Enabling a Revenue Driver
A significant portion of a hospital’s admissions enter through its Emergency Department (ED). Unfortunately, many hospitals exhibit broken processes, long wait times and fundamentally poor coordination of care. As a result, most hospital organizations view their EDs as cost centers and a necessary, though frustrating, component to delivering quality care to its community. Ironically, in high-performing hospitals, EDs are drivers of profitability, adding tremendous value to patients and providers alike. Properly addressed, it becomes a high-value marketing medium to the community providing the hospital a significant competitive advantage.
A significant issue facing EDs today is the rapid increase in under-insured or indigent care seeking “last resort” healthcare. The current economic malaise will only intensify the strains as this trend exponentially increases.
With unemployment rates surpassing 20 year highs, hospital EDs will need to be properly prepared – operationally and financially – to address the influx of these patients and still be able to operate profitably. None of the indicators are positive. Once insured consumers present with health concerns, they will turn to hospitals for primary or urgent care. Many patients will delay treatment due to worsening financial condition, only exacerbating the severity of their condition. The delay could worsen; consequently requiring immediate, urgent and likely more expensive care when considering what might have been treated at the onset of symptoms.
Faced with shrinking contribution margins and steeper losses, EDs are faced with constant prioritization of patient care, payor status and the burgeoning bureaucratic procedures to ensure some measure of compensation for services provided are obtained. The unfortunate, perhaps counter-intuitive, result is that ED staffing is being curtailed particularly when it is most needed. This is a potential “death spiral” if not addressed effectively.
Addressing Under-insured and Indigent Care
That EDs have become a stop-gap treatment source for many under-insured and given the reluctance of consumers to seek medical treatment from primary care clinics do to their seeming lack of financial resources to obtain it, may are seeking urgent care services from a hospital’s ED which significantly constrains capacity and marginalizes those patients in true need. Hospitals must find a way to capture premium or self-pay patients without their leaving. Long wait times or poor service will drive these consumers to seek alternatives. It is worth noting that, on average, admitting 4 premium or self-pay patients per week can provide additional revenue opportunities of $2,000,000 in inpatient, $500,000 in outpatient and 2-3x that amount in supporting or ancillary services revenue. This amount of revenue is significant and lends credence to the design of many leading hospitals to improve capacity, throughput and the patient experience within their EDs.
The ED as the front door of the hospital and primary interaction point for many within its community needs improvement. Approaching the problem from an enterprise perspective and understanding the inherent financial and operational relationships to other departments within the hospital yields transparency to operations. It permits the opportunity to effectively integrate and optimize the services rendered to the community using the hospital serves.
Operational Benchmarks (Recommended Ceilings for Performance)
* % Patients left w/o being seen: <= 3% of Total Visits
* ALOS Door to Triage: <= 15 Minutes
* ALOS Triage to Bay: <= 15 minutes
* ALOS Bay to Physician Visit: <= 30 Minutes
* ALOS Physician to Discharge: <= 30 Minutes
* ALOS Physician to Admit: <= 60 Minutes
Matching the right care to the criticality of the condition sufficiently improves the utilization of assets and resources permitting proper flow and throughput of patients into hospital programs that result in great physician, staff and patient satisfaction.
The unusual confluence of current social and economic conditions has yielded a healthcare paradigm of “episodic care”. What this means to healthcare is that many patients now seek care after falling into illness, often leading to increased acuity, escalating costs and increasing length of treatment. It also suggests that patients will not schedule preventative tests and examinations, such as wellness visits.
Optimization through Process Improvement & Improved Transparency
Fundamental changes in the delivery of preventative care require intelligent choices be made by Hospital executives to reduce the consequential financial and operational burden the organization. Improving the operational integrity and capacity of the EDs is an imperative for survival of many hospitals. Providing preventative programs of various natures have shown excellent results in addressing consequential healthcare costs. The fulcrum for change resides in the ED and identifying and delivering these services should begin there.
