Transcript Improvement Forum Topics

WHA Improvement Forum
For November

“Building the Business Case for
Quality”
 
Tom Kaster
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Improvement Forum Topics
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The Value Equation
IOM Cost of Quality
IHI Building the Case for Quality
The Financial Impact of Quality
HANYS Regulatory Pressures for Improved
Quality
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The Value Equation
Increase Quality = Increase Value
Decrease Cost = Increase Value
Increase Quality and Decrease Cost = Accelerated Increase in Value
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Institute of Medicine (IOM): Cost of
Poor-Quality of Care in Lives and
Dollars
The scope of poor quality of care (3 forms)
– Overuse: Provide unneeded care
– Underuse: Fail to provide needed care
– Misuse: Make a mistake and cause harm
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IOM: Overuse
Overuse occurs when a drug or treatment is
given without medical justification.
– Examples includes:
• Treating people with antibiotics for simple infections
• Failing to follow effective options that cost less or cause
fewer side effects
– Avoiding overuse can decrease cost
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Overuse Examples
Both examples can have a negative impact to
the patients and to costs:
• Prescription overuse
– Prescribing antibiotics for a viral illness
– Using brand name when generics are available
• MRI overuse
– When use appropriate MRI’s are valuable
– Often MRI’s do not change the treatments
prescribed or a patients outcome.
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IOM: Underuse
Underuse is when doctors or hospitals neglect
to give patients medically necessary care or to
follow proven health care practices
– Examples include:
• Failure to give beta-blocking drugs to people having
heart attacks
• People receiving necessary preventative care like
mammograms or vaccinations
– Avoiding underuse improves quality
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Consequences of Underuse
• As many as 91,000 Americans die each year
because they do not receive evidence-based
care for chronics conditions like HBP, diabetes
and heart disease
• Billions of dollars a year are spent reacting to
the consequences of underuse
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IOM: Misuse
Misuse occurs when a patient does not fully
benefit from a treatment because of a
preventable problem, or when a patient is
harmed by a treatment.
– Some examples include:
• Prescribing a drug that a patient is allergic to
• The appropriate care protocol is not given resulting in
patient harm
– Avoiding misuse improves quality
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Consequences of Misuse
• Billions of dollars a year are spent on helping
patients recover from health care harm
• Conservatively between 44,000 and 98,000
people die annually from preventable errors
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Building the Business Case
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Obstacles to Building a
Business Case for Quality
• The complexity of healthcare
• The fragmentation of payer types
• Lack of reliable performance indicators that correlate
QI to cost savings
• The perception that waste elimination will negatively
effect patient care
• The perception that increased efficiencies may
reduce FTE’s
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Preparing Yourself to Talk the Talk
1. Learn and Understand Healthcare Financial
Terms and Payer Dynamics
2. Develop methodologies to measure the
financial impact of improvement (ROI etc…)
3. Understand the importance of connecting
financial impacts to gain management
support
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Dark Green vs. Light Green Money
Light Green Money
Dark Green Money
Efficiencies and cost savings
gained through improvement
efforts that do not have a
direct impact on the bottom
line, but intuitively result in
positive outcomes.
Efficiencies and cost savings
gained through improvement
efforts that do have a direct
impact on the bottom line as
well as produce positive
outcomes.
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Examples of Light Green
• Organize equipment and supplies room to reduce hunting and
searching time
• Streamline workflow to increase efficiencies
• Enable care givers more time at the bedside to meet patient
needs
• Reduces patient harm from falls, pressure ulcers
• Make work more enjoyable and experience less attrition
• Improves patient experience
• Improves HCAHPS scores
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Light Green to Dark Green
May 2, 2012 (San Francisco, California)—
• Blood-product management plan put together by the
Virginia Cardiac Surgery Quality Initiative (VCSQI)
helped optimize the process and lowered the overall
use of transfusions, cutting related mortality by half.
• Savings of $50 million statewide over two years
http://www.medscape.com/viewarticle/763272
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Light Green to Dark Green
A house-wide hourly rounding initiative…
…Requires the improvement of overall efficiencies:
• Nurses spend their time in more value added activities at the
bedside
… Which is shown to improve patient and family satisfaction on
HCAHPS scores
… Which will positively effect Value Based Purchasing factors
• Reduce Harm by lessoning Falls and Pressure Ulcers
... Which will reduce average length of stay for our Medicare
patients
• Decrease overall medication doses per stay
… Which in turn will improve profit margins for fixed payment
patients
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IHI: Examples of Dark Green Savings
Areas of Focus
Supplies and Medication
Effort and Target
Reduce supplies needed by X% by
reducing the number of adverse events
and complications
Purchased Services
(Agency) Fees
Reduce agency fees by XX% due to
improved predictability in demand and
improved staff morale that results from
the change
Overtime
Reduce overtime by XX% due to
improved predictability in demand on
staff from fewer adverse events and
complications
FTE Reduction from
Attrition
Reduce FTE Salary and wages by X% by
not replacing staff following attrition, if
improved work processes permit
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IHI: Equations to Measure Quality in
