Accelerated Operations Improvement
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1 Accelerated Operations Improvement Scott Goodspeed, DHA, FACHE, Principal, Stroudwater Associates Janet Porter, PhD, Director, Stroudwater Associates Ginger Williams, MD, President and CEO, Oaklawn Hospital, Marshall, Michigan May 5, 2015
2 Host Benson Gray 2
3 Audio Broadcast You will see a box in the top left hand corner labeled Audio broadcast. If you are able to listen to the program using the speakers on your computer, you have connected successfully. 3
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6 Chat Function Your Name and the Organization you represent Example: Sam Jones, Midwest Health What is your goal for participating in this Webinar? 6
7 Scott Goodspeed, DHA, FACHE Scott Goodspeed rejoined Stroudwater in 2015 after ten years as Principal and Vice President at ivantage Health Analytics. Scott has been President and CEO of four hospitals in three states, and has deep industry experience and a national reputation in governance; his focus is centered on clarifying strategy, rapid-deployment culture change and enhanced operational/financial outcomes. A nationally recognized speaker, Scott has authored and delivered over 500 presentations to various professional associations and healthcare organizations on topics such as strategic planning, health industry trends, 21st century governance, constructive cultures, and the Balanced Scorecard. Scott s most recent book is titled Community Stewardship: Applying the Five Principles of Contemporary Governance. He has recently written two articles on Population Health and Reducing Waste using Comparative Analytics. In addition, he is conducting research on organization and board culture which will culminate in a book with a current working title The Culture Map: Breaking the Invisible Boundaries in Healthcare. Scott earned his MHA from University of Minnesota and his DHA from Medical University of South Carolina. 7
8 Why We re Here We re passionate about our citizens having access to quality healthcare. Hospitals are the bedrock of our healthcare system. Stroudwater Associates has been committed to helping hospitals and physician practices survive and improve their services for over thirty years. 8
9 Janet Porter, MBA, MHA, PhD Janet Porter, MHA, MBA, PhD, a Principal with Stroudwater Associates, has 38 years of experience as a hospital administrator, teacher, consultant, and public health leader. Dr. Porter served as the Chief Operating Officer of Dana-Farber Cancer Institute; the Associate Dean of Executive Education at the University of North Carolina s School of Public Health; and the Vice President, and then COO of Nationwide Children s Hospital in Columbus, Ohio. Currently teaching strategic management in the Healthcare Executive MBA program at the University of Miami, Janet serves as the Co-Faculty Director of IHI s Leading Quality Improvement Program. She serves on the Board of Directors of AARP and AARP s National Policy Council and on the Advisory Board of the High-Value Healthcare Collaborative. The co-author of Managing the Public Health Enterprise, Janet received her BS and MHA from Ohio State University, and her MBA and PhD in health care strategy from the University of Minnesota. 9
10 Ginger Williams, MD, FACEP, FACHE Dr. Williams began her tenure as President and CEO of Oaklawn Hospital in January Dr. Williams earned her undergraduate degree and medical degrees at University of Wisconsin. Her residency in emergency medicine was completed at Michigan State University. Dr. Williams has been at Oaklawn Hospital for over 20 years, starting then as an emergency medicine physician. In March 2005, she was named Chief Medical Officer and subsequently earned a Masters in Medical Management from Carnegie Mellon University. Dr. Williams is a fellow of the American College of Emergency Physicians and the American College of Healthcare Executives and a diplomat of the American Board of Emergency Medicine and the American Board of Medicine. In 2011, Dr. Williams was appointed to the Board of Examiners for the Malcolm Baldrige National Quality Award. Dr. Williams currently serves as the Vice Chair of the MHA Small or Rural Hospital Council, Chair of the Hospital Network Ventures Board, and Board member of the Spectrum Regional Hospital Network. 10
11 Accelerated Operations Improvement Follow-Up Following the webinar, you will all receive an directing you to the following AOI resources on the Stroudwater website: Accelerated Operations Improvement article for American Healthcare Lawyers Associates Today s PowerPoint slides Accelerated Operations Improvement checklist Phone calls will be set up with those asking for a free onehour consultation 11
