Reducing Total Courier Spend for Health Systems

Health Care Financial Consultant Courier Service
The final configuration of internal and external resources and scheduled routes versus on-demand services resulted in a 22% overall reduction in cost.

An academic medical center and health system had a fragmented current state of Courier Services, with a mix of multiple external providers and internal staff.  Pathstone partnered with the organization with a goal to reduce total courier spend through pricing and utilization while maintaining high quality services.

Pathstone set out with 4 primary guiding questions:

  • How much is the client currently spending annually on courier services?
  • Is current outsourced route and STAT/On-Demand pricing market competitive?
  • Is current internal route and STAT/On-Demand pricing market competitive?
  • Are there opportunities for increased efficiencies by consolidated all courier services to one supplier?

To answer these questions, Pathstone’s non-clinical purchase service consultants collected data from both the external suppliers and internal teams to develop a comprehensive picture of the current state. External data included detailed route information, on-demand call volumes, and associated costs. Internal data components included labor costs (salary and benefits/overhead) and non-labor costs (e.g. vehicles, maintenance, fuel).

Pathstone found the internal couriers did not have the infrastructure, such as GPS tracking, to be as effective as external providers and capital holds limited ability to acquire new vehicles, resulting in running through to end of life.

Ultimately, the team decided to move forward with a competitive request for proposal (RFP) process for all courier services activities.  Development of the RFP required understanding the materials being transported to ensure vendors have the appropriate qualifications.  For example, Department of Transportation certification is needed if couriers are used to transfer hazardous materials.

Supplier RFP responses were evaluated based on vendor qualifications, compliance with bid requirements, service level agreement (SLA) proposals, and financial proposals/route configurations.

The supplier proposals led to strategic discussions around the optimal mix of STAT/On-Demand calls versus scheduled routes to manage end user needs and appropriate expectations for the services offered by the courier program.

One incumbent external supplier presented the strongest overall proposal and end users confirmed their satisfaction with their services in the past. This supplier was selected to serve as the primary supplier, with all other external business and a portion of internal business to be transitioned under their support.

Pathstone also learned this was an area in which end users were leveraging courier services for an enhanced scope of activities, such as running to the local grocery store to pick up cakes for employee birthdays.  While this may not be traditional, it was deemed important to the client team for the initial transition phase and kept within scope to maintain that supportive culture. The client opted to retain a subset of internal resources to complete these more niche on-demand activities. The remaining internal resources were able to be reassigned to other internal operational activities.

The final configuration of internal and external resources and scheduled routes versus on-demand services resulted in a 22% overall reduction in cost while maintaining high-service levels. 

How to Stop Revenue Leakage In Healthcare

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Identify and Evaluate Opportunities

Your organization can prevent revenue leakage by implementing a few best practices that ensure accuracy and efficiency and promote optimization. Addressing points of leakage will enable your organization to increase revenue while maintaining quality patient-provider relationships.

Consider your organization’s practices and determine what processes could be optimized to promote more efficiency. A few areas to evaluate include:

  • Patient scheduling and registration: How do patients schedule appointments? Do they need to fill out paperwork or an electronic form when registering? Where do data entry inaccuracies occur?
  • Recording of medical supplies, procedures and equipment used: Who records information during a patient’s visit? How are procedures documented? Are responsibilities established among staff members?
  • Insurance verification: When does verification take place? Who handles insurance? Where do errors happen in the process?
  • Claims management: Who is responsible for follow-up when claims are denied? Who is responsible for issuing claim submissions? What is the current timeline for claim processes?

Some solutions may be as simple as cleaning up common clerical errors, while others may be more complex, such as implementing digital transformation and integration. Reviewing your processes will reveal opportunities for improvement, expose inaccuracy or inefficiency and enable your team to resolve problems and create a smoother revenue cycle.

Ensure Accuracy

Revenue leakage often occurs from issues at the beginning of the revenue cycle when patients first register or schedule an appointment. Ensuring accuracy in the information collection process will drastically improve how practices capture revenue, enabling them to create claims with correct patient information.

One way to ensure accuracy is to utilize electronic capabilities. Requiring patients to register or schedule appointments online will decrease data entry errors from paperwork. Electronic referrals will help your practice keep track of potential patients and encourage them to schedule.

Verify Insurance

Checking insurance eligibility and approval is another way to prevent revenue leakage by ensuring your services will be covered. Maintaining accurate insurance information will enable your practice to submit claims with precise data.

