates and other savings opportunities.

DRIVING DATA ACCURACYAutomation in processing transactions and in managing contracts drives data accuracy by min-imizing the risks associated with manual data entry and rework. This facilitates an efficient, cost-effective procure-to-pay process and offers healthcare organizations timely and reliable data on which to base their business decisions.

A significant benefit of transaction and con-tract management automation is that it provides healthcare organizations the ability to quickly identify and address data errors and issues, then correct them within their systems to prevent future discrepancies. Research has shown that when an organization’s processes are highly au-tomated, efficiencies are optimized and data is accurate, it can reclaim up to 12% of its supply chain costs.

Having clean and accurate data within the

COO PERSPECTIVE

As the second largest area of expense for hos-pitals, supply chain is the new frontier for cost savings, but not in the tradition-al sense of pur-chasing products from suppliers at the lowest price.

ON THE WEBHealthcare is a dynamic arena of rising costs, high-tech advancement, medical breakthroughs and evolving public policy. Learn how bank partnerships can opti-mize cash flow and land top physicians by read-ing, “Creating Business Partners With Rising Healthcare Costs” at www.advanceweb.com/executiveinsight.




materials management information system (MMIS) has far-reach-ing consequences throughout an organization beyond the supply chain. When product data contains the correct descriptions and information, such as size and unit of measure, a hospital can better manage its inventory and ensure clinicians have the products they need when they need them.

Initiatives including the U.S. Food and Drug Administration’s (FDA) Unique Device Identification (UDI) rule will further en-hance the accuracy of product data within the healthcare supply chain. The final UDI rule, published on Sept. 24, 2013, requires medical device manufacturers selling products in the U.S. to assign and label their products with a unique device identifier (UDI) and provide additional data on those products to a Global UDI data-base (GUDID).

If healthcare organizations adopt the use of UDIs within their internal systems and processes, and in their interactions with business partners, this initiative has the potential to improve the quality of patient care by better facilitating adverse event report-ing and recall management and enhance operational performance by enabling accurate product identification in materials manage-

ment, inventory management, finance, patient billing and other business functions.

STRATEGIC VALUE Materials management is an area that can have a significant im-pact on an organization’s operations and bottom line. Materials management can also have a positive influence on patient care by improving the timeliness and accuracy of product procurement so that clinicians have what they need to best care for their patients.

While healthcare still lags behind other industries when it comes to supply chain processes, organizations such as Doctors Community Hospital understand the strategic value of materi-als management and are reaping the benefits of automation, data accuracy and visibility. As healthcare organizations face cuts in reimbursement, they have no choice but to turn their attention to driving out costs and waste—and materials management is one of the last great frontiers for savings.

ReferenceIndustry average savings calculated from weighted averages for 120 hospitals.

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of other services including primary care, physician offices, psychiatric units and rehabilitation units. In re-sponse to the CEO and CFO’s cost cutting initiative, our organization’s finance team stepped up to the chal-lenge to help reduce costs across the

organization. At the time, the finance team was relying on a legacy process of

cumbersome stand-alone spreadsheets for budgeting and planning that wasn’t meeting its needs. The process was laborious for budget contributors and finance alike and sometimes lacked the accuracy required. The finance team addressed the issue by spear-heading a project to re-design the budgeting and planning process to improve both efficiency and effectiveness.

Finance’s response was to procure a fully-in-tegrated budgeting, reporting and analytics platform to streamline budgeting processes and improve response times to financial and opera-tional inquiries. Norman Regional Health Sys-tem partnered with Axiom EPM in early 2011 to implement strategies, technology and improved processes in an effort to cut costs by accomplish-ing three objectives:

n Streamline budgeting process and reduce time spent by budget contributors

n Reduce costs associated with budgeting


David Whitaker, FACHE, is president and CEO, Norman Regional Health System.

Ken Hopkins is CFO, Norman Regional Health System.

David Janotha is industry vice president, Healthcare Axiom EPM.

C utting or controlling costs is a top initiative for nearly every hospital CEO and CFO. However, while the majority of the health-

care industry chatter in the last couple of years has centered on cutting the cost of care, little discussion has taken place with regard to cutting administrative and operational costs not asso-ciated with the delivery of care. As the impact of 2010 healthcare reform legislation was be-coming clear, Norman Regional Health System’s executive leadership launched an initiative to optimize financial performance by strategically cutting organizational costs not associated with delivery of care.

Based in south central Oklahoma, Norman Regional Health System has multiple acute care facilities with 500+ beds, in addition to a range

CFO PERSPECTIVE

A Fiscally SoundSupply Chain Use analytics to strategically cut costs By David Whitaker, Ken Hopkins and David Janotha

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penses within minutes, reducing time required to maintain and update detailed schedules. In addition to budgeting and reporting, Norman Regional has leveraged the tool to get a better understanding of costs and profitability within key service lines. This has proven beneficial to the organization in identifying and tracking ar-eas that need further attention.

Like most healthcare organizations, the fi-nance team supports departments across the organization by providing data for decision making. In addition to the weekly and monthly reports they routinely prepare on a scheduled basis, they respond to ad hoc inquiries relat-ed to financial and operational issues. With its previous solution, they manually consolidated data in spreadsheets and created reports from

scratch each time. Moving to a true performance management system eliminated all of the man-ual effort. Ongoing reports are set-up once by the finance team, then automated. For ad hoc requests, the finance team can easily import and consolidate multiple data sources into a single repository and create custom reports right in the platform within minutes. These closed-loop management reporting capabilities have elimi-nated the manual processes of integrating data, report writing and report distribution, saving hundreds of hours and leaving finance more time to focus on analysis to support decision making and leveraging opportunities for improvement.

CLOUD SOLUTION REDUCES IT AND CAPITAL COSTSChoosing to deploy the performance manage-ment system on the cloud eliminated IT over-head costs associated with maintaining and up-grading hardware and software needed to run the solution.

While nearly all healthcare organizations will continue to look for ways to cut cost of care for years to come, agile organizations will also look for ways to cut administrative and operation-al costs. Performance management solutions serve as a great way to bring efficiency and re-duce costs associated with budgeting, planning, and reporting, in addition to forecasting and more strategic activities.

n Improve response times to financial and oper-ational inquiries that may identify other cost savings

These objectives were achieved by imple-menting improved budgeting and planning pro-cesses that leverage performance management solutions. To truly streamline the budgeting and planning process and reduce associated costs,

the organization understood that they needed the proper tools to support the new process to minimize time from budget contributors outside of finance. They also needed to establish work-flow and approvals through the finance team to maintain control of the process and maximize analytical efforts.

EFFICIENCY DRIVES TIME AND COST SAVINGSUnder the new process, the finance team estab-lishes the workflow process, budget contributors are notified, then they simply populate a work-sheet for their area of budget responsibility. Upon submittal, that information is automatically saved, business logic is applied systematically and each department’s budget is consolidated with other budget contributor’s information. In the past, the finance team had to manually audit and consoli-date each budget submission so this new process has improved accuracy and reduced the labor hours from both budget contributors and the fi-nance team. Since implementing the new software and new processes, we’ve reduced the time spent contributing to and preparing budgets by 20%.

