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Effective Hospital-Based Palliative Care Programs: Staffing Needs and Cost Savings West Virginia Center for End-of-Life Care September 13, 2006. Lynn Spragens, MBA Spragens & Associates, LLC Durham, NC 919-309-4606 Objectives.

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Lynn spragens mba spragens associates llc durham nc lynn@lspragens com 919 309 4606 www capc org l.jpg

Effective Hospital-Based Palliative Care Programs: Staffing Needs and Cost SavingsWest Virginia Center for End-of-Life CareSeptember 13, 2006

Lynn Spragens, MBA

Spragens & Associates, LLC

Durham, NC


Objectives l.jpg
Objectives Needs and Cost Savings

  • Provide a framework for demonstrating financial impact

  • Present examples of program results and “emerging metrics”

  • Suggest practical operational and financial measures

  • Help you all work on program impact goals

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Comments on WV Center Needs and Cost Savings

  • Great (!!) statewide involvement

  • Thorough data collection by those who report – very impressive

  • Statewide impact re EOL measures

  • Legislation – COOL

  • Concerns

    • Penetration, Sustainability, Depth, $$$

    • EOL Brand and focus

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National Perspective: Needs and Cost SavingsChronically Ill, Aging Population Is Growing

  • The number of people over age 85 will double to 10 million by the year 2030.

  • The 63% of Medicare patients with 2 or more chronic conditions account for 95% of Medicare spending.

    US Census Bureau, CDC, 2002.

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NHWG; Adapted from work of Canadian Palliative Care Association & F. Ferris, MD

Palliative Care: Bridging Restorative and Comfort Care

Disease Modifying Therapy

Curative, or restorative intent



Death &


Diagnosis Palliative Care Hospice

Needs met by palliative care l.jpg
Needs met by Palliative Care Association & F. Ferris, MD

  • Communication re goals of care, plan of care: patient, family, many specialists, etc.

  • Experts in pain and symptom management

  • Providing proactive treatment that offers hope when prognosis is grim

  • TIME, willingness, and expertise

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Palliative Care in 2006 Association & F. Ferris, MD

  • Over 25% of hospitals now have a palliative care program

  • US News & World Report includes palliative care in its criteria for “America’s Best Hospitals”

  • Palliative care set to become an official sub-specialty of internal medicine in 2007

  • Referral rates at established programs are growing each year

Billings JA et al J Pall Med. 2001, AHA Survey 2002, Pan CX et al J Pall Med. 2001

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Indicators of Fast Growth Association & F. Ferris, MD

  • Hospitals with palliative care –

    • In 2000, 632. In 2004, 1102

    • % of total hospitals, from 15% to 27%

  • ABHPM certified MDs now 2140

  • 60 programs are offering fellowships, vs. 17 in 2000 -- a 200% increase in 6 yrs.

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Implications of Growth Association & F. Ferris, MD

  • Expected recognition as ABIM specialty by next year

    • Fellowships

    • Grandfathering of ABHPM certification

  • Competition for MDs and NPs

  • Growing needs for clinical training

  • Strengthening of programs vs. solo offerings

  • Need to cover different settings, not just hospitals

  • Components of the formal strategy l.jpg
    Components of the Formal Strategy Association & F. Ferris, MD

    • Define the need (Support Study)

    • Identify the “markets” – CAPC +

    • Define the product – National Consensus Project (

    • Promote systematic “program” implementation vs. evolution – Tech Asst. (;

    • Create “push” and “pull” marketing strategies

      • Advisory Board

      • JCAHO

    • Business case and MEASUREMENT

    Slide12 l.jpg

    Public Awareness is Growing Association & F. Ferris, MD

    Slide13 l.jpg

    March 10, 2004 Association & F. Ferris, MD

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    Palliative Care IS: Association & F. Ferris, MD

    Re-defining Your Brand

    Palliative Care Is NOT:

    • Excellent, evidence-based medical treatment

    • Vigorous care of pain and symptoms throughout illness

    • Care that patientswant at the same time as efforts to cure or prolong life

    • “Giving up” on a patient

    • In place of curative or life-prolonging care

    • The same as hospice

    A few of our learnings l.jpg
    A Few of Our “Learnings” Association & F. Ferris, MD

    • People are not in the market for a “good death”

    • Providers want to offer something positive to patients and families (which delays prognosis discussions)

    • Lack of time and shared conversations is largest contributor to inaction

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    Where are you NOW? Association & F. Ferris, MD

    • Initial assessment

    • Started services

    • Got busy…

      • Who are you NOT hearing from?

