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Features25 Focus on Patient Safety

5 resources, supplies hospitals are purchasing for patient safetyBy Lori Pilla, RN,BSB/M,MBA

26 Wireless Monitoring Technology for Blood Banks

The ubiquity of wireless network cover-age, combined with the low traffic impact of temperature monitoring, makes wireless monitoring a natural choice for today’s blood bank

By Alan J. Stone

12PopulationHealth Management Turn initiatives to high-performing enterprise strategies By Seth Frazier

CONTENTS EXECUTIVE INSIGHT I 2015 I FEBRUARY

26

15 CEO: Employer/ Provider Partnerships

When health systems and employers work closely to-gether – using actionable data to achieve practical results – employees and community groups steadily get healthier, the cost of care decreases and productivity risesBy Phil Suiter

17 COO: Clinical Decision Support

How implementing a CDSS improves operational efficiencies By Roni H. Amiel

19 CFO: Cost Accounting Strategies

Transformation of healthcare delivery requires evolution of cost accounting system By Nancy Templin, CFO

22 CIO: Risk Adjustment in Population Health

Providers should look be-yond existing patients to the full population and determine the resources needed for effective care management, particularly those that serve disadvantaged populationsBy Gloria Kupferman and Kelly Price

COVER STORY

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Features

CONTENTS continued EXECUTIVE INSIGHT I 2015 I FEBRUARY

8 Editorial The Successful 1800

By Lynn Nace

10 Eye on Quality Lean for Healthcare StaffingBy Chip Caldwell, John Amos, Greg Butler, and Richard Priore, ScD

Features

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29 Models for Implementing Ambulatory Pharmacy

Ambulatory pharmacies help hospitals decrease readmissions and provide continuity of care By Anthony Vecchione

32 The True Cost of LayoffsIndustry experts weigh in on budget- friendly alternatives to employee layoffs By Rebecca Mayer Knutsen

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A s an executive of a hospital feel-ing the momentum of population health initiatives, do you ever feel

like you’ve had to do a complete 1800 from the traditional fee-for-service model? Af-ter all, the approach to patient care, the need and uses of data analytics, regulato-ry requirements (including penalties for noncompliance), financial turnaround and more are all completely different.

Throughout the pages of this issue, ex-perts share experiences, approaches and solutions for ensuring population health initiatives turn into successful strategies. With specific enablers in place, for exam-ple, health systems create powerful re-sults, including “double digit decreases in admissions per thousand and increases in in-system utilization, appropriate severity coding driving up risk revenue by millions, network expansion that creates access to hundreds of thousands of new lives, geo-metric increases in quality care gap closure, and more,” writes cover story author Seth Frazier, chief transformation officer at Evo-lent Health. “This level of performance can sustain a robust population health strate-gy—total medical expense beating risk revenue to create positive margins to drive physician alignment, infrastructure sup-port and retained earnings. This financial viability enables continued investment and expansion of the strategy which, in turn, supports the enhanced mission—improv-ing community health, bending the cost curve and growing market share—a vir-tuous combination for this new era.”

As well, providers should look beyond existing patients to the full population and determine the resources needed

for effective care management, particularly those that serve disadvantaged populations, according to Gloria Kupferman and Kelly Price, DataGen. Read the CIO perspective, “Risk Adjustment in Population Health,” to learn more about when a provider takes on the risk of caring for a specified population, reimbursement must be appropriately ad-justed to reflect the health disparities with-in the population and the costs associated with adequately addressing them.

Our coverage of pop health doesn’t end in this issue, however. Executive Insight is proud to debut our new Population Health Resource Center, found at www.advanceweb.com/executiveinsight. Con-tent is updated regularly with timely ar-ticles, multimedia resources, news items

and more. We welcome—and encourage—feedback and con-tributions. Contact me directly with comments, suggestions and/or article ideas.

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The Successful 1800

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EDITORIAL

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Providers should look beyond existing patients to the full population and determine the resources needed for effective care management.

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Among the 573 CEOs interviewed by the American College of Healthcare Execu-tives, 71% expect their reimbursement to

drop at least 15% over the next three years. As stated by Tennessee Hospital Association Pres-ident Craig Becker, “… hospitals are entering a fiscal crisis, the likes of which we have never seen in our history.” Moody’s and other ma-jor credit agencies report a dismal outlook for non-profit hospitals, with expenses continuing to outstrip revenue, as more than one-quarter of all hospitals have negative operating mar-gins. The current and anticipated increasing regulatory and economic pressure on hospital financial performance and mission support will require a focused, action-oriented, and sustain-able approach to achieving high impact margin improvement.

FINANCIAL THREATS The primary threats to already thin hospital operating margins include cuts in government reimbursement, pressure from commercial pay-ers, increasing operating costs, soft admission volume, and declining market share. The 2012 federal government budget sequestration cut approximately $11 billion in Medicare, more than half of which came from hospitals. The Af-fordable Care Act legislated additional and per-manent Medicare reductions of more than 1% per year over the next 10 years. These cuts are predicted to cause an additional 15% of hospitals to become unprofitable through negative adjust-ments and penalties.

OPTIONS Traditionally, the most common mitigating option in the hospital playbook was to cost- or volume-shift the effect of weaker government reimbursement onto better paying commercial insurance and patients. However, that approach

is less likely in the current operating environ-ment, as commercial payers are increasingly negotiating hospital rate cuts, promoting nar-rower networks, and pushing for better efficien-cy through less costly outpatient care settings, which decreased inpatient admissions nearly 6% between 2008 and 2012.1 Further decreases in inpatient utilization are expected from the em-phasis on value-based population health man-agement care models, such as accountable care organizations (ACO) and patient-centered med-ical homes. In fact, one market estimated a near-ly 5% decrease in inpatient admissions across all ages and payers.2

In addition to declining reimbursement and softer inpatient volumes, labor and non-labor expense that account for 80-90% of all hospital costs will continue to outpace inflation. The cur-rent and projected shortage of nurses and other clinical and technical staff are rapidly driving higher labor expense costs as hospitals must in-creasingly offer more competitive salaries, ben-efits, and other financial incentives to recruit and retain. At the same time, the cost of drugs, supplies, and medical devices that account for more than one-fourth of total hospital operating expense is expected to increase.

While senior leaders have faced the need to reduce costs for many years, the “perfect storm” of compelling factors has never been more ur-gent or more pressing. Former El Camino (CA) Hospital CEO Ken Graham observed, “As insur-ers bundle, we expect a 10-15% decrease in reim-bursement rates.” A recent Pew Center analysis found that state budget shortages averages 12% with California topping the list with a 49% imbal-ance, as shown in Table 1.

IMPACT FACTORThe combined impact of these factors has been projected to shrink already tight operating mar-

By Chip Caldwell, John Amos, Greg Butler, and Richard Priore, ScD

Eye on Quality is sponsored by the American Society of Quality. Contact ASQ at www.asq.org

EYE ONQUALITY

Lean for Healthcare Staffing

John Amos is CEO, Yavapai Health System, Prescott, AZ. Chip Caldwell, Greg Butler, and Rich Priore are principals at Caldwell Butler.

TABLE 1 - STATE BUDGET SHORTAGES

State Budget Shortfall

California 49%

Arizona 47%

Illinois 41%

Nebraska 38%

National Average 12%

The current and projected short-age of nurses and other clinical and technical staff are rapidly driv-ing higher labor expense costs as hospitals must increasingly offer more competitive salaries, benefits, and other finan-cial incentives to recruit and retain.


EYE ON QUALITY

gins by 20% or more (HCAB 2013). Indeed, if there has ever been a time when we need an “all hands on deck” improvement ap-proach – health and hospital C-Suiters, clinical administrators, physician lead-ers—now is that time.

However, traditional manufactur-ing-oriented lean has not lived up to its promise as it has in other industries. As a Michigan CFO lamented, “After invest-ing thousands in traditional lean training, our net income is worse than ever before.” Caldwell Butler’s research has shown that, in healthcare, lean project savings average about $150,000 per project after the first year of “big hit” projects. A case in point: One New Jersey health system was in need of $28 million in additional net income to finance its recent capital expansion. At $150,000 per project, it was estimated that an additional 187 projects would be required, to which the entire C-Suite team acknowledged was absolute-ly unreasonable.

