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Improvement on a Dime

Carrie Vaughan, for HealthLeaders Magazine, May 13, 2009
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New procedures and efficiencies can be implemented very quickly.

Finding better, more efficient ways to deliver care is a worthy goal. But it also takes resources—time, money, manpower. And resources are one thing that hospitals don't have right now. Patient volumes have declined. More uninsured patients are seeking treatment. Philanthropy is down. Accessing the debt markets is difficult. Roughly 50% of hospitals were losing money in March 2009, according to Thomson Reuters. These factors are forcing hospitals to close beds, cut services, and lay off employees. The last thing senior leaders want to do right now is waste resources on a process improvement initiative that may not work. But sticking with current processes—even systems deemed acceptable a few years ago—may no longer be good enough in today's environment.

If healthcare organizations don't try to improve efficiency, effectiveness, and quality outcomes, "they risk becoming obsolete quickly and running a more costly operation," says Gayla Nielsen, PhD, who is director of the emergency department at Cedars-Sinai Medical Center in Los Angeles.

"There is still a lot of waste in healthcare," says Tami Merryman, chief quality officer at the University of Pittsburgh Medical Center. About eight years ago, Merryman, who was the chief nursing officer of UPMC Shadyside at the time, approached the CEO with a plan to improve processes and cut costs. "I said to my CEO, 'Give me one year and if I don't save the salary of the two staff members that I hire, I'll agree to get rid of them.' In the first year, we cut $1 million," she says. "Don't underestimate what you can accomplish with a few people."

Determining where to spend resources and what initiatives to test is not without risks. The effort could disrupt workflow, frustrate staff members, and prove to be more costly or ineffective. But Merryman believes that most CEOs are still willing to accept a certain amount of risk today. CEOs are probably willing to devote at least one full-time employee to the effort, but more than that is questionable, she says, adding that many CEOs still don't have answers on where they are going to find the next dollar to save. "It is a safer bet than nothing," Merryman says.

Align resources
When resources are tight, it's imperative that improvement work be operationally relevant and aligned with the organization's strategic priorities. But having a good strategy will only get you so far. Organizations should have an infrastructure in place to appropriately allocate resources. Otherwise leaders risk those resources being dispersed to different departments, each with its own agenda. The result will likely be a disparate system that lacks the power to drive or sustain the organization's top priorities.

Merryman sits down with the president of the hospital division, the president of the physician division, and key members of her eight-person team every six months to determine what initiatives they will focus on based on the strategic priorities of UPMC. For example, senior leaders at UPMC have identified four organizational priorities this year.

Merryman dedicates her resources to those priorities first. After that, resources are deployed based on the potential impact of the process improvement and on a first come, first served basis. She has noted some changes since the recession began, however. Systemwide initiatives have gained a lot more momentum. Previously, hospital CEOs were more likely to pursue individual requests like identifying bottlenecks in their PACU, whereas, now, they are asking for ways to standardize how all of the hospitals are scheduling their ORs based on best practices, she says. "They have come to see the value of local and systemwide collaboration."

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