WellStar Health System - Opportunities 2010
A Unique Approach to Margin Improvement, Leadership
Development and Cultural Change
FROM SURVIVING TO THRIVING
WellStar Health System - Opportunities 2010
A Case Study of how one health system’s senior leaders came together and made strategic decisions based on values, with
Safety First and Work Life as a cornerstone to a business strategy.
WellStar Health System - Opportunities 2010
FACTS AND STATS:•Not-for-profit.•Integrated health system.•Employer of Choice.•$1.4 billion in net revenue.•11,000 employees.•Five hospitals, 1311 beds.•400 physicians/providers.•Serve 1 million people.•1.1 million office visits.•273,000 emergency visits.•64,000 discharges.•Over 75 locations.
WellStar Health System - Opportunities 2010
Stephen Shortell, Ph.d.; Dean-School of Public Health, University of California-Berkley
“An organization that provides a coordinated continuum of services to a defined population and is willing to be held clinically and fiscally accountable for the outcomes and health status of the population it serves.”
WellStar Health System - Opportunities 2010
• Creating an effective workplace where every team member is valued and given the opportunity and support to succeed at work and at home
• An organization that provides a coordinated continuum of work life programs, family friendly benefits and workplace options and is willing to be held accountable for the outcomes and health status of it’s greatest asset – their people
• Benchmarking ourselves against the best
WellStar’s Journey to Employer of Choice
WellStar Health System - Opportunities 2010
6
VISION: To Deliver World-Class Health CareVISION: To Deliver World-Class Health Care
MISSION: To create and deliver high quality hospital, physician, and other healthcare related services that improve the health and well-being of the individuals and communities we serve.
MISSION: To create and deliver high quality hospital, physician, and other healthcare related services that improve the health and well-being of the individuals and communities we serve.
GROWTHGROWTH
FINANCIAL PERSPECTIVE
Income From Operations Philanthropy
FINANCIAL PERSPECTIVE
Income From Operations Philanthropy
PRODUCTIVITYPRODUCTIVITY
CostCost Asset UtilizationAsset Utilization
Employee ValueEmployee Value
CompensationCompensation RelationshipsRelationships ImageImage
SalarySalary IncentiveIncentive BenefitsBenefits Brand EquityBrand EquityServiceService PartnershipPartnership
Market ShareMarket Share Revenue OpportunitiesRevenue Opportunities
Customer ValueCustomer Value
ProductProduct RelationshipsRelationships ImageImage
QualityQuality AccessAccess SelectionSelection ServiceService PartnershipPartnership BrandEquityBrandEquity
OPERATIONS PROCESSESOPERATIONS PROCESSES
INFORMATION KNOWLEDGE TRAININGINFORMATION KNOWLEDGE TRAINING
PEOPLE CULTUREPEOPLE CULTURE
InvestmentsStrategic Focus Return on Investment (ROI)
04-2009
WellStar Health System - Opportunities 2010
“You only learn who has been swimming naked when the tide goes out...”
Warren E. BuffettChairman, Berkshire Hathaway Inc.
Letter to shareholders, February 2008
WellStar Health System - Opportunities 2010
Primary reasons for the negative sector outlook are:
•The tightening of credit markets, •Expected broad based weakening in hospital operating performance,•Declining liquidity, •Softer volumes; and, •More uninsured patients.
WellStar Health System - Opportunities 2010
What hospitals are doingto meet this challenge:
•Hiring freezes•Reductions in force•Eliminating incentive pay•Reducing management ranks•Suspending merit increases•Salary cuts•Reducing 403b match•Ending defined benefit plans•Renegotiating with supply vendors
WellStar Health System - Opportunities 2010
54%
80%
52%
62%
36%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
All >500beds
300-500beds
100-300beds
0-100beds
Hospitals Losing Money
April 2009 SurveyHealthcare Financial
Management Association
WellStar Health System - Opportunities 2010
WellStar’s financial condition was strong (top 15% of all health systems in the
country).
However, to meet the challenges of the economic environment, our community needs and to continue to invest in our strategic plan, we needed to not only
survive the current environment,
but to thrive in it.
