A footnote in history has always fascinated me: The computer mouse was invented 10 years before the PC. However, without the PC, the mouse—though a new and unique device—was hardly noticed in the marketplace. The invention was all but ignored until a decade later when the PC made its way into our homes. Today you can hardly use a computer without a mouse or some derivation of the technology. It's an excellent example of the difference between invention and innovation, and a good parallel to healthcare reform.
Innovation is from the Latin "Novus" meaning new, to renew, or to create. What distinguishes an invention from an innovation, however, is when the idea or object becomes enmeshed in the marketplace and is successful. Say what you will about the Patient Protection and Affordable Care Act, (often referred to as Healthcare Reform) but the creation and introduction of this legislation into healthcare was a starting point.
Now, if healthcare leaders can correctly implement it, it stands to revolutionize healthcare as we know it. Right now though, it is much like the mouse. It is waiting for the PC to move it beyond a starting point and into the revolutionary.
I was at the VHA Leadership Conference in San Diego last week and had the opportunity to speak with a variety of healthcare leaders ranging from chief financial officers to CEOs to chief nursing officers. The common thread in each of my conversations with these folks—aside from the lack of enthusiasm for the accountable care organization as CMS defines it—was the need for someone to offer a clear pathway for how to make healthcare outcomes and quality better (and do it in a financially viable manner).
I pressed these folks, asking, "Isn't that what Reform is trying to accomplish?" The resounding collective response seemed to be, "Yes, but the regs don't tell us how to do that; they only tell us the penalties for not doing it correctly."
The lack of a clear solution, or bundle of solutions, only adds to the sense of urgency healthcare leaders feel as the legislation continues to roll out new components. Dennis Dunn, Ph.D., and senior scientist at Thomson Reuters, spoke on insurance reform as part of Health Care Reform. Much of what he covered were data points on what is expected to transpire with the newly insured, and one of his statements struck me:
"If you aren't running fast by now, then 2011 is the time. Otherwise your ED will be overrun and you'll be in dire straits," he said.
He's not wrong—with all the newly insured coming in 2013 and not enough primary care doctors to meet this new-patient influx—these patients will likely head to your emergency department. But what made that point so interesting to me was the "act now!" nature of it. Still, no clear definition of how, though.
I'm currently researching an article for an upcoming edition of HealthLeaders magazine that looks at new models for medical group success. My research is offering some answers to the "how". I asked Medical Group Management Association president and CEO Dr. William Jessee, FACMPE, FACPM, what he sees taking place.
"With all the ACO hype, folks are trying to figure out how to create these organizations, but they aren't looking at how they can be different tomorrow. Now is where the opportunities lie to improve quality, safety and patient satisfaction for tomorrow," he says. "With some creative engineering of work, they can get some impressive results."
So it comes back to innovation. There are models out there for folks to start from, but the thing about a starting point is it's just that – a place to begin. A finished and tested solution – which so many in healthcare long for – is not possible. Why? Simply, each market is vastly different. The needs and health issues of each community are different. So what works at Virginia Mason Medical Center may not work at Geisinger or at your facility. You cannot afford to wait for a packaged unilateral solution when applying the Patient Protection and Affordable Care Act.
"In the next several years a lot of models will be tested and we will see what works in what market. But as they say, 'If you've seen one model; you've seen one model,'" says Jessee. "The longer I'm in healthcare the more I know there is no single formula that will work in every area … the solution is what works for the hospital and with the payers."
Though many cringe at the lack of specificity and guidance in the Health Care Reform legislation, vagueness is an opportunity for innovation. Failing to recognize that opportunity will surely affect your finances in the future, but embracing it offers the potential for success. Indeed, there is financial success to be had with taking an innovative approach to areas like quality, safety, patient satisfaction, and outcomes. Though as many of the trailblazers – organizations such as Intermountain Health Care, Geisinger, Mayo Clinic, Virginia Mason and Cleveland Clinic – will tell you, you may lose some money upfront.
Innovation doesn't come without a price tag, yet it often offers a return on investment. In this case, it may start out by offering your hospital or health system a return in better quality, patient satisfaction, and outcomes. These early, nonfinancial successes will ultimately bring rewards to your bottom line, but you should anticipate that it will take several years to occur.
Though we'd all like to pick apart the Patient Protection and Affordable Care Act and the new ACO guidelines, the fact remains they are in place and they provide a spark of invention. Turning that spark into a blaze of innovation is entirely up to those who put this information into practice. It's truly an exciting time in healthcare. Embrace the opportunities that come with it.
There’s a lot of talk in healthcare about physician recruitment, retention, and the current shortage of doctors. Hospitals and health systems can’t operate without these folks, so when there’s a gap to fill and not enough time to fill it (or enough candidates interested in what a facility has to offer), staffing on the margins, or using locum tenens, is the direction financial leaders head.
The current shortage of doctors ensures that a segment of healthcare is going to have more than its share of business in the coming years. A report ontemporary staffing trends from Staff Care, Inc., of Irving, Texas, showed that 48% of physician respondents to a nationwide survey indicated their intention to continue working locums for more than three years. That's up from 39% five years earlier.
Therus Kolff, MD, healthcare strategy advisor for Salt Lake City-based CHG Healthcare Services, spoke at this year’s American Medical Group Conference in Washington, DC. Kolff, a locum tenens thought leader, is the founder of CompHealth, one of the first providers of locum tenens. He offered me his thoughts on the direction of this segment of healthcare.
Q: Where is the locum tenens segment headed over the next three to five years?
A: "It’s grown dramatically and it will continue to do so," he said. The advent of healthcare reform coupled with the fact that baby boomers are getting ready to retire and the continual shortage of medical training programs means increased demand for physicians, he says.
"These days it’s even more important that we retain as many physicians in this profession for as long as possible. There have been a lot of predictions that if the [stock] portfolios of doctors ages 50-60 years old come back, that these physicians may retire. We don’t want that as a society – we need those doctors to continue to take patients," Kolff said.
Q: What prompts a physician to opt for a locum tenens role versus hospital employment?
A: "Locum tenens allows the physician to experience what it’s like to practice pure medicine again; they don’t have to deal with the hassles of billing and collections," said Kolff.
There are three overarching groups of physicians interested in working as a locum tenens, Kolff explains. Each group has a different reason for opting for this avenue—which can be beneficial to the hospital:
(1)The younger physician: This doctor has worked hard to get into medical school and has been working as a resident but not getting paid much. ‘Some of these physicians may not know where they want to live and work, or even what specialty they want to practice. Or they may want to take some time off before they begin working full-time," he says.
