Focusing on quality improvement, customer service and cost reduction, Scott Street, president and chief executive officer at Duncan (Okla.) Regional Hospital, says the 98-bed hospital achieved significant milestones the past three years in all targeted areas. "I tell management staff that if an agenda item doesn't relate to one of those three areas, then don't spend a lot of time on it," Street says. "We have tremendous cooperation from our medical staff to reduce waste as much as we can in the organization and our board is very supportive."
Danbury (Conn.) Hospital has steadily increased quality and lowered costs the past three years by adopting patient-safety practices recommended by the Leapfrog Group and by using hospitalists to manage inpatient care at the 304-bed hospital, says Matthew Miller, Danbury Hospital's chief medical officer.
"We are in partial or complete compliance with most of Leapfrog's 27 initiatives," says Miller. Leapfrog, a Washington-based business coalition, recommends a number of practices to improve quality, including using computerized physician order-entry systems and intensivists to staff hospital critical-care units.
"CPOE has been a key driver in reducing medication errors and improving quality," Miller says. "We try to do the right thing at the right time and place, and we improve patient safety by avoiding unnecessary errors."
Duncan Regional and Danbury Hospital are two of 100 hospitals listed on Solucient's 13th annual list of 100 Top "benchmark" hospitals. It's Duncan Regional's first time and Danbury's second straight year on the list.
The 100 Top hospitals are selected based on their performance in four categories-quality, finances, operations and growth. Solucient analyzed 3,091 acute-care hospitals for 2003 and 2004 using the Medicare Provider Analysis and Review data. Solucient, a healthcare information company based in Evanston, Ill., also used Medicare cost reports and outpatient data from the CMS.
Solucient scored facilities on nine measures: mortality, complications, patient safety, length of stay, expense per discharge, operating profit margin, cash-to-total-debt ratio, tangible assets per discharge and growth in patient volume, a new category that includes inpatient admissions, emergency visits and outpatient surgery visits.
"These top 100 hospitals react quicker to challenges than their peers, and they focus on all aspects of care, not just one," says Jean Chenoweth, Solucient's executive director of the 100 Top Hospitals program. The 100 Top hospitals are different from their peers for several reasons, Chenoweth says, including:
They have a higher case mix, lower cost per case and higher patient volume, yet fewer full-time-equivalent employees.
They have slightly more FTE employees per daily census but lower FTEs per adjusted discharge. This means 100 Top hospitals are better at matching staffing levels to changing acuity levels, saving money.
They have a higher proportion of registered nurses and use intensive-care units more often.
They have significantly more high-severity patients in their emergency departments than peers and admit a higher percentage of those patients.
"These hospitals are strong organizations that can perform across all areas: quality, safety, financial, efficiency and growth," Chenoweth says. "The study measures organizationwide performance that touches every employee."
One of the most striking findings is that 100 Top benchmark hospitals performed significantly better than their peers. For example:
Risk-adjusted mortality index was 0.84, or nearly 17% lower than peer hospitals at 1.01. (The lower the score the better).
Risk-adjusted complication index was 0.82, or 15.7% lower than the 0.97 for peers.
Expenses per discharge (adjusted for case and wage mix) was $4,839, or nearly 9% lower than $5,308 for peers.
Average length of stay was 4.96 days, or 9% lower than the 5.48 days for the peer hospitals.
Operating profit margin was 8.08% compared with 2.56% for peers.
Growth in patient volume was 7.82% compared with 2.63% for peers.
According to Solucient, if all peer hospitals delivered the same level of care to Medicare inpatients as the 100 Top hospitals:
An additional 100,000 more patients would survive each year.
Nearly 117,000 medical complications would be avoided.
The average hospital stay would decline by nearly half a day.
Playing to strengths
After three years off the list, 223-bed Cape Cod Hospital, Hyannis, Mass., returned in 2005. It made the list from 1997 to 1999 and in 2001. "During the years we were selected, it had a profound impact on the public perception of (our) quality," says Stephen Abbott, president and CEO of Cape Cod Healthcare, a two-hospital system that also includes 95-bed Falmouth (Mass.) Hospital. Cape Cod's market share increased to 74% from 62% over the past decade. "Making the list helps reinforce the idea that you don't have to go off the cape to Boston for excellent care," he says.
Another factor that helped Cape Cod return to the 100 Top roster was the hiring of a new quality improvement director, Abbott says. "We got a lot better at measurement, analysis and reporting, and using the data to make changes," he says. In 2004, Cape Cod Hospital's operating margin improved to 2.9% on net patient service revenue of $295.8 million, compared with an operating margin of 1.4% in 2003 on net patient service revenue of $252.6 million.
Despite increasing acuity levels, Danbury Hospital's average length of stay has been stable the past several years at 4.1 days, Miller says. One reason is the organization's 18 employed hospitalists-specialists in inpatient care.
