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Activity-Based Costing and Clinical Service Lines Team up to Improve Financial and Clinical Outcomes

Healthcare costs continue to increase at a disproportionate rate relative to gross domestic product, and Americans are becoming increasingly aware that they aren’t getting their money’s worth. To build a sustainable healthcare system, healthcare organizations must identify and address waste and reduce the total cost of care.

UPMC recognized that the common denominator to addressing threats to sustainability is to fully understand and effectively manage costs. It implemented activity-based costing (ABC), facilitated by the Health Catalyst CORUS™ Suite, to deliver detailed and actionable cost data across the analytics environment, and support service line reporting, contract modeling, and clinical process improvement. UPMC has used this approach to effectively drive cost savings and improve clinical outcomes in many of its service lines, including Surgical Services, Women’s Health, Orthopedics, and Cardiovascular. For example:

  • $3M cost savings/avoidance over 2 years through the implementation of the ERAS program.
  • Increased insight into cost variation and drivers of inefficiency in the operating room setting.
  • Improved patient outcomes and quality (readmissions, complications, patient reported outcomes, patient satisfaction, etc.) for patients undergoing joint replacement.
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Application of Analytics to DNFB Improvement Effort Continues to Deliver Impressive Results

Financial challenges rank as the number one issue hospitals face, and hospital CEOs are always looking for opportunities to boost revenue through improved reimbursement. Managing discharged not final billed (DNFB) cases, where bills remain incomplete due to coding or documentation gaps, is one important way hospitals can improve financial performance. However, without analytics to support efforts, meeting a target for DNFB improvement remains a serious challenge.

Thibodaux Regional Medical Center, a 180-bed community hospital in Louisiana, invested in analytics and resources to improve their DNFB rates. By expanding the use of analytics to every aspect of the work, the hospital transformed financial improvement efforts with impressive results.

While some organizations struggle to sustain hard-won financial improvements, two years after Thibodaux Regional launched its initial DNFB improvement effort, it has sustained the initial outcomes, and further reduced AR days by 27.5 percent, while achieving these additional improvements:

  • $1 million in additional annual reimbursement, attributable to improvements in the accuracy of clinical documentation and CMI.
  • 66.7 percent relative reduction in DNFB dollars, significantly improving cash flow.
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Enhanced Recovery Program Improves Elective Colorectal Surgical Outcomes

Contemporary colorectal surgery is often associated with long LOS, high costs, and surgical site infections (SSI) approaching 20 percent. Much of the LOS variation is not attributable to patient illness or complications, but most likely represents differences in practice style. Successfully reducing SSI requires a multimodal strategy under the supervision of numerous providers with high compliance across the spectrum.

Allina Health was using established, evidence-based clinical guidelines, yet clinical variation remained high across pre-arrival, preoperative, intraoperative, and postoperative care areas, leading to substantial variation in LOS, cost of care, and the patient experience. To ensure greater consistency, Allina Health developed an enhanced recovery program (ERP) for patients undergoing elective colorectal surgery, which built standard protocols into the EHR to address elements of care from pre-arrival through post-discharge.

To facilitate the program and monitor performance, Allina Health developed an ERP analytics application with an administrative dashboard to easily visualize first-year results:

  • 78 percent relative reduction in elective colorectal SSI rate.
  • 19 percent relative reduction in LOS for patients with elective colorectal surgery.
  • 82.4 percent utilization of preoperative and postoperative order sets, increasing the consistency of care and reducing unwarranted variation.
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Using Data to Spotlight Variation and Transform Total Joint Care

Total Hip (THA) and Total Knee (TKA) Arthroplasty are the most prevalent surgeries for Medicare patients, numbering over 400,000 cases in 2014, costing more than seven billion dollars annually for the hospitalization alone. Today, more than seven million Americans have hip or knee implants, and the number is rising. Furthermore, substantial variation in the cost per case has raised questions about the quality of care. At Thibodaux Regional Medical Center, total joint replacement for hips and knees emerged as one of the top two cost-driving clinical areas with variation in care processes.

To address this, Thibodaux Regional maintained its focus on the IHI Triple Aim while developing organizational and clinical strategies to transform the care of patients undergoing THA and TKA. It commissioned a Care Transformation Orthopedic Team that set multiple outcome goals. Among its many efforts, the team established standard care processes, created an educational program, redesigned order sets and workflows, and deployed a joint replacement analytics application.

Thibodaux Regional reduced variability and decreased costs significantly while maintaining high levels of patient satisfaction:

  • 76.5 percent relative reduction in complication rate for total hip and total knee replacement.
  • 38.5 percent relative reduction in LOS for patients with total hip replacements.
  • 23.3 percent relative reduction in LOS for patients with total knee replacement.
  • $815,103 cost savings, achieved in less than two years.

