NewYork-Presbyterian Curbs Costs with a Structured Redesign Approach

Project management staff can play a key role in driving efficiencies in operations, reducing length of stay, optimizing labor, and managing supply costs.

 

Since 2012, NewYork-Presbyterian, a regional academic health system with seven campuses and affiliations with two Ivy League medical schools, has provided comprehensive resources and support to operational leaders to guide their performance improvement efforts. By pairing project management professionals with operational leaders on key initiatives, the organization achieved $96 million in cost savings in 2017 while maintaining high-quality care, says Margaret Janicek, director of financial planning, who leads the health system’s HERCULES project management office (PMO). HERCULES stands for hospital, efficiency, revenue cycle, clinical utilization, length of stay (LOS), and enhanced sourcing.

The HERCULES office is the engine behind more than $300 million in operating performance improvements since 2012. “The whole point of HERCULES is to do performance improvement in a more thoughtful way to maintain the best possible patient care and experience while bending the cost curve,” Janicek says.

HERCULES focuses on four programmatic pillars: operational excellence (focusing on labor-related projects), LOS of stay, clinical resource optimization, and supply utilization. The HERCULES team helps leaders drive strategic change across the organization. The team includes 15 FTEs representing “black belts” who are project management professionals (PMPs); content experts, including clinicians; and Lean Six Sigma professionals, plus PMO staff comprising project managers and financial analysts. Black belts are assigned to one or more of the four programmatic pillars and have a broad scope of practice that includes identifying performance improvement opportunities; setting project standards, templates, and processes; securing executive sponsors; and designing and implementing improvements. The PMO serves all of HERCULES and is responsible for valuing projects, supporting complex data and financial analysis, and building and maintaining the reporting, measurement, and monitoring of projects.

Driving Operational Excellence

The daily work of performance improvement within operational excellence, which is the pillar focused on labor spend, has the support of its own project management forum: the operational excellence PMO. This group concentrates on tactical interventions and day-to-day problem solving, says Nancy O’Toole, director of financial planning. Specifically, the operational excellence PMO helps monitor project progress, ensure accountability, and assist with solutions related to productivity, skill mix, overtime, and staffing projects.

Operational teams leading smaller-dollar projects report into this forum, which includes leaders from human resources, finance, analytics, and benchmarking. During regularly scheduled virtual meetings, this group evaluates the team’s progress using standard scorecards and helps them resolve barriers to their progress.

Teams with high-value projects also report to an operational excellence executive committee that includes senior leaders from nursing, operations, and led by co-sponsors who are COOs from two of the campuses.

Redesigning Processes

For high-value projects, teams including Lean and PMP-trained staff provide support and guidance to operational leaders. One such project is a biomedical equipment lifecycle management process redesign, which is currently in its second year across all campuses. As part of this initiative, leaders at NewYork-Presbyterian have centralized the equipment rental process via a call center to improve oversight, share resources, and ensure that equipment is returned in a timely manner. In addition, the process to manage equipment that is nearing the end of its lease was redesigned and new tools were built to help operational leaders make timely and financially prudent decisions regarding replacement or disposition. Finally, the team is right-sizing the biomed equipment inventory to reduce maintenance, support, and storage costs. O’Toole expects these combined efforts are on track to save nearly $6 million each year.

Optimizing Labor

In 2017, NewYork-Presbyterian achieved more than $34 million in cost savings by working with operational leaders to optimize workforce management. One project focused on reducing nursing overtime and agency spend saving $2.9 million at one campus. Another initiative, originally launched in 2013, focused on improving physical therapist/occupational therapist productivity and has saved $3 million across the organization.

To help new managers make better workforce management decisions, the HERCULES team created an Operational Excellence Academy that provides a library of tools. One tool is a response guide for covering unplanned absences that helps leaders understand their options, from the least costly (covering with existing staff) to the most costly (using overtime).

Another tool is a “vacation smoothing” calculator that helps operational leaders plan when staff can take time off, using inputs that reflect the mix of staff in any area, such as hours per shift and per week, and benefit time. “It’s a simple calculator that has been a game changer,” Janicek says.

The academy also offers five-minute videos on how to use the tools as well as videos highlighting operational excellence success stories during which leaders discuss their strategies and hurdles along the project journey.

