Improve your QI process, manage costs under PPS
Improve your QI process, manage costs under PPS
Benchmarking partnerships offer solutions
If you want to know how to cut costs and improve a certain process or clinical service, your best bet might be to call someone who has already made the improvements. That is the theory behind a networking process or benchmarking partnership program.
The Healthcare Management Council Inc. in Lyme, NH, brings different health care organizations together, pairing them in partnerships that give them an empowered approach to management. "We thought it’d be much better to put these folks together face-to-face so organizations that learn from one another are talking directly to one another and take out the middleman," says Martha B. Tecca, MBA, founding partner of The Healthcare Management Council.
"But we decided not to take out the ability to synthesize things that organizations can learn from one another, so we initiated a benchmarking partnership that includes an analysis of all the data collected from client organizations," she adds.
Participants provide their data to the partnership program and offer consultation on particular issues. "People who participate say, I’ll give you data, and in addition to data, I’ll be here to answer any questions you have about my organization,’" Tecca says. "If you find out I have the most cost-effective admitting process, I’ll be here to tell you how it works, the challenges I faced, and how to move to this new method.’"
Performance strategies
Tecca’s role is to help managers ask better questions to find out specifics about any changes or new processes. The consulting firm has compiled and compared some of this information to formulate strategic ways health care companies can make performance improvements while remaining profitable.
Drawing on some of the strategies suggested by health care businesses involved benchmarking partnerships, Tecca offers these suggestions for how home care quality managers can improve quality while cutting costs:
1. Create a framework for performance improvement (PI) while cutting costs.
From the functional and clinical sides, this means quality managers need to implement a comprehensive assessment for data collection and data reporting. For the customer’s benefit, they need to tie all PI work to diagnoses. And for the financial/administrative benefit, they need to manage costs of both direct care and business processes and grow the business to increase referrals and optimize contracts.
Perhaps the most important of these priorities is to manage costs, Tecca suggests. "Left to their own devices, home health agencies are going to give high-quality care because they go out there and do the best job they can to serve patients well," she says. "But, left to their own devices their care will be very expensive, so there are a lot of drivers in the industry to keep customer satisfaction high and quality high."
Typical business cost model
Tecca finds that a typical business cost-manage-ment model works well. On the top line of the model, an agency will calculate the average total cost per admission or per episode. Below that are two lines, one for direct costs and one for indirect costs. The direct costs are sorted by discipline, diagnosis, and home health-related group category. The indirect costs are sorted by business processes and support services, including human resources and scheduling.
Indirect costs are often referred to as "free money," because if a business can cut those, it will not affect patient care but will have an overall cost savings, especially under the prospective payment system (PPS), Tecca says. "If you make those nondirect care parts of your business as cost-effective as possible and service-oriented, you will increase business and decrease costs."
2. Devise strategies to cut indirect costs.
"First, you have to understand what you’re doing by analyzing your own operation and business processes," Tecca says. She breaks the basic business processes into four categories, including:
• Preadmission process. This begins when the referral arrives, and it includes everything that occurs up to that first admission visit. Ask:
— Who receives the referral?
— What are the different ways referrals arrive, i.e., telephone, fax, e-mail?
— What is the disability level of the patient?
— What kind of information system exists to capture the patient’s health information from the referral source?
— Who verifies insurance and notifies the nurse and team leader of the case?
— Who assigns the case to field staff?
— Who creates a medical record, reviews services with the family and patient, and determines which supplies are needed?
• Admission process. These costs are related to the staffing issue of how much experience and training is required to initiate the admission process. For instance, some agencies will use nurses and others will use clerks for much of the process.
Some questions to ask are:
— What new technologies would make this process easier and less labor-intensive?
— Who sends the nurse a notice of the admission appointment?
— Who reviews the admission report, and does everyone who currently reviews it need to see it?
— Who develops a treatment plan?
— Who reviews services with the family and patient?
— Who completes and enters documentation?
— Who determines which supplies are needed?
— Who assigns other disciplines to the case?
It’s important to eliminate all the tasks that add no value to patient care or the organizational process, Tecca says.
Use technology to stop duplication
For example, if an agency is computerized, then staff should use computers to enter all documentation information, eliminating the need to make copies and rewrite reports. Also, the support staff should correct all documentation errors as they crop up. It’s less costly to correct errors during the process than to wait until the bill is sent out and returned due to errors, Tecca says.
• Care management and provision. This includes scheduling, education, and other activities that support the provision of care.
Questions to ask include:
— Are there less expensive ways to educate staff?
