Reading

Rehabilitation
Implementing Patient-Focused Care
Reading Rehab Hospital Roots
HealthSouth’s RRH Facility
 Built in 1925 the historic
Stone Manor on a 30-
acre campus.
 “The million dollar home”.
 Was originally the home
of Isaac Eberly, a
prominent businessman
and hosiery mogul.
Leading Change
 Clint Kreitner: CEO of RRH from 1989-2000
 History:
 Earlycareer as a Naval officer
 Respected entrepreneur with 4 successful
companies
 On board of RRH for 3 years
Kreitner’s Forecast
 Kreitner: “The hospital had an awesome reputation, a
dedicated staff, and no debt.”
 Instincts: his insight of business told him that RRH was
headed for difficult times
 Reasons:
 Over 50% of RRH referels came from one large hospital
 Industry was inflicting double digit annual increases on the U.S.
economy
 Action:
 He began forums with the staff to communicate need for change
 Opened the financial books to the staff to show them what he saw
Staff Reaction
 This type of communication was a first for RRH
and not typical for that industry.
 It made many of the staff feel uncomfortable
because they had been in a thriving industry for
15-20 years and did not want to believe they
were in trouble.
 Needless to say, his opinion was not universally
shared due to his lack of healthcare industry
experience.
Rehabilitation Services
 Brief History of RRH from 1958 to present
 In 1998 RRH had 76 beds, 116 therapists and 25 million in
revenue
 Most patients came to RRH after treatment of an illness or injury
at an acute care hospital
 Rehab hospitals restore basic functioning, such as walking,
climbing stairs, getting dressed, and feeding oneself
 Used Functional Independence Measures (FIM's)
 Goal was to help patients leave functioning as independentely as
possible
Rehabilitation Services
 RRH, like other rehab hospitals, also differed from acute care hospitals in being smaller than
most of them.
 RRH's annual revenues of $25 million compared to more than $200 million for the largest and
$45 million for the smallest acute care hospital in its region
 RRH admitted patients with a wide range of diagnoses
 Head injury
 Stroke
 Spinal cord injuries
 Orthopedic problems
 Received care from 5 disciplines
 Physiatrists (rehab dr.)
 Nurses
 Social workers
 Physical therapists
 Occupational therapists
 If patient had head injury or stroke:
 Psychologists
 Cognitive therapists
 Speech therapists
Effectiveness
 Measured effectiveness by using three dimensions:
 Average length of stay
 Increase of functional outcomes
 Patient satisfaction
 Average length of stay compared favorably to the national average
which was 21 days
 Achieved nearly the same increase in the level of functional
independence
 Patients were more satisfied with quality of care at RRH compared to
national benchmark)
 Patient care declined over the next 8 years
 This was due to shorter lengths of stay rather than due to fewer patients
 Fewer patient days = Less revenue
Mission
 Mission of Reading Rehabilitation
 As a subsidiary of Adventist Health Ministries, Inc, Reading
Rehabilitation Hospital was a non profit organization in
Pennsylvania.
 The well being of the patient is the number one priority of
the RRH, together with its sister companies.
 Because of the center’s affiliation with the Adventist church,
commitment to the patient’s well being became stronger.
 The mission of the Reading Rehabilitation center did not
limit itself to the physical healing, but spiritual healing as
well.
Purpose
 The organization’s values, as well as strategic and
operational decisions were also base on this vision.
 The mission and vision of Reading Rehabilitation
Hospital was put at a test due to the competitive
world of health care.
 As mentioned by Kreitner, the CEO brought in since
1989, finding balance between mission and real
world business practice was one of the greatest
challenges faced by Reading Rehab.
 Pressures from Managed Care
 1980’s and 1990’s healthcare costs were escalating out of control
with adverse consequences for both the federal budget and U.S.
corporations.

 The government responded with changes to Medicare and Medicaid.

