1. Surgical Directions ©201511

2. 22 Why Focus on Perioperative Services? Perioperative Services drive hospitals’ performance. Over 68% of better performing hospitals’ revenue 60% of margin is derived from better performing perioperative services. Successful system under Value-Based Purchasing/ACO provides both surgeons and payors more value for surgical services. Equation: Outcome/Cost By helping our clients tackle the complexities and minimize political and cultural barriers, our clients have experienced significant improvements in surgeon, staff, and patient satisfaction, which has resulted in improved access to the OR, sustainable growth in surgical volume, and increased market share.

3. Surgical Directions ©201533 Healthcare Leaders Role As healthcare leaders our goal is to improve the value of Perioperative Services

4. Surgical Directions ©201544 The OR of the Future Successful healthcare system perioperative services have common characteristics:  Collaborative governance structure  Transparent, comprehensive information  Engaged involvement of physicians, nursing and administrative leadership  Focus on new innovative model to deliver care  Surgical home  Bundled payment  Focused processes to enhance OR efficiency  Turnover times  On-time starts  Case time  Lower costs  Uncompromised focus on clinical excellence

5. Surgical Directions ©201555 Situation: Beaumont Royal Oak Flagship hospital in trouble and struggling: Not meeting financial goals: Merger talks with Henry Ford terminated Merger discussion with Oakwood Bond refinancing CRNAs employed by hospital meeting to discuss unionization Conflict between hospital and system COO risen to board level Anesthesiologist had only a marginal role in operational leadership and less than optimal relationship with surgeons, nurses, and CRNAs.

6. Surgical Directions ©201566 CEO “Wants” of Anesthesia Goal: Beaumont Health System is the #1 academic medical center in the United States Drive profitability, volume Ensure surgeons are happy Ensure surgical outcomes exceed those of UHC hospital benchmarks Ensure CRNAs do not unionize Relieve hospital administration of the burden of managing the perioperative service line Ensure hospital leadership meets political and budgetary goals

7. Surgical Directions ©201577 Royal Oak Has Opportunities for Improvement MetricBenchmarkRoyal OakRating Shared Governance SSEC: Multi-disciplinary approach to operational leadership Surgeon as Chair Matrix organization with traditional ‘nurse in charge’ model Medical Director Anesthesiologist / CRNA Co-manages OR with nursing Respected Clinically Active Surgeon and anesthesia chair at each tower Lack of collaboration and cross coverage Daily Huddle Multi-disciplinary approach to proactively manage the schedule 1, 3 and 5 days out M, W, F Scheduling Meeting lacking depth and scope in proactive schedule management Accountability Strong and decisive leadership Metrics, Dashboards and KPIs to monitor performance and objectives Culture of Accommodation

8. Surgical Directions ©201588 Royal Oak Has Opportunities for Improvement MetricBenchmarkRoyal OakRating Block Schedule 8 hr blocks plus open time; 75%-85% utilization Current utilization under 50% Cases per OR Main OR IP 950 cases x 50% = 475 cases OP 1,400 cases x 50% = 700 cases Total: 1,175 cases per OR 732 cases per OR Day of Surgery Cancellations <1% ~1% Staff indicate much higher Turnover Time IP: 20-30 minutes OP: 10-20 minutes Not Tracked First Case On-Time Starts 90% or greater within 5-7 minutes of start time Not Tracked NA Notation: Excludes 4 CV OR’s and CV Case Volume

9. Surgical Directions ©201599 Recommendations  Establish a collaborative governance structure -SSEC  Empower anesthesia to co-manage OR  Reallocate block to balance capacity with demand  Build organization consensus on a perioperative growth strategy  Break down silos and build collaboration  Develop system-wide dashboards and key performance indicators  Accountability through redefined roles and responsibilities  Develop standard operating procedures to remove variability -Scheduling -Pre-Admission Testing ( PAT) -Parallel Processing -Leverage IT capabilities (tracking board, etc.)

10. Surgical Directions ©201510 TASK FORCES/PERFORMANCE IMPROVEMENT TEAMS Process Optimization Initiatives

11. Surgical Directions ©201511 Create a Perioperative governing body to align incentives. An Operations Committee for all aspects of Perioperative Services Surgical Services Executive Committee (SSEC) Surgical Leadership OR Nursing Leadership Anesthesia Leadership Sr. Hospital Leadership Chaired by Medical Director(s) of Perioperative Services Administration-sponsored Surgery Board of Directors Controls access and operations of OR Sponsors and directs Perioperative team activity Chaired by Medical Director(s) of Perioperative Services Administration-sponsored Surgery Board of Directors Controls access and operations of OR Sponsors and directs Perioperative team activity Collaborative Governance

12. Surgical Directions ©201512 Case Study: Full or Partial Blocks Full Day BlockPartial Day Block Hospital Revenue ↑↓ Anesthesia Revenue ↑↓ Nursing Costs Per OR Minute ↓↑ Case Volume ↑ ↑ Payor Mix ↑ Commercial ↑ Government Pay Profit Per Case ↑ ↓

