The Case for a Perioperative- Focused Anesthesia Solution: Multiple Benefits from a Single Solution. An ROI White Paper

Transcription

1 The Case for a Perioperative- Focused Anesthesia Solution: Multiple Benefits from a Single Solution An ROI White Paper

2 The average hospital using a perioperative-focused anesthesiology solution, realized annual savings of $584,000 and the hospital s three year investment of $1.3 million generated a positive ROI in 8.1 months. Hobson & Co. July 2008 Introduction Anesthesia Information Management Systems (AIMS) have been available for more than 20 years, although their adoption into practice has been slow. The advanced systems today are capable of much more than reproducing the intraoperative anesthetic record and have evolved to become an integral part of the perioperative record designed to increase efficiency, optimize financial performance, and reduce adverse outcomes and treatment costs. Given the complexities of today s perioperative processes which includes anesthesia, the ability to operate these solutions on a common shared database can provide hospitals with many financial and clinical benefits and operating efficiencies. This can contribute significantly to a hospital s overall success by electronically linking critical anesthesia documentation to the perioperative care event. The following study, based on research conducted by Hobson & Company, a financial research firm specializing in determining ROI for information technology solutions, has identified and quantified the value and ROI benefits hospitals are realizing from the use of specialized AIMS. Methodology This study, commissioned by Surgical Information Systems (SIS), a leading provider of comprehensive perioperative solutions for healthcare organizations, was conducted in 2008 with OR managers, physicians, other clinicians, and IT staff in two hospitals. The purpose of the study was to specifically identify areas of value these hospitals had derived from their perioperative information systems, quantifying these benefits whenever possible to establish a financial ROI. Executive Summary Anesthesia records in the past have largely consisted of paper-based, handwritten documentation, requiring manual trending for evaluation. Since patient outcome is the most important aspect of the anesthesia process, the accuracy and completeness of paper charts is often compromised within the fastpaced perioperative environment. A total perioperative solution, including anesthesia, using a single common database is a superior approach. This single database can then be linked with the hospital s many other databases providing the interoperability to report on comorbidities, laboratory values, length of stay, morbidity rates, patient satisfaction and financial information (charges, cost and revenue). This perioperative-focused automation software ensures compliance with regulatory requirements and is critical for the success of both anesthesiologists and hospitals. The challenges facing perioperative anesthesia environments are: Clinical efficiency is limited due to a manual and cumbersome anesthesia documentation process and frequent chart customization. Optimal financial performance is jeopardized by incomplete anesthesia information leading to cancelled surgeries and decreased reimbursement. The value of a perioperative-focused anesthesia solution such as Surgical Information Systems (SIS) is immediate and demonstrable. An average hospital with 8,000 procedures per year and 12 operating rooms can experience $1.12 million in operational efficiency gains and optimized financial performance in the first three years of operation. 2 Copyright 2008 Hobson & Company

