HCM-FPX5310_MusiKeti_Assessment 3-1
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Assessment 3: Feasibility Study
Keti Musi
HCM-FPX5310: Decision-Making in Healthcare System
Prof. Nowill
Capella University June 25, 2021
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Executive Summary
The United States has the highest health spending per person than comparable countries, with costs approaching 18% of the gross domestic product (GDP). Prior studies estimated that approximately 30% of health care spending may be considered waste (Shrank et al, 2014). NewYork-Presbyterian (NYP) is one of the nation’s most comprehensive, integrated academic healthcare delivery systems, dedicated to providing the highest quality, most compassionate care and service to patients in the New York metropolitan area, nationally, and throughout the globe. I
am a department leader in NewYork-Presbyterian health system’s HERCULES project management office (PMO). I have been asked by the Chief Operating Officer (COO) of NewYork-Presbyterian to propose a project or program to address a specific need, and to develop
a feasibility study to determine if the proposed project or program should be undertaken. The following feasibility study explored implementing six work groups to significantly improve operational efficiencies (i.e., maintaining the best possible patient care and experience while reducing costs). The Organization
NewYork-Presbyterian is one of the nation’s most comprehensive, integrated academic healthcare delivery systems, dedicated to providing the highest quality, most compassionate care and service to patients in the New York metropolitan area, nationally, and throughout the globe. NewYork-Presbyterian encompasses 10 hospital campuses across the Greater New York area, more than 200 primary and specialty care clinics and medical groups, and an array of telemedicine services. A leader in medical education, groundbreaking research, and innovative, patient-centered clinical care, NewYork-Presbyterian Health Care System, is the only academic medical center in the nation affiliated with two world-class medical schools, Weill Cornell
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Medicine and Columbia University Vagelos College of Physicians and Surgeons. This collaboration means patients have access to the country's leading physicians, the full range of medical specialties, latest innovations in care, and research that is developing cures and saving lives. NewYork-Presbyterian has four major divisions: (1) NewYork-Presbyterian Hospital, (2) NewYork-Presbyterian Regional Hospital Network, (3) NewYork-Presbyterian Physician Services, and (4) Community and Population Health.
Problem Objectives
NewYork-Presbyterian, as all U.S. hospitals have, has focused on increasing revenue, volume, and growth. At the same time, the healthcare system has wasted millions of dollars on supply chain inefficiencies, variation, service duplication, and suboptimal labor management. To meet the economic challenges faced in the healthcare industry and to continue to provide low cost and high-quality services, NewYork-Presbyterian is striving to control operational costs. While NewYork-Presbyterian has made tremendous strides in achieving operational efficiency in
recent years, it still has much to do. Therefore, NewYork-Presbyterian created an overarching project management office (PMO) of NewYork-Presbyterian called HERCULES – which stands for hospital, efficiency, revenue cycle, clinical utilization, length of stay, and enhanced sourcing.
HERCULES is the project management office (PMO) of NewYork-Presbyterian focused on quality, cost, and price – i.e., identifying opportunities to achieve operational efficiencies, enhance revenue, and reduce costs OR improving (operational and administrative) efficiency and
reducing costs, while maintaining and enhancing patient care. HERCULES focuses on four programmatic pillars: operational excellence (focusing on labor-related projects), LOS of stay, clinical resource optimization, and supply utilization. HERCULES provides comprehensive resources and support to operational leaders to guide their performance improvement efforts (ex.
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driving efficiencies in operations, reducing length of stay, optimizing labor, and managing supply
costs) in a more thoughtful way to maintain the best possible patient care and experience while bending the cost curve. HERCULES has identified six work groups that would be comprise managers and staff from across NewYork-Presbyterian. The groups would be charged with identifying opportunities to reduced costs, increase efficiency, and revenue enhancing solutions, without compromising patient care.
Program Value
Increasing cost efficiency and simultaneously improving the level of quality-of-care patients receive is the great workhorse of all health administrations (Litvak & Bisognano, 2011). By implementing the six high-value work group initiatives identified by the HERCULES project management office (PMO), we estimate that NewYork-Presbyterian could achieve more than $100 million in cost savings by reducing inefficiencies with operations while maintaining or improving quality of care, access to healthcare, and health outcomes. The six work groups that were identified are:
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Clinical Resource Optimization
– the goal is to enhance patient outcomes by reviewing clinical practice patterns and eliminating unnecessary provision or variation in care whenever possible.
2.
Supply Utilization
– the goal is to identify opportunities to reduce, and in some cases eliminate, the quantity of goods and services used, as well as review all medical supplies and devices in order to standardize whenever possible.
3.
Length of Stay
– the goal is to evaluate opportunities to streamline patient care processes while ensuring optimum care and timely discharge.
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4.
Revenue Cycle
– the goal is to continue to ensure that NYP is accurately and appropriately paid for the services it provides.
5.
Corporate & Support Costs
– the goal is to redesign processes using best practices and innovation in order to lower corporate and support costs. 6.
Service Delivery & System
– the goal is to assure that patients receive care in the most appropriate settings across the NewYork-Presbyterian
The cost savings would be achieved through a step-function improvement in administrative, financial and operational processes to better direct and utilize internal and external resources, which would translate to better outcomes, better experiences, and lower costs (Lin & Clousing, 1995).
