1. Cost Repositioning – an Institutional Case Study
Kandice Kottke-Marchant, MD, PhD
Chair, Robert J. Tomsich Pathology & Laboratory Medicine Institute
Cleveland Clinic

2. Cleveland Clinic’s Cost Repositioning Approach

3. Cost Repositioning Objectives
Provide value and ensure affordable care for patients
Leading innovation in changing industry
Transformational cost structure changes
Balancing the shift: volume to value

4. Cost Repositioning 2014 - 2016 Goals * Implemented Savings
(in millions)
Current workstream goals
Talking point if asked about tie to LRFF – Difficult enough to forecast the next three years. So much changes therefore we are pushing for 3 year goals and will continually re-evaluate the pervasiveness of the goals/cuts.
Clinical
Programs & Assets
Non-Staff
Stewardship
20% Overlap
Indirect
Staff
Research
Education
Total
Value Based Care

5. Org Chart Executive Check In
CEO, Chief of Staff, Chief Strategy Officer
Task Force
Physician-Led with Members Representing:
Physician Leadership
Administration
Nursing
Marketing & Human Resources
Workstreams
Project Management Office
Finance
Human Resources
Marketing / Communications

6. Structure Full engagement & sponsorship of CEO / Chief of Staff
Executive Leadership
Full engagement & sponsorship of CEO / Chief of Staff
Physician-Led
Task Force
Cross-functional physician, nursing and administrative leadership team
Workstreams
Intentionally not aligned with org. structure to encourage transformative change

7. Workstreams Clinical Indirect Non-Staff Staff Stewardship Research
Education
Value Based Care

8. Project Pipeline Total 134* 59 22 Idea / In-Process Approval
Implemented
Clinical 35 17 4
Education 5
Indirect
23 teams* 18
Non-Staff 10
Research 33 1
Staff 2
Stewardship 27 8
VBC
TBD
Total
134* 59 22
As of 4/15/14
*Each Indirect team will present numerous ideas

9. Specific Pathology and Laboratory Medicine Drivers for Cost Reduction

10. Transparency and Decreased Reimbursement
Pathology & Lab Med
Cleveland Clinic
452%
of CMS*
406%
of CMS
285%
of CMS
200%
of CMS
100% Medicare
147%
of CMS
45-80%
of CMS
45-80%
of CMS
* Reflects new lab pricing; UHC’s current price is 537% of CMS

11. Additional Drivers Devaluation Biopsy codes Cytopathology codes
Revaluation
IHC codes
Other changes
Molecular diagnostic billing codes

12. Robert J. Tomsich Pathology & Laboratory Medicine Institute Approach

13. RT-PLM Cost Repositioning Summary
Reduce cost per test by 30%
How?
Assess current operations
Develop enterprise-wide transformational strategies: optimize laboratory resources
Implement
Should be the first slide unless there is an agenda.
2014
12%*
2015
10%
2016 8%
*2.6% from 2014 budget + 9.4% new in 2014

14. Major Projects Department Reorganization Administrative Reorganization
Lab consolidation
Pathology sub specialty consolidation
Allogen: transplant lab reorganization
Preanalytics optimization

15. Big Picture: How We Are Saving

16. Department and Administrative Reorganization

17. Robert J. Tomsich Pathology & Laboratory Medicine Institute 2013
Dr. Marchant, Inst. Chair/
J Seestadt, Admin
Cleveland Clinic
Laboratories
Dr. Bosler, Head
Dr. Stagno
Vice Chair of Operations
D Helmick, Finance Director
Departments
Clinical Pathology
Dr. Hsi
Molecular
Pathology
Laboratory
Medicine
Dr. Hsi
Molecular
Pathology
Anatomic Pathology
Dr. Goldblum
Regional Pathology
Pathology
Dr. Goldblum
Regional Pathology
Cleveland Clinic
Laboratories
Florida Dept. of Pathology
Preanalytic Services
Enterprise Test Utilization/Consultation (NEW) Dr. Procop
Family Health Centers
Centers
Test Development
Pathology Informatics
Internal Assessment & Compliance
Continuous Improvement
Biorepository
Research
Education

