Private Equity Will Hasten Health Care's Transformation
Tony Chen at the Hospital Impact blog has a great post on the tsunami of recent deals in health care. These deals are changing the health care industry. Outsiders in the form of private equity investors and insider hospital M&A are gobbling up failing organizations or those weakened by market changes for which they have ineffective responses. Newly recast ventures that are successful will reward effective change which will drive additional change.
The change required is not the simple head count reduction, and trying to figure out how to do the same old thing with fewer people. What is needed are fundamental changes to the way that care is delivered. These are the changes that will reduce length of stay and improve both patient safety and outcomes. Hospitals today are stuck between a rock and hard place – the rock is the inexorable reduction in reimbursement, and the hard place is the increased visibility and transparency surrounding patient safety and outcomes.
Here are a couple quick examples of the change I'm referring to. Almost every hospital boards patients in the emergency department (ED) to a greater or lesser degree. These patients, shuffled off to out of the way halls awaiting admission, are cared for by off-service nurses (ED nurses) at ever worsening – and sometimes hair raising – nurse to patient ratios. A few heretical hospitals have started boarding those patients awaiting beds up on the floors, on their service. Consequently, each nursing unit could have 1 or 2 extra patients – receiving appropriate care (because they're in the appropriate unit) and at a nurse to patient ratio that is only slightly impacted by a couple extra patients. To someone from another industry this makes admirable sense. From my peers, I've heard excuses ranging from “it's jut not done” to “we can't do it because of fire codes (or department of health regs, etc.)”.
The other example is variable acuity care delivery. Hospitals are organized into units that are specialized based on the level of care, nursing vigilance, therapies that can be delivered, and staff training. This regimented organization was used in manufacturing 20 years ago. Like manufacturing in general, manufacturing healthy patients is not a steady state process. Consequently, census in units varies wildly from unit to unit and day to day. Some units are habitually over capacity, and represent the most common patient flow bottleneck found in hospitals – those over capacity units are critical care units with patient monitoring. Variable acuity units are an analog to manufacturing clusters or pods where the physical environment is quickly modified to adjust to new requirements. Rather than transferring patients because of needed patient monitoring, or a more sophisticated therapy, those patients are kept in their unit and those resources are brought to them. Monitoring patients outside traditional monitored units is a growing trend – half of the telemetry transmitters in hospitals are used on non-cardiology patients. Implementing variable acuity care units is not easy; it requires some pretty fundamental changes.
So, how do you accommodate falling reimbursement and demands to improve patient safety and outcomes? The opportunities to improve operations are many, almost as many as the excuses used to avoid substantive change. As private equity and M&A roils the health care industry, smart people will ask the hard questions with increasing fequency, and change will come.
Pictured right, “resistance is futile.”
ED Diversion Continues to Challenge
The California Healthcare Foundation has underwritten a study looking at ambulance diversions across the state. Findings in this phase 1 report showed that state wide emergency departments (EDs) were on divert an average of 10% in 2005. Emergency department closings to ambulances continue to confound hospital administrators. You can read about a recent survey showing patient flow as an increasing problem here.
ED diversions also frustrate policy wonks and consultants due to the almost total absence of public reporting. Certainly hospitals (and their state associations), emergency response districts, along with some local and state governments, know their emergency room diversion statistics – they just aren't publicly available. Even though access to data is improving, organizations like the CHF have to pay to collect much of their data.
ED diversion affects patient care resources and may result in
continuity of care issues, such as the patient's physician not having
hospital privileges at the alternate receiving hospital and the
hospital not having the patient’s medical records. Diversion also
results in longer hours for ambulance units and, when patients cannot
be transported to hospitals within their health plans, greater overall
health care costs.
This study is part of a project to measure and publicly report the
extent of ambulance diversion. It identifies practices that can help
those communities that have had difficulty resolving their diversion
problems.