Establish correct insurance information by reviewing it with patients at the beginning of their appointment. Update any changes to insurance carriers, coverage or contact information. Adjusting any changes will be easier to complete before the visit rather than tracking down patients after they leave.

Set Financial Responsibility Expectations

Keeping patients informed of their responsibilities will improve your revenue cycle and increase patient satisfaction. Providing estimated costs to patients before their appointment will keep patients informed and prepared to complete their payments.

Collect copays and coinsurance during check-in or after an appointment to ensure accurate and timely payments and decreased revenue leakage.

Organize Claim Management

Commitment to timely claim submission and appeals will enable your practice to improve your revenue cycle. Accurate patient data will decrease the number of claims denials you receive, and a dedicated management team will be able to appeal denied claims quickly and efficiently. Taking the time to evaluate, revise and resubmit denied claims will greatly decrease revenue leakage.

Simplify Payment Processes

Creating an easy payment process for your patients will improve revenue and boost patient satisfaction. Make bill pay convenient by offering an online payment option or a payment plan to give patients the flexibility to meet their bills.

Prevent Revenue Leakage With Help From Pathstone Partners

Revenue management and leakage prevention can be complex, but you can find understanding and empowerment when you work with Pathstone Partners. Our consultants will help you tackle financial and operational processes to identify opportunities, implement solutions and sustain beneficial practices for the success of your healthcare practice.

Our variety of services will enable your organization to manage revenue cycles easily, provide quality patient care, exceed business goals and ensure success. Contact us today to learn how Pathstone Partners can drive value for your healthcare practice.

Service Models to Improve Lithotripsy Contracts

Health Care Financial Consultant Lithotripsy
A large health system on the West Coast spends $1M annually on outsourced lithotripsy and laser services.

A large health system on the West Coast spends $1M annually on outsourced lithotripsy and laser services. Ten unique suppliers are utilized to serve 11 different markets and six of the markets leverage multiple vendors. The contracts in place with lithotripsy and laser providers have a variety of pricing and service models. Fully outsourced model with usage-based pricing structure and equipment lease service model with tiered pricing structure and volume commitments.

The health system was experiencing three major challenges sourcing lithotripsy services:

  • Physician-Ownership: Urologists have ties to local lithotripsy services providers, which may result in significant sensitivities and increased pushback from clinical stakeholders.
  • Remote Locations: Many of the client’s hospitals are located in remote areas making access to labor and standardization efforts more challenging
  • Laser Services: Some lithotripsy vendors bundle laser services into lithotripsy contracts and others do not; this can complicate true conversion opportunities

Pathstone launched initiative efforts by reaching out and holding meetings with the health system’s Chief Nursing Officers and Chief Finance Officers to identify the appropriate stakeholders to join the lithotripsy services project work team.

After meeting with work teams to confirm our understanding of lithotripsy services at each hospital, Pathstone issued a detailed data request to all lithotripsy and laser vendors servicing the health system. The pricing and utilization data collected was then analyzed to generate meaningful insights and to build a business case highlighting significant discrepancies across the health system.

The project work team selected to issue a competitive request for proposal (RFP) to all incumbent providers to test the market and to ensure all hospitals were receiving best-in-class pricing and service levels. Pathstone reviewed and consolidated supplier proposals into a presentation that empowered stakeholders to make data-driven decisions on the future state of lithotripsy services at his or her facility.

Pathstone’s clinical purchased service consultants achieved value for the health system in two ways. First, negotiating with incumbent providers to achieve more competitive pricing and increased service levels. Second, transitioning low-volume hospitals from contracts where pricing was contingent on volume commitments to contracts with usage-based pricing models.

Due to geographic location, supplier proposals revealed that standardization and consolidation efforts would not yield significant financial value for the health system.

Standardizing Language Services Across a Large Health System

female asian translator working working with smiling businesswoman
Enhancements in service quality, the selected supplier was projected to drive a 36% reduction in annual spend.

The two financial components to a remote language or interpretations services program are the services and the hardware used for remote interpretation. Services are typically billed on a per minute basis while hardware can be provided by the interpretation services provider or purchased outright by the hospital. Our client had multiple providers across the health system with various financial models in place.  One supplier was providing hardware in exchange for a commitment to a monthly minimum amount of interpretation minutes, which was typically higher than the actual volumes needed by the system resulting in significantly increased costs

Our clinical purchased service consultants formed a system-wide, cross functional evaluation committee including representation from end users, risk, IT, finance, and supply chain to participate in a competitive request for proposal process.  Suppliers providing services across the system were evaluated for organizational capability, interpretation quality, service delivery, and financial model.

