A data-driven approach to identifying best practices in service-line management

As health systems pare back their number of service lines, New Hyde Park, N.Y.-based Northwell Health recently decided to add on at one of its community hospitals.

Executives for the large system committed to building a neuroscience center of excellence at its community hospital in Glen Cove, a bucolic suburb on Long Island’s North Shore. Over the next several years, the $11.5 billion system plans to turn the 140-bed facility into a destination institute for treating Parkinson’s disease, epilepsy, amyotrophic lateral sclerosis, or ALS, and other neurological and movement disorders.

“There are treatments now like deep brain stimulation that could significantly impact the progress of a disease or completely cure it,” said Mark Solazzo, Northwell’s chief operating officer. “That’s an example of technology that wasn’t here 10 or 15 years ago.”

Developing a neuro rehab unit in a community hospital takes time and money and can be a risky proposition should it fail to attract patients. Northwell’s decision comes amid shifting patterns in the delivery of care that have complicated efforts to develop and execute a successful service-line strategy. The movement from inpatient to outpatient care, driven by advancing technology, value-based reimbursement and patient preference, led to a 6.5% decline in total patient days spent in hospitals from 2008 to 2017, according to Modern Healthcare Metrics.

Moreover, the anticipated gains in occupancy from an aging society have not materialized. Population-adjusted admissions and inpatient days per 1,000 people fell 13.2% over the period. Among Medicare beneficiaries, the decline was a startling 43.5%.

Consulting groups reviewing these trends for hospital clients project the recent downturn of in-hospital treatments will continue for the foreseeable future, yet few systems are taking a hard look at service lines. “Only the more sophisticated ones, almost 30%, are looking at service rationalization,” said Lance Robinson, leader of Kaufman Hall’s performance improvement practice. “They are the organizations taking the lead.”

A Vizient projection for 2017-27 showed cardiovascular inpatient procedures falling 9% over the period, with outpatient procedures rising 23%. The group projected orthopedic and spine inpatient operations would fall 3% as outpatient procedures rise 13%. Inpatient oncology treatments will fall 1%, even as outpatient visits rise 21%.

The only service lines that will escape declines in inpatient utilization, the group projected, are neurosciences and behavioral health. Each is projected to experience an 8% increase over the period. However, outpatient treatments in those areas are projected to grow even faster. The bottom line is that every service line will see a continuing shift toward greater reliance on outpatient treatment, with some moving faster than others.

Northwell began using a service-line approach for managing its operations in the mid-1990s. But as it took over community hospitals (there are now 23 in the system) and expanded to 750 outpatient facilities, it has begun rationalizing where it offers specific services. Not every hospital can offer every service to every patient in its immediate territory.

Hospital executives revamping their service lines are placing a heavy emphasis on patient satisfaction since word-of-mouth is often the best form of marketing. They’re looking for ways to improve and streamline the patient experience from the initial visit at a primary-care office, the referral to a specialist’s office, intake at the inpatient or outpatient facility, to post-discharge instructions and care.

Service-line managers looking to execute these strategies often pull together a multidisciplinary team drawn from every part of the care continuum. They must make heavy investments in data analytics, since the teams need information for measuring performance and setting goals. Without accurate data, there’s no way to accurately identify poor performers and outliers in utilization, or to set meaningful and achievable goals for quality, outcomes and costs.

“We’re going back to our doctors to break apart what we do (in each service line) so we maintain quality but lower cost,” said Chris Van Gorder, CEO of Scripps Health in San Diego. “Right now, 50% of our strategic plan is care affordability.”

A core element of Scripps’ strategic plan involves creating partnership-focused centers of excellence throughout its five hospitals and over 30 outpatient and ambulatory sites. For instance, Scripps formed a partnership with Houston-based MD Anderson Cancer Center for oncology care and concentrated its radiation and infusion services at two of its hospitals, one on each end of its service territory so no patient has too far to drive.

Six years ago, Scripps partnered with Kaiser Permanente to create a cardiovascular institute at its San Diego hospital. Scripps is also partnering with local government to build a 120-bed behavioral health facility, which is called a hospital but doesn’t have an emergency room. Most beds will be filled with insured patients, but 36 have been reserved for “unfunded” patients, who are often homeless. “Behavioral health is the largest unmet need in the U.S., certainly here locally,” Van Gorder said. “We’re looking for different ways to meet our mission and generate growth.”

Novant Health, with 15 hospitals in the Carolinas and Virginia, is also moving to what Chief Medical Officer Dr. Eric Eskioglu calls “an institute mentality.” When he took the job in 2018, his first action was to shrink its dozen service lines to nine institutes. “Behavioral health is never going to make money, but there’s a growing need,” he said. “To stand it up on its own would be impossible because it has a lot of back office and administrative needs. So, we joined it with neurosciences, which generates a lot of money.”

Eskioglu worries less about shrinking in-hospital volumes, which he said have been largely offset by an aging population in Novant’s service territories, than he does about shrinking margins. “As the top margins shrink, we have to cut the fat, decrease our overhead, and get rid of unnecessary instruments so we dovetail how much we get paid with how much we spend.”

Toward that end, Novant is developing a home-grown scoring system for physicians that will include infection rates, patient satisfaction, mortality rates, readmissions, average lengths-of-stay and pharmacy spend. Physicians need to see how they compare with their peers throughout the system, he said.

Houston-based Memorial Hermann, a $5.5 billion system with 14 full-service hospitals, has implemented an aggressive cost-control program across each of its 15 service lines, which are organized by collections of diagnosis-related groups. Three years ago, hospital managers pulled together multidisciplinary teams to develop and implement strategies to standardize care; improve outcomes, safety and the patient experience; and reduce unnecessary utilization in each of its service lines.

The system set a goal of lowering its total costs by $1 billion over five years. It said care redesign would be responsible for coming up with 20% of those savings.

“We decreased lengths of stay; we created consistency in supply utilization so we could decrease its price; we decreased our use of drugs; we moved, where possible, to cheaper drugs of equal efficacy; we eliminated unnecessary laboratory and radiology tests,” said Erin Asprec, executive vice president of acute-care services. “We saved $87 million in the first two years,” which was nearly half of the project’s five-year goal.

Memorial Hermann has also developed tools to move patient care into appropriate settings, no matter what its impact on overall revenue. It has developed a “heart score” tool for triaging patients that present in the emergency room with chest pain.

Many specialties are moving toward greater use of medical management, i.e., drugs, early in the progression of chronic diseases like congestive heart failure, chronic obstructive pulmonary disease and gastrointestinal disorders. The idea is that good adherence to prescribed drug regimens will forestall deterioration in the condition of chronic disease patients and prevent more expensive hospitalizations.

Bay Health, a two-hospital system in Delaware, began encouraging physicians in its service area to improve medical management of patients with digestive, respiratory and cardiovascular diseases in order to reduce its hospital readmission rates.

“Instead of being admitted to the hospital, you’re admitted to the home,” said Chief Operating Officer Deborah Watson. “A lot of our service lines are seeing a shift away from the hospital to the ambulatory setting.”