WEBINAR: Performance Improvement for Children’s Hospitals – Key Steps in Developing a Transformation Strategy

© 2014 Huron Consulting Group. All rights reserved. Proprietary and confidential.
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Performance Improvement
for Children’s Hospitals
Key Steps in Developing a Transformation Strategy
October 28, 2014

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Protocols for Webinar Participation
 Participant lines will be muted upon entry. To keep interactive,
we can respond to questions:
– Submitted through the “chat” box to the side of the screen
– Q&A at end
 All participant lines will be opened during Q&A
– Please mute your individual phone line to reduce background noise
for everyone
– Please do not place the call on hold
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Presenters
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Larry Burnett
Managing Director
Huron Healthcare
Michael Pou
Managing Director
Huron Healthcare
Laura Yaeger
Executive Vice President
Huron Education
Dan May
Managing Director
Huron Healthcare

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A Complex Dynamic
Children's hospitals are challenged to:
Provide exceptional care for children
Manage the input and expectations of involved family members

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The Changing Landscape
Current healthcare changes combined with complex reimbursement updates are
creating challenges for the healthcare and research missions of pediatric facilities
Changes are affecting:
 Billing and Payment
 Delivery of care
 Revenue
These challenges create the need for:
 Hospital roles and structure
 Federal reimbursement
 Research and teaching missions
 Coordinating care
 Reducing patient length of stay
 Clinical documentation knowledge
 Managing labor and resources
 Improving non-labor expenses
 Managing the research enterprise

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Healthcare Transformation for Children’s Hospitals
Revenue Transition
 Model financial implications of
revenue transition
 Evaluate cost and revenue
alignment; move to align
 Update revenue
management capabilities
 Expand market reach
Clinical Transformation
 Improve access to care
 Establish proactive case
management
 Establish interdisciplinary care
coordination
 Reduce care variation
 Establish and implement strategy
for managing health
 Engage physicians and patients
Operational Excellence
 Translate strategy and intention
into transformation plan
 Establish balanced objectives
and metrics in support of plan
 Align organizational structure
and talent to strategy and plan
 Maintain governance with data
driven decision making and
accountability
Scale and Integration
 Define delivery and growth
assumptions of strategy
 Assess hard and soft assets
against assumptions
 Design and implement delivery
model – aligning assets
 Integrate non-clinical operations

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Research Transformation for Children’s Hospitals
1. Organization Structure: How does your research
support structure help empower business
leadership, academic leadership, and faculty to
achieve its goals?
2. People: Do you have the right quality and quantity
of people with the competencies to effectively
provide service and stewardship for your institution?
3. Business Process: Are you deploying effective and
efficient business processes to serve customers?
4. Performance Measurement: What measures do
you use to evaluate the effectiveness of
performance – financial, customer service and
compliance?
5. Technology: Have you effectively leveraged
technology to make business processes more
efficient, effective and compliant to provide adequate
information to internal and external stakeholders?
A comprehensive approach to assessing the research support structure to improve
operating performance incorporates five key elements of an organization.

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Leveraging Change Across the Continuum
Interdisciplinary
Care
Coordination
Ensures patients access the right
care setting and provider at the
right time to improve outcomes
and maximize the use of
valuable resources.
Clinical practice redesign
that improves the reliability,
quality, and safety of patient
care by integrating and
coordinating medical, nursing,
and ancillary practice while decreasing
process and supply variation.
Proactive management of patients
across the continuum driving quality
and cost effective care. Strong
case management reduces
avoidable admissions and
minimizes delays in
clinical settings.
Increases communication
with the care team, ensures
continuity of care, provides
seamless transitions for patients.

