At HealthLeaders Media's fourth annual CFO Exchange, five financial leaders shared innovations on how to improve care while driving down costs. Their stories ran the gamut of hospital functions, from financial to clinical to operations.
As the healthcare industry evolves at a record pace and top leaders look for solutions to their most challenging issues, 42 financial executives from hospitals and health systems around the country gathered at the Grand Del Mar in San Diego last week for HealthLeaders Media's fourth annual CFO Exchange.
During the breakfast session on Friday morning, five attendees shared innovations from their organizations on how to improve care while driving down costs. Their stories ran the gamut of hospital functions, from financial to clinical to operations.
1. Integrating Behavioral Health
Greg Pagliuzza, chief financial officer at UnityPoint Health - Trinity in Rock Island, IL, says his organization is making big strides in its efforts to better manage the care of patients with behavioral health issues.
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About seven years ago, Trinity began working with the state of Illinois on a Donated Fund Initiative to reduce the utilization of services and readmission rates for patients who have both behavioral and medical diagnoses.
Citing data from a study conducted in 1999, Pagliuzza says, "There is definitely a correlation that shows if you have a behavioral issue, you are going to have more medical issues. … There is a higher readmission rate for these patients."
By providing counseling and care coordination services to this population, Trinity has achieved substantial results. ED visits among this group have dropped 50% over a ten-quarter period, which reduced Medicaid payments by 65%. Additionally, psychiatric admissions dropped 54% in the same time frame, cutting payments by 73%.
Pagliuzza says that as health systems begin to take on the financial risk of managing population health, these kinds of behavioral health programs will become increasingly important.
"As financial leaders, this really is an opportunity," he says. "If you start getting into pop health and you start taking on more risk, you can't avoid this population. This group is very expensive, and they are high utilizers. … This is something that will have substantial payback for you."
2. Forming a Regional Alliance
Over the past nine months, Frederick (MD) Regional Health System has been working with Meritus Health and Western Maryland Health System to form the Trivergent Health Alliance, a regional association designed to improve the quality of care provided to patients, lower overall healthcare costs, and create new efficiencies.
"The important part for the three hospitals was to maintain their autonomy in each of their respective counties, and so we came together with the idea of looking at how to improve quality and how to bend the cost curve," says Frederick's senior vice president, finance and chief financial officer, Michelle Mahan.
Through the management services organization component of the alliance, the hospitals have identified potential savings in the areas of revenue cycle, IT, human resources, supply chain, pharmacy, and labs, Mahan says.
"We have been able to come together to find dollars that we can mine in these six areas," she says. "We also worked a lot with the lawyers because we were not merged, so from an anti-trust standpoint there were certain subjects we could not broach."
Although Trivergent is still in its first year, Mahan says there are high hopes for the financial impact. A total of $20 million in savings over a three-year period has been identified, with the largest savings expected to come from revenue cycle and supply chain efficiencies.
"In the long run, the similarity of values and mission of all three organizations really made it possible," Mahan says. "Each of these hospitals wanted to maintain their autonomy, their decision-making abilities, and their board, but they wanted the synergies of being a system for the savings that were available."
3. Reducing ED Utilization
Like many health systems around the country, Albuquerque, NM-based Presbyterian Healthcare Services—an integrated delivery system with eight hospitals and a health plan—had a significant number of patients entering the emergency department for non-emergent health conditions, says senior vice president and chief financial officer Dale Maxwell.
To reduce ED utilization, Presbyterian set a goal to deliver care in the most appropriate clinical setting, with an attendant savings goal of $10 million to $15 million annually.
"We decided that if a patient enters the ED and is not at the level of care that is required for an ED visit that we were going to navigate them out," Maxwell says.
Presbyterian added eight patient navigators to its ED to identify patients who could receive services elsewhere within the system and to coordinate the transition.
The patient navigator role "is very important because when a patient is screened upfront and is deemed not to be acute enough to be in the ED, we had to have a resource to redirect them and get them access to the appropriate physician and care," Maxwell says.
Over the last two years, Presbyterian has navigated about 10% of its ED volume—about 14,000 visits—to other care settings.
"About 79% of those actually received care within 24 hours," Maxwell says. "We've only had 9 patients who have been admitted to hospital after navigation, and only 5% of patients navigated out have returned back to the ED. We are trying to change patient behavior, and we are demonstrating that a change of behavior can be achieved."
"We've saved about $14 million in the past two years," he adds. "We continue to expand the types of patients we are sending to these other settings."
4. Improving Clinical Documentation
Focusing on the revenue cycle and clinical documentation is critical to maintaining a healthy margin as the healthcare industry undergoes payment reform, says Michael Burke, senior vice president, vice dean, and corporate chief financial officer at NYU Langone Medical Center in Manhattan.
"We look over everything that generates revenue in the revenue cycle," he says.
NYU Langone's revenue management initiatives department is responsible for Chargemaster maintenance, clinical chart reviews, charge capture process improvements, strategic and operational pricing, billing edits, and revenue discovery tools and reporting. The health system's clinical documentation excellence department is charged with working with clinicians on the units to ensure complete, accurate, and compliant documentation and with providing training as needed.
One area of particular focus is clinical documentation improvement, Burke says.
"We want to assure that all the documentation the clinicians have is complete and accurate. … We make this part of our compliance program, and we want to get it right. If we get it right, we won't suffer as much on RAC audits. We'll know exactly what we've billed and why we've billed it," he says.
On average, NYU Langone reviews 1,500 to 2,000 charts per month. The internal auditors are generally nurses, which Burke says is "very key to success, especially when you embed them in the units because it is one clinician talking to another clinician about missing documentation."
The CDI program has yielded substantial results. "We realize an average of $1.9 million in net revenue per month," Burke says.
5. Becoming Energy Independent
Jerry Arndt, senior vice president at La Crosse, WI-based Gundersen Health System, says his organization is on a journey to become energy independent, a decision that was spurred in large part by U.S. Department of Energy data that shows hospitals are 2.5 times more energy-intensive than other commercial buildings.
Gundersen's executive leadership made a commitment in 2008 "to become energy independent by 2014, to lead the healthcare industry in energy and environmental stewardship, to be LEED-certified on future buildings and facilities, and to reduce our waste stream and cost associated with generation and disposal of waste," Arndt says.
"Our mission is to minimize human disease and harm to the environment that results from our energy consumption in the healthcare industry while improving the affordability of healthcare. There is a lot of waste in healthcare and one form of that waste is excess energy consumption. Costs can be reduced and, in a lot of cases, eliminated."
To achieve these ambitious goals, Gundersen launched its Envision program to improve energy management and identify opportunities to reduce energy usage. The health system also began using renewable resources, such as solar, wind, and geothermal energy sources, among others, to fuel its hospital campuses.
Gundersen has committed $47.2 million to the Envision program, including $11.6 million in government grants.
"We said we were going to do this only if it made economic sense," Arndt says. "We're getting about a seven-year aggregate payback on this effort."
So far, Gundersen has achieved about $7 million in sustainability savings. Calculated with the health system's typical margin of 4%, Arndt says the financial impact is significant. "It's equivalent to about $175 million worth of revenue."