Dark Green Dollars
• Total Wages per Admission
• Total Medication Cost per Admission
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IHI: Total Wages per Admission
Equation
Total
wages
per
admission
(Average
wage per
hour)
(Worked
hours per
patient
day)
(Patient
days per
admission)
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IHI: Total Wages per Admission
Equation
Average wage per hour:
• Cost associated with recruiting and training
new staff for vacant positions
• Increased cost associated with contract labor
to fill vacancies
• Premium overtime pay
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IHI: Total Wages per Admission Equation
Worked hours per patient day:
• Inappropriate ICU staff time due to discharge delays
to other units
• Excess budgeted hours due to uneven staffing needs
due to poor scheduling of surgeries with disregards
to workflow
• Excess budgeted hours due to poor prediction of
demand
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IHI: Total Wages per Admission Equation
Patient days per admission:
• Excess patient day due to delays in discharge
and poor coordination of the process
• Excess patient days due to lack of setting and
executing daily goals for the patient, family
and care team
• Excess patient days associated with and
adverse event or complication
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IHI: Total Medication Cost per
Admission Equation
Average cost per dose:
• Excess cost of brand names when generic are
available
• Excess cost associated with failure to make a timely
switch in Med Administration mode (IV to Oral)
• Excess cost associated with overuse of expensive
meds when less expensive alternatives are available
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IHI: Total Medication Cost per
Admission Equation
Number of doses per admission:
• Excess cost associated with failure to stop
medications appropriately (continuing preventative
antibiotic use longer than 24 hours after surgery)
• The medication cost associated with treating an
adverse events
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IHI: Tying Equations to Dollars
Reduction in overall SSI:
– Patient days per admissions: Decreased
– Number of doses per admission: Decreased
– Average length of stay: Decreased
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The Financial Impact of Quality
•
•
•
•
Medicare Fixed Payments (DRG’s)
Privately Insured
Uninsured
Regulatory
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The Financial Impact of Quality
Medicare Fixed Payments--Diagnosis Related Groups
(DRG)
WI: Medicare
DRG Reimbursement
for Appendectomy
WI: Medicare
DRG Reimbursement
for Appendectomy
With Minor Complications
No Complications
$14,850
$13,500.00
$11,800.00
14,00016,000
$11,800
12,00014,000
12,000
10,000
10,000
8,000
8,000
6,000
6,000
4,000
4,000
2,000
2,000
0
0
$3,050
$1,700.00
Costw/ Complications
Reimbursement
Cost
Reimbursement
10% Increase
Cost
Reimbursement
Deficit
Deficit
Deficit
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Consequences of Low Quality
• Medicare Fixed Payments--Diagnosis Related
Groups (DRG)
– Falls / PUP / CAUTI / Falls
– Efficiencies / Increase Length of Stay / Increase of
Rx Cost
• Increased financial deficit
• Increased harm to patient
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The Financial Impact of Quality:
Privately Insured
20,000
18,000
16,000
Private Insurer Reimbursement for Appendectomy
with Minor Complications
$19,305
Private Insurer Reimbursement
for Appendectomy
No Complications
$14,850
$17,550
18,000
14,000
16,000
$13,500
12,000
10,000
8,000
6,000
4,000
2,000
0
14,000
12,000
$4,455
10,000
8,000
$4,050
6,000
4,000
2,000Cost w/ Minor
Complications 10%
0 Increase
Reimbursement (30%
Margin)
Profit
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Consequences of Low Quality
• Privately Insured
– Falls / PUP / CAUTI / Falls
– Efficiencies / Increase Length of Stay / Increase of
Rx Cost
• Increased financial revenues
– Eventual lower negotiated reimbursements
– Eventual pressures to adjust or change payment
models
• Increased harm to patient
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The Financial Impact of Quality: Uninsured
18,000
Uninsured Reimbursement for Appendectomy
Minor Complications
$17,820
$14,850
16,000
14,000
12,000
10,000
8,000
$2,970
6,000
4,000
2,000
0
Cost w/ Minor Complications
10% Increase
Direct Cost to Patient (20%
Margin)
Profit
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Consequences of Low Quality
• Uninsured
– Falls / PUP / CAUTI / Falls
– Efficiencies / Increase Length of Stay / Increase of
Rx Cost
• Increase financial burden on patients
• Increased likelihood of unpaid claims
• Increase charitable care
• Increased physical and or financial harm to patient
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Federal Pressures to Improve Quality
(do not pertain to CAH’s)
• Hospital-specific historical quality performance compared to
national performance standards
• Dynamic programs that change each year
– Measures and domains (additions/deletions)
– Performance standards (moving target)
• Increased financial exposure each year (max exposure shown below)
Slide provided by the Hospital Association of New York State
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Takeaways
• Improving quality and / or reducing cost increases value to the
patient
• Financial and Quality leaders can drive huge improvement
and cost reductions by teaming up and learning each other’s
world
• As data becomes more available, so will the ability to tie ROI
to quality
• No matter what the industry, improving value and reducing
cost equates to long term sustainability
• Even if a quality improvement project does not impact the
bottom line it may still be the right thing to do
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Next Month
December – Strategies for
Improving Efficiencies and
Reducing Waste
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Resources
• Institute for health improvement– Increasing
Efficiency and Enhancing Value in Health Care
• Institute of Medicine: Overuse, Underuse and
Misuse of Medical Care
• Blood Use Article:
www.medscape.com/viewarticle/763272
• Hospital Association of New York State Regulatory Pressures to Improve Quality
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Thank You!
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