By Jason Harber, vice president of product management, Hospital IQ
Hospitals and health systems today face significant margin pressures. Those producing weak financial performance may face difficult choices, including becoming part of the industry rollup or closing their doors.
To achieve financial success, hospitals must precisely manage the utilization of their finite resources such as inpatient beds, operating rooms (ORs), and staff. There is little room for error or guesswork in effective resource management. Gaining a competitive edge comes to those who can use new approaches to adapt and maximize the value of these assets for their community.
A major health system in the Midwest recently started to address the need to remove the guesswork from their resource utilization efforts. Though the data needed for such an effort existed in their current IT systems, the organization did not have the right systems and expertise to analyze and share the data effectively. Without major IT investments and multi-year projects, they were unsure how to extract the necessary insights needed to manage the system and improve their financial performance.
There is tremendous opportunity for hospitals to improve operational performance with the data that sits right at their fingertips. Billions of dollars have been invested in EHRs, bed management, patient flow, and OR systems across the country. These systems produce vast amounts of data that, when mined and analyzed strategically, can help hospitals ensure their clinical and operational plans align with and support their financial plans. These data treasure troves can help hospitals find ways to optimize capacity utilization across the entire hospital or health system, specifically by:
- maximizing clinical activity with existing resources (increase admissions, transfers and, surgical volume)
- reducing emergency department (ED) and post anesthesia care unit (PACU) boarding (decrease walkouts, ambulance diversions, and lost transfers)
- staffing with improved accuracy and lead time to reduce total full time equivalent (FTE) and overtime costs
While it is easy to choose any number of areas from which to start, for many reasons, the OR becomes a natural starting point for many hospitals. Today’s OR managers face a number of objectives, such as increasing block utilization, that require easy access to data and progressive management techniques to achieve operational objectives. As a major component of financial stability, OR managers have the eyes and ears of key executives as they work to achieve strategic business goals. They know the financial impact of a successful OR can help fund other initiatives throughout an organization.
To realize improvements in key performance indicators, many institutions use measurement, analysis, feedback, and accountability tools and processes. However, many of the technologies used today are outdated and ineffective in producing high quality insights based on data to make performance changes and/or improvements.
The good news is powerful analytics solutions exist that can turn data into actionable information that forms the basis of strategic business and operational decisions. They can extract valuable insight well beyond what is produced by observations and spreadsheet management alone. The result: quality insights based on real-time data. Analyzing the familiar set of perioperative KPIs used by almost all hospitals can help administrators better understand surgical volume, room utilization, and financial and efficiency performance.
In the OR, these sophisticated predictive and prescriptive analytics can improve block scheduling and staffing structure beyond “guesstimations.” They can provide a more holistic view of how scheduling and staffing changes grounded in real-time data can positively improve operations not only in the OR, but also throughout a hospital.
These new systems allow a manager to understand their historical performance and review future projections of block and OR utilization through an entirely self-service experience. OR managers no longer need to wait for the critical data necessary to make strategic operational decisions. With block and OR utilization, resource management and staff requirements must also account for projected demand. New analytics tools can remove many of the manual staffing methods that ORs use today. OR managers armed with data supporting “what-if” scenarios can ask questions before making decisions regarding existing processes and/or process improvement initiatives.
For those organizations willing to become early adopters, these tools have produced greater bottom line results. Using predictive analytics, the same Midwest medical center that once faced uncertainty around how best to access, analyze, and share critical data was able to tap data-rich insights to help them realize $2 million annual revenue growth by increasing weekly orthopedic cases 44 percent. Using data-driven insight, the center constructed a transformation strategy that demonstrated an increase in surgical caseloads would be manageable without an increase in bed capacity.
Hospitals that use analytics and simulation-based modeling platforms can eliminate weak performance measurement approaches that leave money on the table. These tools allow administrators to take a more holistic approach when assessing bed availability and resource allocation.
Analyzing all the elements related to hospital performance lets administrators set aside guesswork and instead make decisions driven by proven and repeatable data analysis. They can more reliably identify the ideal surgical case mix that makes the greatest financial performance contribution, and then establish required support from schedules that fully optimize OR time, surgical beds, and staff.
Another example of the power of predictive analytics is the $1 million in additional annual operating margin an East Coast safety net gained because of improvements in:
- on-time first-starts from 35 to 85 percent
- surgical volume increases of 2.7 percent
- OR utilization that grew from 80 to 85 percent
To remain competitive, hospitals must balance cost control and revenue with providing access to care and delivering quality service. Using the insights produced from data analytics, they can strike this fine balance. With a comprehensive view into the inner workings of the OR and a more in-depth understanding of the influences that affect performance, administrators can make data-driven decisions in ways that improve the organization’s bottom line without compromising a patient’s care or experience.