Squeezing Water From a Stone: How to Get More From Existing Capacity and Add More to Your Bottom Line

As the health reform law now stands, American hospitals must trim $155 billion in waste over the next decade.

But how will that happen? Job freezes and layoffs are no longer viable solutions. Asking staff to do more with less cannot continue indefinitely. Mistakes cost lives and money. Throw in a projected nursing shortage, an aging population and health coverage for millions more Americans, and you have the ingredients for calamity.

The law will require hospitals to deliver the highest level of patient care or be penalized by extensive losses in reimbursement. According to Moody's analysts, hospitals that can't generate enough efficiency to stay abreast of all the upcoming changes will be forced to make spending cuts and face mergers after 2014.

A PricewaterhouseCoopers report projects that a 300-bed hospital with poor quality metrics could lose more than $1.3 million a year, starting in 2015, and because the results will be published online, losses could snowball with damage to the hospital's reputation.

Hospital executives need a solution that will address overcrowding and produce revenue immediately. Could it be as simple as keeping better track of patients, employees and medical devices?

After decades of cutting staff and services, and implementing industrial efficiency concepts like Six Sigma and Lean Production, hospital executives might do well to consider the roots of those concepts. They were an acknowledgement by corporate leadership that industrial automation alone was not enough. People and technology have to hum along at the same pitch to optimize the overall manufacturing process.

Now a sizable number of forward-thinking hospitals are acknowledging the reverse. After years of focusing on people-oriented efficiency programs, they've realized that people alone can't achieve optimal operational performance. So they have turned to technology.

By incorporating various workflow technologies into their operations, redesigning current operations and involving employees in the changes, these hospitals are speeding processes, eliminating redundancy, getting valuable business intelligence and assigning accountability to help produce incremental but steady performance improvement.

Automating patient flow
One example of this trend is the growing use of logistic control technology in patient flow. Addressing overcrowding exclusively as an ED problem was treating the symptom and not the disease. Without available beds for ED admissions, emergency personnel must split their time between emergent cases and patients who should be moved to the units. Automated patient flow squeezes wasted time out of the bed turnover process, converting that time into space — as much as 20 percent more space without adding a single new bed. By speeding bed turns and transports, patient flow automation can make many more beds available.

Optimizing flow is perhaps the most immediate way to improve operating margin and control increased demand for access. In 2007, The Advisory Board Company quantified the cost of poor patient flow. It said a hospital with poorly managed flow will use its staffed beds about 48.5 times per year. In contrast, hospitals managing their patient flow efficiently will use their staffed beds approximately 62 times per year. For an average-sized hospital of 300 beds with an average contribution margin of $3,000 per discharge, that amounts to a $10 million swing.

With the help of TeleTracking's Avanti consulting division and TransferCenter™ software, Methodist Healthcare System in San Antonio was able to double its transfer volume within one year. The six-hospital system, which provides tertiary services to a large population surrounding San Antonio, accomplished this by automating its existing transfer center and centralizing all enterprise-wide patient flow logistics around it to ensure that all bed capacity within the system was being used effectively.

With federal cuts for hospital-acquired infection-related hospital stays beginning next year, this capability could help hospitals save more than $7 billion in the next decade.

Because systems like TeleTracking automatically trigger communications and alerts to all personnel involved in flow, they can substantially impact the fight against HAI, which is sure to be a key issue under reform. Currently, manual infection control processes can unintentionally create gaps in communication, leaving housekeepers and transporters unknowingly vulnerable to infection by entering an isolation room without warning. Because they are the most travelled employees in a hospital, they can potentially endanger the entire patient population.

However, the real-time nature of patient flow automation permits instantaneous alerts for all appropriate personnel, who can then take measures to greatly reduce the chance of exposure. With federal reimbursement cuts for HAI-related hospital stays beginning next year, this capability could help hospitals save more than $7 billion in the next decade, the total amount the Congressional Budget Office projects the federal government will be withholding.

RTLS and reform

A related technology known as RTLS (Real Time Location Systems) is helping hospitals dramatically reduce search time for medical equipment and decrease capital expenses. TeleTracking's RadarFind asset tracking sensor network enables staff to locate tagged items on a floor plan computer view of the entire hospital or individual patient care areas. The network also yields information on equipment downtime and utilization for better decision-making about the need for purchasing additional equipment.

Southeastern Regional Medical Center in Lumberton, N.C., saved nearly $750,000 in one year by using RadarFind's sensor network to track mobile medical equipment, such as IV pumps and cardiac telemetry devices. Memorial University Medical Center in Savannah, Ga., has slashed costs nearly 40 percent since the RadarFind system went live in May 2010. The hospital saved more than $300,000 in a year-over-year comparison of asset management costs through August 2010.

The savings multiplies quickly when these technologies are applied enterprise-wide. Methodist recently announced plans to install RTLS across five of its six hospitals.

Complete ROI in a year
RTLS systems can typically pay for themselves in less than a year. So why wouldn't hospitals rush to adopt a low-cost tool that can save hundreds of thousands of dollars and improve patient care?

For one thing, early generation tracking systems were fraught with technical problems which interfered with clinical technologies, but newer technologies have removed the interference issues. For another, while hospitals generally are quick to adopt treatment technology, they are slow to accept workflow improvement technology because they don’t perceive themselves as an "industry."

To overcome those obstacles, it may be necessary to incentivize hospitals so they'll invest the time to become familiar with the many benefits of workflow technology. Federally-budgeted incentives could speed the industry-wide adoption period from several years to several months. Given the examples above, that could be the difference between saving and squandering billions of dollars over the 10-year period stipulated by the White House.

Most importantly, in the context of healthcare reform, these technologies can help ensure that patients have timely access to the kind of care they need at the quality level they deserve.

Learn more about TeleTracking.

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