Optimax: state-of-the-art performance improvement system
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The OptiMax technique quantifies the interaction between costs and quality for a healthcare business unit to determine optimal performance levels, finding that only one key quality indicator was optimal and costs were over $1 million above optimal, requiring decreases in costs and increases in quality. The OptiMax consultants help organizations apply this state-of-the-art technique to set reasonable targets for improved performance through simultaneous evaluation of multiple qualitative and quantitative indicators.
Optimax: state-of-the-art performance improvement system
- 1. OptiMax The Fox Group’s Performance Delivery System
- 2. Healthcare Performance Very Complex!
- 3. A healthcare business unit was within budget and at Vignette or near minimums for all performance standards. The budget had been based, year- after-year, upon historical expenses with projections for future increases. Then, through state-of-the-art techniques that quantified the interaction between costs and quality, it was clearly shown that only one of the key quality indicators was at the optimal level. Further, patients showing improvement from treatment were 6% below the optimal. To make matters worse, the total annual costs for patient care were more than $1,000,000 above optimal. The business was clearly in the “red zone.” The team members needed to decrease costs and increase quality. They had been lulled into complacency by (1) the practice of cost-plus budgeting and (2) the comparisons of their quality indicators to averages instead of to the optimal.
- 4. Sample Areas of Performance Assessment Assess Service Differentiation Networking/Group Formation Issues Identification of core services Strategies and consequences Identification of specialized services Healthcare industry and regulatory changes Evaluation of service to referral sources Managed care trends Scheduling & office policies and procedures Finance/operational issues Facility and equipment review Review Human Resource Expertise and Deployment Review Financial Performance General systems Analyze profit and loss performance Interview practices and selection of personnel Income review for past three fiscal years Training process Changes in charges/collections Turnover issues Changes in patient/client volume Evaluate salary levels, incentive plan, benefits Changes in payor mix Team orientation and appearance Changes in expenses Professional development / continuing education Review managed care contracts / assist in negotiations Work flow systems Analyze billing and collections Coding analysis Evaluate Internal Marketing Evaluation of accounts receivable aging and collection related Budget and expenditures protocols Office environment and ambiance Define priorities / Delinquent account strategies Appearance Evaluate controls over cash handling/banking Signage, perceptions, environmental controls Evaluate accounts payables aging Efficiency of layout Review office automation / computerization Exam rooms Document New Areas for Volume/Income Generation Analyze External Marketing Practice start-ups and relocation Audit of promotional materials SWOT analysis Assessment of referral development activities Task-specific plans Sources and extent of referral contacts Growth opportunities Identify techniques to increase referrals Compliance – HIPAA/Medicare Fraud & Abuse
- 5. OptiMax What is the technique Where it is being used How to use it strategically in performance improvement
- 6. Work Measurement Applications OPERATIONS STAFFING PLANNING • Budgeting • Time and cost • Wage trade-off’s for incentives • Workforce new services capacity • Work • Service mix standards • Equipment planning and space • Performance capacity evaluation and • Scheduling improvement
- 7. • Most productive? • Underperforming? • Targets for improvement? • Measures of Provider Productivity
- 8. Office Visits Per Hour Worked 1.00 0.86 0.77 0.73 0.72 32% of 0.75 0.65 Highest 0.49 0.50 0.28 0.25 0.00 A Physician
- 9. Work RVU’s Per Hour Worked 10.00 9.11 7.95 35% of 7.50 6.59 6.34 Highest 5.67 5.25 5.00 3.17 2.50 0.00 Physician A
- 10. Charges Per Hour Worked $700 $645 $588 $600 34% of $500 $472 $466 Highest $416 $400 $326 $300 $221 $200 $100 $0 A Physician
- 11. Productivity - sample INPUTS OUTPUTS • Office Visit Units • Compensation • Hospital Units • Med Units • X-Ray Units • Other Units • Work Relative Value Units • Charges
