Picking Best Practices to Drive Improved Performance Across Healthcare

How to choose the most effective approach to improve cost structure and deliver better patient care across healthcare in America The US healthcare sector today ranks as one of the industries most affected by new regulation as the wide-reaching effects of the Affordable Care Act and changing expectations have made themselves felt across every aspect of operations. Rising costs, lack of transparency, and highly complex supplier and billing procedures have, in fact, made healthcare a poster child of opportunity for business transformation. What adds a significant layer of complexity is the increased number of multi-facility organizations that have emerged within US healthcare. This means one organization stretches from hospitals to surgery centers to physician practices and even long-term facilities. For HCOs that have not yet made transformation a key platform, their very financial viability may be at risk. Challenges appear at every juncture: providers expect reimbursements to decline (some predicting they will have to cut costs by up to 30 percent just to break even), increased pressure to be more accountable to patients and industry watchdogs is adding to costs, and outdated supplier management procedures have created the kind of inefficiencies consultants can only dream of. All of these not insignificant challenges can, however, be summarized by just one imperative: improving the financial performance of the organization. The financial health of the industry will, first and foremost, determine its continued viability. Current pressure on hospitals’ operating margins have fuelled a renewed interest in proven methods of cost reduction to drive critically needed savings, while at the same time regulators are demanding better service. These two conflicting pressures are driving the kind of self-analysis that healthcare has not experienced before. Many HCOs are looking to proven methodologies that have already shored up industries ranging from automobile to banking, themselves not immune to external market vagaries and increased regulation. For most institutions, their very survival will depend on their ability to drive some fairly unfamiliar strategies through their operations, starting from the inside out. These include leveraging the centralization and standardization of Shared Services; reevaluating process improvement through methodologies like Six Sigma, Continuous Improvement or Lean; and optimizing and streamlining a bloated workforce. Process improvement has become a top priority for hospitals and health systems across the country, driven by changes such as EMR implementation, health information technology, reimbursement mandates, new care delivery models and a focus on quality of care. Various process improvement tools are being deployed to monitor and track outcomes as part of a transformation initiative. Business Transformation Based on Established Best Practices Financial services, insurance, the automotive industry … each has weathered storms of varying magnitudes, emerging with more robust processes and procedures that have helped them not just survive but also succeed. As the healthcare industry grapples with its challenges, here are 10 strategies that have already proven themselves: 1. Low Hanging Fruit One approach to prioritizing projects is to focus on areas that offer the greatest opportunities. For most HCOs, supply chain represents the largest expense category when the labor associated with managing this process, and the cost of logistics, is added to the procurement cost of goods and services. 2. Benchmarking The first step to transforming is getting a measure of how you match up with existing processes. Measuring "as is" performance will provide a benchmark. This can be used to track performance towards desired "to be" levels, compare performance across hospitals or business units, or compare your operations against others, wither within your industry or across industries. A common approach is to take highly transactional processes like Accounts Payable and define internal practices. Benchmarking will then help you identify potential efficiencies, which can be targeted by integrating of technology with process improvement. 3. Inside Out Approach Lack of transparency and accountability, bloated staff, a multitude of suppliers, and confusing billing processes to say the least … healthcare presents a case study of opportunities for transformation. As with so many initiatives, the most successful approach starts from the inside and works its way out. This means reevaluating support services for functions like Human Resources, Finance, and Procurement. Marketing has also emerged as a strong candidate for centralization and standardization. [eventpdf] 4. Shared Services A centralized and standardized service delivery model has already reaped high profile successes across industries like financial services, manufacturing and retail, as well as the public sector. In the UK, the National Health Service started its transformation, leveraging Shared Services, nearly two decades ago. Here in the US, increased accountability has driven similar initiatives through the more forward-looking institutions. Today, even those that have shirked the spotlight have no choice but to join in. 5. Front-facing Synergies In more conventional business environments, duplication of processes and effort across "business units" present a prime opportunity for combining services and leveraging synergies. The benefits are twofold: first traditional internal process improvements drive lower cost and higher quality services; but in addition, external facing activities like marketing, promotion, and credentialing of providers also benefits from a more sustainable strategy based on collaboration and centralization. 