Working as a locum tenens can help these younger physicians narrow down the parameters of what they are looking for before they join a hospital. "By working with a hospital first as a locum tenens, both the hospital and the physicians can decide if it’s a good fit. In the long run, that helps the hospital with physician retention," he says.
(2)The middle-age physicians: This group consists of physicians who have practiced medicine for a while. They have settled in at a facility, but they may feel the practice or position didn’t turn out the way they had hoped.
"There are also a number of physicians in these middle years that want to pursue alternative careers, such as painting or playing music, but they want to have the stability of an income," he explains. These physicians may want to work part-time, which can fill in service line gaps at a hospital or they can cover time off when employed physicians go on vacation.
(3)The older physician: This group may have already retired but want to return to work. They are usually empty-nesters who may also want to travel, or relocate to an area where their children now live. "This is the group we like because they have the art of medicine down and they understand how different systems work—that’s beneficial to a hospital," he says.
Q: Using locum tenens is expensive, although vacancies in staff may dictate the necessity to use them. Are they worth it?
A: "What an institution ultimately wants is full-time staff that can provide quality care to the community. It isn’t often you see locum tenens being used to provide services over a long time," Kolff explains.
The cost of locum tenens, however, is significant. According to numerous staffing industry surveys, the average daily rate for a locum tenens physician ranges from $1,000-$2,000 depending on the medical specialty. In addition, the hospital usually pays for housing and transportation. Malpractice premiums may or may not be paid for by the locum tenens agency.
"What we find is these physicians generate revenue in cash in excess of their cost; that revenue stays with the hospital," he adds. A 2010 Jackson-Coker Industry Survey arrived at the same conclusion. With the exception of emergency medicine, the top ten specialties all brought in more in daily professional fees than it cost to staff the physician for a day.
Determining Need, Assessing Value
Although most hospitals and health systems are in search of physicians to immediately fill staffing voids, don’t let the level of urgency for these doctors override the budget completely. Kolff’s assertion that these doctors generate more than enough to cover the cost of their use should be validated at each hospital or health system. Periodically, financial leaders should calculate the cost versus value these physicians are providing to the hospital. Just as all physicians are not created equal, the revenue they generate for the hospital isn’t either.
To assess the value of these physicians, combine the base pay, benefits, incentives, vacation, CME allowance, liability insurance, and taxes to arrive at the cost of a permanent practitioner. Then compare that amount to the cost of a locum tenens in the same position (be sure to include malpractice premiums, housing costs, agency fees, etc.). Finally, calculate the revenue generated by both the employed and locums physicians and compare.
Keep in mind that a couple of less financially tangible factors to consider in your locum tenens needs assessment: patient satisfaction and quality of care. As reform pushes everyone toward providing more for patients in both of these areas—and eventually reimbursing for them—you will need to create locum tenens contracts that allow you to quantify and calculate the value locum tenens provide in these areas as well.
For now, however, if you cannot adequately assess the financial contribution of areas to your hospital or health system, consider the strategic direction your hospital is headed and see if the locum tenens you are utilizing fit that direction. Moreover, if you haven’t done so already, you may also want to start creating locum tenens contracts that guide these physicians toward your strategic vision. Certainly locum tenens are a costly solution to staffing shortages, and as Kolff points out, should not be the long-term solution for this staffing problem.
Unfortunately, as hospitals nationwide find that there are fewer physicians candidate to actually recruit, locum tenens will remain a line item in the budget—how big a number you see in that row depends on how diligently you track the monetary (and non-monetary value) these physician bring to your hospital or health system.
Once the ink dries on your vendor contracts, do they simply get filed away? Many financial leaders would likely respond "Yes", but there's more to supply chain management than getting the best price. Actual supply chain management requires cultivating relationships that can reduce revenue cycle expenses and help a hospital or health system achieve strategic goals.
What is SRM?
Supplier relationship management is an approach to managing business interactions with the vendors. Practiced by many in the business world, it is rarely used in healthcare, though with a larger number of providers using Lean and Six Sigma process improvement initiatives, the numbers are growing. The goal of SRM is to make the processes between an enterprise and its suppliers more streamlined and efficient. SRM encompasses both business practices and software, and falls under the information flow area of supply chain management.
SRM creates a common communication and goal-setting structure between the hospital and supplier, both of whom frequently use different business practices and terminology. In doing so, both the hospital and the vendor increase the efficiency in acquiring goods and services, managing inventory, and processing materials. Advocates of SRM say it lowers production costs and improves quality.
How does it work?
Intermountain Healthcare, a 24-hospital, $3.6 billion net revenue Utah-based healthcare system, embraced SRM eight years ago as part of its supply chain management. Brent Johnson, vice president of supply chain and imaging services and chief purchasing officer, says he found that building a relationship with his vendors opened up a variety of opportunities and cost savings.
Johnson joined Intermountain Healthcare in 2003 after working in the utility industry. He was brought aboard after McKinsey Consulting completed an analysis of the large health system and recommended that senior management bring in a supply chain leader from outside the healthcare industry to spark process innovations.
"When I got to Intermountain, I asked who the top 10 biggest suppliers were and who was managing them. They didn't have an answer," he says.
The system had a $1 billion annual non-labor spend, yet no one was managing the top contracted vendor. The system was overrun with vendors, working with nearly 12,000. Moreover, contract negotiations and vendor selection (often based on physician supplier preference) was done by a variety of personnel at each hospital.
"When you let personal preferences drive you, you'll pay too much; if you don't have standards, you pay too much; and if you don't have leverage, you'll pay too much," says Johnson.
Getting the situation under control would be a large undertaking, but Johnson added to the task by pledging to leadership that he'd knock $20 million off of the bottom line each year over four years. To help him achieve this $80 million goal, 25 new hires were added, many of whom were brought in to help with analytics, strategic sourcing, and supplier relationship management.
Intermountain centralized the ordering and began managing each supplier based on why it was chosen. As part of their supplier relationship management, Johnson and his team communicated what the goals of the system were and they looked for opportunities for the vendors to work with them to achieve success.
For instance, by working with a sterilization vendor for six years to improve outcomes, Intermountain reduced costs by $2 million per year, and reduced medical waste. Both companies developed opportunities to share information and tracked monthly performance metrics against annual goals, Johnson says.