12 Today s Agenda Explain the factors that have changed Operations Improvement Describe traditional Operations Improvement and the Stroudwater approach to Accelerated Operations Improvement Provide case study of AOI at Oaklawn Hospital in Marshall, Michigan 12
13 Today s Agenda Explain the factors that have changed Operations Improvement Describe traditional Operations Improvement and the Stroudwater approach to Accelerated Operations Improvement Provide case study of AOI at Oaklawn Hospital in Marshall, Michigan 13
14 The Outlook for Healthcare S&P: Outlook negative $3 trillion healthcare industry in the midst of most far-reaching changes it has seen Not-for-profit hospitals are running out of ways to maintain their operating margins Not-for-profit hospitals at a tipping point facing decreasing ability to offset changes and negative trends Moody s Outlook negative (since 2008) Low revenue growth and shrinking volumes Expenses growing faster than revenues Fitch Outlook negative Uncertainty and challenges from payment reform and reduced volumes 14
15 External Forces Driving Transformation Declining Hospital Use Rates Availability of Big Data Affordable Care Act, CMS rule changes Demographic changes and increased employee contribution Increased Medicaid coverage, decreased commercial coverage Chronic disease management Hospitals Payors Physicians Population Health infrastructure Quality reporting/ Pay-for-performance Reimbursement reductions and payment reform EMR, PACS, CPOE and e-linkages Physician shortages Biotechnology advances Medical Home, ACO and other delivery system reform 15
16 Completed Hospital Mergers and Acquisitions Since 2010 (signing of the ACA) there has been a surge in transactions, with the trend continuing into Q Nonprofit Buyers For-Profit Buyers Source: Irving Levin Associates 16
17 Hospitals in Health Systems,
18 Today s Agenda Explain the factors that have changed Operations Improvement Describe traditional Operations Improvement and the Stroudwater approach to Accelerated Operations Improvement Provide case study of AOI at Oaklawn Hospital in Marshall, Michigan 18
19 Operations Improvement Approach Traditional Accelerated Long engagements Millions of dollars Board-driven Led by consultants Top down/lack of involvement Focus on cost reduction Action-oriented Results not sustained High velocity progress Cost-effective Driven and led by leadership Senior consultants collaborate with leadership Focus on process improvement, data and tracking Education-oriented Results sustained and embedded in culture 19
20 Today s Agenda Explain the factors that have changed Operations Improvement Describe traditional Operations Improvement and the Stroudwater approach to Accelerated Operations Improvement Provide case study of Accelerated Operations Improvement at Oaklawn Hospital in Marshall, Michigan 20
21 Stroudwater Associates A national healthcare consultancy founded in 1985 with consulting engagement experience in all fifty states Corporate offices in Atlanta and Portland, Maine Mission is to create value for healthcare organizations and providers through analytics, strategic thinking and operational knowledge Twenty-five experienced senior consultants with an average of 25+ years of healthcare experience per consultant Consultants have both multidisciplinary knowledge and extensive practical experience Provides strategic planning, operational improvement, service line planning, capital access planning, revenue cycle, population health, partnerships/affiliations, facilities planning and repurposing 21
22 Oaklawn Hospital in Marshall, Michigan 22
23 Overview Oaklawn is sole hospital in Marshall, Michigan with a rich history; major employer Excellent quality outcomes: Magnet hospital, in 2014 Consumer Reports identified Oaklawn as second safest hospital in the US Fiscal year starts April 1; annual budget of $117M; 125 days cash on hand Inpatient census of 40 represents ½ of budget About 800 FTEs Oaklawn Medical Group employs 55 MDs and mid-levels, losing about $5M per year CEO retired in January 2013 after 36 years Dr. Ginger Williams, former CMO, promoted to CEO in January 2013 FY2013 audit identified issues with contractual allowances; loss of $2M in FY13 audit Loss of $5M projected for FY14 23
24 Oaklawn Has Clear Mission,Vision,Values 24
25 Oaklawn Has Clear Mission,Vision,Values 25