Today, most EDs have a single administrative methodology to process all patients. Altering this process to create a more efficient flow of patients to a level appropriate to both immediate and preventative care is essential in developing efficient integration, flow and throughput as well to reducing the incidence of un-necessary (and unpaid), critical patient flow.
Building operational excellence in an ED begins with understanding the Triage methods used to streamline the use of hospital assets and staff translates quite easily to this process. Application of lean transformation methodologies can result in vastly improved use of hospital assets and resources. Individuals who are actually in need of clinical rather than emergency services would be routed to more appropriate resources aligned to better address those conditions. This permits additional payor issues to be addressed upfront, diverting unnecessary administrative, clinical and infrastructure assets from this patient flow process.
The ED and other departments will continue to receive indigent or under-insured patients. The constraining issues will persist and worsen if not remedied. Unfortunately, few programs are incented to address the most at-risk population or the pending collapse of many EDs and the virtual lack of preventative resources are creating a “perfect storm” of conditions that may paralyze many of our nation’s hospitals.
Gratefully, this situation presents tremendous opportunity to reduce costs of care and capture data to improve a myriad of foundational healthcare issues. Access to the patient population, effective capture and interchange of information and healthcare dollars spent on prevention to reduce treatment costs are the key to optimization.
However, Things Must Change
However, things must change. Today’s healthcare approach to this population is inherently confrontational, whereas overall patient satisfaction is improving. The care giver, at the time of presenting to the ED, is powerless to ‘teach’ their patient of the inherent dangers of lifestyle and dietary habits. They are frequently obligated to point out these shortcomings of personal care in a brief clinical encounter, resulting in an experience neither pleasant nor effective. A more appropriate approach would be to integrate incentives for holistic preventative care with ED treatment. The primary barrier is the compensation for these services. Consequently, low utilization results and the cost of care rises. Fundamentally, the question is how to resolve this “death spiral” of preventative neglect and resulting increased cost, erosion of quality care, and strained infrastructure?
Resolution lies in lean transformation of the ED through proven methodologies, enabling the tactical mission of immediate treatment and also working strategically to connect preventative treatment to at-risk populations. Triaging at the ‘front door’ to appropriately route those in need of clinical (rather than emergency) services, streamlining administrative processes to capture information and compensation, and ultimately direct the underserved patients to resources focused on wellness and primary care.
Creating an efficient ED process is insufficient if it only results in higher patient throughput at a lower cost. The real challenge is improving the wellness of the community the hospital serves and establishing a preventative foundation yielding a higher rate of compensation, thus ensuring the improved ED has a reduced patient population and can sustain the community load at optimal resource and infrastructure costs.
First, consider incentives for those in most need of wellness and primary care services. Many of these patients are presenting in the ED today, within insufficient resources to pay for emergency care and burdening the community with the ‘toll’ for their care. This care should require participation in programs that treat the systemic aspects of their healthcare issues. Incentives would ideally include creation of a means of remaining connected to this resource. Cell phone service, whose minutes are recharged as a reward for continued involvement, discounted prescriptions granted at a rate to match follow up interviews, are just two ideas that hospitals are now using to incent this continued connection.
Compensation is a far more complex issue, though, anecdotally the resolution is simple. The net present value of program preventative care is less than critical care rendered in the ED, yet the flow of funding for such programs creates significant barriers to ownership of the resolution and promotion of a lower cost solution.
Many of the conversations on this issue are oversimplified, but ultimately the answer lies in data, information and transparency. Only through the development of an adequate business case can the barriers for appropriate redress be made. Whether the programs are sponsored by government, non-governmental agencies (NGOs) or private entities is immaterial. The objective result is to deliver the best possible care at the lowest cost while improving the wellness of the community a hospital serves.
Judy Q. Lilley, Contributing Author
For additional information contact:
Black Diamond Transformation, LLC
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