Case Study

Community Hospital Performance Improvement


SITUATION

From 2008 through 2011, a community hospital in California experienced rapid growth in volumes and staffed up accordingly. In 2012, it added 160+ FTEs in anticipation of continued growth and to address the implementation of CPOE. Unfortunately, the volume growth failed to materialize, which resulted in a $19M decrease in its bottom line, compared to the previous year.

To address this severe financial situation, the hospital engaged HFS to assist in executing a major performance improvement initiative. A business imperative of $11M in net annualized improvement (expense reduction and/or revenue enhancement) was identified for 2013.

THE CHALLENGE

Achieve $11M in net annualized improvement (expense reductions and/or revenue enhancement) for 2013. HFS was engaged to address the labor cost reduction portion of this $11M goal.

SOLUTIONS

Over a six-month time period, a comprehensive three-phase approach was implemented to improve the hospital’s performance in labor productivity management and cost reductions.

Phase I Assessment
  • Benchmarking
  • Interviews
  • Department tours
  • Opportunity sizing and prioritizing and target settings
Phase II Design

Establish project structure including steering committee, work groups, PMO, develop internal communications plan and HR plans. Work with VPs and department managers to develop improvement plans to meet targets. Hypothesis-based problem solving, data analysis and modeling.

Phase III Implementation

Action plan development including process redesign, new staffing models, sequencing, investments and training. Coordination with HR, measurement and tracking, managing “backsliding,” accountability.

RESULTS

The client identified and implemented approximately $9M in annual labor cost reductions exceeding the goal of $8.6M.