Using Evidence Based Practices Turned Things Around for One Hospital

From $12M Loss to $8.4M Profit in 365 Days

Lynn McVeyActing CEO & PresidentMeadowlands Hospital

Secaucus, NJ

LYNN MCVEYCAREER PATH BEGAN IN 1982

RADIOLOGY MANAGER

2008: After 25 years in imaging, elected national president 4000-member AHRA. Discovered Radiology is an industry without external benchmarks

2009: Discovered extreme practice variations existed in Radiology operations - Published findings.

2010: As consultant, saved 10 hospitals $million$ by implementing EB practices in their Radiology depts.

2011: As COO; rolled out EBM to every (clinical + non-clinical) department in 200-bed community hospital

2012: As CEO, discovered healthcare is an industry without external benchmarks

RESULTS OF USINGEB PRACTICES HOSPITAL-

WIDE 2010: Meadowlands Hospital was

losing $1 million/month ($12m/year). 2011: Twelve months later,

Meadowlands Hospital showed a $8.4 million profit.

MHMC captures 6 Key Performance indicators (KPIs) each month, from every manager.

DEPT NAME J F M A M J J A S O N D 2013 AVG 2012 AVG 2011 AVGSalary Expenses                         $12,000 $13,000 $14,000Non-Salary Exp.                         $2,000 $2,500 $3,000TOTAL Exp/Costs                         $14,000 $15,500 $17,000Gross Charges  

                      $3,000,000 $2,500,000 $2,000,000Collections

(15%)                         $450,000 $375,000 $300,000Net Revenues                         $436,000 $359,500 $283,000

Volume IP 1,400 1,300 1,200Volume OP 1,300 1,200 1,100Volume ER 700 600 500

Volume TOTAL 3,400 3,100 2,800$ Supply/Exam   $0.59 $0.81 $1.07$ Salary/Exam   $3.53 $4.19 $5.00$ Cost/Exam         $4.12 $5.00 $6.07

$ Revenue/Exam         $128.24 $115.97 $101.07$ Net

Profit/Exam         $124.12 $110.97 $95.00AVERAGE OT % 2.00% 2.00% 2.00%

EBM dashboard – Summary of the data collections

TWO PRACTICAL CASE STUDIES

1. Evidence based knowledge helped determine that $144 million was left on the floor of an Interventional Radiology Suite.

2. Evidence based practices reduced OVERTIME and ABSENTEEISM by 7.2% or $5.7 million

RESPIRATORY Jan Feb Mar Apr May Jun Jul 2012 AVG 2011 AVG

Salary Expenses $111,082 $86,404 $134,636 $83,038 $70,375 $73,134 $74,866 $83,112 $110,406

Non-salary Exp. $10,637 $9,097 $6,546 $13,817 $28,885 $22,628 $21,832 $16,206 $13,931

TOTAL Exp/Costs $121,719 $95,501 $141,182 $96,855 $99,260 $95,762 $96,698 $99,318 $124,336

Gross Charges $2,738,145 $2,161,470 $2,406,385 $2,153,859 $1,508,465 $2,403,221 $2,407,319 $2,183,717 $1,582,855

Collections (15%) $410,722 $324,220 $360,958 $323,079 $226,270 $360,483 $361,098 $327,558 $237,428

Net Revenues $289,003 $228,720 $219,775 $226,224 $127,010 $264,722 $264,400 $224,812 $113,092

Volume IP 4487 3238 4004 3188 3111 2921 2385 2937 4363

Volume OP 335 95 396 398 444 399 353 388.5 383

Volume TOTAL 4822 3633 4400 3586 3555 3320 2738 3326 4746

$ Salary/Exam $23.04 $23.78 $30.60 $23.16 $19.80 $22.03 $27.34 $38.26 $24.00

$ Non-Salary/Ex. $2.21 $2.50 $1.49 $3.85 $8.13 $6.82 $7.97 $4.71 $3.00

$ Cost/Exam $25.24 $26.29 $32.09 $27.01 $27.92 $28.84 $35.32 $42.38 $26.20

$ Revenue/Exam $85.18 $89.24 $82.04 $90.09 $63.65 $108.58 $131.88 $98.50 $50.03$ Net Profit/Exam $59.93 $62.96 $49.95 $63.09 $35.73 $79.74 $96.57 $56.12 $23.83

AVERAGE OT % 1.1% 1.0% 1.2% 0.6% 0.5% 0.5% 0.3% 0.9% 2.0%

ABSENTEEISM 3 3 8 7 3 0 1 3.125 2.6

GROSS CHARGES IS ONEOF THE REQUIRED KPI

(KEY PERFORMANCE INDICATORS)

CASE STUDY 1 - 2003

PRACTICE VARIATIONS

200-bed Community hospital Interventional suite gross charges = $150,000/month

888-bed Level 1 Trauma Center interventional suite gross charges = $150,000/month

RETRO-BILLED AND COLLECTED $5MILLION OF $144MILLION LEFT ON THE FLOOR OVER 20 YEARS

Gross charges rose from $150K/month to $750K/month overnight. This means an extra $7.2 million/year for a struggling inner-city hospital.

