To thrive in today's challenging healthcare environment, organizations need swift, enterprise-wide change in order to accelerate financial, clinical and operational excellence. An expert from Premier outlines three keys to a successful transformation journey.
Today, health systems are trapped in a financial pincer: fixed costs for drugs, labor and patient care expenses continue to rise as the population ages and develops more acute ailments, while reimbursements from public and private payers get smaller. To weather this reality, organizations need to be much more deliberate in deploying strategies that maximize all potential sources of new and existing revenue, while jettisoning activities that are not generating added value. Creating a broad-based approach to managing organizational finances in this way often requires a system-wide transformation.
Move beyond cutting costs
For many years, healthcare organizations feeling a budgetary pinch defaulted to traditional cost cutting measures. Oftentimes, leaders were handed down systemwide cost reduction goals, with almost no thought applied to emerging growth opportunities. Attempting to achieve transformation by cutting costs alone will miss the mark in preparing for and funding an organization’s strategic goals over the next five to seven years. Health systems need to transform their cost structures and create new revenue lines to effectively support the transition to new payment and care delivery models. Staying focused on these two levers of margin improvement is critical to a health system’s balanced approach to achieving their strategic vision.
Use data to ask and answer questions across the continuum
Successful and sustainable performance improvement work cannot be standalone or accomplished in siloes. Enterprise-wide transformation requires integrated business intelligence that illuminates directional opportunities and potential interdependencies across practices in the workforce, supply chain, care delivery and more. This information can help leaders ask key questions and thread decisions across departments, service lines and care sites. Expanding transformation initiatives outside the acute environment is essential to address considerations across the continuum and ensure that every aspect of the enterprise is positioned to meet the system’s strategic goals. This alignment of leaders, staff and providers to a common goal serves to strengthen an organization’s ability to achieve meaningful and sustainable improvement.
Establish a strong foundational infrastructure
Improvement and decision-making infrastructures must be strong enough to effectively enable action, facilitate timely communication, and serve as a venue to manage interdependencies and challenges. A solid organizational governance structure that includes a Board of Directors, a mature workforce management council, an active value analysis committee and other key oversight groups will assist in aligning decisions and facilitating change. This coordinated and disciplined infrastructure allows leaders to evaluate data-driven opportunities and quickly make operational decisions that support overall organizational goals, while preventing duplicative work and managing process gaps. Additionally, strong decision-making bodies serve as a training ground for developing leaders and building the organization’s capabilities to manage large-scale, interdependent, long-term change. Many organizations will also leverage these foundational groups to create a culture of accountability and transparency – using time together to manage variances and support meaningful action planning.
Premier® is working closely with health system executives and clinical leaders to navigate complex enterprise-wide transformation. With an impetus to evolve and adapt to today’s dynamic healthcare environment, Vidant Health – a 1,447-bed academic health system in eastern North Carolina – recently partnered with Premier to support their long-term transformational performance improvement and growth journey. Vidant is leveraging Premier’s academic collaborative, subject matter specialists, and suite of business intelligence services and solutions to leverage financial, clinical and operational data to identify and prioritize opportunities. Vidant is also adapting its existing decision-making infrastructure to ensure changes are coordinated, effective and sustainable across the continuum.
Informed by data, Vidant and Premier have built a complex, three-year strategic roadmap focused on well-paced, year-over-year improvement – with an identified financial opportunity of more than $75 million. Interrelated initiatives are being implemented across multiple work streams, including non-labor expense reduction, cross-continuum care management integration and physician practice performance improvement. As part of this work, Vidant anticipates an annualized savings of more than $2 million from enhanced group purchasing prices and $1.4 million in savings from better managing contract labor arrangements, as well as an opening of nearly 11,500 more visits across its ambulatory care facilities. Vidant is accelerating its “Voyage to Excellence” by developing the future-focused skills and competencies needed to succeed in new payment models, and solidifying its mission to improve the health and well-being of its community.
It’s a challenging time. Health systems often need support to quickly stand up and mobilize transformation initiatives that will achieve their strategic vision. With next-generation analytics, seasoned experts and a vast network of healthcare stakeholders, Premier is helping healthcare organizations assess, build and sustain operational and care delivery transformations for success in the future.
Bianca A. Briola, MPH
Vice President of Enterprise Value Optimization Solutions
Leading Premier’s efforts in organizational transformation, Bianca devises successful margin improvement programs that maintain or improve the quality of care.