Comprehensive Cost and Margin Improvement
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1 Comprehensive Cost and Margin Identify your organization s most challenging areas and find the biggest opportunities for savings and process improvement. From labor resource and compensation optimization to supply chain analytics and medication management, you can reduce costs and improve productivity long term. TM Expertise for your every day TM
2 Cost Solutions That Reach All Corners of Your Organization Experts predict that most health care organizations will need to take 20% 30% out of their cost structure within the next two years to operate effectively. VHA is your partner for optimized performance across your entire organization. We provide guided expertise and thoughtful solutions to help you thrive in the new health care landscape. Our Comprehensive Cost and Margin solution identifies your organization s most challenging areas and finds the biggest opportunities for savings and process improvement. From supply chain analytics and medication management to labor resource and compensation optimization, this unique solution helps reduce costs and improve productivity for the long term. So whether you select a few specific components or choose the entire engagement, our Comprehensive Cost and Margin solution can help you achieve measurable results year after year. Achieve Highest Total Value of Care Improved total labor costs Improved supply and pharmacy savings, including physician preference items Optimized medication management, leading to improved patient care Improved operations, productivity and work quality Increased patient, staff and physician satisfaction Real and sustainable positive culture change 2
3 Five Steps to Improved Performance Our Comprehensive Cost and Margin solution uses structured proprietary methodology for continued performance. 2. Recommend cost and productivity initiatives 1. Assess opportunities to reduce costs and improve processes Collect data Analyze Conduct interviews Make on-site observations Strategic Insights into Every Aspect of Your Organization Our Comprehensive Cost and Margin solution assesses all areas of your organization to reduce variation and drive enterprise-wide performance improvement. This approach combines a blend of three effective methods: Labor Resource Optimization Supply Cost Operational The next few pages examine all three in greater detail. Identify improvement opportunities Present opportunities to stakeholders Develop plan of action Facilitate buy-in 3. Implement initiatives Establish savings and performance goals Engage staff and physicians Provide guidance for implementation Supply Cost Labor Resource Optimization Operational 4. Measure performance Establish metrics for measuring performance Produce reports reflecting performance 5. Sustain improvements Provide tools and training to sustain improvements Follow up to ensure consistent Embed analytics and advisory services performance Comprehensive Cost and Margin $ 3
4 An Easier Way to Control Labor Expenses If your health care organization is like most, 60% of your expense budget is allocated to labor. We offer Labor Resource Optimization, an interdisciplinary approach that improves labor costs, staffing, scheduling and work quality while increasing employee satisfaction. Labor Productivity helps you reach productivity targets while balancing cost, quality and service expectations. Management Structure identifies and implements opportunities to streamline management and increase efficiency. Compensation Practices maximizes the value of your organization s compensation dollars by ensuring your policies reflect current market practice. Benefit Program Optimization helps you develop a competitive and financially sustainable benefit program that gives employees incentives to use resources responsibly. Case Management helps you ensure that care is coordinated and that related revenue cycle processes are managed. Labor Resource Optimization Labor Productivity Management Structure Compensation Practices Benefits Optimization Case Management Achieve Significant Results with Labor Resource Optimization 3% 7% annual reduction in labor costs Improved operations and work quality 1% 3% annual reduction in payroll and benefits costs Improved patient, staff and physician satisfaction Improved staffing and scheduling practices 4
5 Supply Variation Maximize Opportunities across Your Organization with Supply Cost We know that every hospital is different. That s why our Supply Cost methods are tailored to meet the specific needs of each hospital. We draw from our vast experience in contracting, industry-leading tools, proprietary methodologies and unmatched physician alignment to provide significant cost improvement from the operating room to the patient floor. Hospitals around the country have also benefited from improved supply utilization, increased productivity and enhanced care and culture. Supply Cost Physician Preference Management Supply Chain Analytics Clinical Quality Value Analysis Medication Management Services Physician Preference Management identifies savings opportunities and helps physicians manage costs and quality in high-impact service lines such as orthopedics, spine and cardiology. Supply Chain Analytics offers a suite of powerful business intelligence solutions that provide greater supply chain transparency and drive cost savings. Clinical Quality Value Analysis improves supply costs by engaging materials staff with clinicians and physicians in a consistent purchase-making process that impacts cost, quality and safety. Medication Management Services supports the clinical and operational aspects of the pharmacy, resulting in cost reduction, improved resource utilization and enhanced quality of care. $500M in Savings Produce Substantial Savings 25% on physician preference items 15% in pharmacy expense 10% in medical/surgical costs 10% in purchased services 91% Satisfaction Rating Practice Physician Variation Our consulting services have a consistent member satisfaction rating of 91%. Members have saved $500 million in the past five years by working with our consultants. One member saved a record-breaking $33 million in just 11 months, and another saved $80 million in under two years. 5
6 Operational Recovers Costs throughout the Patient Journey Supply Acquisition and Utilization Cost Reduction At the heart of our organization are members and the patients they serve. Operational uses datadriven methods to skillfully examine patient care from admission to discharge. This includes implant pricing and utilization, capital equipment, labor efficiencies, patient throughput, physician engagement and even appropriate reimbursement. Then, experienced clinical consultants use a performance-based approach with guided implementation and recommend strategies to create physician buy-in and involvement. Savings Roadmap creates a financial, clinical and operational savings plan, including strategies for implementation. Operational $ Patient Throughput Operational Productivity Reduction of Mortality, Infection and Re-admission Rates and Co-morbidity Documentation and Coding Workflow Optimization leverages Lean Six Sigma methods for improvement in the emergency department, operating rooms, cath labs and other key departments. Utilization and Throughput identifies and implements strategies for more efficient patient throughput and optimal use of supplies and ancillary services. Custom Pricing and Contracting Strategies blends strategies and negotiations to obtain the best possible price on the items your physicians want by accessing the expertise of VHA s supply contracting company, Novation. VHA LYNX analytics solutions are embedded to deliver powerful business intelligence that provides meaningful insight to savings opportunities. VHA LYNX solutions deliver quick time to value, provide process improvements and help sustain savings after your engagement has been completed. Operational for the Highest Total Value Supply acquisition costs can be improved by up to 25% Utilization costs can be improved by up to 30% Patient throughput can be streamlined by up to 40% Operational productivity can be improved by up to 25% Operational Enhances All Dimensions of Patient Care Supply acquisition prices Supply and ancillary service utilization Patient throughput Operational productivity Clinical quality Documentation and coding Physician alignment and engagement 6 Higher levels of cooperation between labor and management led to a higher ratio of registered nurses to patients, higher levels of employee involvement and better financial performance among the hospitals studied. (Source: Economic Policy Institute, Feb. 1999)
7 Let VHA Meet Your Savings and Operational Goals Improving operational and clinical processes in a timely manner requires bold thinking, expert advice and collaborative processes. That s exactly what our Comprehensive Cost and Margin solution delivers, along with thoughtful guidance that empowers your organization and the lives of those you serve. Our embedded analytics and ongoing advisory support provide continuous knowledge transfer, so you will continue to make improvements and sustain value after the engagement ends. To learn more about how VHA can help you take control of your supply chain and increase cash flow with Comprehensive Cost and Margin, visit us today at vha.com or
8 TM Expertise for your every day TM Since 1998, VHA has completed more than 5,000 consulting engagements for hospitals and health systems, including some of the nation s largest and most prominent health care providers. We are the largest pure health care consulting organization in the industry with more than 250 consultants who average 25 years in health care. Let our breadth of services and extensive experience help your organization achieve and sustain measurable success.
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