A LOOK BACKWhy has traditional Lean failed to live up its promise? In our nationwide research, published by the American College of Healthcare Executives,3 of almost $200 million saved among 47 U.S. medical cen-ters, involving collection of 16,952 manag-er-driven changes, both clinical and oper-ations changes, we found that top quartile margin improvers focused on high-impact core processes involving staffing issues while lower performers focused on low impact, throughput projects. Since staff-ing represents half of healthcare costs and causes up to 40% of quality and through-put issues, a focus on having the “right staff at the right place at the right time” would logically produce a more meaningful im-pact on quality, patient safety, throughput and costs. In short, we found that while throughput is an important process out-come, a strategic focus on the impact of having the “right staff at the right place at the right time” had a much more profound impact on both quality and costs.

TOP, LOW PERFORMERS Caldwell Butler findings of nationwide

ON THE WEBReferences for this article can be found under the “Toolbox” tab at www.advanceweb.com/executiveinsight

provide tools and structure to work across our organization to find ways to gain ad-ditional efficiencies. Our success is the result of engaging our dedicated team of caregivers and healthcare professionals at all levels throughout the organization. Our culture of accountability and commitment to quality fueled our efforts to achieve meaningful and sustainable results.” A rep-resentative department “Lean for Health-care Staffing” is shown in Fig. 1.

ACHIEVING SUCCESSHow did these top performers get there? The answer isn’t simple, but it has a simple form. The beginning point is that leaders in top performing organizations – at all levels, C-suite, VPs, directors, and physi-cian leaders—have taken ownership of the organization-wide change model, or qual-ity improvement system. As noted by Don Berwick, MD, founder of the Institute for Healthcare Improvement, leaders in lower performing organizations continue to “rely on much simpler notions of leadership, like empowerment, guidelines, scorecard-ing, or incentive pay design, in which the workforce—clinicians and others—figure out the new models of care delivery.”5

In the next “Eye on Quality” install-ment, we’ll continue with a discussion of what elements of successful organiza-tion-wide change models were mastered by top performers.

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In QualityActualS

taff

FIGURE 1 - LEAN FOR HEALTHCARE STAFFING OPPORTUNITY ANALYSIS

research of top and low performing healthcare organizations revealed that if one characteristic could be isolated, it would be the rate of change.4 In fact, the difference between top quartile perform-ers and bottom quartile performers was significant. The median number of imple-mented changes in the top quartile was 2.3 changes per director per month while the median in the bottom quartile was 0.1 (or only one change per director every 10 months).

For example, Yavapai Regional Medical Centers (YRMC) is a two-hospital, 206-bed health system serving the Prescott and Prescott Valley, Arizona area commu-nities. John Amos, YRMC president and CEO, astutely recognized the disturbing trends outlined above and, rather than wait for margins to become non-existent, chose a proactive strategy. Engaging Caldwell Butler & Associates to deploy “Lean for Healthcare Staffing” vs. traditional man-ufacturing-oriented Lean, the senior team set a goal of $7.3M annualized, but after only eight months of “Lean for Health-care Staffing” they had realized $9M in CFO-validated improvements, with an-other $11M in the works. To achieve this result, directors implemented 1,085 pro-cess changes, or greater than two changes per director per month.

John Amos stated, “Our lean perfor-mance program at YRMC is designed to



T he concept of population health management is pervasive in healthcare, but it can be difficult to deliver better, holistic patient care while still ensuring the health system secures return on its

investment. The definition of population health management can be convoluted,

but most agree it entails an entirely different mission -- from caring for the patient in front of you, to proactively caring for a covered life wherev-er they are. This transition is accompanied by risk -- for the clinical and fi-nancial outcomes -- for covered lives. Few of a health system’s established operating capabilities are specifically targeted around this new model of delivering care. As many systems take up this challenge, they initiate pilot programs to build capabilities: medical home, hospital transitions, heart failure clinics, academic detailing on pharmacy to build capabilities, new analytics, etc.

While individually these programs may have a small price tag, our ex-perience has shown that in sum, health systems canbe spending tens of millions of dollars on population health. And yet, these investments often collectively underperform. One might see clin-ical progress in focused pilot areas but only having a modest impact on bending the cost curve overall. The financial challenge is compounded by tough provisions in payer risk agreements (e.g., rebasing, quality gates) that diminish provider returns from what progress is made.

The success of population health strategies is critical as future access to patients and market share growth will be driven by the health system’s ability to manage total cost of care. So the question arises: How


By Seth Frazier

COVER STORY

SCO

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RYM

OYE

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can health systems emerge from this cost-ly “initiative phase” of population health to a high-performing enterprise strategy that yields powerful clinical outcomes and finan-cial returns?

Our experience at Evolent Health in work-ing in over 20 markets across the country suggests there are five key enablers to driv-ing enterprise success for population health strategy:

CEO commitment: While CEO commit-ment is critical to every enterprise strategy, it is especially important in population health for several reasons. Population health must address the “innovator’s dilemma” of reduc-ing financially contributing volume in service of a longer term objective of enhanced community health and mar-ket share. Most existing internal micro-incentives for physicians and administrators support volume growth, not population health management. The CEO is key to catalyzing meaningful change through a range of tactics – changing leadership incentive com-pensation, recognizing team members who drive successful ini-tiatives, making visible decisions that favor the population health agenda when volume and value strategies conflict.

Dedicated organization model: As far back as the “In Search of Excellence” work from the 1980s, we have known that new strategies that cannibalize current business will get swallowed by short-term business priorities, even in the most well-intentioned environments. Creating a dedicated business unit, wholly focused on population health, is the best approach to drive the intensity needed by this complex new model. The establishment of this en-tity, what we call the Value-Based Service Organization, helps to integrate and optimize population health programs, and aligns and focuses execution. This organization serves as the operational driver of key capabilities – physician alignment/network devel-opment, care management programming/services, provider and payer contracting and IT/analytics/reporting.

Physician alignment: Clinical results are, of course, driven by the degree of physician alignment. At the head of the strategy must be a physician body that can rally the network to perform well. Compensation models need to evolve to support population health returns. Most importantly, our experience is that physicians are most powerfully driven by the “joy of medicine” – what orig-inally inspired them to pursue their vocation. Population health initiatives that create manageable workflows that enable physi-cians to get better results while reducing administrative burden or after-hours coordination will get rapid uptake. The construction of a high-value, cross-continuum network will drive care to the most effective and efficient providers in the community.

Delegated risk: The operational engine for population health success is fueled by timely use of intelligent data embedded in new clinical routines. It is critical for the provider to have real-time ac-cess to data from key processes—e.g., utilization management,

care management and claims payments. If the responsibilities for these processes re-main out of provider hands, often data are not received in time to truly make an impact. California and other markets have decades of experience in proving that provider sys-tems can competently manage these payer administrative functions. The ability of the provider system to intervene in the imme-diate, toward effective and efficient care, is greatly enhanced. What makes this viable is the assumption of full risk (with exceptions for catastrophic and out-of-network care). The ability to capture nearly 100% of the financial gains—to fund the strategy long-term—is critical. Accordingly, the terms of

full risk agreements need to be carefully developed and reviewed by contracting experts, with experience in risk, to avoid terms that may appear neutral but in actuality are less than optimal. This is crucial in ensuring the strategy will deliver on its financial promise.

Administrative and clinical capabilities: Finally, there is no substitute for a strong administrative, clinical backbone. Elements include an IT platform to integrate data from clinical and insurance sources, apply sophisticated rules to drive timely intervention, facil-itate care management and clinical workflow, and to report risk-ad-justed clinical and financial outcomes. Highly structured care man-agement capabilities are also essential. Population health is a specific competence and all too often we see care management programs that lack the clinical and operational rigor needed to achieve results.

