In this episode, Laurie Jaccard & Steven Berger of Clinical Intelligence, provide a sneak peek into the upcoming webinar, Clinical Variation Reduction Program Outcomes, presented live on Wednesday, March 12, at 1 PM ET.
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Learn how to listen to The Hospital Finance Podcast® on your mobile device.Highlights of this episode include:
- The definition and purpose of a clinical variation reduction program
- How to define value
- Some of the other ways that organizations can ensure positive outcomes
- KPI examples
- Success stories where this approach has led to significant improvements
- Advice to organizations just starting on their clinical variation reduction journey
Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome back Laurie Jaccard and Steven Berger. Laurie Jaccard is the founder, president, and CEO of Clinical Intelligence, a healthcare consulting firm she established in 2001. With a career that began as a registered nurse, Laurie brings 25 years of experience in clinical operations and care management consulting. Her extensive background in healthcare led her to recognize the need for effective data utilization in hospitals and physician practices, inspiring her to develop ClinView, an interactive analytics platform that integrates data from various sources into a single comprehensive view. Steven Berger is a senior advisor for Clinical Intelligence and has 50 years of healthcare financial management and leadership experience. During his first 25 years in the hospital healthcare industry, he was a hospital financial executive across four hospitals and health systems. Steven has written several articles for leading healthcare magazines, in addition to four peer-reviewed books including Fundamentals of Health Care Financial Management. In 2000, he founded Healthcare Insights and created the Insights Budgeting, Monitoring, and Reporting Software System, which won several best-in-class awards. For the last several years, Steven has been a senior advisor to Clinical Intelligence, among other pursuits.
In this episode, we’re providing a sneak peek into an upcoming webinar, the last in a three-part series by our partner Clinical Intelligence, this one, Clinical Variation Reduction Program Outcomes that we’re presenting live on Wednesday, March 12, at 1 PM Eastern Time. Welcome and thank you for joining us again, Laurie and Steven.
Steven Berger: Thank you.
Kelly: Well, let’s go ahead and jump in. So can you review the definition and purpose of a clinical variation reduction program?
Steven: Well, sure. Thanks for having us. We’re defining clinical variation as the over, under, or unnecessarily utilization of healthcare services or resources, resulting in suboptimal margin and value, value being a key word, relative to its best practices, evidence-based medicine, and contractual benchmarks. So, it’s really important to recognize that we need to understand clinical variation, and then we need to do something about it.
Kelly: Wow, thank you for that. So, well then, how would you define value?
Steven: Also, another interesting definition. Value generally is defined as quality over cost or quality divided by cost. This means that the higher the quality against a stable cost structure, the value will increase. Additionally, if the value goes up and the cost of services comes down, the organization will have an even higher value from its efforts. We want to make sure that we are getting the best possible outcomes from the lowest possible cost.
Kelly: That makes a lot of sense, Steven. So, as I understand it, the organization should be doing everything it can to increase quality and decrease costs. I know in the first webinars that you guys did, you described several ways in which to do this for the structure and process of the clinical variation reduction. Now, for this upcoming webinar, which encompasses the outcomes, what are some of the other ways that organizations can ensure positive outcomes?
Laurie Jaccard: So, this is a great question. So, in our first webinar, we presented a structured framework outlining a readiness and implementation roadmap for reducing clinical variation in hospitals and health systems. This was divided into three phases: the structure phase, the process phase, and the outcomes phase. This actually is really important because we need to have structure before we start implementing process, and we need both structure and process to drive outcomes. The structure focuses on the readiness, the first pathway, which includes defining the vision, the strategies, the goals, establishing the governance, the resources, just getting set up. This is where we actually get the clinical consensus teams and finance teams ready. This is really the first key milestone of the entire process. And the first milestone is selecting the first project. So, we explored how to effectively measure and analyze direct costs with robust analytics. So, with every phase, there’s a very much focus on outcomes throughout every phase of this process.
The second pathway is the activation phase, including framing the project charters, analyzing the key performance indicators and the dashboards and scorecards. We talked about creating storyboards. We discussed how we identify performance gaps and creating those detailed improvement and education plans. So that is the process. We also reviewed the importance before we begin a clinical variation study. We want to operationally define that study, whether it’s a clinical condition like heart failure or a surgical condition like hip replacement, or maybe it’s a specific procedure or process. We need to really define that, and we want to establish a homogeneous population as best as possible. That means removing outliers, trimming volume as needed. Because after all, what we’re trying to do is forecast what is that potential benefit opportunity, cost, quality, etc.