New capabilities also resulted in time savings and improved accuracy in some specific areas. We now budget for revenue by payor class so contractual estimates take less time and are more accurate. Additionally, they can easily create de-tailed comparison reports for all revenue and ex-

Performance management solutions serve as a great way to bring efficiency and reduce costs as-sociated with budgeting, planning, and reporting, in addition to forecasting and more strategic activities.

ON THE WEBAdditional revenue-gen-erating, cost-cutting tips can be found within our white papers section at http://healthcare-execu-tive-insight.advanceweb.com/resourcecenter/whitepapers.aspx


dation in the industry. The interfaces needed to successfully integrate dis-parate systems are out there but can be both time-consuming and costly to implement. Even organizations with a single, integrated system have

their challenges when it comes to in-formation management. While the EMR

system at Christus Health does integrate financial management capabilities, it is a very

basic system with limited supply chain capabili-ties. But that is perhaps the strength of the sys-tem—its simplicity. Extracting data, at least the data that is collected, is relatively easy.

COST, QUALITY AND OUTCOMESFor Christus, there have been two concurrent approaches that have made an impact on main-taining a strong supply chain. First, estimating the total cost of ownership of key supplies, par-ticularly equipment, has been an evolving skill of our professionals. While we still have a ways to go before we have captured all the variables of the equation, our thought leadership in conjunc-tion with how we use data has positioned us well.

Second, remaining rabidly clinically centric and highly collaborative with our suppliers has served to create a unique environment. Our cli-nicians know that Supply Chain Management is there to manage the knowledge and the process

W hile the incorporation of integrated sys-tems has had a positive impact on the provider community, the information

provided by these technologies has been largely clinical. In the current financial and operational climate, organizations that can most readily uti-lize data derived from their systems and are able to share that information between stakeholders will stay one step ahead of the curve. Collabora-tion and communication across the board not only allow the staff to remain as efficient as possi-ble, but entire healthcare systems as well.

Truth be told, the impact of the electronic medical record (EMR) systems on the supply chain have been relatively limited to date, espe-cially between facilities with different systems, which is commonly the case due to the consoli-

A CollaborativeSupply ChainIntegrating systems for enterprise management is key By Ed Hardin

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CIO PERSPECTIVE

Ed Hardin is system vice president, supply chain management at Christus Health.

E X E C U T I V E I N S I G H T I 25

to ensure clinicians make fact-based decisions about the quality, outcomes and efficacy of product utilization. Perhaps more impor-tantly, our clinicians know that ultimately the decisions are theirs to make and that they will be held accountable for making them. In turn, we work with our suppliers to ensure they can articulate the clinical value and differentiators of their products. Our suppliers know that they can no longer say their products are the best, they have to prove it and we assist in this effort by creating opportu-nities to pilot their products. At the end of the day, our clinicians have what they need to make the right clinical decisions and they do so with information that Supply Chain Management has gar-

nered through collaboration with its vendor community.

SUPPLIER RELATIONSHIP MANAGEMENTTo that end, the second approach as it relates to collaboration with our suppliers is not built simply on being polite and easy to work with, but from establishing infrastructures that force a productive, open and honest relationship. My organization uses the opinions of our staff along with the information provided by our systems to support how we determine the good business partners from the bad.

Specifically, one very visible way in which we have disrupted the industry is with the formation of our Partner Advisory Council, which has served to elevate the most strategic and collaborative of our vendor relationships in such a way that we are able to do more with less. That is, we view our best suppliers as extensions of our supply chain team. As such, our business relationship with these 25 or so members is best described as a partnership, thus the name-sake for the Council. Most importantly, members of the Coun-cil are determined through a vendor segmentation and balanced score card approach—both of which strongly rely on our ability to extract data from our systems. We rely on our data to help support a meritocracy within our vendor community and ultimately lead to positive changes in their performance and mutual expectations but, in some unfortunate instances, our data can also inform us of which vendors we need to counsel or remove entirely from doing business with us.

Remaining rabidly clinically centric and highly collaborative with our suppliers has served to create a unique environment.

ON THE WEBFor related content, enter “Supply Chain Management” in the keyword search box at www.advanceweb.com/executiveinsight.

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VNA Solutions: LearnMore About the NextEvolution of ImagingAn interview with Chris Tomlinson, MBA, CRA, and Jon Hamdorf

F or healthcare organizations aiming to improve how they manage, access and store clinical content and images, a ven-dor-neutral archive (VNA) is a cost-effective and efficient way

to do so. For some organizations, this transition could prove to be daunting, especially in the goal to preserve data and bring eco-nomic and clinical value to the organization. Studies show that the adoption of VNAs will continue to grow during the next three years. In fact, IHS Medical Enterprise Data Storage has been mea-suring VNA growth since 2011, and a recent report estimates that VNA sales will continue to increase more than 200% by 2017.

One health system that made the decision to move to a VNA is The Children’s Hospital of Philadelphia (CHOP), and the move has proved successful. As an early adopter of this technology, the hospital embarked on this process in 2009—starting with their radiology department. They are now in the process of deploying the VNA in other departments, most recently in cardiology. In this Q&A, Chris Tomlinson, senior director of radiology and executive director of Radiology Associates at CHOP and Jon Hamdorf, di-rector of global VNA solutions at Perceptive Software, discuss the ultimate benefits of a move to implementing a VNA.

Q: PRIOR TO IMPLEMENTATION, WHAT WERE SOME OF THE OBSTACLES CHOP FACED WITH THEIR DATA?

Chris Tomlinson (CT): There were many information silos that existed within the clinical areas, and we were not able to leverage patient data longitudinally. All patient images were individual and separate—i.e., cardiology, non-radiology, ultrasounds, etc.

Q: FROM PERSPECTIVE SOFTWARE’S VIEW-POINT, WHAT WERE CHOP’S MAIN CLINICAL OBSTACLES?

Jon Hamdorf (JH): CHOP had silos of storage in different depart-ments that were underutilized, as Chris mentioned. Everyone was buying their own storage, and there was only about a 20% utili-zation rate across each department. With a potential move to a

VNA, the hospital would be able to store everything under the in-formation systems (IS) department and would be able to purchase storage in increments for the entire organization instead of making multiple purchases—allowing for better negotiations, contracts and optimized business plans.

Q: SINCE THE MOVE IN 2009 WITH RADIOLOGY, WHAT HAVE BEEN THE CLINICAL AND ECO-NOMIC BENEFITS?

CT: Economically, within a five-year period since 2009, we were able to save $2.8 million just in radiology. Additionally, the clinical benefits—the ability to leverage content—have been a huge value. And it is not only for the areas producing the images, but for the clinicians using the images and the IS department managing the infrastructure. Now all these stakeholders can go to one enterprise view to see patient images across the continuum of care regard-less of where the images were acquired. You also have one place to store data and link to the electronic medical records. For CHOP, the VNA provides a unique way for clinical areas and IS to partner to create a win-win situation.

Q: WERE THERE ANY INTERNAL CHALLENGES PRIOR TO AND FOLLOWING IMPLEMENTA-TION, AND HOW WERE THESE ADDRESSED?

CT: You have to have buy-in from the IS department and from all the clinical areas. You also need to have or acquire the technical resources to be able to administer a system that crosses many clinical disciplines.