3 Key Challenges Facing Perioperative Anesthesia Environments After interviewing Anesthesiologists, Directors of Surgical Services, RNs, Physicians, and IT/IS Project Managers at a number of hospitals across the U.S., two key challenges were identified for the perioperative Anesthesia environment: Challenge 1: Clinical efficiency is limited due to a manual and cumbersome anesthesia documentation process and frequent chart customization. Anesthesiologists and CRNA s spend a significant amount of time documenting vitals and patient history during Pre-Op evaluation and handoff communication in PACU. Much of this information is frequently gathered at other care events as well, creating inefficiencies for the anesthesia staff. During the stay in PACU, CRNA s interviewed often cited that the time spent repeatedly recording vitals detracts from patient care. Customizing anesthesia charts to keep up with new requirements and standards issued by the Joint Commission, CMS and other regulatory bodies also detracts from productivity. Every time a new requirement is issued, new patient charts must be created, either in-house or purchased externally. The convenience of automated data collection is not a trivial benefit. - Anesthesiologist, Top US Hospital Challenge 2: Optimal financial performance is jeopardized by incomplete anesthesia information leading to cancelled surgeries and decreased reimbursement. Anesthesia involvement in the management of surgical patients in a preoperative clinic has been proved to decrease unnecessary testing and costs. Without a perioperative-focused software solution, manual anesthesia documentation inefficiencies can impact the hospital s bottom line. Patients previous medical records are typically reviewed prior to administering anesthesia for the current procedure. If an old anesthesia record is needed for consultation but will take significant time to locate if it is stored in archives, a surgery may be delayed or cancelled. This day of surgery cancellation impacts both the hospital s revenue and patient satisfaction. Financial reimbursement is also limited by what can be charged from a surgery. For example, capturing all drugs and correct dosages used during a procedure is difficult for the pharmacy. Often times, charts are difficult to read, or illegible, making it hard to accurately bill for all of anesthesia used. Accessing old anesthesia records was a time-consuming process. First, we requested the chart, then a medical records clerk located the chart either physically located in the hospital or somewhere in archives, then the chart was delivered back to us. Sometimes the process was so slow; we delayed or cancelled the surgery. Key Sources of Value - Anesthesiologist, Top US Hospital The value of perioperative-focused anesthesia software, using a single database, is immediate and demonstrable. Based on interviews with administrators and clinicians at a number of US hospitals, the value falls into two main categories: Increases Efficiencies Optimizes Financial Performance 3 Copyright 2008 Hobson & Company

4 Each value area can be further broken down into a set of specific benefits. A sample of the benefits for each are summarized below and will be fully explained and supported in the following section. VALUE Increases Efficiencies Optimizes Financial Performance SPECIFIC BENEFITS Reduces documentation time for Pre-Op and PACU Reduces the cost of customizing anesthesia charts Increases drug reimbursement Reduces the number of delayed or cancelled surgeries ANNUALIZED FINANCIAL BENEFITS FOR AN AVERAGE HOSPITAL $298,000 $30,000 $200,000 $56,000 Total Annualized Benefits: $584,000 FIGURE 1: VALUE AND SPECIFIC BENEFITS The following illustrates the potential value of perioperative-focused Anesthesia software for each value area based on an average hospital with the following inputs: Number of ORs = 12 Number of Procedures per year = 8,000 Average revenue per procedure = $5,000 Value Source #1: Increases efficiencies 1. Reduces documentation time for Pre-Op and PACU. Patient charting is a time consuming manual process. CRNAs can spend at least 30 minutes per patient in Pre-Op and PACU documenting anesthesia related information. Automated anesthesia software with pre-defined wizards for each procedure prompts CRNAs to enter only the necessary data and prepopulates common fields, speeding up the information gathering and ensuring that patients charts are complete. The automated wizards speed up documentation time and ensure completeness - Anesthesiologist, Major US Hospital For the CRNA nurses, documentation time is reduced by 10 minutes in both Pre-Op and PACU for the 8,000 procedures performed each year. Clinical productivity could improve by $298,000. Impact for average hospital: $298,000 annual incremental revenue 4 Copyright 2008 Hobson & Company

5 2. Reduces the cost of customizing charts. Perioperative-focused Anesthesia software can adapt to any new regulation or requirement. On-line customization allows CRNAs and OR administrators to focus on patient care and not spend time updating charts each time a new requirement is issued. We print charts in-house, but were being billed full price by the copy department. For the average hospital which makes at least 12 changes to charts per year, the potential cost savings is $30,000. Impact for average hospital: $30,000 cost savings - CRNA, Major US Hospital Value Source 2: Optimizes Financial Performance 1. Increases drug reimbursement. An automated Anesthesia software accurately tracks and records all procedures and events as they happen, improving the drug capture. We could never bill on an itemized basis prior to the Anesthesia software. Now, we bill more accurately. - Pharmacist, Major US Hospital For the average hospital which performs 8,000 procedures per year, a 5% increase in drug reimbursement yields incremental revenue of $200,000. Impact for average hospital: $200,000 annual incremental revenue 2. Reduces the number of delayed or cancelled surgeries. All previous anesthesia records are stored on a common database, giving all clinicians immediate access to patient history. If an old record is needed for an impeding procedure, the information can be pulled up immediately, and there is no delay, or possible cancellation, due to the medical team awaiting a patient chart from medical records or from archives. For the average hospital which performs 8,000 procedures per year, a 2% reduction in day-of surgery cancellations due to limited access to old anesthesia record results in incremental revenue of $56,000. Impact for average hospital: $56,000 annual incremental revenue 5 Copyright 2008 Hobson & Company

