How Hospitals Can Shape Sustainable Cost Control
The ThedaCare approach consists of three caregivers—a physician, a registered nurse, and a pharmacist, all of whom meet with each patient within 90 minutes of admission. Then the trio develops a care plan that's shared with the patient. Gruner explains that bringing together the three providers creates a more balanced care plan and ensures that all staff members know and understand that plan.
"We found that many of our admitted patients were on multiple medications and … a number of medication errors could be made within the first 24 hours, such as wrong dose or frequency or not adjusting for current weight or kidney or liver function. By adding the pharmacist to the team and using collaborative care we have now gone over four years without a single medication error," says Gruner.
Creating this type of care team brought about the need to reconfigure the patient rooms, too. There are computers at the bedside for immediate access to patient medical records and tests, and all patient medications are kept locked and in the patient's room for ready access. In addition to reducing medication errors, the approach allows nurses to spend more time with the patients and reduces the amount of time they spend searching for supplies by 30%. In total, ThedaCare says the process has resulted in an approximately 25% reduction in the average length of stay, zero medication reconciliation errors for four years in a row, a $1,200-per-case cost reduction for inpatient care, and readmission rate reductions to less than 9%.
"By doing this we eliminated a lot of complications for the patient and prevented them from having to stay longer because we did the job right the first time," Gruner notes. "This process has reduced the length of stay, reduced our costs, and improved the satisfaction of our patients and our nurses," he says.
Although ThedaCare found a way to make a strategic cut to its bottom-line costs, the organization continues to look for more ways to improve patient care without increasing cost. "This is a marathon not a wind-sprint, and there's still more work to do."
Leaning on Lean
Though many in healthcare use Lean initiatives as a mechanism for uncovering waste and making swift slices to the budget, at Denver Health in Colorado, the Lean approach is the only way to operate. Patricia Gabow, MD, CEO at the 525-licensed-bed safety-net facility, says when the organization began using Lean in 2005 it set out to transform the quality of patient care and the satisfaction levels of "stressed-out, unhappy employees." Although the effort produced very little fruit in its first year, it has led to $144 million in financial benefit over the past seven years
Gabow, who has worked in healthcare for 40 years and spent the past 20 as a hospital CEO, says it was clear to her the organization "needed to step back and ask how to get this strategy right. At the end of the first year of Lean we decided there were multiple pieces of the puzzle we needed to fix if we were going to get the perfect patient experience."
One of the first areas Denver Health tackled was the supply chain, as the organization was seeing a steady increase in year-over-year cost of $1.7 million to $2.1 million. Gabow says after doing some Lean process analysis a simple fix saved millions. Everything in the engineering department supply closet was put in color-coded bins, with the things most often used placed in front for easy access; this prevented the unnecessary ordering of products already in stock—the kind of change that saved the system $3 million. However, it's that kind of sustainable change that has served Denver Health well over the years, Gabow says, considering the organization has added 35% more square feet yet maintained steady supply costs.
"So this is a simple thing that adds up to savings," she says. But, Gabow says, the organization knew there were greater savings that could come from digging more deeply into patient care. So, it turned to engineers, a consultant, and its 1,500 employees to do just that—starting with the operating room, access to care, billing, and outpatient and inpatient flow.
The organization held numerous rapid improvement events during the year, and changes from those events saved Denver Health nearly $144 million—about one-third from increased revenue, another third from cost savings, and the remainder from increased productivity, Gabow says.
The triple-digit savings came from eliminating waste through an operations restructuring to create a system of patient care joined by its information systems and processes. Patients have one ID number to use with any Denver Health provider, which gives access to all of the patient's data. The effort also standardized best practices for everything from blood anticoagulant use to rapid response.
For instance, rather than keep a 24/7 dedicated team on call for rapid response, the medical center staff generated a regular assessment schedule for nurses to monitor their patients, and criteria were written so nurses could determine whether a patient was at risk. If a nurse made that determination, then the staff had written protocols to follow for escalating up the chain of command if an attending physician was unavailable or the patient's condition failed to improve. Denver Health staff found that the number of non-ICU cardiac arrest incidents decreased with the new procedures, improved the patient's continuity of care, and lowered costs.
In total, all the changes Denver Health made to its processes allowed providers to see 30,000 more people in the community without increasing the number of staff.
"When you talk about sustainability, if you get rid of waste permanently, not only do employees like it, but you end up improving quality because wasteful processes don't improve quality," says Gabow. "We know this is sustainable [cost reductions] because the employee engagement is so high and we see results all the time, but it takes ongoing work."
And the work is continuing at Denver Health. Although Gabow is slated to retire this year, the organization has uncovered another $55 million in financial benefit in 2011 due to process improvements, a fitting departure gift for the woman who helped make Lean a way of life for the system.
Healthcare cannot cut costs at the expense of quality, and these four health systems are a testament that by using the patient as the guiding force in finding a solution, healthcare leaders can realize long-sought and enduring cost savings.
This article appears in the June 2012 issue of HealthLeaders magazine.
Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
- $6.4B Henry Ford, Beaumont Merger Failed on Cultural Hurdles
- How Chargemaster Data May Affect Hospital Revenue
- Primary Care Docs Average More Hospital Revenue Than Specialists
- House Lawmakers Grill CMS Over Health Exchange Navigators
- Fortunately, Angelina Jolie Isn't On Medicare
- ED Physicians Key to Half of Hospital Admissions
- Don't Let Nurses Sink Your Bottom Line
- Insurer's App Aims to Lower Healthcare Costs, Securely
- 69% of Employers Plan to Offer Healthcare Coverage After 2014
- Uncompensated Care Faces a Double Hit in Some States