How Benchmarking Can Help You Improve Revenue

January 21, 2016 | Article

Health care reform is potentially reshaping the landscape of how critical access hospitals will be paid in the future. Value-based reimbursement is on the horizon and forward-thinking critical access hospitals are acting now to prepare their facilities to receive maximum reimbursement once these changes hit. Value-based purchasing is already in place for non-critical access hospitals and it separates winners and losers—to the tune of two percent of reimbursement per year. As it moves into the future, the domain weightings are changing and a fourth category of efficiency is being added—with the efficiency category assessing only the spend per Medicare beneficiary.

The chart below shows how the weightings are changing.

Benchmarking Improves Revenue

We believe that value-based purchasing will in some way come into play for critical access hospitals in the future.

Why an Operational Analysis is Your Key to Future Revenue
In order to maximize future revenue, critical access hospitals can conduct an analysis of their operational efficiency and productivity department by department.

Through this analysis, your facility can benchmark itself and compare productivity to other critical access hospitals. Benchmarks are the scorecard that help you determine how your facility stacks up against local, regional and national peers. Benchmarks are not new and some critical access hospitals have used them to help measure their financial performance. However, the concept of going department by department to uncover inefficiencies, waste and improve operations is not something most critical access hospitals have ever implemented.

Measuring productivity by statistical calculation shows where you stand now and helps you set operational goals. These goals, in turn, guide workflow and processes that improve staff efficiency, reduce costs and, when coupled with a holistic viewpoint to patient care, create a better patient experience. Benchmarks are not just about operational efficiency; they help you put the processes and practices in place that can generate improved patient satisfaction scores—another future determinant of revenue.

Benchmarking for Efficiency 
When benchmarking, a number of factors come into play such as: patient mix, technology investment, staff training, staff experience level, facility layout, physician practice patterns and volumes. For this article, we’ll examine staffing. Most critical access hospitals focus exclusively on nursing staff, but keep in mind that other departments impact nursing efficiency and need to be evaluated.

Staffing Efficiency 
When looking at staffing levels, the question you want to answer is: what is our current productivity level and how does it compare to outside peers? Once the calculations have been completed, it becomes a question of why there are differences and is the level at your facility acceptable? In our work with facilities, we have found a wide variation exists in the critical access hospital industry, in regards to appropriate staffing levels. You may recall in statistics class the concept of variation; there should be a normal bell shape curve that occurs around the performance of departments. In actuality, too many facilities are two or three standard deviations away from an optimal performance level.

In order to determine your productivity, break down the total hours in each department. How many hours were non-productive? Overtime? Call time? Worked hours? Start with worked hours and look at that per statistic. For example, a med/surg floor would look at worked hours per patient day. If the benchmark for med/surg is 8.5 worked hours per patient day for the unit, and your med/surg department is averaging 15 worked hours per patient day, you have a long way to go to meet that benchmark (but it can be done!). If you have never assessed your productivity and do not know the benchmark, you have no way to determine how well— or how poorly—you are actually doing.

Benchmarks give you data to work against. Once you know your benchmarks per department, you can start to ask questions. Why are we different than top performers? Is it our volumes? Is it staffing, training, processes, procedures? In the past, any sort of issue was typically dealt with by throwing more staff at it. This will no longer work as the Centers for Medicare, and Medicaid are not going to pay for inefficiency.

Start Benchmarking Today
The benchmarking process starts with learning. When you discover where you have been and where you are now, you can lay down the path to where you want to be in the future. The advent of better technologies has created a huge opportunity for critical access hospitals to begin to access this information and use it to make better and more informed decisions that impact your facilities efficiency. For example, by looking at staffing levels during peak and low census times of the day, week or months, staff scheduling can be done on a more-timely basis. Once an organization begins this continuous learning, you can begin to add deeper analysis. An example is to study time per procedure in surgery. By understanding past times, you can predict with a high rate of accuracy how long a procedure will take (with exceptions, of course). This allows you to create more efficient staffing and scheduling for those procedures. This type of data will also enable you to meet patients’ growing demand for more information and better communication up front.

Changes to the reimbursement model are coming, and there has never been a better time to begin the Journey to the Operationally Intelligent Critical Access Hospital!

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