Another instance where mutual goal setting is paying dividends developed over a four-year period of working closely with a manufacturer of smart infusion pumps; Intermountain reduced costs, increased quality, and reduced medication errors. Both companies committed resources to develop an improved pump with more advanced technology.
Some financial leaders may believe that SRM can only work if a facility has the financial clout of an Intermountain. However, smaller facilities can also reap the benefit of creating a strategic relationship with a key vendor.
At 69-bed Gordon Hospital in Calhoun, GA, it took a new physician to prompt a review of vendors. Gordon Hospital, which has net revenue of $85 million annually, had recruited a young, tech-savvy urologist who encouraged the hospital to reassess the number of vendors and products it was using, explains Cory Reeves, CFO at the hospital.
Reeves, along with Pat Aaron, the director materials management, decided to work with one vendor representative to do a full assessment of the inventory. The assessment revealed that the hospital was overstocking—keeping some 31,000 different products on hand. Through a process I'll explain momentarily, it narrowed that list to 10,000, which yielded annual savings of $16,000.
"$16,000 is a nice chunk of change for our hospital, Cook [Group Inc., the vendor] also helped us to look at ways we could reduce our overall inventory," Reeves explained. "Actually, they helped us reduce our inventory by 75%."
To accomplish this, they brought together a physician—in this case the urologist that had sparked the hospital's effort—and the vendor who worked to assess which products were necessary. For instance, the physician reviewed the materials for a specific urology procedure and determined that the hospital was using two products by one vendor, when a single product by another vendor would work equally well.
"We were able to reduce our inventory, and our costs, and pass the cost savings onto the patients," explains Aaron.
Although Gordon Hospital works with a group purchasing organization for many of its supplies, their process assessment clarified that it was using too many vendors. A situation they corrected by narrowing five vendors down to a single vendor. The change has made the process of ordering and tracking supplies easier and more efficient.
"Having a vendor get so highly engaged in what our needs are and helping us [reach our goals] made us feel like a much bigger fish, and it's saved money," adds Aaron.
Though Reeves and Aaron may not put the formal tag 'supplier relationship management' on their interaction with the vendor, Gordon Hospital applied one of the key principles to SRM: It leveraged the vendor's expertise to help attain the hospital's goal of cost reduction.
I write about healthcare all the time, and as CFOs you live and breathe it. However, if you aren't looking at your hospital or health system through the eyes of a patient, then no matter what your role in the C-suite, you're missing the future of healthcare.
Everyone in healthcare knows all about the rising cost of care, and how patients and payers in the U.S. pay double for average care, while in countries like Australia the cost is less and the outcomes better. Could it be, in other countries, something other than reimbursement drives the system?
Before I continue with that train of thought, let me recount a very personal story. Last July was the first time I was ever admitted into a hospital. Although it was for a very happy reason—to give birth to my son—it was also quite scary. As I lay in the hospital bed in one of New England's largest and most well-known healthcare facilities, I was awash with mixed emotions and adrenaline. I was excited to meet my son, yet fearful of the pending C-section.
Just an hour before my surgery, two anesthesiologists entered my room and rattled off choices on which drugs I could have; what the ramifications of the drugs could be; how each anesthetic is administered, and a host of other details. Then they asked which drug I wanted and put a consent form in front of me to sign.
Now to the hospital's credit, they had given me some literature to read prior to the physician's arrival—and I did read it—but even for my education and healthcare background, the adrenaline got the better of me. My brain was a swirl; and the physicians standing in front of me trying to clarify details actually confused me more.
Now I applaud the physicians for speaking to me like an intelligent person, but the fact is at that moment I wasn't operating to the height of my intellect. So I looked at both doctors and sheepishly said, "I'm really not clear about anything you just told me, or how you will be doing it. Could you draw me a picture?"
Although I felt like a child for having to ask them to literally draw me a diagram, they complied with my request. The visual aid helped put the information into context and gave me a chance to process it. Then I asked them for 15 minutes of time before I signed the form. It was then that they pushed back. They told me they couldn't wait or the procedure might be delayed.
Now I felt rushed and irked. I basically told them "Too bad, I need time."
The physicians were clearly not pleased, but they did give me the time. Now the difference between me and many patients is I didn't just nod my head pretending that I understood what was about to happen, and then sign the form. Many patients do this because they are dazed about their situation and they feel rushed. It's an awful feeling to be at your most vulnerable, then to have unfamiliar terms tossed at you, and then to be hurried into a decision that impacts your life.
The Beryl Institute, an organization advocating for better patient experiences within the healthcare system, last week released a study of more than 790 hospital executives that looked at the state of the patient experience in the nation's hospitals and identified the greatest road blocks to implementing change.
Patient experience/patient satisfaction ranked number two (21%) in terms of top priorities for the C-suite, second only to quality/patient safety (31%), according to the study. Despite its prominence on the hospital executive priority list, nearly (73%) of executives do not have a formal definition for patient experience. Ergo, many are addressing the issue tactically, with the top three priorities being:
Noise reduction
Discharge process and instructions
Patient rounding
Interestingly, while executives don't feel they've gotten their arms around this 900-pound gorilla, nearly 61% of respondents felt positive or very positive about their progress in addressing the issue.
Let me summarize my interpretation of these findings in one sentence: We don't know what patient-centered care means nor do we know how to approach it, but things are going great.
I cannot imagine any other industry in which you guess what your customers want without asking them, and yet while attending healthcare conferences and conducting countless interviews I've found that many hospitals do not have a single patient on their small patient-experience committee (of which the study says 42% of folks are using to drive this initiative). Imagine a quality committee without your quality officer or your electronic health records initiative without the CIO.
But back to my story; to the hospital's credit, this process was somewhat patient-centered. Somewhat. While they did draw me a picture, my physicians' desires to proceed at a swift pace were great for the hospital, the staff and the OR turnover, but it wasn't great for me.
That's where the lesson lies, as does the simple definition of patient-centered care: it's not about your hospital's goals or anyone else in it, true patient-centered care is all about me—the patient.
Now for a longer definition of patient-centered care, I like this hybrid—I feel it best reflects my needs as a patient. Care of a patient should involve education about the patient's illness (acute or chronic), an understanding of its impact on the patient and family as a whole, a full explanation of the proposed therapy (ideally with multiple treatment options), and engagement of patients as members of the overall care team.