- 12. Example of Variables Input Variables Output Variables Administrative expenses/licensed bed Net income/patient day Dietary expenses/patient day Not Decubitus % Facility expenses/licensed bed Patient days Housekeeping expenses/patient day Procedures/FTE Licensed beds Procedures/Patient LVN FTE/Patient day * 1,000 Relative Value Units/FTE Square feet of facility/patient day Relative Value Units/Patient Non-clinical staff FTE/Patient * 1,000 Relative Value Units/Procedures Non-clinical staff salaries / patient day Return on Capital/Patient Day Patient expenses/patient day Treatment plans meeting standard % Professional salaries/patient day Patients with in-home treatment only % Net revenue / patient day Patients with improvement % RN FTE/Patient day * 1,000 Timely Treatment %
- 14. The OptiMax Difference Optimal Same as others Optimal . . . more/less . . . Optimal
- 15. The OptiMax Difference A single performance score Reasonable, individualized targets
- 16. Qualitative & Quantitative Data com bined
- 17. Users Manufacturing Insurance Oil Exploration Banking Who uses this method? Restaurants Healthcare Retail Schools
- 18. Healthcare Users - sample
- 20. The OptiMax Difference Typical Some of the Differences . . . Benchmarking OptiMax Tailored to individual, unique Business setting Comparison to a known standard Evaluates qualitative (quality) and quantitative (costs, revenues) indicators simultaneously Comparison to your own best internal performance Evaluates Indicators ONLY one-at-a-time “Rolls up” multiple indicators into a single score Objectively provides targets for improvement based on a simultaneous evaluation of all indicators Quantifies targets for improvement based upon achieving performance comparable to the best already in your organization Early warning that costs are too high or quality too low Short time investment and easily repeatable analyses
- 21. Three-Months Efficiency Score 100% 100% 100% 98% 100% 93% 93% 85% 75% Standard For Efficiency 50% Improvement Possible 25% 0% Physicians
- 22. Improvement Targets Target $110,462 of increased charges per PHYSICIAN D PHYSICIAN B quarter PHYSICIAN E PHYSICIAN A
- 23. A Typical Workplan Study Design Areas to Variables to Initial Staff Optimize Consider Training Data Data De- Additional Collection identification Collection Staff Training Instruments of Data Analysis and Comparative Optimization Staff Reporting Reports Targets Reporting Select Implemen- Optimization Develop Monitor tation Specific Plans progress Targets
- 24. The OptiMax Solution Implementing the OptiMax Cycle
- 25. OptiMax Outcome – sample of 7 member medical group Findings, per quarter: $110,000 in billed charges Findings, per year: $440,000 in billed charges
- 27. The Challenge Unfortunately, the benchmarks established using old analytical schemes based on various multiple ratios created more dilemmas than solutions. Yasar A. Ozcan Professor of Health Administration Virginia Commonwealth University 2008 27
- 28. The Challenge How do you bring your financial experts and your quality experts together? 28
- 29. The Challenge How to evaluate costs and quality all at the same time? 29
- 30. OptiMax Applications - sample Business Description OptiMax Targets for Improvement Specialty mental health services for just one city region of a carve-out health plan Over $1,000,000 • Improvement strategies included broader applications of out- per year patient specialty services Twelve member specialty medical group • Improvement strategies included modifications in scheduling Over $400,000 practices for both acute care consultations and out-patient per year visits
- 31. Hospital Example Study of 131 Large Hospitals 100% 100% 95% 90% 84% 80% $29 M 68% 70% $35M Efficiency 60% 54% 50% $45M 40% 30% $82M 20% OptiMax Scores 10% 0% H1 H2 H3 H4 H5
- 32. Managed Care Example Center Inputs Outputs Clinical Out of Clinical Tx Plans Tx Plans In-Home Patients Costs / Home Costs/Pt Meeting Current % Tx Only % Improved % Patient Costs Improved Standards % A $33,492 $29,535 $16,359 65% B 82% 67% C D 84% E $12,228 $7,597 97% 100% 79% 78% F $17,365
- 33. Sample Quality Incentives: Charting 100% 90% 80% 70% DOCUMENTATION SCORES 60% (Compliance with Coding Standards) 50% 50% 44% 40% 33% 30% 30% 30% 20% 20% 12% 10% 0% F G E B D C A
- 34. OptiMax Targets - sample Medical • Current: $6.00/Visit Supply Costs • Target: $5.23/Visit • Current: 325/Month Patients • Target: 369/Month • Current: $98/Visit Charges • Target: $101/Visit
- 35. The OptiMax Score 100% 90% 80% 70% 62% 60% Establish the 50% system as an Help select Coach in the indispensible meaningful 40% calculation part of the indicators processes 30% management 20% culture 10% 0% 1 3 4 5 8 9 7 6 10 2
- 37. “The relationship has brought us nothing but success and growth… excellent command of financial planning and analysis … amazing accuracy...quality of their work is always superior.” President, Berryman Health, Inc.
- 38. CONSULTANTS TO THE HEALTHCARE INDUSTRY 99 “C” Street, Ste 207 Upland, CA 91786 Phone: (909) 931-7600 Fax: (909) 931-7655 Web: www.foxgrp.com Email: contact@foxgrp.com Providing Excellence Since 1989