UAB Case Competition 2009 Team 25

Critical Success Factors: Laying the Foundation for Metro City Hospital’s Vision 2012 Team 25: Travis Sherman and Stephanie Triplett

Outline

Overview Need for Change Finance Culture and Leadership Current State Operations Patient and Community Needs

Overview Need for Change Finance MCH Net Operating Margin 2000 - 2011 4% Culture and Leadership 0% Net Operating Margin -4% -8% Patient and Community -12% Needs -16% 2000 2002 2004 2006 2008 2010 Operations

Overview Need for Change Finance MCH Net Operating Margin 2000 - 2011 4% Culture and Leadership 0% Net Operating Margin -4% Patient and -8% Community Needs -12% -16% 2000 2002 2004 2006 2008 2010 Operations

Overview Need for Change Finance Days Cash on Hand Culture and 200 Leadership 167 160 120 Patient and 80 Community Needs 28 40 0 Metro City Hospital Hospital Average Operations

Overview Need for Change Finance Average Age of Plant Culture and 19 20 Leadership 16 12 9.7 Years Patient and 8 Community Needs 4 0 Metro City Hospital Hospital Average Operations

Overview Need for Change Poor quality, Best quality, vulnerable, will default reliable, stable AAA AA A BBB CCC R D Standard and Poor’s Long Term Credit Rating Scale

Overview Balance of Payments Problem Finance Culture and Leadership Patient and Community Needs Operations

Overview Need for Change Culture and Finance Leadership Little support and coordination Poor working relationships Current State Patient and Operations Community Needs

Overview Need for Change Culture and Finance Leadership Current State Low patient experience ratings Unmet community health needs Patient and Operations Community Needs

Overview Need for Change Culture and Finance Leadership Current State ED capacity > 100% Clinic charges not collected Patient and Operations Community Needs

Overview Need for Change Finance Culture and Leadership Current State Operations Patient and Community Needs

Overview Need for Change Finance Culture and Leadership Need for a Turnaround Strategy Operations Patient and Community Needs

Current Market Environment • Unstable economic conditions • Increase in the number of un/underinsured • The healthcare system faces limited government resources and competing priorities • There will be more people with more chronic conditions in the future • Consumerism is embracing new competitors as people look for better, cheaper options

Critical Success Factors Phase 1 Communication Realign expenses and increase cash flow Accountability

Phase 1 Realign Expenses and Increase Cash Flow Revenue cycle management Denials Patient management registration Accounts Point-of-service receivables collection management Diagnostic coding

Phase 1 Realign Expenses and Increase Cash Flow Revenue cycle management • Ensuring nothing is overlooked in billing and collection and that MCH is paid the maximum for the procedures MCH does • West Jefferson Medical Center able to recover $10 million in underpayments in approximately 12 months

Phase 1 Realign Expenses and Increase Cash Flow Begin using kaizen events and tracer teams • Use a variety of feedback, brainstorming and staff contribution methods such as kaizen events and tracer teams to identify “quick wins” in process improvement

Phase 1 Realign Expenses and Increase Cash Flow Identify ED quick wins and create ED “fast track” • The ED has become the front door to primary care, a portion of MCH’s patients are inappropriately using the ED • Fast tracking the ED involves identifying non-critical patients and rotating them between the services they need and the waiting room; however, they are never assigned a bed • Northwestern Memorial Hospital in Chicago was able to reduce wait times by 46%, increase capacity by 20%, and improve patient satisfaction scores by implementing a similar strategy

Phase 1 Realign Expenses and Increase Cash Flow Overturn every $tone • Be cognizant of stimulus situation and outside funding • Hospitals could qualify for several million, and money may go to federally qualified health centers

Phase 1 Realign Expenses and Increase Cash Flow Evaluate private payer contracts • MCH 2.15% decline in reimbursement from all sources; however MCH is more cost effective than our competitors

Phase 1 Realign Expenses and Increase Cash Flow Create and monitor a balanced scorecard • Use to evaluate and monitor strategic progress in a timely manner (daily) • Hold organization accountable to turnaround strategy improvements

Outline

Critical Success Factors Phase 2 Position for Change and Growth Continue Communicating Improvements Vision 2012

Phase 2 Position for Change and Growth Create PACT (Program for Assertive Community Treatment) teams • Using PACT, MCH needs to target 20% of patients that are responsible for 80% of costs • Metropolitan Hospital Center: 60 percent reduction in mental health treatment costs for target patients • Apply same model to other diseases, populations, or zip codes (i.e. AIDS case rates in zip codes 10002 and 10006 are very high)

Phase 2 Position for Change and Growth Cost effective options for elective surgery • Over 120 Joint Commission accredited hospitals internationally • By partnering with a company who arranges care abroad, MCH can continue to meet its mission by providing quality care to patients who could not otherwise afford care, but with a lower cost to MCH resulting in less detriment to MCH’s bottom line

Phase 2 Position for Change and Growth Projected Number of US Patients Travelling Abroad for Medical Care 25 “In 2007, 750,000 20 Americans travelled Millions of Patients overseas for care. That 15 number will increase to 6.5 million by 2010.” 10 5 0 2007 2010 2013 2016

Phase 2 Position for Change and Growth US US Outside US inpatient outpatient (including travel) Knee Surgery Glaucoma Procedures Cataract Extraction Haemorrhoi- dectomy Hysterectomy Hernia Repair Shoulder Angioplasty Skin Lesion Excision Eardrum Reconstruction

