The OptiMax technique quantifies the interaction between costs and quality for a healthcare business unit to determine optimal performance levels, finding that only one key quality indicator was optimal and costs were over $1 million above optimal, requiring decreases in costs and increases in quality. The OptiMax consultants help organizations apply this state-of-the-art technique to set reasonable targets for improved performance through simultaneous evaluation of multiple qualitative and quantitative indicators.

1. OptiMax
The Fox Group’s Performance Delivery System

2. Healthcare Performance
Very Complex!

3. A healthcare business unit was within budget and at
Vignette or near minimums for all performance
standards. The budget had been based, year-
after-year, upon historical expenses with
projections for future increases.
Then, through state-of-the-art techniques that
quantified the interaction between costs and
quality, it was clearly shown that only one of the
key quality indicators was at the optimal level.
Further, patients showing improvement from
treatment were 6% below the optimal. To make
matters worse, the total annual costs for patient
care were more than $1,000,000 above optimal.
The business was clearly in the “red zone.” The team
members needed to decrease costs and increase
quality.
They had been lulled into complacency by (1) the
practice of cost-plus budgeting and (2) the
comparisons of their quality indicators to
averages instead of to the optimal.

4. Sample Areas of Performance Assessment
Assess Service Differentiation Networking/Group Formation Issues
 Identification of core services  Strategies and consequences
 Identification of specialized services  Healthcare industry and regulatory changes
 Evaluation of service to referral sources  Managed care trends
 Scheduling & office policies and procedures  Finance/operational issues
 Facility and equipment review
Review Human Resource Expertise and Deployment
Review Financial Performance  General systems
 Analyze profit and loss performance  Interview practices and selection of personnel
 Income review for past three fiscal years  Training process
 Changes in charges/collections  Turnover issues
 Changes in patient/client volume  Evaluate salary levels, incentive plan, benefits
 Changes in payor mix  Team orientation and appearance
 Changes in expenses  Professional development / continuing education
 Review managed care contracts / assist in negotiations  Work flow systems
 Analyze billing and collections
 Coding analysis Evaluate Internal Marketing
 Evaluation of accounts receivable aging and collection related  Budget and expenditures
protocols  Office environment and ambiance
 Define priorities / Delinquent account strategies  Appearance
 Evaluate controls over cash handling/banking  Signage, perceptions, environmental controls
 Evaluate accounts payables aging  Efficiency of layout
 Review office automation / computerization  Exam rooms
Document New Areas for Volume/Income Generation Analyze External Marketing
 Practice start-ups and relocation  Audit of promotional materials
 SWOT analysis  Assessment of referral development activities
 Task-specific plans  Sources and extent of referral contacts
 Growth opportunities  Identify techniques to increase referrals
Compliance – HIPAA/Medicare Fraud & Abuse

5. OptiMax
 What is the technique
 Where it is being used
 How to use it strategically in performance
improvement

6. Work Measurement Applications
OPERATIONS
STAFFING
PLANNING
• Budgeting • Time and cost • Wage
trade-off’s for incentives
• Workforce new services
capacity • Work
• Service mix standards
• Equipment planning
and space • Performance
capacity evaluation
and
• Scheduling improvement

7. • Most productive?
• Underperforming?
• Targets for improvement?
• Measures of Provider Productivity

8. Office Visits Per Hour Worked
1.00
0.86
0.77
0.73 0.72
32% of
0.75
0.65 Highest
0.49
0.50
0.28
0.25
0.00
A Physician

9. Work RVU’s Per Hour Worked
10.00
9.11
7.95
35% of
7.50
6.59 6.34 Highest
5.67
5.25
5.00
3.17
2.50
0.00
Physician A

10. Charges Per Hour Worked
$700 $645
$588
$600
34% of
$500 $472 $466 Highest
$416
$400
$326
$300
$221
$200
$100
$0
A Physician

11. Productivity - sample
INPUTS OUTPUTS
• Office Visit Units
• Compensation
• Hospital Units
• Med Units
• X-Ray Units
• Other Units
• Work Relative Value Units
• Charges

12. Example of Variables
Input Variables Output Variables
Administrative expenses/licensed bed Net income/patient day
Dietary expenses/patient day Not Decubitus %
Facility expenses/licensed bed Patient days
Housekeeping expenses/patient day Procedures/FTE
Licensed beds Procedures/Patient
LVN FTE/Patient day * 1,000 Relative Value Units/FTE
Square feet of facility/patient day Relative Value Units/Patient
Non-clinical staff FTE/Patient * 1,000 Relative Value Units/Procedures
Non-clinical staff salaries / patient day Return on Capital/Patient Day
Patient expenses/patient day Treatment plans meeting standard %
Professional salaries/patient day Patients with in-home treatment only %
Net revenue / patient day Patients with improvement %
RN FTE/Patient day * 1,000 Timely Treatment %

