Lynn Hill Spragens, MBA Spragens and Associates, LLC Lynn@Lspragens 919-309-4606

1. How to use Financial Data to Strengthen your PC program, increase referrals, and Support your clinical mission Lynn Hill Spragens, MBA Spragens and Associates, LLC Lynn@Lspragens.com 919-309-4606

2. Stage of development vs. measures • Start-up plan = hypothesis and pro forma • Early activities = operational and process measures • 1 year + = comparison to goals, and financial cost impact with actual data • Each year = matching of goals, staffing, budget, and proven impact www.CAPC.org

3. Our focus today • In the CAPC seminars and the Palliative Care Leadership Center visits, the focus is on the initial stage and the pro forma. • Our focus is on early stage operational measures that help with growth and management • This builds a base for future support www.CAPC.org

4. What did the Pro Forma Promise? • Activity level (new patients) • Impact (pain and symptoms, satisfaction) • Impact (cost avoidance, LOS) • Team Composition • Other activities www.CAPC.org

5. Implementation Steps • Use recommended “rounding tool” • Record data from tool + demographics in a database • Establish dashboard for monthly management, and for quarterly or semi-annual sponsor reports (include financials at semi-annual or annual periods) www.CAPC.org

6. Dashboard components • New patients and Aver. Daily Census • Source of referrals and location of patients • LOS pre and post referral (average and distribution) • Impact on symptoms • Cost avoidance and billing revenue (less frequent) • Patient, family, or staff satisfaction www.CAPC.org

7. Essential Measures: Program Referrals & Census www.CAPC.org

8. Essential Measures: Referral Sources www.CAPC.org

9. Essential Measures: Pre-Referral Days’ IntervalAverages and Distribution of LOS www.CAPC.org

10. Essential Measures: Post-Referral Days before Discharge www.CAPC.org

11. Essential Measures: Pain & Symptom ManagementExample: Include multiple measures in actual report!! www.CAPC.org

12. Longer term Financial Impact • Include updated budget re “budget to actual” for staffing and other expenses • Include information on net billing revenue, showing volume and ave. payment and coding breakdown • Retrospectively match your database with hospital finance, and run “cost avoidance” • Ask Brad (brad@lspragens.com) for instructions www.CAPC.org

13. Example of Impact on Inpatient Costs: Making Cost Avoidance REAL Source: T.J. Smith, MD, et al, VCU Massey Cancer Center, manuscript, “Palliative Care Unit Costs”, 2002, NOT FOR FURTHER DISTRIBUTION OR REPLICATION WITHOUT AUTHOR’S PERMISSION. www.CAPC.org

14. Palliative Care: Sources of Direct Cost Savings (Based on 583 palliative care consult patients discharged alive. First days and last days of stays excluded.) www.CAPC.org

15. Team Meetings • Premise: the team meets at least monthly to review progress and make plans (vs. daily or weekly patient care meetings) • You review the data together, sometimes with invited guests (your sponsor, data analyst, case manager?) – goal – identify opportunities and next steps www.CAPC.org

16. Team Meeting – Suggestions • Review workload (may require simple time tracking methods periodically) – patient care, education, admin, other • Discuss practice variations on the team! • Widen the ad-hoc network you work with • Challenge generalizations; search for specifics, then use them www.CAPC.org

17. Use the data to build Referral strategy • Compare to baseline data and hypothesis • Compare to concurrent info re deaths, outlier stays, and multiple admissions • LOS > 20 days by unit and service • >=4 admissions/yr by DRG and service • Deaths by unit and service • Who are you NOT hearing from? Where do you need to be visible? www.CAPC.org

18. Evaluate Workload & Opportunities • If you could be busier, reach out to high yield services wt more rounding, “detailing”, testing flags or protocols, formal check-in’s with the ED, ICU, hospitalists • If you are very busy, what is the opportunity cost of what you are not doing? Estimate value, demonstrate current results, leverage for resources. www.CAPC.org

19. Double check • Are you “too busy” because • Not using / getting MSW help – evaluate! • Being too open-ended re nights and weekends – try setting parameters for family meetings, etc. • You do it yourself vs. coaching the primary care team or providing skills to floor staff? • Chaos to schedule makes it more stressful? • Not letting team “know what you need”? www.CAPC.org

20. All requests are data points • How do you track requests you can’t fulfill? (hours, location, outpatient, skills, etc.) • How can each answer solicit good information? • Have you enlisted case management to help you track unmet need? www.CAPC.org

21. Back to VOLUME • Appropriate referrals are the lifeblood of the program • Growth (within reason) supports diversification and a healthy team • Assess who you have, and who you do not have • Repeat some of the initial assessment process www.CAPC.org

22. Observation • Early growth may be fast (low hanging fruit), • Next 6 months may be slow (lack of penetration / awareness) • Eventually (1 year – 2 years) you get credibility and awareness, and “passive referrals” grow rapidly – be prepared! www.CAPC.org

23. Costs: Methods influence outcomes For illustration only; not predictive of local results 30% of variable costs = $200, 30% of direct = $400 www.CAPC.org

24. Points re Direct and Variable • The shorter the time frame, the more items are fixed; • Organizations who can look to longer term sustainable, structural, cultural changes can give higher credit to cost savings www.CAPC.org

25. Contribution Margin: Capacity • If “on average” the net revenue from a case = total costs • And days saved can be re-deployed into new cases (requires coordination and timing) • Then Total cost - “variable cost” is the contribution margin = fixed costs; in our example, the value of saved days redeployed = $1400! www.CAPC.org

26. Tracking LOS impact • This is what we are LEAST good at • Requires negotiation, hypothesis, and agreement on methodology UP FRONT • Approaches • Define the broad DRG/LOS/Mortality risk group in the baseline that will be your comparison, then diligently compare • Keep a diary with representative cases and good notes on outlier cases • Brainstorm ideas that fit your place! www.CAPC.org

27. Other finance special topics • What is the “opportunity cost” of a 5 day vs. 7 day service? Consider for staffing/volume tradeoffs • In proforma (variables page) we use 50% of deaths (as appropriate) and 60% as ratio of patients who do not die to deaths – what does this mean? www.CAPC.org

28. Ratio • If 40% of an average program’s referrals are for patients who are actively dying (die in the hospital), then 60% are discharged alive • If we know that there are 713 deaths total in the hospital and we guess that ½ of these might be appropriate for palliative care, what might we deduce about total patients who might be appropriate for palliative care? www.CAPC.org

29. Ratio, continued Deaths x % appropriate (50%) (1- ratio of live discharges to deaths) = 713 x 50% 40% = 891 potential patients (then x capture rate) www.CAPC.org

30. Conclusions • Pro formas are only as good as your work and ownership of the “reasonable-ness” of assumptions • Monthly dashboards should strive to track the key variables of your pro forma • There is an “opportunity cost” to inadequate resources • Longer term vision can support higher value to cost savings • Capacity and LOS can be highest leverage, if tracked www.CAPC.org

31. Questions Ask now, or email me at Lynn@LSpragens.com We are interested in your concerns, even if we don’t have answers (yet!)!! www.CAPC.org