"At least 80% of admissions are cared for by hospitalists, and they have had tremendous impact on length of stay as compared with community physicians," Miller says, noting that length of stay dropped more than half a day after the program began in 2001.
Hospitalists also have helped reduce patient expenses, Miller says. "They help us make more efficient use of resources," he says. For example, hospitalists review patient charts daily and work with case managers to determine whether ordered tests or diagnostic procedures are appropriate, he says. At more than $5,000 per day, Miller says expense per discharge is "one of the categories we will continue to work on."
Danbury's operating margin declined slightly in 2004 to 4% on operating revenue of $323.8 million, compared with 4.7% on revenue of $297.7 million in the previous year.
Of the 100 hospitals on this year's list, medium and smaller hospitals performed as well or better than larger hospitals and the differences in scores compared with their peers were more significant. In the small-hospital category, for example, the median mortality index was 0.73 compared with 0.98 for peers, a 26% difference. For large community hospitals, the benchmark was 0.87 vs. 1.01 for their peer group, or a 13.5% difference.
"We have a tremendous quality staff that sits down individually with physicians to go over performance data," says Street, who adds that Duncan Regional's mortality index declined to 0.53 in 2004 from 0.8 in 2002. "We reward our employees for higher quality and customer service like giving away movie passes or gift certificates." Duncan Regional reported an operat- ing margin of 6.22% in 2004 on revenue of $54.6 million, down from an operating margin of 7.74% on operating revenue of $50.2 million in the previous year.
Medium-sized community top hospitals also scored higher in patient volume growth at 8.7% compared with other hospital categories, but major teaching hospitals were close behind, posting an 8.6% increase. This compares with the median benchmark patient volume increase of 7.8% for all hospitals and 6.3% for large community hospitals.
"We had a robust growth year in 2004, especially in the outpatient area," Abbott says of Cape Cod Hospital. "Adding an open-heart surgery program helped."
At 330-bed Denver Health Medical Center, Peg Burnette, the hospital's chief financial officer, says hiring a medical director for quality, increasing patient volume and updating the physical plant were three major changes that made a difference. This year marks the Colorado hospital's first time on the list.
"One of the things we are trying to do, being a public hospital, is to get rid of an image that we are not updated with technology," Burnette says. "We love getting the word out that our quality of care is outstanding."
During the past few years, Denver Health has attracted a higher proportion of private-pay patients, which helped increase the hospital's volume and profitability. "When I first started here 10 years ago, we didn't have any contracts with commercial companies. Now we have two," she says. "We also have put a process in place for one-time negotiations with payers that don't have contracts with us."
Another change in 2003 was hiring an associate medical director of quality improvement. "In the past, it was difficult to generate reports. We now have an electronic data warehouse that brings together clinical and financial data," she says. Along with that effort, Denver Health saved money by hiring an in-house information staff after outsourcing the services. "That made a huge dent in bringing costs down," she says.
From 2001 to 2003, Denver Health lost $13 million after Congress capped the Medicare disproportionate-share program, she says. As a result, the operating profit margin dropped to 0.3% in 2003 on operating revenue of $398 million. But the margin rebounded in 2004 to 3.2% on revenue of $422 million, she says.
At 719-bed Willis-Knighton Medical Center, Shreveport, La.-which made the 100 Top roster for the first time in 2005-James Elrod, president and CEO of the four-hospital parent system, says hiring six physician advisers to work with admitting doctors to make more accurate coding and treatment decisions has paid dividends the past two years.
"Many doctors were undercoding complex cases," Elrod says. "Private-practicing doctors are busy and don't have a lot of free time for documentation. The physician advisers look over the charts and work with the physicians to make sure if a patient has a complication we record it."
Elrod says the physician advisers, who are internal medicine specialists working between eight to 20 hours per week, also have helped to reduce length of stay and improve quality.
"I attribute a large part of our success to having the physician advisers," Elrod says. "Our continuum of care is better and we had a 5% drop in costs" from 2003 to 2004. During that period, the system's operating margin increased slightly from 0.5% on net revenue of $452 million in 2003 to 0.6% on net revenue of $464.2 million in 2004.
In 2004, Willis-Knighton saw a 12% growth in patient volume primarily because of the addition of surgical services and two urgent-care centers, Elrod says. "It is rather gratifying for me to be recognized as a 100 Top hospital," he says. "I have been here 40 years, and it is hard to separate myself from the hospital system. A third-party validation of our work is an honor because our goal is to be one of the best hospitals."
Jay Greene, a former Modern Healthcare reporter, is a freelance writer based in Thompson, Conn. Reach him at [email protected]
Web-exclusive charts can be found at the 100 Top Hospitals section of modernhealthcare.com
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