The evaluation committee selected the supplier that offered the most competitive comprehensive proposal. In addition to enhancements in service quality, the selected supplier was projected to drive a 36% reduction in annual spend by eliminating monthly minimums and reducing service rates.

Insourcing vs. Outsourcing in the Hospital Supply Chain

Health Care Financial Consultant 05

What is Make vs. Buy in Healthcare?

Make vs. buy in healthcare can be defined as the extent to which hospitals choose to use in-sourced or out-sourced resources.  Many clients often do not pursue this lever because each evaluation is unique; it requires robust data analysis, deep operational knowledge, change management and a longer timeline to successfully implement. However, the benefits that come with the make vs. buy lever can be enormous to any healthcare organization.

Key Opportunity Indicators:

Significant Change in Volumes

A significant change in volumes, regardless if products or services are outsourced or provided in-house, can be a good signal it is time to evaluate the make vs. buy value lever. As demand changes, hospitals need to determine if either a make or buy model is best suited to maintain costs and quality levels over the long-term. Often, an increase in volume can serve as a strong leverage point for negotiations with suppliers. Conversely, with a significant decrease in volumes, organizations need to evaluate if its service delivery model has a flexible cost structure that can match current demand or if it is heavily burdened by fixed costs.

  • Client Example: Pathstone recently worked with a large health system that was experiencing continuous growth in annual bed rental spend. Although renting beds provided benefits such as procurement flexibility and third-party maintenances services, our analysis showed the increase in volumes was large enough that an investment in purchasing hospital beds was more favorable to the organization. As a result of our recommendations, the health system was able to reduce rental costs by 20%.

Increasing Program Costs & Decreasing Quality

If annual costs related to a service are increasing while quality is decreasing, it may be worth evaluating make vs. buy opportunities. From a cost perspective, organizations need to understand the key drivers of increased costs. Is it price, volume or productivity? Furthermore, hospitals can partner with third parties (GPO, consultants, benchmarking service, etc.) to determine how costs compare to the market and begin to measure key performance indicators for their  health system. From a quality perspective, performance on key service level agreements (SLA) and end-user feedback can be gathered to understand key drivers of decreasing quality levels. Is it bandwidth, staff capabilities or limited resources?  By understanding the current state, hospitals can then effectively evaluate the benefits of transitioning to a make or buy model.

Fragmented Service Delivery Models

If your organization has a different mix of service delivery models, it may indicate opportunities to generate value. Fragmented service delivery models lead to differing levels of productivity, cost and quality, potentially impacting patient care and operations. By selecting a standard make or buy model for a given product or service, an organization is essentially applying another form of the third value lever we’ve covered, standardization.

  • Client Example: Pathstone has encountered several clients that have fragmented models for courier services which led to differing levels of staffing, service quality and cost, all of which can also make daily operations challenging to manage. In several of those situations, a decision was made to outsource courier services by working closely with key stakeholders across the health system, leading to more consistent service delivery and lower costs.
Key Success Factors

Develop Business Cases

Organizations that utilize a comprehensive business case to evaluate the pros and cons of an in-sourced or outsourced model will increase their chance of success. The business case is a fact-based tool that allows teams to have an open and objective dialogue when selecting the best strategy.  For complex categories, engaging third parties to develop business cases can provide market information and objective analysis necessary to make the best decision.

Evaluate Program on an Ongoing Basis

Since costs, quality and performance of programs can change over time, organizations that continuously evaluate make vs. buy opportunities position themselves to generate more value over the long-term. Continuous self-assessment can uncover opportunities resulting from minor improvements in supplier relationships to complete transformations for an organization’s service delivery model. For example, one important question for an organization to ask about an insourced operation is: “What else can we do with these resources?” The opportunity cost of those resources can help identify alternatives that drive more value for the organization. Furthermore, alignment of the service with the organization’s overall mission should be evaluated.

Access to Market Intelligence and Best Practices

Hospitals that have conducted extensive market research are well positioned to evaluate existing outsourced or internal programs.  Market intelligence on leading practice cost metrics and performance indicators can be an effective barometer to measure financial, quality and operational performance. Partnering with third party providers that can provide insight on market benchmarks can help an organization set the right targets to measure the competitiveness of existing programs.

Strategic Supplier Campaign

Pathstone Partners Chicago Health Care Consulting (19)
The client achieved over $3.5M+ in annual benefit in several key strategic categories.

