The CFA Perspective

Are You Considering Consolidating (Rationalizing) Clinical Services Across Your Health System? Consider these 12 Key Questions

Posted by Charles Franc

7/21/15 4:12 PM

CFA recently completed an engagement in which the rationalization (consolidation) of cath lab services within a two hospital system was hotly debated.  CFA was asked its opinion of closing the cath lab at the smaller hospital (or limiting it to diagnostic-only services) and re-focusing services at the regional hospital some forty miles away.  Regardless of corporate strategic direction, it is important to consider the following practical questions when debating a rationalization issue:Merger

1.  Will you truly save money?  CV services are complex and expensive to start, keep current and maintain.  Closing/modifying a service and directing at least some patients to another hospital for a specific service or procedure may save money in the short term, but will the longer term impacts—loss of revenue, loss of patients, negative publicity/community perception—result in a net negative financial impact?

2.  Will you lose referrals?  Will referring physicians shift their preferences from the local hospital to the regional hospital?  Or will loss of market share or outmigration to other competitors become an inevitable consequence of change in local capability?  How will the population being served react?  Can better services at a regional level ever be fully justified by a perceived diminished local capability?

3.  Is the option acceptable?  Is hospital “A” as acceptable to the local population as is hospital “B?”  Is the travel time between them a factor?  Differences in reputation?  Other factors?  Are there competitive options?

4.  How will your cardiologists react?  If interventional cardiology and vascular services capability changes at the local hospital, will your staff cardiologists shift their practices to the regional hospital, or will they seek out more convenient and comprehensive alternatives in order to protect their income, save travel time and maintain their efficiency?  How will this apply to employed versus non-employed cardiologists?  Can the regional hospital absorb them?  Will I have dissention in the ranks?  Will I lose interventionalists?

5.  How will closing an interventional laboratory (for example) impact noninvasive cardiac and vascular services?  Losing interventional capabilities will have some negative impact on noninvasive testing due to loss of volume and potential negative perception.  What impact will it have and how do you mitigate this impact?

6.  What will happen to the local STEMI and stroke program?  If, for example, the “local” STEMI program transitions to a “regional” STEMI program, what are the consequences for EMS response times, door-to-balloon times and other factors critical to local healthcare? How will the service population react?

7.  Will it harm or enhance the overall clinical reputation of the hospitals?  Hospitals gain and keep non-cardiovascular patients given their overall CV program reputation (the “halo” effect).  If this reputation is diminished through a change in capability, what are the consequences?  Difficult to quantify and very subjective, it is never-the-less a real issue when considering changing any hospital’s CV capabilities.

8.  Are low volume versus quality outcomes at issue?   If a smaller program is closed, will low volumes translate to higher volumes with better outcomes in the regional program?  If low program or individual operator volumes are at issue, or if sub-standard outcomes are at play, how will consolidation impact these metrics?

9.  How will the payer community react? Will such a change enhance or diminish a hospital’s capability to negotiate competitive pricing and secure the contracts it needs to thrive? Will any competitive edge be lost or gained by either facility?

10.  Will our competitors seek an advantage?  If we lose market share and our clinical capabilities change, will our competitors seize this opportunity?  Could they realize a competitive advantage that would negate any potential financial savings from operations?  Will they try to “poach” our interventionalists?

11.  How will capacity and patient throughput be impacted?  Can the new volume be absorbed by a single facility, or will it require additional capacity, equipment, staffing, etc.  Can throughput efficiencies be enhanced or will they actually diminish given new volume?

12.  What unintended consequences may be created?  While rationalization decisions are frequently political, there may be unintended consequences that will have to be considered as the decision making process unfolds.

    Answering these and other logical questions during the analyses of rationalization or consolidation of services between facilities is a critical exercise that will help to insure a rational and well planned outcome.

    As always, CFA invites your comments, questions and suggestions.

    Topics: Clinical Programs & Services, Cardiovascular Hospital Services Optimization

    California Elective PCI Program Update on Application Process

    Posted by Charles Franc

    7/6/15 2:58 PM

    cath_lab.jpgAs we have reported in past blogs, California law now allows hospitals licensed to provide emergent cardiac catheterization laboratory services to perform scheduled, elective PCI regardless of the presence of cardiac surgery-on-site.  This change in law provides an opportunity for hospitals to add a service that can significantly impact the health of the population they serve and the convenience of receiving services, while providing real potential for positive financial outcomes for the organization.  Spin-off benefits relating to organizational reputation and growth in other services is also a real possibility.

    The California Department of Public Health (CDPH) held a webinar on May 29 to formally go over the required application and formal process and field questions from the audience.  Applications are available for download at http://www.cdph.ca.gov/programs/LnC/Pages/PCI.aspx along with the final California Senate regulation.

