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Health System Improves Efficiency With Lean Management Solutions

Wed, 04/07/2010 - 6:27am

After exploring several manufacturing companies and hospitals that were applying the Toyota Production System (TPS) to improve processes and eliminate “waste,” St. Joseph Heath System-Humboldt County in California developed their own focused commitment on improvement called “The Humboldt Way.”

April 7, 2010

St. Joseph Heath System-Humboldt County (SJHS-Humboldt County) is committed to meeting the highest standards in health care delivery.

St. Joseph Heath System-Humboldt County (SJHS-Humboldt County) is committed to meeting the highest standards in health care delivery. SJHS-Humboldt County consists of two hospitals: St. Joseph Hospital in Eureka, Calif., and Redwood Memorial Hospital in Fortuna, Calif. With more than 1,200 employees, it is one of the largest employers in the county. SJHS- Humboldt County consistently receives high quality marks; in fact, Avatar recently named Redwood Memorial one of its national award winners in healthcare service quality for exemplary service in “Exceeding Patient Expectations” for the year 2008.

SJHS-HC Turns to the Manufacturing Industry for Inspiration

Despite its consistent high marks in quality and service, administration believed they could continue to improve in efficiency and sought inspiration from an unlikely source, the manufacturing industry. In 2007, SJHS-HC administrators visited several manufacturing companies and hospitals around the country that were applying the Toyota Production System (TPS) to improve processes and eliminate “waste.”

With a focused commitment on improvement called “The Humboldt Way,” in December 2007 SJHS- Humboldt County enlisted the help of Simpler Healthcare to coach hospital staff on the application of TPS skills to transform the organizational culture, engage staff, improve efficiencies and improve the delivery of patient care.

With a focused commitment on improvement called “The Humboldt Way,” in December 2007 SJHS- Humboldt County enlisted the help of Simpler Healthcare to coach hospital staff on the application of TPS skills to transform the organizational culture, engage staff, improve efficiencies and improve the delivery of patient care.

Since implementing The Humboldt Way, SJHS- Humboldt County has realized approximately $1,130,700 in combined hard cost savings and has engaged over 230 clinicians and employees, more than 20 percent of its staff, involved in learning problem solving skills and techniques.

Improving Revenue with Charge Capture

Simpler Healthcare worked with senior leaders at SJHS-Humboldt County to determine priority areas where The Humboldt Way could first be applied using TPS techniques. SJSHS-Humboldt County and Simpler Sensei (improvement management coaches) determined there was potential to increase revenue capture from medical, surgical and implant supplies in the Operating Room (OR) that were not being properly identified as chargeable.

Hospitals keep track (“capture”) of a patient’s use of hospital resources, such as equipment, medical supplies, diagnostic testing, medication and hospital staff. These charges are recorded and then billed to patients and third party payers. Often times, the use of a resource may be overlooked. The process behind “charge capture” can be complex, making it very important that that a system is in place to capture charges completely and correctly, maximizing the potential reimbursement for revenue.

The Problem

  • Hospitals keep track (“capture”) of a patient’s use of hospital resources, such as equipment, medical supplies, diagnostic testing, medication and hospital staff. These charges are recorded and then billed to patients and third party payers. Often times, the use of a resource may be overlooked. The process behind “charge capture” can be complex, making it very important that that a system is in place to capture charges completely and correctly, maximizing the potential reimbursement for revenue.
    SJHS-HC determined there were more than 100 implants missing Meditech charge codes, which represented an annual cost to the hospital of $164,520 and missed potential gross revenue of $700,598 annually.
  • Additionally, staff determined there were more than 450 possible patient chargeable surgical supplies that did not have corresponding Meditech charge codes, with a total cost of $540,246, and potential gross revenue of more than three million dollars annually. 

The Process

Simpler Healthcare’s hands-on sensei (coaches) went to work with a team of hospital administrators, physicians, nurses and other staff spending one week in a rapid improvement event.

Simpler Healthcare’s hands-on sensei (coaches) went to work with a team of hospital administrators, physicians, nurses and other staff spending one week in a rapid improvement event. In that event the group identified implants that had been used, but not charged. A flow chart was designed to identify whether an item was chargeable or not. Standard work was established to request Meditech numbers for chargeable items and to manage discrepancies of PMM (database for material management) numbers found within PICIS (the OR documentation program). By the end of the week, all implants had a Meditech charge code that was put into the electronic system for tracking usage, as well as charging. The accounting department then re-adjusted the billed accounts to capture lost revenue.

The Results

Although SJHS-HC is still in the beginning stages of applying The Humboldt Way to the revenue cycle, in one RIE the team was able to:

  • Establish processes to improve charge capture of more than 149 surgical supplies, resulting in more than $165,222 of added revenue in 2009
  • Achieve nearly $930,000 in net savings.
  • Improve communication between the accounting department, the OR team and materials management.
  • Engage in problem solving using a systems approach that respected all participants.
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