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Clinical Variation Management
A Holistic Approach to Cost and Quality
Focusing on all components of cost and quality creates the ability to see
interdependencies and maximize savings more holistically.
Interdisciplinary
Care
Coordination
DME
Prof.
Services
Ancillary
Tests
Drugs
Imaging
Implants
Medical/
Surgical
Supplies
Blood
Length of
Stay
Patient and
Staff
Satisfaction
Readmissio
n
Rate
Complicatio
n
Rate
Outcomes
Direct Costs Resources Quality
Critical
Care
Palliative
Care,
Hospice

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Case Study: Children’s Hospital LA
 Founded in 1901, oldest freestanding children’s hospital in California
 By the numbers:
- 347 active beds overall
- 106 pediatric critical care beds (more than any other hospital in the western U.S.)
- More than 5,200 employees and nearly 600 medical staff
- Average length of stay: 7.4 days
 Annual statistics:
- Admits 13,800 inpatients
- Nearly 319,000 outpatient visits
- More than 70,000 Emergency Department visits
- More than 104,000 individual patients
- More than 16,000 pediatric surgeries performed
Background

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Case Study: Children’s Hospital LA
Challenges and Opportunities
 Children’s Hospital Los Angeles (CHLA) was forecasting
a significant impact to financial stability and needed
to take immediate steps to transition to a DRG-based
payment structure
 The organization embarked on a significant, organization-
wide transformative journey, which included major
changes to care delivery processes
 CHLA fully engaged all members of the care team in
innovative ways, enabling them to work in a results-
focused, mutually accountable, symbiotic manner,
maintaining focus on the patient
Results

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Clinical Transformation Outcomes
Medi-Cal/ Medicaid Average LOS trends by severity
Updated as of March 31, 2014

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Clinical Transformation Outcomes
Medi-Cal/ Medicaid Average LOS trends by severity
Updated as of March 31, 2014

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Revenue Transition

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Revenue Transition
 Happening at different speeds in different markets
 Regardless, CEOs are committed to preparing for the shift
 Organizations must build capabilities needed to operate and thrive under
the value model – while remaining cost effective under the current model
 Organizations must develop a granular understanding of current and
future top-line revenue sources
 The type of revenue changes and the rate of change will help each health
system set priorities for healthcare transformation

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Current and Forecasted Revenue Sources
Are current process
and system
opportunities
optimized?
What portion of your top-line revenue is from traditional fee-for-
service, and what portion is from emerging value-based models
(bundled payment, shared savings, shared risk, capitation, etc.)?
What increases or decreases
in utilization are occurring
across the health system?
What shifts in utilization
are occurring across the
health system?
What portion of
revenue is from
non-patient care
sources?
What changes are you
forecasting for top-line
revenue mix, utilization, and
non-patient care revenue?

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Process Improvement
A comprehensive approach to improving every aspect of the revenue cycle

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Organizations are Following Multiple Tracks
Transformative change Going beyond traditional revenue and cost
improvement initiatives
New patient care revenue Expanding market share and reach,
expanding programs and services
Non-patient revenue Exploring cautiously
Ensuring information systems are optimized Work drivers, reporting and accountability is
driven through the organization
Optimization/Performance improvement of
current processes
Understanding additional dollars that could be
collected for services provided

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Case Study: Connecticut Children’s Medical Center
Challenges and Opportunities
Challenge:
Bring more of the hospital's revenue cycle activities in house
Implement a new EHR and ensure process improvements to
revenue cycle would support the EHR conversion
Our Approach:
Insourced patient financial services supported by proprietary
reporting solutions
Increased productivity and quality with clear benchmarks and
productivity standards
Improved the insurance verification process
Improved charge capture and managed care
Worked closely with CCMC and Epic to ensure seamless
integration of the new system
Results

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Revenue Transition – Key Takeaways
Over-reliance on revenue from inpatient care carries one set of risks,
while reliance on new, alternative revenue streams carries another
Moving from volume models is essential, but moving too quickly
weakens revenues and puts significant pressure on the organization
Improving quality, improving the patient experience, and improving
the cost structure remains the winning combination
Invest now in current processes for leaner times ahead

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Operational Excellence

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Operational Excellence Outcomes
 Non-labor/ 340B
 Labor/ span of control
 Human Resources
Texas Children’s Hospital
CT Children’s Medical Center
 Non-labor/340B
 Labor

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Operational Excellence – Best Practices
Labor
Implement prospective labor
tools to assist managers to
adjust staffing in variable
departments every 4 hours;
include organization and
enterprise-wide views
Implement retrospective
labor tools to assist
managers to monitor results
and identify data trends
Implement predictive
volume forecasting tool(s),
especially important given the
seasonality of some clinical
events (e.g., asthma)
Capture data on key cycle times
(e.g., order communication to
fulfillment) and quality measures (e.g.,
no show rates in OP areas);
incorporate the data into business
driver dashboard by function to
focus on identifying and resolving
root causes of outlier performance

