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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

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


  • 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
comments on wv center
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
national perspective chronically ill aging population is growing
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.

nhwg adapted from work of canadian palliative care association f ferris md
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
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
palliative care in 2006
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

indicators of fast growth
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.
implications of growth
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
components of the formal strategy
Components of the Formal Strategy
  • 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
palliative care is
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
a few of our learnings
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
where are you now
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!!
ways to find gaps
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???
mid stream assessment
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
political capital budget control
Political Capital / Budget Control
  • Case Management
    • “Variance days” – your impact?
    • Readmissions?
  • Pharmacy
  • Home care and Hospice?
  • Nursing – staffing and satisfaction (CNS model)
  • MDs? Hospitalists?
opportunities for support
Opportunities for Support
  • Board of Directors
  • Hospice and community agencies
  • Payers / Insurance / Pay for Performance
  • Philanthropy
  • Demonstration Projects
  • Billing
variables for direct support
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
defining need volume is key variable
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?
volume two methods
“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


Certain locations (MICU)

Volume – Two Methods
spragens staffing rules of thumb
“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
dilemma chicken or egg
Adequate Staffing

To develop and meet


Dilemma: Chicken or Egg?

Adequate Volume to demonstrate savings and justify the program

methodology recommended
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!
baseline needs approach
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?
opportunity cost approach
“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?
cost avoidance challenge
“Cost Avoidance” Challenge

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
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…
example of financial results
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

Total 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.


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



Work Teams










Semi-variable cost behavior for Savings and Revenue

Using averages

Reality = “Breakpoints”

making the financial case costs pre post palliative care referral

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

palliative care sources of direct cost savings
Palliative Care: Sources of Direct Cost Savings

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

what does that mean
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)
funding building blocks
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
simple critical assumptions
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
use dashboards to help
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
summary points
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