Phase 2 Position for Change and Growth US inpatient knee surgery is $11,600 whereas the same surgery of comparable quality is $1,300

Phase 2 Position for Change and Growth Cost effective options for elective surgery

Phase 2 Position for Change and Growth Providing appropriate cost effective care Cost of caring for a patient with strep throat $310 $106 $91 $72 Retail Clinic MD Office Urgent Care ED

Phase 2 Position for Change and Growth Providing appropriate cost effective care • A subset of non-emergent health issues can be treated under a less expensive retail clinic cost structure, thereby decreasing cost and ED misuse • Partnering with a retail “minute clinic” • Less expensive for MCH to give un/underinsured patients a voucher for a minute clinic than to treat them in the ED

Phase 2 Position for Change and Growth Merge with local tertiary hospital • For a hospital looking to grow, MCH has an existing facility, resources, and a patient base which is their best option in the current economy • Economies of scale and scope • Advantage for MCH by the now shared ability to retain earnings and diversify risk • As a once novel service line becomes common place it is more cost effective to transition these services to a more cost effective hospital, such as MCH

Phrase 3 Flexibility for Overall Improvement Families Community Employees Patients People Continuous Exceptional Improvement Finance

Phrase 3 Flexibility for Overall Improvement Enhance health service delivery Improve patient safety and satisfaction Target workforce and cultural development Develop community support and partnerships Expand past “quick win” process improvement Invest back into MCH – equipment, EMR, building

Phase 3 Involving the community • Communities that have a stake in their community hospital and own health have lower utilization rates and decreased severity • Care in exchange for community service outreach and partnering Provide Repay in Uninsured health community population Provide care education education

Mission, Growth, Success, and Community Stewardship Phase 3 Community support Wellness education Mental health Primary care Alcohol MCH and drug Chronic disease management Tertiary partner support

Communication Plan • Refine plan and present to MCH Governing Board, management, and employees • Leadership must demonstrate the urgency for change • Throughout each Phase, leadership must inform key stakeholders, employees, and the community of current state and objectives and be receptive to feedback • In forming Vision 2012, MCH should involve the Governing Board, leadership, employees, and other community stakeholders • It will be essential for MCH to communicate where the organization is going and why

Implementation Plan Phase 1 Phase 2 Phase 3 March Aug. 2010 2011 2012 2009 2009 Negotiate merger Negotiate “minute clinic” Negotiate care abroad partnership Negotiate pricing

Implementation Plan Phase 1 Phase 2 Phase 3 March Aug. 2010 2011 2012 2009 2009 Merge Open “minute clinic” Begin care abroad partnership PACT teams

Implementation Plan Phase 1 Phase 2 Phase 3 March Aug. 2010 2011 2012 2009 2009 Community engagement Overall continued improvements Addressing community need

Financial Projections Implementation Costs Phase 1 Revenue Cycle FTE (0.5) 40,000 Process Improvement FTE (1) 50,000 Employee Benefits (1) 12,500 Program Resources 25,000 TOTAL $ 87,500 Phase 2 International Program FTE (1) 35,000 PACT Team FTEs (4) 170,000 Employee Benefits (5) 50,750 PACT Resources 25,000 Estimated Voucher Expense 10,837 TOTAL $ 516,587

Financial Projections Return on Investment Strategy Year 1 Year 2 Revenue Cycle Management 570K 1.15M Evaluate Pricing Strategy - 150K Retail Clinic Partnership 720K 1.5M Care Abroad Partnership 430K 930K PACT Team Interventions 525K 538K TOTAL $2.2 M $4.25 M

Financial Projections Return on Investment MCH Net Operating Margin (NOM) and Projected NOM 2000 - 2011 4% 0% Net Operating Margin -4% -8% -12% -16% 2000 2002 2004 2006 2008 2010

Summary MCH’s Mission To provide quality healthcare for persons of all races, creeds, nationalities, and socioeconomic backgrounds. Phase 1 Phase 2 Phase 3

Questions? Special thanks to the UAB organizers and judges

ED “fast track” bed holding before Radiology Pathology Bed holding time: 1.5 1 hour 0.5 hours 2.5 hours Triage Waiting area

ED “fast track” bed holding after Radiology Pathology Bed holding time: 0 hours 0.5 hours Triage Waiting area

Balanced scorecard

PACT Identify patients Screening and evaluation – preset criteria ensures that patient is a good candidate for the program Case management – insight into daily living skills, social and family support, and educational and vocational skills Patient education and referral – patients and family members receive ongoing education about their medications and illnesses Follow-up – patients who miss appointments are contacted or if a targeted patient is hospitalized the PACT team is notified to help reduce length of stay

Merger Examples University of Pittsburgh Medical Center (UPMC) and Mercy Hospital “ . . . for years Mercy has provided a high level of uncompensated care . . . For UPMC the Mercy merger brings hospital beds to a system that otherwise was looking to construct a new inpatient tower . . . the idea is to enhance and add to, not take away from [Mercy], there may be movement of some other services that aren’t here now into Mercy.” - Pittsburgh Post-Gazette Kaleida Health ad Niagara Falls Memorial Medical Center “ . . . the hospital [Memorial] is projecting a $1.5M deficit for 2008 . . . we’re [Memorial] a safety-net hospital which means, by definition, provide significant care to low-income and uninsured people . . . the benefits to be realized will be through a full asset merger . . .reinventing Memorial could mean an emphasis on cardiac, stroke and renal care ” - Niagara Gazette

UAB Case Competition 2009 Team 25

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