How Texas Children’s Hospital Reduced Their Healthcare Labor Costs
My experience in nursing started in a busy level one trauma center. I thrived on the fast pace of the emergency department (ED) and the need to make rapid decisions in complex situations from the very beginning. Over time, I assumed the position of assistant manager and expanded my responsibilities to include scheduling, staffing and budgeting. We were able to balance patient volumes with budgeted staff hours by using a shared decision making model amongst the charge nurse group. Due to report lags of more than a month, the charge nurses also used their experience and instinct coupled with historical volumes.
There is a constant need to balance staffing to deliver quality patient care and meeting your financial objectives. As any manager or supervisor knows, it is possible to come to the end of the month and realize you have a budget variance. Finance and operations leaders expect the variance to be explained. You know you had to call-back some of your key personnel and your overtime was higher than you expected. You start trying to pull data from various sources to look at a number of variables. These variables might include the number of patients seen, vacation schedules, and sick time. You’re trying to do manual healthcare analytics in a retrospective fashion.
The Healthcare Labor Productivity Challenge
U.S. healthcare transformation is changing things. Texas Children’s Hospital, a client of mine, found they needed an immediate solution to address their labor and productivity challenges. They were moving away from a reimbursement model based on percentage of charges to an APR-DRG payment structure. Like most organizations experiencing the shift to value-based care, the hospital began to see its bottom line decline. This trend created a new urgency at Texas Children’s to fully understand its costs in relation to its revenues.
The Healthcare Enterprise Data Warehouse and Healthcare Analytics
Texas Children’s needed a better solution, and they found it in Health Catalyst’s Late-Binding ™ Data Warehouse platform. Texas Children’s had already implemented the healthcare enterprise data warehouse (EDW) to drive higher-quality, lower-costs in their clinical programs. They realized that by simply running the Labor Productivity Advanced Application on top of their existing EDW platform they could efficiently and accurately manage labor and productivity. Built on top of the EDW—which combines data from the electronic health record (EHR), time clock, enterprise resource planning (ERP), and budgeting source systems—the Health Catalyst Labor Productivity Advanced Application delivers a view of staffing levels, volume and productivity across Texas Children’s various cost centers. The application enables the business and unit managers to track and manage their resources. It delivers information into the hands of decision makers to help them manage their business. Managers can track performance as often as daily to see exactly how well labor is being allocated and make rapid modifications to counter scheduling problems. In the event that labor utilization outpaces volume, managers can drill further into labor data to understand utilization at the job code level.
In its first year of implementation, with the advanced healthcare analytics application rolled out to 65 percent of its units, the hospital has achieved:
- An estimated 2% reduction in total salaries and benefits to date
- 66% percent increase in the speed of data availability
- Estimated Net Present Value (NPV) of $425,000 savings over a 4-year period from automated data integration
- 500% increase in the number of managers using data to drive decisions
Read more analytics success stories in healthcare.
If you are interested in learning more about the U.S. healthcare transformation and value based purchasing check out these resources:
- Understanding the Future of Shared Accountability – by Dr. David Burton, MD, Executive Chairman Health Catalyst (white paper)
- ACO Drives Demand for Data Warehousing – by Dr. David Burton (article)
- The New Health Catalyst 2.0 Platform and Product Introduction (on demand webinar)
I’m interested in your experience with Labor Productivity Management. What solutions are you using to manage your labor resources? What’s working? What IT solution and healthcare analytics gaps have you identified? Please add your comments below.