Following implementation, I think it makes sense to form a solid infrastructure and governance model to help staff deal with chal-lenges that may arise. At CHOP, I co-founded, along with one of the directors in IS, an enterprise imaging governance committee. The committee’s purpose is to make sure the big users of imaging —those who consume and order it—are represented along with the producers of images—areas such as radiology and cardiology. The idea is to bring these groups together to ensure we stay with a single governance model and to safeguard against new information silos.

The committee addresses issues that may impact the existing in-frastructure. For instance, at CHOP, our content management sys-tem and VNA initially did not include operating room video. This is an example of new data types that the committee is able to make universal decisions about and where and how the data is stored in the system.

Q: WHAT WOULD YOU SAY ARE THE MAIN DRIVING FORCES BEHIND THE SHIFT TO VNA IMPLEMENTATIONS?

JH: Healthcare leaders have to grapple with clinical, operational, and financial issues. The move to a VNA brings sustained benefits to all three of these areas. A VNA allows the elimination of costly storage silos and interfaces while enhancing imaging workflow and archiving. Its ability to store and allow access to all images and oth-er content at the point of need, directly from the EMR, increases physician collaboration and enables improved care.

26 SPONSORED CONTENT BY PERCEPTIVE SOFTWARE

To learn more about Perceptive Acuo VNA, visit www.perceptivesoftware.com/healthcare.

JANE DOE



nature of the illness, focusing on flu in the fall. With the introduction of the avian flu pandem-ic in 2009, though, providers and patients alike learned what flu specialists had long known: In-fluenza can occur throughout the year.1 Even as spring heralds the traditional end of flu season, the pre-season starts in summer. And it starts with prevention.

PREVENTION 21st century researchers have an intimate un-derstanding of the flu virus and, as such, have an equally clear method of flu prevention. Gone are the finger-crossing days of high-dose vitamins and homeopathic remedies as our only immu-nologic guardians at the gate.2,3 Modern-day vac-cines offer multiple approaches for protection; the data on their effectiveness in preventing in-fluenza is robust. One only has to look back four years to see the proof of prevention. Between 2010 and 2012, children immunized against the flu reduced their risk of pediatric intensive care admissions by 75% compared to their un-im-munized classmates. Between 2011 and 2012, investigators noted a 71% reduction in hospital-izations among all adults immunized against the flu. And in perhaps the most compelling data of effective prevention, when pregnant patients re-ceived the flu vaccine any time before delivery, they reduced the chance of their infants being hospitalized with the flu by 92%.4

In many ways, the seasonal flu vaccine is the culmination of surveillance year-round. Each year, the protective coat of antigens that sur-rounds the influenza virus undergoes subtle changes, allowing it to escape the notice of our immune systems. Like a sports jersey redesigned in the off season, the drift of antigens that coat the flu virus can surprise the unsuspecting im-mune system, even as the viral players wearing that jersey are essentially the same. In contrast to subtle drifts, tectonic shifts of antigens are akin to the virus being traded to a new team, effec-tively blindsiding the immune system in an un-recognized jersey, thereby setting the stage for a pandemic.5 By studying the trends of drifting vi-ral “jerseys” across the globe each year, research-ers anticipate which virus will reach our shores during the flu season.

FLU STRAINS At a minimum, the flu vaccines train our bod-ies to recognize the colors of three separate

Seasonal flu does not discriminate. Like any self-respecting infection, it preys on humans least prepared to fight it off. But

unlike many vaccine-preventable illnesses im-munized against in childhood, seasonal flu re-quires constant vigilance, renewed each year. Influenza is as likely to be found in a board room as a boarding house. It will sneak through nurs-eries and nursing homes with equal ease, leaving an unmistakable path of cough, congestion, and muscle aches that last a week or more. Healthy hosts of the flu become homebound, waiting for the fever to break. When influenza knocks on the door of those with chronic illnesses, though, the results can be devastating.

Many people tend to emphasize the seasonal

peerreviewed

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INFLUENZA

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Steven Russell, MD, is a double board-certified (internal medicine and pediatrics) lead physician at UAB Moody Clinic, and assistant professor at the UAB School of Medicine.

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strains of flu, two from team A and one from team B. Some manufacturers have added recog-nition of a second B strain to their vaccine, effec-tively building antibodies to four types of flu in a “quadrivalent” vaccine.

Whether offering protection against three strains or four, the seasonal flu vaccine is pack-aged in a variety of ways to meet the many needs of our patients. Traditional methods of grow-ing flu vaccines in egg cultures can rarely cause problems with patients who experience severe egg allergies, so some manufacturers offer egg-free vaccines. Older adults may need a stronger dose of antigen to boost their immune system, so some manufacturers offer “high-dose” vaccines for those over 65 years of age. Now the develop-ment of a child-friendly vaccine masquerading as a nasal spray offers equal protection for kids and adults without having to endure the shot.

But as any sports enthusiast can attest, the expectations of spring training are not always realized in the post-season. Likewise during flu season, the viral antigens we thought we would see may not match up to the reality of circu-lating strains. When that happens, a mismatch can occur between the vaccine and the virus, decreasing the effectiveness of our protection. Indeed, even some who stood in line early to get their vaccine can end up with the flu. For those unlucky enough to get the vaccine and the flu, the cases tend to be milder and end sooner than if they had not been vaccinated at all. In certain circumstances, when the risks are high and the exposure is certain, a prescription for pills can offer additional prevention as well.

THE SEARCH FOR ALTERNATIVESThe search for other ways to prevent the flu continues. Investigators around the globe have studied various vitamin cocktails and herbal sup-plements to boost the immune system and pre-vent the flu. However, rigorous scrutiny of those results remains disappointing.6 Vaccine prevent-able illnesses are, in the end, best prevented by vaccines. To be sure, the vaccine effectiveness is not perfect. In a mid-season study of how well we are doing at preventing the flu with current vac-cines, the Centers for Disease Control and Pre-vention estimated the 2013-2014 vaccine was ef-fective at preventing the flu 61% of the time.7 This is not perfect, but not significantly different from the vaccine effectiveness of previous flu seasons.

In our office, the biggest hurdle to acceptance

of the flu vaccine is the concern that it will cause the flu itself. Nothing could be farther from the truth. Just as one cannot get manhandled by a mannequin wearing the visiting team’s uniform, neither can the isolated viral antigens of the shot cause illness. The minor symptoms one may ex-perience after immunization is, in fact, a good sign, revealing the symptoms of an immune sys-tem preparing itself for a future viral onslaught. Once that is understood, most patients are will-ing to follow me down the road to improved health through prevention.8,9

SPREAD PREVENTIONWhen influenza introduces itself to your hospi-tal, as surely it will, prevention takes on a new urgency. The flu vaccine is now recommended for all of us, and prevention starts with encour-aging everyone to get it. But for those already diagnosed with the flu, prevention of spreading it involves staying home for at least 24 hours af-ter their fever resolves. Those remaining at work should employ lessons learned in kindergarten: Cover your cough. Wash your hands. Avoid rub-bing your eye. Even these simple measures have been time tested to slow the spread of illness.

Seasonal flu does not discriminate, but pa-tients can. By planning for prevention now, we can be prepared for the urgent debut of influenza during its season.