    Anyone interested in applying should download the application and begin their internal process for evaluating the feasibility of applying for certification in the new program.  Some salient points that came out of the webinar are as follows:

    • Hospitals can submit applications any time after May 29.  Although the law was intended to accept an unlimited number of qualifying applicants, into the future, technically the current authorizing law sunsets at the end of 2015.  Therefore, to be on the safe side, applications should be submitted as soon as possible.

    • Applications are handled on a first-submitted-first-reviewed basis.  It was made clear that hospitals submitting applications will need to be site-visited before a recommendation is made of approval from the site-review team.  Given the limited availability of the site review team, this could create scheduling problems that will significantly lengthen the total review and approval process.  Again, time is of the essence if implementation is expected in 2015.

    • The applicant must prove, to the satisfaction of CDPH, validated upon site visit, that it can achieve a total volume of 200 elective and primary PCI’s per year once approved.  A detailed plan and supporting data must be submitted that documents the number of procedures the applicant expects to perform annually and where the patients will come from.  This documentation is critical.  Failure to achieve minimum volumes at acceptable quality levels could initiate program de-certification.

    • Primary operators must meet minimum volume standards of greater than 50 PCI’s per year (averaged over two years) at acceptable minimum quality standards. Other quality metrics and performance standards are specified.

    • Rigorous quality assurance and NCDR® data reporting requirements are specified to monitor and maintain quality outcomes.

    • The remainder of the 28-page application specifies exact requirements and necessary documentation that must be provided to CDPH to process the request for certification.

    Interested in learning more about this regulatory change, the application process and how it may benefit your hospital?  Please call a member of the CFA team at (949) 443-4005 for a further discussion of this important opportunity.  As a California-based, CV Services-exclusive consulting services provider, CFA can help you and your organization with advice and/or direct assistance throughout the application and implementation process.

    Topics: Clinical Programs & Services

    Rational Regionalization of Cardiac Services

    Posted by Peter Rastello

    4/16/13 4:46 PM

    The American Hospital Association publication, A Guide to Strategic Cost Transformation in Hospitals and Health Systems (available for download at:  www.hpoe.org/strategic-cost-transformation) deals with the overriding issue of cost management in an era of evolving value-based business models.  It is highly recommended reading for cardiovascular service line administrators and other healthcare administrators.

     

    The authors, Kaufman, Hall & Associates, Inc., set forth three tracks for hospitals to strategically think about managing costs.  These tracks are:

    1. Cost management pathway – an approach to significantly reshape and reduce cost
    2. Business restructuring pathway – critically asking, “What business are critical to our mission and vision going forward (and which ones are not critical).”
    3. Clinical Transformation pathway – reducing costs through clinical transformation 

     

    Under the Clinical Transformation pathway, CFA was struck with the opinion expressed on the underlying need for hospitals and health systems to rationally look at the provision of programs and services, what they call the “distribution of services,” over a region or market area, with the goal of “regionalizing” or “rationalizing” the access, location, and provision of services in the most effective manner.

     

    Over the years, CFA has been involved with a number of projects where multihospital systems attempt to rationally distribute cardiovascular services by relocating/consolidating them from hospital “A” to hospital “B.”  Most typically, this has involved consolidating cardiac surgery into a single facility from two or more hospitals in a single-market area system.  The reasons behind this strategy have been quality issues, volume issues, cost containment, unique local circumstances and combinations thereof.  The single greatest mitigating factor has historically been the regulatory and clinical need to provide surgery-on-site to justify offering percutaneous coronary intervention (PCI).  A decision to consolidate is made infrequently, due to its obvious difficulty, with political, clinical and financial consequences to all members of the system and cardiovascular program.  Now that justifying surgery based on the need to provide surgery-on-site for PCI is steadily declining (virtually non-existent in many, but not all states), one major regulatory reason for justifying CV surgery has diminished.  Beyond the choice of CV surgery, there are other low-volume, high-tech and expensive programs and services that are candidates for regionalization. The example of Transcatheter Aortic Valve Replacement (TAVR) comes to mind, as the CMS conditions of participation are stringent and set minimal volumes for both initiation of the new and maintenance of the existing TAVR program.