As expected, the study finds that ED diversions occur mostly in urban areas. Increasingly districts and hospitals are implementing “no diversion” policies – in other words they simply take the patients that they used to refuse – even though in most cases little or nothing has been done to improve emergency department overcrowding or patient flow.
You can download your version of the first report here.
HIMSS Monday – New Orleans 2007
When attending these shows I feel compelled to try to decipher the “buzz,” to name the hot issues or key trends that characterize the event. This show has gotten so large and so diverse that, like the elephant and the blind men, buzz is perceived through your own perspective and interests. So, HIMSS this year is all about connectivity – not really, but that's what it seems to me. I was talking to Matthew Holt last night and the buzz for him was more around broader health care policy (EHRs and consumer health). In the end, whatever you're interested in, you can find plenty of buzz around it at this year's show.
Since patient flow interests me, all of the patient flow and bed management vendors are on my list to visit. I started with StatCom who officially introduced their new product at this year's show. Their new release is a combination of new architecture upon which they're running current and new applications. According to StatCom CEO Eric Morgan and EVP Ben Sawyer, the new release takes StatCom from a departmental orientation to supporting patient flow and the delivery of care on a new enterprise-level scope. Automation in support of the efficient movement of patients through the care delivery process is the health care equivalent of industrial logistics management – health care may lag 10-15 years in this area, but we can take advantage of concepts, software application design and architecture that have been refined over many years. Obviously, we can't just apply industrial management techniques to health care, but the concepts and processes are readily transferable to the delivery of care. StatCom is keenly aware of this and is drawing heavily on industrial logistics to guide and inform their approach to automating the care delivery process to increase patient velocity through the hospital.
Ken Kiser MD, CEO of MedSphere, is probably the most visible proponent for bringing the open source software model to health care. MedSphere is using the VA's VISTA EMR as the code base for their EMR. Last week MedSphere had two big open source releases. They released server and clinical information system services under a GPL license and another release under a Mozilla variation that they call an MPL license. This is their first big contribution of new features to the code base, that's available to the public. They've reserved some rights like attribution, but there are no license fees. Their business model is based on providing implementation services and ongoing software support and enhancement around their code base.
Ken believes the open source business model is well suited for health care. There are many applications and capabilities that providers would like to have. In a market dominated by large health care IT vendors, new software (what little they actually develop rather than acquire) must be justified by large market opportunities, leaving many market requirements unmet. Open source efforts can fill this gap by providing complete applications or software components that meet those needs that lack the big market potential conventional vendors need to justify new product development. The challenge for the open source business model is to come together into an effective organizing structure to facilitate interoperability, consistency and quality. With this most recent code release, MedSphere hopes to contribute to advancing the open source model. Rusty Lewis, MedSphere's CTO, is leading this effort and MedSphere plans to add dedicated resources to advancing open source software in health care.
Later I came across an RFID vendor I'd never heard of called RadiantWave. Business models in the RTLS space are presently going through considerable transition. Some vendors are moving to become enterprise infrastructure providers, others are moving into the application space. Some RTLS vendors have developed their own technology, while others have OEM'd their technology. RadiantWave is an unusual chimera – they are tag agnostic through an “edgeware” positioning engine that they developed and an enterprise mobile resource management system licensed from Red Prairie. RadiantWave has been working with large health care delivery providers (multi site providers is their sweet spot) by providing an enterprise logistics system and configuring specific applications for providers on top of that enterprise architecture. The result strikes me of an enterprise oriented custom application development business model. I can't decide whether this is an oxymoron or a brilliant business strategy.
Final Thoughts on Optimizing Observation Patient Management
This conference was a great investment of time. (I would include a link to the event so you could see who presented and the topics, but WRG has taken down the link and does not seem to list any past events.) Without exception, the speakers were knowledgeable and informative, conveying lots of good details and experience. This was the fifth year that WRG has produced this conference and a large number of attendees and presenters have participated in the event over the years. The continuity from repeat participation resulted in interesting observations and lessons-learned, based on changes over time.
