Many hospital cardiac programs are barreling down the freeway with their eyes closed, making moves to invest in expansions or renovations with a dearth of basic financial information such as profits and losses.
That was one of the findings of a national survey conducted by Corazon Consulting, which specializes in heart programs. The study gathered data from 101 hospitals for a national bench-marking survey that aims to establish key cost and quality performance indicators for hospitals wishing to measure the success of their cardiovascular programs. Results of the study were released exclusively to Modern Healthcare.
It is no surprise the competition among cardiac programs is fierce, and the survey determined that 78% of the hospitals that responded are planning to expand their programs this year. The programs are most commonly expecting to spend capital on catheterization labs and cardiac beds, while vascular centers and heart-failure programs top the list of programs planned, according to Corazon. Somewhat surprising is that only 10% of the programs surveyed actually measure profit, loss and other indicators of their financial success. Dedicating financial resources to cardiovascular management was identified by Corazon as an important strategy for making fiscal and business decisions that help an organization capitalize on market opportunities, yet 43% of the hospitals surveyed do not even have a cardiovascular service-line operating budget.
"They may be looking at individual costs, but clearly when it comes down to it, it looks like not a whole lot of (hospitals) are getting a distinct view of profitability as a distinct business unit," said Susan Heck, a Corazon director. "You need to have that level of financial detail ... to make money."
Skip Meador, director of cardiac services at Stroobants Heart Center of Virginia, Lynchburg, part of Centra Health system, said he wasn't surprised by the results, though his cardiac program, which did not participate in the survey, is "ahead of the curve." The program invested $7 million in an expansion that will add a fourth catheterization lab by early next year. Cardiologists at the heart center are currently using drug-eluting stents about 60% of the time, and the guidelines for using them were developed before the stents even went on the supply shelf a year ago, he said.
Centra's cardiac service line is responsible for as much as 40% of the entire system's bottom line. In 2001, the system earned
$8.4 million on $257 million in revenue, according to Guidestar, an online financial database for not-for-profits. "Putting quality first" has contributed to substantial profits for the not-for-profit system, Meador said. It's hard to imagine how a top-drawer program could be managed without knowledge of profits and losses, he added.
"We're one of the last profitable programs in the system. We're helping to keep our health system afloat-we take that seriously," he said. "It's not just about economics. If you can't measure it, how in the world do you know how you are doing or the direction you are going in?"
Operationally, 68% of the surveyed hospitals admitted they are plagued with scheduling problems, which affect the efficiency of operations. Many programs are not managing implementation of new technologies any better. For example, though the surveyed hospitals that are using drug-eluting stents anticipated 70% utilization of the ground-breaking technology within a year, only 47% of those same hospitals have developed guidelines to manage stent use, Heck said. Heck said she was surprised to find that 43% of the hospitals surveyed purchased supplies from four or more vendors, with 25% winnowing it down to one or two suppliers. Limiting the number of vendors affords cardiac programs the best pricing and can also be a first step to standardizing practices to achieve quality outcomes and cost savings, she said.
Heck also said that having a service-line organizational structure-an autonomous department independent of other service lines-gives hospitals a strategic advantage over competitors in making nimble business decisions, and 62% of the hospitals reported having that model. "It appears that people are moving to the service-line concept, but what is lagging behind is the financial structure to support that," Heck said.
The survey examined five areas for cardiovascular program success: program design, and fiscal, information, operations and quality management. Cardiac programs at hospitals with catheterization labs and more than 150 beds were solicited through a mailing, newsletter advertisements, Web site notices and letters to client contacts. The hospitals that participated came from 28 states, and nearly 70% identified their organizations as a community hospital. Open-heart surgery is performed at 62 of the respondents and cardiac catheterizations at 99. Two of the programs provide medical and diagnostic surveys only. Seven are performing angioplasty without an on-site cardiac surgery program.