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Non-labor
Develop a strategy to drive standardization. This is the next big area of
opportunity for children’s hospitals
Implement data tools to improve your ability to analyze and manipulate
non-labor pricing and utilization data
Develop a strategy to benchmark and renegotiate physician preference
items and purchased service contracts not covered by Novation (approx.
50% of your spend)
Work with Novation to optimize GPO commodity pricing and standardization
rebates (approx. 50% of your spend)
Work with Novation to convert old Premier contracts that were not exact
matches to the Novation portfolio in order to collect admin fees from Novation

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Human Resources
Combine time-off with pay programs to align use of time away from
work for its intended purpose and to manage the organization’s liability
Implement comprehensive leave
of absence policy
Implement vendor management for
contingent labor that standardizes
rates by job, limits the number of
vendors, and provides automated tools
Adopt premium pay policies that
provide inflationary control, create
equity across job families, and are
competitive within the local market
Structure health plans and employee
costs to provide recognizable value
choices among options and support
personal accountability for health

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SHARED
DECENTRALIZED CENTRALIZED
OUTSOURCED
Redundant
Inefficient
Creative
Non-Standardized
Flexible
Closer to the “Action”
Command & Control
Inflexible
Unresponsive
Efficient
Cost Allocation
Service Culture
Leading Practices
Efficient Delivery Model
Infrastructure
Independent Entity
Economies of Scale
Not Mission Invested
Can be Held Accountable
Detached from Business
Service Agreements
Customer-
Focused
Business
Intelligent
Leverage
Purchasing
Power
Standard
Processes

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Examples of Potential Shared Services Functions
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Information Technology Payroll Integration
Facilities Decision Support Analytics
Human Resources Accounts Payable Media Relations
Legal Community Relations Cancer Support
Supply Chain Clinical Support Services Patient Experience
Dietary Quality and Patient Safety Performance Improvement
Risk Management Compliance Infection Control
Safety/Security Business Development Medical Staff Credentialing
Clinical Operations Payer Contracting Strategy
Physician Services Physician Contracting Accounting
Research Foundation Nurse Education
Communications Government Relations Budgeting
Marketing Revenue Cycle Grants Management Services
Finance Behavioral Health Administration Health Information Management
Accounting Real Estate Float Pool
Internal Audit Governance Others . . .

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Louisiana Children’s Medical Center TEAM Project
Integrating an academic medical center, children’s hospital, and two acute hospitals into
an integrated health system to effectively serve Louisiana patients
Academic Medical Center – Interim LSU Hospital (ILH)
Integrating ILH operations into LCMC while balancing their tripartite mission of
providing medical education, research and patient care
Integratedservicestomeetpatientneeds
Pediatric Hospital – Children’s Hospital New Orleans (CHNOLA)
Integrating CHNOLA operations into LCMC while continuing to provide high quality
clinical care to children in the New Orleans market
Acute Hospitals – Touro Infirmary and New Orleans East Hospital
Integrating TI and NOE hospitals into LCMC while continuing to provide state of the art
clinical and surgical services to adult and elderly patients
Integrated Health System - LCMC
Developing LCMC’s shared service capabilities (revenue cycle, supply chain, HR etc.)
with standardized back office operations to reduce costs and improve efficiency

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Research Transformation

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Research Enterprise Management
CHALLENGES Research is small part of the business and often lacks the appropriate
support mechanisms.
Culture of autonomy among units engaged in research inhibits enterprise change.
Silos of custom systems to support research impede effective data sharing.
Obtaining actionable data is slow and difficult. Benchmarking information is
more limited than in clinical.