With these enablers in place, we have seen health systems create powerful results—double digit decreases in admissions per thou-sand and increases in in-system utilization, appropriate severity coding driving up risk revenue by millions, network expansion that creates access to hundreds of thousands of new lives, geometric increases in quality care gap closure, and more. This level of perfor-mance can sustain a robust population health strategy—total med-ical expense beating risk revenue to create positive margins to drive physician alignment, infrastructure support and retained earnings. This financial viability enables continued investment and expansion of the strategy which in turn supports the enhanced mission—im-proving community health, bending the cost curve and growing market share—a virtuous combination for this new era.

Seth Frazier is chief transformation officer, Evolent Health.

COVER STORY

ON THE WEBWant to learn more about dangers of “do-it-yourself” data analytics or maximize the success of population health? Be sure to visit our exciting new Population Health Resource Center at http://healthcare-executive-insight.advanceweb.com/Population-Health/default.aspx. Check back often, as content will be continually updated.

The success of population health strat-egies is critical as future access to patients and market share growth will be driven by the

health system’s ability to manage total cost

of care.

http://healthcare-executive-insight.advanceweb.com/Population-Health/default.aspx

http://healthcare-executive-insight.advanceweb.com/Population-Health/default.aspx

CEO PERSPECTIVE

F or population health management to be truly effective, it must leverage the power of relationships. Healthcare providers must de-

velop stronger ties to all individuals in the com-munity, not just those who are currently patients. This is why progressive health systems are now proactively partnering with local employers and community groups. Their main objectives are:

n To obtain an accurate picture of community health trends (e.g., high incidence of obesity,

Employer/Provider PartnershipsWhen health systems and employers work closely together – using actionable data to achieve practical results – employees and community groups steadily get healthier, the cost of care decreases and productivity rises By Phil Suiter

diabetes, smoking, etc.)n To identify community members who are most

at risk of developing chronic diseasesn To provide upstream education, intervention and

appropriate hospital services to help prevent individuals from developing those chronic diseases

The key steps involved in creating a successful partnership may look like this:

A provider targets area employers, offering the expertise to create healthier, more produc-tive organizations, reduce insurance premiums and lower absenteeism. The provider works di-rectly with each employer to conduct health risk surveys and biometric screenings of the work-force, often including spouses and family mem-bers. This data is analyzed in a variety of ways and becomes the basis for a provider-sponsored health management program to address the organization’s health challenges at both group and individual levels. Participants receive a personalized health score, health risk profile, and content tailored to address their specif-ic health issues or conditions that can lead to

chronic illness. This becomes the foundation for a population

health website that employees can easily access. To maintain confidentiality, only the

employee and the provider have access to Protected Health

Information. The employ-er, however, receives an

aggregate view of em-ployees’ health along

with a financial analysis tool that details the cost associated with current health risks and

Phil Suiter is president and CEO of Aegis Health Group in Brentwood, Tennessee.



identifies potential savings that may be realized from various health initiatives. Here is where the partnership gains traction, as the health system and employer team to create targeted, cost-ef-fective programming for risk reduction. Employers can also track, manage and evaluate incentive offerings, key to many workforce activities.

Most healthcare organizations understand the basics of what’s required for population health management but lack a clear strat-egy for making it successful in their marketplace with consumers. Here are some guidelines that can make a big impact:

Rule 1 – Seek first to understand, then to be understood. This principle, first attributed to St. Francis of Assisi and in recent times to author Steven Covey, helps lay a solid foundation for communi-ty partnerships. For example, the healthcare needs of a company predominantly composed of female office workers will look very different from those of a construction company. Engaging effec-tively with area employers requires empathy and research, not just a canned response.

Rule 2 – Speak the employer’s language. You’ll be much more successful if you don’t confuse local employers with healthcare and technical jargon like “covered lives” and “interoperability.” Employ-ers would much rather discuss return on investment than some hospital-centric topic like HEDIS quality scores.

Rule 3 – Meet them where they are. Health systems with the most successful community and employer-directed initiatives em-ploy an employer relations specialists who meets on-site with local employers. They take a consultative approach, tailoring employ-er-specific programs to improve health outcomes and lower costs. Helping employers reach those goals provides a boost to strategic hospital programs, services and specialties.

Rule 4 – Provide tools to manage the employer’s investment in better health. Many health systems claim to have a population health platform, yet it is often so complex it does not engage the consumer or the program manager. A truly effective platform needs to be simple to use, create a connection with its users and automate key functions like tracking employee participation and determining which incentives work best. In population health, data analytics needs to be practical and actionable.

The platform also needs to include a population health website that lets employees track their own progress, view content per-sonalized to their health risks and communicate easily with care

coordination teams if this component is built into the program.Rule 5 – Develop programs to fit each employer’s budget and read-

iness level. There are basically three levels of employer engagement:

n Early adopters who are willing to gather employee data with a Health Risk Assessment tool and to participate in health seminars or on-site health sessions.

n Consciously committed employers that see the advantages that can be gained from understanding and addressing their workforce health risks. These companies often have created budgets for more robust biometric screenings.

n Fully engaged employers who have well-defined incentive pro-grams, often looking for ways to improve on what they have, and may even have on-site nurse practitioners.

Your health system needs to develop programs tailored to each of these employer categories.

Here’s an example of a provider/employer partnership that has produced outstanding results:

The R.E. Darling Company in Tucson, Arizona, is a manufac-turer with only about 100 employees. Several years ago, its health-care costs had risen to nearly $1 million annually. The company worked with its hospital partner to create special $1,000 health savings accounts for employees who participated in a population health initiative. The hospital worked with an outside firm to de-velop a platform for managing biometric screenings, health fairs and awareness campaigns, health coaching, fitness classes and much more.

In the first year of the program, employees posted a 23% im-provement in cholesterol scores and an 18% increase in establish-ing relationships with a primary care physician. Meanwhile, the company achieved a 74% reduction in healthcare spending.

When health systems and employers work closely together – using actionable data to achieve practical results—employees and community groups steadily get healthier, the cost of care decreases and productivity rises. In short, this new partnership is helping to realize the full potential of health reform—and hospitals are build-ing meaningful, local relationships comprised largely of a commer-cial payer mix.

CEO PERSPECTIVE

Most healthcare organizations under-stand the basics of what’s required for population health management but lack a clear strategy for making it successful in their marketplace with consumers.

ON THE WEBPopulation health management is the coordination of health-care that emphasizes assessing and improving the health of a group, rather than focusing on only those patients in need of immediate care. By analyzing patterns across the population, clinical and financial outcomes are improved, helping health-care organizations deliver higher quality of care and improved care coordination. Learn more by listening to our archived vir-tual event, “A Roadmap for Population Health Management,” found in our new Population Health Resource Center at www.advanceweb.com/executiveinsight.




COO PERSPECTIVE

Roni H. Amiel is CIO at Blythedale Hospital.

T he concept of computerized decision-sup-port is not new. As far back as 1961, it was described as a mathematical approach

for the diagnosis of congenital heart disease. Although, historically, clinical decision support systems (CDSSs) primarily were focused on di-agnostic recommendations, decision-support can be provided by any computer system that deals with clinical data and medical knowledge to help deliver patient-specific advice.

The work of clinicians is largely about mak-ing decisions and problem solving. Often, it boils down to prioritizing, goal setting, and interpre-tation of clinical data while reducing risks and variability to patients and costs. A principal goal

of healthcare is about decision making.In today’s changing climate, move toward

population health and rapidly growing informa-tion overload, clinicians are challenged with the interpretation of patient data, mainly because the required expert knowledge in each of many different medical fields is enormous and the in-formation available for the individual patient is multidisciplinary, imprecise and very often in-complete.

This has prompted the need to re-examine the manner CDSS solutions provide the means for clinicians to receive relevant, evidence base, effective and efficient clinical decision making. The CDSS is increasingly gaining recog-

Clinical Decision SupportHow implementing a CDSS improves operational efficiencies By Roni H. Amiel

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nition in healthcare for being a catalyst for change, the kind of change that can impact quality of care and optimize cost.