You may be wondering why, as the financial leader of your hospital or health system, that patient-centered care should be so important to you. Aside from the Medicare changes to reimbursement for 30-day readmission, there's money to be gained from this approach. Consider this data example from the IBM white paper Capturing Value from Patient-Centered Care:
"We used a hypothetical private, 800-bed academic medical center operating in the United States with net revenues of about $1.5 billion. This hospital uses a mix of fee-for-service, managed private care, public insurance reimbursements and direct payments by patients. The model estimates that the total annual economic benefit it could achieve from the implementation of patient-centered care approach is $81.3 million."
Patient-centered care is not only great for your patients, but there are potentially millions at stake for enacting it—that should be more than enough reason to make you a champion for this cultural shift. But if you want more reasons why patient-centered care is the model of the future, you may want to listen in to a recent presentation I attended, Patient Centered Accountable Care, which outlines in greater detail the financial and clinical benefits of this approach.
What I found most appealing about this presentation on patient-centered care was that the facilities involved have embraced this philosophy completely, making it a part of their overall culture. This meant they sought the guidance and insight of their patients in as many areas as possible. In doing so, these hospitals have made huge strides not only in their patient satisfaction, but also in their cost reduction efforts and quality.
It's unlikely that any courses taken in business and finance school ever fully prepared financial leaders for the shrewd rigors of healthcare payer contract negotiations. Nevertheless, it still falls on the CFO to ensure contracted payer reimbursements stay as favorable to the hospital or health system as possible.
Without a strong background in contract negotiations, however, financial leaders can make costly missteps, says Kyle Kobe, a principal at Equation, a Salt Lake City, UT-based healthcare consulting firm. To remedy this, he offers three strategies for to make this process a more fruitful one for the hospital and health system.
Strategy 1: Know Thy Current Value
Kobe says financial leaders should begin the contract negotiation process before the payer arrives. So, keep in mind that all three of these strategies are meant to be tackled prior to talking with your payers.
"You need to know the current value of your contracts within the hospital or health system," he says.
Healthcare leaders often take this to mean knowing the percent of profit for the overall charges with a payer, but Kobe recommends going beyond that and understanding the margins and how much every payer they work with is contributing to the overall bottom line.
"A negotiation should be predicated on creating a contract that supports the level of work the hospital does [for the payers]," he says. "Then they need to say, 'This contract is worth this much to us in terms of our bottom line, as well as what we are trying to accomplish as a hospital or health system.'"
Strategy 2: Know Thy Market
Kobe says it's important to understand how valuable the hospital, health system or physician practice is in the market and then discern whether the current or proposed contract reflects that position. First, for example, assess what services are offered at your hospital versus others in the area. Or factor in whether you are the sole provider for an offering, and then do a benchmark for your rates. While you may not be able to learn how much your competitor(s) are earning with the same payer's contract, you can take each of your existing payer contracts and benchmark the rates against one another.
"You need to understand where this contract fits into the spectrum of contracts you have," Kobe explains. "Then you can talk to the payers about the rates and have an understanding of where the [contract] needs to go. Once you know the benchmark … you can be more aggressive in your negotiations. You can potentially push back to get what you need."
Kobe says to keep in mind that your analysis may also reveal that you don't have as much market power as you might think. "Even if you don't have any market power, by understanding and knowing where your strengths lie you may be able to pick up a couple of additional points," he notes.
Strategy 3: Know Thy Options
When it comes to negotiating, it helps to have a tactical plan. The first two strategies avail you of the information you have in your system, now you need to run some best- and worst-case scenarios.
"You need to know what's financially viable with this contract; what you're willing to accept in terms of rates, and what your fallback position is," Kobe says.
Part of your tactical approach should include revealing the data you chased earlier. By showing the payer this information the financial leaders is indicating an awareness of the economics of the contract as well as how the reimbursements are reflected in the health system, Kobe explains.
For instance, if the hospital's internal analysis uncovered that a large number of the payer's clients come through the system, then now is the time to play that up as market power. Bear in mind however, that you should be aware of what percentage of your overall patient census is coming from this payer, too. If the payer is your largest source of revenue and the payer knows it, it could weaken your negotiating position.
Alternatively, if you have little market power, Kobe says, healthcare leaders could take their case to the public via the press. "You look at the numbers and explain to the press that the hospital may have a difficult time providing care if it doesn't at least get a market rate from the payer, or you may want to show how it could cause financial trouble for the hospital if the rate stays the same," he says.
Beyond financials, Kobe suggests that financial leaders come prepared with clinical outcome rates and services provided for the payer's customers.
"Regulatory changes are pushing healthcare in different directions and in some cases encouraging partnering with payers," he notes. "It may be beneficial to find out how a hospital can work with the payer on areas such as diabetes to reduce the costs to the provider and the payer."
Lastly, as part of your tactical strategy, Kobe says that healthcare financial leaders should also know when or if they are willing to cancel a contract entirely.
"If you are going to take the nuclear option, you have to know in advance if it is economically viable to give up the contract," he says.
The tactic can be beneficial in some instances, Kobe says, as it can result in a more mutually beneficial negotiation later. "I've seen it happen where the payer would negotiate in the beginning and the provider dropped them. Later when the payer realized they needed [the hospital] they were more willing to negotiate. … Sometimes you need to surprise the payer to really get everyone talking," he says.
Although the payment environment may change in the coming years, one area that's unlikely to change is payer contract negotiations—payers certainly won't make it any easier for financial leaders to get additional reimbursement. By coming prepared with data and strategies, CFOs can make the process less favorable for payers and more favorable for the hospital or health system.
When you consider that 30-40 cents of every dollar spent on healthcare, or more than a half-trillion dollars annually, is spent on costs associated with unnecessary, inefficient and even unsafe care, it should come as no surprise that healthcare leaders are looking for fresh solutions.
In this continuation of our look at process improvement, we see how baby steps taken with small initiatives can lead to giant strides when Six Sigma or Toyota Lean Process Improvement principles are implemented.
Many healthcare leaders are onboard with process improvement at their facilities. Where they are lagging is in the full execution of these initiatives. The American Society for Quality conducted a study of 77 hospitals and found that 53% of hospitals have some type of Lean initiative while 42% are using Six Sigma. Interestingly, the same American Society for Quality study reported that only 4% of hospitals have full deployment of these process improvement initiatives.