References1. Fineberg HV. Pandemic preparedness and response – Lessons from the H1N1 Influenza of 2009. New Engl J Med. 2014;370:1335-42.2. Rees JR, et al. Vitamin D3 supplementation and upper re-spiratory tract infections in a randomized, controlled trial. Clin Infect Dis 2013 Nov;57(10):1384-92.3. Mathie RT, et al. Homeopathic oscillococcinum for pre-venting and treating influenza and influenza-like illness. Co-chrane Database Sys Rev. 2012 Dec 12;12:CD001957.4. http://www.cdc.gov/flu/about/qa/vaccineeffect.htm (ac-cessed June 2, 2014)5. American Academy of Pediatrics. Red Book 29th Ed.: 2012 Report on the Committee of Infectious Disease. P 440.6. Wong LY. A herbal formula for prevention of influen-za-like syndrome: A double-blind randomized clincal trial. Chin J Integr Med 2013. 19(4): 253-59.7. Flannery B, et al. Interim estimates of 2013-2014 seasonal influenza vaccine effectiveness – United States, February 2014. MMWR. 2014; 63 (07): 137-142.8. Van der Wouden JC, et al. “Preventing Influenza: An overview of systematic reviews.” Respiratory Medicine 2005:99,1341-1349.9. Committee on Infectious Diseases. Recommendations for prevention and control of influenza in children, 2013-2014. Pediatrics 2013;132:e1089.

INFLUENZA

ON THE WEBFor additional strategies on keeping your staff and patients safe, be sure to review the archived webi-nar, “Influenza: Nothing to Sneeze At,” at www.advanceweb.com/execu-tiveinsight.

21st century researchers have an intimate un-derstanding of the flu virus and, as such, have an equally clear method of flu prevention.

http://www.cdc.gov/flu/about/qa/vaccineeffect.htm





If we follow the growth trend of medical homes, it would be easy to predict that in five years, 20% of this country’s group practices will have

adapted to the medical home model. After all, 10% of primary care practices are already NC-QA-Recognized medical homes.1

But let’s be bold and go farther; let’s say that in five years, half of practices will be medical homes. Sound optimistic? Consider that Aetna, Cigna, Wellpoint, Blues plans and other insur-ers offer higher reimbursements to practices that are organized as medical homes, as does the Centers for Medicare & Medicaid Services. What’s more, evidence confirming the value of medical homes continues to pour in. At NCQA, we are hard pressed to keep up with the flood of applications to our medical home recognition program.

This is good news. It means that more people will enjoy same-day appointments, receive coor-dinated care and be assured that automated sys-

tems are supporting their care teams, preventing drug interactions and helping them avoid illness altogether.

But as our healthcare system evolves, we must remember that medical homes do not spring into existence overnight. Recognition from a reputable organization is a good sign that a med-ical home is living up to its promise, but more important is whether a practice can actually do what is expected of a medical home. It’s a long list. Here are a few issues NCQA’s PCMH Rec-ognition Program reviews:

1. DOES THE PRACTICE ENSURE THAT CARE IS ALWAYS ACCESSIBLE? Above all, a medical home is expected

to offer patient-centered care—help and advice when a patient needs it. In today’s connected world, that means the ability to exchange secure electronic messages with a physician, check test results online, get clinical advice over the phone and access medical records electronically.

Access is a major quality issue; imagine the difference between learning you have a serious medical condition today, and learning it weeks from now.

2. DOES THE PRACTICE HAVE A TEAM-BASED APPROACH TO CARE THAT ENGAGES PATIENTS?

By definition, patient-centered care involves pa-tients in the care process. Often, this requires educating patients about self-care—in their own language. A medical home is expected to do this and to clearly define the role of every practi-tioner involved in a patient’s care, hold progress meetings with the patient and develop treatment plans that fit the patient’s goals.

3. DOES THE PRACTICE USE TECHNOLOGY TO HELP MANAGE PATIENTS’ HEALTH?

It is becoming hard to defend practicing med-icine without electronic support. Computers can do things people can’t, like track patients and send reminders to those who are due for immu-nizations or other needed care.

Medical homes track dozens of data points about their patients and their health risks. They use the data, along with evidence-based care guidelines, to tell patients about needed care for chronic conditions, immunizations and other care.

MEDICAL HOMES

Margaret E. O’Kane is president of the National Committee for Quality Assurance (NCQA), an independent, nonprofit organi-zation that improves healthcare quality through measurement, transparency and accountability.

6 Questions to Aska Medical HomeIf your practice is considering adopting this model or in transition, critical issues must be addressed By Margaret E. O’Kane

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4. DOES THE PRACTICE WORK TO IDENTIFY AND SUPPORT HIGH-RISK PATIENTS?

It is widely understood that most healthcare ser-vices and expenses go to relatively few patients with complex health issues. Medical homes are expected to leverage data collected from diverse sources such as payers, EHRs and enhanced registries to identify those patients, and to work with them to design suitable, evidence-based treatment plans.

Because adherence to medication schedules is a steep challenge for many patients, medical homes are expected to use electronic prescrib-ing. “E-prescribing” systems are critical for managing medication interactions, tracking pre-scriptions and notifying providers about generic alternatives.

5. CAN THE PRACTICE COORDINATE CARE EFFECTIVELY WITH OTHER ORGANIZATIONS AND PROVIDERS?

Patients with multiple serious health conditions can have many providers involved in their care, creating the potential for repeated tests, conflict-ing treatment plans and poor health outcomes.

Medical homes maintain formal relation-ships with other provider groups—labs, area hospitals, behavioral healthcare practitioners and so on—that make coordination possible. For example, medical homes are expected to monitor lab and imaging tests and inform pa-tients and providers of the results. They are also

MEDICAL HOMES

‘We are excited about the promise of medical homes to help revitalize American medicine.’

—Margaret E. O’Kane, president, NCQA

ON THE WEBHave you visited our ACO Resource Center lately? Check it out at www.advanceweb.com/execu-tiveinsightaco.

012/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 01/30/14

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FIGURE - PCMH GROWTH GRAPH expected to track referrals and ensure smooth care transitions.

6. DOES THE PRACTICE WORK TO IMPROVE? The promise of the medical home is that

it will improve care, reduce waste and increase patient satisfaction. Medical homes should mea-sure their performance in all three areas, set goals for improvement and design plans to reach those goals. At NCQA, we see that even small improvements add up to meaningful differences over time.

NCQA’s standards related to medical homes (168 factors across six broad areas) are rigorous and comprehensive. It is important to apply the standards as a holistic set, not as “a la carte” op-tions. Ask yourself if you’d feel comfortable as a patient in a practice that couldn’t coordinate your care. What if it was difficult for you to access that care? Would it be all right if the practice didn’t remind you that you missed an important visit? Would you want to see a doctor who didn’t un-derstand how to use technology? Should anyone?

If the next five years unfold as I expect they will, the medical home model will come to define how medicine is practiced in this country. And we will all benefit as a result. Although we might never hear a patient say, “Thank goodness I’m in a medical home,” I think we will hear something much more important:

n I’m getting great care… n My doctor is really on top of things… n It’s so easy being a patient there…

We are excited about the promise of med-ical homes to help revitalize American med-icine. There may be growing pains along the way—many practices are only now considering adopting the model, and others have just begun the (lengthy) transition process. But as with any effort to create something of lasting value, the first few brush strokes are less interesting and telling than the last are. The best, I believe, is yet to come.

