Improving Hospital Productivity to Reducing Costs
There is broad agreement
that health care value needs to be improved. Preventable harm continues to
cause significant morbidity and mortality. For example, many patients’ chronic
diseases are not treated optimally, resulting in avoidable health care use. In
2017, health care spending increased 3.9 percent, totaling $3.5 trillion or
close to 18 percent of the gross domestic product (GDP). Of that, it has been
estimated that approximately 30 percent can be attributed to wasteful or excess
spending, including spending associated with unnecessary or inefficiently
delivered services, excess administrative costs, prices that are too high,
missed prevention opportunities, and fraud. Health care costs continue to
increase faster than the GDP, impacting the budgets of federal, state, and city
governments, employers, and individuals.
In any industry, there are
two ways to reduce costs: Use fewer services or increase productivity. The
health care industry has largely focused on using fewer services. On the one
hand, this is appropriate because the industry overuses many services, and some
are harmful. On the other hand, no other industry solved its cost problems by
simply consuming less; they also improved productivity. To explore
opportunities to improve productivity in health care, a team from Johns Hopkins
University hosted leaders from several technology and management consulting
companies to discuss the use of systems engineering in health care. This post
presents the highlights of the group’s discussion and subsequent work to
identify a small number of high-impact interventions that can improve hospital
labor productivity.
Designing Health Care
to Achieve a Purpose
The health care industry has
experienced declines in productivity despite spending enormously on technology.
It is posited that recent small productivity gains have come from clinicians
working at unsustainable levels—tempos that result in burnout. Economic models
suggest that if health care productivity could grow by 4 percent, we would
solve the health care cost problem.
Some have argued that
productivity in high-touch industries such as health care and teaching cannot
be improved. No doubt, it will be difficult to improve productivity in some
components of health care, such as discussing individual preferences for cancer
care options. Yet, other components of care are rife with waste and are ripe
for significant productivity gains. The Affordable Care Act (ACA) could help
motivate such gains. For example, the ACA calls for the Centers for Medicare
and Medicaid Services to reduce payments to hospitals over time, based on
anticipated productivity gains. Despite this plan, these gains have yet to be
realized, and the investment service Moody’s reported that hospital expenses
are rising more rapidly than revenues, resulting in reduced margins.
To demonstrate the lack of
systems engineering in health care compared with other industries, participants
in the workshop explored how a major airline acquires a jet. This hypothetical
airline does not order the components—the wings, engine, landing gear,
instrumentation—independently and then try to assemble them. Instead, it
contracts with a system integrator such as Lockheed Martin, who builds a plan
to specific design requirements. Health care lacks a Lockheed Martin-equivalent
to serve as a system integrator that can build an integrated hospital.
Currently, leaders building a new hospital do not have a standard component
integration plan or purpose-built design. Instead, they approach independent
vendors to provide equipment and services. As such, performance—quality, cost
(both capital and operating), and productivity—suffers.
In the workshop, the Hopkins
team pointed out that 20 years ago, the 1,000-bed, academic Johns Hopkins
Hospital employed 3,000 people to care for its patients. Today, it employs just
below 12,000 people, with the same number of beds and approximately the same
number of discharges. Although the patients may be more acutely ill and the
treatment more complex, no other industry has had this type of growth in labor
costs. Some of the costs were due to regulatory requirements, some to
technologies that hurt productivity, and some to more complex therapies. We
believe that a large portion of the costs increases are driven by the organic,
instead of designed, development of health care systems. As care has become
more complex, new equipment, capabilities, and requirements have simply been
added without a system integration plan. Aviation and other industries have
demonstrated that purposely designed and integrated systems can significantly
reduce materials and labor costs while increasing efficiency and safety.
Opportunities To
Improve Hospital Labor Productivity
Workshop participants from
the private sector and Johns Hopkins were aligned around the opportunities to
improve productivity. In addition to building a purposely designed and
integrated hospital, the private-sector leaders asked whether there were a
small number of interventions that could be rapidly implemented to improve
productivity or whether significant productivity gains would require hundreds
of small improvements over a longer period. The Johns Hopkins team responded
that while building a purposely designed hospital would improve quality and
reduce capital and operating costs, a small number of work processes could be
redesigned to improve productivity, especially for nurses, the largest
component of hospital labor costs. Accordingly, we identified, based on experience
and literature, the top five interventions that could significantly improve
labor productivity and be addressed with existing technology. While there are
other potential interventions to improve productivity, such as improving
communication among clinicians and with patients, the problems to be solved
were less well circumscribed and the solutions less certain. Below, is a
discussion of the five interventions to improve hospital labor productivity.
Manage The Last 10
Feet of The Supply Chain
One study estimated that
nurses spend approximately 7 percent of their time hunting for supplies such as
medications, infusion pumps, commodes, and nutritional supplements. At Johns
Hopkins Hospital, it is estimated that these activities take 20 percent of
nurse time. For example, it has been found that there is generally no signal to
indicate to nurses when a medication arrives on the unit from the pharmacy.