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Opportunities: Transforming the management of the research enterprise
 Closely-coordinated, metrics-based,
highly-responsive administrative processes
 Highly-integrated yet administratively
distributed Research Enterprise Systems
 Easily accessed, actionable data
 Measurably improved
investigator service

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Assess to diagnose &
prioritize improvement
opportunities:
 Organization
 People
 Technology
 Metrics
Assess Implement
Hands-on
Implementation
Metrics to confirm
project success &
establish future
priorities
Plan implementation of change:`
 Organizational structures that align
optimally within the AMC enterprise and
allow for enhanced collaboration to
support researchers
 Clear roles & responsibilities for
professionals who support research &
promote compliance
 Efficient & effective processes that
minimize PI burden
 Integrated & flexible systems to support
researchers & provide data for decision
making
Plan

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Case Study: The Children’s Hospital of Philadelphia
Goal: Best support and manage a growing research
enterprise.
Scope of Improvement Areas:
Research administration support structure and
compliance program effectiveness
Enterprise systems planning and implementation –
Lawson Grants, Click Commerce
AAHRPP accreditation assistance (human subjects
protection program)
Financial performance improvement – optimize cost
recovery from federally sponsored programs (indirect
cost rate, recharge centers, etc).
 Strong, responsive strategic planning
methodologies & approaches
 Mature research administration infrastructure
 Highly-motivated, incentivized, and well-
credentialed support staff
 Supportive institutional risk profile
 Complementary compliance programs built around
common core elements
 AAHRPP-accredited program for the protection of
human subjects
 Enabling technology platforms for compliance and
the administration of sponsored programs, fund
accounting, research billing, receivables, and
research contract administration
 Maximal indirect cost recovery rates
Challenges and Opportunities Results
Research Support Model Transformation

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Case Study: The Children’s Hospital of Philadelphia
Overview of Research Support Structure
Deputy Scientific Director
CHOP Chief
Financial Officer
Chief Scientific Officer,
Office of Clinical &
Translational Research
Director
Deputy Administrative
Director, Vice President
Research
Information
Systems
Director,
Environmental
Health & Safety
Office of Research
Compliance and
Regulatory Affairs
Office of Faculty
Development
Office of
Technology
Transfer
Office of
Research Safety
Laboratory Core
Facilities
Clinical and
Translational
Research Center
Office of
Responsible
Research Training
Office of
Postdoctoral
Affairs
Clinical Research
Support Office
Clinical Core
Facilities
Core Facilities
Administration
Research Finance
Research
Resources
Clinical Trials
Financial
Management
Research
Communications
Lab Animal
Services
Sponsored Projects &
Research Business
Management
Policy and
Procedure
Documentation

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Case Study: Children’s National Medical Center
Challenges:
Research volume had increased by 18% per year compounded from ’98
($12M) to ’08 ($63M)
Pre-award reported to the VP/Research
Post-award reported through the Controller to the CFO
Research community had little support from, or confidence in,
administration
Staff levels were too low to provide controls, training, outreach and
support to PIs
Staff turnover was high
Our Approach:
Developed & implemented a new organizational
model for providing support
Revised policies & procedures
Assessed backlogs (financial reporting, cash management, and other key
risk areas)
Implemented new research administration and financial systems
 Single point of accountability
- All report to Executive under VP/Research
 “Dotted line” to Finance maintains internal controls
and financial integrity
 A new Financial Coordinator position serves as
liaison/support to PIs
 Pre-award, Post-award & Financial Coordination
teams with own managers
- Aligned to support 4 major research institutes
 Enhanced staffing levels improve service to
researchers
 Improved internal controls
 Increased process efficiency and effectiveness
 Has enabled continued growth in the research
enterprise
Challenges and Opportunities Results
Research Administration Transformation

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Key Takeaways
To thrive in the changing healthcare environment,
most children’s hospitals face the need to improve
performance between 5-15 %
Achieving this level of improvement requires a strategic transformation plan
To be successful, the healthcare and research strategies should span the enterprise
- Healthcare: Clinical transformation, revenue transition, scale and integration,
operational excellence
- Research: People, organizational structure, business process, technology,
performance measurement

Contacts
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Larry Burnett
Managing Director
Phone: 480-254-0851
lburnett@huronconsultinggroup.com
Michael Pou
Managing Director
Phone: 504-723-7528
mpou@huronconsultinggroup.com
Laura Yaeger
Phone: 312-583-8762
lyaeger@huronconsultinggroup.com
Dan May
Managing Director
Phone: 678-576-0408
dmay@huronconsultinggroup.com

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Questions
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WEBINAR: Performance Improvement for Children’s Hospitals – Key Steps in Developing a Transformation Strategy

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