CASE STUDY 2MONITORING OT + SICK PAY

According to Bureau of Labor Statistics, healthcare is an industry with above average Overtime and Absenteeism

10.8% = OT (4% all industry average)4.2% = SICK (2% all industry average)

http://www.prnewswire.com/news-releases/overtime-in-us-extended-hour-operations-continues-to-rise-73013397.html

http://www.bls.gov/cps/lfcharacteristics.htm

RESPIRATORY Jan Feb Mar Apr May Jun Jul 2012 AVG 2011 AVG

Salary Expenses $111,082 $86,404 $134,636 $83,038 $70,375 $73,134 $74,866 $83,112 $110,406

Non-salary Exp. $10,637 $9,097 $6,546 $13,817 $28,885 $22,628 $21,832 $16,206 $13,931

TOTAL Exp/Costs $121,719 $95,501 $141,182 $96,855 $99,260 $95,762 $96,698 $99,318 $124,336

Gross Charges $2,738,145 $2,161,470 $2,406,385 $2,153,859 $1,508,465 $2,403,221 $2,407,319 $2,183,717 $1,582,855

Collections (15%) $410,722 $324,220 $360,958 $323,079 $226,270 $360,483 $361,098 $327,558 $237,428

Net Revenues $289,003 $228,720 $219,775 $226,224 $127,010 $264,722 $264,400 $224,812 $113,092

Volume IP 4487 3238 4004 3188 3111 2921 2385 2937 4363

Volume OP 335 95 396 398 444 399 353 388.5 383

Volume TOTAL 4822 3633 4400 3586 3555 3320 2738 3326 4746

$ Salary/Exam $23.04 $23.78 $30.60 $23.16 $19.80 $22.03 $27.34 $38.26 $24.00

$ Non-Salary/Ex. $2.21 $2.50 $1.49 $3.85 $8.13 $6.82 $7.97 $4.71 $3.00

$ Cost/Exam $25.24 $26.29 $32.09 $27.01 $27.92 $28.84 $35.32 $42.38 $26.20

$ Revenue/Exam $85.18 $89.24 $82.04 $90.09 $63.65 $108.58 $131.88 $98.50 $50.03$ Net Profit/Exam $59.93 $62.96 $49.95 $63.09 $35.73 $79.74 $96.57 $56.12 $23.83

OVERTIME 1.1% 1.0% 1.2% 0.6% 0.5% 0.5% 0.3% 0.9% 2.0%ABSENTEEISM 3% 3.1% 8.0% 7.4% 3.1% 0% 1.0% 3.13% 2.6%

2 OF 6 KPIS MONITORED

Case Study 2Monitoring OT + SICK Pay

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Case Study 2Monitoring OT + SICK Pay

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CASE STUDY 2MONITORING OT + SICK PAY

Liberty Hospital 2010 Budget = $80m$48,000,000 60% = SALARY

$7,200,000 (Liberty) 10.8% = OT and 4.2% = SICK$1,440,000 (MHMC) 2% = OT and 1.0% = SICK

$5,760,000 7.2% reduction

US Hospital Data 2011MedPac$421,254,620,889 60% = SALARY $63,188,193,133 10.8% = OT and 4.2% = SICK$12,637,638,627 2% = OT and 1.0% = SICK

$50,550,554,507 7.2% reduction

EBM cases at Meadowlands Hospital Incomplete documentation of medical records - average admission = $11,000

(cardiologist = $6m)

Staffing Plan in EBM format 1- disclosing practice variations ($144K in Lab, $120K in Radiology)

2- On-call/night shift in ultrasound cost $100K/year. Staffing it cost $84,000. "we like the extra money"

Overtime in EBM format discloses $160K in OT in Cardiac Cath Lab - 4 fTEs worked 7a-3pm; moved 2 to 9-5p

Productivity in EBM format discloses low performers (<20% average = progressive discipline)

Absenteeism in EBM format discloses unaddressed/excessive absenteeism ($268K reduction Year 2)

2 - Hawthorne Effect eventually reduced OT to 2% + SICK to 1%; reducing $1m/year in labor costs (Year 3)

Volume in EBM format discloses referral patterns of physicians in real-time; triggers intervention

Failed Bills/Edits in EBM format discloses root cause of denials (usually Registration omission)

North Jersey hospitals rated for patient safety Wednesday, May 8, 2013 BY LINDY WASHBURNSTAFF WRITER - The RecordChilton Hospital dropped to a D and Meadowlands Hospital Medical Center improved to a B in the latest hospital grades for patient safety reported Tuesday by the non-profit Leapfrog Group. The rest of North Jersey's hospitals maintained the grades they received six months ago.

EBM CAN FILL THE “GAP” BETWEEN CLINICAL MANAGERS AND BUSINESS

Evidence

Based

Practices

saved

MHMC

I’ve used EBM since 1982. In 2012, my graduate degree’s theme was “EBM in the acute care setting”.I’ve demonstrated several EB-practices with significant results here today.As a CEO, I witness the “knowledge gap” in ClinicalManagers everyday. My role has become EBM educator.

I believe EBM shouldbe a required coursefor both undergraduateand graduate clinicalprograms.