IT’S ROLE CDSSs are software applications that integrate patient data, often with a knowledge base that is interrupted to produce patient-spe-cific recommendations, assessments, alerts and reminders to ac-tively support practitioners in clinical decision making. Computers offer the obvious solution both for the management of information and for its faster retrieval.

The best approach is a collaborative environment where IT and clinicians sit together to discuss the pain point, gaps and opportu-nities. The CDSS will not fix a broken process or lack of data input, consistency or integrity; therefore, a vital step is to review the cur-rent workflows in comparison to evidenced-based practices and the process that fits best with your organization and decide if they are sound or can be optimized. Research has shown that:

n Computer-based decision support is more effective than manual processes for decision support.

n CDSS interventions that are presented automatically and fit into the workflow of the clinicians are more likely to be used.

n CDSS that recommends actions for the user to take are more effective than simply providing assessments.

n CDSS interventions that provide information at the time and place of decision making are more likely to have an impact.

RECOMMENDATIONS Like with any clinical improvements or transformation initiative, the approach I recommend is to start with a small, systematic, focused effort. Establish a process for evaluating the clinical op-portunities and select your team, identify error or deficiencies, determine root cause, brainstorm for corrective action, perform cost benefit analysis, set realistic deadlines, evaluate and monitor progress. If you reach your goal you are ready to apply technology.

Here are my recommendations for identifying design character-istics associated with a successful CDSS deployment and applica-ble for third party solutions or in-house:

n Decide what relevant data you plan to utilize and set up a data mart (small data repository) away from your operational repository (EHR\other clinical systems) to eliminate performance bottlenecks.

n Your data set preferably should include clinical and administrative data; the CDSS should serve the entire organization, not just clinicians.

n Establish a synchronization schedule for the data to maintain accurate and as near real-time as possible between the EMR\clinical systems and your data repository.

n A well-designed and deployed CDSS should integrate seamlessly and on a real-time\near real-time basis with the computerized clin-ical and management solutions that renders predefined conditions and triggers.

n CDSS should be capable of mining a patient’s medical record for relevant information and include such information in its determina-tion-making process. The rules, triggers and conditions must take into consideration variability in data and accordingly respond.

n Choose a vendor\solution that helps you with determining CDSS interventions, target areas, type of notifications and user interac-tion and the analytics that goes with it.

ADOPTION RATES To date, adoption rates in healthcare have not been high and while healthcare organizations agree on the benefits of utilizing CDSS, they continue to put it off. How can we increase adoption rates in healthcare? There are several drivers that can promote further use of a CDSS in healthcare:

n Federal\state\payer initiative that provides incentives for CDSS deployment

n Technology should integrate more seamlessly with the EMR and oth-er clinical systems and the need to make it easy, cheaper and flexible.

n CIO\CMIO needs to start the conversation with clinicians, man-agement and anyone who can support such initiative and take the lead on the buy-in of a pilot and, ultimately, organization-wide deployment.

To gain optimal benefit, technologists and clinicians need to un-derstand its benefits and limitations, and the unique challenges of designing and implementing a CDSS solution. Those responsible for implementation need to recognize that a CDSS requires careful integration into the clinical workflow, which will take effort and involvement on the part of clinicians.

With growing recognition that a CDSS holds great potential to improve health and quality, increase efficiency and reduce health-care cost, it is important that organizations view it as an interven-tion requiring careful consideration of its goals, how it is delivered, and who receives it.

COO PERSPECTIVE

A CDSS requires careful integration into the clinical workflow, which will take effort and involvement on the part of clinicians.

ON THE WEBAre you looking to add qualified staff to your hospital team? Be sure to check our job board at www.advancehealthcare-jobs.com

http://www.advancehealthcarejobs.com



CFO PERSPECTIVE

Nancy Templin, CPA, is CFO, All Children’s Hospital in St. Petersburg, Fla.

Cost AccountingStrategiesTransformation of healthcare delivery requires evolution of cost accounting system By Nancy Templin, CFO

W hen healthcare providers were reim-bursed reasonable costs, cost account-ing systems were not needed. The

focus was on systems to support Medicare cost reporting. This changed when Medicare began shifting risk to providers through implementa-tion of the diagnosis related group (DRG) pay-ment methodology and continued the introduc-

tion of prospective payment systems, eliminating all cost-based reimbursement programs. Insur-ance companies were quick to catch on and also began introducing risk shifting payment struc-tures. Provider cost accounting became a strate-gic need for organizations to remain financially stable. Organizations needed to understand if its costs were out of line with reimbursement for specific patient services. Cost accounting sys-tems soon became the basis for a provider con-tracting with commercial managed care payers. Fast-forward to the Affordable Care Act (ACA) and the Institute for Heath Improvement’s (IHI) triple aim initiative and cost accounting is taking on a new level of relevance.

These changes in provider reimbursement be-came the basis of how cost accounting systems were established – based on how the provider was paid. And even though these new reim-bursement types were disruptive for healthcare, providers were still paid on a fee-for-service ba-sis. So cost accounting systems were designed to measure the cost per encounter.

Cost accounting systems must now evolve to support changes in provider reimbursements, quality and outcomes, and changes in healthcare delivery. These systems must be able to measure the cost of value rather than volume.

Cost account-ing systems must now evolve to sup-port changes in provider re-imbursements, quality and outcomes, and changes in healthcare delivery.

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REDEFINE COSTSWhen the IHI includes lowering per capita costs as part of the triple aim, it is referring to over-all spending on healthcare. From a provider’s perspective – ‘cost’ in this instance – is reim-bursement or payments received for healthcare services provided. So to lower per capita costs, payments to providers will either need to de-crease or providers will need to care for more of the population for the same overall reimburse-ment. Therefore, providers must also under-stand costs per patient, rather than just costs per encounter.

UNDERSTAND THE DRIVERS OF COSTThe drivers of healthcare costs, while complex and multi-faceted, can be simplified in two main categories – waste and utilization. Waste is those costs that do not add value to the pa-tient’s care. Medicare and commercial payers are carving out payments for waste by not pro-viding reimbursement for readmissions within certain parameters or hospital acquired condi-tions. Waste as a driver of costs is also operat-ing inefficiencies such as an over-utilization of overtime and expensive agency labor or excess capacity.

Utilization is the amount of services provided to patients, whether during a single hospital en-counter or over a period of time. This driver of costs continues to be the basis of payments for most hospitals. Again, to decrease utilization in an effort to lower per capita costs, organizations will need to understand the optimal utilization of services for specific diagnoses or groups of diag-noses and service lines. Cost accounting systems need to be flexible enough to measure variability in care provided to patients and provide the in-formation necessary for providers to influence utilization.

INCLUDE ALL COSTSWhen measuring per capita costs, organiza-tions should include all services related to a patient’s care. This includes services provided

by physicians, diagnostic centers, pharmacies, as well as other providers. For most hospitals, including all costs related to a patient’s care may require including information from out-side their systems.

DEMONSTRATE VALUEValue is defined as the quality of care received in relation to the cost. Better quality at lower cost is higher value. Therefore, cost accounting systems must be able to measure the cost of quality, or the lack thereof. And in an environment where quality outcomes are the basis for payments, cost accounting systems will need to identify and in-corporate what is determined value.

DEVELOP FLEXIBLE SYSTEMS And as we are defining what determines value, providers are being asked to develop varying re-imbursement structures. These new reimburse-ment methods are intended to drive changes in utilization to lower healthcare spending. Having the ability to model costs of different payment structures will allow providers to adapt to these changes.

KNOW PATIENT COSTSConsumer-driven healthcare, while not a new concept, is one that providers need to pay atten-tion to from a cost perspective. As consumers become more educated in the cost of their care, they will start looking for quality providers with lower out-of-pocket costs for them. Reimbursement models have influenced the delivery of care and therefore the way cost ac-counting systems are established. In an ideal situation, the best way of delivering healthcare would drive reimbursement methodologies. The delivery of care continues to transform with the introduction of new procedures, technolo-gies and pharmaceuticals, as well as a renewed focus on preventative care and health initiatives. Therefore, payment structures will also contin-ue to evolve and subsequently cost account ac-counting systems must change as well.

