SSM Health Care System is embarking on an ambitious effort to coordinate 11 clinical and management services among seven of its St. Louis-area hospitals.
In a plan approved last December, SSM has begun a yearlong process to standardize materials management; laboratories; hotel services; patient accounts and finance; patient-care delivery and support; case management; and women's, cardiovascular and surgical services.
Through consolidation and service improvement, SSM expects to reap annual savings of $43 million, or about 8% of total operating expenses of $550 million, said Ronald Levy, executive vice president of SSM's St. Louis Health Care Network. The network comprises 12 area hospitals, but five that are owned, managed or affiliated with SSM are not part of the consolidation plan.
The integration plan will cut the number of jobs in the seven hospitals. By the end of this year, SSM will reduce full-time-equivalent employees through attrition by 1.5% to 6,624 from 6,724, Levy said. Last year the system reduced its work force by 320 FTEs.
SSM's St. Louis network is one of a growing number of regional systems that are integrating clinical and management services among operating units. The benefits of such integration include financial savings, improved quality and efficiency, system executives say.
As in other markets, St. Louis' hospitals are consolidating and forming networks because of the growing clout of managed care and the need to reduce costs. From 1991 to 1995, managed-care penetration in St. Louis increased to 70% of the area's insured population from about 50%.
"All healthcare networks are moving in various ways to integrate their delivery systems, but we are doing it at seven hospitals," Levy said. "Some systems are focusing on the hospital piece. We are integrating our hospitals in a comprehensive way with physicians and managed care."
SSM operates one of three large networks in St. Louis. In addition, SSM has a teaching affiliation with St. Louis University's Health Sciences Center.
Overall, SSM sponsors 19 hospitals and three nursing homes in Georgia, Illinois, Missouri, Oklahoma, South Carolina and Wisconsin.
The largest system in St. Louis in terms of market share is BJC Health System, which operates eight St. Louis-area hospitals and five others in Missouri.
Currently, BJC's market share is about 30%, with seven-hospital Unity Health Network at 24% and SSM at 23%. The 10 other area hospitals control the remaining portion of the market.
"We want to increase our market share by 7% to 9% over time," Levy said. "Our goal is to ultimately be responsible for the care delivery of about 800,000 covered lives."
The St. Louis metropolitan statistical area comprises 2.4 million people.
SSM's St. Louis network includes three components: hospitals, a managed-care subsidiary that includes its physician-hospital organization with 1,100 physicians and the SSM Medical Group, which includes three group practices with 150 primary-care doctors.
To administer its network, SSM streamlined its executive team. By July, SSM will have appointed 11 new network vice presidents to oversee the 11 revamped clinical and management service areas.
Those areas include:
Materials management: By standardizing purchasing and reducing inventories, SSM projects annual savings of $8.7 million. Its materials management department will be reduced through attrition or reassignment to 130 employees from the current 145, Levy said.
Laboratory: By creating a single core reference lab with expanded testing capabilities, Levy said the system will generate annual savings of $2.8 million.
Hotel services: By contracting for dietary services and consolidating laundry and linen, engineering, maintenance and environmental services, SSM projects annual savings of $9 million.
Patient accounts and finance: Accounts payable and payroll integration among the seven hospitals will be completed this summer, Levy said. Consolidating patient billing and accounting will be accomplished over the next two years as SSM upgrades its management information system, he said. Estimated annual savings will be $2.5 million.
Total business office staff will be reduced to about 70 FTEs from the current 240, he said.
Other services SSM plans to standardize include patient-care delivery and support services ($8 million in annual savings), case management and ancillary utilization management ($8 million), and surgical services ($9 million).
SSM's long-range plan is to develop an information system to tie its hospitals together with a single medical and billing record for patients.
It also is developing a system to monitor and improve the health of the communities it serves.
"In the past, each hospital had its own community outreach program, parish nurse program and relationship with schools," Levy said. "Our goal is to encompass all that in the network rather than through the seven hospitals."