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Lynn Spragens, MBA Spragens & Associates, LLC Durham, NC Lynn@LSpragens 919-309-4606 capc

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 Lynn@LSpragens.com 919-309-4606 www.capc.org. Objectives.

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Lynn Spragens, MBA Spragens & Associates, LLC Durham, NC Lynn@LSpragens 919-309-4606 capc

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  1. 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 Lynn@LSpragens.com 919-309-4606 www.capc.org

  2. Objectives • 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

  3. Comments on WV Center • 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

  4. National Perspective: Chronically 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.

  5. 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 Life Closure Death & Bereavement Diagnosis Palliative Care Hospice

  6. Needs met by Palliative Care • 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

  7. Palliative Care in 2006 • 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

  8. Indicators of Fast Growth • 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.

  9. Implications of Growth • 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

  10. Components of the Formal Strategy • Define the need (Support Study) • Identify the “markets” – CAPC + • Define the product – National Consensus Project (www.ncp.org) • Promote systematic “program” implementation vs. evolution – Tech Asst. (www.hsc.wvu.edu; www.capc.org) • Create “push” and “pull” marketing strategies • Advisory Board • JCAHO • Business case and MEASUREMENT

  11. Public Awareness is Growing

  12. March 10, 2004

  13. Palliative Care IS: 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

  14. A Few of Our “Learnings” • 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

  15. Where are you NOW? • 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!!

  16. Ways to Find Gaps • 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???

  17. Mid-Stream Assessment • Alignment opportunities – key initiatives of the hospital • Rapid Response Teams • 100,000 lives Campaign • Medication Management • “Transitions” • Geriatric nursing initiatives? • Plane Tree

  18. Political Capital / Budget Control • Case Management • “Variance days” – your impact? • Readmissions? • Pharmacy • Home care and Hospice? • Nursing – staffing and satisfaction (CNS model) • MDs? Hospitalists?

  19. Opportunities for Support • Board of Directors • Hospice and community agencies • Payers / Insurance / Pay for Performance • Philanthropy • Demonstration Projects • Billing • AND “COST AVOIDANCE”

  20. Variables for Direct Support • Patient volume • Degree of Impact and Duration of Impact = Savings per day • LOS impact (avoided outliers) • Billing and other revenues • Cost of services

  21. Defining Need: Volume is key Variable • 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?

  22. “Top Down” % 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 Deaths Certain locations (MICU) Volume – Two Methods

  23. “Spragens” Volume Estimator

  24. “Spragens” Staffing Rules of Thumb • 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

  25. Adequate Staffing To develop and meet demand Dilemma: Chicken or Egg? Adequate Volume to demonstrate savings and justify the program

  26. Methodology recommended • 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!

  27. Baseline “Needs: Approach • “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?

  28. “Opportunity Cost” Approach • “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?

  29. “Cost Avoidance” Challenge If we do this, then the undesirable outcome does NOT happen…How do we get credit for what DID NOT happen???

  30. Strategy: Avoid the “Case Management” Cycle… • 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…

  31. Example of Financial Results • 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

  32. Total Costs FIXED COSTS 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. VARIABLE COSTS 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. FIXED INDIRECT 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 administration. VARIABLE DIRECT * 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. VARIABLE INDIRECT The costs or expenses that cannot be specifically traced to an individual patient but which do vary with volume. Examples: social services, medical records. FIXED DIRECT Costs that can be traced to or identified with a specific product or service but that do not vary with volume. Examples: supervisory personnel, equipment. • The main source of potential savings associated with cost avoidance efforts. Courtesy of Kathleen Kerr, UCSF, 2/1/05

  33. 4 3 Work Teams 2 1 0 0 10 20 30 40 Volume Semi-variable cost behavior for Savings and Revenue Using averages Reality = “Breakpoints”

  34. Per day costs: pre- and post-referral 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

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

  36. Carle Foundation Hospital: 190 beds (2 yr old service, 35+ new patients/mo)

  37. What does that mean? • $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)

  38. Funding Building Blocks • 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

  39. Simple (critical) assumptions • 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

  40. Use Dashboards to Help • 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

  41. Dashboard: Volume

  42. Penetration: of Patients who Die

  43. DASHBOARD: Time Before, Time After

  44. Where are you being called?

  45. Summary Points • 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

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