Download - Designing a Cost Model that is CJR Ready
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Designing a Cost Model
that is CJR ReadyJune 15, 2016
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ONE OF THE SCARIEST PLACES ON EARTH?
The Impact Zone is where the swell of rising energy becomes
a breaking wave.
Based upon “Impact Zone Decisions: What the Surf Zone taught me about Decision Making!”, by Dawid Mocke
3Images: Lucas Gilman, ESPN.com
OPTION #1: DON’T CATCH THE WAVEYou could try to paddle and get
yourself over or around the Impact Zone…
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OPTION #2: CATCH THE WAVEThere are many
advantages to riding the wave.
Images: Lucas Gilman, ESPN.com
5
INDECISION = DISASTERDon’t wait too long, or the wave will ride you!
Images: Lucas Gilman, ESPN.com
Comprehensive Care for Joint Replacement (CJR) Model
› CJR is the Wave› Why CJR?› What does CJR cost?› Building a Cost Model› Benefits of Analysis› Operational Changes› Summary› Q&A
Riding The Wave:
Images: Lucas Gilman, ESPN.com
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Currently being tested in 67 MSAs – Started April 1st
Hospital can either earn a reward or have to repay Medicare for spending above established target
Incentive for hospitals to work with other providers› Coordinated care› Reduce avoidable readmissions and complications› Control costs
Comprehensive Care for Joint Replacement (CJR) Model
CJR is the wave…what lurks within?
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CJR Hospitals will receive separate episode target prices for MS-DRG 469 and 470
Target price provided each year› Discount over expected episode spending› Blend of historical hospital-specific and regional spending
w/ regional component increasing over time› Incentives of 5% increasing to 20% bonus or penalty› Adjusted for Quality component
Comprehensive Care for Joint Replacement (CJR) Model
CJR is the wave… what lurks within?
999999
Hip and Knee Replacements most common inpatient surgery for Medicare beneficiaries
Huge variation in quality and cost:
› Rate of complications up to three times higher in some facilities
› Total expenditure ranges from $16,500 to $33,000
Result - incentivize the coordination of care for the episode
Comprehensive Care for Joint Replacement (CJR) Model
Why CJR?
Quality
Cost
Best of the Best
$25,565 (39% post discharge)average cost per episode
Inpatient Hospital Stay: $13,193Skilled Nursing Facility: $5,034Inpatient Rehabilitation Facility: $1,568Home Health Agency: $2,123Physician: $1,675Hospital Readmissions: $1,155Outpatient: $604Durable Medical Equipment: $122Other: $91
Comprehensive Care for Joint Replacement (CJR) Model
What does the average CJR Episode cost? (National Breakdown)
90-Day Episode
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Comprehensive Care for Joint Replacement (CJR) Model
Building a Cost Model
To understand the financial impact of decisions› Operational/Process
› Purchasing/Contract Management› Clinical
To make informed conclusions on the wisdom of those decisions via
› Conversations with medical and non-medical staff› Data driven comparisons between financial impact and
› patient outcomes› patient, physician, and employee satisfaction
Comprehensive Care for Joint Replacement (CJR) Model
Cost Model: Why bother? It can be painful!
Know Your Chart of Accounts›Categorize into Cost Buckets that contain similar types of resources
› Salaries, Wages, Benefits› Contract Services› Supplies
›Which types of expenses are fixed, which are variable?›Are there underlying issues with your Chart of Accounts?
› Do you need more/fewer accounts?› Is it well organized?› Are processes built and are they being followed?