CFO PERSPECTIVE

“Cost accounting systems must now evolve to support changes in provider reimbursements, quality and outcomes, and changes in healthcare delivery.”

ON THE WEBAs of Dec. 12, 2014, near-ly 2.5 million consumers have signed up for cov-erage through the federal insurance exchange. Enrollments are on track to meet the government’s projection of 9 million total participants by 2015. What is driving con-sumer sentiment about Obamacare and federal insurance exchanges? Read, “The State of U.S. Health Insurance” at www.advanceweb.com/executiveinsight

COMPREHENSIVE PATIENT INFORMATION AT YOUR FINGERTIP

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With Sandlot’s analytics technology, providers receive tailored clinical guidance and compliance alerts at the point of care, directly in their current workflow.

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AN INTEROPERABLE PLATFORM BUILT FOR POPULATION HEALTH



Risk Adjustment inPopulation HealthProviders should look beyond existing patients to the full population and determine the resources needed for effective care management, particularly those that serve disadvantaged populations By Gloria Kupferman and Kelly Price

F or 30 years, Medicare’s hospital Inpatient Prospective Payment System has used Diagnosis Related Groups (DRGs) to ac-

count—or risk adjust—for the differences in the

cost of care for clinically complex patients. By creating a direct link between reimbursement and outcomes, pay-for-performance adds a new layer to the issue of risk adjustment.

Myriad quality metrics are used in health-care—for comparing providers to each other, informing consumers and clinical teams, and establishing payment bonuses or penalties to in-centivize improvement. Depending on the pur-pose, quality metrics may also be adjusted for clinical risk factors, such as severity of illness and comorbidities, recognizing that a patient who is sicker, with multiple conditions and comorbidi-ties, has a higher likelihood of a poor outcome. Risk adjustment is particularly important when the metric is used to compare providers or estab-lish payment penalties.

However, risk adjustment for reimbursement and performance metrics does not account for so-cio-economic status (SES) risks such as pov-

Gloria Kupferman is vice president and Kelly Price is senior director, DataGen.

CIO PERSPECTIVE

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erty level, language barriers, and access to social supports. These fac-tors are critically important to improving outcomes in a population health world where providers are held accountable for managing the health of individuals rather than just treating illness and disease.

RISK ADJUSTMENT Population health management focuses on patient-centered care for a specified group (or population). Pay-for-performance and popu-lation health payment models are designed to incentivize changes in care delivery, with a focus on wellness, while keeping costs in check. Under a successful population health approach, providers are held accountable for driving better outcomes and are paid appropriately to reflect the resources required to deliver on that accountability—whether that payment is a retrospective fee for services rendered, a risk-based capitation amount, or something in between.

Whereas risk adjustment under a fee-for-service reimburse-ment system is all about the patients a provider knows and has treated, in a population health approach, providers manage care for the full range of healthcare services—from primary, preventive care to acute and post-acute care. In this environment, risk adjust-ment should be related to the characteristics of the populations (healthy and sick) being served rather than the clinical complexity and costs of caring for patients who require treatment.

When a provider takes on the risk of caring for a specified pop-ulation, reimbursement must be appropriately adjusted to reflect the health disparities within the population and the costs associat-ed with adequately addressing them. Concepts such as “hot-spot-ting” are used to identify groups in need of higher resource invest-ment. There is a growing body of literature in favor of SES payment adjustments to adequately cover the costs of addressing disparities.

WHERE SHOULD WE ADJUST FOR RISK AND WHY?In a population health environment, some degree of risk adjust-ment for clinical severity will continue to be necessary, particularly for illnesses or injuries that cannot be treated proactively. While we believe that reimbursement should be adjusted for SES, we would argue against an SES adjustment for outcomes. Here’s why: The existing encounter-based reimbursement system has three levels of risk adjustment:

n Premiums paid to insurers are adjusted to reflect the risks of incurring higher costs for certain underlying clinical factors in the insured population;

n Payments to providers are adjusted by DRGs, which reflect the relative resource requirements for different clinical complexities; and

n Quality outcomes are adjusted to reflect the lesser or greater likelihood of poor outcomes, such as mortality or readmission, due to clinical factors.

There is no recognition anywhere in the current payment/mea-surement stream of the resources required to address SES factors or the impact those factors have on outcomes. One could argue that, because there is no payment recognition of SES factors, we must adjust the outcomes measures so that providers are not unduly pe-nalized for disparities that are not addressed at the point of care.

As the delivery system moves toward population health and pay-ment is redesigned, the issue becomes how an SES factor is incor-porated—should both payment and outcomes be adjusted for SES?

Existing adjustments within premiums and payments would continue as highlighted in #1 and #2 above. However, if payments to providers also take into account population risk factors, includ-ing SES, and are not as directly tied to encounters, then the pro-vider has the resources required for addressing SES as part of the care that is delivered to the population. It becomes the provider’s responsibility to mitigate differences in health outcomes caused by socio-economic disparities. In a truly successful population-based healthcare delivery model, the need for SES adjustments to quality outcomes measures should also be mitigated, if not eliminated. Providers are paid upfront to address SES and performance on outcome measures should reflect the impact of that funding.

IMPACT ON HOSPITALS, HEALTHCARE PROVIDERS While there are many challenges ahead as the health system evolves to effective population health management, including the applica-tion of SES risk adjustment, hospitals and healthcare providers can prepare by examining data and approaches to care to determine how to achieve better outcomes for existing patients. Providers should look beyond existing patients to the full population and determine the resources needed for effective care management, particularly those that serve disadvantaged populations.

As the delivery system moves toward population health and payment is redesigned, the issue becomes how an SES factor is incorporated—should both payment and out-comes be adjusted for SES?

ON THE WEBPopulation health requires changing the hearts and minds of individuals, especially those at risk for developing chron-ic illnesses. Read, “Big Data Not the Answer in Population Health,” at www.advanceweb.com/executiveinsight.

CIO PERSPECTIVE



mask and cap, a sterile gown, and sterile gloves and to use a large (head-to-toe) sterile drape over the patient during the placement of a CVC or ex-change of a catheter over a guidewire.

Antimicrobial- or antiseptic-impregnated catheters are also useful products to consider to prevent CLABSI. Unique additions to IV line bundles such as disinfection cap systems de-signed for use on needle-free valves and the end of the IV tubing are also gaining in popularity.

ALCOHOL-BASED HAND RUBSHands are the main pathways of germ transmis-sion. Clean hands are the single most important factor in preventing the spread of pathogens and antibiotic resistance in healthcare settings. More widespread use of hand hygiene products that improve adherence to recommended hand hygiene practices, including the growing use of alcohol-based rubs, promotes patient safety and prevents infections.

Some of the benefits of alcohol-based hand rubs:

n Require less timen More accessible than sinksn Reduce bacterial counts on handsn Improve skin condition

MEDICATION LABELING SYSTEMSMedication errors are estimated to cause more than 7,000 deaths annually, and 50% of medica-tion errors reported to the FDA have naming, labeling and/or packaging issues associated with them.

Keeping pace with automation and comput-er-based information systems, medication labeling systems are now available in a wide range of sizes, formats, materials and adhesives designed to work with all hospital, pharmacy and laboratory IT soft-ware. Specific products can include traditional pre-printed instructional and warning labels, bar coded and sequentially numbered labels, blank labels and label/form combinations designed to print on thermal, laser or dot matrix printers.

EDUCATIONAs compliance requirements continue to grow and evolve, continuing education is essential to providing the best in quality and patient safe-ty, allowing clinicians to stay current with new technologies, standards and practices. You are only as good as the information you have and to say “I didn’t know” is not an option today.

A chieving patient-centered excellence and ensuring clinicians have the tools and support necessary to deliver evi-

dence-based care consistently and safely is a major objective for any healthcare organization. What are some of the important products and resources facilities are purchasing to help them along the journey to patient safety?

