The A-B-Cs of Making a Business Case for SPH in Your Organization. October 17, 2013
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1 The A-B-Cs of Making a Business Case for SPH in Your Organization October 17, 2013 Page 1
2 Today s Speaker Edward Hall Chief Operating Officer Stanford Risk Authority 15 Years of Work in 15 Minutes Page 2
3 Our Story: A. Assemble your data B. Build a financial projection C. Consider other benefits, costs, and alternatives Page 3
4 Learning Objectives: A. What data to Assemble and how to do it B. How to Build a financial projection C. How to Consider other benefits, costs and alternatives Page 4
5 Historically USA Data has Focused on the Following: Workers compensation costs for injuries due to patient handling Lost and restricted days for staff injured handling patients Costs to implement SPH, including: Initial equipment costs Purchase Installation Ongoing costs Sling laundering Sling replacement Training costs Initial training Ongoing training Page 5
6 SHC Aggregate Claims Costs Each Cause Group RMI $10,175,957 Push, Pull, Lift, Manipulate $8,427,681 Patient Handling $6,123,402 Slip / Fall Struck, Hit or Injured Trip / Fall $2,111,290 $3,198,968 $2,714,189 Motor Vehicle Stress Combative Pt / Assault Inhalation / Exposure Allergic Reaction BBF Burn $441,832 $311,326 $233,142 $176,115 $133,224 $77,130 $54,905 $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 Page 6
7 SHC Aggregate Claims Costs- Patient Handling Injuries Page 7
8 3000 SHC Patient Handling Injuries Days Restricted Duty & Days Absent Restricted Lost Board of Trustees of the Leland Stanford Jr. University All Rights Reserved. Page 8
9 Assess Needs and Provide Initial Installation and Training Estimates. Page 9
10 Our Story: A. Assemble your data B. Build a financial projection C. Consider other benefits, costs, and alternatives Page 10
11 To Build a Financial Projection, You Need to: Project total program costs and benefits over a chosen time period, such as 5 years. Costs are total program costs (installation, ongoing, training, etc.) Benefits are how much you ll save by implementing the program. Once fully implemented, you can probably save 60-80% of the workers comp costs from injuries handling patients. You can save a similar amount in lost & restricted days The financial value of the program is the benefits minus the costs in each year It s usually convenient to convert the year-by-year results to a net present value (NPV) or return on investment (ROI). Page 11
12 Program Costs: Category Clinical training and consultation Labor training $700k Equipment $800k Cost Two years, estimated at $150k total Ongoing program expenses Patient-specific slings estimated at $25k per year Recurrent staff and coach training estimated at $6k $8k per year (2 coach days, 4 staff training days) Page 12
13 Board of Trustees of the Leland Stanford Jr. University All Rights Reserved. Page 13
14 Our Story: A. Assemble your data B. Build a financial projection C. Consider other benefits, costs, and alternatives 14 Page 14
15 Why Consider Other Costs or Benefits? The regulatory mandate is not enough and you need to show the business case for the program. You re considering a program more expensive than what can be justified just based on savings in workers compensation or lost & restricted days, such as: Installing overhead lifts rather than portables Installing in care areas with higher mobility scores For some other reason, your program is complex (many facilities, many care areas, mix of retrofits and new construction, etc.) Page 15
16 For Any Decision Involving Complexity and/or Uncertainty, We Use Decision Analysis: Page 16
17 The Dialogue Decision Process Gets Everyone On the Same Team to Find the Best Answer. Decision Makers The Problem Alternatives & Information Analysis & Recommendations Project Team Action Page 17
