Southern hospitals keep the heat on
Southern hospitals keep the heat on
South, West dominate HCIA/Mercer top 100 list
If someone told you to pick just one region of the country in which to do your hospital benchmarking, you’d probably pick the West with its mature, managed care markets and penchant for trend-setting. You’d be missing something if you did. According to the annual 100 Top Hospitals: Benchmarks for Success 1998, the South is where things are really hot.
HCIA Inc., a health care information company based in Baltimore, and William M. Mercer Inc., a human resources consulting firm based in New York City, have teamed up every year since 1993 to provide a list of 100 top hospitals from around the country. Here are some highlights of the 1998 study:
The South continued to dominate the group of top performers, as it has for the last four years. Although the South contained only 37% of the hospitals included in the study group, 43% of all benchmark hospitals were located there. Of all hospitals in the South, 3.6% made it on the list. The West was the second-best represented region, with 18% of all benchmark hospitals. Of all hospitals in the West, 3.2% won benchmark status this year.Southern hospitals had low complication and mortality rates, high profits, and high-total-asset turnover ratios (productivity), while hospitals in the West had the most efficient lengths of stay and the lowest expenses. Hospitals in the North Central region had high median outpatient revenues, high profitability, and low complications, but they didn’t do as well in occupancy rate, expenses, and total asset turnover ratio measures. In the Northeast, hospitals had higher median average lengths of stay and expenses, and lower profitability, occupancy growth, and total asset turnover ratio than other hospitals in the United States.
"The study bears out that fierce competition causes the greatest change," says Jean Chenoweth, senior vice president for 100 Top Programs at HCIA. "In the South — particularly Florida, Texas, and Tennessee — there are hotbeds of competition for chains. As a consequence, the hospitals are likely to use benchmarks and make change quickly. I think they picked up the benchmarks from California hospitals, which led the study [results] the first couple of years, and used them as targets for performance. That caused change to take place rapidly."
In the West, median lengths of stay actually rose with the level of managed care penetration, contrary to general expectations. Hospitals in the South and West with the highest levels of managed care penetration had the lowest median percentages of outpatient volumes.The data showed that the average length of stay is starting to creep up in hospitals with a high managed care penetration, Chenoweth says, and preliminary data for the next study show this trend as a minor increase across the whole Western region. "Once a hospital has done everything they can do based on today’s technology and the shifting of patients to alternate settings, all you’re left with in the hospital are the very severely ill. The hospital’s costs are going to go up," she says. "They’ve spent all this time reducing the skill levels and the size of their staff, and all of a sudden, they have a sicker patient population than they’ve ever had before. They’ll have to re-evaluate the skill mix needed to care for these patients. Hospitals will have to raise prices. There will inevitably be a real conflict between the goals of the managed care companies and the hospitals. They’re going to have to think up new ways to approach cost reductions if there are to be more."
Smaller hospitals performed better than large hospitals in most criteria, both clinical and financial. In fact, hospitals with 25 to 99 beds ranked first in all three clinical indicators in the study.The difference, most likely, is the quicker pace of change in smaller hospitals, Chenoweth says. "In a hospital with 26 beds, the administrator probably is the CEO as well. That person knows if someone steals Band-Aids," she says. "When the CEO makes a decision, he tells two or three people and the change is made. Change can take place quickly, and costs are reduced because fewer people are involved. At a large teaching hospital, it takes until hell freezes over to change something."
Chenoweth points out that small hospitals tend to concentrate on procedures they do well and may have a cost structure that is akin to an outpatient segment of a larger facility. That’s exactly why the study breaks the hospitals into groups according to size. The hospitals are different, she says, but they can still learn from each other.
Quality at benchmark hospitals was at least 16% better than in the rest of the country. Quality was measured by mortality and complications. Benchmark hospitals have done more with less. On average they have employed 18% fewer staff per unit, have had 22% higher occupancy, and have been consistently more profitable.Fairview Ridges Hospital in Burnsville, MN, is a case in point. Mark Enger, senior vice president and administrator at the hospital, says the key to his hospital’s success is a management design that encourages productivity across the entire work force. The hospital stays about 90% full, and there’s no room to add any more managers. "We appropriately staff the needs of the patients," he says. "We remain focused on the fact that our purpose is patient care. Our staffing is built around that."
The hospital has identified core functions that support patient care — radiology, materials management, nutrition services, support services, laboratory — and uses standardized processes to manage those areas across the seven-hospital Fairview system. Each site has accountability, but best practices can be shared across the system.
Benchmark hospitals had an average length of stay for complex cases that was 7% shorter than other hospitals in the United States. Expenses would decline by an aggregate $26.3 billion a year if all U.S. acute hospitals were to operate like the 100 Top Hospitals, according to the study. The benchmark hospitals had 15% lower expenses than those of the rest of the nation. Multi-year winners share certain characteristics, according to a five-year retrospective study done by Mercer. Hospitals that have appeared on the list more than once were interviewed, and they possessed these qualities:— had a superior management team performing on all cylinders;
— clearly communicated a set of goals that everyone from the CEO to the physician to the nurses to the floor-cleaners followed;
— continually focused on performance improvement;
— invested in the infrastructure needed to support change.
[For more information or a copy of the complete 100 Top Hospitals report, contact HCIA at 300 E. Lombard St., Baltimore, MD 21202. Telephone: (800) 568-3282.]
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