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90-Day Cycle Revs Vidant Savings to $16 Million

 |  By Rene Letourneau  
   July 27, 2015

To maintain Vidant Medical Center's ability to function as a safety net provider, it has adopted an approach called the 90-day cycle, in which data on outcomes and expenses are used to engage physicians in a discussion on clinical protocols so they can make improvements around cost and quality.

The great need for effective cost containment strategies among hospitals and health systems is only being exacerbated by healthcare reform legislation, says Brian Floyd, president of Vidant Medical Center, a 909-bed academic hospital that is the flagship institution of Greenville, NC-based Vidant Health.

"When you look at the [Patient Protection and] Affordable Care Act and reform changes, we all understand the intention is to shift dollars from the hospital industry into preventative care measures," Floyd says.

 

Brian Floyd

"There are no new dollars. There is a diminishing pie of dollars, and we have to fulfill our mission in eastern North Carolina now with less dollars coming in than have come in in the past."

Doing More with Less
Due to reimbursement changes, Vidant Medical Center will receive about $500 million less over the next 10 years than it would have if not for the PPACA, putting significant pressure on the hospital to cut costs, Floyd says.

"We have a mission to sustain ourselves in areas where the economics do not make it easy, and the future requires us to reduce our spend in order to be sustainable."

To prepare for the loss of revenue and maintain Vidant's ability to function as a safety net provider, executive leaders are looking for more ways to rein in costs while also improving quality. The focus now is on "product and process," Floyd says.

"We felt we had a lot of people working very hard on a variety of areas, but there was a lack of coordination that was in and of itself a challenge… It is difficult because of the sheer volume of work people have taken on. We wanted to move from a fragmented system to one that is coordinated."

A New Approach
While Vidant has long been working to remove cost from its supply chain, Floyd says the organization began about a year ago to apply an approach called the 90-day cycle, which is a method of identifying high-use, high-cost, and high-variation DRGs and working to make improvements around cost and quality.

Through the 90-day cycle, Vidant uses data on outcomes and expenses to engage physicians in a discussion on clinical protocols.

"We show each doc their costs relative to the rest of the physicians doing the same procedure. They all have preferences for how they do a procedure and what supplies they use. One doc, for example, might use a certain kind of glue, but another may use a different kind that costs $10,000 less," Floyd says.

"We let the docs negotiate among themselves based on our own data. If they could make a case for why something was necessary, then that is fine, but the process is about debating the evidence of prices and products in relation to quality."

The data makes it more difficult for physicians to resist change that would bring down costs without negatively impacting quality, Floyd says. "It makes it hard to be an outlier among the peer group… [It's a] system based on our own data. It's not national data; it's not a myth. It's the guy sitting across the table who can do the same procedure for less with the same outcomes."

Physicians have a set amount of time to "argue amongst themselves about the products," Floyd says, and then Vidant negotiates as quickly as possible with vendors to reduce spending on the supplies that ultimately make the cut.

"We want to do the entire process in 90 days so people can see the end-to-end accomplishment and start to feel good about it," he says. "We needed to create a systematic process and engage people and allow people to see the impact."

Vidant has experienced significant savings as a result of the 90-day cycle. In a typical year, the organization cuts about $3 to $5 million from its supply chain. This year, it's on target to cut $16 million.

"This has escalated our savings," Floyd says.

Achieving Physician Support
Gaining physician support of the process is essential to success, Floyd says, adding that one way to achieve buy-in is to emphasize the goal of doing what is right for patients.

"It's not just about supply chain. It's a value chain for the patient. When we are talking about the tools physicians use … docs are willingly coming to the table, and that process is creating a lot of engagement around the idea of making sure we are providing value for patients."

While physicians and staff were hesitant at first to embrace the 90-day cycle, Floyd says people are now on board because they can see results and they understand its importance as the healthcare industry moves away from fee-for-service reimbursements.

"It has taken us about a year to start to really have success because initially it looked like an administrative program so people were reluctant to participate… The first 90-day cycle was painful, but what we learned created a situation where it cost patients less to get the same or better quality and outcomes as before," he says.

"For the second 90-day cycle, everyone showed up and was trying to be part of the process. … Once we designed a timeline and processes to push hard for improved quality and value for patients, it became difficult for anyone to stand in the way of it."

Creating a Culture Shift
Rolling out a cost-savings program that puts patients at the center of the process and that is evidence-based has been a game changer for Vidant, Floyd says. People are now "hungry," he adds, for the next opportunity to participate in a 90-day cycle.

"We're getting tremendous savings, but I believe it's a cultural transformation for us, as well," he says.

"This is about more than supplies. It's about how much it costs to care for patients and using evidence to choose products and improve outcomes. Being able to fulfill our mission in the long term requires us to reduce cost for patients while pursuing better quality. We've been very transparent and intentional about this process, and it's yielding for us a better organization."

Rene Letourneau is a contributing writer at HealthLeaders Media.

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