So, the outcomes phase, that third phase in this very detailed roadmap that we shared in webinar one and two, we’ve walked through those first steps. Now, my favorite step is the outcomes. We’ll dive into the sustain phase here in this upcoming webinar. We’re going to review the systematic approach to how we, again, operationally define our study, how we set specific outcomes and process goals. We’re going to be defining– Steve will be defining the macro and the micro values to monitor and really understand that they’re both important. And so, we’re very focused on emphasizing the workflow sustainability, where stakeholders provide continuous feedback loops, they control the process, and this is really where we can move the needle on decreasing variability.
And again, we talk about decreasing variability to improve quality and decrease cost, leveraging evidence-based medicine. So, we can improve the quality and realize results with the second key milestone of this process being how we evaluate the outcomes. So, it’s a very comprehensive approach. We’re going to be really digging into the outcomes. Primarily, we’ll be talking about each step in the process, how we’re going to utilize the outcomes, how we’re going to create the SMART goals, how we’re going to forecast what we want to improve, and then finally, how we’re going to measure realization.
Steven: Yeah. And let me add that really the only way that you can achieve these outcomes is to set the goals. Laurie’s mentioned it. I’m going to mention it in a couple of minutes from now. But this whole goal setting idea is so important. Without goals, how would you know if you’ve achieved anything of value? Quantitative goals of key performance indicators of these KPIs, which I also call metrics, with monitoring of the outcomes can and should produce results. So that’s what we’re going to be talking about in this third phase, this third webinar, setting the goals around the proper KPIs and so that we can see the outcomes after all the work has been done for the improvement.
Kelly: Wow, that makes a lot of sense. Yeah, I know that it’s building upon the first two webinars there. So can you give us some examples of these KPIs?
Steven: Certainly, when we’re establishing the SMART goals, the actual key performance indicators that we turn into SMART goals with timelines, with relevance to the organizational values, we’re really going to operationally define the macro goals. What are those true north goals that we’re going to drive our success? But equally as important are the micro goals to get kind of like really into the process, what we want to change, where is the root cause of the opportunity? So, if we just focus on macro goals, we’re not going to be able to get to the heart or the contributing factors to drive the outcomes. So, some of the examples of the macro goals– and these could be financial, clinical, operational. These would be direct costs per capita. We can look at payment. We can look at reducing excess days in the hospital by just taking out some excess waste. We can look at reducing clinical denials. That’s going to be a financial metric. We can improve the clinical documentation, which would drive the case mix. That’s a quality metric and also financial metric. So those are some examples of some macro.
Some in-process metrics or the micro would really be specific to that root cause, where we saw that opportunity when we looked at the overutilization areas. How many CBCs are we doing? How many chest x-rays do we need to provide a patient with a five-day stay? We just really want to look at those process measures that we need to improve. In a sepsis example, it might be what percentage of the time do we follow the evidence-based recommendations on sepsis care bundles? Or how well are we utilizing the admission protocol? Are we 80%, 100%? So, you kind of get the sense that the metrics are very high level, and they’re very focused. Treatment compliance, like the stay, morbidity, mortality, readmission rates, patient satisfaction. So, it’s very comprehensive. In order to move the needle on the true north metrics, you have to really establish your process metrics as well.
Kelly: Thank you so much for those examples, Laurie. So that is the beginning of a very big list. So, what are the best ways that organizations can really work to achieve these goals?
Laurie: Yeah, we really want them to achieve the goals. They have to set those goals. So, I’ve been advocating for a very defined management style for the last 25 to 30 years. And if used, it’s guaranteed, let me say that again, guaranteed to achieve the goals set by the organization. It’s not very complicated. It’s a seven-step process. It goes something like this. Step one, you need to determine which KPIs or metrics or measures, whatever words you’d like to use, you need to determine what are the most important KPIs that your organization wants to achieve. Every organization is going to be different. But what is your organization’s most important outcomes that they want to achieve? There are KPIs or metrics for those. That’s step one. Once you’ve decided which are those metrics– and keep in mind, there are hundreds and hundreds across the whole spectrum of financial, clinical, quality, satisfaction, you name it, hundreds. What do you want to use?