13. The OptiMax Solution

14. The OptiMax Difference
Optimal
Same as others
Optimal . . . more/less . . . Optimal

15. The OptiMax Difference
A single performance score
Reasonable, individualized targets

16. Qualitative & Quantitative Data
com
bined

17. Users
Manufacturing Insurance
Oil Exploration Banking
Who uses this
method?
Restaurants Healthcare
Retail Schools

18. Healthcare Users - sample

19. The OptiMax Solution

20. The OptiMax Difference
Typical
Some of the Differences . . . Benchmarking OptiMax
Tailored to individual, unique Business setting
Comparison to a known standard
Evaluates qualitative (quality) and quantitative (costs, revenues) indicators
simultaneously
Comparison to your own best internal performance
Evaluates Indicators ONLY one-at-a-time
“Rolls up” multiple indicators into a single score
Objectively provides targets for improvement based on a simultaneous
evaluation of all indicators
Quantifies targets for improvement based upon achieving performance
comparable to the best already in your organization
Early warning that costs are too high or quality too low
Short time investment and easily repeatable analyses

21. Three-Months Efficiency Score
100% 100% 100% 98%
100%
93% 93%
85%
75%
Standard For Efficiency
50% Improvement Possible
25%
0%
Physicians

22. Improvement Targets
Target
$110,462 of
increased
charges per
PHYSICIAN D
PHYSICIAN B
quarter
PHYSICIAN E
PHYSICIAN A

23. A Typical Workplan
Study Design Areas to Variables to Initial Staff
Optimize Consider Training
Data Data De-
Additional
Collection identification
Collection Staff Training
Instruments of Data
Analysis and Comparative Optimization Staff
Reporting Reports Targets Reporting
Select
Implemen- Optimization
Develop Monitor
tation Specific Plans progress
Targets

24. The OptiMax Solution
Implementing the OptiMax Cycle

25. OptiMax Outcome – sample of 7 member medical group
Findings, per quarter:
$110,000 in billed charges
Findings, per year:
$440,000 in billed charges

26. A few more
observations…

27. The Challenge
Unfortunately, the
benchmarks established
using old analytical
schemes based on various
multiple ratios created
more dilemmas than
solutions.
Yasar A. Ozcan
Professor of Health Administration
Virginia Commonwealth University
2008
27

28. The Challenge
How do you bring
your financial
experts and
your quality
experts together?
28

29. The Challenge
How to evaluate
costs and quality
all at the same
time?
29

30. OptiMax Applications - sample
Business Description OptiMax
Targets for Improvement
Specialty mental health services for just one city
region of a carve-out health plan
Over $1,000,000
• Improvement strategies included broader applications of out- per year
patient specialty services
Twelve member specialty medical group
• Improvement strategies included modifications in scheduling
Over $400,000
practices for both acute care consultations and out-patient per year
visits

31. Hospital Example
Study of 131 Large Hospitals
100% 100% 95%
90% 84%
80% $29 M 68%
70%
$35M
Efficiency
60% 54%
50% $45M
40%
30% $82M
20% OptiMax Scores
10%
0%
H1 H2 H3 H4 H5

32. Managed Care Example
Center Inputs Outputs
Clinical Out of Clinical Tx Plans Tx Plans In-Home Patients
Costs / Home Costs/Pt Meeting Current % Tx Only % Improved %
Patient Costs Improved Standards %
A $33,492 $29,535 $16,359 65%
B 82% 67%
C
D 84%
E $12,228 $7,597 97% 100% 79% 78%
F $17,365

33. Sample Quality Incentives: Charting
100%
90%
80%
70% DOCUMENTATION SCORES
60%
(Compliance with Coding Standards)
50%
50% 44%
40% 33%
30% 30%
30%
20%
20%
12%
10%
0%
F G E B D C A

34. OptiMax Targets - sample
Medical • Current: $6.00/Visit
Supply Costs • Target: $5.23/Visit
• Current: 325/Month
Patients • Target: 369/Month
• Current: $98/Visit
Charges • Target: $101/Visit

35. The OptiMax Score
100%
90%
80%
70%
62%
60% Establish the
50% system as an
Help select Coach in the
indispensible
meaningful 40% calculation
part of the
indicators processes
30% management
20% culture
10%
0%
1 3 4 5 8 9 7 6 10 2

37. “The relationship has brought us nothing
but success and growth… excellent
command of financial planning and
analysis … amazing accuracy...quality of
their work is always superior.”
President, Berryman Health, Inc.

38. CONSULTANTS TO THE HEALTHCARE INDUSTRY
99 “C” Street, Ste 207
Upland, CA 91786
Phone: (909) 931-7600
Fax: (909) 931-7655
Web: www.foxgrp.com
Email: contact@foxgrp.com
Providing Excellence Since 1989