The study concludes that in order for Lean management to truly be effective it has to be driven by a unified team mindset—everyone has to believe in and act Lean. Unfortunately the study found that 30% of hospitals are still lacking leadership buy-in while 59% are lacking resources. Two healthcare systems—Virtua and Virginia Mason Medical Center—exemplify the accuracy of that conclusion. Both providers have full management buy-in for their process improvement programs and they are staying ahead of the cost curve.
Virtua, Marlton, NJ
Consisting of four hospitals, Virtua has been using Six Sigma to improve its business operations since 2000, when leaders created a strategic partnership with General Electric.
Rich Miller, CEO and president of Virtua has seen how using this methodology has shaped everything it does.
Virtua, which earns net revenue of $1 billion annually, started the process by talking to managers and looking at their patient and employee satisfaction scores as well as quality scores and operating income.
"When we looked at the results they were all very middle of the pack, and that wasn't good enough," Miller explains. "I wanted to change us to a culture of excellence."
So in 2001, Miller took a bold step, and after doing a year of Six Sigma targeted pilots, he rolled management philosophy out system-wide. They invested just $1 million, which went toward training managers to be "black belts" in process improvement parlance. Once trained, the managers began to look for inefficiencies and ways to streamline the system.
They looked at all processes in all four hospitals—concentrating on areas of quality and safety. "Now we use this tool relentlessly. But it's really important that people understand that this tool isn't a short-term measure you turn to in tough economic times," he says. "You need the consistency to see the full results."
And they did see results, to the tune of $28 million overall since implementation as well as quality and patient safety improvements. For example, since applying theSix Sigma Toolbox the system has seen their core measures improve in areas such as dysphagia screening for patients being assessed for a stroke.
Virtua's clinical assessment rate is 90%, which exceeds the American Heart Association's "Get with the Guidelines" benchmark of 85%. Virtua was also part of the Joint Commission's Center for Transforming Health Inaugural Six Sigma Project for adherence to the World Health Organization's guidelines for hand hygiene—improving their hand hygiene by 118%.
"It's really a misnomer in healthcare that if we take the money out of the system that you reduce quality. Every other industry has shown that they improve quality when they reduce costs. You have to take the variation out of the process and reduce fragmentation, and then you'll reduce your costs," says Miller.
Healthcare IT implementation is a good example, Miller says, "We spend a lot of money on IT and use 20% of it. It's because we are implementing this technology into an already fragmented process. You need to correct your processes before you add the technology so you don't repeat the same mistakes."
Those who healthcare leaders look to roll out this type of process improvement initiative may want to start by analyzing their infection rates, medication errors rates, and readmission rates, according to Miller.
"Those are the areas that offer a broad brush for cost savings," he says.
"[Six Sigma] is so relevant today because we have to reduce variations and costs. Healthcare leaders have to think about tools that can change the paradigm. If you're not thinking about the different tool kits you need to move forward, that survival will be difficult," says Miller.
Virginia Mason Medical Center, Seattle, WA
Virginia Mason Medical Center has literally written a book—Transforming Health Care—on how to apply process improvement in a healthcare setting. Virginia Mason operates a system of integrated health services including a large, multi-specialty group practice of more than 480 physicians, a network of neighborhood clinics, an acute care hospital; and a research institute.
Having started the transformational journey in 2002, it began using Toyota's Lean Process improvement approach and then eventually created its own specialized process improvement model, dubbed the Virginia Mason Program System (VMPS). Virginia Mason was the first to integrate the Toyota philosophy throughout its entire system, and a few years after working through many of its own process flaws found VMMC had become an industry model for how to apply this system.
Virginia Mason's CEO Dr. Gary Kaplan and his senior management team moved its facility from a Lean approach into VPMS, a system-wide program that changes the way it delivers healthcare by improving processes as well as patient safety and quality.
"It's important to differentiate that this is a way to manage and lead—it's a management system—not a program," says Kaplan.
It's a key distinction, he notes, because Virginia Mason found that many in healthcare are keen to use Lean or Six Sigma tenets to target areas of the business for process improvement with some limited success, but often fail to roll it out on a broader scale to reap the full reward.
"Healthcare is known for following the fad of the month or year to save money … but we look at this as comprehensive management system that's also about quality, safety and patient and staff satisfaction," he says.
"In the early years [of adopting this program] we said we can't be successful unless we change the mind of senior leadership, so they were the first people we trained … it's really a critical piece of the process," he says.
The return on investment for this type of system-wide process improvement, Kaplan says, extends beyond revenue enhancement. VMMC has also seen its professional liability expenses decrease to the tune of millions of dollars for several years now and its self-insured retention requirement dramatically decrease from the previous year. Plus with healthcare reform taking hold and the decreased reimbursements hitting everyone's bottom line, Kaplan believes that this approach is even more relevant today than ever.
The quick fixes are few and far between these days for health systems and process improvement programs—though they can work on a small scale—have an even greater potential when they are rolled out on a larger one. As healthcare leaders look for strategies to help them generate more revenue, process improvement methodologies can cut out system waste while improving the overall quality of the care that is delivered. Ultimately that will generate even greater returns.
The first piece of advice a dietician offers a weight-loss patient is to make small changes, and then to build on these until a full-scale, permanent life change is achieved. The same is true for hospitals and health systems considering a Lean and Six Sigma approach. These process improvement plans offer healthcare leaders a sound path to meet the goal of improved quality of care delivered at the lowest possible cost.
For most hospitals or health systems, process improvement generally starts out as targeted strikes and eventually rolls into a whole new way of operating. In my next two columns I take a look at how four different providers approached process improvement, and how the changes they made—small and large—paid off.
Stage One: Small Changes Yield Encouraging Results
Every big change begins with a small step, and at North Ottawa Community Hospital, an 81-bed acute care facility located in Grand Haven, MI, the hospital was looking at a variety of inpatient, outpatient and support services to find ways to bolster margins while reducing cost and improving patients’ access to care. To that end, it affiliated with several organizations to help bolster its services and transform from a standalone hospital into a healthcare delivery system.
However, while the affiliations meant better patient care, NOCH’s billing and collections department had some process inefficiencies that had the potential to offset the progress. Moreover, some of the hospital's processes would soon be in conflict with new laws regulating how payment information is kept.
“My staff was writing payment information down and keeping it at their desks—that isn’t allowed with the new laws. Also, sometimes that information would get misplaced and the payment wouldn’t get run. So, this was also a security effort; we knew we had to tighten things up,” said Mary Oomen, patient financial service manager at NOCH.