WellStar Health System - Opportunities 2010
WellStar Health System 2009 Strategic Goals
Achieve the following Patient Satisfaction percentile targets:
Inpatient – 65th
Outpatient – 80th
Amb Surg – 90th
Emergency – 55th
WS Phy Group – 80th
Achieve the 65th percentile on Employee Engagement
Reduce system-wide turnover rate for FT/PT staff to 12%
Realize an Operating Margin of 4.0%
Achieve Foundation Philanthropy Goal of $5.0 million.
Avoid layoffs and enhance benefits.
Achieve projected volume growth in
Inpatient - 4%
Amb surgery - 3%
Emergency - 2%
Imaging - 5%
Cardiac - 7%
Quality & Patient Safety
Achieve CORE measure top performer status for 70 of 97 measures
Identify and implement strategic performance-improvement initiatives to realize $34 million in improvement and an operating margin run rate of 6% by the 4th quarter FY09
Reduce Healthcare Associated Infections to 47 or fewer total CLI’s and VAP’s
People x
Financial x
Customer Service
Successful Growth
Exceed State & National benchmarks on percentages of 9’s and 10’s on the “Overall Rating” HCAHPS question
WellStar Health System - Opportunities 2010
Supply: Other, $3,000,000
Supply: TOG, $2,000,000
Benefits, $3,500,000
Purchased Services / Other, $2,500,000
Non-Patient Revenue, $2,000,000
Revenue Cycle, $2,000,000
Utilization Management,
$4,000,000 Salary, $15,000,000
WellStar Health System - Opportunities 2010
“Great things are not done by impulse, but by a series of small things brought together.”
Vincent van Gogh (1853-1890)Dutch painter
WellStar Health System - Opportunities 2010
Top Opportunities Group
Cobb Douglas Kennestone Paulding Windy Hill Enterprise Support
Supply Expense
Benefits Purchased Services / Other
Non-Patient Revenue
Opportunity
Teams
Business Unit Teams
Labor Utilization
Expense Reduction
Revenue Cycle
Utilization Mgmt
Physician Group (WPG)
WellStar Health System - Opportunities 2010
8
TOG Responsibilities: Prioritization & Oversight
• Develop strategy for accomplishing Opportunities 2010 goals
• Identify potential performance improvement initiatives & opportunity • Prioritize and determine targets for each initiative
• Communicate strategy to organization
• Identify Project Opportunity Teams (Define Expectations)
• Weekly feedback on progress with supporting leadership decisions
• Allocate of resources to assist teams
WellStar Health System - Opportunities 2010
Opportunity Teams Responsibilities: Planning / Execution / Implementation
• Develop project plans to accomplish Goals & present to TOG
• Collect Data, perform analysis, and develop recommendations • Communicate targets to Business Units Teams
• Maintain a system approach across business units • Secure resources needed for Implementation • Develop & initiate measurement / feedback mechanism
WellStar Health System - Opportunities 2010
Business Unit Teams Responsibilities : Planning / Execution / Implementation
• Develop project plans to accomplish Opportunities 2010 Goals
• Collect Data, perform analysis, and develop proposed tactics & submit to Opportunity Teams
• Assist with communication to staff regarding purpose and process for Opportunities 2010
• Secure resources needed and implement tactics within Business Unit • Develop & initiate measurement / feedback mechanism
WellStar Health System - Opportunities 2010
Recommendation Development: Opportunity Teams identify strategic performance improvement
initiatives that assist in achieving the team goals for improving operating margin. Develop recommendation
through analysis and quantify by business unit, if applicable.
Pass I Approval:Opportunity Team presents recommendation to TOG for Pass I
approval. Pass I approval indicates that the TOG believes that the recommendation is feasible and additional
analysis should be completed to validate opportunity at the business unit level.
Pass II Approval:Business Unit Teams will evaluate recommendations with Pass
I approval for implementation feasibility, and make adjustments to recommendation. Business Units will work
in partnership with Opportunity Teams to take revised recommendation back to TOG for Pass II approval.
Implementation Planning and Execution:Recommendations that receive Pass II approval are
ready for implementation planning. Opportunity Teamswill support Business Unit Teams in the development of
implementation plans and execution.
Measurement / Validation:Opportunity Teams will determine metrics to measure and
sustain success of implementation. Metrics will be reported to TOG..