13. Surgical Directions ©201513 Case Study: Block Time Ratings Metric Benchmark- CurrentMemorial Previous Length 8 hour +Variable Utilization to maintain 75%50% Release timeVariable by specialty24 hour Open rooms 20%0

14. Surgical Directions ©201514 What is the Huddle? PROBLEM/OPPORTUNITY LIST: 1)Recap of previous day 2)Total cases for next day and 5 days out; PAT and scheduling completion 3)Review of schedule 4)Total number of anesthesia providers to start day 5)PAT problem review 6)Antibiotics review 7)Review Pending Action items

15. Surgical Directions ©201515 Case Study: Pre-Anesthesia Testing Effective PAT Medical Director Telephone Questionnaire Single Pathway Scheduling Risk Management Strategies Testing Protocols Systems to treat patients with co-morbid conditions

16. Surgical Directions ©201516 PAT at Beaumont Hospital Pre-intervention Patients screened - 66% –Inadequate nursing staff to do the calls or visits –No inpatients screened Very limited real time screening of lab data (done 3 days out) No midlevel support in PAT Remote from hospital Post-intervention Patients screened - close to 100% –Adequate staffing levels to complete calls and visits –All inpatients screened Real time lab review –Using SD Abby process Midlevel support coming on board Developing hospital based PAT and remote call center

17. Surgical Directions ©201517 PAT Pre-op Clinic Advantage Patients arrive 72 hours prior to procedure for lab work, if required Reduce or eliminate lab delays on day of surgery Allow the hospital to capture the revenue associated pre-op visit Introduction of the Preoperative Surgical Home concept

18. Surgical Directions ©201518 Key Drivers: Non-Labor Costs MetricBest PracticeNorm Inventory Turns PAR, Min/Max levels Single sourcing 10-122 Returned items from case<10%30% High dollar implants/costs (knees) Optimize GPO contracts Create capitated rates Leverage consignment $3,200$4,800 Reprocessing30%5% Non-Labor costs 60% of OR budget

19. Surgical Directions ©201519 ANESTHESIA Driving Perioperative Performance

20. Surgical Directions ©201520 Anesthesia’s Role is to Drive Perioperative Performance Effective Medical Director Strong leader Stipend based on service standards Incentives aligned Available effective regional blocks PAT Protocol driven and evidenced- based Surgical Home & Bundled Payments Participate in Daily Huddle On-time starts Quick procedural turnover ti me Well- positioned for the future Respected clinically

21. Surgical Directions ©201521 Key Performance Indicators

22. Surgical Directions ©201522 SURGEON-SPECIFIC SCORECARD & ACCESS Data-Driven Decision Making Initiatives

23. Surgical Directions ©201523 Physician Scorecard

24. Surgical Directions ©201524 Physician Scorecard (cont’d)

25. Surgical Directions ©201525 Surgeon Dashboard

26. Surgical Directions ©201526 Case Time Task Force

27. Surgical Directions ©201527 Results  Case volume increased by 9%  Anesthesia units increased 9%  Government pay decreased 2.5%  Hospital administration very satisfied  Relationship between anesthesia, surgeons, and hospital improved

28. Surgical Directions ©201528 Outcome Impact:  9% increase in case volume over prior year in HJD National recognition:  Increase in US News and World Report ranking for HJD from 4 to 8 in two years

29. Surgical Directions ©201529 Surgical Home Provides Surgical Home ensures your hospital provides high-value care to patient and payors ValueQualityCost

30. Surgical Directions ©201530 Surgical Home Manages the Patient Experience Post Discharge Hospital Recovery Surgery Pre-Surgical Optimization Scheduling

31. Surgical Directions ©201531 Who Participates? All disciplines: Surgeons, nurses, anesthesiologists and discharge planners work collaboratively to optimize the patient experience

32. Surgical Directions ©201532 Critical Components Pain Management ExpertisePain Management Expertise –Ambulation Post-DischargePost-Discharge –PCP visit within 24 hours to manage cormorbidity –Home health meets patient upon arrival home –Daily rounding (SNF and homebound patients)

33. Surgical Directions ©201533 The Impact of a Surgical Home Surgical homes are impacting outcomes, costs and patient satisfaction Note: The University of California Irvine is now leading superior performance to grow market share University of California Irvine Joint Replacement UCIBenchmark LOS2.7 days3 days 30-day readmissions.05%4.4% Cancellation Rate.05%1.5% Patient Satisfaction Rate 99%95%

34. Surgical Directions ©201534 How to Get Started  Gather everyone around the table  Build organization consensus on the benefit of a surgical home  Identify key surgical line procedures: Orthopedic Hip Knee Cardiac  Identify CHAMPION  Organize team  Develop opportunity for evidence-based practice/coordination of care  Manager Care Pre-Surgical Acute Post Discharge  Measure process and outcomes through dashboards  Gather everyone around the table  Build organization consensus on the benefit of a surgical home  Identify key surgical line procedures: Orthopedic Hip Knee Cardiac  Identify CHAMPION  Organize team  Develop opportunity for evidence-based practice/coordination of care  Manager Care Pre-Surgical Acute Post Discharge  Measure process and outcomes through dashboards

35. Surgical Directions ©201535 Questions