HFMA WEBINAR

Sponsored By:
Value Project Webinar: Positioning for the Unknown by Transforming Organizational Culture and Management Structure

Date: February 21, 2013 Time: 2:00 3:30 p.m. Central

(12:00 1:30 pm Pacific/1:00 2:30 pm Mountain/3:00 4:30 pm Eastern)

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Sponsored By:

Positioning for the Unknown by Transforming Organizational Culture and Management Structure
Value Project Webinar
February 21, 2013 2:00 3:30 pm Central/3:00 4:30 pm Eastern

Peggy Deming, FHFMA, CPA Executive Vice President and CFO University Health System

Agenda
Organization Overview Uncertain Environment

Transformation Strategy
Transformation Partnership Increasing Complexities Value Results First Year Accountability and Sustainability What We Achieved and Learned

Learning Objectives
How to assess your organizational challenges How to indentify changes that can be made to become not only more efficient but more effective Learn steps to develop a culture of accountability and sustainability

Organization Overview

Mission Driven Health Care

The Bexar County Hospital District was established in 955 by the voters of Bexar County (d.b.a. University Health System)
Core mission is to provide for the needy and indigent of Bexar County

Primary teaching partner of the University of Texas Health Science Center in San Antonio since 1968
Supports mission of Patient Care, Medical Research and Teaching the next generation

Bexar County Commissioners Court

Appoints Bexar County Hospital District Board of Managers; Sets the annual Hospital District tax rate; and approves the annual capital, debt service and operations budgets

A Higher Level of Inpatient Care

University Hospital in partnership with UT Medicine

Level I Trauma Center

Joint owner of San Antonio AirLife

Level II Pediatric Trauma Center Pediatric burn program University Transplant Center Level III Neonatal ICU Heart Vascular Lung Institute Certified Stroke Center

A Comprehensive System

Medical Homes across the community

The right level of care in the most convenient location

ExpressMed 5 urgent care centers Texas Diabetes Institute Community Medicine Associates

Nonprofit provider practice with 52 PCPs, 50 mid-level providers & 30 specialists

Community First Health Plans

Nonprofit HMO with 118,000 at risk lives & 12,000 ASO lives

CareLink program to better manage sponsored care

How we Serve our Patients: Right Place at the Right Time

Awards for Organizational Capabilities

People / Culture Staffing
200911

Skills
Performance Improvement Patient Safety High Risk Care
US HHSC

Award Chief Learning Officer Competency & Credentialing Institute Magazine

CNOR Strong SILVER Learning in Practice

Business Intelligence

2009 - 2012
Platinum Award National Cardiovascular Data Registry

Growing to Serve our Community Better

New 10-story tower at University Hospital
Flexible single-patient rooms New & larger Emergency Center and operating suites New parking garage

New 6-story building at the Robert B. Green Campus downtown

Advanced outpatient diagnostic & treatment

On target to achieve LEED Gold status

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University Health System Operating Perspective

Regional Reach
22 county trauma region Serve as the Regional Health Partnership anchor for 20 Counties

$1B operating revenue 24% covered by property taxes

5,900 employees, medical staff of 1,300 & 600 residents

Operating margin of 4% in 2012 AA+ bond rating

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Uncertain Environment

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The Texas 82nd Legislative Session

The Problem: $27 Billion State Budget Shortfall Cost Cutting Measure: Expand Medicaid Managed Care

Negative Impact: Two billion Dollars ($2 Billion) in annual Upper Payment Level (UPL) payments to Texas hospitals lost
What is UPL? Historic supplemental payments made to certain hospitals and providers to make up the difference between what Medicaid actually paid for Medicaid clients and what Medicare would have paid for the same services
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Mitigation Strategy
Texas requested an 1115 Medicaid Waiver
A waiver under section 1115 of Social Security Act is a vehicle states can use to test new or existing ways to deliver and pay for Medicaid health care services

New Supplemental Funding: Worth $29 billion (all funds) over five years

Waiver Term - 5 federal fiscal years (October 1, 2011 to September 30, 2016)
CMS approved the waiver December 12, 2011