 In 1983, Medicare introduced a Prospective Payment System (PPS)

under which standard payments were made based on a patient’s
diagnosis, regardless of the institution’s actual cost.

 Medicaid, funded through state budgets, declined in funding over the

1980’s and 1990’s, reducing the level of reimbursements.

 One of the most significant innovations affecting the U.S. healthcare

industry was the rapid emergence of “managed care.”
What is “Managed Care”?
 The term “managed care” is used to describe
a variety of techniques intended to reduce the
cost of providing health benefits and improve
the quality of care.
 According to the National Library of Medicine,
“managed care” encompasses programs.
Main Purpose:
To reduce unnecessary health care costs through a variety
of mechanisms such as:

Economic incentives for physicians and patients to select less costly forms of care

Programs for reviewing the medical necessity of specific services

Increased beneficiary cost sharing

Controls on inpatient admissions and lengths of stay

Selective contracting with health care providers

Intensive management of high-cost health care cases

Fee-for-Service (FFS)
Until 1980s private health insurance plans allowed patients
to choose their own doctors.

Doctors were free to prescribe any treatment consistent with accepted

medical practice and to determine fees for such treatment.

Under this fee-for-service (FFS) model, the role of the

insurance company was simply to “pay the bills.”
Change…
• This all changed in 1980s with new state laws that allowed insurance companies to
negotiate prices directly with health care providers.
• In attempt to reduce costs…

Managed care organizations (MCO) adopted a more business-like

approach for delivering care.

The idea was to get doctors and hospitals under contract at

discounted prices and then control the use of services by managed
care health plan members.
What would happen …
• Patients would choose from a predetermined list of
participating doctors, a primary care physician (PCP)
who served as the “gatekeeper” for the patient.

• These changes meant that hospitals had to perform

tasks more efficiently so costs did not exceed
payments received from MCOs.
Reading Rehabilitation Hospital
 Acute Rehabilitation hospitals like RRH were cushioned
from some of these changes in the healthcare system…
at least for the time being!
 Most RRH patients were on Medicare, and the more
generous the Medicare rate was, the more advantage it
was for the Reading Rehabilitation Hospital.
 Kreitner noted, “”At times, we would keep patients twice
as long as we do, and get reimbursed for it.”
 “But we can’t afford to get lazy. So we strive to keep
costs down and maximize incentive pay, rather than
maximizing the reimbursement.”
 Main Goal…
“TO MAXIMIZE INCENTIVE PAY”
RRH (Reading Rehabilitation Hospital) was at advantage because they
would keep patients longer and they would get reimbursements

Prospective Payment System did not force them to lower their cost because
Medicare would pay the difference between average cost and what their limit was
Competition
Upstream acute Rehabilitation Downstream
care hospitals Hospitals Organizations
 Reading Rehabilitation Hospital
 Onlyacute rehab in Pennsylvania market
 Accounted for about 6% of market share
 Shared the market with 3 acute care hospitals
 Reading Hospital & Medical Center (RHMC): 57%
 St. Joseph’s Medical Center: 24%
 Community General Hospital: 13%
Patient Flow
Local Acute Care Hospitals

Trauma Centers Incoming Patients

Physicians (home/nursing homes)

Home

Discharged Patients
Nursing homes
Continuum of Care
 Acute care hospitals kept patients longer
 Create new efficiencies and fill empty beds
 Traditional nursing homes began offering
many rehab services
 Rehab expansion of other industry
participation would have a negative effect
on RRH
Market Conditions
 RRH = only licensed provider of acute rehab
services in Berks County
 RHMC tried to buy RRH’s license
 Clint
Kreitner valued it at $6-$8 Million
 Pennsylvania Regulations required Certification of
need (CON) before granting license for new acute
rehab service
 CON limited rehabs services others could provide
Market Conditions
 Increasing competition in product market
 Highly competitive labor market
 Occupational Therapists
 Physical Therapists