CHAIR/BED PATIENT SECURITY Falls are the most commonly reported safe-ty event for patients hospitalized in the United States. Their prevention has been deemed so im-portant that the Centers for Medicare and Med-icaid Services (CMS) will no longer reimburse hospitals for treatment related to falls. Using products designed to reduce the risk of fall-re-lated injuries, healthcare facilities can maximize protection and care of patients, while reducing costs associated with falls. Some of the most common products include:

n Fall risk indicatorsn Bed/chair exit alarmsn Floor cushions and mats n Hip protectorsn Side rail protectors

SUPPLIES TO HELP PREVENT BLOODSTREAM INFECTIONS The most recent CDC data (2013) estimates that 41,000 patients develop blood stream infections (Central Line Associated Bloodstream Infections (CLABSI) associated with central venous cathe-ters (CVCs).

Several studies have demonstrated the benefit, either alone or as part of multimodal CLABSI prevention strategies, of using maximal sterile barrier (MSB precautions) during CVC place-ment to reduce the risk of CLABSIs. MSB pre-cautions require the CVC inserter to wear a

Focus onPatient Safety 5 resources, supplies hospitals are purchasing for patient safety By Lori Pilla, RN,BSB/M,MBA

PATIENT SAFETY

Lori Pilla is vice president, Clini-cal Advantage and Supply Chain Optimization at Amerinet.

You are only as good as the in-formation you have and to say, “I didn’t know” is not an option today.


peerreviewed

PR M aintaining a blood and tissue storage environment that meets regulatory standards for temperature has histori-

cally been a never-ending tactical challenge for laboratory staff. Over the years, the process of manually checking and recording temperatures on a recurring basis has been supplemented by standalone data recorders with built-in mem-ory; however, these have their own shortcom-ings, most significantly the need to consistently download cached information.

The advent of wireless network-based mon-itoring took the standalone data recorder con-cept one step further, continually transmitting temperature measurements to a network server. Not only does this approach add a level of redun-dancy to the solution, but it also centralizes the flow of data, which makes real-time reporting

and analysis possible.Wireless monitoring affords key improve-

ments for the blood bank/blood center, including:

n Optimization of Staff Workflow – Through effective use of automated alerts and reporting, temperature monitoring is handled by excep-tion. This frees up staff to more efficiently handle mission-critical tasks, without the disruption caused by frequent, manual checks and record-ing.

n Trend Discovery and Analysis – Wireless temperature tags are typically configured to measure and send temperature data every few minutes. This level of granularity can expose trends over time, thus potentially warding off the risk to stored materials due to improperly set thermostats or catastrophic equipment failure, through early detection of cyclical problems. The availability of a data warehouse and analytics component for business intelligence should be a key selection criterion for a progressive solution.

n Audit Readiness and Reporting – Even when an audit is scheduled in advance, the collective level of associated stress can be a major disruption to daily workflow. Having a repository of

Wireless Monitoring Technology for Blood BanksThe ubiquity of wireless network coverage, combined with the low traffic impact of temperature monitoring, makes wireless monitoring a natural choice for today’s blood bank By Alan J. Stone

Alan J. Stone is the solutions manager for Environmental Monitoring and Asset Manage-ment for STANLEY Healthcare, Waltham, MA.

BLOOD BANKING

JEFF

REY

LEE

SER

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Microsoft®-based platform that helps organizations reduce operating costs and enhance efficiency to help impact patient safety

To find out more and hear directly from Paragon customers, visit www.mynewHIS.com©2014 McKesson Corporation and/or one of its subsidiaries. All rights reserved. Paragon is a trademark of McKesson Corporation and/or one of its subsidiaries. Microsoft and Windows are trademarks of Microsoft Corporation.

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system is designed for hospitals and health systems of all sizes and offers

An intuitive, Windows®-based system Comprehensive clinical and financial applications in one system that helps simplify IT and vendor management

Microsoft®-based platform that helps organizations reduce operating costs and enhance efficiency to help impact

©2014 McKesson Corporation and/or one of its subsidiaries. All rights reserved. Paragon is a trademark of McKesson Corporation and/or one of its subsidiaries. Microsoft and

Running a large

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“ We’re a 600+ bed hospital system and have been running Paragon for a year now. Our experience has been very, very positive. It’s built to handle larger organizations. Some of the other vendors purport it is only for smaller hospitals, but we really have not found that to be the case.”

Steve StanicCIOMississippi Baptist Health SystemsJackson, MS



real-time data available on the server for on-de-mand reporting can serve to reduce that stress and satisfy auditors’ needs expeditiously.

KEY CONSIDERATIONSPreparing for a successful wireless monitoring solution deployment requires that the blood bank/center work in close concert with facilities, IT and/or biomedical partners within the orga-nization. Those leading the initiative should be ready to answer these key questions:

Is My Wireless Environment Ready?n Wireless temperature tags require only a mini-

mal level of wireless coverage to transmit their data; however, IT should be engaged to measure coverage levels at each unit’s location to ensure that data will be reliably transmitted. It may be necessary to add or relocate wireless access points to provide this minimal level of coverage.

Are My Refrigeration Units Ready?n The two primary types of tags are self-contained

tags, which reside completely inside the unit, and tags that use an external tag and probe/cable. Self-contained tags require a consistent location for mounting, typically in the center of the refrigerated mass. Tags with a probe/cable typically use existing “portholes” for access to the refrigerated space, but in rare circumstanc-es, drilling may be necessary.

Is My Staff/Policy Ready?n While continual wireless monitoring certainly

eases the day-to-day burden for staff, the need for a well-defined process of dealing with inci-dents is paramount. Prior to any deployment going live, workshops with all key impacted staff should be conducted, and the output from this process will include a firm understanding of what happens when an alert occurs and who is responsible for each step. Maintenance of tags (cleaning and battery replacement) and system uptime monitoring are critical components that require defined ownership and accountability.

How Will Wireless Monitoring Impact My Audits?n A reactive approach to an auditing team

in-house is rarely ideal, so it is critical to have scheduled and on-demand reports at the ready. The frequency of report generation, formatting, contents and report recipients should be defined

as a key output of the deployment workshops.

UNIQUE BLOOD BANK/CENTER ISSUES The blood bank/center faces unique require-ments that do not factor into a typical laboratory environment, and while none of these are insur-mountable, they have a real impact on solution planning and design. These include:

n Shelf/Tray-Level Monitoring – Many refrig-eration units optimize the use of space by employing a system of multiple pull-out shelves or trays. Temperatures from top to bottom in a unit can vary significantly, so it may be neces-sary to deploy tags/probes at multiple locations within a single unit.

n Monitoring While in Transport – If blood/tissue is transported among multiple facilities/locations, wireless coverage is not guaranteed or assumed at all points along the way. The ability for a wireless tag to “store and forward” temperature readings taken while in transit is a key consideration when choosing a solution, so that the integrity of storage conditions can be guaranteed/reported from end to end.

n Timeliness of Incident Response/Remediation – The sensitive nature of blood and tissue requires that stringent response policies and related system settings be in effect. This includes a tight threshold for out-of-range alerts, a well-defined workflow around response to such alerts, and a requirement for consistent entry of corrective actions taken. Additionally, the facility needs to take care to ensure adequate space for emergen-cy relocation of unit contents, in the event of a failure requiring repair.

CONCLUSIONThe ubiquity of wireless network coverage, com-bined with the low traffic impact of temperature monitoring, makes wireless monitoring a natural choice for today’s blood bank/center. However, before rushing headlong into a solution, organi-zations need to take the time to carefully evalu-ate market-leading offerings for fit and function. Additionally, all solution stakeholders—those who support the infrastructure, those who maintain it and those who handle the monitor-ing and response—must be made an early part of deployment planning. Following these simple guidelines can ensure an end result that saves time and resources, while continuing to meet regulatory requirements.

BLOOD BANKING

Preparing for a successful wire-less monitoring solution deploy-ment requires that the blood bank/center work in close concert with facilities, IT and/or biomedical partners within the organization.

