The health system discovered $10 million in equipment and labor costs that are now accurately attributed to specific surgeries.
Two years ago, finance leaders at Augusta University Health System were eager to make their decision-support processes more efficient and powerful. This was critical as the Augusta, Ga.-based organization was undergoing a transformation, including a name change (the health system was formerly known as Georgia Regents Health) and planning for a future expansion. Currently, the health system includes Georgia’s only public academic medical center, a children’s hospital, and more than 80 outpatient practices. Augusta University Health System also holds a certificate of need (CON) to build a 100-bed hospital in an adjacent county.
Such large-scale change required leaders to lean on their data so they could confidently plan for the future. But that confidence was lacking, as reports crunched by different teams sometimes revealed different data.
“When I came to Augusta two years ago, financial planning and analysis, including decision support, was broken into silos, and people did not realize they often were replicating the same reports,” says Suzanne Wojtowicz, director, financial planning and analysis. Her goal was to create an agile analytics team and implement a platform so leaders across the organization would have access to the same information.
Tackling Perioperative Costs
After hiring analytics expertise and piloting a renovation and expansion of the decision support system, Wojtowicz recognized the need to prioritize her team’s efforts by areas with the greatest opportunity. One early focus area was perioperative services, which included the adult operating room, the children’s hospital operating room, labor and delivery, the cardiac catheterization lab, and the digestive health center. These service lines shared the same IT platform and would require the same types of interfaces with the new decision support system.
Michael Phipps, business manager of perioperative services, had a specific goal at the outset: to calculate the true cost of a case so he could develop meaningful case cost reports. Specifically, he wanted other leaders to understand how variation between physicians affected costs. He also wanted to link costs to clinical outcomes, such as surgical-site infections and blood loss.
In addition, Phipps wanted to create more sophisticated block-utilization reports to determine which surgical procedures created ROI for the institution. “In most institutions, the most valuable real estate is your surgical OR,” he says.
Phipps worked with Wojtowicz to identify the most accurate data source and integrate case cost data with financial data in the health system’s new decision-support system. As a result of their efforts, the organization now can directly attribute equipment costs to specific procedure codes and cases, such as robot-assisted surgeries. In the past, $10 million in equipment and labor costs associated with these cases was distributed among all OR cases, clouding the true costs.
Increasing physician confidence in the data was another key goal. With the new reports, leaders have a much clearer picture of the true cost of a case. From there, they can work with surgeons to discuss ways to standardize care and reduce costs. “Most surgeons are very competitive with each other, and they will look to drive down the cost of each individual case and standardize the set of supplies that go with it,” Phipps says. For example, the perioperative services department recently completed a standardization effort around endomechanical devices. By moving from multiple vendors to a single vendor, leaders saved $220,000 in the first six months of the current fiscal year. They also are consolidating the use of biosurgery (hemostatis) products, which is expected to save $230,000 annually across the perioperative services and pharmacy departments.
Grounding Decisions in Data
In addition to their cost-reduction efforts, leaders at Augusta University Health System were consumed with planning the new 100-bed hospital. Specifically, they needed to calculate space needs based on clinical growth projections. “It can be just as dangerous to under-build as it is to overbuild,” says Jennifer Smith, assistant vice president of planning design and construction.
Smith and her colleagues wanted to predict how adding services at the new hospital might affect volumes at the flagship hospital and other locations. “I wanted to be able to look across a single encounter in a particular service and see the effect on ancillary services,” Smith says. “But there wasn’t one single place I could go to for that information in all of our systems.” When Wojtowicz learned of Smith’s struggles, she suggested using the same decision support platform to help with facilities planning.
Now, Wojtowicz and Smith meet weekly with a newly formed business development team, which includes the health system CFO, the vice president of facilities, and directors from marketing and outreach. During these meetings, the team leverages market share, volume projections, and other data for long-term planning purposes. They also share robust inpatient and outpatient volume forecasts with a third party that specializes in long-range planning. From there, leaders can determine whether to accept or reject a business proposal.
Access to this data also has helped leaders have more informed discussions when recruiting talent from other organizations. They have projections based on reality, rather than optimism, Smith says.
In fact, Smith wants all of the health system’s strategic planning decisions to be grounded in reliable data. To that end, she uses the reports to help her determine when it is time to respectfully push back and ask a department leader for more information to back up his projections.
Smith also uses reports to develop the facilities master plan and determine capital needs. “We’re really looking forward to tying the capital planning with the strategic planning,” she says.
Sharing Lessons Learned
Leaders at Augusta University Health System offer the following advice for other finance leaders looking to reinvent decision support at their organizations.
Empower your team members to become subject matter experts. Wojtowicz asked her team to “specialize” in specific areas of decision support so they can be resources to others in the organization.
Check your interfaces between systems. These are essential to making sure costs are being accurately transmitted from the materials system into your costing systems, Phipps says. He created the position of inventory control coordinator to monitor these interfaces and validate costs.
Standardize service definitions in every reporting system. Now that service definitions are the same organizationwide, planning exercises are more accurate and meaningful.
Use decision support to understand pharmacy costs. Leaders at Augusta University Health System engaged a consultant to help them develop a tool to arrive at accurate costs that reflect group purchasing organization versus 340B pricing, as well as map costs by patient location and labor category. As a result, the health system can now report pharmacy costs per case and by service line, including inpatient versus outpatient costs.
Bringing Transparency to the Entire Organization
Today, financial planning and analysis at Augusta University Health System is no longer siloed and inefficient, thanks to better coordination and tools.
To reduce ad hoc reporting requests, Wojtowicz and her team have created dashboards for specific audiences, including leaders in the C-suite, perioperative services, ancillary services, ambulatory services, and revenue cycle.
See related web extra: Direct Cost Dashboard
However, she warns against the dangers of overwhelming leaders with too much data. “You have to be mindful of the audience for each of these reports and keep the reports manageable,” she says.
Digging Deep for Cost Data
By integrating case cost data with financial data in its decision support system, Augusta University Health System can now gain a clear picture of the true cost of a single patient case. This big-picture view also helps leaders better leverage data on market share and volume projections for long-term planning purposes.
Interviewed for this article:
Suzanne Wojtowicz is director, financial planning and analysis, Augusta University Health System, Augusta, Ga.
Jennifer Smith is assistant vice president of planning design and construction, Augusta University Health System.
Michael Phipps is business manager of perioperative services, Augusta University Health System.
This article is based in part on a presentation at the 2016 Strata Decision Summit held in October in Chicago.