18. Administrative Restructuring
1st Tier: Clinical Operations
2nd Tier: Lab Med and
Preanalytics
Non-Clinical Operations 1
FORMER: 41 FTE
REVISED: 23 FTE*
REDUCTIONS: 13 FTE
FORMER: 25 FTE
REVISED: 23 FTE
REDUCTIONS: 2 FTE
FORMER: 45 FTE
REVISED: 34 FTE
REDUCTIONS: 12 FTE
Align management
(regional hospitals)
Accountability
Supervisor + team leader/coordinator
PreA
PreA
FHC CP
Lab Med MP
Lab Admin
Quality
Informatics
Finance
Education RP AP
Path

19. Lab Consolidation

20. Lab Medicine Consolidation – Why?
Increased efficiency and decreased cost/test
Enterprise subspecialty lab oversight
Standardize enterprise quality and compliance
Enterprise-wide oversight of laboratory operations and preanalytics
Consolidated pre-analytics will improve quality and decrease errors

21. Ashtabula CMC H
Euclid Hospital H
Cleveland Clinic
Hillcrest Hospital H
Lakewood Hospital H
South Pointe Hospital H
Lutheran Hospital H
Marymount Hospital H H
Fairview Hospital
Following the completion of lab and pathology consolidation, main campus will ultimately see about a 32% increase in billable tests. H
Medina Hospital

22. Lab Consolidation Process Highlights
Enterprise Optimization Committee
Members from across the enterprise –
Hospital presidents/COO
pathology and laboratory medicine (SME)
Nursing
IT, logistics, preanalytics, finance, quality
Defining required service levels between main campus and regional hospitals.
Scope: Daily draw times, standardization, TAT, couriers (q2hr), billing, communication

23. Lab Test Consolidation Plan

24. Pathology Consolidation - Why?
All enterprise pathology specimens with subspecialty signout
Improve histology and cytopathology processing efficiency: decrease cost/test
Pathologist RVUs 80th percentile target
Standardize frozen section & cytology rapid reads - ePathology

25. Pathology Consolidation
Professional Subspecialty Service Model
Frozen Section Coverage
Surgical Pathology & Cytopathology subspecialty plan
Credentialing
Consolidate Technical Operations
Accessioning, specimen tracking, courier deliveries, histology, cytology, billing, etc.
Facility & Equipment Prerequisites
Main campus office space
Biopsy cell
Digital scanners and web cams
Scheduling system

26. AP Consolidation (Regional to Main) 2013 Workload by Subspecialty
Subspec. Wt. FTE Need^
GYN GI
Breast
SFT
Ortho GU
HPB
ENT
Derm
PUL
10.20
Cyto
BM/Lymph (EH)

27. Pilot Metrics Lost specimen rate by site of origin
Critical Value Performance for test that are moving
# calls to AP pathologists for coverage (New for AP)
Clients Service performance metrics
% or # of STAT orders for tests that are moving
Length of stay metrics by hospital
TAT for top 10 tests by volume
AP Bx TAT
Logistics Measures
% on time pick ups and % of scheduled pickups complete
Duration of routes and time spent at each site for pickup
% that short notice Pathologists arrive within 60 minutes (New to Pathology)
Revenue
Denial Rate performance
Productivity Impact
Earned FTE vs. Actual FTE at pilot sites (Productivity Report)

28. RT-PLMI Cost Repositioning 2014 Timeline
2nd Tier Reorg
Pathology
Consoli-dation
New Managers Hired
Approvals granted
September
October
December
August
May
June
July
First RT-PLMI Ent. Opt. Meeting
Dept + Admin
Restructure
First Pilot Meetings with Lutheran and Marymount
Pilots Begin

29. Percentage of Savings = 9.4%
Total 2014: 9.4% new in % from 2014 budget

30. Challenges Long-term, multi-year transformation
Change throughout organization
Aligning annual planning timeline / process
Organizational engagement
Communication to all stakeholders
Setting service level expectations

31. “….the pathway to improving quality and safety is the same pathway to lowering cost, and that involves relentlessly taking waste and unnecessary variability out of our processes.”

32. Questions?