OptiMax

The Fox Group’s Performance Delivery System

Healthcare Performance

Very Complex!

Vignette

A healthcare business unit was within budget and at or near minimums for all performance standards. The budget had been based, yearafter-year, upon historical expenses with projections for future increases.

Then, through state-of-the-art techniques that quantified the interaction between costs and quality, it was clearly shown that only one of the key quality indicators was at the optimal level.
Further, patients showing improvement from treatment were 6% below the optimal. To make matters worse, the total annual costs for patient care were more than $1,000,000 above optimal. The business was clearly in the “red zone.” The team members needed to decrease costs and increase quality.

They had been lulled into complacency by (1) the practice of cost-plus budgeting and (2) the comparisons of their quality indicators to averages instead of to the optimal.

Sample Areas of Performance Assessment
Assess Service Differentiation
     Identification of core services Identification of specialized services Evaluation of service to referral sources Scheduling & office policies and procedures Facility and equipment review

Networking/Group Formation Issues
    Strategies and consequences Healthcare industry and regulatory changes Managed care trends Finance/operational issues

Review Financial Performance
              Analyze profit and loss performance Income review for past three fiscal years Changes in charges/collections Changes in patient/client volume Changes in payor mix Changes in expenses Review managed care contracts / assist in negotiations Analyze billing and collections Coding analysis Evaluation of accounts receivable aging and collection related protocols Define priorities / Delinquent account strategies Evaluate controls over cash handling/banking Evaluate accounts payables aging Review office automation / computerization

Review Human Resource Expertise and Deployment
        General systems Interview practices and selection of personnel Training process Turnover issues Evaluate salary levels, incentive plan, benefits Team orientation and appearance Professional development / continuing education Work flow systems

Evaluate Internal Marketing
      Budget and expenditures Office environment and ambiance Appearance Signage, perceptions, environmental controls Efficiency of layout Exam rooms

Document New Areas for Volume/Income Generation
    Practice start-ups and relocation SWOT analysis Task-specific plans Growth opportunities

Analyze External Marketing
    Audit of promotional materials Assessment of referral development activities Sources and extent of referral contacts Identify techniques to increase referrals

Compliance – HIPAA/Medicare Fraud & Abuse

OptiMax
 What is the technique  Where it is being used

 How to use it strategically in performance improvement

Work Measurement Applications

OPERATIONS

• Budgeting • Workforce capacity • Equipment and space capacity • Scheduling

PLANNING

• Time and cost trade-off’s for new services • Service mix planning

STAFFING

• Wage incentives

• Work standards
• Performance evaluation and improvement

• Most productive? • Underperforming? • Targets for improvement? • Measures of Provider Productivity

Office Visits Per Hour Worked

1.00 0.86 0.77 0.75

0.73

0.72 0.65 0.49

32% of Highest

0.50

0.28 0.25

0.00

A

Physician

Work RVU’s Per Hour Worked

10.00

9.11
7.95

7.50

6.59

6.34

35% of Highest
5.67 5.25
3.17

5.00

2.50

0.00

Physician

A

Charges Per Hour Worked

$700 $600 $500 $400 $300 $200 $100 $0

$645 $588
$472 $466 $416 $326 $221

34% of Highest

A

Physician

Productivity - sample
INPUTS
• Compensation

OUTPUTS
• Office Visit Units • Hospital Units • Med Units • X-Ray Units • Other Units • Work Relative Value Units • Charges

Example of Variables
Input Variables
Administrative expenses/licensed bed Dietary expenses/patient day

Output Variables
Net income/patient day Not Decubitus %

Facility expenses/licensed bed
Housekeeping expenses/patient day Licensed beds LVN FTE/Patient day * 1,000

Patient days
Procedures/FTE Procedures/Patient Relative Value Units/FTE

Square feet of facility/patient day
Non-clinical staff FTE/Patient * 1,000 Non-clinical staff salaries / patient day Patient expenses/patient day

Relative Value Units/Patient
Relative Value Units/Procedures Return on Capital/Patient Day Treatment plans meeting standard %

Professional salaries/patient day
Net revenue / patient day RN FTE/Patient day * 1,000

Patients with in-home treatment only %
Patients with improvement % Timely Treatment %

The OptiMax Solution

The OptiMax Difference
Optimal

Same as others

Optimal

. . . more/less . . .