 

 

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Clinical and Financial Partnership Reduces Denials and Write-Offs by More than $3 Million

CMS denies nearly 26 percent of all claims, of which up to 40 percent are never resubmitted. The bane of many healthcare systems is the inability to identify and correct the root causes of these denials, which can end up costing a single system tens of millions of dollars. Yet almost two-thirds of denials are recoverable and 90 percent are preventable.1 Despite previous initiatives, The University of Kansas Health System’s denial rate (25 percent) was higher than best practice (five percent), and leadership realized that, to provide its patients with world-class financial and clinical outcomes, it would need to engage differently with its clinical partners.

To effectively reduce revenue cycle and implement effective change, The University of Kansas Health System needed to proactively identify issues that occurred early in the revenue cycle process. To rethink its denials process, it simultaneously increased organizational commitment, refined its improvement task force structure, developed new data capabilities to inform the work, and built collaborative partnerships between clinicians and the finance team.

As a result of its renewed efforts, process re-design, stakeholder engagement, and improved analytics, The University of Kansas Health System achieved impressive savings in just eight months.

  • $3 million in recurring benefit, the direct result of denials reduction.
  • $4 million annualized recurring benefit.
  • Successfully partnered with clinical leadership to transition ongoing denial reduction efforts to operational leaders.
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Advancing Health Equity – Data Driven Strategies Reduce Health Inequities

Health equity means that everyone has an equal opportunity to live the healthiest life possible – this requires removing obstacles to health. The U.S. ranks last on nearly all measures of equity, as indicated by its large, disparities in health outcomes. Illness, disability, and death in the United States are more prevalent and more severe for minority groups. Health inequities persist in Minnesota as well, which motivated Allina Health to take targeted actions to reduce inequities.

Allina Health needed actionable data to identify disparities and to reduce these inequities. This came in the form of REAL (race, ethnicity, and language) data, which Allina Health analysts used to visualize how health outcomes vary by demographic characteristics including race, ethnicity, and language.  To understand the root causes of specific disparities as well as to identify solutions within their sphere of influence as a healthcare delivery system, Allina Health consulted the literature and also consulted patients, employees and community members. Then Allina Health created appropriate interventions based on this information.

As a result, Allina Health created an awareness of the health inequities among its patient populations, as well as effective approaches to breach the barriers that were preventing these patients from getting the care they needed. While much work remains in this long journey to achieve health equity, Allina Health has taken some significant steps forward, including:

  • Three percent relative improvement in colorectal cancer (CRC) screening rates for targeted populations, exceeding national CRC screening rates by more than ten percentage points.
  • REAL data embedded in dashboards and workflow to easily identify and monitor disparities.
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Unleashing the Data to Sustain Spine Service Line Improvements

Research shows that despite an increase in the number of improvements in clinical, cost, and operational outcomes, there is a lack of sustained improvements. Some of the key challenges can be access to the data and analytics, and adherence to data-driven clinical standards, things the Allina Health Spine Clinical Service Line (CSL) clinical leadership team experienced.

By providing widespread access to the data and analytics, the Spine CSL at Allina Health has been able to continue its reduction in LOS and further improve its reduction in complications, all while increasing cost savings and achieving pay-for-performance incentives.

Results:

  • $1 million in pay-for-performance incentives received.
  • More than $2 million in supply chain savings, a result of data-driven clinical standardization.
  • 31 percent of expected complications avoided.
  • 22 percent relative reduction in surgical site infections.
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Blood Conservation Program Yields Millions of Dollars in Savings

Every three seconds, someone in the United States will need a blood transfusion, which adds up to nearly 17 million blood components transfused annually. Yet, evidence shows that up to 60 percent of red cell transfusions may not be necessary. In 2011, Allina Health, a healthcare delivery system that serves Minnesota and western Wisconsin, had a wide variation in transfusion practices throughout the system and a transfusion rate that was 25 percent above national benchmarks. In an effort to improve outcomes of high-risk transfusions, Allina Health turned to its data to develop an evidence-based blood conservation program aimed at reducing costs and saving valuable blood resources.

Results:

  • $3.2M decrease in annual blood product acquisition costs since 2011
  • 30,283 units saved annually
  • 111 units of red cells saved per 1000 inpatient admissions
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Data-Driven Approach Identifies Nearly $33 Million of Savings Annually

Today’s healthcare industry, in which a lack of insight into clinical variation has contributed to increased expenses, has significant opportunities to use data and analytics to improve outcomes and reduce costs. As part of its ongoing commitment to improve clinical value, Allina Health has employed a systemwide process to identify, measure, and improve clinical value. The health system has been able to quantify the value of clinical change work to improve outcomes, while reducing costs and increasing revenue for reinvestment in care.