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University Health System Market Dynamics

Strong economy in Texas and City of San Antonio / Bexar County Below National unemployment rates Friendly competition Texas ranks 50th in uninsured Medicaid pays less than 60% of cost Governor does not want to expand Medicaid under the Accountable Care Act

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Transformation Strategy

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Strategic Vision: Invest in Care Transformation

Triple Aim plus
Improve the Patient Experience Improve Quality and Outcomes

Improve Efficiencies
Plus Improve Access in light of the anticipated growth in insured lives under the Accountable Care Act (ACA)

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Right People on the Bus

CEO aligned executive team Hired strong COO focused leading culture change Hired CMO with preventive and population management expertise

Hired hospital and ambulatory leaders focused on same strategy with different objectives
Hired VP of Care Coordination to assure coordination of hospital & ambulatory care Promoted a strong CIO to provide tools and training Repositioned VP focused on translational research to improve care and quality Commitment made to create an overarching data governance for business intelligence
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The Case for Transformation

Position of Strength
Ambulatory / preventive focus key Medicaid 1115 Waiver Positioned to succeed

Increasing Complexity
Regional responsibilities Waiver implications Address more difficult efficiencies

Uncertain Environment
ACA & implications in Texas Not enough providers Expertise needed quickly

Transformation
Clear strategic vision

Dedicated executive team on bus Seek transformation partner

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Transformation Partnership

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How UHS Selected Its Transformation Partner

Anticipated Legislative cuts in 2010 & set a target improvement goal of $15M

Reached out to GPOs for additional savings

Requested a comprehensive solution Requested a savings guarantee with a fee structure Wanted shared accountability for savings and on-site experts Wanted to include a sustainability plan with focused performance improvement & integrated analytics

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Project Structure
Project lead fully accountable to UHS for success Subject matter experts report to Project Lead 6-10 experts on-site 3 days/week or as dictated by project activities Year 1 focus on driving cost savings Year 2-3 focus on knowledge transfer and sustainability
Staff Project Lead Clinical Expert Labor Expert Purch Svc Expert Non-labor Expert Proc Impr Expert Sustainability Expert Project Manager Analytical Support Q1 x x x x x x x x 2012 Q2 Q3 x x x x x x x x x x x x x x x x Q4 x x x x x x x x Q1 x x x x x x x 2013 Q2 Q3 x x x x x x x x x x x x x x Q4 x x x x x x x x x x x x x x x x x x x
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Cost savings

Q1 x x

2014 Q2 Q3 x x x x

Q4 x x

Knowledge transfer

Behindthe-scenes

Solution for UHS Sustainability & Financial Performance

Clinical Clinical Solution: LOS and Utilization
Quality and Evidence Based Medicine Physician / clinician alignment Reduce over utilization of ancillary Decongesting ER Use of OR preference cards

Labor Solution: Staffing and Premium Pay

Labor
Reduce OT for staff on 12-hr shifts Set productivity standards Review PRN models and pooling Evaluate flex compensation for coders Purchased Services Standard maintenance contracts Parking and transportation costs Use of referral lab testing Transcription cost management Supply Expense Mgmt Maximize use of 340b program Review contents of custom packs Inventory Mgmt Reduce use of expense supplies Value Analysis refinement
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Purchased Services: Contracts and Utilization

Supply Expense Solution: Supplies

A Comprehensive Approach Net Patient Revenue 360,380,000

Other Revenue Total Patient Operating Revenue 47,606 360,427,606

UHS: 1/1/10 - 12/31/10

UHS: 1/1/10 - 12/31/10

Employee Compensation 299,738,000 Net Patient Revenue 360,380,000 $520 M Supplies 114,988,000 Other Revenue 47,606 Purchased Services 106,181,000 Total Patient Operating Revenue 360,427,606 Medical Services 118,575,000 Deprec & Amort 37,208,000 All Around Lean Process Other 1,603,000 Improvement & Technology Employee Compensation 299,738,000 Enabled Total Operating Expense 678,293,000 Supplies 114,988,000 Purchased Services 106,181,000 Medical Services 118,575,000 Clinical Solution: Labor Solution : Supply Expense LOS, Quality, Evidenced Deprec & Amort 37,208,000 Purchased Services: Solution: Staffing, Premium Contracts and Based Medicine, Supplies, 340B, Value Other 1,603,000 Pay, Productivity, Utilization Utilization, Patient Flow, Analysis, PPI, Blood Pools 678,293,000 Total Operating Expense Quality/Outcome
Revenue Cycle Cash Acceleration, Charge Master Review, Denial Management