Comprehensive Care for Joint Replacement (CJR) Model
Cost Model: Getting Started
Medical SuppliesDrugs
ImplantsOther
Know Your Departments
Categorize into Direct (Clinical-Care) or Indirect (Non-Clinical Care)Further Categorize into Functional Groups:›Diagnostic›Med/Surg›Pharmacy
Should some departments be combined for a better matching of Resource Consumption?›What resources are being shared across departments?›How well managed is Home vs. Worked vs. Paid Employee Hours?›Apply Reclassifications where necessary
Comprehensive Care for Joint Replacement (CJR) Model
Cost Model: Getting Started
Cost Model: Getting Started
Know Your Operations
Determine appropriate drivers for your Costs
Operating Room Med/Surg Pharmacy Radiology
Comprehensive Care for Joint Replacement (CJR) Model
HUMAN RESOURCES
Cost Model: Getting Started
Know Your Operations
Determine appropriate drivers for your Costs
Operating Room Med/Surg Pharmacy Radiology
Comprehensive Care for Joint Replacement (CJR) Model
HUMAN RESOURCES
Cost Model: Getting Started
Know Your Operations
Determine appropriate drivers for your Costs
Operating Room Med/Surg Pharmacy Radiology
Comprehensive Care for Joint Replacement (CJR) Model
HUMAN RESOURCES
Cost Model: Getting Started
Know Your Operations
Determine appropriate drivers for your Costs
Comprehensive Care for Joint Replacement (CJR) Model
SWB Supplies Equipment Other
Operating Room
Cost Model: Getting Started
Know Your Operations
Determine appropriate drivers for your Costs
Operating Room
Comprehensive Care for Joint Replacement (CJR) Model
SWB Supplies Equipment Other
Cost Model: Getting Started
Know Your Operations
Determine appropriate drivers for your Costs
Operating Room
Comprehensive Care for Joint Replacement (CJR) Model
SWB Supplies Equipment Other
Cost Model: Getting Started
Know Your Operations
Determine appropriate drivers for your Costs
Comprehensive Care for Joint Replacement (CJR) Model
Procedure 1 Procedure 2 Procedure 3 Procedure 5Procedure 4
SWB
Cost Model: Getting Started
Know Your Operations
Determine appropriate drivers for your Costs
Comprehensive Care for Joint Replacement (CJR) Model
Procedure 1 Procedure 2 Procedure 3 Procedure 5Procedure 4
SWB
Cost Model: Getting Started
Know Your Operations
Determine appropriate drivers for your Costs
Comprehensive Care for Joint Replacement (CJR) Model
Procedure 1 Procedure 2 Procedure 3 Procedure 5Procedure 4
SWB
Once configuration is complete, and a good costing software in place, this should be the easiest step.Speed of this step will depend on the amount of data being processed (size of hospital, time range, etc) and the individual costing solution used
Cost Model: Run Your Model
Comprehensive Care for Joint Replacement (CJR) Model
Processing…
Comprehensive Care for Joint Replacement (CJR) Model
Develop a consistent process to perform this task.The process should include trace all of the below back to your General Ledger:
› Total Expenses› Gross Revenues
› Net Revenues
An acceptable variance for your will depend on your facility and personal comfort level.Reconciliation items – known variances
› Understand these variances!
Cost Model: Validate
Little or no variance
Variance < 1% (timing differences)
Variance < 3% (timing, modeling differences)
Comprehensive Care for Joint Replacement (CJR) Model
Reasonableness TestsReview with managers and staff for better understandingAdjust as appropriate based on new information
Cost Model: Review, Refine, Repeat
Continuous
Improvement
Comprehensive Care for Joint Replacement (CJR) Model
Benefits of Analysis
PhysicianRoom &
Board Implants
Surgery - PACU -
Anesthesia Radiology Lab PharmacyCardio -
Respiratory ER PT/OT Grand TotalPhysician 1 1,024 6,219 2,402 31 138 397 93 9 224 10,537Physician 2 1,340 5,362 2,536 78 167 363 117 0 265 10,229Physician 3 1,368 5,411 2,659 138 302 510 209 0 323 10,919Physician 4 1,062 5,247 2,538 78 186 511 119 0 207 9,949Physician 5 1,201 5,121 2,501 31 125 375 71 0 250 9,676Physician 6 1,418 5,657 2,696 35 141 403 95 10 325 10,780Physician 7 1,900 5,539 2,962 68 170 437 143 0 413 11,632
Average 1,330 5,508 2,613 66 176 428 121 3 287 10,532
* Note that the above data is for illustration purposes only and does not represent any JHMH actual data.