Pathstone partnered with a large academic medical center, which included six additional hospitals throughout the system. After a three-year effort dedicated towards driving benefit across large, complex categories, leadership charged supply chain and Pathstone to drive remaining benefit opportunity quickly and ensure no stone was left unturned. “Speed-to-Value” became a frequent talking point in all client conversations and out of these conversations a Strategic Supplier Campaign was strategized, mobilized, and executed.

Throughout the first three years of the client engagement, Pathstone had successfully interacted with many suppliers through competitive bid processes and stakeholders through utilization and standardization initiatives. Though significant benefit was achieved through these efforts, it was clear that there were many additional suppliers that had opportunity to achieve price improvements.  

Pathstone reviewed accounts payable data, contract expiration reports, pipeline activities, group purchasing organization (GPO) involvement and benchmark data to identify key suppliers to include in the Strategic Supplier Letter Campaign. Out of this review process, 105 suppliers representing $100M in total spend were selected for the campaign.  

Having created a strategically focused list, Pathstone created a timeline to reach out to all 105 suppliers within one month of go-live. Prior to go live, a workplan with roles and responsibilities was developed with and agreed upon by client stakeholders. 

The Strategic Supplier Letter Campaign had three primary goals that were communicated with the selected suppliers:
  1. Review of Current Supplier Relationships: We provided a data request template within each communication to the suppliers. These templates allowed Pathstone and the client to evaluate the current utilization and spend, including comparing expected rates and spend against actual rates and spend.
  2. Reduce Overall Costs: Included in the data request template was a suggested reduction in current rates. Pathstone utilized available internal and client-based benchmarking to determine this request. Suppliers had the opportunity to provide enhanced pricing within the data request template, which allowed for a real-time view of expected spend and benefit delivered to the client.
  3. Solidify and Enhance Long-Term Partnership: Knowing that the list of 105 selected suppliers were strategic suppliers, many of which had been key partners of the client for multiple years, Pathstone’s client was offering to extend any active agreement for a select number of years if the supplier could meet the request.

As a result of Pathstone’s Strategic Supplier Campaign, the client was able to achieve the following results:

  • Achieved $3.5M+ in recurring non-labor expense reduction: The client achieved over $3.5M+ in annual benefit in several key strategic categories including Surgery, Cardiovascular, IV, Neurology, Spine, Respiratory, Patient Supplies, Wound Care, Laboratory, and Dietary.
  • Received accepted proposals from over 50% of suppliers within 4 months: Speed-to-value was a prominent theme for this strategy. Pathstone made concerted efforts to keep communication channels open with suppliers and review proposals as promptly as possible. Each week a list of proposals was brought to the client’s supply chain team for acceptance and then moved through the contracting process.
  • Identified $51K in overpayments: Pathstone carefully reviewed current contract rates versus rates provided in the data request template and identified over $51K in overpayments. Through conversations with 5 different vendors, the client received refunds for these overpayments.
  • Strengthen partnership with 63 suppliers: By the conclusion of the Strategic Supplier Campaign, Pathstone’s client received reduced rates and extended their relationship with 63 key suppliers across the system.
  • Confirmed Benefit: Pathstone worked directly with the supply chain, finance, and legal teams to confirm the benefit of each supplier’s proposal. A thorough review of these proposals was necessary to ensure the benefit being proposed fell within the client’s future operational plans. Pathstone actively communicated with impacted stakeholders to confirm the benefit before marking complete.

What do firms look for when hiring a healthcare consultant?

Health Care Financial Consultant Jobs

Our Team Shares a Handful of Qualities

While there is no exact template for success in consulting, our team shares a handful of qualities that help make us successful in what we do. The following list contains a few qualities that can help new hires be successful in their new role:

Problem-Solving Skills

Helping clients solve complex problems and develop solutions requires strong intellectual abilities, as well as a practical sense of what works and what does not. If you have the experience, make sure you can talk about instances where you took initiative and the impact of your contribution to solve complex problems.

Teamwork

Consulting is a team-based career, so your ability to work well in teams is incredibly important. We are looking for someone who can work both independently, under their own guidance, as well as someone who engages well with the rest of the team.

Experience

Although new hires are not expected to have vast work experience, it is important to have shown an effort to be involved in applicable life experiences. This may include involvement in internships, extracurricular organizations, and volunteering. It is especially important to communicate the transferable skills gained from these experiences, such as data analysis, presentation skills, or teamwork.