      • What needed services are not yet available?

      • Where do you want to go next to help patients?

      • Have you made the business case?

  • Time to “reassess” and move ahead wt confidence!!

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    Ways to Find Gaps Association & F. Ferris, MD

    • Patients >75 with 4+ admissions

    • Patients with LOS > 10 or 14 days

    • Patients admitted from SNF with multiple admissions

    • Patients with “risk of mortality” score of 4 (retrospective)

    • Patients with LOS > 4 days and who died without palliative care

    • Other???

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    Mid-Stream Assessment Association & F. Ferris, MD

    • Alignment opportunities – key initiatives of the hospital

      • Rapid Response Teams

      • 100,000 lives Campaign

      • Medication Management

      • “Transitions”

      • Geriatric nursing initiatives?

      • Plane Tree

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    Political Capital / Budget Control Association & F. Ferris, MD

    • Case Management

      • “Variance days” – your impact?

      • Readmissions?

    • Pharmacy

    • Home care and Hospice?

    • Nursing – staffing and satisfaction (CNS model)

    • MDs? Hospitalists?

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    Opportunities for Support Association & F. Ferris, MD

    • Board of Directors

    • Hospice and community agencies

    • Payers / Insurance / Pay for Performance

    • Philanthropy

    • Demonstration Projects

    • Billing


    Variables for direct support l.jpg
    Variables for Direct Support Association & F. Ferris, MD

    • Patient volume

    • Degree of Impact and Duration of Impact = Savings per day

    • LOS impact (avoided outliers)

    • Billing and other revenues

    • Cost of services

    Defining need volume is key variable l.jpg
    Defining Need: Volume is key Variable Association & F. Ferris, MD

    • Which patients have unmet needs?

    • Where are they?

    • How can you get to them?

    • When do you get to them?

    • What do you do?

    • For how long?

    Volume two methods l.jpg

    “Top Down” Association & F. Ferris, MD

    % Medicare

    # of deaths

    # wt long stays

    Comparative Data

    2 – 7% of patient admissions = estimated demand

    “Bottom Up”

    Patients wt certain DRGs

    Multiple admissions

    With LOS > xxx

    Admitted from SNF


    Certain locations (MICU)

    Volume – Two Methods

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    “Spragens” Volume Estimator Association & F. Ferris, MD

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    “Spragens” Staffing Rules of Thumb Association & F. Ferris, MD

    • For programs of 150 beds and up, REALLY a good idea to go with at least 1.5 ftes, 200+new patients

    • Capacity of NP, MD, MSW team with good ad hoc team support is 300-400 new patients per year

    • Assume (very rough) 700-1000 visits per year per MD or NP provider (mix of new and f/u)

    • Impact and growth is related to staffing

    Dilemma chicken or egg l.jpg

    Adequate Staffing Association & F. Ferris, MD

    To develop and meet


    Dilemma: Chicken or Egg?

    Adequate Volume to demonstrate savings and justify the program

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    Methodology recommended Association & F. Ferris, MD

    • Use estimates from other programs for the “pro forma” stage

    • Use local examples and specific data

    • Get buy-in and refinements from your own leaders and finance staff

    • Measure results, and gradually update the model with your own data.

    • Check in, and get credit!

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    Baseline “Needs: Approach Association & F. Ferris, MD

    • “We’ve been working really hard and have taken care of 100 patients this year. Without us, their costs would be higher, and LOS longer. We need $100k to fund continuation.”

      • Where are the savings from this work in the YTD actual financial results?

      • What will have to happen to find this money?

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    “Opportunity Cost” Approach Association & F. Ferris, MD

    • “We’ve made a difference without adding staff – we’ve seen 100 patients this year, and here are the results. We’ve saved at least $125,000 for the hospital on these patients. Next year, we think we could double this impact, if we could commit $100,000 to dedicated resources.”

      • What is different?

      • How could this be funded?

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    “Cost Avoidance” Challenge Association & F. Ferris, MD

    If we do this, then the undesirable outcome does NOT happen…How do we get credit for what DID NOT happen???