Department Charge Code Units Direct Fixed Cost Direct Variable Cost Indirect Fixed Cost Indirect Variable Cost3101000 - R&B M/S 4TH FLR 2 694.37 0.00 894 31 3101220 - TEL 4TH FLR 1 107.49 0.00 138 5 4000896 - HANDPCE/HIGH FLW TIP 1 2.19 18.63 18 0 4000897 - CEMENT MIXING BOWL 1 3.06 26.05 25 1 4001063 - BLADE- SURG STERILE 1 10.29 87.55 84 2 4001404 - OR 1ST HR 1 56.53 480.88 459 12 4001405 - OR 15MIN 3 42.39 360.56 344 9 4010406 - PWR KNEE DRILL 1 14.41 122.57 117 3 4428365 - IV .9% SOD/CLOR IRRG 1 0.31 2.66 3 0
410 - PACU 4106211 - RECOVERY ROOM 1 HOUR 1 70.63 0.00 63 3 4115021 - CANNULA NASAL W/CO2 1 1.42 0.00 1 0 4115049 - TRAY SPINAL 1 8.66 0.00 6 0 4115067 - REG. ANES. 1ST HOUR 1 71.64 0.00 48 1 4115068 - REG ANES Q/15 MINS. 3 53.73 0.00 36 1
415 - RADIOLOGY 4157356 - XR KNEE 1-2 VIEWS LT 1 18.97 0.00 23 1 4301284 - GLUCOSE - BEDSIDE 9 15.38 0.00 11 0 4302021 - HEMATOCRIT 2 15.67 0.00 12 0 4302024 - HEMOGLOBIN 2 15.67 0.00 12 0 4306857 - VENIPUNCTURE 2 4.99 0.00 4 0 4400058 - ZOFRAN 2MG/ML 8 42.48 0.00 42 1 4400069 - TRANEXA 1000MG/10ML 10 26.86 0.00 27 1 4400263 - DIPRIVAN 200MG/20ML 20 7.02 0.00 7 0 4400273 - EPHEDRINE 50MG/ML 1 11.68 0.00 12 0 4420003 - DVT CALF CUFF 1 0.00 0.00 2 0 4421169 - LS LF PRIMARY PLUMST 1 0.00 0.00 1 0 4421291 - SOD CHL .9% 500ML 1 0.00 0.00 0 0 4422000 - EXTENSION SET 18" 1 0.00 0.00 0 0 4427032 - TRAY FOLEY IC 1 0.00 0.00 4 0 4428155 - BLANKET, BAIR HUGGER 1 0.00 0.00 2 0
453 - CARDIOPULMONARY/RESPIRATO 4537015 - INCENTIVE SPIROMETER 1 6.04 0.00 5 0 4652498 - PT INITIAL EVALUATIO 1 63.44 0.00 51 2 4654010 - PT EXERCISE I 1/4 HR 3 54.77 0.00 44 2 4657066 - MOBILITY CURRENT STA 1 0.20 0.00 0 0 4657072 - MOBILITY GOAL STATUS 1 0.20 0.00 0 0 4657080 - MOBILITY D/C STATUS 1 0.20 0.00 0 0 4658010 - PT GAIT TRN I 1/4 HR 3 48.67 0.00 39 2
465 - PHYSICAL THERAPY
310 - MED SURG 4TH FL
401 - Surgery
411 - ANESTHESIOLOGY
430 - PATHOLOGY LAB
440 - PHARMACY
442 - CENTRAL SUPPLY
Comprehensive Care for Joint Replacement (CJR) Model
*Note that the above data is for illustration purposes only and does not represent any JHMH actual data.
