HONORARY MENTION
into orthopedic service line Specialty focus designed to blunt sting of federal reimbursement
cuts to serve patients by Cheryl Flury and Rick Dana Barlow
S
urgical Services may be one of the leading revenue generators for a healthcare organization, but it’s also widely acknowledged as one of the lead- ing cost centers. This motivates providers to identify and rein in expenses as quickly and thoroughly as possible. Generally, healthcare organizations tackle this on a product or project basis; the more astute concentrate their efforts on specific specialties or service lines involving the consumption and use of the highest-cost products and clinical expertise.
For Florence, SC-based McLeod Health, a seven-hospital system serving patients in an 18-county region spanning North and South Carolina, their fi rst target was orthopedics.
“Often orthopedic profits fuel other service lines,” noted Dr. Patrick Denton, Orthopedic Surgeon, Director of Sports Medicine, and Orthopedic service line leader.
And target it they did with pinpoint accuracy and accountability. In fact, their dedicated efforts and impressive achieve- ments in this complex but comprehensive project earned them Honorable Mention for the inaugural Surgical Performance Excellence in Supply Chain Award by Healthcare Purchasing News.
While McLeod Health’s total joint service line was critical to the health and well-being of its patients, it was a strain on the health system as a result of the U.S. Centers for Medicare & Medicaid Services (CMS) reimbursement cuts. Leadership recognized the need to fi nd new ways to reduce spend in this area without nega- tively impacting care. “All of these outside infl uences were putting cost pressure on us,” recalled Boyd “BJ” McCluskey, Director, Resource Optimization, McLeod Health. “We needed a measurement and a way to track [data] between Supply Chain, Quality, Finance and clinical.”
To sustain the viability of the service line, McLeod’s orthopedic and supply chain teams joined forces to examine how they could reduce costs, maintain patient care quality, and improve fi nancial out- comes for the organization. To do so, they needed visibility into every aspect of total joint procedures that could impact costs, quality and outcomes by surgeon and by case, including supply usage/costs, amount billed to/ reimbursed by payer, patient outcomes and case revenueprofi t.
Outlining the Process
McLeod’s orthopedic and supply chain teams joined forces to examine how they could reduce costs, maintain patient care quality, and improve fi nancial outcomes for the organization. They needed vis- ibility into every aspect of total joint procedures that could impact CQO by surgeon and by case: • The supplies used in the case and their cost (as well as supplies that were picked for the case but returned to inventory or wasted)
Total case cost (fi xed and variable costs) • Amount billed to the payer • Reimbursement received • Patient outcomes, including infections and readmissions
Case revenueprofi t (reimbursement less costs)
• Variation of the direct and indirect cost per facility The goal was to create a dashboard containing this data, making it as close to real-time as possible, then using the dashboard to measure the impact and outcomes of decisions.
A key challenge this team faced was that the data resided in separate systems, including healthcare supply chain tech- nology and clinical and financial plat- forms, that lacked integration: • Enterprise resource planning (ERP) system for item master and purchase order (PO) data
14 March 2022 • HEALTHCARE PURCHASING NEWS •
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• Inventory point of use (POU) system for supply consumption data (e.g., supplies used by each surgeon in procedures)
• Cost accounting system for financial data (e.g., what supplies were billed, how much the health system was reim- bursed by payers)
• Quality system for patient outcomes data, including infections, readmissions “One of the surprising things was what a challenge it was to get all the appropri- ate data that we needed,” Denton noted. “Unfortunately, some data is in one computer system for supply chain, some data is in another system for our CFO and revenue management, another one for what we actually used in the procedure. We needed a way to fi lter this data and make it as clean as possible.”
They strove to set up a simple platform, according to McCluskey.
“We needed to see one complete picture accessible to all,” he said. “And we wanted to scale it for other service lines if we were successful.” To create an integration solution, the team worked with SupplyCopia to develop a user-friendly and intuitive dashboard to support its total joint CQO pilot. This Software-as-a-Solution (SaaS) product could easily combine disparate datasets and apply artifi cial intelligence (AI) and machine learning (ML) to gen- erate actionable insights on cost, quality and outcomes.
To present a comprehensive picture of CQO for McLeod’s total joint procedures, the SupplyCopia team performed a series of data integrations. First, the team inte- grated supply purchasing costs from the item master with the BOM to establish a cost structure for each physician by procedure. Next, they integrated the cost data with reimbursement data from the fi nance system and utilization data from the POU system. Lastly, they integrated patient demographics data with the cost and reimbursement data.
McLeod implants cost-effi ciency
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