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•Transforming
•Hospital
Operations
•Executive summary
•
•A well-executed, operational transformation can deliver stepchanges in patient experience and quality while reducing the cost
structure by 20% or more
•This next generation of operational performance will come from
engaging clinicians is new and deeper ways, enabled by the
proper IT and performance management systems
•A truly transformational response will be required as hospitals
strive to improve quality, transparency, and patient experience
whilst also improving operating margin
•
Hospitals can follow a prescribed change cycle
of: ▪ ‘Unfreeze’ the status quo
•▪ ‘Transform’ clinical processes with pace and energy ▪
‘Refreeze’ the new ways of working
•McKinsey & Company | 2
•Elements of a hospital transformation
•Aspirations, Programme
•Design and Governance
•Capability
•Building
•Front-line
•Transformatio
n
•Clinically-led
•Management
•Hospital-wide
•Diagnostic
•McKinsey & Company | 2
•Change cycle of front line transformation
•‘Unfreeze’ the status quo
•How change ready is your organization?
 Clear case for change, broadly understood
 Transparency of organizational performance
 Real engagement of clinicians to lead
•Transform the clinical processes
•What will it take to achieve a step change?
 Physicians jointly managing quality, supply costs
and throughput in line with wider objectives
 External partnerships to manage overheads
 IT systems that enable real-time decision-making
•‘Refreeze’ the new way
•How will you “institutionalize” the change?
 Practical capability-building at scale
 Performance management systems in place,
including for clinical teams
 Purposeful role modeling of the new ways of working
•SOURCE: K.Lewin, E.Schein McKinsey & Company | 3
Unfreeze: build the case for change based upon a deep
understanding of performance
Quality
Workforce
Operations
Finance
•McKinsey & Company | 6
Unfreeze: identify variations in clinical practice as a basis for
discussion and improvement
•
•Pneumonia
•Consultant •Average LOS, days Spells
•COP
D
•Consultant Average LOS, days Spells
•Dr
A
•Dr
B
•Dr
C
•Dr
D
•Dr
E
•Dr
F
•Dr
G
•Dr
H
•Dr
I
•Dr
A
•Dr
B
•Dr
C
•Dr
D
•Dr
E
•Dr
F
•Dr
G
•Dr
H
•Dr
I
•12.
1
•23.
2
•14.
1
•10.
0
•14.
1
•14.
8
•14.
3
•10.
4
•12.
0
•x2
%
•7
6
•5
5
•5
4
•5
3
•3
1
•3
1
•2
9
•2
6
•2
0
•8.
0
•12.
7
•7.
9
•4.
8
•10.
0
•10.
0
•8.
8
•7.
9
•10.4
•x3%
•3
4
•3
2
•3
2
•2
9
•2
5
•2
5
•2
1
•1
9
•1
8
•McKinsey&&Company
Company| |65
•McKinsey
•Unfreeze: share ‘management’ information
•with clinicians to get distributed ownership
•Use encouraged1
•Vendor scorecard
•Goo
d
•DISGUISED
CLIENT EXAMPLE
•Neither encouraged
or discouraged
•Use discouraged2
•Pacemaker “B”
Lead “C”
•AICD “C”
CRT “B”
•Pacemaker “C”
AICD “B”
CRT “C”
Lead “B”
•CRT “A”
Lead “A”
•AICD “A”
•Pacemaker “A”
•0-5% above
target price
•Pric
e
•At or below
target price
•Servic
e Level
•Ba
d
•>5% above
target price
•1 When clinically appropriate
•2 Red vendors will not be allowed access to facilities unless they are invited by a physician
•McKinsey & Company | 6
Transform: engaging clinicians can yield significant additional
savings
•From
•To
•Pricing levers for supplies and
•services
•Non-price levers addressing what
•is used and how it is used
•Lean operations focused on
•“never events” and patient flow
•Disease-based protocols that
•simultaneously improve outcomes
•and lower length of stay
•Top-down driven quality and
•efficiency
•Bottom-up initiatives that lead to
•continuous improvement
•McKinsey & Company | 1 3
Transform: hospitals may need to consider where to “place your
bets” on shared services
•Categories Example services (not exhaustive)
•
 Full-time and/or temporary staffing services for physicians,
nurses, and allied (tech) staff
 Department management
 Labor management, optimization, and scheduling tools
•Clinical
services
•Suppl
y
chain
 Group purchasing organizations (GPO)
 Last mile, in-hospital distribution, and warehousing
 Supply and formulary management
•Business
processes




Revenue-cycle management
IT&S and data analytics
Financial and operating reporting
Accounting, payroll, AR/AP, etc.
•Hotel/
Hospitality