References1. http://www.ncqa.org/Portals/0/Public%20Policy/2014%20Comment%20Letters/The_Future_of_PCMH.pdf NCQA-Recognized PCMH clinicians and sites by year: See Excel file and line graph “PCMH Growth Graph 12-31-13.xlx”

http://www.advanceweb.com/executiveinsightaco



http://www.ncqa.org/Portals/0/Public%20Policy/2014%20Comment%20Letters/The_Future_of_PCMH.pdf

http://www.ncqa.org/Portals/0/Public%20Policy/2014%20Comment%20Letters/The_Future_of_PCMH.pdf

Sunquest provides comprehensive solutions that deliver quality diagnoses, optimize effi ciency, improve patient safety, and respond to a changing market. Laboratory data accounts for approximately 70% of the patients’ medical records and affects up to 80% of clinical decisions. Providers depend on reliable results to deliver optimal care across their network.

With healthcare legislation and increasing regulatory oversight, it is vital that your lab be a part of your clinical team. With more than 30 years of experience, Sunquest continues to be the chosen partner in over 1700 laboratories today.

Sunquest has redefi ned the lab, empowering its partners to turn results into knowledge.

To learn more about solutions from Sunquest, call (800) 748-0692 or visit www.sunquestinfo.com.

Sunquest is themarket leaderin Laboratory.

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W hile every hospital and network in the U.S. doesn’t have to make their clinical lab a separate entity, all administrators

need a strategy to grow their outpatient business. It is critical to focus on outpatient, ambulatory, and outreach to cover and exceed the fixed costs required to support the shrinking, but critical, inpatient work. It is imperative that hospitals and healthcare-associated reference laboratories reach into the community and capture more of their ambulatory testing work and execute that work with greater efficiency.

CLP’S GROWTH STRATEGY Clinical Laboratory Partners (CLP) has been extremely successful at doing just that. Their growth strategy has been two-fold: Manage the hospital and physician office labs and obtain the work in and around their network through strong sales and service.

CLP is a reference laboratory business that was developed from a hospital outpatient lab-oratory service and now recognizes $100 mil-lion annual revenue by serving the 101 towns across the state of Connecticut. CLP has about 60 full patient service centers. Incoming sam-ples are processed at its six laboratories spread throughout the state, with the majority of work conducted at the core lab in Newington, CT, and at their large Rocky Hill, CT, lab, which focuses on women’s health to support 25 women’s health practices in the state.

CLP’s roots are in the outpatient lab at Hart-ford Hospital, formerly Hartford Medical Lab. It grew and eventually formed into the entity it is today when HHC (then Connecticut Health System) bought Midstate Hospital in 1998. At that time, three area laboratories came together

BUSINESS STRATEGIES

Megan Schmidt is director of Product Strategy at Sunquest Information Systems.

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Lab Business in an ACO EnvironmentA growth strategy to capture more clinical laboratory work and execute with greater efficiency is revealed By Megan Schmidt and David J. Molusis

David J. Molusis is vice president and CIO at Clinical Laboratory Partners.

to focus on providing the most local, compre-hensive laboratory services possible.

To achieve the first part of its growth strategy, CLP provides the system improved profitability by streamlining the inpatient lab while directing the bulk of work to the CLP Labs. There are chal-lenges in this approach; these moves produce anxiety in the hospital in regards to turnaround times that impact the local hospital’s work and budget. This can be overcome by leveraging ser-vice level data and receiving support from hos-pital administration to explain that revenue is staying within the system to benefit the hospital, rather than sending work outside the system.

To achieve and maintain strong sales and ser-vices, the second part of its strategy, CLP lever-ages their quality, local pathologists, lab-expe-rienced sales and service personnel, and their ability to accept all payers. CLP also uses infor-mation technology to their advantage. They are quick to market with EMR interface deploy-


laboratory must ensure efficient workflows are in place to protect service levels and profitabil-ity. To handle the required volumes with effi-cient workflow, and to manage the routing and tracking of specimens around the network, CLP utilizes Sunquest as the primary LIS along with some other ancillary systems in the core lab and hospitals that manage the laboratory. Future CLP strategies include initiatives to consolidate labs and further centralize work at Centers of Excellence associated to departments. For ex-ample, the first initiative may be to centralize microbiology.

The CLP story likely aligns to other networks and ACOs that are pulling in their own work and centralizing laboratory services. Executives would be wise to ensure that their regional net-work-affiliated laboratory is at the table in any acquisition, consolidation, ACO formation, or contracting regarding laboratory work. Hospital inpatient labs do not always make a profit for the inpatient work, and that work is declining, but by securing more outpatient work from the com-munity of providers in an area, more revenue is kept within the system. This must be executed with great client services and efficiency within the laboratory.

ULTIMATE BENEFITS Consolidating laboratory services to a local provider ultimately benefits the system, physi-cian, and patient. Keeping the testing in-house supports the whole and helps the system with their ACO goals. With longitudinal and con-tinuous views of a patient’s lab results, physi-cians can better manage test utilization and expedite treatment, leading to better outcomes for the patient.

ment, with 150 deployed to date. CLP further differentiates themselves from others by offer-ing a portal that provides Hartford Healthcare physicians access to view both outpatient and inpatient laboratory results across the healthcare continuum. Through the portal, they can also provide physicians with access to information for specific patient populations and tools to an-alyze that data.

The challenge—one that other systems will face if adopting a similar strategy—is the neces-sity to standardize test methodologies and refer-ence ranges so the data is combinable. To over-come this obstacle, leadership must be engaged. CLP works with the business executives, medical staff, chief of pathology, and medical chief of staff to articulate the value of participating in this data exchange.

ENSURING EFFICIENCYOnce expanded business has been achieved, a

BUSINESS STRATEGIES

ON THE WEBAre you expanding your team of qualified profes-sionals? Check out our job board often at www.advancehealthcarejobs.com.

Executives would be wise to ensure that their regional network-affiliated laboratory is at the table in any acquisition, consolidation, ACO formation, or contracting regarding laboratory work.


A t first glance, creating a healthcare system that focuses on lowering

costs seems counterintuitive in an environment that re-wards quality improvements. But that’s the challenge today’s healthcare finance executives are faced with—lowering costs while improving quality, and combining the two to ensure a thriving bottom line.

It’s a winnable challenge, provided the healthcare system approaches the task with a thor-ough understanding of where it stands relative to clinical quality measures and the costs associ-ated with delivering care.

For finance executives, the need to account for clinical quality to predict the financial health of the organization is

a significant paradigm shift. In the traditional fee-for-service reimbursement environment, measuring volume was front and center for the finance team—and it’s still a key part of the equa-tion today. Generally, healthcare has adapted to per-case payment methodology. But with pay-ments also hinging upon quality, focusing solely on old metrics won’t bring financial success, par-ticularly not in a world of accountable care, qual-ity measures, shared savings, and bundled pay-ments. Today’s focus must shift to lowering the costs associated with obtaining higher quality.

FINANCES AND CLINICAL PROCESSESWith the shift to value-based purchasing, the U.S. healthcare system faces its most significant transformation since the advent of managed care in the 1980s. Health system financial executives are in the thick of navigating the complexities of this change, tasked with helping their orga-nizations determine exactly how to strategically approach the new reimbursement environment.

