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Copyright © 2015 Studer Group. Please do not quote or disseminate without Studer Group authorization
Making the Case for
Change Without a Burning Platform
Presented By: Rex P. Budde, CPA, MBA
President and CEO
Southern Illinois Healthcare, Carbondale, IL
Copyright © 2015 Studer Group. Please do not quote or disseminate without Studer Group authorization
2
Region’s second largest employer
3,700 total employees
Service area encompassing the southernmost 16 Illinois counties
Tax-exempt health system with over $100 million in
uncompensated government sponsored care and in excess of $9
million in charity care in FY 2015
Region’s only dedicated cancer center
National acclaim for cancer, cardiac, stroke, bariatric, breast
imaging and rehabilitation services
Affiliations with The BJC Collaborative, Prairie Heart Institute and
Rehabilitation Institute of Chicago.
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3
Financial History of SIH
YEAR INVESTMENTS DAYS CASH ON HAND
CASH TO DEBT
DEBT TO CAPITALIZATION
2001 $ 45,822,000 96 63% 40%
2005 $ 145,580,000 262 122% 39%
2010 $ 228,349,000 255 167% 30%
2016 $ 378,903,000 280 219% 25%
Financial Ratios
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Financial History of SIH
YEAR ADMISSIONS ED SURGERIES OUTPATIENT
MARKET
SHARE
2001 13,666 55,809 7,628 175,217 46%
2005 15,068 59,630 8,366 228,768 43%
2010 15,507 64,836 9,964 262,558 48%
2016 17,804 72,791 11,425 351,894 54%
Volumes/Market Share
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Six Sigma Journey
5
Becoming a Learning Organization
2004
– Introduction of Six Sigma, Work-Out, Change Acceleration Process
– Established the process improvement department
– Trained 4 Black Belts, 12 Green Belts, and 16 Change Agents
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Lean Journey
6
Becoming a Learning Organization
Oct 2011
• Rapid Cycle Improvement Events
Dec 2011• Lean Daily Management
March 2012• Strategy Deployment
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X Matrix Process
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Becoming a Learning Organization
Step 4: WHO?
Resource Deployment
Step 3: HOW?
Which Key Processes?
Step 1 : WHAT?
Breakthrough Thinking
Step 2: HOW FAR?
This Year?
Step 5: HOW MUCH & WHEN?
Measures?
Top Level X Matrix
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New Goal Emphasis
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Becoming a Learning Organization
• Behaviors observed in an organization indicate what’s important to the people of the organization.
• Modeled behavior drives culture.
• Culture drives patient experience.
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Creation of SIH Medical Group
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Physician Involvement
• Formed in 2006 to employ high end specialists.
– Created to facilitate physician recruitment to rural
market amid the Illinois medical liability insurance
crisis of 2004-2006.
• Southern Illinois Medical Services, NFP (SIMS)
– 501.c.3 not for profit.
– Wholly owned subsidiary of Southern Illinois Hospital
Services.
– Governed by SIMS Board of Trustees.
• Initially targeted 20-30 physicians
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Creation of SIH Medical Group
10
Physician Involvement
Today
• 157 physicians
• 62 advanced practice providers
• Over 550 employees at 29 practice locations
• Over $75 million in net revenue
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Creation of PHO – From 2009 to Today
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Physician Involvement
• PHO Physician Steering Committee formed
• Interim Board of Managers formed and Quality Health Partners
created
• Key QHP executives chosen
• QHP Physician Network closed
• Clinical performance measures chosen, agreements completed,
and negotiations begin with commercial payers
• Physician and hospital clinical integration
• Assess Medicare ACO operations and develop population health
strategy tactics
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Creation of Integrated Leadership Teams
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Physician Involvement
• Multidisciplinary group of physicians collaborating with the CEO,
hospital administrator, CMO, nurse executive and IT with a focus on
addressing operational issues that impact patient care, patient
safety, patient experience and physician workflow
• Teams formed - MHC 2011 / HH 2012 / System ILT 2014
• 247 issues addressed since 2014
• Benefits of ILT
– Improves quality of care
– Improves physician engagement and satisfaction
– Builds interdisciplinary relationships
– Improves relationship between administration and physicians
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The BJC Collaborative - to achieve even higher quality care for
the patients served by these independent not-for-profit health
care organizations
The Collaborative members have a footprint of 6,855 staff
hospital beds spanning Missouri, Illinois and Kansas, and
combined annual revenues of over $9 billion focusing on:
Population Health Management, Clinical and Service Quality,
Capital Asset Management and Information Systems and
Technology.
Affiliation with BJC HealthCare
Upstream Collaborative Relationship
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Affiliation with BJC Healthcare
Upstream Collaborative Relationship
http://www.bjc.org/About-Us/The-BJC-Collaborative
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• Clinical Engineering Operations Committee: Capital Equipment Savings
of $104,221,558 (SIH savings of $9 million)
• IT Operations Committee: CCMR work and Epic
• Clinical and Service Quality: Reduction in catheter associated infection.
• Government Relations: Sharing information on various legislative issues,
such as Illinois managed care and Missouri telehealth statutes.
• HR/Lifelong Learning: Sharing of best practices such as retention
strategies and voluntary turnover.
• Legal: Antitrust Training & Evaluating Shared Services Platform options.
• PR/Communications: Dedicated BJC Communication Team to share
success stories.
