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Cost Repositioning – an Institutional Case Study

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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?


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