Financial Sustainability

Care management and reduced LOS: How hospital leaders can connect the dots

March 16, 2020 7:22 pm


A hallmark of hospital best practices in care management is the full engagement of physicians in the organization’s efforts to reduce patients’ length of stay (LOS). 

When seeking to reduce costs, hospital and health system leaders have historically focused on streamlining or improving how they are deploying the organization’s resources, from labor to supplies to facilities. But an opportunity to save millions of dollars by eliminating excess LOS is hiding in plain sight every time patients walk through the front door. 

Emerging care management approaches are focused on coordinating each step in a patient’s care journey, from tracking status at admission, to anticipating and avoiding denials, to coordinating with community-based providers after patients are discharged. Care management teams can also help staff members improve how they document and track key milestones throughout the episode of care.

Challenges to a team approach

Adopting a team-based approach to care management can be challenging:

  • Frontline staff may lack the training to appropriately track and assign patient status from the different portals of entry, which may complicate discharge planning. 
  • Financial and clinical departments may communicate poorly, which can result in knowledge gaps regarding contract requirements, and lead to costly denials. 
  • The organization may have difficulty persuading physicians to work on reducing LOS because it lacks actionable data to share with them that links improvements in the quality of patient care with financial goals.

A carefully executed initiative aimed at managing the entire episode of care across the continuum can make major contributions to organization-wide efforts to improve performance, including reducing LOS by addressing discharge “bottlenecks.” In some instances, the resulting reductions in LOS could open up enough capacity to obviate the need to construct new additions or even new facilities.

Forging an integrated, data-driven approach

Only 14% of hospital leaders who responded to the Kaufman Hall/HFMA 2019 Healthcare Performance Improvement survey said their clinicians would say they have access to actionable information to address clinical variation. In turn, only 4% of respondents reported success in reducing variation, and 25% of respondents named it as the area of greatest difficulty.

Emerging analytics that integrate cost and quality data can help hospitals identify opportunities to reduce LOS, using Medicare’s geometric mean length of stay (GMLOS) as a baseline. An integrated approach can also be used to foster greater organizational collaboration. Care management teams that effectively engage business leaders, hospitalists, post-acute care partners and other clinical leaders in reviewing data and determining potential solutions can forge a more consistent approach for managing everything from medical necessity documentation to ensuring discharge criteria are uniformly applied.

Care management across the continuum

At the outset of care management initiatives, relevant hospital employees should be trained to understand and fulfill patient precertification and regulatory requirements. Care management teams also should ensure staff at every portal of entry to the facility use a consistent process for tracking patient status from the moment they arrive. Once a patient is admitted, the care management team should initiate planning for discharge and ensure any throughput barriers are addressed in real time.

The care management team also should work closely with emergency department physicians and hospitalists to track patients’ status, ensure necessary documentation for medical necessity is collected and help prevent unanticipated denials. 

Hospitalists and other physicians also play a critical role. Daily multidisciplinary rounds for each patient can help ensure clinicians collaboratively identify a discharge plan, medical milestones  and throughput barriers, and help address potential bottlenecks hours before they occur. 

Successful care management teams continue their work after discharge. By collaborating with physician practices, insurers and community-based providers, these teams can help support efforts to keep patients healthier in their communities and avoid costly readmissions.

Setting targets for reducing LOS

Using the tactics described above, one hospital located in the Northeast with about 400 licensed beds had an opportunity in 2019 to significantly reduce LOS.

By subtracting the number of inpatient days the organization might expect in a fiscal year, based on the Medicare GMLOS, from the observed or actual number of inpatient days in that same fiscal year, the hospital was able to determine its opportunity for eliminating excess days. The organization uncovered a potential opportunity of between roughly 1,600 to 5,000 excess days in one calendar year. At an average potential savings of roughly $640 for each excess day, the approximate potential savings opportunity was between $1 million and $3.2 million. These results prompted the hospital’s leaders to commit to employing many of the interventions outlined in this article in 2020 to eliminate remaining excess days.

This hospital’s actions represent a significant step toward reducing cost and improving revenue. But as the hospital continues this journey, it has the potential to achieve untold improvements. Organizations with leading care management practices in place typically can reduce excess days by 35% to 40% through targeted and facility-specific interventions.

Characteristics of a high-performing integrated care model

Model characteristics

Defining elements

Routine process for status assignment
  • Accurate status is assigned at all portals of entry.
Utilization review and documentation
  • Care processes involve clinical pathways and standard workflows.
  • Documentation supports efforts to prevent and manage denials.
Care coordination and discharge planning
  • Care coordination is a collaborative process.
  • Discharge planning starts on admission.
Care progression and multidisciplinary collaboration
  • Care progression includes multidisciplinary rounds.
Physician escalation and governance
  • Processes for physician escalation and governance are clearly defined.
Driven by data and technology
  • Robust analytics tools allow for data-driven decisions.



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