Northwood was faced with the need to link several systems. They sought an automated field solution for home health aides that would be compatible with their back office and clinical system from Procura as well as with a payroll system. Integrating all systems and improving data accuracy was a primary project goal.

Three IT implementation teams — Northwood’s, Procura’s and CellTrak’s — developed the integration that was key to project approval. CellTrak took charge of training 200 Northwood staff on their own CellTrak Visit Manager application and CellTrak web portal as well as on BlackBerry devices. Northwood executives worked on assuring field staff buy-in to the new technology and a new way of doing business.

Appartently, the joint efforts paid off. At completion, field staff reported that they “felt more connected” to the rest of the organization. Some commented that they liked the fact that they now had a “green” solution without paper.

One Northwood official added, “They know that their schedules are up to date and that they have and provide the latest information while taking care of their patients. Nothing is ever lost or missing now, as often happened with paper processes of the past. By giving our workers the right tools, they can focus on what they do best, with confidence, namely providing the best client care possible.”

Controller David MacDougall’s goal was to balance payroll accuracy with fairness towards paying all staff properly. “The accuracy and consistent data that CellTrak provides allows us to better manage our finances.”

About Procura

Procura provides an integrated software application for point-of-care, clinical (InterRAI MDS-HC) and back office administration for Regional Health Authorities, and Home Care and Community Care agencies across Canada and Medicare billing functions for U.S. agencies. Over 6,000 users at more than 350 client sites in North America and Australia use Procura.

www.goprocura.com

About CellTrak Technologies

Founded in 2006, CellTrak Technologies, Inc. is provides integrated mobile point-of-care systems for home healthcare, hospice, and private duty agencies. A patent pending, software-as-a-service system runs on GPS-enabled mobile devices. Data is transmitted wirelessly to an internet site. Secure integration is provided to back-end clinical systems and payer networks.

www.celltrak.com

It began at a national home care meeting, Director of Clinical Services Denise Shaffer remembers. “I heard two conflicting messages that sent me home to Toledo shaking my head. One speaker was firmly convinced that mobile computers – laptops, notebooks or Tablet PCs running Windows – are the only solution to the paperwork burden imposed on visiting nurses in a Medicare agency. Another group, by no coincidence the audience of the presenter with the other opinion, responded with stories about how many nurses they lost after imposing laptop PCs on them.”

They were both right, she decided. At least they both possessed a piece of the truth. Shaffer was determined to put the pieces together and come out with a whole solution for her staff.

On the one hand, it is true that nurses are asked to do too much in a Medicare agency, Shaffer realized. Too few nurses are required to care for growing patient case loads and complete a mountain of paperwork for each patient. She also knew that completing OASIS assessments on paper forms contributes to the workload and that excessive workload is thought to be the reason clinical documentation quality is a perennial problem.

Converting from paper to an electronic system, given the right electronic system, streamlines a nurse’s task load and puts more patient information at his or her fingertips. Electronic patient records frequently improve inter-disciplinary communications and result in better patient outcomes.

If you can convince them to accept technology, that is.

On the other hand, those colleagues who had lost staff after introducing computers must be telling true stories as well, Shaffer further reasoned. With the nursing shortage severe in northwest Ohio, she did not want to propose a move to management that would make it worse. Still, something had to be done to reduce paper and increase efficiency.

“Nurses carry too many things already,” she firmly believed. “Adding one more three-to-five pound device is likely at least part of the reason some nurses resist. Add to that a laptop’s typical short battery life and small screen size, factor in the average nurse’s aging eyesight, and you can understand why people in that audience said what they did. Some admitted that most of their nurses who did accept the computers do not complete their charting in the patient’s home but in their own home at night. Some do not even take the laptop into the patient’s home.”

If only there were an in-between solution,” she found herself wishing, “something like a telephone that they already know how to use and are comfortable using. Everyone agrees that a cell phone is most unsuited to filling out an OASIS assessment but that is only if you try to use the phone as if it were a computer, she continued to reason, typing paragraphs on the tiny keypad or touch screen.”

Why not use the phone as a phone?

With company owner Ritch Adams’ encouragement and a minimum of outside help, Denise Shaffer devised her own OASIS call-in reporting system, based on one she had seen working at another agency. From simple, somewhat awkward beginnings, it passed through three generations to reach full 24/7 automation and integration with Heritage’s back office software system.

1) Person to Person

For the first year, nurses called the office and dictated their OASIS answers to a live typist. Shaffer was surprised to learn each clinician/typist pair could complete an OASIS assessment in less time than a clinician on her own, including the time to enter the data into an electronic system after the paper had been delivered. Assessments were entered into Heritage’s back office system the day they were done instead of three to seven days later, as was the case under a paper system.