WellStar Health System - Opportunities 2010
Our CredoI believe every person and every job is important and I am accountable for achieving my goals.
I believe in compassion and understanding.
I believe in innovation and creative thinking.
I believe in our WellStar Team and we are making a difference in people’s lives.
Our greatest asset is our people and we will
consider the human toll of our business decisions
and ensure we are valuing their input, ideas and
experience.
WellStar Health System - Opportunities 2010
Provides an opportunity for all team members
and physicians to submit their ideas for
performance improvement.
The key is to draw upon the wisdom, insight and strength of our
team members.
WellStar Health System - Opportunities 2010
Building Trust Through Transparency
•Opportunities 2010, e-newsletter sent as initiatives are approved. Messaging aligns with the Strategic Plan, including “Myth Busters” to dispel rumors. •Monthly Partners news brief
•eSource Spotlight
•Hospital & Medical Staff Newsletters •Director Meetings
•Manager Roundtables
•Town Halls Meetings
•WellStar Medical Staff Meetings
WellStar Health System - Opportunities 2010
• Standardized custom packs
• Discontinued personal inkjet printers • Reduced outside catering
• Renegotiated spine implant pricing
• Restructured case management function
• Eliminated budgeted, but unfilled positions
• Renegotiated IT maintenance agreements
• Reduced insurance company payment denials
• Eliminated non-essential outside consultation
•Eliminated non-essential outside consultation
•Renegotiated cardiac implant pricing
•Renegotiated neuro stimulator pricing
•Implementing e-payables
•Restructured courier service and bid out services
•Performed a lighting retrofit of facilities
•Drilled a well for cooling tower and boiler
•Improving patient chart documentation
•Implemented new productivity monitoring system
•Consolidated janitorial services
WellStar Health System - Opportunities 2010
• Implement in-house employee pharmacy
• Increase results of blood drives
• Implement blood conservation program
• Adjust certain pay practices to reflect local market conditions
• In source esoteric lab tests
• Renegotiate revenue contracts which were below current market conditions
• Implement in room patient massage and salon services
• Begin selling spa robes on a retail basis
• Restructure transcription services
• Implement UV window tinting
•In source self pay collection process
• Reduced distribution center inventory levels
• Terminate IT recovery center no longer needed
• Standardize formulary for office supplies
• Redesign laundry/line process at hospitals
• Redesign process and control utilization of scrubs
• Renegotiate vascular graph pricing
• Work closely with hospital GPO to enforce a “no price increase” policy
WellStar Health System - Opportunities 2010
WellStar Health System: Total System Report
* Approxiamate annualized value of currently implemented improvements = $51,957,500 (Wave 1&2 completed Pass II initiatives)
Wave 1 & 2:Pass II Approved
Annualized
Wave I Goal
$34 Mil
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Mill
ion
s
YTD *
FY09 Operating Margin Percent (Budget vs Actual)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09
Budgeted Operating Margin Actual Operating Margin 4th Qtr Target Operating Margin
Pass II Projected Timing of Concluded PlansWave I & Wave II Initiatives
FY09 QuarterlyRun Rate Goal
$8,500,000
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
Imp
rove
men
t R
ealiz
atio
n
Utilization Mgmt $0 $0 $333,333 $1,000,000 $1,233,600 $1,233,600 $1,233,600 $1,232,000
Revenue Cycle $550,000 $887,500 $1,166,250 $1,566,250 $6,413,872 $6,413,872 $6,413,872 $6,413,872
Non-Patient Revenue $0 $39,000 $72,616 $82,205 $84,705 $94,720 $94,720 $94,720