Questions financial executives must address include:n Do we want to create or participate in an

accountable care organization (ACO)?n Are we prepared to manage partnerships? How

will we collaborate with payers?n What level of risk should we assume?

Editor’s note: Achieving financial success in healthcare can no longer be measured strictly in terms of volume. Changes in the industry are driving a need to bring quality and oth-er measures into the equation. In Part 1 of a three-part series, Bobbi Brown, a former healthcare finance executive for some of the nation’s largest health systems, explains the challenges and risks that value-based care brings, and the metrics finance executives need to take into account when developing new success measures. Part 2 will examine the barriers to using clinical data (as it is normal-ly found in healthcare organizations) to drive value-based decision-making. FI

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Bobbi Brown is vice president of Financial Engagement for Health Catalyst, a data warehousing and analytics company based in Salt Lake City.

VALUE-BASED PURCHASING

FIGURE - HEALTHCARE’S NEW FINANCIAL METRICS

Surviving Value- Based Purchasing in HealthcareConnect your clinical and financial data for the best ROI By Bobbi Brown

Each of these metrics carries potential penalties and/or incentives under the various payment innovation programs sponsored by the Centers for Medicare and Medicaid Services (CMS). Organizations that thrive in a value-based environment will routinely track these measures as part of their reporting and monitoring structure rather than spon-sor occasional studies of their performance in these areas.


Quality. With value-based purchasing, hos-pitals are required to assess and report mea-sures of quality relative to defined benchmarks. Did patients receive drugs within the appro-priate time period? Were they given discharge instructions? Did the care manager schedule follow-up visits? How many falls occurred in the hospital? How many hospital-acquired in-fections were there? Hospitals not reporting quality metrics are subject to penalties. For Centers for Medicare & Medicaid Services value-based purchasing, the penalty/incentive phase began in 2013. Hospital performance is being judged on both achievement relative to the national benchmark and improvement rela-tive to internal prior score.

Readmissions. Quality will also be assessed based on the rates of readmissions for all causes within a certain time period for specific patient populations. For example, what are the rates of heart failure, pneumonia and AMI readmissions within a 30- and 90-day period? In 2013, Medi-care began enforcing penalties for 30-day read-missions. Penalties will increase in future years.

Mortality rates. What are the hospital’s mor-tality rates for pneumonia, heart failure and acute myocardial infarction (AMI) among its pa-tient populations? Beginning in 2014, Medicare will include this measure in its value-based pur-chasing formula. High mortality rates in pneu-monia, health failure and AMI will result in loss of incentives.

Patient satisfaction. Patient satisfaction is more than just a concern and a goal, it’s now tied directly to payment models. How satisfied are patients with their care experience? Was the room satisfactory? Was the family comfortable? Would they recommend the hospital? Concern for patient satisfaction is a key metric in Medi-care’s value-based payment system. In 2013 the patient satisfaction scores were weighted at 30%.

Cost per episode of care. Containing costs is now more important than ever as value-based purchasing systems strive to keep treatment consistent and expenditures appropriate and predictable. What are the costs of the individ-ual components of care? What are the costs of the episode across the continuum of care? Which clinical processes have the greatest cost variation? Reducing this variation will improve the cost structure. Plus, in 2015, CMS plans to adopt a new measure—Medicare spending per beneficiary.

n What is the ideal financial arrangement for shared savings?

Additional considerations include the regu-lations and quality metrics affecting a hospital’s reimbursement—how many people go to the ER, how are patients rating their satisfaction, how is one hospital performing against others? While each individual quality measure is a small thing to track, the combination of quality measures coupled with an influx of new regulations heavily impacts the bottom line. Add to this the fact that quality measures can and likely will change over time and that each payer has the right to associ-ate different penalties and incentives with them, and tracking develops into a very complicated proposition.

Quality measurement is just one of the com-plexities that value-based purchasing introduces into the process of managing an organization’s costs. Understanding how clinical quality and other factors affect the bottom line requires fi-nancial executives to master the new lexicon of value-based purchasing, which pays and rewards based on the quality of the outcome and the pa-tient’s satisfaction. Volume metrics alone can’t provide the insight needed for an organization to succeed under health reform.

FINANCIAL METRICS FOR VALUE-BASED PURCHASINGWithin value-based purchasing are key metrics (Figure) that go beyond volume that finance ex-ecutives need to track to obtain a full picture of a health system’s cost and to make sound deci-sions, including:

Throughput. The time it takes to complete a process now translates directly into money and greatly affects quality. What is the average wait time in the emergency department? What is the time between cases in the OR? What is the turn-around time for labs? With value-based purchas-ing, improved throughput will benefit the orga-nization by reducing cost and increasing patient satisfaction – two key metrics.

VALUE-BASED PURCHASING

Understanding how clinical quality and other factors affect the bottom line requires financial executives to master the new lexicon of value- based purchasing.

ON THE WEBUnder the Medicare Shared Savings Program, contracted providers are paid standard Medicare rates with the opportu-nity to receive bonus payments if quality targets are met and if total healthcare costs for patients affiliated with the ACO fall below a stated benchmark. This benchmark consists of projected spending based on the provider’s past Medicare costs. The lower the costs relative to this benchmark, the larger the bonus pay-ment. However, some of the shared savings are retained by—or shared with—Medicare. Learn more about full risk capitation by reading “Taking, Managing Risk” at www.advanceweb.com/executiveinsight.




A n estimated 700,000-1 million patient falls occur each year in U.S. hospitals.1-2

In November 2011, the Joint Commis-sion Center for Transforming Healthcare set out to address this widespread and persistent issue and in collaboration with seven organizations developed an approach to inpatient falls with very encouraging results. A pilot study complet-ed in August 2013 showed that the center’s new-ly developed measurement systems and solu-tions reduced the number of patients injured in a fall by 62% and the number of patients falling by 35%.

The results of the center’s Preventing Falls with Injury project have a far-reaching impact both for patients and healthcare organizations. From 30-35% of patients who fall sustain an inju-ry.3-7 On average, these injuries result in an addi-tional 6.3 days in the hospital.8 If the center’s ap-proach is translated to a typical 200-bed hospital, the number of patients injured in a fall could be reduced from 117 to 45, and save approximately $1 million annually through fall prevention ef-forts. Similarly, a 400-bed hospital could reduce the number of patient falls with injury by 133 and expect to save $1.9 million annually.

The organizations that volunteered for the center’s project to address fall prevention were:

n Barnes-Jewish Hospital, Missouri n Baylor Health System, Texasn Fairview Health Services, Minnesotan Kaiser Permanente San Diego Medical Center,

Californian Memorial Hermann Healthcare System, Texasn Wake Forest Baptist Medical Center, North

Carolinan Wentworth-Douglass Hospital, New Hampshire

These seven participating hospitals range from a 178-bed community hospital to a 1,700-bed academic medical center. All of the orga-nizations used Robust Process Improvement® (RPI®) to identify causes and develop solutions to prevent patient falls. RPI is a fact-based, system-atic and data-driven problem-solving method-ology that incorporates tools and concepts from Lean Six Sigma and change management.