ON THE WEBMeeting patients’ needs round-the-clock can be challenging, particularly for organizations operat-ing with tighter margins and already overworked staff. By developing a comprehensive com-munication strategy that balances patient access requirements with staffing constraints, or-ganizations can not only optimize their resources, but also ensure patients receive prompt and suf-ficient care-essential for supporting a high-qual-ity, high-touch home health experience. Read “Lending a Helping Hand 24/7- the Smart Way” at www.advanceweb.com/executiveinsight to learn more.



T he question for hospitals these days is not whether they should establish an ambu-latory pharmacy, but rather which model

provides the best overall outcome.Reducing 30-day readmissions is one of the

primary reasons why hospitals decide to open an ambulatory pharmacy. Numerous studies have revealed that when patients leave the hos-pital with the medications prescribed to them, adherence and compliance rates improve. And that improvement in readmission rates is some-thing that hospitals take seriously. According to a survey conducted by the American Soci-ety of Health System Pharmacists (ASHP), 30% of hospitals report that they run an outpatient pharmacy. Data from the National Council for Prescription Drug Programs (NCPDP) revealed that in 2012 and 2013, the number of retail pharmacies in hospital settings went up com-pared to previous years.

PROS, CONS Once a hospital makes the decision to open an ambulatory pharmacy, a major consideration is whether the hospital should own the pharmacy outright or lease space to an outside company. While both models are widely embraced, the model that a hospital chooses is often guided by the strategic direction of the organization.

Ownership is an attractive choice because it means a po-

tential new revenue center. Hospitals that go the ownership route are also concerned with control over staff and continuity of care.

On the other hand, leasing space to a Wal-greens or CVS can deliver similar patient-care benefits that ownership offers, without the re-sponsibilities associated with being the employer.

EXAMPLES OF OWNERSHIP At Saint Vincent Hospital in Worcester, MA, a 285-bed city hospital that has a strong orthope-dic surgery unit, an active emergency depart-ment and a cancer and wellness center, Phar-macy Manager Jason Poquette said that having full control over the continuity of care that is provided to the patient when they are being dis-charged is a big plus. “If you are leasing, you’re just a landlord. You’re allowing that other retail-er to run their business and you’re satisfied with collecting the rent.”

Another benefit to ownership, said Poquette, is that the hospital can appreciate some of the revenue generated by the prescription stream.

“Rather than turning over these prescriptions to other healthcare institutions such as retailers, the hospital itself can appreciate some of that revenue stream themselves.”

Saint Vincent Pharmacy contracted with Amerisource Bergen (ABC) to run their am-bulatory pharmacy. The pharmacists are em-ployees of ABC’s consulting unit, Pharmacy Healthcare Solutions (PHS). PHS manages the personnel and the operations, but the hospital owns the pharmacy.

Poquette noted a third benefit to owning an ambulatory pharmacy: “Hospitals have em-

ployees and those employees have to go somewhere for their prescrip-tions.” By owning the pharmacy, the hospital effectively is able to keep some of the costs under con-

2 Models for ImplementingAmbulatory PharmacyAmbulatory pharmacies help hospitals decrease readmissions and provide continuity of care By Anthony Vecchione

PHARMACY


Anthony Vecchione is with Amerisource Bergen

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trol, particularly if it’s a self-insured hospital. As well, the hospital has access to virtually all of the records

needed to take care of a patient, such as medication history and drug allergy information.

At Novant Health, a multi-hospital system based in Winston-Sa-lem, NC, the ambulatory pharmacy is owned by the hospital and the pharmacy staff is employed by the hospital. There’s no outside management company involved. According to Michael Nnadi, corporate vice president of Pharmacy Services, one of the benefits of owning your own pharmacy is that it is part of the health system and, therefore, provides an integrated delivery of care.

“You know the providers, and you know the physicians that write the prescriptions,” said Nnadi. “You can talk to those physicians and you can walk over and review the patient’s medical records—infor-mation that is not possible when you do not own the pharmacy.”

The patients also have access to the pharmacist unlike in a typi-cal retail or leased program where hours may be 9am-5pm.

EXAMPLE OF LEASING While ownership of an ambulatory pharmacy has its advantages, particularly as it relates to revenue optimization, some hospitals find that leasing their ambulatory pharmacy is a suitable option.

At St. Rita’s Medical Center in Lima, OH, for example, Walgreens has been operating an onsite pharmacy in the lobby for seven years. They lease the space from the medical center where they occupy a small area just off the lobby. In addition to carrying prescription drugs and over-the-counter medications, they also offer patients other necessities that a retail pharmacy provides. The pharmacy is open Monday thru Friday, 9am-5pm. Outside of those time, patients have their prescriptions filled at a retail pharmacy in the community.

Brian Latham, director of pharmacy at St. Rita’s, said the phar-macy is particularly appealing and convenient for same-day sur-gery patients. Instead of picking up their prescription at a pharma-cy in town, they can have it in hand before they leave the hospital. Latham said the hospital does not urge anyone to use Walgreens; however, they offer the services that Walgreens provides as a con-venient resource for their patients.

Not unlike a hospital that owns their own ambulatory pharma-cy, Latham pointed out that if there’s a problem with a medication such as a drug interaction or a prior authorization is required, the Walgreens pharmacist can address the problem by contacting a phy-

sician and getting it resolved in a timely manner prior to discharge.“We have seen positive results in our readmissions and I believe

part of that is having Walgreens pharmacy on site,” said Latham, who added that one-in-three patients don’t fill their prescriptions after they leave the hospital and some, even if they drop off the prescription, never pick it up.

At St. Rita’s, the Walgreens pharmacists engage in bedside deliv-ery, similar to what a hospital-owned pharmacy would do, by bring-ing medications to the nursing units as well as talking to patients. In addition, Latham said that they also engage in “new to therapy calls.” If a new drug is prescribed for a patient, the Walgreens pharmacist calls them within 48 hours to see how they’re doing with the new medication and addresses any questions that they might have.

The hospital has an indigent prescription program, Mercy Ac-tion Fund, that helps patients who can’t afford their discharge med-ications. They are visited and consulted by a social worker who approves their medications to be covered on discharge so they can leave with those drugs. Walgreens is able to provide a contracted rate for those prescriptions filled through that fund for the hospital.

Staff pharmacists at St. Rita’s work collaboratively with the Wal-greens’ pharmacists. In addition to reconciling home medication lists, they work on discharge medication reconciliation to help pa-tients get what they need before they leave the hospital.

TRENDING NOW Whether a hospital chooses to lease or own their ambulatory phar-macy, industry insiders contend that the trend to include an onsite pharmacy is on the rise due in part to the positive impact it has on patient care, patient satisfaction and the hospital’s bottom line.

David Chen, RPh, MBA, senior director, Section of Pharmacy Practice Managers Pharmacy Practice Sections at ASHP, said that more hospitals are realizing they have the ability to provide some sort of improved discharge planning where the patient is leaving the hospital with their medications. “That’s not only beneficial to the hospital from customer service and patient satisfaction, it can be beneficial to the hospital financially because it’s another business unit.”

Chen noted that the proliferation of ambulatory pharmacies, whatever the model a hospital chooses, is a win-win for pharma-cists and patients. “For the pharmacists who work in those mod-els it represents growth for pharmacy. It’s growth for the patient to have access to the pharmacists and it’s also the recognition that ease-of-access, facilitation of adherence and ability to stay compliant with medications means improved outcomes and im-proved health.”

Whether a hospital chooses to lease or own their ambulatory pharmacy, in-dustry insiders contend that the trend to include an onsite pharmacy is on the rise due in part to the positive impact it has on patient care, patient satisfaction and the hospital’s bottom line.

ON THE WEBHospital formularies can include 3,500 drugs or up to 5,000 drugs for a large health system. Initial formulary charac-terization and review become critical to understanding and managing enterprise and clinical-level risk. Read, “Managing Pharmaceutical Waste” at www.advanceweb.com/execu-tiveinsight for more information.