Department Charge Code Units Direct Fixed Cost Direct Variable Cost Indirect Fixed Cost Indirect Variable Cost3101000 - R&B M/S 4TH FLR 2 694.37 0.00 894 31 3101220 - TEL 4TH FLR 1 107.49 0.00 138 5 4000896 - HANDPCE/HIGH FLW TIP 1 2.19 18.63 18 0 4000897 - CEMENT MIXING BOWL 1 3.06 26.05 25 1 4001063 - BLADE- SURG STERILE 1 10.29 87.55 84 2 4001404 - OR 1ST HR 1 56.53 480.88 459 12 4001405 - OR 15MIN 3 42.39 360.56 344 9 4010406 - PWR KNEE DRILL 1 14.41 122.57 117 3 4428365 - IV .9% SOD/CLOR IRRG 1 0.31 2.66 3 0
410 - PACU 4106211 - RECOVERY ROOM 1 HOUR 1 70.63 0.00 63 3 4115021 - CANNULA NASAL W/CO2 1 1.42 0.00 1 0 4115049 - TRAY SPINAL 1 8.66 0.00 6 0 4115067 - REG. ANES. 1ST HOUR 1 71.64 0.00 48 1 4115068 - REG ANES Q/15 MINS. 3 53.73 0.00 36 1
415 - RADIOLOGY 4157356 - XR KNEE 1-2 VIEWS LT 1 18.97 0.00 23 1 4301284 - GLUCOSE - BEDSIDE 9 15.38 0.00 11 0 4302021 - HEMATOCRIT 2 15.67 0.00 12 0 4302024 - HEMOGLOBIN 2 15.67 0.00 12 0 4306857 - VENIPUNCTURE 2 4.99 0.00 4 0 4400058 - ZOFRAN 2MG/ML 8 42.48 0.00 42 1 4400069 - TRANEXA 1000MG/10ML 10 26.86 0.00 27 1 4400263 - DIPRIVAN 200MG/20ML 20 7.02 0.00 7 0 4400273 - EPHEDRINE 50MG/ML 1 11.68 0.00 12 0 4420003 - DVT CALF CUFF 1 0.00 0.00 2 0 4421169 - LS LF PRIMARY PLUMST 1 0.00 0.00 1 0 4421291 - SOD CHL .9% 500ML 1 0.00 0.00 0 0 4422000 - EXTENSION SET 18" 1 0.00 0.00 0 0 4427032 - TRAY FOLEY IC 1 0.00 0.00 4 0 4428155 - BLANKET, BAIR HUGGER 1 0.00 0.00 2 0
453 - CARDIOPULMONARY/RESPIRATO 4537015 - INCENTIVE SPIROMETER 1 6.04 0.00 5 0 4652498 - PT INITIAL EVALUATIO 1 63.44 0.00 51 2 4654010 - PT EXERCISE I 1/4 HR 3 54.77 0.00 44 2 4657066 - MOBILITY CURRENT STA 1 0.20 0.00 0 0 4657072 - MOBILITY GOAL STATUS 1 0.20 0.00 0 0 4657080 - MOBILITY D/C STATUS 1 0.20 0.00 0 0 4658010 - PT GAIT TRN I 1/4 HR 3 48.67 0.00 39 2
465 - PHYSICAL THERAPY
310 - MED SURG 4TH FL
401 - Surgery
411 - ANESTHESIOLOGY
430 - PATHOLOGY LAB
440 - PHARMACY
442 - CENTRAL SUPPLY
Comprehensive Care for Joint Replacement (CJR) Model
Department Charge Code Units Direct Fixed Cost Direct Variable Cost Indirect Fixed Cost Indirect Variable Cost3101000 - R&B M/S 4TH FLR 2 694.37 0.00 894 31 3101220 - TEL 4TH FLR 1 107.49 0.00 138 5
310 - MED SURG 4TH FL
*Note that the above data is for illustration purposes only and does not represent any JHMH actual data.
Department Charge Code Units Direct Fixed Cost Direct Variable Cost Indirect Fixed Cost Indirect Variable Cost3101000 - R&B M/S 4TH FLR 2 694.37 0.00 894 31 3101220 - TEL 4TH FLR 1 107.49 0.00 138 5 4000896 - HANDPCE/HIGH FLW TIP 1 2.19 18.63 18 0 4000897 - CEMENT MIXING BOWL 1 3.06 26.05 25 1 4001063 - BLADE- SURG STERILE 1 10.29 87.55 84 2 4001404 - OR 1ST HR 1 56.53 480.88 459 12 4001405 - OR 15MIN 3 42.39 360.56 344 9 4010406 - PWR KNEE DRILL 1 14.41 122.57 117 3 4428365 - IV .9% SOD/CLOR IRRG 1 0.31 2.66 3 0