6. Outsourcing Over the past half a dozen years BPO providers have been developing their transactional and process expertise based on specific industries’ needs, with healthcare recognized as one of the key verticals poised for industry-specific BPO growth. This specialization (e.g., benefits administration) means that today’s outsource providers know your processes, and the requirements of your industry as they impact service delivery, better than you do. They are also keen to partner with you and drive improved business insights and value through collaboration. For many HCOs, the question of whether to step up their internal capability by investing in the new automation technology, or whether to partner with a provider who has already made that investment, is a crucial one. 7. Data Analytics Todays’ value-add strategy is all about analytics. And when you combine the insights of internal process data with the power of big data (unstructured external market data) the patterns that emerge tell you so much more about your business. The real benefit of the kind of access to data that today’s technology offers is that it provides information on suppliers, spend patterns, and regional differences which were previously just not available. AS a result, management is able to make smarter decisions not just better ones. 8. Process Automation While the founding principles of Shared Services-type models are based on centralizing work and getting fewer people to do the work previously done by many, we are now finding that even the Shared Services model is just a stepping stone towards a more fully automated environment. The latest is Robotic Process Automation solutions offers a "virtual" human operating at the user interface level, taking the screen-scraping technology a step further by introducing a more cognitive type of element (though we are still far from the capability of IBM’s Watson). What this means is that industries whose support processes are heavily repetitive will stand to gain from the various benefits of automation – including speed, zero errors, and auditability that this implies. 9. Agility For businesses today – and healthcare is no exception – a key attribute is "agility". This means the ability to react speedily to changes in internal process volume or demand, as well as to changes in the external market, which impact the end-customer (the patient). Organizations weighed down by embedded processes and outdated systems will find that they lag their competitors and fall down in customer service and satisfaction. Developing a service delivery framework tat has agility and flexibility inbuilt is therefore a priority. 10. Culture One of the core drivers of both transformation and of new improved service is "culture." While difficult to summarize in a paragraph, culture is heavily dependent on leadership, and extends to the way business is done. This includes being open to suggestions, allowing mistakes to happen in the name of progress or innovation, keeping an open door and looking outside your organization (and industry) for ideas. Culture is no more about quarterly staff picnics than it is about posters with smiling faces professing the "customer is king". Culture is the stuff that surrounds you and your team. Done right it is extremely powerful and will keep your attrition rate low and your performance rate high. Whatever the Methodology – Take a Consistent Approach to Change Management There are a multitude of approaches that HCOs can take to improve cost structure, increase the quality of service, drive business intelligence or impact the bottom line. But whether you opt for Shared Services, Continuous Improvement, Kaizen, Six Sigma or Lean … there are a few steps that remain constant. These include forming a team that will take a lead in developing a business case and implementing the project; agreeing targets and objectives to work towards; collaborating with customers/stakeholders so they have skin in the game; establishing metrics that will chart your progress; selecting a methodology to drive your transformation; testing improvements along the way; rolling out the changes across the business; and constantly communicating and engaging with your customers. Following this approach will maintain a structure for transformation and guide your team along the way. [Note: if you liked this article, please use the buttons on the left side of the screen to share it across your LinkedIn groups. Thank you for being part of SSON's community - Barbara Hodge] Interested in finding out more about how to drive Business Transformation and Improvement through healthcare? Join us at Business Transformation for Healthcare and Hospitals in Dallas, TX, January 26-28, 2015. Key topics to be discussed will include: Latest trends in provider consolidation and integration as a result of healthcare reform Potential changes in healthcare reform given the shifting political environment Strategies and tools to increase responsiveness to market and regulatory changes Leadership in times of uncertainty Register today – download the brochure here to get more details.

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