— Could the scheduling process be more efficient?
— Who supervises staff, and can this role be combined with others?
— Who manages office and clinical operations?
— How are data entered for continuing orders?
— How are visits documented and are any of those ways redundant?
— Who performs care and case management?
— Who performs the quality improvement (QI) processes?
— Who maintains clinical and nonclinical stock?
Some of those processes can be changed fairly easily, Tecca suggests. For example, there are ways to have ongoing educational certification become a part of an agency’s daily or monthly routine. "If you do these things on an incremental basis, you won’t have big chunks of change go into the educational process," she says.
• Claims processing. This involves the entire process, from logging in the initial data to checking for accuracy to verifying insurance coverage, monitoring claims, and collecting accounts.
"For each of those you need to identify steps and then figure out how many resources are used for each step, like staffing and computers," Tecca says. "Also, do you do the activity in the patient’s home or the nurse’s home or back in the office?"
Also, look for any sharing of resources, such as in a centralized admitting process, she adds.
Some other considerations are:
— Who logs in the initial data and checks for accuracy?
— How is the bill generated and who verifies it?
— Who submits the final bill?
— Who monitors claims and collects patient accounts?
— Who verifies continued insurance coverage and recertifies patients?
Home care agencies could benefit from some technology improvements at hospitals by interfacing with the hospital’s information systems to reduce the amount of intake patient information. Some agencies also use modems to verify insurance.
3. Cut direct costs where possible.
Direct costs need to be analyzed thoroughly. Start with a flowchart that lists the average direct cost per admission at top. Below it are boxes for the average cost per visit and visits per admission. Under the average cost per visit are the further categories of discipline-specific cost per visit and skill mix.
Then, determine direct costs by calculating cost by diagnosis and further determine the impact of case mix to develop care paths. "Do as much job sharing as you possibly can," Tecca suggests. "If you’re a stand-alone agency, is it necessary to have a human relations department, or can you think about outsourcing some of those things?"
Share support services with other agencies
Freestanding agencies could also consider sharing billing and staff with another freestanding agency, a process that already has occurred in many areas where home care agencies merge or form partnerships with competitors.
Other strategies are to:
• Eliminate redundant and nonvalue-added tasks.
• Redefine accountability.
• Reduce lag time.
• Correct errors at the earliest point in the process.
• Employ technology where appropriate to support new processes.
4. Make cost improvement a QI project.
PI and financial considerations have to be tied together, Tecca states. "There’s a cost to quality improvement, and there’s a clinical component to managing your expenses," she says.
Quality managers need to know everything they can about expenses and cost cutting so an agency won’t simply be subjected to a financial person making decisions to cut staff. If they don’t start to manage costs more efficiently for each case, then the agency eventually will have to start refusing care to some people, she adds.
"Start at the top: What is your overall cost position?" Tecca says. "How serious is your cost problem or how great is the cost improvement opportunity?"
Steps to success
Here’s how to make this a QI project:
• First, create a matrix which has one side managing operating efficiency, and the other side involving care paths and care management.
• Second, under the operating efficiency category, make sure each discipline is as cost-efficient as possible. This possibly could be done through forming a committee in which representatives from each discipline bring in suggestions for improving efficiency in their areas. Managers would look at whether the skill mix is right, particularly for PPS, which will have an impact on the ratio between nursing and aide staff.
• Third, compare costs by discipline, looking at how much nurses cost per visit, how many visits by nurses are recorded per admission, and how many visits are made per day.
• Fourth, analyze your cost findings. For example, if nursing costs are higher than desired per visit, then analyze whether this is because the nursing salaries are higher than the industry norm or there are not enough nursing visits.
• Fifth, develop solutions. If nursing salaries are too high, then design a different type of compensation package that contains the right amount of incentives so nurses will provide as many visits as possible within their salary range, Tecca says. "And do the same thing with home health aides and decide whether to manage your own aides or find a contract home health aide service."
• Lastly, understand the costs by grouper or patient group or by diagnosis. For care planning, managers need to recognize the distinctions."Then once you have that information by diagnosis, you can also do a case-mix adjusted comparison across agencies, which is valuable," Tecca says. "OASIS [the Outcome and Assessment Information Set] should give you the utilization component you need, and you should have your own cost report forms because you absolutely should know this information."
• Martha B. Tecca, MBA, Founding Partner, The Healthcare Management Council Inc., One Lyme Common, Lyme, NH 03768. Telephone: (603) 795-4802. E-mail: [email protected].
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