410 - PACU 4106211 - RECOVERY ROOM 1 HOUR 1 70.63 0.00 63 3 4115021 - CANNULA NASAL W/CO2 1 1.42 0.00 1 0 4115049 - TRAY SPINAL 1 8.66 0.00 6 0 4115067 - REG. ANES. 1ST HOUR 1 71.64 0.00 48 1 4115068 - REG ANES Q/15 MINS. 3 53.73 0.00 36 1
415 - RADIOLOGY 4157356 - XR KNEE 1-2 VIEWS LT 1 18.97 0.00 23 1 4301284 - GLUCOSE - BEDSIDE 9 15.38 0.00 11 0 4302021 - HEMATOCRIT 2 15.67 0.00 12 0 4302024 - HEMOGLOBIN 2 15.67 0.00 12 0 4306857 - VENIPUNCTURE 2 4.99 0.00 4 0 4400058 - ZOFRAN 2MG/ML 8 42.48 0.00 42 1 4400069 - TRANEXA 1000MG/10ML 10 26.86 0.00 27 1 4400263 - DIPRIVAN 200MG/20ML 20 7.02 0.00 7 0 4400273 - EPHEDRINE 50MG/ML 1 11.68 0.00 12 0 4420003 - DVT CALF CUFF 1 0.00 0.00 2 0 4421169 - LS LF PRIMARY PLUMST 1 0.00 0.00 1 0 4421291 - SOD CHL .9% 500ML 1 0.00 0.00 0 0 4422000 - EXTENSION SET 18" 1 0.00 0.00 0 0 4427032 - TRAY FOLEY IC 1 0.00 0.00 4 0 4428155 - BLANKET, BAIR HUGGER 1 0.00 0.00 2 0
453 - CARDIOPULMONARY/RESPIRATO 4537015 - INCENTIVE SPIROMETER 1 6.04 0.00 5 0 4652498 - PT INITIAL EVALUATIO 1 63.44 0.00 51 2 4654010 - PT EXERCISE I 1/4 HR 3 54.77 0.00 44 2 4657066 - MOBILITY CURRENT STA 1 0.20 0.00 0 0 4657072 - MOBILITY GOAL STATUS 1 0.20 0.00 0 0 4657080 - MOBILITY D/C STATUS 1 0.20 0.00 0 0 4658010 - PT GAIT TRN I 1/4 HR 3 48.67 0.00 39 2
465 - PHYSICAL THERAPY
310 - MED SURG 4TH FL
401 - Surgery
411 - ANESTHESIOLOGY
430 - PATHOLOGY LAB
440 - PHARMACY
442 - CENTRAL SUPPLY
Comprehensive Care for Joint Replacement (CJR) Model
4115021 - CANNULA NASAL W/CO2 1 1.42 0.00 1 0 4115049 - TRAY SPINAL 1 8.66 0.00 6 0 4115067 - REG. ANES. 1ST HOUR 1 71.64 0.00 48 1 4115068 - REG ANES Q/15 MINS. 3 53.73 0.00 36 1
411 - ANESTHESIOLOGY
*Note that the above data is for illustration purposes only and does not represent any JHMH actual data.
Department Charge Code Units Direct Fixed Cost Direct Variable Cost Indirect Fixed Cost Indirect Variable Cost3101000 - R&B M/S 4TH FLR 2 694.37 0.00 894 31 3101220 - TEL 4TH FLR 1 107.49 0.00 138 5 4000896 - HANDPCE/HIGH FLW TIP 1 2.19 18.63 18 0 4000897 - CEMENT MIXING BOWL 1 3.06 26.05 25 1 4001063 - BLADE- SURG STERILE 1 10.29 87.55 84 2 4001404 - OR 1ST HR 1 56.53 480.88 459 12 4001405 - OR 15MIN 3 42.39 360.56 344 9 4010406 - PWR KNEE DRILL 1 14.41 122.57 117 3 4428365 - IV .9% SOD/CLOR IRRG 1 0.31 2.66 3 0
410 - PACU 4106211 - RECOVERY ROOM 1 HOUR 1 70.63 0.00 63 3 4115021 - CANNULA NASAL W/CO2 1 1.42 0.00 1 0 4115049 - TRAY SPINAL 1 8.66 0.00 6 0 4115067 - REG. ANES. 1ST HOUR 1 71.64 0.00 48 1 4115068 - REG ANES Q/15 MINS. 3 53.73 0.00 36 1
415 - RADIOLOGY 4157356 - XR KNEE 1-2 VIEWS LT 1 18.97 0.00 23 1 4301284 - GLUCOSE - BEDSIDE 9 15.38 0.00 11 0 4302021 - HEMATOCRIT 2 15.67 0.00 12 0 4302024 - HEMOGLOBIN 2 15.67 0.00 12 0 4306857 - VENIPUNCTURE 2 4.99 0.00 4 0 4400058 - ZOFRAN 2MG/ML 8 42.48 0.00 42 1 4400069 - TRANEXA 1000MG/10ML 10 26.86 0.00 27 1 4400263 - DIPRIVAN 200MG/20ML 20 7.02 0.00 7 0 4400273 - EPHEDRINE 50MG/ML 1 11.68 0.00 12 0 4420003 - DVT CALF CUFF 1 0.00 0.00 2 0 4421169 - LS LF PRIMARY PLUMST 1 0.00 0.00 1 0 4421291 - SOD CHL .9% 500ML 1 0.00 0.00 0 0 4422000 - EXTENSION SET 18" 1 0.00 0.00 0 0 4427032 - TRAY FOLEY IC 1 0.00 0.00 4 0 4428155 - BLANKET, BAIR HUGGER 1 0.00 0.00 2 0
