Take steps now to survive as reimbursement methods shift
Don’t just try to do more with less money
It’s not just a matter of cutting costs to survive the influx of managed care. Rehab providers must make aggressive and comprehensive changes in the way they do business in order to continue to provide high quality care at significantly lower costs, health care experts say.
"Most hospitals are going to have to decrease their internal operating budgets by 20% to 30% or face going out of business in three to five years. This means they have to completely redesign the way they give care," asserts Peter Boland, PhD, health care analyst and president of Boland Healthcare, a healthcare publishing firm located in Berkeley, CA.
It’s no longer a matter of whether you’ll have to redesign your service delivery. It’s a matter of when and by what method, Boland says.
Re-engineering can work and does work when it’s implemented properly, he says.
"We have case study after case study, from large hospitals down to very small rural providers. They realized they had to change, and they did it. But I haven’t found one that thought it was an easy, fun process," he adds.
With six months of experience in a new patient-centered care model, Bryn Mawr Rehab in Malvern, PA, is beginning to see results.
Patient satisfaction scores are at an all-time high. The number of staff interacting with patients has been slashed by 33.4%.
No one was laid off, and no salaries were cut. Management is continuing to analyze how to gain efficiency.
When Bryn Mawr Rehab embarked on its massive re-engineering program in 1995, the hospital was operating effectively and efficiently, but managed care was on the increase, and the administration knew that changes had to be made.
"We realized that our own bureaucracy burdened our costs and kept us from being able to be nimble in terms of responding to patient needs" says Jan Bergen, vice president of administration for the hospital.
Bryn Mawr’s redesign project eliminated the traditional clinical departments, centralized administrative tasks to a few people, and shifted the responsibility for making decisions about the care needs of a patient to the people who provide the care.
"The challenge we faced was to keep doing all the good things we had been doing yet be competitive with all the competition coming in and with pressure from payers to reduce costs," says Daniel Keating, PhD, administrative director for the 141-bed hospital’s neurocognitive division.
(For more on Bryn Mawr’s redesign project, see related articles, pp. 19-21.)
Boland, who studied the re-engineering plans of between 250 to 300 hospitals in preparation for his publishing company’s new book, Redesigning Healthcare Delivery: A Practical Guide to Reengineering, Restructuring, and Renewal, estimates that 70% of re-engineering efforts are not successful because they don’t go far enough in making the fundamental changes necessary to be effective.
One way to ensure success when you redesign your health care delivery system is to come up with a clear plan of where you want your organization to go, what results you want to achieve, and why you want the results, advises Richard H. Gregg, director of the health care practice for Innovation Associates, a Waltham, MA-based management consultant firm.
"You may save $100,000 in this year’s budget [with a re-engineering program], but in the long term the costs may be exorbitant if you redesign before you know what you really need," adds Connie Burgess, MS, RN, president of Connie Burgess & Associates, a Lakewood, CA, rehabilitation consulting firm.
Plans for the redesign program should concentrate on what your future needs are, rather than on what you practiced in the past, Burgess says.
When you start to redesign your service delivery system, look at where you want to be in five years and work backward, Boland suggests.
"The most important thing is to have a very clear business strategy. Re-engineering isn’t something you do in and of itself. It’s not an end. It’s a means to get you somewhere, and if it doesn’t support your underlying business strategy, you can end up shooting yourself in the foot," Boland says.
He suggests studying reimbursement trends, sources of patients, and your region’s health care market to determine the position of your hospital in relationship to other resources in your area.
Specialty providers also need to look at partnering with others, even their competitors, in order to provide the full continuum of care, Boland asserts.
"No one has the time, the skill, or the capital to provide everything themselves," he adds.
Burgess calls for redesigning rehabilitation programs to eliminate separate departments and to create a multidisciplinary clinical team that focuses on what is best for the patient.
"It’s too costly to remain in separate departments and separate disciplines. If a team member has to have allegiance to both a department and a program, it divides their attention, their energy, and their loyalty," adds Burgess.
She admonishes rehab professionals to call off the interdisciplinary turf wars that have occurred during many hospitals’ re-engineering projects and go to work as a truly integrated team.
"People have got to realize that this is no longer about saving their discipline. It is about saving their business," she says.
Here are some other suggestions for developing and carrying out a successful re-engineering project:
• Don’t automatically eliminate seasoned staff to save money on salaries.
It could cost you money in the long run because the experienced staff can better predict outcomes and are more familiar with alternative approaches to treatment, Burgess says.
"When you eliminate the highest cost staff, you may also lose the smartest and the most experienced. Often they are the ones who can make a big difference to the success of an organization," Burgess says.
On the other hand, if staff is unwilling to change to meet the new health care environment, they have to go, regardless of their experience, she adds.
• Look at re-engineering as a way to save jobs in the long run, Boland says.
"The sooner you do it, the better position you are going to be in. If you get more efficient, you can increase your market share, and that means keeping jobs in the future," he adds.
• Give your staff the skills they need to handle the new way of doing business.
In re-engineering, staff is often cut, expenses are cut, and the process is reorganized, but those who are left behind don’t have any new skills in order to operate the new organization, Gregg says.
"If re-engineering doesn’t include new skills, new ways of thinking and interacting, the re-engineering probably won’t work and often will be a failure," he adds.
To maximize the efficiency and effectiveness of the new organization, the staff should have the collaborative and communication skills that enable them to operate highly skilled teams. The teams should have clear goals, clear accountability, and a clear sense of purpose, he adds.
• Make sure everyone in the organization is behind the strategy, from the board of directors on down.
"If the top people are not in agreement about what has to be done and how to do it, it’s not going to be successful," Boland says.
• Be prepared to change your own management style.
The old "command and control" style won’t work anymore, Boland says.
"It takes a different type of leadership style. Decision-making has to be closer to patient care," he explains.
• Remember that re-engineering is an on-going project, not a one-step exercise.
"This may be the biggest mind-set change of all. Re-engineering is a continuous process, and once you get finished, you need to start over again and look for more ways to improve," Boland adds.
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