     

    The historical justification for regionalization now takes on new meaning.  The AHA publication makes the case that the new environment makes hospitals being “all things to all people” a mission that will doom many to ultimate financial failure.  Local community access to some programs and services may have to be accomplished via referral to system partners or strategic partnership outside the system.  The authors set forth eight strategies for analyzing these difficult and far-reaching

    1. Start with an evaluation of the organizations strategic
    2. Evaluate each business unit and service line to identify core elements
    3. Use a structured process to analyze the core businesses and services
    4. Institute a business/services line analysis framework
    5. Understand when and why service distribution planning will be needed
    6. Initiate the process of defining the most efficient and effective distribution of services
    7. Use a structured framework for service distribution planning
    8. Ensure a solid fact base for the service distribution plan

    Call it regionalization, rationalization, or optimal service distribution, this concept takes on new meaning in the absolute need to aggressively manage costs.  CFA knows of one prominent ten-hospital, multistate system that will soon take on the optimal distribution of CV services head on.  One-third of their facilities have full-service CV programs. These are hard decisions that need solid facts, dispassionate analysis, logical decision-making and analytical frameworks, a reasonably quick decision making timeframe, and, most importantly, total commitment from the highest levels of system and regional administration, given the enormous practical and political challenges.  Many hospitals and healthcare systems will be reluctant to consider such decisions; but the strategic and economic challenges ahead are simply too daunting to not face the difficult reality of creating an optimal distribution system for high-priced specialty services that will support financial success under fee-for-value reimbursement systems.

     

    CFA invites your comments, suggestions and questions.

    Topics: Clinical Programs & Services, Cardiovascular Hospital Services Optimization

    The Transradial Approach to PCI – A “Win-Win” for Everybody?

    Posted by Peter Rastello

    3/31/10 7:30 AM

    When was the last time you came across a simple and straightforward change in clinical technique that typically results in better clinical outcomes, fewer complications, higher patient satisfaction, and lower cost per procedure?  While that has occasionally happened in the cardiovascular field, the increasing trend for substitution of the transradial (through the wrist) for the transfemoral (through the groin) approach for PCI, seems to be a real "win-win" for everyone involved.

     Traditionally, guidewires and catheters for PCI are inserted through the femoral artery.  Bleeding or vascular complications occur about 2% of the time.  Patients are recovered lying flat and immobile for 4-6 hours to prevent bleeding, which has also been helped by the advent of vascular closure devices.  The patient is more comfortable, dangerous bleeds are reduced, but vascular complications still exist.  Enter the transradial approach in the late 1980's.  Outside of the U.S., about 40-50% of all PCI's are done transradially.  In the U.S., that number currently is in the low single digits and only a small percentage of U.S. interventional cardiologists have been trained to use this approach.

     The advantages of the transradial over transfemoral approach are significant and include:

    • The initial needle puncture is simple and straightforward
    • Not impacted by a patient with peripheral vascular disease, obesity or female gender
    • No need to recover the patient lying flat and immobile; patients are recovered sitting up and can leave the cath lab almost immediately post-procedure; this allows (theoretically) the patient to forgo spending an overnight stay in the hospital
    • Because no vascular closure device is required, a significant cost is eliminated
    • Less bleeding and other complications, significantly decreasing the risk of mortality
    • If present, bleeding or other complications are readily identified and easy to address
    • Overall case cost is decreased by obviating the use of vascular closure devices
    • It is safer, more convenient, and more comfortable for the patient

     There are several reasons the approach has not been used more frequently, including:

    • Lack of trained cardiologists
    • Lack of financial incentives due to the existing reimbursement structure
    • Lack of a marketing campaign by device manufacturers (who have concentrated their efforts outside the U.S.)
    • Lack of patient demand because the approach has not been widely publicized
    • An impression that the learning curve is too steep and learning inertia on the part of busy interventional cardiologists
    • Lack of recognition and inclusion in practice guidelines or recommended practices by professional societies

     As with any procedure, there are certain contraindications and potential complications.  Additionally, physicians need to be trained in the procedure by those with solid experience.  Like all new procedures, there is a learning curve.  Despite these factors, the transradial approach is gaining momentum, fostered by recent study results and an increasing recognition by influential physicians that this approach has real benefit.  CV services management staff should fully evaluate this approach, seek out physician champions and put together an implementation plan to successfully integrate this technology into their program.  This can be a perfect hospital and physician performance improvement project or targeted metric as part of a physician/hospital alignment effort.  It's not very often that a modest clinical change can simultaneously improve clinical outcomes, reduce complication rates, increase patient satisfaction, and lower procedure costs and be a "win-win" for all involved!

     For further information, CFA suggests you review the article, Trends in the Prevalence and Outcomes of Radial and Femoral Approaches to Percutaneous Coronary Intervention:  A Report from the National Cardiovascular Data Registry, published in the November 2009 Journal of the American College of Cardiology - Cardiac Interventions.

    Topics: Heart Hospital Services Optimization, Clinical Performance Improvement, Cardiovascular Physician-Hospital Alignment, Clinical Programs & Services