Becker's Hospital Review

Executive Briefing: Total Process Transformation 41 Sponsored by: Comprehensive Healthcare Transformation Requires Comprehensive Change By Heather Punke H ealthcare is changing fast, and the various changes impacting the industry are affecting the bottom lines of hospitals and health systems across the country. For example, the federal sequester spurred a nationwide 2 percent Medicare cut, and various states also have cut hospital funds. Further potential reduction to hospital and health system profits and operating budgets stems from the shift from fee-for-service to a pay-for-performance environment. Healthcare organizations have taken different approaches historically to cutting costs to meet budget constraints, usually focusing heavily on supply chain costs. "There's always been a sort of piecemeal approach to cost management," says Dan Piro, president of Advisory Solutions for MedAssets, a healthcare performance improvement company. "But that was always based on the foundation of having fee-for-service reimbursement, which healthcare as a whole is moving steadily away from." Because of the dramatic industry shift, Mr. Piro recommends ditching a focus on individual supply chain cost silos and instead going for a comprehensive approach to lower the total cost of care and better align those costs to reimbursement. Comprehensive changes It can seem like staggering task to achieve comprehensive change in all aspects of a healthcare organization. In order to become more efficient and lower the total cost of care, it involves changing the underlying cost structure and even culture. At first, University Health System considered taking the "traditional" approach of cutting costs. "Initially, we looked at supplies and standardization," says Ms. Vasquez, but then system leaders realized the opportunities for change expanded beyond those traditional cost silos. University Health System eventually teamed with MedAssets to help guide the system in its journey to transform its operations, finances and culture. Vasquez adds, "A health system can no longer make these significant changes on its own. System-wide changes need to occur simultaneously across the organization in an aligned and proven method. It was the right course to engage a third party with deep expertise to help lead us through this process and significantly augment my team." "Making simple cost reductions will no longer be enough. You need to take a system-wide, continuum of care view to controlling costs and improve efficiency and outcomes to gain sustainable long-term organizational success." - Dan Piro, President, Advisory Solutions, MedAssets While comprehensive change is massive, Mr. Piro warns it is important to start now. "If you don't think about it at the core of the organization up, you probably won't get to the level of change needed to be successful in the new landscape," he says. "Making simple cost reductions will no longer be enough. You need to take a system-wide, continuum of care view to controlling costs and improving efficiency and outcomes to gain sustainable long-term organizational success." San Antonio-based University Health System is one system that heeded the market's warnings and decided to make some major changes. "We were seeing state- and federal-level cuts and decided to continue to plan for reductions in payments," says Christann Vasquez, executive vice president and COO of University Health System. "We started looking for answers." Through the collaborative business relationship, MedAssets and University Health System tackled several initiatives, including: • anaging supply expenses M • mproving clinical resource utilization and standardization I • mproving labor expense management I • hanging culture through Lean C • nhancing revenue through an expedited claims process E

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