The main problem was that NOCH was still using dial-up credit card terminals in multiple locations and manually depositing checks at the bank. Its system lacked the ability to collect payments at any web-based computer in the hospital or at the new affiliate locations. In fact, one billing employee was still logging checks manually in an Excel spreadsheet, and another employee had to audit that log and physically bring the checks to the bank.
The collection process wasn’t any less manual either. Collection calls were made and payment information was taken over the phone. Then, the collections employee brought the information to the cash office, and it would be entered into a credit card terminal. If the card was rejected, the file would go back in to collections. If the card was accepted staff had to mail the patient a receipt for the transaction.
Kim Denhof, business manager for NOCH’s extended care services, says “just going to the bank, from start to finish, was 45 minutes every day and two people had to be involved in the process.”
Moreover NOCH lacked the ability for patients to pay online, via debit card, or to set up recurring automated payments. In short, posting, reporting, and reconciliation processes were rife with inefficiency.
As with our diet scenario, NOCH recognized that this was an easy area to take a first step at improving process. The hospital added a patient payment and remote deposit software program from InstaMed, and saw a 44% boost in collections. Plus it saved 20 hours of staff time each week.
“The individual who was responsible for making the deposit before now does it remotely, and it’s freed them up to work in our accounts receivable and outstanding accounts issues,” said Denhof.
Additionally, Oomen says patients who pay over the phone now receive a receipt via email instantaneously and they can complete the transaction while the patient is on the phone. They also can set up recurring payments with a debit card.
“[Automating] helped make our work more standardized throughout because we could offer this at the hospital and to our affiliates. It also helped eliminate a security risk for us, and the patients like it,” said Oomen.
Four years ago, leaders at Phoebe Putney Memorial Hospital, a 443-bed facility in Albany, GA, took a look at their revenue management process. The hospital was processing 215,000-225,000 claims per year, yet it had only four auditors, two for inpatient and two for outpatient.
“We were able to audit about 10% of the claims annually. There just wasn’t enough time or personnel to even review the charts for charge accuracy,” explained Wendy Allen, director of revenue management for the hospital. “We would audit a chart if a payer needed something or if a patient requested it, but we didn’t have a formal process in place.”
In this instance, the solution was actually only the beginning for multiple process improvements. Like its counterparts at NOCH, Phoebe Putney added technology from MedAssets-- new charge capture software which improved claims processes. Since adding the program, Phoebe Putney has been able to realize $12 million in net corrections by producing cleaner claims and processing each charge correctly on the first take.
Improving the charge capture process yielded some other important findings pointing to other hospital inefficiencies. The system was able to identify a situation where employees were stealing narcotics.
The staff would dispense medication from the system and charge it to a patient, but they weren’t providing the supporting documentation for the administration of the drugs. Without the software the limited number of auditors wouldn’t have been able to track the number of instances this activity took place and then work with their pharmacy to verify patient orders.
“This program helped us fix that and our processes,” explains Allen. “It also helped us look at and correct some compliance issues,” she says.
Phoebe Putney has been able to identify consistent coding mistakes and work with and train coders to avoid these errors. Moreover, the system also revealed that the labor and delivery department was processing patients incorrectly.
“If a patient delivered at night or on the weekend they were likely not going to pay for it because the staff wasn’t charging for it. We had a breakdown in communication between staff members. So, we implemented a new process to correct that, and then our charge capture software helped us determine if the new process was being followed,” Allen explains.
Though the intent was to use charge capture software to improve the department’s own inefficiency and increase the bottom line, what the hospital found was that one process improvement leads to another.
NOCH and Phoebe Putney offer glimpses of how early-stage process improvements can yield results on a small scale. What happens when healthcare leaders embrace process improvement as an organizational philosophy and encourage Six Sigma or Lean to influence every aspect from billing to care delivery? Next week we’ll look at two large providers who have done just that—which made them financially stronger and improved the quality of their care.
After much anticipation, the public comment period on the proposed Accountable Care Organization regulations from the Centers for Medicare & Medicaid Services began last week. The release of the proposed regs prompts me to ask: Are the potential cost savings worth the effort to establish an ACO, and if so, is now the time to set one up?
These aren’t simple questions to answer.
Donald Berwick, MD, the CMS administrator said in a March 31 perspective published in theNew England Journal of Medicine that the purpose of ACOs is to foster changes in patient care so as to accelerate progress toward:
Better care for individuals
Better health for populations
Slower growth in costs through improvements in care
Should your facility jump on the bandwagon? The answer is likely yes, but you may want to do so with optimistic trepidation. Here are few areas to keep in mind:
Details of an ACO
An ACO is an organization whose primary care providers are accountable for coordinating care for at least 5,000 Medicare beneficiaries. CMS will grant groups of Medicare providers the ability to share in cost savings if they create an ACO.
CMS will require ACOs to report metrics on their clinical processes and outcomes, patient experience, utilization, and costs - - all of which will be calculated to create a per-member cost for treatment in a given timeframe. This figure would be compared to benchmarks the government will establish based on rolling averages of per-beneficiary costs for the ACO, plus an adjustment to account for national expenditure growth.
Now, if the ACO meets the quality and patient perspective benchmarks, and manages to exceed a minimum savings threshold (also set by CMS), then the participating hospitals or health systems will be able to share savings with Medicare. How the money will be distributed among the participants of the ACO is based on the patient’s utilization of services within the ACO. Currently, the proposed regulations do not specify how much the incentives for providers will be.
Participation Concerns
Though there will be some cost savings afforded to ACOs, the overall financial benefit to participants of an ACO is still cloudy. Financial leaders don’t do well with “cloudy” when it comes to numbers, which is why many healthcare leaders haven’t been quick to support this initiative. Nevertheless, under the heading of “he who hesitates,” it may be time to look into participating in an ACO, so you don’t miss out on future market share opportunities.
In another New England Journal of Medicine article, researchers remark that the power struggle between physicians and hospitals will only heat up as ACOs come online. The article’s authors suggest that those who make the first move will control ACOs in a local market for many years into the future.
The authors write, “If physicians come to dominate, hospitals’ census will decline, and their revenue will fall, with little compensatory growth in outpatient services, since physicians are likely to self-refer. This decline will, in turn, lower hospitals’ bond ratings, making it harder for them to borrow money and expand. As hospitals’ financial activity and employment decline, their influence in their local communities will also wane. And it will be hard for them to recover from this diminished role.