Upstream Collaborative RelationshipParticipating in the BJC Collaborative
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• Case Management: A SIH nurse navigator has been placed at BJH to
coordinate transfers to/from SIH & BJC
• Neurosciences: SIH neuro team access to ClinDesk with Washington
University for shared patients
• Telemedicine/ICU: SIH and surrounding hospitals provide telemedicine
services with WUSM specialists
• Oncology: Second Opinion Clinics for SIH patients with WUSM
• Trauma: BJH and WUSM proving recruitment assistance and consulting
services to SIH in development of a Trauma Center
• Pediatrics/OB: SIH Outreach Clinic with BJH for remote EEG and high
risk pregnancy ultrasound
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Upstream Collaborative Relationship
Participating in the BJC Affiliation
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17
Financial Projections That Spurred Concern
Future Vision
Expense Growth Rate Average
Base Case 7.0%
Controlled Cost Growth 5.5%
Income from Operations
Base Case $ (224,340)
Controlled Cost Growth 252,730
Operating Margin Target
Base Case 4.0% -3.53% Controlled Cost Growth 4.0% 3.98%
Days Cash on Hand Target
Base Case 300
Controlled Cost Growth 300
Fiscal 2013 to
2023
(Dollars in $000)
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18
Financial Projections
That Spurred Concern
Healthcare Reform Effect
Fiscal 2011through 2022
Future VisionMEMORIAL
IP Rate Reductions $ (53,664,958) OP Rate Reductions $ (22,152,071)
Disp Share Reductions $ (36,492,348)
Healthcare Reform $ (112,309,377) Coding $ (34,729,001)
Wage Index Reductions $ (4,804,831)
Total $ (39,533,832) TOTAL MEMORIAL $ (151,843,209)
HERRIN
IP Rate Reductions $ (22,321,587)
OP Rate Reductions $ (9,381,621) Rehab Unit Rate Reductions $ (10,485,780)
Rehab Unit Disp Share Reductions
$ (3,159,590)
Healthcare Reform $ (45,348,578)
Coding $ (14,554,963) TOTAL HERRIN $ (59,903,541)
GRAND TOTAL $ (211,746,750)
Herrin’s Medicare Dependent Status Ended in FY 2013
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Vision SIH
Need for Change
The Environment Has Changed• Reduced reimbursements
• Reduced overall demand
• Increasing competition
The significant
challenge will be
accelerated with
the help of a
partner –
Huron Consulting
Group
Proven ability to
identify and
achieve millions of
dollars of cost
savings and
revenue
improvement
Multi-disciplinary Teams
System-wide initiative
Goal: To Maximize
efficiencies while
enhancing our
commitment to providing
the highest quality
patient-centered care.
Margin Dilution is Real• $45 million of cost reductions or
operating income from new
revenue is needed over the next
3 years
Efforts Underway• Lean teams and initiatives
• BJC Collaborative
• Waste elimination
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Vision SIH
Guiding Principles
• Initiative is owned, led and managed by Southern Illinois Healthcare,
• The Initiative goal is to improve our operational and financial performance by
transforming how we do our work and establishing new ways of defining success.
• Our fiscal responsibility as stewards of a limited resource is as important as
delivering high-quality care. We need to anticipate and prepare for inevitable
changes in our operating environment.
• We are not looking for “business as usual.” We have to challenge what we are
going and now, and look for ways to capitalize on our individual and collective
strengths while improving our financial health while maintaining or enhancing
service, quality, and safety. We will leverage best practices and strive to achieve
standardization.
• The SIH leadership team needs to share equally in accountability and actions,
and be supportive of decisions and consistent in communications.
• The strategy deployment, daily management, and rapid cycle improvement
processes will be leveraged to support the Vision SIH efforts.
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21
Vision SIH
Communications Plan
Principles:
• Communicate transparently
• Advance communication to management
team to catalyze meaningful conversations
• Create a means to gain employee input/buy-in
• Be mindful that anything shared with
employees may be shared with local media
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22
Vision SIH
Communications Plan – Communicating Work Through Teams
There were nine
Vision SIH teams
represented on
an SBAR
template that
was utilized for
all system-wide
communications.
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23
Vision SIH
Communications Plan – Communication Coordination
• The Marketing & Communications team logged all
past, present and anticipated communications
with a goal of limiting Vision SIH communications
to one per day. Not always possible.
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24
Vision SIH
Communications Plan – Celebrating Progress
On multiple
occasions when
fatigue was
beginning to
show, info-
graphics were
used to celebrate
progress and to
motivate EEs.
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25
Vision SIH
Communications Plan – Lessons Learned
• Communication key to successful change
management.
• Plan and execution strong, line-of-sight
communication from managers seen as
improvement opportunity.
• “Voice-of-customer” sought but not sufficient to
gauge Employees readiness for change
• Readiness for change within organizational context
key to success.
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26
Vision SIH
Results
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27
Next Steps
Conversion to Epic• Multiple EHR systems • Single, totally integrated, IT
solution• Optimize clinical and revenue cycle
Information• Real-time course corrections• Prerequisite to the analytics
required to manage Population Health
Other Next Steps• Address “gaps” (PAC and nurse
coordinator’s roles)• Build “CCMR with BJC
Collaborative project • Pursue relationship with present
ACO or establish an ACO• Create a Behavioral Health
program strategy• Create a diabetes management
program
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28
The Learning Journey
• No sacred cows
• Emphasize local data in making HR decisions
• Underestimated the anxiety level, both
managers and staff
• Communication techniques
Slide 29
Thank You!
Rex Budde, CPA, MBA
President and CEO
618.457.5200, ext. 67100
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