Regardless of the motivation driving observation unit creation in a hospital, every hospital has observation patients. Because of their undeniable presence among your patient population, they cannot be avoided. Certainly improved management of observation patients has the potential to improve patient flow. But regardless of this potential, observation patients must be managed properly to ensure good outcomes – both clinically for the patient, and financially for the hospital. Recent reimbursement changes have increased the potential for negative financial outcomes with observation patients. A consensus among presenters was that observation patients managed in a dedicated obs unit were significantly better managed than observation patients placed in on-service care units throughout the hospital. Another key learning was that appropriate case management staffing levels are essential (and easily justified if you dig for the data) to avoid loosing your shirt with observation patients.
The practice of emergency medicine, for physicians and nurses, has changed over the past 10 years. The role of observation medicine has grown considerably – many ER docs and nurses still find observation medicine boring and look to swap assignments with others in triage or more acute care areas – but there is a growing acceptance and understanding of the observation role. At the same time, a growing number of hospitals are committed to getting observation right.
It struck me that the level of care delivered (not patient status) in most observation units is very similar to variable acuity units. Obs units tend to have a higher nurse to patient ratio than med surg, but less than the ratio in the ED. These specialized units also include patient monitoring capabilities and the observation of some pretty complex therapies like chemotherapy. Many of the same management and implementation challenges exist for both obs and variable acuity units – staffing skill mix, admissions requirements, and policies and procedures that are unique in the hospital. Many hospitals feel they lack the patient volumes to clearly justify dedicated obs units, despite patient flow problems. Why not create a unit that provides both observation care and variable acuity nursing?
Another topic that came up at the conference was the discharge lounge. The group reported, “I've never heard of a discharge lounge that worked.” And yet, the reasons described for past failures seemed, to this observer, to be implementation failures rather than an indictment of the concept itself. Creating new types of care delivery units of any kind in hospitals is hard - hence the value of a conference on observation units.
I also noticed at this conference a keen interest in other institution's policies, procedures, templates and guidelines – particularly as it relates to implementing a new policy or procedure at the requesting hospital. This is also a common request on the listservs that I subscribe to, the NPSF and biomed listservs. The delivery of health care is incredibly complex and highly variable from provider to provider. Other institutions' protocols, order sheets, policies and procedures are an interesting read, but their value is directly related to how closely your hospital's operations and environment (including providers and patient population) match those of the other hospital's – an unlikely coincidence in my experience.
There is no substitute for good needs assessment, planning, execution and ongoing active management; there is no “instant” observation unit kit to which a hospital can just add staff and a few hundred square feet to create an effective and profitable observation unit that will run itself. To me this is healthcare's greatest frustration and attraction – it's not easy playing Sherlock Holmes and helping solve Important Problems in the delivery of care, but it is what makes getting up the morning worthwhile.
Oh, by the way, you can buy a CD of all the presentations (except the pre-conference workshops like mine – those were charged for separately) from this conference. Go to this page, and select conference “HW707-01/22/2007 Optimizing Observation Pa, $150.00″ from the drop down.
Day Two – Optimizing Observation Patient Management
Joe Zebrowitz MD, started the day talking about medical necessity and observation status. A big challenge to observation is the different rules for Medicare, Medicaid, and managed care – keeping all these straight is problematic. He presented that the typical attending physician doesn't really know what “observation status” really means. They care about how observation will impact their patients:
- Access to care
- Are concerned about how it may impact their reimbursement, and
- Are oblivious to the impact of observation status on the hospital.
Ensuring that physicians are educated and supportive is key. His data, based on about 16,000 cases reviewed, shows that observation is over used on average 45%. If the ALOS is less than 24 hours, the over use is closer to 35%, and if the ALOS is over 24 hours, the over use is closer to 55%. For every patient that is put in observation inappropriately, you've wiped out $100,000 of hospital revenue.