$22M (4%) Targeted Savings in 12-16 months Future Sustainability

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Project Timeline: Three Years

2012: Savings, roadmap, labor, clinical, purchased services, supplies

2013: Utilization, process improvement, change management, analytics

2014: Best practice, process improvement, sustainability, strategic planning

Performance Platform: Process Improvement in focused areas, plus LEAN, Kaizen, Six Sigma overlaid as applicable to projects over time Technology Platform: Service Line Analytics + Labor/Staffing Tool + Dashboard for Process Improvement, Outcomes, KPIs
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Increasing Complexities

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Waiver Pool Payments

The Uncompensated Care (UC) Pool
UC Pool Payments replace UPL payments & are designed to help offset the costs of uncompensated care provided to Medicaid eligibles or to individuals who have no funds or third party coverage for services provided by the hospital or other providers.

The Delivery System Reform Incentive Pool (DSRIP)

DSRIP Pool Payments are available as incentive payments to hospitals that develop programs or strategies supporting hospitals efforts to enhance access to health care, increase the quality of care, the costeffectiveness of care provided and the health of the patients and families served. Payments are outcome based.

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Meeting the Triple Aim Plus:

Improving the Patient Experience
Expand Care Transitions Programs

Measure & improve patient experience

Establish an ambulatory patient care navigation program Expand Interpretation Services for culturally competent care Establish an interactive health promotion program for kids

Improving Efficiencies
Apply Lean Process Improvement to Improve Quality/Efficiency Enhance Medication Management to avoid medication errors Develop a Mental Health Crisis Stabilization Service Develop a Crisis Intervention Unit and Intensive Outpatient Program
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Meeting the Triple Aim Plus:

Improving Quality and Outcomes
Implement a chronic disease management registry Implement a Palliative Care Program for end-of-life care & needs

Implement Evidenced Based Disease Prevention Program

Establish care coordination team to support chronic care and education Development a Psychiatric Emergency Service Implement/expand care transitions programs Expand FQHC dental clinics

Improving Access
Expand adult & pediatric primary / specialty care providers & capacity Improve access to specialty care Expand Mobile Clinics to schools Expand Patient Centered Medical Home
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Value Results First Year

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First Year Results

$13.4M in Savings and $14M in Cash Compression
2012: Savings, roadmap, labor, clinical, purchased services, supplies 2013: Utilization, process improvement, change management, analytics 2014: Process improvement, sustainability, strategic planning
Performance Platform: Strategic Sourcing, Construction, Process Improvement in clinical & non clinical areas; Transforming culture with LEAN Technology Platform: Strategic Information, Service Line Analytics, Labor Staffing Tool, Process Improvement Dashboard, Protocols, KPIs, Claims Management, Charge Capture Audit

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Transforming Culture to Improved Quality and Reduced Cost

Month
Front Line and Mgmt Training and Coaching* Cultural Maturity Assessment/ Exec Coaching, Strategy & Progress Reviews Facilitated Process Improvement Activities Project Kickoff and StartUp Activities

April/ May

Jun

Jul

Aug

Sep

Oct

Nov

Dec
Course 3

Jan

Feb

Mar

Apr

May

Course 1

Course 2

Course 4
CMA

1 P 1 P 2 P 3

3 P 5 P 7 P 6

5 P 9 P 11 P 10

7
P 13 P 15

P 4

P 8

P 12

P 14

P 16

Rapid Improvement Activity (5 day), with Prep, Plan, Follow-up, Coaching Week Project Leadership On Site (Kickoff & Leadership Training) Project Strategy Meeting and coaching opportunities For head Executive to attend 2 of these meetings Project Kickoff and Start-Up Activities