“Conversely, if hospitals come to dominate ACOs, they will accrue more of the savings from the new delivery system, and physicians’ incomes and status as independent professionals will decline. Once relegated to the position of employees and contractors, physicians will have difficulty regaining income, status, the ability to raise capital, and the influence necessary to control health care institutions. Therefore, the actor who moves first effectively is likely to assume the momentum and dominate the local market.”
While the thought of losing market share is often enough to stir healthcare leaders into action, there’s a very important challenge to also consider—the legal, antitrust ramificationsof ACOs. The new ACO antitrust guidelines indicate that CMS, the Federal Trade Commission, and the Anti-Trust Division of the Department of Justice will all be closely monitoring these organizations. Just getting approval by CMS to launch an ACO may be very time consuming, and may make it more trouble than it’s worth for some hospitals and health systems.
You see, the government realized preemptively that ACOs were a possible avenue for antitrust issues. CMS recognized that healthcare providers would be more likely to integrate their care delivery for Medicare beneficiaries through ACOs if they could also use the same ACO for commercial insurance. This would likely lead to a new delivery and payment system with commercial payers, which might also inspire some unsavory results, such as price fixing and market allocation agreements among competing healthcare providers. All of which would drive up the cost of consumer care.
“The agencies recognize that not all such ACOs are likely to benefit consumers, and under certain conditions ACOs could reduce competition and harm consumers through higher prices and lower quality of care. Thus, the antitrust analysis of ACO applicants to the Shared Savings Program must ensure that ACOs have an opportunity to achieve substantial efficiency yet the analysis must remain sufficiently rigorous to protect both Medicare beneficiaries and commercially insured patients from potential anticompetitive harm,” CMS wrote in the document.
If you are considering partnering with one of your competitors to set up an ACO, the proposed regulations may make it challenging depending on the size and location of your organization. Then again, not attempting to establish an ACO in your area could prove to be a market share blunder, if the authors of the NEJM are correct.
Which brings me back to my original question: Are the potential cost savings worth the effort to establish an ACO, and if so, is now the time to act? The true answer is that every healthcare organization must carefully decide for itself. The best guidance anyone can offer is to be sure to complete your due diligence before deciding to pursue or disregard this initiative.
After she took a spill on the soccer field and landed on her noggin, Milton Silva-Craig took his daughter to the hospital emergency department to have her injury assessed. The patient registration representative confirmed his demographic information and verified his insurance. Then the woman instructed him that the hospital normally takes $150 at intake. Many patients would likely reach for a credit card, however, more patients are starting to ask, "Can you explain what that’s for?"
That’s what Silva-Craig did, but he’s no layperson. Silva-Craig is the executive vice president of credit and information management consulting firm TransUnion Healthcare, a wholly owned subsidiary of credit and information management company TransUnion, and so he viewed the situation with an eye on payment approach and risk. What he found was that when he pushed back with a few questions, the payment collection process sort of dissolved. It went something like this:
Yes, the woman had verified his insurance.
Yes, she had verified his co-pay amount.
No, she couldn’t tell him if he had met his deductible amount.
No, she couldn’t tell him if he had co-insurance.
No, she couldn’t tell him about his credit rating or likelihood to pay.
Moreover, had this been a more complex medical scenario, he adds, she likely wouldn’t have been able to give him an estimate on the cost of treatment either.
It turns out the $150 the front office was asking for was an average patient payment amount, which the hospital arrived at in order to obtain at least some of the patient portion of a bill at the point of service.
Kudos to the hospital for at least making some attempt to collect payment at the point of service, however, as consumers become more responsible for the cost of their care, this approach isn’t going to fly. Hospitals and health systems must give their staff the tools to answer questions like the ones Silva-Craig posed.
Payment transparency or lack thereof, opens hospitals up to a boatload of financial risk as the payment environment shifts. Consider that in just four years, the health plan environment has changed drastically from one in which the majority of consumers had little knowledge (or interest) in the cost of their care, to the age of high-deductible, consumer-directed health plans. As consumers grapple with funding more of their own care, they now want to know their care costs. In many hospitals and health systems, these are answers the front office doesn’t have, but they really should.
John McLaughlin, managing director and practice leaders with LECG Corp., a global consulting and business advisory firm, says that managing this risk as the payment environment evolves is vital, albeit challenging in healthcare.
"A health system today is as complex as running a $5 billion company," McLaughlin says. "However the difference is, in corporate America there’s a push for enterprise risk management … that’s not the case in healthcare."
Enterprise Risk Management or ERM is a method, framework, and process to manage risks to an organization by taking a holistic view of the various uncertainties involved across the organization. Before a hospital or health system can address the risks associated with its payment process, McLaughlin says healthcare leaders must know where their financial risks lie. To do so, McLaughlin recommends pulling together a team from all areas of the hospital (financial, administrative, clinical, customer service, etc.) and applying the following principles:
1.Establish the organization’s objective(s) (e.g., to increase profits by 5%).
2.Evaluate the hospital’s risk tolerance and add a tolerance metric which is approved by the board. (How much potential loss are you willing to take on?)
3.Evaluate the events that can lead to a risk (i.e., Accountable Care Organizations or bundled payments).
4.Determine solutions for mitigating those identified risks.
5.Enact solutions and assign an owner for each risk area.
"An [ERM] tool can be used for this, but it can be done without one," he says. In order to make this risk management session productive, you will need to provide the team with your gross charges and profits for each procedure, the costs and opportunities to reduce them, and the reimbursement levels.
Once the risks have been identified, one of them is likely to be the area of payment transparency and that’s where your front office may need to change.
"The whole conversation that I had at the ER registration could’ve gone better if the woman had had the data I wanted in her hands. Then we could’ve had a meaningful conversation," he says. "But with only limited information, she wasn’t empowered and when I pushed back she gave up. That now puts a lot of risk on the hospital as to whether I pay my balance after I leave."
Silva-Craig’s colleague Jim Bohnsack, vice president of product development at TransUnion, says hospitals and health systems already have many of the tools in place to provide patients answers to their payment questions. However they lack the ability to pull all of the pieces together in the front office at the point of service.
"One of the pieces everyone does to verify insurance benefits and eligibility is a HIPAA 1270/1271 … they check it on a binary level for a ‘yes’ or ‘no’, but there is a ton of other information that can be pulled from that transaction," Bohnsack says.