My own little teaching that I’ve done over a 25-year period would say that you probably don’t want to have more than 30, 3-0, you probably don’t want to have more than 30 across the entire organization. Okay, that’s what I’m talking about. But that’s step one. What are they? Once you know what they are, we go to step two, which is setting the goals. I cannot overemphasize that this is so important. You’ve got to benchmark around those goals in order to set them. Do you want to use peer group comparatives, which are internal or external benchmarks? Prior actual outcomes. Do you want to use that? Do you want to use some kind of trended values or forecasts? Whatever you choose to use is okay as long as you know that you are setting these goals and you’ve got a reason or a rationale for doing that.
So, for example, as you set the goals, okay, okay, we want 100 to be the goal. Well, what is 100 in terms of the benchmark? Well, the benchmark, a good benchmark, median is 200. Well, then 100 would be terrible, and this is higher is better. So, 100 would be terrible. If you wanted to set it at the median, so you say, “I’m going to set this outcome of whatever the KPI is at 200.” Okay, so now you’re setting it at the 50th percentile of every organization that’s out there. I don’t think that’s very good. Yikes. 50th percentile. What about the 75th? I know a lot of organizations like to set it the 75th. Well, that’s a C if you’re grading A, B, C, D, E.
Kelly: Right, it is.
Laurie: 75 is a C. That’s right. So that’s not good enough. I tell every organization I’ve ever spoken to, “You need to start at 90.” Let me say it a different way. You need to end at least 90. Because what if you are only at the 55th percentile? Okay, maybe we have a three-month goal to get to 65th. Maybe you have another three months after that to get to 75th. And then, as you can tell, maybe six months later, you go to a 90th percentile. All of that is important. What are you setting your goals at? I can’t overemphasize this. Step three, once you know the goals, create an action plan to achieve the goals. That’s the big process step that Laurie talks about. Step four, implement the action plans. Again, the implementation of the action plans that you set against the goals. And step five, monitor the results of the implementation. I would say monitor them along the way, but certainly monitor them at the end. Did you achieve the goals? Step six, communicate the results back to the affected parties, which would typically be the managers who you gave the goals to be achieved. Did they achieve them?
When you come down to thinking about what is management; management is nothing more than meeting or exceeding the goal set by the leadership. That’s it. Everything else, to me, is a subcategory. Meet or exceed the goals. Did they do it? Send them the feedback and send them the feedback along the way also, not just at the end. And lastly, if you want to be sure that the managers can achieve these goals, develop and utilize positive and negative consequences when the goals are met or not met. In other words, great if they met them. Perhaps you can give them some kind of extra kudos. If you’re in a not-for-profit hospital, you really can’t give money, although you can in a certain way, including it in an annual review, you can make it a percentage, a higher percentage on what the review accounts for. In an investor-owned hospital, you can give direct money if you want to, as a bonus. That’s fine. That’s the carrot. What about the stick? What about the negative consequences if they don’t meet the goals?
This is where the rubber meets the road, folks. If you’re not having negative consequences such as leaves or unpaid leaves or whatever you want to call it, or termination of employment because over the course of 1 month, 2 months, 5 months, 6 months, 8 months, 12 months, the goals haven’t been met, well, then why set the goals? Why do it? If you’re not going to have any consequences for not meeting the goals, the managers figure that out really right away. They know they don’t have to achieve it. So, what’s the point of the first six items in this process? It’s not very useful. So, make sure you have some negative consequences for not meeting goals, so that’s important. This structured approach ensures the organization remains focused on its goals and continually improves its process and outcomes.
Kelly: I love that, Steven. It’s all about accountability and having all of that in place. Yes, definitely. So, Laurie, can you share any success stories or examples where this approach has led to significant improvements?
Steven: Absolutely. It just resonated everything Steve says, as a CFO, and he’s holding people accountable to the goals and the consequences of those. It just makes so much sense, Steve. And I met a CFO just a little time ago where he was so excited about this new kind of analysis around clinical variation reduction opportunity. And he said, “Laurie, I am doing a DRG review every month. I’m going to be doing 12 reviews a year.” And I was so excited that the CFOs are really starting to look at clinical variation as their standard work in their analysis. And we talked in the first webinar about how important it is to look at both a vertical and horizontal strategic approach to margin improvement. So the service lines– well, we have some service line goals, and then we kind of layer those department goals to work collaboratively. And we can establish teams around the service line and also some foundational performance improvement projects.
So I’m going to give you an example of a hospital that we worked with that we conducted an assessment, and there was at least a $10-million opportunity. And as a result, the hospital achieved over 8 million of realized bottom-line contribution margin impacted by revenue enhancements and direct cost reduction. They saw a 20% reduction in their excess days. They reduced their left-without-being-seen rates in the emergency department, their borders in the ER. Their flow began to improve, the length of state index. The opportunity day ratio began to decrease over time as we started to put the best practices in daily rounds, interdisciplinary coordination. This hospital also saw a 15% improvement in the adherence to their clinical pathway in the first year.
