OptiMax

The Fox Group’s Performance Delivery System

Healthcare Performance

Very Complex!
 A healthcare business unit was within budget and at
Vignette or near minimums for all performance
standards. The budget had been based, year-
after-year, upon historical expenses with
projections for future increases.

Then, through state-of-the-art techniques that

quantified the interaction between costs and
quality, it was clearly shown that only one of the
key quality indicators was at the optimal level.

Further, patients showing improvement from

treatment were 6% below the optimal. To make
matters worse, the total annual costs for patient
care were more than $1,000,000 above optimal.

The business was clearly in the “red zone.” The team

members needed to decrease costs and increase
quality.

They had been lulled into complacency by (1) the

practice of cost-plus budgeting and (2) the
comparisons of their quality indicators to
averages instead of to the optimal.
Sample Areas of Performance Assessment

Assess Service Differentiation Networking/Group Formation Issues

 Identification of core services  Strategies and consequences
 Identification of specialized services  Healthcare industry and regulatory changes
 Evaluation of service to referral sources  Managed care trends
 Scheduling & office policies and procedures  Finance/operational issues
 Facility and equipment review
Review Human Resource Expertise and Deployment
Review Financial Performance  General systems
 Analyze profit and loss performance  Interview practices and selection of personnel
 Income review for past three fiscal years  Training process
 Changes in charges/collections  Turnover issues
 Changes in patient/client volume  Evaluate salary levels, incentive plan, benefits
 Changes in payor mix  Team orientation and appearance
 Changes in expenses  Professional development / continuing education
 Review managed care contracts / assist in negotiations  Work flow systems
 Analyze billing and collections
 Coding analysis Evaluate Internal Marketing
 Evaluation of accounts receivable aging and collection related  Budget and expenditures
protocols  Office environment and ambiance
 Define priorities / Delinquent account strategies  Appearance
 Evaluate controls over cash handling/banking  Signage, perceptions, environmental controls
 Evaluate accounts payables aging  Efficiency of layout
 Review office automation / computerization  Exam rooms

Document New Areas for Volume/Income Generation Analyze External Marketing

 Practice start-ups and relocation  Audit of promotional materials
 SWOT analysis  Assessment of referral development activities
 Task-specific plans  Sources and extent of referral contacts
 Growth opportunities  Identify techniques to increase referrals

Compliance – HIPAA/Medicare Fraud & Abuse

OptiMax

 What is the technique

 Where it is being used

 How to use it strategically in performance

improvement
Work Measurement Applications
OPERATIONS

STAFFING
PLANNING
• Budgeting • Time and cost • Wage
trade-off’s for incentives
• Workforce new services
capacity • Work
• Service mix standards
• Equipment planning
and space • Performance
capacity evaluation
and
• Scheduling improvement
• Most productive?
• Underperforming?
• Targets for improvement?
• Measures of Provider Productivity
Office Visits Per Hour Worked

1.00
0.86
0.77
0.73 0.72
32% of
0.75
0.65 Highest
0.49
0.50

0.28
0.25

0.00
A Physician
Work RVU’s Per Hour Worked

10.00
9.11
7.95
35% of
7.50
6.59 6.34 Highest
5.67
5.25
5.00
3.17
2.50

0.00
Physician A
Charges Per Hour Worked

$700 $645
$588
$600
34% of
$500 $472 $466 Highest
$416
$400
$326
$300
$221
$200

$100

$0
A Physician
Productivity - sample

INPUTS OUTPUTS

• Office Visit Units

• Compensation
• Hospital Units
• Med Units
• X-Ray Units
• Other Units
• Work Relative Value Units
• Charges
Example of Variables
Input Variables
Administrative expenses/licensed bed
Dietary expenses/patient day
Facility expenses/licensed bed
Housekeeping expenses/patient day
Licensed beds
LVN FTE/Patient day * 1,000
Square feet of facility/patient day
Non-clinical staff FTE/Patient * 1,000
Non-clinical staff salaries / patient day
Patient expenses/patient day
Professional salaries/patient day
Net revenue / patient day
RN FTE/Patient day * 1,000
Output Variables
Net income/patient day
Not Decubitus %
Patient days
Procedures/FTE
Procedures/Patient
Relative Value Units/FTE
Relative Value Units/Patient
Relative Value Units/Procedures
Return on Capital/Patient Day
Treatment plans meeting standard %
Patients with in-home treatment only %
Patients with improvement %
Timely Treatment %
The OptiMax Solution
The OptiMax Difference
Optimal

Same as others

Optimal . . . more/less . . . Optimal

The OptiMax Difference

A single performance score

Reasonable, individualized targets
Qualitative & Quantitative Data

com
bined
Users

Manufacturing Insurance
Oil Exploration Banking

Who uses this

method?