Proper case management is dependent on both a good process and 100% review of every case. Many hospitals are putting case managers in their EDs to review cases, but many get steered into a social worker role doing complex discharge planning. Process variability is a common theme among many of the presenters at this conference. Joe offered a great approach to reducing variability.
Joe also introduced a new term to the audience, the retrospectoscope, a device that allows the user to look back in time to “improve” decisions made in the past.
Kathy Tyrrell, Case Management Director, Prince William Hospital, talked about a role at their hospital, the bed control ESD case manager. This role assesses the appropriate level of care and appropriate status. Reinforcing the previous presentation, Kathy described a great process, and less than perfect results came from process variability. As a small community hospital, she provided a very realistic approach to improving the observation process.
The last presentation that I caught, was by Chris DeFlitch, MD. He compared and contrasted clinical decision units with observation units. At his hospital, justification for the CDU was based on improved
patient flow. Hershey Medical Center was at 100% capacity, and they
could either board patients in the ED or try an observation unit. They
built an 8 bed unit (Hershey has just under 500 beds overall). Like
many other presenters, DeFlitch reported a heavy emphasis on the tight
protocols and disease specific guidelines.
They had a great foundation;
a bueautiful new space (8 beds, 2 RNs) – but RN hires didn't wan to be an
“inpatient nurese” and they had inconsistent MD buy-in. The size
of the unit and patient volume meant RNs and docs were shared with the ED – the
staff resisted adoption of the obs service. What they learned was that implementing the Clinical Decision Unit was not just a new space and procudures, but a transformational change
that they didn't really address.
Observational medicine is different
and requires a considerably different As an aside, the CDU is now also
used surge capacity, minor emergency crowding and boarders. In addition to these changes, observation patients are also allowed in other units/services. Patients must come in through the ED. If the Internal Medicine attending wants to manage observation patients, that's fine too, but there's oversight to ensure they have the appropriate hour-by-hour focus to ensure that care and disposition progresses in a timely fashion. Emergency Medicine observation patients have an ALOS that's 6 hours shorter than the other services – the important point, of course, being that ALOS is tracked and reported monthly by service. Flitch wrapped up with a great description of how they overcame the inevitable implementation problems.
Day One – Optimizing Observation Patient Management, Afternoon
After lunch, Trevor Lewis, MD, kicked things off with a presentation called, Engineering the Observation Unit. As you might expect from the title, he provided an overview for to create and manage observation units. Starting with unit goals and building support for an obs unit, Lewis detailed many of the issues revolving around staffing these units. Policy and procedures described admission protocols, diagnostic testing and capturing data for optimization. The presentation included a lot of great suggestions for integrating an obs unit into the rest of the hospital”s (and attending physician's) operations.
Introduced as a “reimbursement geek,” Konstantinos Agoritsas, MD, was next up talking about revenue opportunities in the ED with observation care coding. He practices at a SUNY hospital where he works with residents and some of the older staff to educate them on proper coding. The focus was on proper and complete documentation, patient classification issues, and the proper way to code for complete reimbursement. Also presented was an interesting financial model based on a very modest patient volume.
A panel discussion on overcoming observation patient management challenges. The panel included a physician and 2 directors of case management. There were lots of questions and discussion on ensuring observation patient support in the EMR. The expansion of diagnostic services was also implemented to ensure timely testing and patient flow. What followed were a lot of questions about the nitty gritty operation of ops units.
The final presenter for the day was Beth Simms, Network Coordinator, Outpatients in Beds/Observation Care Management, Community Health Network in Indianapolis. Her focus was on the impact of nursing on observation patient management and drug administration. Community Health has 4 hospitals, 2 of which have dedicated observation units and 2 that don't. Community has noted that LOS is shorter in hospitals with dedicated observation units, where staff is experienced in managing observation patients.