Communication

Communication is essential to a consultant’s success and all consulting firms look for evidence of both written and verbal communication skills. Candidates must be clear and concise, both in client-facing scenarios and when communicating with your team. Your first opportunities to display this skill will be through your resume and initial interview discussions with the firm.

Business Acumen

Consultants work to solve a wide variety of complex business problems. It is critical to understand business fundamentals across different domains such as finance, operations management, and information technology, as we apply this knowledge to help businesses solve complex problems and ultimately achieve their goals.

Personality

Consultants spend a lot of time with their coworkers and clients. The ability to develop strong relationships with each of these groups is maybe the most important skill in this list. Almost all aspects of our job are social: collaborating effectively, appropriately, and professionally with peers, superiors, and clients.

How to Improve Hospital Efficiency

Health Care Financial Consultant Efficiency

Create Your Strategy

Efficiency often goes hand in hand with other goals, like profitability and patient safety. Consider the following strategies if you’re looking to improve hospital efficiency.

Improve Cross-Department Coordination

Many patients, especially those with comorbid or chronic conditions, work with multiple providers. Even within one hospital, patients rely on the coordination of various departments. A visit to the emergency room might involve services from internal medicine, radiology, the lab and the pharmacy. Ensuring these departments are on the same page and collaborating with each other can help reduce the risk of errors and facilitate more efficient information sharing.

Departmental coordination can also support a positive, collaborative workplace culture and minimize the risk of data silos, miscommunications or redundancy. Some ways you might improve coordination include implementing cohesive technology solutions and creating cultural shifts.

Provide Proper Staff Training

A well-trained staff can work more efficiently, with less need to find answers to questions, fix errors or learn new concepts on the fly. Invest in your team and provide appropriate training. Stay on top of industry trends, new technologies and policy changes as they occur in the organization.

Make Patient Safety Your Top Priority

Putting patient safety first is a worthwhile goal on its own, but it can also increase hospital efficiency. Consider the time and costs associated with errors and delays. If you can avoid a misdiagnosis, you might also avoid the additional work it takes to address complications, legal issues or reputational damage. The additional diagnostic and treatment costs of poor patient safety can greatly impact efficiency and slow down your operations, further reducing profitability.

Look for initiatives that help you be proactive about safety. For example, using decision support systems or cracking down on administrative fraud can help you avoid problems altogether and eliminate the additional resources required to address them.

Contact Pathstone Partners for Healthcare Consulting

It’s no revelation that healthcare organizations are complex. With advanced technology demands, strict regulations, evolving patient needs, vendor complexity and labor challenges, there’s a lot to cover. Pathstone Partners puts experienced consultants on your side. With a focus on non-labor cost reduction, we’re dedicated to improving hospital profitability and efficiency across the board.

We start by identifying areas for opportunity in all non-labor spend categories. Then, we work as an extension of your team to implement and sustain savings initiatives, complete with training and talent development. As an industry leader, we know the value of a long-term partner you can trust for successful implementation and ongoing support.

Reach out to us today to see why over 175 hospitals across the United States have turned to Pathstone Partners for organizational transformation.

The Value of Strategic Alliances in the Hospital Supply Chain

Health Care Financial Consultant Alliance in Healthcare

What is a Strategic Alliance in Healthcare?

A strategic alliance can be defined as a form of mutually beneficial relationship or partnership between two parties focused on collaboration that achieves results for both organizations they wouldn’t be able to realize on their own. Strategic alliances are an increasing trend in the healthcare industry as a mechanism to achieve cost reduction and increase profitability. There is a broad spectrum of strategic alliances ranging from formal arrangements, such as joint ventures to more loosely affiliated collaborations.

Strategic alliances can offer the following benefits to an organization:
  • Incremental cost savings or revenue
  • Increased sustainability of long-term cost savings
  • Increased access to additional resources (knowledge, capital, etc.)
  • Expanded reach in the community through new partnerships
Key Opportunity Indicators

Minimal Investment in Outpatient Services

The healthcare industry is rapidly changing on a local level with competing hospitals establishing strategic relationships around the community, which can significantly increase competition for patients. With an on-going shift towards outpatient care in the market, hospitals continue to evaluate opportunities to increase outpatient offerings. Hospitals are often turning to suppliers for partnership opportunities to increase patient reach

  • Client Example: Dialysis services is an example where we see hospitals partner with the external service providers in joint venture arrangements with a goal of expanding offerings in the local market. Becker’s Hospital Review released an article, Joint ventures and collaborations across healthcare services (August 2017), which reported hospitals are increasingly turning to dialysis services as an area with clear benefits to hospital and supplier strategic partnerships. Since managing costs and the complexity of care for dialysis patients is difficult on both an inpatient and outpatient basis, it’s not a surprise that we see the industry leaders like DaVita and Fresenius partnering with hospitals across the country in joint ventures to deliver care. Negotiating such arrangements with competitive rates for dialysis inpatient services while also delivering competitive revenue share for the hospital through the joint venture is very challenging.