18 Patient Mobility Invest in Safe Patient Handling Program Ongoing Costs Required Equipment Change in patient satisfaction (Press Ganey) Initial Cost Reduction in employee injuries Reduction in patient falls Mix of Injuries (serious vs. minor) Reduction in employee turnover Change in employee Satisfaction (Gallop) Mix of injured staff (RN vs. support) Reduction in pressure ulcers Ulcers acquired by stage Average cost of injuries Mix of SPH staff (RN vs. support) Average cost of replacement staff Average cost of treatment Savings on lost & restricted days Savings on workers comp claims Reduced claims from patient falls Savings in ulcer treatments and Claims Retention cost savings Average cost to recruit & train Time replacement factor Direct Financial Benefits Benefits from employee satisfaction Equivalent HR budget savings Increases in patient referrals Profits from patient referrals Cost of Program Total Program Value Benefits from patient satisfaction Equivalent campaign budget savings Page 18
19 The Tornado Chart Shows the Key Drivers for Total Value. Net Present Value ($ '000) Expected value = $5,184 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000 $6,500 $7,000 Base Value Reduction in Turnover 0% 20% 2% Increase in Patient Press Ganey Score (% pt) Workers Comp Growth (baseline) Increase in Staff Gallup Score (% pt) Percentage of Ulcers in Stage 1 or 2 Lost & Restricted Days Growth (baseline) 0% 3% 2% -17% 19% 0% 0% 2% 1% 80% 70% 75% -17% 36% 0% Reduction in Workers Comp 60% 82% 60% Ulcer Reduction Rate 30% 40% 30% Percentage of Patient Referral 1% 20% 1% Patient Volume Growth -1% 5% 0% Page 19
20 The Waterfall Chart Shows the Breakdown Among Cost and Value Components. -$1,536 Initial Investment Workers Comp Savings Lost & Restricted Days Savings $1,789 $500 Patient Falls Savings $245 Ulcer Treatment Savings $1,761 Retention Costs Savings Gallup Score Improvement $782 $374 Press Ganey Score Improvement Patient Referral $1,307 $106 -$144 On-going Costs Mean NPV $5,184 -$3,000 -$2,000 -$1,000 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 NPV ($ '000) Page 20
21 We Look at the Uncertainty in Rate of Return Cumulative Probability 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 40% 60% 80% 100% 120% 140% 160% 180% 200% IRR (EV = 111%) Page 21
22 Staff Had to Monitor and React When Results Were Out of Range Net Present Value ($ '000) Expected value = $5,184 $3,500 $4,000 $4,500 $5,000 $5,500 $6,000 $6,500 $7,000 Base Value Reduction in Turnover 0% 20% 2% Increase in Patient Press Ganey Score (% pt) Workers Comp Growth (baseline) Increase in Staff Gallup Score (% pt) Percentage of Ulcers in Stage 1 or 2 Lost & Restricted Days Growth (baseline) 0% 3% 2% 33% -17% 19% 0%.002% 0% 2% 1% 80% 70% 75% -17% 36% 0% Reduction in Workers Comp 60% 82% 60% Ulcer Reduction Rate 4 Year Cost Savings of $470, % 40% 30% Percentage of Patient Referral Yes 1% 20% 1% Patient Volume Growth -1% 5% 0% Yes Page 22
23 We Needed to Look for Additional Sources of Value When Budget for Ceiling Lifts in the New Stanford Hospital was Slated to be Cut. Page 23
24 Diligent Mobility Assessments- All SHC 18% 31% 18% 33% Independent: Minimal Assist: Extensive Assist: Total Lift: Page 24
25 Diligent Inpatient Unit Assessment in E2 ICU 100% Independent: Minimal Assist: Extensive Assist: Total Lift: Page 25
26 Diligent Inpatient Unit Assessment in North ICU Independent: 40% 10% Minimal Assist: Extensive Assist: 50% Total Lift: Page 26
27 Page 27
28 Page 28
29 Page 29
30 This Approach Has Been Widely Heralded. Incorporated in the 2010 Guidelines for the Design and Construction of Health Care Facilities published by the American Society of Healthcare Engineers (ASHE) ubs.html Safe Patient Handling Best Practices Award Published in American Society for Healthcare Risk Management Monograph - October 2010 Risk & Insurance Innovator of the Year Melinda S. Mitchell, Service and Quality Award - November 2010 Page 30
31 Links for more information: Write-up in the health care facilities design guidelines: New certificate in Strategic Decisions and Risk Management with an emphasis in health care: New Stanford Center for Professional Development course in Strategic Risk Management for Health Care: = Page 31
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