Sally Franz, director, Medical/Surgical/Crit-ical Care Nursing at Kaiser Permanente San Diego Medical Center, said partnering with the center contributed to significant improvements in patient safety.

Inpatient Fall PreventionA robust approach leads to significant reduction of inpatient falls with injury By Erin S. DuPree, MD

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Erin S. DuPree, MD, is the chief medical officer and vice president for the Joint Commission Center for Transforming Healthcare.


SAFETY

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“The experience provided a structured framework around which to build our work for preventing patient falls and pa-tient falls with injury,” said Franz. “In ad-dition, the sharing of strategies and best practices with other organizations was invaluable.”

In all, the participating hospitals and the center developed a total of 21 targeted solutions during the course of the project. As solutions were developed, the hospitals discovered that fall prevention was not a set of disparate and unrelated activities. In-stead, preventing falls was a key strategy in preventing or minimizing patient harm.

The examples in the Table are some of the targeted solutions developed and thor-oughly tested to address contributing fac-tors around why patients fall.

According to Amy Fritz-Campiz, Black Belt and Center project lead at the Joint Commission Center for Transforming Healthcare, “Addressing this prevalent problem with effective targeted solutions has motivated all levels of hospital staff to focus on preventing inpatient falls – from chief nurse officers to housekeepers to those working in transportation services. In addition, the signing of a patient agree-ment form is a tool to encourage patients and their family members to be part of the solution, emphasizing the risk factors and the proper procedures needed by all to create an injury-free environment.”

The Targeted Solutions Tool® (TST®) for preventing falls with injury is in develop-ment for release in 2015. The TST is an on-line resource that provides a step-by-step process to assist organizations in measur-ing performance, identifying barriers to excellent performance, and implementing the center’s proven solutions that are cus-tomized to address specific barriers. TST modules are now available for improving hand hygiene, hand-off communications and wrong site surgery.

Patient falls are a serious problem that have received a great deal of attention, yet defy easy solutions. In partnership with the center, these seven organizations are leading the way in developing strategies that keep patients safer. By using these approaches to determine the specific causes of falls

It’s estimated that 30-35% of patients who fall sustain an injury, and on average, those injuries result in an additional 6.3 days in the hospital.



and targeting interventions accordingly, real and substantial im-provement can be achieved.

REFERENCES1. Currie L. Fall and injury prevention. In: Hughes RG., ed. Patient Safety and Qual-ity: An Evidence-Based Handbook for Nurses. (AHRQ Publication No. 08-0043). Rockville, MD: Agency for Healthcare Research and Quality; 2008;. http://www.ahrq.gov/qual/nurseshdbk/docs/CurrieL_FIP.pdf. Accessed December 10, 2013.2. Cameron ID, Murray GR, Gillespie LD, et al. Interventions for preventing falls in older people in nursing care facilities and hospitals. Cochrane Database Syst Rev. 2010;( 1): Art. No.: CD005465. doi: 10.1002/14651858.CD005465.pub2.3. Ash K, MacLeod P, Clark L. Case control study of falls in the hospital set-ting. Journal of Gerontological Nursing 1998:Vol. 24, 7-15. doi: 10.1111/j.1525-1497.2004.30387.x4. Fischer I, Krauss M, Dunagan W, Birge S, Hitcho E, Johnson S, Fraser V. Patterns and predictors of inpatient falls and fall-related injuries in a large academic hospi-tal. Infection Control & Hospital Epidemiology 2005:26(10);822-827. 5. Healey F, Scobie S, Oliver D, Pryce A, Thomson R, Glampson B. Falls in English and Welsh hospitals: A national observational study based on retrospective analy-

sis of 12 months of patient safety incident reports. Quality & Safety in Health Care 2008:17(6);424-430. 6. Hitcho E, Krauss M, Birge S, Dunagan W, Fischer I, Johnson S, Nast P, Costan-tinou E, Fraser V. Characteristics and circumstances of falls in a hospital setting. Journal of General Internal Medicine 2004:19(7); 732-739. doi: 10.1111/j.1525-1497.2004.30387.x7. Schwendimann R, Buhler H, De Geest S, Milisen K. Falls and consequent injuries in hospitalized patients: Effects of an interdisciplinary falls prevention program. BMC Health Services Research, 2006: 669-7. doi:10.1186/1472-6963-6-69.8. Wong C, Recktenwald A, Jones M, Waterman B, Bollini M, Dunagen W. The cost of serious fall-related injuries at three midwestern hospitals. The Joint Commission Journal on Quality and Patient Safety 2011: 37(2).

SAFETY

ON THE WEBNot only are falls devastating to patients and their caregivers, they also affect the financial health of hospitals. To learn how technology may provide assistance, read, “Technology to the Rescue,” at www.advanceweb.com/executiveinsight.

Contributing Factor Categories Targeted Solutions

Patient fell while toileting nImplement hourly rounding with proactive toileting of all patientsnImplement scheduled toileting for high risk patients: get patient up for toileting on a regular schedule

Medications that increase the risk of falls combined with toileting

nEducate patients on medication side effects and increased risk for fallsnSchedule medication administration for at least 2 hours prior to “bedtime”

Patient did not know, forgot or chose not to use call light

nEducate patient on how to use and the need for using the call light for assistance at all times, especial-ly when getting into/out of bed

Fall prevention education to patient/family not used or inconsistent

nRevise patient/family fall precaution education packet and process. Education should be targeted and individualized to patient specific fall risks

Patient awareness and acknowl-edgement of their own risk for falls

nImplement a patient agreement form to use call light for all ambulation. Emphasize risk factors during education and signing of patient agreement

Risk assessment tool is not a valid predictor of actual fall risk

nImplement a “validated” fall risk assessment toolnImplement a standardized cognitive assessment toolnIntegrate cognitive assessment tool results with fall risk assessment tool

Inconsistency in ratings by different caregivers

nStandardize assessment tools used between nursing staff and physical therapy/occupational therapy/rehab staff; allow both service areas to access each other’s charting detail in the Electronic Medical Record (EMR)

Inconsistent or incompletecommunication of patient risk for falls between caregivers

nUtilize white boards to communicate patient fall risk to all staffnIncorporate alerts into the EMR that alert staff to patients who are at risk for fall and effectively trans-

late fall risk information into useful tasks, reports and promptsnInitiate bedside shift report with patient that includes focus on fall risk concerns

Standardization of practice and application of interventions

nImplement house wide culture messaging around fall safety for all patients

TABLE - CONTRIBUTING FACTORS, TARGETED SOLUTIONS FOR FALL PREVENTION

http://www.ahrq.gov/qual/nurseshdbk/docs/CurrieL_FIP.pdf

http://www.ahrq.gov/qual/nurseshdbk/docs/CurrieL_FIP.pdf



Healthcare today is in a unique period. It is no longer as simple as using DRGs in the ’80s or managed care in the ’90s, and the

changes that have occurred have really rewrit-ten the script. The need for critical information to help manage patients, patient populations, chronic diseases and patients with multiple co-morbidities is stronger than ever. Yet reimburse-ments are a challenge, and the ever-increasing pressure to manage costs without compromising quality means that healthcare professionals have had to rethink how we do our work, monitor our processes and get things done.