Strong Existing Supplier Relationship

Many hospitals have been successful capitalizing on a history of strong relationships with their suppliers by taking the relationship to the next level through creative new partnerships that deliver greater value for both organizations.

  • Client Example: Pathstone has encountered hospitals that have formed joint ventures with air ambulance providers that have been long-time service providers for those hospitals. In a service category such as this, hospitals have limited supplier choices in the market due to significant supplier consolidation over the years. When the two parties embark on a joint venture, one common goal may be the expansion of medical services to under-served areas that either the hospital or air ambulance company is challenged to serve on their own. By partnering, both organizations benefit from expanded market reach.

Merger and Acquisition (M&A) is Not an Option

Although M&A activity in the healthcare industry is occurring at an increasing rate, some hospitals are seeking alternatives that can still deliver the financial and operational efficiencies necessary to survive in the current market. M&A transactions are often very long, complex ordeals that come with heavy scrutiny of potential competitive implications, which we believe is one reason there is an increase in strategic alliances.

  • Client Example: Regional or local Purchasing alliances are becoming more popular across the country as an enhancement to hospital centric or national GPO purchasing. This is one example of hospital collaborations that can be achieved without formal mergers or acquisitions.
Key Success Factors

Align Goals

Ensuring a “win-win” mindset for all parties involved in an alliance is no easy feat. At the outset, the alliance must agree on their mutual purpose to keep everyone committed on a common goal and consistently seeking out the synergies for both parties, while still pursuing their individual organization’s goals. Many alliances will develop a charter and detailed workplans to keep on track. Sharing institutional knowledge and best practices can be invaluable to help each party achieve their mutual and individual goals.

Manage Conflict of Interest

Although collaboration in the healthcare industry is commonplace today, limitations do exist regarding those that can collaborate and the degree to which they collaborate. This is especially true for physician-hospital relationships because of Stark Law, where potential conflicts of interests can carry the threat of litigation and hefty fines. What makes matters more complicated is that Stark Law does lack clarity which is why you should pay careful attention to any relationships that may involve physicians. For example, we sometimes encounter hospital employed nephrologists that enter into partnerships to open dialysis outpatient clinics in the same town. On top of this, the hospital that employs the nephrologist sometimes engages in a joint venture with the nephrologist partnership for the dialysis outpatient clinic. This is especially complex and needs to be managed appropriately because the situation runs the risk of having business interests interfere with patient recommendations for outpatient dialysis services.

Maintain Effective Leadership

The right leadership is a key success factor for strategic alliances. Without this the best designed and well-intentioned alliance will often fail. Collaborative leadership teams that effectively utilize Steering Committees to manage key decisions should be required to help work out any issues and review progress towards the mutual goals.

Supply Chain’s Role in Compliance with IONM Services

Health Care Financial Consultant Neuromonitoring
The team achieved increased insurance limits and implemented $150K or 15% cost savings.

A multi-hospital health system did not have visibility into system Intraoperative Neuromonitoring (IONM) Services. Our cursory look identified the following:

  • Multiple vendors providing similar services
  • Delivery models outside recommended clinical scope of practice
  • Several contentious legal cases on vendor billing practices occurring at a national level

Pathstone’s clinical supplies consultants spearheaded a deep-dive review of supplier relationships, delivery models, and industry best practices. The team synthesized all relevant information into three primary opportunities:

  • Compliance: all IONM cases must include a monitoring technologist (IONM-T) and supervising professional (IONM-P) with appropriate hospital credentialing
  • Quality: IONM suppliers must carry appropriate general and products liability given litigation risk
  • Cost: IONM suppliers must provide equitable pricing given hospital geography and case load

Pathstone formed a cross-functional team of C-Suite, Physician, Supply Chain, and Credentialing stakeholders to triage opportunities in an appropriate manner:

  • Pathstone partnered with a physician team to develop a system standard delivery model in compliance with The American Society of Neurophysiological Monitoring. Pathstone then worked closely with Medical Staff Services to operationalize the delivery model and credential all vendor IONM-Ps at relevant hospitals
  • Pathstone simultaneously conducted an RFP process to address quality and price variation and strengthen contractual terms around fair patient billing. The team achieved increased insurance limits and implemented $150K or 15% cost savings.

