The residents of Parkersburg, West Virginia, are seeing big changes in how they receive medical care, thanks to a combination of technology-enabled improvements in service delivery and a shift in how the local hospital system operates.
Camden Clark Medical Center (CCMC) is a 248-bed not-for-profit community hospital and subsidiary of the West Virginia United Health System (WVUHS). CCMC had been on the rocks since 2011, showing heavy losses of as much as $15 million in 2013, and was being cited regularly for poor performance. The trouble was the result of a combination of factors including the recent acquisition and closure of nearby St. Josephs Hospital, challenging professional recruitment, and changes brought on by the Affordable Care Act.
In 2014, the hospital brought in Accenture to consult on and support a turnaround plan aimed at getting the hospital back to break even, if not profitability. “We thought that within a year’s worth of work we could turnaround $22 million in opportunity,” explains Doug Pedersen, managing director of healthcare providers at Accenture Strategy, in an interview with CivSource.
Accenture set about implementing changes in six areas of operations: revenue cycle; supply chain; clinical processes, such as care management and patient flow; human resources; facilities; and employed-physician practices. When fully implemented, the initiative is expected to help the medical center sustain performance improvements that will decrease operating costs by $22 million annually.
“The work completed (on this New Horizons initiative) has been instrumental in moving the hospital from a loss of over $12 million per year to a break even position in 2015,” said David McClure, chief executive officer at Camden Clark Medical Center in an interview. “We’re working toward adding a 5% margin so that we have more flexibility if situations arise.”
As CCMC consolidated, essentially two problematic business tracks emerged for the hospital. On the staffing side, doctors moved from private practice to being employees of the hospital system, which raised operating costs immediately. And, to continue recruiting doctors to the small, rural town in West Virgina, recruitment packages were often significantly higher than those in hospitals of comparable size in more desirable cities. Simultaneously, the hospital was working through the closure and sale of the old St. Josephs building, as well as managing new patient care payment systems and fee schedules as a result of the ACA.
“We have been able to reduce expenses and generate revenue on the patient side, but we’re still struggling to work through the losses on the physician side, in terms of covering those payroll costs,” McClure says. “It also costs approximately $3 million a year just to maintain the closed St. Joseph’s campus. But, we are hopeful that building will be sold by the end of the year.”
On the patient side, 75% pay below cost as a result of being on programs like Medicare and Medicaid. In February, the hospital found itself poised to lose another 1% of its Medicare funding due to “hospital acquired conditions,” a designation made by CMS on quality of care. CCMC disputes this claim, but in the interim, it means that the hospital will be paid at an even lower rate – below cost to provide care in some cases.
“Medicaid expansion cut down our charity care, but those reimbursements come in below cost. PPIA, the state-run program pays even less.” McClure says. “So really, we’re looking at the majority of our revenue coming from that other 25% on private plans, which can be challenging. What we see now with more folks on the high deductible/high co-pay plans, is more bad debt. So we have to work with those folks to create payment plans. If they can’t pay it, they can’t pay it. We have an obligation to take care of our patients, but we are being penalized for it.”
CCMC is working with Accenture to evaluate care processes, patient data, and staff productivity to create a roadmap for streamlining care delivery and eliminating bottlenecks and delays. So far, these efforts have resulted in a 14% decrease in patients’ average length of stay, from 4.7 days to 4.1 days per discharge.
In addition to these improvements, the team created a formal follow-up process for patients post-discharge, ensuring they have the support they need to continue care at home through patient navigators. The initial results have generated nearly 900 incremental visits to the CCMC Physician Network, to make care transition more sustainable and avoid repeat hospital stays.
“When hospitals acquire physician groups things immediately turn unprofitable. We have been able to work with Camden to improve scheduling and set up patient planning that brings those costs down. It’s going to allow the hospital to operate from a stronger position going forward,” Pedersen says. “If you were to go in and just fix one area, that could create problems down the line. You have to look at the whole picture.”
The hospital is also using technology like the Xenex robot cleaner to come in and clean rooms, to avoid the spread of common hospital-acquired sickness. The $134,000 machines use a light burst to obliterate bacteria and other pathogen,s and can clean a room in seconds after hospital staff have removed and replaced linens and other items.
With these improvements, the hospital is on pace to break even this year and is poised to move into profitability within the next couple of years. But, McClure adds it won’t be easy to maintain. “In healthcare you really don’t cut staff when new technology comes on the scene because most of that still requires human operators. When we spend $20-30m on a new IT platform to handle patient records and scheduling, you still have to have all the staff in place doing the work. The robotics you need to do procedures are also an added cost, but you need those, or you lose doctors, and patients want better options in the OR too. That’s what keeps the cost curve high in healthcare. I don’t know what the answer is, but we’re moving at the speed of light to try to find the best pathway to meet all of these competing needs.”