Optimal

The OptiMax Difference

A single performance score

Reasonable, individualized targets

Qualitative & Quantitative Data

com

bined

Users

Manufacturing

Insurance

Oil Exploration
Who uses this method?
Restaurants Retail

Banking

Healthcare
Schools

Healthcare Users - sample

The OptiMax Solution

The OptiMax Difference
Some of the Differences . . .
Tailored to individual, unique Business setting Comparison to a known standard
Typical Benchmarking

OptiMax

Evaluates qualitative (quality) and quantitative (costs, revenues) indicators simultaneously
Comparison to your own best internal performance Evaluates Indicators ONLY one-at-a-time “Rolls up” multiple indicators into a single score Objectively provides targets for improvement based on a simultaneous evaluation of all indicators Quantifies targets for improvement based upon achieving performance comparable to the best already in your organization Early warning that costs are too high or quality too low Short time investment and easily repeatable analyses

Three-Months Efficiency Score

100%

100%

100%

100%

98% 93% 93% 85%

75%

Standard For Efficiency Improvement Possible

50%

25%

0%

Physicians

Improvement Targets

PHYSICIAN D

PHYSICIAN B

Target $110,462 of increased charges per quarter
PHYSICIAN E PHYSICIAN A

A Typical Workplan

Study Design

Areas to Optimize Data Collection Instruments Comparative Reports Select Optimization Targets

Variables to Consider Deidentification of Data Optimization Targets

Initial Staff Training

Data Collection Analysis and Reporting

Additional Staff Training

Staff Reporting

Implementation

Develop Specific Plans

Monitor progress

The OptiMax Solution
Implementing the OptiMax Cycle

OptiMax Outcome – sample of 7 member medical group

Findings, per quarter: $110,000 in billed charges
Findings, per year: $440,000 in billed charges

A few more observations…

The Challenge

Unfortunately, the benchmarks established using old analytical schemes based on various multiple ratios created more dilemmas than solutions.
Yasar A. Ozcan Professor of Health Administration Virginia Commonwealth University 2008

27

The Challenge

How do you bring your financial experts and your quality experts together?

28

The Challenge

How to evaluate costs and quality all at the same time?

29

OptiMax Applications - sample

Business Description
Specialty mental health services for just one city region of a carve-out health plan
• Improvement strategies included broader applications of outpatient specialty services

OptiMax
Targets for Improvement

Over $1,000,000 per year

Twelve member specialty medical group
• Improvement strategies included modifications in scheduling practices for both acute care consultations and out-patient visits

Over $400,000 per year

Hospital Example
Study of 131 Large Hospitals
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 95% 84% $29 M 68%

Efficiency

$35M
$45M

54%

OptiMax Scores

$82M

H1

H2

H3

H4

H5

Managed Care Example
Center
Clinical Costs / Patient

Inputs
Out of Home Costs Clinical Costs/Pt Improved Tx Plans Meeting Standards %

Outputs
Tx Plans Current % In-Home Tx Only % Patients Improved %

A B C D E F

$33,492

$29,535

$16,359 82%

65% 67%

84% $12,228 $17,365 $7,597 97% 100% 79% 78%

Sample Quality Incentives: Charting

100%

90%
80% 70% 60% 50% 40% 30% 20% 10% 0% F G E B D C A 50%

DOCUMENTATION SCORES
(Compliance with Coding Standards)
44%
33% 30% 30% 20% 12%

OptiMax Targets - sample

Medical Supply Costs
Patients Charges

• Current: $6.00/Visit • Target: $5.23/Visit

• Current: 325/Month • Target: 369/Month
• Current: $98/Visit • Target: $101/Visit

The OptiMax Score

100% 90% 80% 70% 60%

62%

Help select meaningful indicators

50%

Coach in the 40% calculation processes 30%
20% 10% 0% 1 3 4

Establish the system as an indispensible part of the management culture

5

8

9

7

6

10

2

“The relationship has brought us nothing but success and growth… excellent command of financial planning and analysis … amazing accuracy...quality of their work is always superior.”
President, Berryman Health, Inc.

CONSULTANTS TO THE HEALTHCARE INDUSTRY

99 “C” Street, Ste 207 Upland, CA 91786 Phone: Fax: Web: Email: (909) 931-7600 (909) 931-7655 www.foxgrp.com contact@foxgrp.com
Providing Excellence Since 1989

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