Purchased Services $269,368 $236,250 $120,750 $157,226 $1,510,726 $1,510,726 $1,510,726 $1,510,726
Benefits $130,000 $230,000 $1,380,000 $1,380,000 $1,380,000 $1,380,000 $1,380,000 $1,380,000
Supplies: Value Analysis $1,904,526 $1,904,526 $1,904,526 $1,904,526 $1,904,526
Supplies: TOG $70,913 $70,913 $270,913 $270,913 $942,583 $942,583 $942,583 $942,583
Labor Utilization $2,821,330 $2,821,330 $2,821,330 $3,134,811 $3,134,811 $4,308,524 $5,482,237 $5,482,237
Quarterly Run Rate Goal $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY 2009 FY 2010
WellStar Health System - Opportunities 2010
4.8%
3.3%
4.6%4.7% 4.5%
3.5%3.7%3.5%
0.6%0.1%
4.8%
3.1%3.90%
2.8%
4.80%
3.1%
8.20%
5.3%
8.80%
2.9%
8.90%
2.8%
12.40%
2.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN
Actual Plan
Operating MarginFY 2009 Trend
WellStar Health System - Opportunities 2010
Actual Plan Prior Year Amount Percent Amount Percent
36 System Operating Margin % 5.9% 3.2% 4.0% 2.7% 84.4% 1.9% 47.5%37 System Investment Return % (10.3%) 6.5% 2.7% (16.8%) (258.5%) (13.0%) (26.2%)38 Net Revenue per CMI Wt Adj Acute Discharge (Incl BD) 6,285 6,412 6,297 (127) (2.0%) (12) (0.2%)39 Expense per CMI Wt Adj Acute Discharge (Excl BD) 5,777 6,210 6,029 433 7.0% 251 4.2%40 Adult & Peds Acute ALOS 4.67 4.88 4.85 0.21 4.2% 0.18 3.7%41 Adult & Peds Acute ALOS CMI Wt 3.56 3.73 3.71 0.18 4.7% 0.16 4.2%42 Medicare Acute ALOS 6.12 6.53 6.53 0.41 6.3% 0.41 6.3%43 Medicare Acute ALOS CMI Wt 3.96 4.16 4.16 0.20 4.8% 0.20 4.8%44 Paid FTEs per CMI Wt Acute AOB 3.70 3.78 3.83 0.07 2.0% 0.13 3.3%45 Salary per Adj Acute Discharge 2,931 3,102 3,085 171 5.5% 154 5.0%46 Supply Expense per CMI Wt Adj Acute Patient Day 219 229 224 10 4.6% 5 2.2%47 Drug Expense per CMI Wt Adj Acute Patient Day 57 61 58 5 7.6% 1 2.2%48 Cash Collected as % of Net Revenue (Excl BD) 101.4% 100.0% 98.8% 1.4% 1.4% 2.6% 2.6%49 Net Days in Accounts Receivable 48.8 54.0 53.3 5.2 9.6% 4.5 8.4%
(5%) to < 0% Unfavorable < (5%) Unfavorable
0 % to < 5% Favorable Favorable >= 5%
Year to DatePlan Variance Prior Year Variance
Fina
ncia
l
WellStar Health System (Excluding Phy Div)
WellStar Health System - Opportunities 2010
Fiscal Year Improvements
From 2008 to 2009
23% 25%
77%
6%
-4%
47%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
EmployeeEngagement
PatientSatisfaction
SafetyImprovement
Growth Expenses FinancialMargin
WellStar Health System - Opportunities 2010
Gallup Engagement Scores in Top Quartile Medical Staff Satisfaction Scores in Top Quartile Turnover Rate significantly below national healthcare
benchmark Low vacancy rates in all positions – especially difficult to fill
roles National Recognition by Working Mother Magazine, AARP,
Fortune 100, Alfred P. Sloan
Employer of Choice Goals 2010
WellStar Health System - Opportunities 2010
Employer of Choice Alignment
Work/Life BalanceWork/Life BalanceBenefits/CompBenefits/Comp
Work ForceWork ForceDevelopmentDevelopment
PerformancePerformanceManagementManagement
LeaderShip LeaderShip DevelopmentDevelopment& Learning& Learning
CulturalCulturalCompetencyCompetency
WellStar Health System - Opportunities 2010
Happy endings and happy beginnings . . .
The Labor Utilization Team
Out of over 11,000 positions only 44 positions were
identified to eliminate all 44 were offered
reassignment with 1 being a promotion.
Only 3 chose to seek opportunity elsewhere.
WellStar Health System - Opportunities 2010
WellStar has taken extraordinary effort to make my transition into my new role a wonderful experience. I now have a better job, a great manager and am working on my computer tech degree.
Thank you WellStar for considering me in your decisions! On left is Teresa Walker, Systems Analyst 1,
with Manager Pam Pfeifer
WellStar Health System - Opportunities 2010
Thank you for this opportunity.
Questions?