Existing Commitments

Surgical Improvement ProjectTeam 5 Meeting

Lisa Brandenburg, C.O.O.Ed Walker, M.D., Medical Director

May 3, 2005

2

UWMC Strategic Planning

UWMC’s program planning over the last 4-5 years has focused on promoting growth of the services lines

Therefore, existing UWMC commitments relate largely to supporting the growth & development of the service lines

3

UWMC Strategic Planning

Examples – commitments to support the growth in Transplant, Regional Heart Center

(includes CV Surgery), Orthopedics through recruitment of new surgeons, Oncology, Oto & Neurosurgery through the recruitment of new surgeons

4

Current Service Lines at UWMC Cardiovascular (UWRHC) Oncology - includes the SCCA Orthopaedics and Sports Medicine Organ Failure and Transplant Otolaryngology Neurosurgery Criteria: High-volume and/or High-charge

Services; Program Profitability; Program Readiness

5

UWMC Departments

SERVICE LINES

CANCERPATIENT

CARDIACPATIENT

Opera

tin

g

Room

Short

Sta

y

Un

its

Rad

iolo

gy

Inp

ati

ent

Un

its

Lab/P

ath

Serv

ices

Data tracking

Business systems

External market information

Outp

ati

ent

Clin

ics

6

Structure of Service Lines at UWMC Organizational Priority

Service lines heart of Quality Improvement activities Structure used as collaborative physician and Medical

Center vehicle to manage growth

Service Line Administrator and Physician Partner

Committee Structure; Team Membership Strives for multidisciplinary representation along the

continuum Works together to develop annual goals and implement

strategies Designated support resources (CDS, Q1, etc.)

7

1998-2003 Change and Growth1,

073

4,38

4

2,55

7

3,03

7

-1,1

34

3,12

7

2,92

3

-6,8

75

-3,4

08

1,71

2

1,54

6

-1,2

09

17%

33%

23%18%

14%

-71%

-7%

10%

-7%

10%

-10%

21%

-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

Au

bu

rn R

egio

n M

ed H

osp

Eve

rgre

en H

sp M

ed C

trG

oo

d S

amar

itan

Ho

spH

arb

orv

iew

Med

ical

Ctr

No

rth

wes

t H

osp

ital

Ove

rlak

e H

osp

Med

Ctr

Pro

vid

nc

Eve

rett

Md

Ctr

Ste

ven

s H

osp

ital

Sw

edis

h/P

rovi

den

ceU

niv

WA

Med

Ctr

/SC

CA

Val

ley

Med

Ctr

- R

ento

nV

irg

inia

Mas

on

Med

Cn

t

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Growth % Growth '98-03

Are All Hospitals Growing?

8

SURGERY CASES

3,394

3,464

3,444

3,7153,675

3,616

3,729

3,353

3,244

3,138

3,405

3,249

3000

3100

3200

3300

3400

3500

3600

3700

3800

Jun2002

Sep2002

Dec2002

Mar2003

Jun2003

Sep2003

Dec2003

Mar2004

Jun2004

Sep2004

Dec2004

Mar2005

UNIVERSITY OF WASHINGTON MEDICAL CENTERQUARTERLY VOLUME TRENDS

FY 2002 - 2005

9

Is All Growth Good for the Bottom Line?

• Profitability data isn’t perfect at the encounter level:

• Reimbursement is estimated based on actual payments and spread across like populations.

• Direct costs are allocated based on gross charges in specific areas.

• Indirect costs are allocated based on gross charges and are spread according to assumed utilization.

• The costs of the finance department are spread across all encounters.

• Department support for a program such as Oncology is spread across all oncology encounters.

• All of these graphs on the following slides generally need about 100 footnotes each.

10

Business Matrix - Size and Profitability Analysis (FY 2004)

Oncology

Heart Center

Transplant

Ortho

OB/Perinatal

Surgery

Neurosurgery Gen Med

Ophthal

Gyn

Derm

Rheumatology

Urology OtoRehab

Psych

Neurology

Gastro Endoc

Inf. Disease

Business Profitability (Operating Income per Patient Day)

Bu

sin

ess S

ize (

Pati

en

t D

ays)

Oncology Heart Center Transplant Ortho OB/Perinatal Surgery Neurosurgery

Gen Med Ophthal Gyn Inf. Disease Derm Rheumatology Urology

Oto Rehab Psych Neurology Gastro Endoc

Service Lines/Areas – Per Patient Day

unprofitable/large

unprofitable/small

profitable/large

profitable/small

Service lines and areas are defined by APR-DRGs, DRGs and departments and reflect IP and OP operations. Encounter assignment is hierarchical beginning with service lines and then by service areas. As such, General Medicine and Surgery exclude encounters that are assigned to Oncology, Transplant, Heart Center, Ortho and Oto.

Why Support Service Line Growth?

11

Essential ServicesBusiness Matrix - Ancillaries Size and Profitability Analysis

(FY 2004)

Laboratory

Pathology

Radiology

Pharmacy

Business Profitability (Net Income)

Bu

sin

ess

Siz

e (G

ross

Ch

arg

es)

Laboratory Pathology Radiology Pharmacy

profitable/large

profitable/small

unprofitable/large

unprofitable/small

12

Payor Profitability – IP and OPContribution to FY04 Operating Margin (Inpatient and Outpatient)

-200.0% -150.0% -100.0% -50.0% 0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0%

Commercial

Medicare

Self-Pay

Medicaid - Title 19

Medicaid - MI/GAU

Medicaid - Healthy Options

Medicaid - Basic Health Plan

Medicaid Other

Other

Pay

or

Percent Margin Generated

13

Payor Profitability – IPContribution to FY04 Operating Margin (Inpatient)

-200.0% -150.0% -100.0% -50.0% 0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0%

Commercial

Medicare

Self-Pay

Medicaid - Title 19

Medicaid - MI/GAU

Medicaid - Healthy Options

Medicaid - Basic Health Plan

Medicaid Other

Other

Pay

or

Percent Margin Generated

14

Payor Profitability – OPContribution to FY04 Operating Margin (Outpatient)

-200.0% -150.0% -100.0% -50.0% 0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0%

Commercial

Medicare

Self-Pay

Medicaid - Title 19

Medicaid - MI/GAU

Medicaid - Healthy Options

Medicaid - Basic Health Plan

Medicaid Other

Other

Pay

or

Percent Margin Generated

15

Implementation Issues Transplant – how do you accommodate

urgent/emergent cases, how do you support 2 rooms at the same time

Cardiac Surgery – same issue w/ urgent/emergent cases

Ortho – how do you support standardization while bringing in new faculty

All surgical services – how do we plan for time in the OR for new surgeons when they may not have full case loads to start

16

What have we learned? Can’t predict every issue that will surface as

we try to grow various programs, but we could do better

New business planning process developed by UWMC Finance will seek to evaluate impact on related services such as Anesthesia, Radiology, Pathology, Lab, etc. and related departments

17

INCOME FROM OPERATIONS(in millions)

5

3.6

8.7

7.8

6.6

7.8

3.9

0.5

7.3

2

11.4

(2)

-

2

4

6

8

10

Jun2002

Sep2002

Dec2002

Mar2003

Jun2003

Sep2003

Dec2003

Mar2004

Jun2004

Sep2004

Dec2004

Mar2005

UNIVERSITY OF WASHINGTON MEDICAL CENTERQUARTERLY VOLUME TRENDS

FY 2002 - 2005