The Importance of Measuring Productivity

Health Care Financial Consultant Productivity

Measuring Productivity

Measuring productivity is vital to optimizing economic outputs in the healthcare industry with low productivity impacting a healthcare facility’s ability to function and support the economy in meaningful ways. Keep reading to learn more about how to improve productivity in your facility.

Healthcare is a main pillar of the U.S. economy, accounting for 19.7% of the national gross domestic product (GDP) in 2020. Nonetheless, healthcare does not always have a significant contribution to national economic growth with many factors playing a role in this discrepancy. Some of these factors include market irregularities, U.S. healthcare infrastructure peculiarities and regulatory requirements. Despite this, one factor a healthcare practice can control is its productivity measures.

The Importance of Measuring Productivity

Measuring productivity allows you to find the areas of your facility that are operating smoothly and efficiently and those that could use improvement. Doing so helps you:

  • Focus on long-term growth rather than short-term productivity gains that may undermine operations.
  • Identify specific opportunities to control healthcare spending growth in ways that support the economy and patient outcomes.
  • Deliver higher quality services while spending less on non-essential expenses.

In short, measuring productivity enables you to increase productivity to achieve positive outcomes. In healthcare settings, positive outcomes may involve continued medical advances, staying on top of service demands and improving affordability for patients.

However, measuring productivity is not as straightforward as it may seem, as the methods you use to measure productivity also matter.

Traditional Measurement Methods

Traditional productivity measuring methods focus on hard metrics like time and financials. These hard metrics emphasize human capital and labor production rather than the services delivered. When seen through these measures, solid productivity in a healthcare setting is a matter of lower costs and quicker services.

Time metrics evaluate such factors as the following
  • The time needed to care for patients and complete each case
  • The number of patients doctors treat per day
  • The time healthcare employees spend with each patient
The financial healthcare productivity metrics look at
  • Employee labor costs: Financial metrics assess positions essential to patient care and those that provide supplemental benefits. Maximizing productivity in this area may involve redistributing wages, culling staff or exploring casual and temporary hires.
  • Amount of overtime pay given: Sometimes overtime hours are necessary, such as when treating a patient in an emergency takes providers past closing hours. Other times, overtime hours are less critical, such as staying after hours to complete paperwork or spending too much time with each patient.
  • Supply and equipment costs: Financial metrics weigh the benefit and expense of each medical device the clinic or hospital uses. State-of-the-art devices may be expensive, but their benefit may provide a worthwhile return on the investment. Conversely, a clinic or hospital may opt for the bare essentials to cut expenses. Other considerations include keeping enough medications on hand to meet patient demand.
  • Other expenses: Electrical, heating, water and other utility bills are necessary to provide adequate patient care. Still, finding ways to cut back on these expenses increases financial productivity.

The traditional methods of measuring healthcare productivity are quantitative rather than qualitative. A clinic may reduce open hours or hire only essential staff to maximize productivity. Doctors may also prioritize brevity when seeing patients, making quick decisions and only pushing for more details when significant concerns arise.

By focusing on time and financials, traditional methods focus on patient volume rather than the patients themselves, their needs and satisfaction with their care. Likewise, by disregarding patient satisfaction, these methods answer only half of the question of productivity. Decreased patient satisfaction can undermine such productivity methods.

Take Action

Measuring productivity is vital to your organization on a high level, get in touch with Pathstone today to start monitoring your overall productivity and explore how we can increase your bottom line.

The Value of Utilization in the Hospital Supply Chain

Health Care Financial Consultant Supply Chain 02

What is Utilization in Healthcare?

Utilization can be defined as the extent to which hospitals are making use of products or services. Many hospitals have historically focused on savings related to pricing and standardization. However, with seemingly relentless financial pressures and complexities of the healthcare supply chain, utilization opportunities are the next wave to spark interest of savvy hospital executives.

Opportunity for improvement in utilization can exist due to over, under, or improper use of a hospital’s goods, equipment or services. Being able to conduct an accurate assessment of current operations to determine if utilization opportunities exist is a challenge for most hospital leaders due to several factors such as unreliable documentation data and constantly evolving market options for products and services.