To move beyond a two-dimensional check of a patient’s ability to pay, hospitals and health systems should use the existing eligibility information and cross reference it with the information from your payers’ contracts. Then the system should assess the patient’s ability to pay, and factor in an estimate of the cost of a procedure, Bohnsack says. By merging all these systems, a hospital can provide the patient with a far more accurate estimate of what they may owe for their care. Moreover, they have the tools they need to explain how they arrived at the estimated cost.
It is the explanation and the transparency around the bill that not only leads to hospitals getting paid the correct amount, but also yields a better patient response to the bill. Over the years, many healthcare leaders have pooh-poohed the idea of estimating the cost of a procedure, saying the number would be inaccurate due to all the possible avenues of treatment.
However, by using the gross charges McLaughlin mentions above, hospital administrators should be able to arrive at a reasonably accurate amount. Moreover, Silva-Craig notes that if a bill is based on one procedure, for instance natural childbirth, and another procedure is performed, such as a C-section, when the billable amount changes the patient will have a clear understanding of why.
As financial leaders search for the next place to reduce costs, it may be time to spend money to achieve that end. By allocating $20,000-$40,000 toward adding technology that pulls all of your existing systems' information together for your front-office workers, you can improve not only your point of service collections but also your patient collection interactions.
Nothing catches the attention of a finance editor like seeing the grocery bill go up by 20%. That's what happened to me last week when I was purchasing my usual salad fixings. Posted above the romaine lettuce was a sign explaining that due to extreme weather in various countries, crops have been killed and some grocery items are in short supply (which means you'll pay dearly for the ones produce suppliers can get for you).
The price increase did give me pause: "Should I buy the lettuce or skip it this week?" I decided it was a necessity and purchased it anyway. However, my trip to the local market got me thinking of the global one and how some recent world events (such as strange weather, major earthquakes, and governmental unrest) may be adding costs to hospital and health system budgets.
So, I decided to check in with a financial leader in America's heartland. Adam Paul is CFO and vice president of fiscal services at Catholic Health Initiatives' St. Mary's Healthcare Center. With annual net revenues of $50 million, this 60-bed acute-care hospital is the sole community hospital in Pierre, SD.
Paul, who has been in healthcare finance for nearly 18 years and has spent the last four with CHI, says he is paying attention to the global economy, but so far he hasn't felt the full effect of the inflated prices—something he attributes to being part of a larger health system with a centralized supply chain.
"We only spend $700,000 [annually] on food, so even when we have inflation with food prices, it represents a small enough portion of our budget that the changes aren't enough to keep me up at night. However the oil and energy costs can definitely have a bigger impact on our bottom line," he says.
To Paul's point, at most hospitals or health systems, food represents a very small portion of the overall budget, so shifts in cost are seemingly inconsequential. However, from a global perspective, inflation in the cost of food can portend larger economic price shifts in areas such as energy. Shawn Fleming, portfolio executive for the healthcare supply contracting company Novation, has been tracking the global economy and its effect on raw materials for healthcare providers in a monthly report.
The company began producing the report to help its clients track price fluctuations in areas such as cotton and steel in an attempt to aid providers in accurately forecasting their budgets and supply spending trends. This month, the report projects that market prices will increase 2.8% overall. A few other highlights got my attention as well, including:
Rubber prices are up 63% over the last 12 months. Production output is expected to grow 5.3% in 2011 after growing 5.7% in 2010. The increases are expected to continue through 2011.
On a steady climb since 2009, cotton prices skyrocketed in the last three months, increasing 37.6% over that time period and jumping a whopping 125% in just one year. Fleming says the price increases are due to sharp demand increases in China coupled with supply shortfalls caused by crop loss.
Global steel prices have risen 12.4% in the last three months and 25% in the last year. Though steel output has grown, there is also greater demand and the raw materials needed are also seeing a price increase.
Inflation in food is expected to continue for the first six months of the year, according to the U.S. Agriculture Department. Some of the increases are attributable to the increase in energy prices—getting the food to market is simply more expensive. Another influence behind the increase is the severe weather that nearly every country has been experiencing in the past few years that has left shortfalls in supply.
"The indicator that scares me is food; it's always the first to go up, … then after that it's oil and then you start to see a plethora of commodities be affected," says Fleming.
To be sure, oil and energy prices are also on the rise, which will affect not only the cost of supplies transported to hospitals, but also the energy costs needed for the facilities. According to a release by the U.S. Energy Information Administration (EIA) on the short-term energy outlook:
West Texas Intermediate (WTI) and other crude oil spot prices have risen about $15 per barrel since mid-February partly in response to the disruption of crude oil exports from Libya. Continuing unrest in Libya as well as other North African and Middle Eastern countries has led to the highest crude oil prices since 2008. As a result, EIA has raised its forecast for the average cost of crude oil to refiners to $105 per barrel in 2011.
EIA expects the retail price of regular-grade motor gasoline to average $3.56 per gallon in 2011, 77 cents per gallon higher than the 2010 average and EIA projects gasoline prices to average about $3.70 per gallon during the peak driving season (April through September) with considerable regional and local variation. There is also significant uncertainty surrounding the forecast, with the current market prices of futures and options contracts for gasoline suggesting a 25-percent probability that the national monthly average retail price for regular gasoline could exceed $4.00 per gallon during summer 2011.
As prices of goods in the global economy increase, Fleming says even supply contracts with fixed pricing or GPO contracts can only weather these additional cost increases for so long without having to pass them along to their customers—if not in the current contract, then in the future ones.
"The impact it can have on hospital budgets is potentially devastating. They are already being asked to do more with less, and rapid changes in the global economy can mean increases in supply costs that weren't planned for in the budget. [These types of increases] can mean the difference between staff and stuff," he says.
Fleming's thoughts should telegraph the significance of the global economy to all healthcare financial leaders because labor costs account for 40%-60% of most hospital budgets.
After all, hospitals and health systems must adhere tightly to their budgets if they are to succeed in the changing payment environment. And if supply prices for everything from gauze and gurneys are increasing, hospital finance executives may have to look at labor decreases to offset price constraints set off by activity in the global market. Fleming, however, offers a couple of other thoughts for financial leaders:
Make some predictive projections for your budgets based on the global market.
Stay informed about the global markets, so you can make smart purchasing decisions and created a fixed price with your vendors.
"There have been a [number] of factors affecting the global prices this year, but remember economies are also cyclical and what goes up must come down," says Fleming.