The nations top hospitals not only deliver higher quality care at lower cost to more and sicker patients, but they also do it with fewer people.
They use 35% less contract labor and pay 14% less overtime. They pay their people better; salary and benefit costs per employee are more than $3,000 higher than at the average hospital. Their ratio of registered nurses involved in direct patient care is higher. And their case mix and patient volumes are both higher than the average hospitals. But they have a lower cost per discharge and a shorter length of stay.
If all hospitals were able to duplicate the statistics of the top performers, the U.S. healthcare system would save more than $7.25 billion a year in labor costs, or an average of almost $2.68 million per hospital.
These results come from a study of Medicare data by Solucient, an Evanston, Ill.-based company that provides tools for analyzing healthcare cost and quality, and each year designates 100 Top Hospitals honorees based on a variety of quality and efficiency measures. For this study, the firm analyzed data for the top 100 group, looking at metrics such as total paid hours, hours worked per patient day, hours worked and wages paid per adjusted discharge, and wages and benefits per full-time employee. It then compared these benchmark numbers with the average performance of the 2,834 hospitals in its database (See the roster, starting on p. 9.)
These hospitals are leaner in every areanot just one, which is frankly what I expected, says Jean Chenoweth, who led the research team and is senior vice president of performance improvement and the 100 Top Hospitals program at Solucient. These hospitals really have developed approaches that are systemic.
And it all starts at the top. The top hospital CEOs think about quality and efficiency simultaneously and always have, Chenoweth says. Average hospitals focus on one or the other. But she acknowledges that an institution has to start somewhere. If you are just getting your board to focus on quality, thats a beginning step. Then theres a natural progression of communication and ongoing monitoring of progress.
Some top hospitals say their stellar stats are a matter of necessity. The main reason we operate as efficiently as we do is that we have to, says Greg Loomis, chief operating officer of 230-bed Mercy General Health Partners, Muskegon, Mich., which made the 100 Top list for the first time this year. Our payer mix is tough and the reimbursement just isnt there.
The University of Kentucky Hospital, Lexington, made the list this year for the first time since a three-year streak in the mid-90s. Sergio Melgar, vice president of health affairs at the 436-bed hospital, points to hard times back then as the genesis of its efficient practices. We had a lot of financial pressure and we werent growing, so we put a big effort into staying productive while minimizing costs, he says. When the institution began to grow rapidly a few years ago, it couldnt immediately staff up to the levels it would have preferred, and the efficiencies it had adopted in the lean years allowed it to get by with fewer people.
But many hospitals face similar pressures and dont post similar results. Here are some strategies that have made the difference in the institutions honored on the 100 Top Hospitals list.