July 9, 2008
The appeal of a service line strategy is obvious: growing patient volume through market differentiation while limiting costs and improving outcomes through targeted efforts. Yet all too often, healthcare systems fall short in realizing the strategy's full potential.
One of the most common reasons is that the organization fails to appropriately define the service lines, as noted in "Measuring Service Line Success: The New Model for Benchmarking," an article in this month's hfm magazine. Without this focus, duplication and fragmentation often begin creeping in.
To improve your organizational understanding of service lines — and ultimately, have a starting point for determining those that will warrant investment — authors Tara Tesch and Alexis Levy from Navigant Consulting recommend keeping in mind several guiding principles:
Service lines are patient centered. Programs that will reap the most benefit are those that involve care delivery at sites across the entire care continuum. In traditional hospital management structure, care is organized by skill (lab, imaging, medicine, surgery) or by facility (physician office, hospital, outpatient center, nursing home). In contrast, a service line model should place less emphasis on where care is delivered and more on the care's coordination; patients should be able to access the service line from any point in the care continuum.
Under a service line model, the hospital should be looking for opportunities to create protocols, standardize processes, and leverage IT so that the patient experience is consistent regardless of where care is delivered. Furthermore, as a greater proportion of care is provided on an outpatient basis and with value-based incentives from payers to keep patients out of the hospital, addressing health care from this continuum approach is increasingly important.
Patients can identify with the service. In addition to this patient-centered orientation, the service line needs to be the reason that the patient is seeking healthcare services. For example, patients understand that they have a cancer diagnosis or a heart condition, or need a joint replacement. Other functions such as imaging, lab, and rehabilitation are provided in support of the service lines; for example, a patient receives rehabilitation services because he or she had a hip replacement, which would fall under a potential musculoskeletal/orthopedic service line.
Coordination of services improves quality and efficiency. Service lines should be focused on programs that can make a meaningful impact on the organization not only from a financial perspective but also based on quality and outcomes measures. An organization should take the time to quantify the potential "lift" it could gain from investing in a service line in terms of margin per market share point or additional outpatient procedure performed, as well as understand how difficult it would be to obtain that incremental business.
Services can cut across different sites of care, but simply because a service is delivered in multiple locations does not necessarily mean it is a service line. In some instances, services may represent supporting businesses that benefit from coordination and centralization, but are not necessarily patient centered. A lab is an excellent example of a service that benefits from centralization across a system; however, lab services are driven by clinical programs or services lines — for example, a patient needs lab work due to a specific diagnosis.
Once service lines are defined, hospitals can better focus on measuring their success. To learn how to benchmark your service line performance and communicate these results for change, read the article in its entirety on the hfm magazine Web page.
Key to service line planning is financial forecasting, a challenge in health care's rapidly changing and complex environment. Some experts suggest that a simple forecasting model that can be updated quickly is best in such an environment. Access a model for financial forecasting from HFMA's CFO Forum. And sign up to get regular tools and expert insight exclusive to HFMA's Forums.
Similarly, measuring performance of a service line must foster prompt decision making. Therefore, data must be accessible, understandable, and reliable. That means having the appropriate information systems and knowledgeable support staff that can cull information and present it in a format that's easy to understand. All decision makers within the service line need reliable information to make sound decisions and effect change. More information about selecting service line performance indicators can be found in HFMA's educational report By the Numbers: Using Data for Optimal Service Line Management. The report is sponsored by MedAssets.