So, we implemented that care management optimization that we talked about as a department foundation and the CDI work, but then we layered on clinical variation projects on top. So, we said, “Okay, we’ve got the foundation. We’ve got the shop in order. Now let’s go to a more advanced strategy around clinical variation.” So, we started with sepsis. We created a roadmap. We said, “Here are five areas that have really high cost, lots of variability. These could really be some great projects.” We brought it to the utilization management committee, the physician selected sepsis care. So, this hospital experienced a notable increase in the evidence-based recommendations. Their sepsis bundles were being implemented, timely. The hospital saw a decrease in the readmission rates and which further improved the patient care and alleviated these financial pressures they were having.
So by standardizing these treatment protocols, and I mean standardization, this was just amazing. The intensivists, the hospitalists, the infectious disease doctors, we got together over three meetings, and we developed protocols. What antibiotics? What was the standard care for these patients? And we implemented those across all departments. We streamlined the operations around sepsis alerts, and we just boosted the overall efficiency and got everybody really excited about it. The patients got better education. The staff was educated on this. So you can kind of see it just really kind of took very macro systematic approach. So additionally, the staff and the satisfaction levels increased as they saw tangible benefits of their efforts improving patient care. It really got everybody excited. So the hospitalists led this program. They got a lot of support from the specialists, and they were excited to do another project. So that’s a great example of how this collaborative approach can foster a continuous improvement accountability leading to sustained positive outcomes over time. And again, this is just one example of how a clinical variation program can be reinforced. That could really greatly help the hospital’s reputation for high quality care and operational excellence.
Kelly: Wow, that is impressive. So, what advice would you give to organizations just starting on their clinical variation reduction journey?
Laurie: Well, I would say start by identifying the KPIs and setting clear, achievable goals. Engage the staff in the process and ensure they understand the importance of reducing clinical variation. Regularly monitor the progress and be prepared to adjust strategies as needed. It’s simple. Does that sound simple? Oh, sure. It’s easy and simple.
Kelly: Yeah, simple. [laughter]
Laurie: Easy and simple. Let’s go. Well, how about this? Let’s go. Come on. Let’s get this in a systematic way. You can improve your outcomes by millions and millions of dollars. If you set up the right KPIs and the right processes, you can have it work.
Steven: Any advice I would love to give the organizations that are listening here as you begin to start your clinical variation reduction journey, or you’ve already been on this journey for a long time and you just need a little boost, attend our webinar. I think you’re going to come– really, it’ll be packed with just some ideas and some examples. We’re going to share some examples of how do you even create the opportunity, the benefit opportunity, how do you create those SMART goals? How do you ensure that you’re monitoring the right metrics and sharing data back? And then finally, are you measuring the realization that in the end– at the end of the day, did it work? So, the last thing I would say – and remember, it’s a continuous journey – celebrate your successes, learn from your challenges, and keep striving for improvement. The first few you do and you tackle, it just seems, “Oh my gosh, this is so daunting. We don’t have time to do this.” But the next one, it’ll just be so much easier. And then the 3rd and 4th and the 12th will become really just part of your standard work. So just remember, the ultimate goal is to provide the highest quality at the lowest possible cost.
Kelly: Thank you for sharing that advice with us. Thank you both for sharing all your insights too. Are there any final thoughts?
Laurie: Sure. I would say just that reducing clinical variation is crucial for improving patient outcomes and financial performance. It’s a win-win for everyone involved.
Steven: I agree. I think just staying committed, staying focused, and you’ll see the benefits in both patient care and your bottom line.
Kelly: Wonderful. Thanks for sharing that with us. Thank you so much for joining us, Steven and Laurie, for sharing all these great insights in the sneak peek into your last of your series of three live webinars that you’re providing as part of BESLER’s The Hospital Finance Academy. This is going to be part three, Clinical Variation Reduction Program Outcomes Webinar that you’re presenting live on Wednesday, March 12, at 1 PM Eastern time. And as a bonus, you can earn CPE. And if you’re interested in learning even more about clinical variation reduction, check out parts one and two of their series, Clinical Variation Reduction Program Structure and then Clinical Variation Reduction Program Process, which is available on demand on our website now. You don’t want to miss this series. Learn more on our website. Thank you all for joining us for this episode of the Hospital Finance Podcast. Until next time.
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