Successful implementation of utilization opportunities delivers the following benefits to an organization:
  • Financial benefits ranging 7-15% depending on the category
  • More efficient use of time and resources
  • Discovery of other deep issues within a category, often quality related
Key Opportunity Indicators

Poor Asset Management

In today’s environment, hospitals have a broad mix of assets across the organization. Understanding the true total cost of those assets is a challenge. Total cost of ownership for each asset includes not only the acquisition cost but also ongoing expenses related to maintenance, service and consumables. Furthermore, with hospital service lines experiencing continuous evolution, it’s difficult to maintain current lists of assets, let alone track service and maintenance records. As a result, an organization may find many inefficiencies or low returns on investments when true total cost of ownership is revealed.

  • Client Example: In our experience, clinical engineering often comes up in client discussions as an area to review due to its costly asset acquisitions, large asset inventory, and significant recurring spend on service and maintenance. Optimizing service levels on under-utilized or low-risk devices can drive utilization improvement. As an example, in outsourced maintenance agreements for ultrasounds, there may be significant savings to move from a platinum to silver or bronze support levels when in-house maintenance capabilities exist or sufficient inventory is available to swap out devices as equipment downtime occurs.

High Volume of Add-on Charges

For outsourced services, expenses can mount quickly due to “add on” charges for line items such as over-time, out of scope requests, volume commitment penalties, etc. These situations can result when service requirements were not anticipated when the agreement was created or if an organization experiences operational changes that impact how the services are now used. For these reasons continuous utilization reviews are important.

  • Client Example: Within our client’s clinical purchased services spend, such as dialysis, we discovered a high volume of “delay” charges that increased over several years. This led us to identify an operational bottleneck that was occurring with the patient transport process for treatments performed in the dialysis suite. Once the problem was understood, the transport process was redesigned, resulting in improved patient flow and a significant reduction in delay charges.

Misalignment with Key Performance Indicators (KPIs)

Although the process for determining utilization opportunities does not rely on data alone, using Key Performance Indicators (KPIs) to monitor high level utilization trends is helpful.  KPIs are multi-dimensional, data-driven measurements of key operational data that highlight performance relative to targets and help measure productivity in healthcare organizations. KPIs are a good first place to look for unfavorable utilization trends that may be a symptom of a larger underlying operational issue. We find implementing a KPI reporting tool that ties operational performance to cost can bring more awareness to potential utilization improvement opportunities and ultimately help drive and sustain change.

  • Client Example: Appropriate linen utilization is a common issue for many hospitals, and an opportunity that our clients typically believe exists based on operational practices they witness.  However, determining just how much utilization opportunity there is can be difficult to pinpoint. In our experience, a KPI that effectively measures linen utilization levels, including linen loss, reported in a metric of pounds per adjusted patient day helps our clients identify utilization improvement opportunities.
Key Success Factors

Establish Multi-Disciplinary Teams

Discovering utilization opportunity requires a long-term, multi-faceted approach more complicated than identifying opportunities in pricing or standardization, which are common focuses for traditional value analysis teams. Therefore, it helps to have a dedicated team that understands the nuances of the specific utilization elements. Multi-disciplinary teams including nursing, finance, support services and supply chain are most effective. For many organizations, engaging a third party to determine team composition, establish charters, facilitate initial meetings and help cultivate working relationships on the team, has been very beneficial to expediting efficient and effective utilization projects.

Leverage Multiple Tools and Processes

Identifying utilization opportunities is a comprehensive evaluation process. There is no one tool, process or metric that leads to successful utilization-based initiatives. It is often a combination of many tools that effects sustainable change over the long-term.

Find the Right Change Agent(s)

One of the most difficult aspects to pursuing utilization opportunities is effecting lasting operational changes. Once opportunities are identified and an implementation strategy is defined, an important next step is gaining support of those involved in the operation that change is necessary. An influential leader that can gain organizational support for change – whether it is a change in practices, processes or technologies – is crucial for transformation. Individuals need to feel well supported in the direction the organization is taking, especially when that direction requires change. Success will be elusive without stakeholder buy-in and support.

Improve Continuously

Continuously re-evaluating operations by looking to leading practices inside or outside your organization is important to maintain proper utilization. Take advantage of healthcare industry associations, roundtables and whitepapers that are regularly published to stay aware of key trends. Utilization opportunities, unlike pricing, are not proprietary and can typically be shared through collaborative discussions with peers.