6 Overall Value For this average hospital, the four implementation benefits add up to an annual savings of $584,000 million. The hospital s three year investment of $1.3m generates a positive return in 8.1 months. The three year net present value (NPV) and return on investment (ROI) are strong at $1.12m and 446%, respectively. The key financial metrics for the sample hospital were calculated by standard methods and are shown below. The NPV calculation assumes a 10% cost of capital. FINANCIAL METRIC 3-YEAR VALUE Payback (months) 8.1 months NPV $1,117,000 ROI 446% FIGURE 2: TABLUAR DISPLAY OF KEY FINANCIAL METRICS The chart below shows the extent to which each value driver contributes to the total value of perioperative-focused Anesthesia software. For the avereage hospital, increasing efficiencies and optimizing financial performance represent the majority of the value. 44% Increases Efficiencies 56% Optimizes Financial Performance FIGURE 3: PIE CHART DISPLAY OF VALUE DRIVERS 6 Copyright 2008 Hobson & Company

7 Based on the benefits described in the previous section, the breakdown of revenue and productivity benefits is pictured below. Cost Savings 5% Productivity Gains 51% Revenue Benefits 44% 0% 10% 20% 30% 40% 50% 60% 70% 80% FIGURE 4: BAR CHART DISPLAY OF REVENUE, PRODUCTIVITY AND COST BENEFITS Opportunity for Perioperative-Focused Anesthesia software To dimensionalize the opportunity for perioperative-focused Anesthesia automation software, the pre- and post-implementation productivity gains are outlined below. PRE-IMPLEMENTATION POST-IMPLEMENTATION HOURS GAINED CRNA $892,800 $595,200 2,667 FIGURE 5: TABULAR DISPLAY OF ANNUAL EFFICIENCY GAINS Perioperative-focused Anesthesia automation software has a direct impact on the financial performance of the hospital. Additional revenue No anesthesia related cancellations ADDITIONAL REVENUE ADDITIONAL CASES $56, FIGURE 6: TABULAR DISPLAY OF ANNUAL CASE LOAD OPTIMIZATION 7 Copyright 2008 Hobson & Company

8 Conclusion An automated anesthesia software solution offers obvious benefits over manual, paper-based documentation, which until recently has been commonplace in many hospital operating rooms. However, when the anesthesia software is integrated into a single common database operating the entire perioperative process, the benefits become exponential. Not only have significant operational efficiency gains and optimized financial performance been documented saving a sample hospital $1.12 million over three years, but an ROI on the system investment was realized in just 8.1 months. More importantly, such a system greatly improves the quality of patient care, reducing anesthesia-related errors and enabling clinicians and care giver to spend more time with patients at each phase in the perioperative process. 8 Copyright 2008 Hobson & Company

9 About SIS SIS provides software solutions that are uniquely designed to add value at every point of the perioperative process. Developed specifically for the complex surgical environments, all SIS solutions including anesthesia are architected on a single database and integrate easily with other hospital systems. SIS offers the only surgical scheduling system endorsed by the American Hospital Association (AHA), and a rules-based charging system that has been granted Peer Reviewed status by the Healthcare Financial Management Association (HFMA). For more information, please visit About Hobson & Company Hobson & Company helps early stage technology vendors and purchasers uncover, quantify and validate the key sources of value driving the adoption of new and emerging technologies. Our focus on robust validation has helped many technology purchasers more objectively evaluate the underlying business case of a new technology, while better understanding which vendors best deliver against the key value drivers. Our well researched, yet easy-to-use ROI and TCO tools have also helped many technology companies better position and justify their unique value proposition. For more information, please visit 9 Copyright 2008 Hobson & Company