Memorial Healthcare System, based in Hollywood, Fla., has saved millions of dollars through its nationally recognized organizational improvement program.
The goal of the two-year program is to reduce costs and increase quality through competitive bidding for vendor contracts and by using employee ideas to restructure jobs and clinical procedures, said Frank Sacco, president and chief executive officer of three-hospital Memorial.
"We need to reduce our controllable operating expenses because if we don't reduce expenses and improve quality we won't do well in the future," said Sacco, who has been with Memorial for 20 years, the past nine as CEO.
Using some 30 organizational improvement teams composed of more than 200 physicians, nurses, technicians and other employees, Memorial has carefully scrutinized operations and patient services to wring out unnecessary costs and improve patient satisfaction and clinical outcomes, Sacco said.
"I'm most proud that over 400 employees and physicians participated in these teams to reinvent the way we work," Sacco said. "No one in administration or executive management could be a direct participant in developing the plans for our change. Management modified the plans and put them into place."
Through its staff's efforts, Memorial cut expenses 18% and saved $17 million in fiscal 1996 ended April 30. The system projects savings in fiscal 1997 of $15 million, or 15% of its controllable operating expenses, Sacco said.
Memorial was one of 20 hospitals this year to receive honorable mention for its organizational improvement program from the National Association of Public Hospitals.
Sacco said one downside of the program has been turmoil among some managers and employees.
"We expected some difficulty, but we underestimated how difficult it would be to implement some of our plans," Sacco said. "You need to spend more time on the implementation process."
Sacco said some managers weren't prepared to deal with the additional authority and responsibility they were given.
"It is getting better, but some mid-managers were not ready for the degree of empowerment our employees have now," he said. "Some left." The exact number wasn't available.
Like many systems, Memorial also is seeking to save money by signing contracts for individual services across the system, such as emergency, anesthesiology and radiology.
Memorial now contracts with Coastal Physician Group, Durham, N.C., to staff the emergency department at two of its hospitals, 739-bed Memorial Hospital, Hollywood, and 100-bed Memorial Hospital West, Pembroke Pines, Fla. It also contracts with InPhyNet Medical Management, Fort Lauderdale, Fla., for the emergency department at 301-bed Memorial Hospital Pembroke, Pembroke Pines, Fla.
In December 1995, Memorial sent out a request for proposals to staff its three emergency departments. It received 11 bids, and three contract management companies were selected as finalists: Coastal, InPhyNet and St. Louis-based Synergon.
Memorial plans to make a final selection later this month, Sacco said. The contracts would begin in May 1997.
As part of a larger effort to streamline vendor contracts, Memorial has reduced its vendors from 3,000 to about 50 during the past six years, Sacco said. At one time, Memorial had eight vendors for pacemakers and contracted with three emergency management firms, he said.
"Last year we saved $1 million alone by consolidating contracts," Sacco said. "We are not unhappy with our (contract managers); we are just looking for a lower price and improved communication."
The system saved money in other ways. Individual savings on each project were unavailable. Some examples:
A central transportation department was created to move patients throughout the hospital and better monitor scheduling of tests.
To increase response time to patients needing assistance, nurses carry wireless phones and use laptop computers to enter patient data.
Pharmacists are now stationed at nursing units with laptop computers to speed medication ordering.
Patients are now admitted in their rooms by nurses, eliminating the need for a large admissions office.
The system's materials management department reduced the number of vendors for supplies to seven from about 200. Memorial has been a shareholder with Premier, the nation's largest group purchasing hospital alliance, since earlier this year.
"We have quality indicators in each department that tell us how well we are doing in patient satisfaction and clinical quality," Sacco said. "In some cases we are doing better, and in some cases we aren't doing as well yet. Over time, this will help us prepare for the changes ahead."