Improving LOS

To improve LOS, HERCULES partnered with the analytics team at NewYork-Presbyterian to develop a real-time interactive length of occupancy (LOO) dashboard. The tool displays in-house LOS sortable by campus, unit, service, and attending down to the patient level. It focuses managers on potential discharge LOS issues, brewing capacity issues, and demands for daily discharge. The LOO dashboard complements an LOS dashboard previously created by the same team; this dashboard supports both retrospective analysis of performance by department, division, attending, DRG, and discharge disposition as well as robust, algorithm-driven monthly predictions of variance to expected LOS.

Heeding Lessons Learned

Janicek and O’Toole offer the following advice for finance leaders on achieving operational efficiencies.

Select the right projects to support. Leaders at NewYork-Presbyterian encourage departments to identify their own performance improvement projects. This helps drive accountability, O’Toole says.

When prioritizing which projects to support with HERCULES resources, leaders consider the following questions:

• Does benchmarking reveal an opportunity for improvement?
• What is the potential financial benefit?
• How complex is the project? For example, does it require coordination with multiple sites and stakeholders?
• How long should the project take?

• Does benchmarking reveal an opportunity for improvement?
• What is the potential financial benefit?
• How complex is the project? For example, does it require coordination with multiple sites and stakeholders?
• How long should the project take?

HERCULES also manages infrastructure-related projects, such as creating the aforementioned dashboards that may not have an immediate or direct financial return. For these initiatives, the team values the potential gains, such as greater staff accountability and transparency, net of the costs to build and maintain.

Document the project business case up front. This creates consistency in how projects are submitted to the HERCULES PMO office, O’Toole says, so they can be evaluated, prioritized, and resourced accordingly. In the form, department leaders are required to detail the objectives, suggest a measurement methodology, identify the potential financial benefit, and outline the potential investments required.

 

 

View related web extra: New York-Presbyterian Performance Improvement Project Request and Evaluation Form

 

Centralize measurement in one office. The HERCULES PMO oversees the measurement and monitoring of projects so there is a single source of truth across the organization and impact can be verified through the general ledger and tied to financial statements. “So much time can be spent in performance improvement arguing about the data,” Janicek says. “If everyone agrees on common data sources and measurement methods, you can start talking about solutions.”

Assign black belts to high-dollar projects. NewYork-Presbyterian’s HERCULES black belts have received their project management professional (PMP) certifications and help operational leaders use project management tools, charters, and work plans. “You want to make it clear that they are collaborators and partners,” O’Toole says. “We want to be successful as a team, and that mentality is critical.”

Use benchmarking to set enterprise direction. NewYork-Presbyterian subscribes to a common industry benchmarking tool but has also created an opportunity snapshot that visually prioritizes benchmarking areas of opportunity in worked hours, skill mix, overtime, non-labor expense, and utilization in comparison to a select group of peer organizations. The dashboard shows variances at department- and campus-levels to the enterprise target of achieving the 50th percentile of performance.

Improve visibility and celebrate success. “Key to our success in cutting across silos is our ability to be completely transparent with our data,” O’Toole says. Making successes more visible by celebrating wins during organizational town halls and other recognition events creates enthusiasm and showcases emerging leaders.

The Importance of Strong Leadership

HERCULES leadership at NewYork-Presbyterian believes that strong executive leadership has been critical to the success of the program over the years. Executive sponsors weigh in on the prioritization of projects, help set targets related to benchmarks, and play a critical role in moving projects forward. Physician champions also help build the momentum.

“You have to have leadership committed for the long haul,” O’Toole says. “Our program is embedded in the organization—it is not a flavor of the month. We’ve been at this for a number of years now, and it’s just the way we do business.”

This article is based in part on a presentation at the 2018 ACHE Congress.

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Laura Ramos Hegwer is a freelance writer and editor based in Lake Bluff, Ill., and a member of HFMA’s First Illinois Chapter.

Interviewed for this article:

Margaret Janicek, MS, is director, financial planning, NewYork-Presbyterian, New York City.

Nancy O’Toole, MPA, is director, financial planning, NewYork-Presbyterian, New York City.