The concept of a High Reliability Organization (HRO) began with studies of air traffic control and nuclear power stations. Today, an HRO es-sentially relates to any organization where day-to-day operations involve significant complexity with high risk for errors, yet the organization is able to systematically avoid catastrophic out-comes. As laboratories, we more than fit the bill: We run multiple highly complex tests on literally thousands of patient samples every day, with full knowledge that our results will guide the treat-ment plan for physicians and patients. It is a priv-ilege and huge responsibility.

As executives we can ensure that our labora-tories are operating as true HROs by embracing the five key HRO concepts highlighted below and embedding them across our operations.

1. SENSITIVITY TO OPERATIONSFor an HRO, sensitivity to operations means an acute awareness of the com-

plexity of work being performed. The U.S. De-partment of Health and Human Services’ Agen-cy for Healthcare Research and Quality (AHRQ) termed this “a state of mindfulness” across op-erations. In its publication, “Becoming a High Reliability Organization: Operational Advice for Hospital Leaders,” AHRQ emphasizes that while

policies and procedures are critical, the highly complex nature of diagnosing and treating pa-tients means that teaching “situational aware-ness” is critical as “it is the only way anomalies, potential errors and actual errors can be quickly identified and addressed.”

Reliability has a very special meaning in the laboratory: We can’t make mistakes. People need to be able to believe in their laboratory results because of the vital health decisions that are be-ing made using these results.

At Alverno Clinical Laboratories, we invest in education that promotes operational under-standing beyond the scope of job descriptions so that our employees are mindful of what is hap-pening throughout the laboratory. Employees receive Lean skills training and are encouraged to speak up when they see opportunities for im-provement anywhere in the organization. This is especially important during extremely busy times, when volumes and variables automatical-ly up the ante for potential issues.

2. PREOCCUPATION WITH FAILUREPreoccupation with failure means a commitment to monitoring and analy-

sis—a willingness to continually dig in and look for areas of potential risk or waste, then look deeper for root causes and solutions. Quality metrics and tools related to the technical side (instrumentation and testing) are part of this, and technology is blossoming in all sorts of dif-ferent directions to assist us here. But equally important is a willingness to examine every ac-tivity throughout the laboratory to identify areas with potential for failure or improvement.

HROs apply systematic analysis, such as Lean principles, to ensure operations are continual-ly maximized with a goal toward zero defects. Alverno’s journey to becoming an HRO includ-ed over 350 Kaizen events, involving every

The Lab as a High Reliability OrganizationEmbrace 5 key concepts and embed them across your operations By Sam C. Terese

BUSINESS STRATEGIES

Sam C. Terese is CEO and president, Alverno Clinical Laboratories, LLC.

1Sensitivity toOperations

2Preoccupation With Failure

3Deference to

Expertise

4Reluctance to

Simplify

5Resilience


BUSINESS STRATEGIES

role in the organization. By engaging employees at all levels in root cause analysis and solutions, we have achieved new levels of ac-countability that allow us to meet ever-more stringent expecta-tions from our provider partners.

An example: Alverno added a significant number of new and modified tests to our client testing menu last year, as well as 20 new EMR interfaces (with many more under development). Our vol-umes rose to 14 million billable tests across 30 locations, and our employee count rose to approximately 1,700 staff. With new faces, new tests and new equipment to process our expanding menu and volume, we were preoccupied with the idea that incomplete, un-even or missed trainings could result in errors, drops in efficiency and quality issues. Through Lean analysis, we identified that of-fering continuing education is not enough; what we lacked was a sophisticated tracking mechanism that would help both managers and employees know at any given time where training was lack-ing or could be expanded across all 1,700 staff. We have since im-plemented a highly effective, computerized system which tracked more than 31,590 hours of trainings last year.

3. DEFERENCE TO EXPERTISEDeference to expertise in the HRO laboratory takes two forms: internal and external. Internally, it is imperative

that an HRO have a culture in place where every team member’s viewpoint is expressed, heard and valued and that leaders defer to those with the most knowledge and expertise on the subject at hand. We are each experts at different things, and we play differ-ent roles in our organization. Likewise, each team member sees the exact same activity from a different viewpoint, and each view-point is not only valid, but valuable. Employees must be empow-ered to speak up, and to yield the floor to others when an issue arises that requires different expertise.

It is equally critical to partner with external experts who em-brace the needs of the HRO. Our partnership with Beckman Coulter, for example, is absolutely critical. We expect their instru-ments to perform at a very high level, of course, but we also value their internal adherence to Danaher Business System (DBS) tools and Lean principles focused on measurement, improvement and enhanced execution. Our partners share not only their expertise but the expertise of their customers in achieving optimal results, so that all of us continue to grow and improve, improving the health care provided to all of the communities we serve.

4. RELUCTANCE TO SIMPLIFYA reluctance to simplify means a willingness to keep expla-nations for the complex tasks being performed at a com-

prehensive level. Processes can and should be simplified wherever

possible, but the “why” behind the work we do—the explanations for why each step is critical to achieving accuracy, efficiency, consistency and reliability—should not ignore how complex our work is. HROs clearly communicate the reasons behind each step of each process and ensure that employees both understand and remain acutely at-tuned to possibilities to further reduce risk or eliminate waste. Only by acknowledging complexity, and clearly communicating what must be done and why, can we avoid technical and/or service errors.

There is debate about the exact percentage that laboratory results make up of each patient’s medical record, but bottom line, these re-sults are significant and they will guide provider decision-making in treatment. Thus, while laboratory efficiency expectations have never been greater, a reluctance to simplify is essential.

5. RESILIENCEFor many organizations (and individuals) with a long his-tory of proven success, realization that the tools that drove

their success through the years are no longer relevant is hard to accept. Many hospitals have seen patient volumes decrease sig-nificantly, and now must operate in the face of decreased revenues without compromising care. In the laboratory, specifically, over the next several years there will be substantial cuts in reimbursement for certain tests that will create significant pressure. At the same time, testing volumes are increasing and many laboratory organi-zations are growing at an extremely rapid rate.

Being able to shift gears and realign to changing realities as they de-scend is the key to a resilient laboratory. Employees must be ready to learn new skills and new ways of doing things. Hopefully you have an engaged workforce that can respond to these shifting environments, using the tools that they have in their tool box and the new tools that you have helped them to gain. Training, communication and a culture that rewards a willingness to speak up play a huge role in an organization’s ability to be resilient as our healthcare system evolves.

Sensitivity to operations, a preoccupation with failure, deference to expertise, a reluctance to simplify and resilience are achievable ideals for any laboratory. Laboratories that make a commitment to these ideals, and embed them into our operations and culture, become true HROs capable of responding to the changing needs of the healthcare communities we serve—efficiently, effectively and with the highest quality and reliability.

ON THE WEBAs the healthcare industry dramatically changes, the pressing need to save money and improve efficiency is emphasized. Strat-egies to determine optimal workforce productivity using a LEAN approach and new, innovative approaches to improvement initia-tives are explored in our archived webinar, “Process Improve-ment and LEAN,” at www.advanceweb.com/executiveinsight.

Sensitivity to operations, a preoccupation with failure, deference to expertise, a reluctance to simplify and resilience are achievable ideals for any laboratory.


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ExecutiveInsight July 2014 - Supply Chain cover story

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