Health Industry Organizational Design Project

In the early 1950s, people of a mid-sized town in Southern California found themselves in desperate need of a new hospital.

A fundraising campaign was formed by civic leaders and healthcare professionals to raise money to build a true community hospital — one owned and governed by the people.

This drive led to the opening of the original 112-bed Hospital in 1956. The Hospital has undergone a vast transformation since then; it is now a regional medical center offering nationally-recognized departments and services, with 418 general acute beds, 48 licensed critical care beds, 13 state-of-the-art surgical suites, and a full-service Emergency Department with a Chest Pain Center and nationally certified Stroke Center.

Opportunities:

• The town and surrounding County community markets are growing.
• State of the art regional medical facilities and skilled staff.
• Community owned and historically a cultural icon.

Threats:

• National Healthcare Mandate (Obama care) will reduce government insurance (Medicare) hospital payments.
• Increasing state government regulation adding to operating costs.
• Community needs expanding with increasing operating costs.
• Intense competition from surrounding private hospitals.
• Hospital reputation is declining.

1. Considering the expanding community needs, The Hospital needed to find ways to deliver services to a growing volume of patients with the same (or less) facilities and resources.
2. With the possible implementation of the National Healthcare Mandate, the Hospital may need to provide more services with less revenue (40%).
3. With increasing competition from more medical providers in the community, the Hospital needs to improve “customer” satisfaction through superior service  (re-branding).
4. Market growth through customer satisfaction will need to translate into effectiveness (quality) and efficiency(speed) in delivering medical services.
5. Increasing government regulations will require discipline in compliance and accuracy in documentation to minimize non-value overhead burden.
6. To attract the necessary professional talent to execute the strategy, the Hospital will need to be recognized in the community as a “best place to work.”

Hand & Associates was contracted to assist in the needed Organizational Development Project that lasted 6 months, from planning to implementation.

Hand & Associates targeted the Hospital’s Emergency Department (ED). The rationale for choosing ED was based on the following facts:

• ED treats the highest volume of patients from the community.
• Most critical and urgent needs served.
• Highest legal risk to the hospital.
• Most visible to the community.
• It is the economic “engine” of the hospital (50% of all revenue).

​Before gathering the actual data “from the field”, we asked Management to determine their goals in key metrics – see Figure I below.

These are some of the findings from our OD expert’s on-site inspections/interviews:

• “Purpose” and “direction” were unclear among staff and no measurable performance metrics existed.
• Skills were inconsistent across the department.
• General attitudes and morale were negative and uncooperative at times.
• Coordination/teamwork lacking especially between nursing and physicians.
• Management span of control too broad for performance monitoring & coaching.
• Critical work standards were not identified and/or enforced.
• Bottlenecks in the system negatively impacted ED throughput times.
• Patient discharge practices of “batching” exceeded ED capacity.
• Staff nursing scheduling was inconsistent and unbalanced – perception of favoritism.
• Admissions/ED interface lacked coordination interfering with process “flow”.
• Cath-Lab/Stemi team interface lacked robust coordination process.
• Conflicting staff values regarding ED values and priorities.
• “We/They” issues among, nurses, travelers, physicians impeded communication.

​The only metrics that could be gathered are those shown in red in Figure II below:

Our OD expert put forward to Management the following key recommendations and coached key personnel where necessary on how to:
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• Communicate to staff and review “future state” metrics on key performance processes.
• Process-flow all ED key processes from “door to discharge.”
• Centralize control and approval of scheduling with ED Direct initially.
• Organize staff into multi-functional ED teams (1) Intake Team, (2) Critical Care Team, (3) Moderate Care Team, (3)Routine Care Team, (4) Registration & Discharge Team.
• Hire second shift supervisor reporting to day shift manager.
• Create ED team “event” purpose to reconnect the provider “calling.”
• Team development for each of the four multi-functional teams.
• Create daily and monthly communication processes (Morning “huddles”).
• Develop critical work standards and manage to policy.
• New-hire orientation process to socialize in the ED norms and expectations.

Subsequent to the implementation of the above recommendations, the following key metrics were gathered – see “Actual” column (green) in Figure III below:

Capacity increase:

• Processing 225 patients versus 147 [a 58% increase in volume], increases capacity equivalent to 4 additional beds and 5 full time nurses. (Per corporate calculations)
• 5 Rn’s at $98K (salary & benefits) = $490,000 per yr.
• 4 additional beds @ 400 sq ft = 1,600 sq ft X $2.50 per sq ft = $4,000.

​Patient revenue:

• Additional patients treated who otherwise would have to be redirected to another hospital or leave without being treated.
• 108 additional patients per day (255 vs. 147) X 365 days = 39,420 patients a year @ $600 average per visit = $23,652,000
• 7% of 147 patients leave without being treated and the Hospital not receiving payment = 10 patients per day X 365 days = 3,650 people per year @ $600 average per visit = $2,190,000 lost revenue.

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Total yearly financial improvement = $26,336,000 (three year payback $79,008,000)

Other intangibles included: (a) better healthcare delivered to the community and (b) less funding by the community for hospital operations.