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In this business profile, a leader from McKesson discusses how healthcare reform is forcing hospitals and health systems to take a different approach to capacity management and patient flow.

Tell me a little bit about your organization.

McKesson, the oldest and largest healthcare services company in the nation, provides innovative distribution and technology solutions for healthcare organizations. An especially timely offering is our dynamic capacity management solution, which helps health systems improve operating margins by reducing labor costs, optimizing patient flow, and avoiding quality risks.

The solution includes predictive analytics that help hospitals and health systems accurately forecast patient demand far enough in advance so they can align resources and schedule the right staff without incurring last-minute expenses. Not only does this allow for more precise resource allocation, it can improve margins. Additionally, McKesson's solution can help organizations avoid quality risks by ensuring they provide all required care on time.

What are some of the biggest challenges you see affecting healthcare organizations?

Hospitals and health systems are facing a huge transformation with the emergence of value-based reimbursement. Payers are encouraging their members to seek care in lower-cost settings, which affects a hospital's ability to understand what capacity is going to be next week, next month, and next year. Payers are also tightening reimbursement, pushing hospitals to shorten lengths of stay and penalizing them for avoidable readmissions. All this change is causing facilities to look for ways to reduce costs.

Unfortunately, healthcare organizations have done just about everything they can to cut back and eliminate expenses. Now they have to examine processes that they may not have considered before. For example, they must evaluate the impact of an overflowing emergency department, an underutilized operating room, or capacity on MedSurg floors. Moreover, management has to think about patient flow across the organization to get a better understanding of capacity issues.

Historically, hospitals and health systems have managed capacity to averages. If you think about it in terms of maximum and minimum patient census, it is easy to see where this approach could cause great problems. For example, say a specialty care unit in a hospital treats five patients on a typical Monday, but on one particular Monday, 10 patients need care. If the hospital is staffing for average capacity, it could be caught short, leaving the organization without enough staff to meet regulatory requirements. Conversely, if there is only one patient on a Monday, nursing leadership would tell staff not to come in or send staff home, creating schedule chaos for the employees.

Managing to averages could also leave the hospital without the appropriate staff based on patient acuity. For example, there could be a situation where the orthopedic unit is full, but there are insufficient ortho-certified nurses on staff that night. Not only could this be a patient safety risk, it also puts the organization in a difficult position in terms of compliance with internal or external requirements.

Rather than staffing to averages, hospitals need to accurately forecast capacity so they can allocate resources more precisely.

How does your product or service offering(s) help address these needs?

As mentioned before, the McKesson capacity management solution provides predictive analytics that let providers accurately forecast patient demand so they are not managing to averages. That means they can staff appropriately, based on true capacity and acuity, making sure they have the staff with the right credentials and skill mix in the right place at the right time. They can also reduce reliance on overtime and travel nurses.

Our solution also helps manage patient flow, allowing organizations to better monitor a patient's specific position in the hospital at any given time. Using the solution, staff can immediately identify and clear any bottlenecks. In doing so, organizations can make sure they optimize how they use every single bed and even create virtual capacity.

The capacity management solution draws data for predictive analytics via HL7 from historical ADT data, which can come from human resource and/or health information systems. The solution automatically converts demand forecasts into suggested staffing needs in McKesson's workforce management solution, removing much of the effort to optimize schedules from unit managers.

What are some key considerations for healthcare leaders when choosing this type of product or service? Are there key product/service features that people should know about?

When seeking capacity management solutions, hospitals and health systems should look for healthcare expertise, especially with managing capacity and patient flow. In addition, companies should be able to supply proven customer success stories and clearly demonstrate something that differentiates their product from the competition. For example, many demand forecasting solutions produce only a static, short-term demand projection for the next 7 days, without converting the projection to a staffing plan. Our solution produces long-term, budgetary, and near-term forecasts, and even predicts patient arrival and discharge times. It also allows for OR schedule optimization, including the downstream impact on units.

If your goal is to sustainably reduce operating expenses by transforming how you allocate staff and resources, you need a holistic system. The fact that McKesson offers a bundle of solutions related to capacity management—predictive analytics, workforce management, and patient flow management—uniquely positions us among competitors to ensure that hospitals and health systems fully optimize their resources. Our company also scores highly with KLAS Research, which rates products for healthcare organizations.

As healthcare organizations implement use of your product or service into their day-to-day operations, what advice would you offer so they can best set themselves up for success?

A hospital or health system must be committed to making changes, and that is not easy. Technology, by itself, is not going to be enough. These entities must seek a vendor that is willing to work through all the necessary nuances to improve capacity management.

To navigate change, organizations should embrace the concept of change management. Looking at your capacity and patient flow in a different way can be nerve-wracking for people who have been doing things the same way forever. Embracing change management will help hospitals and health systems be successful as new payment models take shape.

Are there any educational materials you would like to share to help healthcare providers in these efforts?

For more information about McKesson's capacity management solution, visit the website.

To learn more about how to improve forecast accuracy, download our most recent white paper.


HFMA is the nation’s leading membership organization for more than 40,000 healthcare financial management professionals. Business Profiles are funded through advertising with leading solution providers. Learn more.

McKesson LogoContent for this Business Profile is supplied by McKesson. This published piece is provided for advertisement purposes. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions of those profiled are those of the individual and not those of HFMA. References to commercial manufacturers, vendors, products, or services that appear do not constitute endorsement by HFMA.

Publication Date: Friday, January 01, 2016