Becker's Hospital Review

26 Executive Briefing: Transforming the OR Sponsored by: Surviving the Big Squeeze Transforming Your OR for the Era of Falling Payments and Rising Quality Expectations By Jeffry Peters, President and CEO, Surgical Directions H ospitals depend on perioperative services to drive bottom line results. In better performing hospitals and health sys- tems, the operating room generates more than 68 per- cent of revenue and 60 percent of margin. Unfortunately, health- care reform is threatening this key source of revenue and profit. Value-based purchasing, bundled payments, readmission penal- ties, accountable care and other new payment models are low- ering reimbursement while they raise quality requirements. This is forcing hospitals to re-examine the entire organizational and economic structure of their ORs. Hospitals that want to survive the "big squeeze" must find new ways to control surgery costs while optimizing quality. Over the past few years, my colleagues and I have worked with hundreds of hospital ORs nationwide. We've seen many depart- ments that are struggling with the new requirements — and sev- eral ORs that have developed powerful strategies for meeting the challenge of healthcare reform. The most exciting thing I've learned is that success in today's peri- operative environment is not a fluke. Thriving ORs share a set of common characteristics that distinguish them from their competi- tion. These characteristics drive lower costs, better clinical out- comes and more satisfied patients. Put simply, today's most successful ORs have developed three critical abilities: 1. How to engage physicians in solving the OR's biggest problems. Leading ORs have pioneered an innovative physician governance model that transforms OR culture and supports un- beatable strategy. 2. How to use modern efficiency principles to create a lean oR. Better performing ORs have mastered the art of wringing waste and inefficiency out of the perioperative flow, reducing costs and generating higher revenue. 3. How to use innovation to boost quality, outcomes and safety. Leading ORs have "cracked the code" on how to imple- ment new care models successfully. They provide surgeons with monthly dashboards tracking quality and efficiency metrics. This allows them to achieve superior clinical outcomes while creating opportunities to thrive under new payment models. Hospital ORs that combine all three abilities are building a sus- tainable competitive advantage. How are they doing it? Here are three examples: Florida hospital improves bottom line by $2.5M Memorial Regional Hospital is a tertiary care hospital in Holly- wood, Fla. It is the flagship facility of the nation's second largest public health system. For several years, the hospital's OR strug- gled with efficiency problems. Low efficiency created frustration among surgeons, leading to decreasing case volumes. Low OR volumes were dragging down the hospital's financial performance. In 2012, Memorial Regional established a physician-led Surgi- cal Services Executive Committee to govern the OR. The SSEC serves as an operational "board of directors" for perioperative ser- vices. It is led by clinically active surgeons and anesthesiologists, with representation from nursing and other key stakeholders. Administration gave the SSEC full control over the OR, including decisions regarding block time, scheduling and other key issues. The committee spearheaded a cultural and operational transfor- mation of the OR that improved efficiency while helping to lower OR costs. Efficiency improvements enabled surgeons to perform more cas- es per room, increasing OR revenue and boosting surgeon satis- faction. This allowed Memorial Regional to implement a targeted service line growth strategy aimed at splitter surgeons. The entire initiative resulted in double-digit growth in OR volume. Bottom line: Hospital profitability increased by more than $2.5 million in 12 months. New York specialty center thrives under bundled payment NYU Langone Medical Center's Hospital for Joint Diseases is a nationally recognized leader in orthopedic surgery. The Manhat- tan hospital competes locally and nationally for both surgeons and patients. Yet efficiency problems in the OR were leading to high costs and low case volumes. Cost problems were especially con- cerning since the hospital was set to participate in the Medicare bundled payment initiative. Recently, HJD launched several initiatives to transform the OR. First, the hospital established physician governance through the nation's leader in perioperative consulting offers or, central sterile and Materials leadership interim and permanent placements perioperative & anesthesia consulting · assessment · interim management 312.870.5600 www.SurgicalDirections.com STABILITY TRANSITION Meeting the challenge of change A change in leadership can be disruptive to any organization; critical forward movement and improvements can be hampered or even stopped by the loss of a department leader. At Surgical Directions, we believe finding the experienced professional that fits your need is critical to making the transition to new leadership successful. If you need support for current initiatives or to move in a new direction, our experienced professionals will help you meet your needs in a time of change. Whether you seek an interim or permanent placement, we provide experienced, highly qualified leaders. Our candidates are thoroughly screened and we match their skills and experience to meet the specific needs of your situation. Our proven talent will help you make a seamless transition. We provide interiM and perManent placeMents in: ◗ Surgical Services – Nursing Managers and Directors ◗ Surgical Services – Nurse Educators ◗ Surgical Services – Business Managers ◗ Sterile Processing Department – Managers and Directors Our goal is simple: to provide you with leadership that will insure stability and direction in a time of transition. during during

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