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Premier Inc.
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SSM Health Care analyzes revenue and supply chain link in Premier Inc. Collaborative Breakthrough Series
Oklahoma hospital uncovers $1.3 million opportunity to improve finances; Catholic system expects to expand project to other hospitals
CHARLOTTE, N.C. (October 24, 2007) – By participating in the Premier alliance’s Sixth Annual Collaborative Breakthrough Series (CBTS), St. Louis-based SSM Health Care uncovered a significant opportunity to improve the financial health of one of its hospitals. It also identified system-wide improvements that will strengthen the link between supply chain operations and the revenue cycle that could enhance the organization’s ability to serve its communities.
As the SSM team discovered, despite the challenges of such a complex project, it’s well worth the effort. According to Nalin Kulasekara, SSM’s Corporate Director, Supply Chain Management and team leader, “As a system, we were looking for a way to better synchronize our supply chain efforts with the revenue cycle. But in the past we’ve had very little experience linking these two areas, so we really weren’t sure what to expect.”
In total, 32 teams representing 15 hospitals and healthcare systems participating in the Premier series implemented changes resulting in cumulative, validated savings of more than $19 million – $6.3 million more than the series’ goal of $12.7 million. Since Premier launched the CBTS six years ago, more than 230 teams have taken part, capturing cumulative savings of more than $170 million.
SSM has a long and proven track record in the Premier alliance’s CBTS.
SSM teams have participated in projects during the past five years with
great success, Kulasekara said. “We know that the CBTS methodology works,
and when this year’s project offered a revenue cycle management track, I
thought the timing was right to explore this area of opportunity.”
Sponsored by the Franciscan Sisters of Mary, SSM is one of the largest
Catholic systems in the country. It owns, manages and is affiliated with 20
hospitals and two nursing homes in four states: Missouri, Illinois,
Wisconsin and Oklahoma. In 2002 it was the first healthcare organization to
win the Malcolm Baldrige National Quality Award.
Kulasekara approached Teri Reger, a financial consultant in SSM Corporate
Finance, about the opportunity to participate in the revenue cycle
improvement track. “Based on the project description, it appeared to be a
good fit and would help us more closely examine our processes related to the
revenue cycle,” said Reger. “Although the CBTS was new to me, I was willing
to get on board. As a not-for-profit hospital system, we are always looking
for opportunities to improve the revenue stream. With payers constantly
reducing reimbursement, it’s an ongoing challenge to uncover new methods to
ensure our financial health.”
When the team began to dive into the project, the complexity the initiative became clearer. Traditionally, the data systems and operational processes of the finance and supply chain departments have existed in separate worlds. Understanding how billing and payment accuracy can affect the margin associated with reimbursement for supplies requires a sophisticated contracting strategy and effective markup methodology. It also demands linkages among various departments to ensure effective contract management, billing accuracy, charge integrity, as well as the ability to optimize the IT infrastructure.
The team began to understand the enormity of its initial goal, so members decided to break the project down into smaller, more manageable components. To uncover necessary data and have sufficient time for analysis, the team decided to identify the net revenue opportunity of just one hospital.
Oklahoma City’s St. Anthony Hospital was chosen in part because of the expertise of Network Contract Manager Margaret Shiff’s unique skill set combining both finance and supply chain expertise which was instrumental in executing the project. She is also a member of the corporate Charge-master Steering Team led by Reger.
In addition, Shiff was a veteran of former CBTS projects and understood the value. “As far as the CBTS series goes, it’s always been rewarding,” she said. “I’ve never been involved in one that didn’t have significant success, so I was willing to give this one a chance.”
After a detailed data collection and analysis process, Shiff identified several areas that offered significant net revenue opportunities for St. Anthony, including the outpatient imaging, outpatient cath lab and orthopedic implants. In total, Shiff’s analysis uncovered more than $1.3 million in revenue opportunities for St. Anthony.
“While this particular project was more challenging and time consuming than prior CBTS projects SSM has participated in, it has been very beneficial,” said Shiff. “It was an intense nine-month process, but we’ve gained significant knowledge and have a clear roadmap for the future.”
While overall success for the system is yet to be realized, the project did uncover some system-wide process improvement opportunities and helped SSM better understand the linkages between the supply chain and revenue cycle. The team’s work will help lead to agreement on some best practices related to revenue, including the development of better linkages between supply requisition, inventory utilization, charge capture and pricing, and billing and collections.
St. Anthony’s success also created justification for other hospitals to participate in phase two of the project. In that phase, SSM plans to develop a new vision for all SSM hospitals for managing supply chain and revenue cycle in a synchronized way.
Premier’s Collaborative Breakthrough Series is based on a methodology for collaborative improvement created by the Institute for Healthcare Improvement (IHI). As incorporated into the CBTS, the methodology allows participants to identify and implement improvements in supply chain management that result in significant supply cost reductions. The teams set their goals and report progress toward attaining those goals monthly. Progress is shared through monthly data exchanges, e-mails, conference calls and face-to-face meetings.
Kulasekara went on to say, “The CBTS continues to offer SSM opportunities to connect with other healthcare organizations for collaborative learning opportunities. The program’s structure allows us to implement rapid cycle improvements while learning from others about unique savings opportunities that we haven't thought of in the past.”
About Premier Inc., 2006 Malcolm Baldrige National Quality Award
recipient
Serving 1,700 hospitals and more than 48,500 other healthcare sites, Premier
is the largest healthcare alliance in the United States dedicated to
improving patient outcomes while safely reducing the cost of care. Owned by
not-for-profit hospitals, Premier operates one of the nation's largest
healthcare purchasing networks, the most comprehensive repository of
hospital clinical and financial information and one of the largest
policy-holder owned, hospital professional liability risk-retention groups
in healthcare. Headquartered in San Diego, Premier has offices in Charlotte,
N.C., Philadelphia and Washington. For more information, visit
www.premierinc.com.
About SSM Health Care
Sponsored by the Franciscan Sisters of Mary and based in St. Louis, Mo., SSM
Health Care (SSM) is one of the largest Catholic systems in the country. The
system owns, manages and is affiliated with 20 hospitals and two nursing
homes in four states: Missouri, Illinois, Wisconsin and Oklahoma. More than
5,000 affiliated physicians and 24,000 employees work together to provide a
wide range of services, including rehabilitation, pediatrics, home health,
hospice, residential and skilled nursing care. For more information, visit
www.ssmhc.com.
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