 Unfavorable Supply/Demand
 Kreitner: “We constantly live in fear that our therapists
will bail out en masse and as a result, the
organization will be brought to its knees.”
The Rehabilitation Process
 Admission from upstream providers
 Care providers from multiple discipline
evaluate patients
 Weekly conference involving interaction
between the patient and care providers
 Integrated plan care
 Discharge
The Rehabilitation Process
Process Improvement
 Kreitner assumed Leadership
 Patient care across disciplines ineffective
 Delay in treatment and inconsistency among
treatments
 Kreitner Implemented Continuous Improvement
Initiative
 Kaizen Effect Process
Process Improvement
Process Improvement (Barriers)
 Issues impacting the process improvement
 Staff disciplines cannot cross train
 Staff could not be in “ready” status
 Patient severity was not known in advance
 Shorter length of stay, immediate need to the
discipline
Performance Improvement
(Barriers)
 Variance in patient acuity leads to
scheduling problems
 Service lines are not flexible for the short
length of stay
 Medicare reimbursement is driven to the
therapy target – loss of revenue
Staffing Barrier Specifics
 COP for CMS Requirements for IRF
 Dailyaccess to Physician
 24 hour nursing
 Minimum 3 hours per day/5 days
 Two forms of therapy available
Reading Rehabilitation Hospital:
Where are they now?
 Acquired by HealthSouth Corp in 1998
 One of multiple purchases in the 1990’s
 Others included NovaCare, Columbia/HCA
 Mix of facilities, including acute care rehab

 Not unlike RRH, faced challenges due to changing reimbursement

landscape
 Medicare Balance Budget Act
 Managed Care Organizations

 Succeeded in maintaining, then increasing revenue projections

 Diversification
 Capturing market share (simultaneously solving RRH volume problem)
Changes in Organization Model
 Prior to sale, RRH returned to the “departmental” structure
 Staffing efficiencies returned
 Issues relation to patient care addressed via better process coordination

 As HealthSouth, RRH continues to use this model, now lead by a primary

nurse

“24-hour team of registered nurses and personal care assistants assess and
attend to each patient's needs. They work in partnership under the primary
nurse-model, which assures continuity of care. “

 Although “time-limited” twice weekly conferences were piloted, weekly

interdisciplinary team meetings have been adopted under HealthSouth

“Each week your treatment team will meet to discuss your progress, goals and discharge
plan.’
Continued Growth and Success
 The HealthSouth Reading Rehabilitation Hospital has expanded to offer
 Inpatient Rehabilitation
 Outpatient Rehabilitation
 Home Heath Care Service

 Continues to demonstrate high levels of patient satisfaction, as evidenced

by higher than average ratings in two important measures:
 “Would You Recommend”
 “Overall Quality of Care.”

 Utilizes an “Outcomes Measurement” tool to track each patient’s functioning

both upon admission and after treatment

 Uses such data to benchmark outcomes and ensure programs are meeting
patient rehabilitation needs
Reading Rehab Group:
 Jimmie Olazaba
 Stacey Benson
 Anemone Basabakwinshi
 Tahira Raza
 Ailiya Raza
 Quynh Smith
 Charles Workman
 Kenith Causey
 Grace Cruz
References
Commitment Quality. Retrieved November 7, 2008, from HeathSouth
Reading Rehabilitation Web site:
http://www.healthsouthreading.com/quality_commit.asp
Frequently Asked Questions. Retrieved November 7, 2008, from
HeathSouth Reading Rehabilitation Web site:
http://www.healthsouthreading.com/quality_commit.asp
Gittell, J.H (1999). Reading Rehabilitation Hospital: Implementation Patient-
Focused Care, Teaching Note. Harvard Business Review, 5(899-139), 1-
16.
Managed Care. Medline Plus. Retrieved November 4, 2008, from
http://www.nlm.nih.gov/medlineplus/managedcare.html
Managed Care. Retrieved November 4, 2008, from
http://en.wikipedia.org/wiki/Managed_care