    Strategy avoid the case management cycle l.jpg
    Strategy: Avoid the “Case Management” Cycle… Association & F. Ferris, MD

    • Stage 1: Invest to Change Outcomes

    • Stage 2: Get results and maintain

    • Stage 3: Baseline budget pressure, “What have you done for me lately?”

    • Stage 4 = CUTS and gradual erosion of results

    • Stage 5:Reinvest and begin the cycle again…

    Example of financial results l.jpg
    Example of Financial Results Association & F. Ferris, MD

    • A hospital wide consult service with 1.5 to 3 ftes serving a 300 bed hospital might see 300 -600 +patients/year

    • Estimated cost savings (direct cost avoidance and some value to LOS savings) range from $250,000 to $750,000 depending on assumptions and methods.($200-$400/day)

    • Professional part B billing may generate another $65k-$120k of revenue, depending on staff and model

    Slide35 l.jpg

    Total Costs Association & F. Ferris, MD


    Those costs that do not vary directly with

    volume. Over a specified period these

    costs would be incurred regardless of

    volume. As shown below, fixed costs

    have two components.


    Costs that vary directly and proportionately

    with the volume of patient services provided.

    These expenses may fluctuate day to day

    and would not be incurred if no services

    were used. As shown below, variable

    costs have two components.


    Costs that cannot be

    specifically traced to an

    individual department and

    do not vary with volume.

    These costs are allocated to

    all departments. Examples:

    utilities, hospital



    Costs that can be traced to

    a specific product or service.

    These costs increase or decrease

    according to the volume of

    services. Examples: nursing

    care, supplies.


    The costs or expenses that

    cannot be specifically traced

    to an individual patient but

    which do vary with volume.

    Examples: social services,

    medical records.


    Costs that can be traced

    to or identified with a

    specific product or service

    but that do not vary with

    volume. Examples:

    supervisory personnel,


    • The main source of potential savings associated with cost avoidance efforts.

    Courtesy of Kathleen Kerr, UCSF, 2/1/05

    Semi variable cost behavior for savings and revenue l.jpg

    4 Association & F. Ferris, MD


    Work Teams










    Semi-variable cost behavior for Savings and Revenue

    Using averages

    Reality = “Breakpoints”

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    Per day costs: pre- and post-referral Association & F. Ferris, MD

    Making the Financial CaseCosts Pre & Post Palliative Care Referral

    Charts courtesy of J Brian Cassel, PhD, Massey Cancer Center, Virginia Commonwealth University Smith et al. J Pal Med 2003

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    Palliative Care: Sources of Direct Cost Savings Association & F. Ferris, MD

    (Based on 583 palliative care consult patients discharged alive. First days and last days of stays excluded.)

    What does that mean l.jpg
    What does that mean? new patients/mo)

    • $800/day difference (total cost)

      • Estimate $500/day direct cost

        • Estimate $300/day “direct variable cost”

  • Average LOS post referral = 4 days;

  • Total patients/yr = 350 x 4 days x $300

    • = $420,000 in “cost avoidance savings” (conservatively, and excluding LOS impact and quality impact)

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    Funding Building Blocks new patients/mo)

    • Cost Avoidance & LOS reduction

      • Plan of care

      • Site of care

      • Speed of care

      • Appropriateness of care

    • Billing revenue (Part B)

    • Services, Stipends, Grants, other

    • Goodwill and direct subsidy

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    Simple (critical) assumptions new patients/mo)

    • Volume of new patients

    • Frequency of visits

    • Estimated savings per day

    • Estimated LOS impact

    • Value/credit for saved days

    • Net revenue collected per billed service

    Use dashboards to help l.jpg
    Use Dashboards to Help new patients/mo)

    • Actual results replace estimates

    • Helps identify who you do see, and also who you do not

    • Use internally to set goals

    • Use externally for updates and reports

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    Dashboard: Volume new patients/mo)

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    Where are you being called? new patients/mo)

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    Summary Points new patients/mo)

    • It won’t happen without a deliberate plan

    • The best outcomes come from the relationships, not perfect data

    • Lack of perfect data creates opportunity

    • Consider your role in culture change and skill building

    • Challenge your own hypothesis re cause and effect