Under the Hospital Readmission Reduction Program

of The Patient Protection and Affordable Care Act of 2012,

the Centers for Medicare and Medicaid Services calculates

acute-care hospitals’ readmission rates and compares them

to expected readmissions rates. The act mandates that

acute-care hospitals with higher-than-expected readmissions

will receive lowered Medicare payments.

During a hospital admission, patients are transitioned

through the enterprise. There are many opportunities for

improvement throughout the process. In fact, studies show

that 46% of medication errors occur at transition points,

namely upon admission, at discharge, or during transfer

from one unit to another. Post-discharge care coordination,

in particular, is a critical piece of a robust transitional-care

plan that is often overlooked.

Pharmacy Healthcare Solutions consultants can assist with

an operational assessment to develop your transitional care

program.> Coordinated medication reconciliation> Discharge concierge services> Ambulatory pharmacy infrastructure> Post-discharge workflow and escalation protocols

We offer flexible, scalable solutions tailored to your particular

health system’s requirement that can be expanded and

enhanced as required.

For more information about Pharmacy Healthcare Solutions, contact us at 877-892-1254 or email [email protected]

Reduce 30-dayReadmission Penalties ThroughEnhanced Transitional Care

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STAFF ISSUES

Medical institutions in the United States are drowning in cost crises due to reimbursement reductions

associated with healthcare reform and other financial strains. Reducing the work-force to slash payroll expenses may seem

like the most logical solution; however, organi-zations need to weigh the long-term effects on morale, reputation and quality of care.

“Financial pressures are alive and well in hos-pitals,” observed Jill Schwieters, president of Cielo Healthcare, formerly Pinstripe Healthcare. “Labor costs are the biggest expense within a health system, so it’s natural to make those cuts first. But with the right strategies in place, layoffs don’t have to be the answer.”

Many organizations fail to consider how much layoffs will actually cost, explained Barry A. Guryan, an attorney with the healthcare and life sciences and labor and employment practic-es at Epstein Becker Green in Boston. “The costs incurred can include federal, state and local legal compliance obligations; severance pay; loss of morale; loss of skills and recruiting efforts once business improves,” he said.

Guryan advises a financially troubled organi-zation to identify its problem areas, then devise a solution to improve efficiency. In the process, identifying and retaining top-performing em-ployees with the skills to deliver is key, he told Executive Insight.

“Patient care is of paramount concern and should be considered with every new change,” said Tim Tolan, senior partner, Sanford Rose As-sociates (SRA)-The Tolan Group, a healthcare

The TrueCost ofLayoffsIndustry experts weigh in on budget-friendly alternatives to employee layoffs By Rebecca Mayer Knutsen

Rebecca Mayer Knutsen is on staff at Executive Insight.


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Industry experts question the use of layoffs as a viable cost re-duction plan, as layoffs are close-ly tied to the hos-pital’s image in the community.

recruiting office. “The ways to avoid or extend the need to do layoffs are plentiful.”

Within a health system, people account for more than 50% of operating expenses, according to Tolan. To put it in perspective, if an organiza-tion loses $100,000 in Medicare revenue, then about 1.6 jobs need to be terminated to make up the difference, he explained.

The alternatives hospitals might consider in-clude: cutting expenses, wages or benefits; of-fering unpaid temporary leave or furlough; in-stituting shorter work weeks; cutting expenses of consultants and other outside services and redeploying employees within the organization.

ALTERNATIVE SOLUTIONSSchwieters encourages hospital leaders to under-stand how the current workforce is performing. “Strategic workforce plans look broadly across or-ganizations to ensure the right resources are in the right place at the right time,” she said. “What are your needs, where is the volume or demand from consumers, and who do you have to deliver?”

By identifying strengths in one area that could benefit another, hospitals can redeploy staff to make budget cuts. To improve a staffing imbal-ance, Schwieters suggests moving an employee to a high-volume area instead of bringing in a per diem employee at a higher rate.

As delivery systems are changing, employee roles are changing, Schwieters said. “Hospitals can take a twofold approach: redeploy employ-ees to similar roles or redeploy in new roles and build upon the competency of the individual,” she shared.

Tolan suggests limiting or eliminating the use of staffing companies that have a higher cost per employee than internal staffing efforts. Addi-tionally, organizations should consider updating policies that allow employees to carry paid time off (PTO) year to year. “This becomes an expense on the balance sheet,” Tolan said. “I’m a big be-liever of ‘use it or lose it.’”

Delaying expansion plans is another way to cut expenses in the short term. “An organization should put plans to build a new facility or reno-vate an old wing on hold until it has climbed out of the red,” Tolan stated.

SAVING FACEIndustry experts question the use of layoffs as a vi-able cost reduction plan. Strategies to avoid layoffs are closely tied to the hospital’s image in the com-

ON THE WEBFor valuable career advice and tools for yourself and to share with staff, be sure to review the “Career” section of our job board, www.advancehealthcare-jobs.com

munity, Tolan told Executive Insight. “Bad news travels fast,” he said. “You don’t want people think-ing there’s an issue with clinical care or there’s not enough staff to handle a procedure or illness.”

According to Schwieters, layoffs negatively impact the individual but there’s also survivor syndrome to consider. “Hiring freezes and lay-offs harm the culture and morale of a workplace,” she said. “The events are perceived as a breaking of trust between staff and administration.”

Guryan proposes asking employees to brain-storm ideas to improve expenditures and pro-vide solutions for containing costs. “Employees know their organization well and can often pro-vide valuable solutions,” Guryan said.

Asking employees to participate in a prede-termined furlough, subject to management approval, is another avenue to consider. “A sur-prising number of employees will volunteer for furloughs—without losing critical skills,” Gury-an said. “Shorter work weeks are an option for certain employees, as long as the hospital pays particular attention to patient care.”

When layoffs or other extreme employment changes are unavoidable, it’s important for or-ganizations to follow a strategic plan with prop-er messaging. “Key decision makers need to be honest with the employees to build trust,” Tolan said. “Don’t make decisions behind closed doors.”

LOOKING AHEADTo offset financial constraints, healthcare lead-ers can strategically consider the necessity of filling an opening as employees resign or retire. “Attrition needs to be part of the bigger plan,” Schwieters said. “No job should be automatically replaced in healthcare.”

Tolan agrees hospitals need to reassess the processes they have in place to determine the financial costs of filling an open position versus reallocating internal resources.

Organizations should also consider the long-term costs of losing employees with particular skill-sets. “The hospital will need to reacquire skills when the situation improves,” Guryan said. “Organiza-tions may not think that far ahead, but they should.”

A good strategic workforce plan considers the demands of the workplace over the next three to five years, according to Schwieters. “These plans are shorter than they used to be because of the economy in general and global volatility,” she said. “A strong plan is vital but more importantly, the organization needs to be agile and nimble.”




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Why Cost Savings Initiatives Under Deliver

Building an Effective Cost Improvement Structure

QUALITY IMPROVEMENT STRUCTURES COST IMPROVEMENT STRUCTURES

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TRACK SAVINGS

DIFFICULT TOKEEP TRACK

OF PROJECTS

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SAVINGS

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CMO &VP QUALITY

WELL DEFINEDCOST METRICS

DASHBOARDS,& ANALYTICALHORSEPOWER

COSTCOMMITTEES

CLINICAL &OPERATIONAL LEADERS

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SENIOR LEADEROF COST

IMPROVEMENT

Hitting Your Cost Reduction Target

In an era of mounting fiscal uncertainty marked by flat, or even downward trending net revenue, the need for cost reduction has never been greater. In fact, ac-cording to a recent Strata Decision Technology survey of 100 health-care providers, 88% of organiza-tions have cost reduction targets but only 17% are achieving their goals. Listen to expert strategies on effective cost improvement initiatives via our archived webinar, “Establishing a Successful Cost Improvement Program,” at www.advanceweb.com/executiveinsight.

© 2015 Citigroup Inc. All rights reserved. Money2, the Money2 logo, and Powered by Citi are service marks of Citigroup Inc. Citi and Citi with Arc Design are registered service marks of Citigroup Inc.

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