Restaurants Healthcare
Retail Schools
Healthcare Users - sample
The OptiMax Solution
The OptiMax Difference

Typical
Some of the Differences . . . Benchmarking OptiMax

Tailored to individual, unique Business setting

Comparison to a known standard

Evaluates qualitative (quality) and quantitative (costs, revenues) indicators

simultaneously
Comparison to your own best internal performance

Evaluates Indicators ONLY one-at-a-time

“Rolls up” multiple indicators into a single score

Objectively provides targets for improvement based on a simultaneous

evaluation of all indicators
Quantifies targets for improvement based upon achieving performance
comparable to the best already in your organization
Early warning that costs are too high or quality too low

Short time investment and easily repeatable analyses

Three-Months Efficiency Score

100% 100% 100% 98%

100%
93% 93%

85%

75%
Standard For Efficiency

50% Improvement Possible

25%

0%

Physicians
Improvement Targets

Target
$110,462 of
increased
charges per
PHYSICIAN D
PHYSICIAN B
quarter
PHYSICIAN E
PHYSICIAN A
A Typical Workplan

Study Design Areas to Variables to Initial Staff

Optimize Consider Training

Data Data De-

Additional
Collection identification
Collection Staff Training
Instruments of Data

Analysis and Comparative Optimization Staff

Reporting Reports Targets Reporting

Select
Implemen- Optimization
Develop Monitor
tation Specific Plans progress
Targets
The OptiMax Solution

Implementing the OptiMax Cycle

OptiMax Outcome – sample of 7 member medical group

Findings, per quarter:

$110,000 in billed charges

Findings, per year:

$440,000 in billed charges
 A few more
observations…
The Challenge

Unfortunately, the
benchmarks established
using old analytical
schemes based on various
multiple ratios created
more dilemmas than
solutions.
Yasar A. Ozcan
Professor of Health Administration
Virginia Commonwealth University
2008

27
The Challenge

How do you bring

your financial
experts and
your quality
experts together?

28
The Challenge

How to evaluate
costs and quality
all at the same
time?

29
OptiMax Applications - sample

Business Description OptiMax

Targets for Improvement

Specialty mental health services for just one city

region of a carve-out health plan
Over $1,000,000
• Improvement strategies included broader applications of out- per year
patient specialty services

Twelve member specialty medical group

• Improvement strategies included modifications in scheduling

Over $400,000
practices for both acute care consultations and out-patient per year
visits
Hospital Example
Study of 131 Large Hospitals

100% 100% 95%

90% 84%
80% $29 M 68%
70%
$35M
Efficiency

60% 54%
50% $45M
40%
30% $82M
20% OptiMax Scores
10%
0%
H1 H2 H3 H4 H5
Managed Care Example

Center Inputs Outputs

Clinical Out of Clinical Tx Plans Tx Plans In-Home Patients
Costs / Home Costs/Pt Meeting Current % Tx Only % Improved %
Patient Costs Improved Standards %

A $33,492 $29,535 $16,359 65%

B 82% 67%
C
D 84%
E $12,228 $7,597 97% 100% 79% 78%
F $17,365
Sample Quality Incentives: Charting

100%
90%
80%
70% DOCUMENTATION SCORES
60%
(Compliance with Coding Standards)
50%
50% 44%
40% 33%
30% 30%
30%
20%
20%
12%
10%
0%
F G E B D C A
OptiMax Targets - sample

Medical • Current: $6.00/Visit

Supply Costs • Target: $5.23/Visit

• Current: 325/Month
Patients • Target: 369/Month

• Current: $98/Visit
Charges • Target: $101/Visit
The OptiMax Score

100%

90%

80%

70%
62%
60% Establish the
50% system as an
Help select Coach in the
indispensible
meaningful 40% calculation
part of the
indicators processes
30% management
20% culture
10%

0%
1 3 4 5 8 9 7 6 10 2
“The relationship has brought us nothing
but success and growth… excellent
command of financial planning and
analysis … amazing accuracy...quality of
their work is always superior.”
President, Berryman Health, Inc.
 CONSULTANTS TO THE HEALTHCARE INDUSTRY

99 “C” Street, Ste 207

Upland, CA 91786

Phone: (909) 931-7600

Fax: (909) 931-7655

Web: www.foxgrp.com
Email: contact@foxgrp.com

Providing Excellence Since 1989