Housekeeping & laundry
Dietary
Facility maintenance
Site selection, design, and build
•SOURCE: Broad market research; team analysis
•McKinsey & Company | 18 3
•Refreeze: build defined set of capabilities in lead clinicians
•EXAMPLE
•Strategy and
management
•Economic
fundamentals
•Collaboration
with the
administration
•People
leadership
•2
•1
•3
•6
•4
•5
•Processes
and quality
•Managing external
stakeholders
•SOURCE: McKinsey Hospital Academy
•McKinsey&&Company
Company| 1| 3
10
•McKinsey
•Refreeze: develop ‘behavioural standards’ for leaders to underpin the new
•clinical standards
The vision

•
Ward expedite flow of patients
20% reduction in average
length of stay
–
What needs to be done
•Actio
n
 Sustain Pilot initiatives
8 am ward round and afternoon check-in
Use ward board to indicate discharge
date and responsible consultant
Complete EDCs and TTC overnight
Each SHO own bleep
Consent obtained on ward
•
•
•–
•
Clear and effective
communication to enable Cath
labs to optimise capacity and
increase throughput
 Launch of departmental
key metric reports
Ward round start times
No. of discharges before
12pm No. of late discharges
as a result of late decision
–
•Wh
o
–
–
•–
–
•–

 Consultant,
SpR,
Pharmacist
 Consultant,
Ward manager
SHO. Ward SpR
–
–
•–
•
•–
•–
 Introduce and follow new checklists
(p28- 29)
Overnight PCI
Patients going to Cath lab have own
summary and tracking sheet
Escalation options
Routine patients
 Ward manager
–
 Set up Ward board
Responsible staff/contact numbers
–
 Implement new discharge
procedure Set target for all new
patients Nurse led discharge 8 am
–
 Ward Manager


Consultants
Nurse in charge
–
•McKinsey&&Company
Company| 1| 3
10
•McKinsey
•Case Study #1: A transformative operational program lowered cost
•base and enhanced capabilities
•Program design
•Unfreeze
 Communicated bold vision of moving from a
holding company to an operating company
•Overall context
•
•
•
•
 ~ $5 B USD
•fe
 Strong growth aspirations,
but
functioning
as ainholding
company
regional
system
in
•▪
Grounded
case
for change
the need
to
deliverfrom
greater
w
•synergies
realized
merge
US performance
•r
•quality and patient experience at lower average cost
 Non-standard clinical and non-clinical
 Excessive cost base for the system
• th variable
•size
•processes wi outcomes
Transform
 Took “bite sized” initiatives to gain buy-in and •across the system
•p Strate
•per areas
•▪ Supply costs rose faster than
Capital
p
•revenues for 5 consecutive years
Variable capabilities •in the rogressively
address
dee
gic
sourcing
•organization with little “bench
•roductivity •acy •perations
· Centralized
not well-aligned creating
•strength”
o •▪ Physician
·pharm
Patient experience and clinical
operations limited ability to
drive quality
•initiatives
· Enhanced RCM
•
•–
•–
•
•
•Refreeze - Organisational ‘upgrade’
 Focused on both management and clinician
capababilities and incentives
•McKinsey&&Company
Company| 1| 3
10
•McKinsey
Case Study #1: Integrated operations program reduced costs by
more than 20% over ~ 3 years
•Annual impact – Savings and revenue capture
USD, Millions
•10
•185
•
•15
•20
•35
•6
5
•4
0
•Clinical Supply RCM Capital Shared Information Total savings
•operations chain productivity services technology
•24% reduction of the
$760M spend addressed
•McKinsey & Company
Company | 11 23
Case study #2: Hospital went through two waves of efficiency
improvements in their core areas – with more to come
•Increase in efficiency
Index, 2004 = 100
•12
5
•12
0
•11
5
•11
0
•10
5
•10
0
•~
7%
•9
5
•9
0
•200
•0
•0
4
5
6
€ €€ •Wave 1 – costs
•€
• ▪ Savings in both
medical and nonmedical areas
•▪ Focus on pay
•SOURCE: McKinsey, client data
•Numbe
r
of cases
•Are ~ 30%
realistic?
•~
14%
•FTE medical
services
•0
7
•0
8
•0
9
•1
0
•Wave 2 – growth
and procurement
• ▪ Focus on organic
growth and total cost
of ownership in
procurement
•1
1
•1
2
•1
3
•201
4
•Wave 3 – organizational health
• ▪ Focus on
organizational structure
and cultural changes
•McKinsey & Company | 1 3
•What has worked well for your hospital?
•‘Unfreeze’ the status quo
•How change ready is your organization?
 Clear case for change, broadly understood
 Transparency of organizational performance
 Real engagement of clinicians to lead
•Transform the clinical processes
•What will it take to achieve a step change?
 Physicians jointly managing quality, supply costs
and throughput in line with wider objectives
 External partnerships to manage overheads
 IT systems that enable real-time decision-making
•‘Refreeze’ the new way
•How will you “institutionalize” the change?
 Practical capability-building at scale
 Performance management systems in place,
including for clinical teams
 Purposeful role modeling of the new ways of working
•SOURCE: K.Lewin, E.Schein McKinsey & Company | 1 4
•McKinsey & Company | 1 3