Course Course

Lean Foundations Course w/ Internal Facilitator Dev. Potential Lean Foundations Course (Internally Facilitated) Exec or Management Rapid Improvement Activity (5 day), with Prep, Plan, Follow-up, Coaching Week Cultural Maturity Assessment (Stage One)

First 11-Month Accomplishments

Developed Internal Champion Demonstrated Success with Methodologies Training for Facility Leadership Completed 16 Rapid Improvement Activities (96-160 participants) Clinical and Operational Held Two Lean Foundations Courses w/32 Participants Developed Internal Training Capacity (2 instructors) Participant at a Lean Healthcare Certificate Program Conducted Cultural Maturity Assessment (Stage One)

P 5
CMA

Kickoff and Assessment Meeting Leadership Training: Includes Lean Simulation Preparation for Events: Competency And Leadership Matrix, Training Room Location, Order Materials, Schedule, Travel Arrangements Planning for First Event: Value Diamond, SIPOC, Team Participants, Roles/Responsibilities

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Accountability and Sustainability

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Transformation Project Goal: Position for Accountability and Sustainability

Focus in specific areas for maximum impact Experts on-hand to fast-track savings Coordinated, systematic approach All technology tools provided Assure accountability in place Process improvement and quality management for longterm sustainability

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Key for Accountability: Accountability Education

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Key for Accountability: Financial Management

1654 NEONATAL ICU UOS or Activity) Expenses Salaries Benefits Medical Services Purchased Services Medical Supplies Non-Medical Supplies Total Operating Expenses Salaries per UOS Medical Services per UOS Purchased Services per UOS Medical Supplies per UOS Operating Expenses per UOS 2012 Projected 12,614 2013 Budget Request 13,979 Variance 1,365 % Var 10.82%

$6,689,419 $6,845,911 $497,788 $523,712 $810,456 $898,446 $72,054 $76,253 $530,285 $587,651 $688,221 $768,132 $9,288,223 $9,700,106 $530.30 $64.20 $5.70 $42.00 $736.30 $489.70 $64.30 $5.50 $42.00 $693.90

($156,492) ($25,924) ($87,990) ($4,199) ($57,366) ($79,911) ($411,883) $40.60 ($0.10) $0.30 $0.00 $42.40

-2.34% -5.21% -10.86% -5.83% -10.82% -11.61% -4.43% 7.65% -0.04% 4.50% 0.00% 5.76%
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Key for Accountability: Project Management

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How do we change our culture?

We have to have absolute faith that we can and will prevail... At the same time, we have to confront the most brutal facts of our current reality whatever they might be.
Jim Collins Good to Great

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Key for Sustainability: New Customer Service Program

My Pledge
That was then

- This is now
- I am the one

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What We Achieved and Learned

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What we Achieved
Reduction to LOS of .4 days Reduced days in AR by 6 Significant increase in cash collections $48M Real expense savings bent cost curve Change in culture
Lean Thinking

New U

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What we Learned
Executive visibility and support is key Lean rocks for construction & Joint Commission too! Take advantage of technology Accountability is everyones responsibility Sustainability needs to become an expectation Learning is forever Get wrong people off the bus Change is never easy
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A Chinese Proverb States:

When the wind is blowing: Some people curse the wind Some people build walls While others build windmills

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Questions?

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Peggy Deming, FHFMA, CPA Executive Vice President & CFO peggy.deming@uhs-sa.com

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Remember to Complete the Program Evaluation

CPE Information To receive CPE Credits for this webinar. You must complete it within 2 working days. The URL below will take you to HFMA on-line evaluation form. You will need to enter your member I.D. # (can be found in your confirmation email
when you registered)

Enter this Meeting Code: 13AT6 URL: http://www.hfma.org/awc/evaluation.htm Your comments are very important and enables us to bring you the highest quality programs!

If you have any questions or do not know your id # you may contact Member Services 800.252.4362, ext 2

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