Allina Health achieved the following meaningful results with this collaborative, data-driven opportunity analysis process:

  • Identified nearly $33 million in potential cost savings for the first three quarters of 2017.
  • Achieved over $10 million of confirmed savings during the first three quarters of the year.
  • Elevated discussions of cost concerns, leading to the development of standard processes, and significantly reducing unwarranted clinical variation.
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Using Data-Driven Insights to Improve Practice Management

Effective practice management includes tracking and reporting patient outcomes, and effectively managing revenue cycle, as well as keeping an eye out for market changes and growth opportunities. Well-managed practices effectively balance supply and demand on a daily, weekly, and long-term basis, actively managing encounter volume, panel size and scope, timeliness of available appointments, and payer mix.

John Muir Health faced challenges in obtaining data that would provide leaders with strategic decision support information that fostered effective practice management. John Muir Health had attempted to use its EHR to obtain this information, but discovered it was unable to meet the complex demand. As a result, the organization relied on burdensome manual work processes, resulting in delays and a backlog of data requests, and limited ability to make well-informed, data-driven decisions.

After leveraging the information within its data warehouse and analytics platform to create a network leadership encounter application, John Muir Health acquired the following capabilities:

  • All leaders have on-demand access to performance data at multiple levels from the organization-wide performance down to the patient and provider level.
  • Senior leaders are making data-driven decisions for strategic responses across John Muir Health to shifts in market, growth opportunities, and emerging markets.
  • The regional management teams are using the application to inform:
    • Daily operations.
    • Encounter processing
    • Patient access
    • Budget variances.

By leveraging these new capabilities, John Muir Health has achieved:

  • Transparency of the data and accountability of the regional management teams for key performance indicators
  • 14 percent improvement in completed physician encounters, resulting in faster revenue capture, when compared with the previous year.
  • Eliminating the encounter-associated report backlog.
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Clinically Meaningful Quality Metrics Improve the Provider Experience

Nearly half (46 percent) of all physicians report that they suffer from burnout, citing too many bureaucratic tasks as one reason. Providers want to find meaning in their work, and improvement on many current quality metrics do not predict better patient outcomes or experience of care. They are looking for tools to reduce their workload and improve their ability to provide excellent care, including having metrics and registries that are meaningful and informative.

Faced with the challenge of making quality measures meaningful, Partners HealthCare worked to redefine measures to be more relevant, create point-of-care registries to manage an all-payer population, created teams of Population Health Coordinators to support front-line teams in managing the registries, and used its analytics platform to monitor change and explore provider variation in order to improve quality. This resulted in:

  • 85 percent of clinicians surveyed felt that the new metrics helped them take better care of their patients.
  • Quality improved at an unprecedented rate on an all-payer population five times bigger than the standard pay-for-performance population.
  • Near real-time measurement using clinical data eliminated months-long delays, while run charts and provider and clinic-comparison views turbo charged quality improvement.
  • 125 percent increase in user adoption of the analytic tool (99 unique users, 674 unique sessions, and rising).
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Data-Driven Approach to Improving Cardiovascular Care and Operations Leads to $75M in Improvements

Health spending in the United States is greater than the gross domestic product of most nations, and the costs for cardiovascular disease (CVD) and stroke care alone total $193.1 billion. CVD accounts for approximately one out of every three deaths in the U.S. and contributes to the shorter life expectancy of Americans. Thirty-five percent of CVD related deaths occur before the age of 75 years, and 19 percent before the age of 65.

Allina Health is a large integrated healthcare delivery network operating in Minnesota and western Wisconsin that includes three large cardiac centers. Due to the prevalence and mortality rate of CVD, leaders at Allina Health recognized that they needed to focus on cardiovascular health in order to truly impact the population health and patient outcomes of the communities they serve.

By leveraging real-time data from its enterprise data warehouse (EDW), Allina Health effectively identified and addressed clinical practice variation and operational issues affecting cardiovascular care and costs. In doing so, the health system realized more than $75 million in performance enhancement savings and revenue increase over a four-year period by focusing on supply chain, lab test and blood utilization, clinical practice changes and clinical documentation improvement.

 

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Allina Health: A Successful Approach to Improving VTE Care and Prevention across a Large Health System

An estimated 1 million cases of venous thromboembolism (VTE) occur each year in the United States—with approximately 300,000 of these cases resulting in death. These sobering statistics led Allina Health to embark on a journey to address prevention and improved care for its VTE patients—one of the most common causes of hospital-related death in the United States—and one of the most preventable. Supported with analytics, Allina implemented a physician-led, multidisciplinary workgroup to standardize order sets and engage clinicians in improvement efforts. To date, their system-wide efforts have generated measurable improvements including an 11 percent increase in VTE bundle compliance rate, a 96.9 percent compliance with VTE prophylaxis, and a 41 percent increase in compliance with VTE warfarin therapy discharge instructions.

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