26 Oaklawn Has Clear Mission,Vision,Values 26
27 Michigan Age Normalized Use Rate Comparisons - Discharges/1, Minimally Managed Market (High 118/Low 96) 2021 U.S. Average (High 93/Low 61) 2021 Highly Managed Market (High 70/Low 42) Current use rates based on Truven Healthcare Analytics population and discharge estimates by Dartmouth Hospital Service Area (HSA) use rates based on Milliman Governance Institute Presentation (2/2012). Only Michigan HSA s with 2014 population between 10,000 and 50,000 are shown Source: Truven Health Analytics 27
28 Goals of Engagement Quantify the scale of financial performance improvement required to overcome future reductions in volume and revenue and achieve an operating margin sufficient to provide adequate investment capital for Oaklawn Hospital over time Identify specific opportunities, approaches, skills and tools for achieving this level of performance improvement by applying a combination of expense reduction and revenue growth strategies Develop analytic and performance improvement competencies in the administrative and physician leadership Embed a set of tools and leadership and management skills that will allow this performance improvement trajectory to continue beyond the timeframe of this engagement 28
29 Stroudwater Associates Project Team Marc Voyvodich Engagement Leader Janet Porter Project Lead Louise Bryde Clinical Lead Troy Trejo Analytics Lead John Behn Revenue Cycle Lead Don Horstkotte Financial Analysis Terry Bauer MD Practice Lead Melissa Lin Performance Improvement Keith Bubblo Analytics Steve Hyde Employee Health Lead 29
30 Accelerated Operations Improvement Approach March April May June July August On- Going Phase I : Laying the Foundation Develop Connectivity with PowerHealth and ivantage Refine Five-Year Financial Projection Confirm FY15/16/17 Improvement Goal Phase II : Analysis Financial, Operational, Quality Analysis Benchmark Comparisons, Interviewing Identify/Charter Major Initiatives/Teams Phase III : Plans and Implementation Teams with SA Coaches Prepare Plans Plans Presented to SC SC Confirms Goal Met/Approves Plans Plans Refined and Implemented Workforce Reduction Planned and Completed Phase IV: Sustainability Leadership Uses Tools to Identify Additional Opportunities FY15 A3s to Monitor Performance Leadership Development and Tools Training 30
31 Accelerated Operations Improvement Approach March April May June July August On- Going Phase I : Laying the Foundation Develop Connectivity with PowerHealth and ivantage Refine Five-Year Financial Projection Confirm FY15/16/17 Improvement Goal Phase II : Analysis Financial, Operational, Quality Analysis Benchmark Comparisons, Interviewing Identify/Charter Major Initiatives/Teams Phase III : Plans and Implementation Teams with SA Coaches Prepare Plans Plans Presented to SC SC Confirms Goal Met/Approves Plans Plans Refined and Implemented Workforce Reduction Planned and Completed Phase IV: Sustainability Leadership Uses Tools to Identify Additional Opportunities FY15 A3s to monitor performance Leadership Development and Tools Training 31
32 Analytics Tools: PowerHealth 32
33 Analytics Tools: ivantage 33
34 Accelerated Operations Improvement Approach March April May June July August On- Going Phase I : Laying the Foundation Develop Connectivity with PowerHealth and ivantage Refine Five-Year Financial Projection Confirm FY15/16/17 Improvement Goal Phase II : Analysis Financial, Operational, Quality Analysis Benchmark Comparisons, Interviewing Identify/Charter Major Initiatives/Teams Phase III : Plans and Implementation Teams with SA Coaches Prepare Plans Plans Presented to SC SC Confirms Goal Met/Approves Plans Plans Refined and Implemented Workforce Reduction Planned and Completed Phase IV: Sustainability Leadership Uses Tools to Identify Additional Opportunities FY15 A3s to Monitor Performance Leadership Development and Tools Training 34
35 ivantage Total Cost/Adjusted Admission Benchmark Savings potential of at least $9.4M 35
36 Benchmarking Top Opportunities 36
37 Oaklawn Sustainable Quality Healthcare 2014 FY2015 Goal of $4.9 M Established/$8.9M Annualized AOI Teams Established April 28 OMG Budget: $20.5 Goal: $2M Mark Montross Terry Bauer Nursing Budget: $20M Goal: $900K Kristin Sims Louise Bryde Operations Budget: $22M Goal: $1.05 M Sherry Boyd Janet Porter Admin Budget: $25M Goal: $1.1M Ginger Williams Janet Porter Revenue Cycle* Budget: $10.6M Goal: $2.05M Greg Beeg John Behn Benefit /Wage* Budget: $9.8 M Goal: $1.05K Jan Sinclair Steve Hyde/ Janet Porter Supply Chain Budget: $8.8M Goal: $750K Bill desmet Janet Porter * Revenue Cycle has $600,000 in improvements loaded in FY15 budget, and $300,000 has been loaded in benefits improvements in FY15 budget. The total annualized RCT goal is therefore $8.9M. 37