453 - CARDIOPULMONARY/RESPIRATO 4537015 - INCENTIVE SPIROMETER 1 6.04 0.00 5 0 4652498 - PT INITIAL EVALUATIO 1 63.44 0.00 51 2 4654010 - PT EXERCISE I 1/4 HR 3 54.77 0.00 44 2 4657066 - MOBILITY CURRENT STA 1 0.20 0.00 0 0 4657072 - MOBILITY GOAL STATUS 1 0.20 0.00 0 0 4657080 - MOBILITY D/C STATUS 1 0.20 0.00 0 0 4658010 - PT GAIT TRN I 1/4 HR 3 48.67 0.00 39 2
465 - PHYSICAL THERAPY
310 - MED SURG 4TH FL
401 - Surgery
411 - ANESTHESIOLOGY
430 - PATHOLOGY LAB
440 - PHARMACY
442 - CENTRAL SUPPLY
Comprehensive Care for Joint Replacement (CJR) Model
4306857 - VENIPUNCTURE 2 4.99 0.00 4 0 4400058 - ZOFRAN 2MG/ML 8 42.48 0.00 42 1 4400069 - TRANEXA 1000MG/10ML 10 26.86 0.00 27 1 4400263 - DIPRIVAN 200MG/20ML 20 7.02 0.00 7 0 4400273 - EPHEDRINE 50MG/ML 1 11.68 0.00 12 0
430 - PATHOLOGY LAB
440 - PHARMACY
*Note that the above data is for illustration purposes only and does not represent any JHMH actual data.
Comprehensive Care for Joint Replacement (CJR) Model
Contract Negotiation › Dip your toes in the water early to test› Start with 1 payer first to get a feel for if you’re ready
Vendor Negotiation› Help your vendors to see the reality
Physician Scorecard› Help your physicians to reduce cost variation
And More…› Pricing Transparency› MD Save
Make changes based on cost model results
Comprehensive Care for Joint Replacement (CJR) Model
Whether your hospital is zoned for CJR or not, now is the right time to prepare for CJR. Might as well ride the wave and reap the rewards rather than delay and drown in penalties.
Summary
Comprehensive Care for Joint Replacement (CJR) Model
CJR Final Rule: https://innovation.cms.gov/Files/fact-sheet/cjr-providerfs-finalrule.pdfCoach Potato Cost Model: https://www.linkedin.com/pulse/healthier-hospital-costing-6-steps-get-your-service-off-scanlon-cma?trk=prof-postCost Correlation Conundrum: https://www.linkedin.com/pulse/understanding-your-hospitals-costs-cure-cost-christie-scanlon-cma?trk=prof-postImpact Zone: https://www.linkedin.com/pulse/impact-zone-decisions-what-surf-taught-me-decision-making-dawid-mockeBecker spine article: http://www.beckersspine.com/orthopedic-spine-practices-improving-profits/item/30556-cjr-bundles-to-pay-25k-per-episode-8-statistics-on-cost-breakdown.htmlAgilum Healthcare Intelligence: http://www.agilum.com/Jack Hughston Memorial Hospital: http://www.hughston.com/Angela Hadzega’s LinkedIn: https://www.linkedin.com/in/angelahadzegaChristie Scanlon’s LinkedIn: https://www.linkedin.com/in/christie-scanlon-cma-507a571a
Links…
Questions?
Christie ScanlonHealthcare Cost Consultant
Scanlon Enterprises, [email protected]
843-364-6948
Angela HadzegaChief Financial OfficerJack Hughston Memorial [email protected]
The choice is yours….