Increasing Efficiency and Utilization in Healthcare

By

Kathleen P. Wall

Introduction

This paper presents a team-based problem-solving approach for implementing measurable improvements in a healthcare business. Competitiveness was improved through increased utilization and efficiency. Attendees will learn how to apply basic industrial engineering principles in a non-manufacturing environment.

Business Conditions

A large healthcare provider was faced with increasing costs, decreasing revenue and new reimbursement guidelines from insurance companies. They were also preparing for a JHACO audit, knowing they were not meeting restrictions concerning timely record filings.

The revenue stream was impaired by low staff utilization and inefficient systems; specifically in the area of home health aides. Cost was exacerbated by high expenses and overtime.

Schedule coordinators had little more than a phone, forms and grease-board to coordinate staff availability and patient needs. The process was informal and chaotic, leaving many billable hours unused. Few policies and procedures were documented.

Approach to Problem-Solving Methodology

To ensure a solid understanding of the current situation, the service’s management empowered a cross section of staff members including management, information systems, functional areas, and home health aides. This approach fostered a sense of ownership and commitment during implementation.

Before attacking the problems as identified by management, we ensured that key success factors were in place. Those factors were:

· Support from top management – To empower the teams and supply the resources necessary for the team to perform

· Team objectives and roles – To have clear understanding and expectations of what the team is to achieve

· Training – To have the skill and a consistent approach to problem solving. We typically teach how to hold effective meetings; decision-making methods; how to structure a problem; and the seven TQM tools.

· Key metrics – To be able to benchmark the performance of a process and then measure improvements (savings) or justify expenditures

· Self-evaluation criteria - To establish a scorecard of goal attainment to stay on track or identify where a team is falling short (Denton, IIE Solutions 2000)

The goal of each team was to identify potential solutions, evaluate the benefits of those solutions and then put an implementation plan in place to accomplish the team's objective. The teams used the six-step problem solving process.

Problem Definition

"It isn't that they can't see the solution. It is that they can't see the problem..." G.K. Chesterton

The problem definition is a clear, concise, objective statement of the undesirable condition that the team is trying to correct.

The guidelines include:

§ Describe specifically the condition that you want to correct as it currently exists

§ Do not imply a solution or cause

§ Be specific and definitive

The completion of this step requires the following:

§ A statement of undesired condition

§ Impact of that condition

§ Description of the desired state

§ Everyone in the problem-solving group has the same understanding of the problem as it is stated.

With all the issues facing the service, there was a variety of problem statements that were proposed. For example:

“Increase the efficiency of the HHA”

or

“Increase Utilization”

or

“Control Expenses”

However, we were seeking a statement that would encompass all the cost issues facing management. The team finally settled on a problem statement that they felt would allow us to address all factors: “Identify and Eliminate the Reasons for Lost Billable Hours.”

Cause & Effect Analysis - The "Fishbone Technique"

"Bring ideas in and entertain them royally, for one of them may be king..." Anonymous

Problems are often complex, with several causes interacting with each other. Applying cause and effect thinking to problems is essential if they are to be properly diagnosed and corrected. A good way to focus your problem analysis is to construct a Cause & Effect Diagram. A Cause & Effect Diagram is a popular tool for diagnosing complex problems that have several possible causes and is often referred to as a "fishbone." A Cause & Effect Diagram is a "picture" of a group brainstorming session in which members together identify all probable causes of a problem listed in categories.

The example below was developed by the health service team to address the causes of lost billable hours.

The team used these guidelines during their sessions:

§ Determining the root cause(s) of the problem is based on the gathering and analysis of data

§ Get the viewpoints of others who are affected by the problem

§ Avoid jumping to conclusions about the root cause(s) until all the data have been reviewed

Also, a step-by-step process was followed

1. Confirm that the problem actually exists by collecting and analyzing the appropriate data

2. Identify potential causes of the problem

3. Select from the list of potential causes the most likely root cause(s) of the problem

4. Validate the root cause(s) by re-analyzing the data or gathering and analyzing additional data

5. Review the problem statement to ensure that it is still accurate in light of the data. Revise, if appropriate

The health services team developed a fishbone diagram from a series of brainstorming sessions. From the diagram, they concluded that the main causes for lost billable time were:

§ Ineffective procedures and processes

§ Ineffective scheduling

- Poor systems

- Poor information

§ Call-offs and refusals

§ Factors external to the company

Generate Solutions

This step in the process called for intense data collection and an understanding of the current financial systems. Reams of reports were scrutinized while some data had to be extrapolated from sampling. Based on the work performed by the team, the size of the problem was determined (over $2million per year in lost revenue) and the areas of opportunity could be prioritized. The cost data revealed:

From this analysis, four initiatives were launched:

§ Increase use of off-peak hours

§ Improve the scheduling process

§ Increase service delivery efficiency

§ Establish policies

Select and Plan Solution

"Take care of the means, and the ends will take care of themselves…."Gandhi

Usually, the objective of this step is to select from among the alternatives generated the best solution to the problem, as well as plan for its implementation. With the health service team, the focus initiatives were all considered critical for maximizing billable hours. The objective was to recoup as much of the $2 million as possible. In most cases, however, we use these guidelines for selections:

§ Objective evaluation of the alternatives

§ Management approval to implement the solution

The process used for this selection includes:

1. Identify the important decision-making criteria that should be used to select the appropriate solution

2. Apply the criteria to the potential solutions, selecting the best solution or combination of solutions for solving the problem

3. Identify and rank barriers to the successful implementation of the selected solution

4. Develop an implementation plan that identifies all the steps required to successfully implement the solution

5. Develop an evaluation plan for the solution

6. Gain the necessary approval to move to implementation

Implement

"A solution is no better than its implementation..."

Kepner and Tregoe

As solutions were identified, the teams started the work to implement instead of passing the recommendation to another group. This approach not only maximized creativity, but more importantly, insured a successful implementation.

The objective is to implement the solution based on a step-by-step plan. The team continued meeting to monitor its implementation plan and ensure that all the necessary actions were carried out.

Evaluate the Solutions

"The chief cause of problems is solutions..."

Eric Sevaried

The team determined that the problem is, in fact, solved because the solution worked as planned. In order to evaluate their success, the health service team developed a series of performance metrics. These metrics were measurable factors that were benchmarked and then tracked during and after implementation:

1. Collect the baseline data

2. Compare current state with the original state

3. Determine the team's next steps

The health care team determined they could evaluate the level of their success by measuring:

§ Total Hours Delivered

§ Overtime Expense

§ Mileage Reimbursement

The team established a benchmark quantity for each measurement and then began tracking them on a monthly basis.

Results

From the teams' work, a series of solutions were implemented. First, management established standard policies and procedures to increase staff utilization.

For example:

§ Assigning HHA’s to Geographic Zones to Minimize Travel

§ Defining Legitimate Call-Off and Refusal Policies

§ Scripting Responses to FAQ’s

§ Defining the Requirements and Use of the Paging System

§ Classifying and Setting Standards for Scheduling Changes

Also, scheduling was supported by an improved computerized system that allowed block scheduling of healthcare providers. Time slots that were formerly left empty could now be readily visible to the schedulers. In addition, providers were assigned to geographic zones which minimized non-productive travel time and expenses.

As a result of these changes, the agency experienced drastic improvements over the first three-month period:

§ Staff utilization increased 7%

§ Overtime costs decreased 13%

§ Reimbursable expenses decreased 22%

Conclusion

The healthcare industry is facing increased competition, price sensitivity, and licensing scrutiny in trends that show no signs of decreasing. With solid industrial engineering approaches to cost reduction and process improvements, healthcare can conquer these challenges.

By applying basic analytical skills from the manufacturing world, we have demonstrated that non-manufacturing environments readily relate to and effectively use concepts taken for granted by IE’s.

Following the six-step problem-solving process enhanced the skill level and corporate performance of this healthcare provider.

Biographical Sketch

Kathleen P. Wall, Vice President at CMS Healthcare Solutions, Inc., has over 18 years experience as a management consultant, specializing in operations and materials management. Her background includes systems analysis, selection, and implementation; workflow optimization; and facilities planning.

Since working with CMS, she has learned the great advantage team-based implementation has on measurable success.

Kathleen has a Master’s degree in Information Science and an MBA from DePaul University in Chicago, Illinois. She is also APICS certified.

References

Denton, Kimberly E., (2000). Solutions 2000: Strategic Development of High Performance Work Teams. Norcross, GA: Institute of Industrial Engineers.

Capezio, Peter, and Morehouse, Debra. (1995) Taking the Mystery Out of TQM. Franklin Lakes, NJ: Career Press.