Nurses search the unit to determine whether the medication is available. If it
is not on the unit, they try again later. This occurs for every dose, for every
medication, for every patient. A nurse may care for five patients, and each
patient might be on four medications. These activities add up to wasted time
and unnecessary costs, introduce safety risks to patients, and are
disrespectful of nurses’ professionalism, contributing to dissatisfaction,
burnout, and turnover.
The health care industry has
focused significantly on managing upstream supply costs yet neglected to
address the high downstream costs of safety risks, nursing inefficiencies, and
dissatisfaction. Tools to manage this part of the supply chain exist in several
other industries and can be adapted and applied to health care.
Convert Human Double
Check of Medications to Electronic
Nurses perform a human
double check when administering high-risk medications such as insulin or
narcotics, as recommended by the Institute for Safe Medication Practices and
required by many organizations. At Johns Hopkins it was found that these double
checks can consume as much as 22 percent of nurses’ time if performed as
required. We also observed that the protocol is infrequently followed and that
the process may introduce, rather than defend against, risks. At best, one
nurse gets another nurse to perform the double check, distracting the second
nurse from his or her tasks, and adding little safety to the medication
administration process, while potentially increasing risk when the second nurse
must cognitively re-engage in the prior task. Despite having an electronic
medical record (EMR), nurses often manually do multiplication to calculate the
required doses of insulin, heparin, or narcotics.
An electronic double check
would be more effective and efficient than a human double check; it would
reduce medication errors, avoid distraction errors in the second nurse, and
result in labor savings. The technology to convert from electronic to human
double check is available. To accomplish this, regulators and professional
organizations need to revise their standards to allow automation of dose
calculations, and health systems need to specify the required equipment and
data standards to enable the technology.
Eliminate False
Alarms
False alarms impose risks to
safety and reduce productivity. On average, nurses answer a false alarm every
45 seconds from multiple devices used in support of patient care. These devices
were not designed nor developed to achieve a common purpose, and as such, their
respective alerting and alarming mechanisms were not integrated or normalized,
resulting in higher than necessary alarms. Had health care alarms been
intentionally designed like key technologies of other high-risk industries
(such as oil production, weapons systems, and aerospace)—as a set of
interacting parts designed to achieve a goal—alarms and alerts would function
in a way that would assist, not distract, caregivers’ attention and purpose.
Other industries generally
use “dumb” sensors—sensors without alarms or software—and integrate the data
into one “command center” that can set rules, prioritize alarms, and monitor
performance. The health care industry has done the opposite. Every sensor comes
with its own software and hardware to produce its own alarms and integrating
data from multiple devices requires new clearance and additional software
interfaces. All this software and hardware adds greatly to the capital
and operating costs of
medical devices while detracting from innovation and system performance.
Referred to as the “alarms race” to get providers’ attention. If the health
care industry were to engage a system integrator to integrate alarms and other
processes, it would be much safer and less expensive to build and operate, just
as Lockheed Martin did for planes.
Minimize Human
Documentation
Clinicians spend up to half
their time and several hours after work documenting in the EMR, contributing to
physician burnout and its associated safety, productivity, and personal risks.
Many physician groups have hired scribes and successfully addressed clinicians’
burdens of documentation. It is ironic that the advent of the printing press
eliminated the need for scribes for centuries, but the EMR has resuscitated it.
Rather than rely on archaic models, delivery systems can improve clinician
productivity significantly by automating documentation as part of daily work.
To solve this, regulators need to reduce documentation burden, clinicians need
to partner with technology companies, and EMR vendors need to allow other
companies to document in their EMRs.
Eliminate Human Labor
Costs for Submitting and Processing a Claim
Hospitals’ administrative
costs—including costs for submitting and processing claims—account for 25
percent of total spending on hospital care. Insurers and employers also incur
significant costs for processing claims. Each insurance company has a different
process and platform for claims submission. Each step in the claim’s submission
process, such as prior authorization, is often disconnected from the others,
such as utilization management or payment integrity. As a result, providers
often receive multiple requests for the same piece of data. Furthermore,
providers often communicate by fax, which must be manually uploaded into a
database. Rework, repeated requests, and waste are the norm. Electronic
submission and a common data platform for all insurers, including guidelines
around appropriateness and other quality parameters, could significantly reduce
costs for providers and insurers and enhance quality.
Summary
The health care industry can
significantly improve labor productivity by addressing these five areas and
likely several others. These opportunities stem from a dysfunctional narrative
that productivity is based on the heroic efforts of clinicians instead of the
design of safe systems. Yet, new narratives are possible. Central
line–associated bloodstream infections were substantially reduced across the US
when clinicians told a new narrative that harm is preventable. Health care
needs a new narrative that productivity is based on the design of safe systems,
rather than the heroism of clinicians, leveraging proven systems engineering
approaches. By addressing the specific opportunities outlined above, health
care safety and productivity can be significantly improved. Most importantly,
as health care delivery evolves into an engineered system, opportunities for
improved value and productivity will grow, and delivery systems will be able to
provide the type of care that patients deserve, providers desire,
and payer demand.
Jan Ricks Jennings, MHA,
LFACHE
Senior Consultant
Senior Management
Resources. LLC
JanJennings.Blog.BlogSpot.com
724.733.0509 Office
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