Financial and Economic Issues
Ultimately, it is important to weigh the cost of financing against the opportunity cost, balancing the cost of the investment against the need to maintain margins and preserve a strong balance sheet to see them through the uncertainty ahead (Rashid & Jusoff, 2009). Given the opportunity to achieve significant operational and administrative efficiency and value (at least $100 million) and deliver both revenue growth and profit margin improvement (i.e., improving financial performance and operating margins), NewYork-Presbyterian could justify the required capital expenditure of $10 million (to cover vendor, project management professionals, operational leaders, human resources, finance, analytics, and executive costs). NewYork-Presbyterian’s CFO should evaluate required capital investments with an eye toward ensuring it will be beneficial to patients, reduce costs, provide continuity of care, and maintain or improve quality, all of which are critical under a value-based payment methodology (Zeithaml et al, 1990). Given the capital investment amount, NewYork-Presbyterian’s CFO
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should choose to finance the capital expenditure with liquidity reserves and cash flow (given the investment will not strain the balance sheet of the organization). Marketing
NewYork-Presbyterian’s Office of Marketing and Communications will need to develop integrated internal and external marketing, communications and PR efforts (leveraging variety of
content and channels) with the goal of raising awareness (and informing and influencing in an authentic way) with the target market (which includes patients and families, communities, doctors/physicians, medical personnel, hospital staff, community leaders, influencers and society) around the importance of the six initiatives identified by the HERCULES project management office (PMO) – (1) Clinical Resource Optimization, (2) Supply Utilization, (3) Length of Stay, (4) Revenue Cycle, (5) Corporate & Support Costs, and (6) Service Delivery & System – in further enabling and empowering NewYork-Presbyterian to provide low cost and high quality healthcare services and providing education on what’s current – and what’s next – for NewYork-Presbyterian (ultimately helping to develop and build consumer preference and demand for the hospital). Organizational Impact
Efficient and effective operation of hospitals is one of the major concern areas for the management team of any organization as it involves multiple departments, numerous activities, intertwined processes, involvement of staff at different levels. As a result of such diversity, the HERCULES project management office (PMO) will need to conduct a series of information (learning) and training sessions and ongoing communication with doctors/physicians, medical personnel and hospital staff to ensure they understand the changes in practices, processes and procedures, and how the changes will impact the organization, to minimize (or mitigate)
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disruption risks to patients, visitors, physicians, and staff during this transition. It will be pivotal to communicate internally and establishing an accessible network of information resources in a shared drive for 24/7 reference.
Recommendations
Given the long-term and substantial positive implications and financial impact, it is recommended that NewYork-Presbyterian’s move forward with all the six initiatives identified by the HERCULES project management office (PMO). A balanced approach – one that enables NewYork-Presbyterian not only to improve operating efficiency (i.e., costs) but also maintain or improve the current quality of patient care, access to healthcare, and health outcomes and upgrade its services and capabilities to respond to market needs and prepare for the future – is imperative to the success of NewYork-Presbyterian’s operations and profitability (Øvretveit, 2000). It’s important for NewYork-Presbyterian to recognize that long-term fiscal efficiency (i.e.,
reducing costs while maintaining/improving quality) is impossible to achieve without a corporate
culture that supports and values it.
Conclusion
NewYork-Presbyterian has a proud tradition of being one of the nation’s most comprehensive, integrated academic healthcare delivery systems, dedicated to providing the highest quality, most compassionate care and service to patients. The feasibility study explored the idea of implementing six work groups identified by the HERCULES project management office (PMO) to significantly improve operational efficiencies (i.e., improving or maintaining the
best possible patient care, while reducing costs). The result of this study indicates a the moving forward with all six initiatives would enable NewYork-Presbyterian to maintain/improve high quality of patient care and access to healthcare, while reducing costs. This will advance a
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sustainable financial model for NewYork-Presbyterian and will significantly support the health, wellness, and economic stability of the communities it serves.
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References
Lin B., & Clousing, J. (1995). Total quality management in health care: a survey of current practices. Total Qual Manage. 6(1):69-77. Retrieved from https://www.tandfonline.com/doi/abs/10.1080/09544129550035602
Litvak E., & Bisognano M. (2011). More patients, less payment: Increasing hospital efficiency in
the aftermath of health reform. Health Affairs. 30(1): 76–80. Retrievd at https://pubmed.ncbi.nlm.nih.gov/21209441/
Øvretveit, J. (2000). The economics of quality–a practical approach. Int J Health Care Qual Assur Inc Leadersh Health Serv 2000;13(4-5):200-207. Retrieved from https://pubmed.ncbi.nlm.nih.gov/11486674/
Rashid, W.E., & Jusoff, H.K. (2009). Service quality in health care setting. Int J Health Care Qual Assur. 22(5):471-482. Retrieved from https://pubmed.ncbi.nlm.nih.gov/19725368/
Shrank, W.H., Rogstad, T.L., & Parekh, N. (2014). Waste in the U.S. health care system: Estimated costs and potential for savings. Journal of the American Medical Association. 315(16):1750-1766. Retrieved from Zeithaml V.A., Parasuraman A., & Berry L.L. (1990). Delivering Quality Service: Balancing Customer Perceptions and Expectations, New York: The Free Press. Retried from https://scholar.google.com/scholar?q=Zeithaml+VA,+Parasuraman+A,+Berry+LL.
+(1990)++Delivering+Quality+Service:
+Balancing+Customer+Perceptions+and+Expectations+,+New+York:+The+Free+Press+
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