38 Communications Plan Phase I: Building the Case for Change April 2014 Phase II: Explaining the Approach May 2014 Phase III: Announcing the Plans/Workforce Reduction June 2014 Phase IV: Providing Updates on Plan Status and Sustaining Improvement July
39 Accelerated Operations Improvement March April May June July August On- Going Phase I : Laying the Foundation Develop Connectivity with PowerHealth and ivantage Refine Five-Year Financial Projection Confirm FY15/16/17 Improvement Goal Phase II : Analysis Financial, Operational, Quality Analysis Benchmark Comparisons, Interviewing Identify/Charter Major Initiatives/Teams Phase III : Plans and Implementation Teams with SA Coaches Prepare Plans Plans Presented to SC SC Confirms Goal Met/Approves Plans Plans Refined and Implemented RIF Planned and Completed Phase IV: Sustainability Leadership Uses Tools to Identify Additional Opportunities FY15 A3s to Monitor Performance Leadership Development and Tools Training 39
40 Oaklawn Sustainable Quality Healthcare 2014 FY2015 Goal of $4.9 M Established/$8.9M Annualized AOI Teams Established April 28 OMG Budget: $20.5 Goal: $2M Mark Montross Terry Bauer Nursing Budget: $20M Goal: $900K Kristin Sims Louise Bryde Operations Budget: $22M Goal: $1.05 M Sherry Boyd Janet Porter Admin Budget: $25M Goal: $1.1M Ginger Williams Janet Porter Revenue Cycle* Budget: $10.6M Goal: $2.05M Greg Beeg John Behn Benefit /Wage* Budget: $9.8 M Goal: $1.05K Jan Sinclair Steve Hyde/ Janet Porter Supply Chain Budget: $8.8M Goal: $750K Bill desmet Janet Porter AOI Plans Developed May 27 AOI Plans Executed June through August * Revenue Cycle has $600,000 in improvements loaded in FY15 budget, and $300,000 has been loaded in benefits improvements in FY15 budget. The total annualized RCT goal is therefore $8.9M. 40
41 Examples of AOI Initiatives Eliminated Baylor plan in Nursing Changed nurse staffing models in terms of ratios and skill mix Completely revised master charge file Closed alternative health clinic Revised plan/schedule of adding physician practices Stopped providing benefit of cell phone coverage Reduced employee tuition reimbursement benefit Revised and restructured employee health plan Changed endoscopy schedule Energy consultation identified HVAC capital investments with ROI of 18 months 41
42 Accelerated Operations Improvement Approach March April May June July August On- Going Phase I : Laying the Foundation Develop Connectivity with PowerHealth and ivantage Refine Five-Year Financial Projection Confirm FY15/16/17 Improvement Goal Phase II : Analysis Financial, Operational, Quality Analysis Benchmark Comparisons, Interviewing Identify/Charter Major Initiatives/Teams Phase III : Plans and Implementation Teams with SA Coaches Prepare Plans Plans Presented to SC SC Confirms Goal Met/Approves Plans Plans Refined and Implemented Workforce Reduction Planned and Completed Phase IV: Sustainability Leadership Uses Tools to Identify Additional Opportunities FY15 A3s to Monitor Performance Leadership Development and Tools Training 42
43 Oaklawn SQH Leadership Program Goal: To strengthen Oaklawn s leadership team s ability to improve financial and operational performance for organizational sustainability and improved community health A3 Projects Leadership Forum Janet Session #1 Janet Session #2 Breakthrough Horizons Session #3 Breakthrough Horizons Session #4 Breakthrough Horizons Session #5 Greg Session #6 Greg Improving Financial Performance Improving Processes Leading People and Change August September October November December 43
44 Conversation with Oaklawn CEO What has been the outcome of your work to improve operations? What advice would you give to those considering a major effort to improve operations? What lessons did you learn from this effort? If you had it to do over, what would you do differently? 44
45 Thank You and Next Steps Thank you for attending We hope you have found this helpful as you think about how to accelerate operations improvement in your organization The Accelerated Operations Improvement slides can be found at The Accelerated Operations Improvement article can be found at If you are interested in a free one-hour consultation based upon the Accelerated Operations Improvement Checklist, please contact Janet Porter at jporter@stroudwater.com. 45
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