There are two fundamental productivity-driven approaches to cost improvement in a hospital environment:
Improvement in resource allocation
Reduction in patient Length of Stay (LOS)
Typical resource allocation approaches include unit staffing models, the use of physician extenders, and hospitalists.
LOS approaches are typically either Diagnostic Related Group (DRG) based or process-based. DRG-based approaches are well known and have been used with varying success for many years. On the other hand, process-based approaches to reducing patient LOS are less well known, but potentially more effective.
The advantage of a process-based approach is that it benefits all cases utilizing a given process or service, as opposed to a more narrowly focused DRG approach. One example of a process-based approach to managing LOS is care management. This approach has shown dramatic success when deployed in a full-immersion model.
LOS greater than 4 days
LOS initiatives stalled or inactive
Excessive payor denials
LOS reduced by a day or more
Bottom line impact of up to $3,000 per bed per 0.1 day reduction in LOS
By Andrew Wilson MD, Chief of Emergency Medicine, William Beaumont Hospital, Royal Oak, MI
Today's razor thin hospital margins demand painstaking attention to appropriate resource allocation. Too little staff, space, and equipment means difficulty in meeting increased demand for services, while too much of the same can leave a hospital vulnerable in a demand downturn. The one constant in this dynamic balancing act between demand and capacity is LOS. Success in managing and reducing patient LOS allows a hospital to better utilize capacity/resources while improving margin.
Managing LOS requires a vital interface between medical staff and patient. The processes chosen to optimize LOS must address the sensitivities of all stakeholders and reflect the culture of the hospital, as well as recognize the realities of decreased daily presence of physicians at the hospital and the changing role of nursing as a principal day-to-day mediator of care.
Enter care management. Care management provides two very significant advantages: first, the ability to optimize LOS for individual patients and second, delivery of the data needed to drive change in all areas of the hospital impacting patient length-of-stay. Additionally, care management improves patient and physician satisfaction and enhances patient safety. However, care management is not free, but the stakes are too high not to consider it as a productivity solution, especially when considering a sustained 0.1 day reduction in LOS represents an annual cost savings of approximately $2,000-$3,000 per bed.
There are at least two ways to approach implementation of care management. The first requires a hospital-wide commitment to make the necessary process changes. The second is a unit-by-unit approach, and with demonstration of success–a full implementation. The degree of involvement by Care Managers in various aspects of care is also a critical variable that needs to be conscientiously addressed.
Many hospitals have care managers in one form or another. In some situations they are focused on addressing payor requirements for complex cases. In other situations, Care Managers are responsible for all cases, typically reviewing individual cases once every two or three days. A full immersion care management model prescribes a care manager review of every case, every day.
An initial implementation of full immersion care management, with daily review of all cases, was recently conducted hospital-wide in a 300-bed facility. In this particular hospital, it was found that less frequent case reviews had little or no impact on length of stay. However, data supports daily case review as the mechanism responsible for a dramatic reduction of approximately 1.5 days in adjusted length-of-stay, to the current level of 3.8 days.
In a sister hospital, full immersion was subsequently started on a trial basis in a pilot unit. With five months of data for the pilot, LOS is down 17%, against a nominal 3% decline in the rest of the hospital.
Large teaching hospital environment
Overall pressure to reduce length of stay
Traditional approaches to LOS already tried with mixed success
Use a process-based rather than traditional DRG-based approach to address LOS
Enhance patient and physician satisfaction by eliminating non value-added delays
Enhance patient satisfaction and safety through oversight of inpatient care processes
Capitalize on the cost savings available through reduction in LOS
Average total reduction of 1.5 day LOS in one facility
Reduction of 17% average LOS over five month period in second facility pilot unit
Approximately $2,900 per bed for each 0.1 day LOS reduction