This innovation’s advantages were outweighed, however, by the necessity to restrict dictation to office hours. “Monday mornings were overwhelming,” Shaffer says. “We had three full-time typists and three more cross-trained from other positions but all six were not enough to handle the weekend backup.” They tried bringing a person in on Sunday afternoons for a while but that turned out to be a very unpopular solution.

2) Person to Software

The second year saw the introduction of an IVR system from Heritage’s telephone service provider, VorTalk, which was negotiated by Adams but evolved into a full “TeleOASIS” system following Shaffer’s urging and guidance. Now, clinicians were able to dictate OASIS assessments over the phone at all hours, including weekends, as no attendant was required. The system read each OASIS question and waited for a numeric response, delivered by voice or touchtone. Data was still entered manually from the new system into Heritage’s clinical and billing software.

Though this version was a giant step forward, it had disadvantages of its own. To get OASIS data into their back office system, a transcriptionist had to sit in front of two monitors, one with the VorTalk system and the other running the back office software. Data entry was still manual but now typed into one system by reading from another rather than by listening to a live voice.

3) Person to Software to Software

Finally, Heritage arrived at its fully-developed system, TeleOASIS, in mid-2009. They supplemented the IVR system with another application developed to serve virtually any business arena, including healthcare and banking, from a company called HTECH. Known as Cascader, the application converts data automatically and seamlessly exchanges it between TeleOASIS and the Heritage back office system.

“I am not sure exactly how HTECH’s Cascader TeleOASIS works,” Shaffer admits. “I have a feeling there is some magic involved. It can convert data between and among almost any number of applications, no matter what language they were each written in or what operating system they run on. I just know it works and works fast.”

She offers two examples of what the Cascader system has done for Heritage’s office productivity. All positions related to entering OASIS data have been eliminated. Also, the process of calculating grade card scores (see Sidebar), which used to involve combining several reports from different sources, a full-day task, is now completed in 20 minutes.

Laptop computers and handheld PDAs may never appear at Toledo’s Heritage Health Care Services, Inc. Ask Denise Shaffer whether her staff uses an electronic point-of-care system, however, and she will answer that they most certainly do.

Editor’s note: Cascader TeleOASIS has completed beta testing and is just now becoming commercially available through HTECH. Cascader also powers Heritage’s Grade Card Scoring system (see sidebar). www.TeleOASIS.com

In the spring of 2006, Home Healthcare Partners (HHP) began placing remote telehealth monitors in patient homes. Today, the Dallas agency reports a 30-day rehospitalization rate that has dropped from near the national average, approximately 29% according to most reports, to a point just under 6%. Just as significant, rehospitalization among patients that are not monitored is less than 15% as a result of approaches to care that grew from the telemonitoring program.

HHP has accumulated a mountain of data in four years, data that can be analyzed in a number of ways to provide insights into the agency’s remarkable success. Twelve hundred patients are being monitored from 35 office locations and the plan is to double that number in 2010 but that is just the beginning of the data story.

HHP has captured data from more than 11,000 completed telehealth episodes. By the end of the year that will translate to almost a million patient days of data. At this point, HHP may have the most robust data repository, collected over the shortest period of time, related to home health remote monitoring, perhaps surpassing data collection on remote monitoring programs from grant funded academic studies and non-academic reports with relatively limited data.

Impressing referral sources

Healthcare reform has many complex ramifications but everyone is clear that reducing preventable hospitalizations is a top priority for cutting healthcare costs. Hospitals will soon pay penalties for uncontrolled recidivism rates and will be looking to post-acute care centers for help. Dropping to 6% and 15% for monitored and non-monitored patients, respectively, HHP will have quite a story to tell to area hospitals.

By all national comparisons, these are almost unheard of reductions. They become even more significant when considering that HHP’s service areas in Texas and Louisiana have the highest rates of uninsured in the country. Add to that evidence of increased use of healthcare services by new Medicare beneficiaries without previous insurance and the increased liklihood that these patients will have multiple chronic conditions propelling them to the ER and hospital.

What is HHP doing with all that data?

HHP has the ability to analyze data any way it chooses, using a particular analysis tool. Clinical and telehealth systems data are combined and housed in a data warehouse owned by HHP. As a result, data can be sifted and sorted to track, compare or contrast. The more data they collect, the more opportunity for analysis.

Using a prevailing motto shared by Wayne Bazzle, CEO, and Georgia Brown, Senior Vice President of Operations, “You can’t manage something without measuring it.”

Example. National studies identify medication management and compliance as a serious contributor to rehospitalization (up to 40%). What better data to add to the warehouse? HHP now enters all patient medications. Clinical and telemonitoring data is not collected haphazardly, however, nor does it exist in a vacuum. It is derived from very specific processes, processes that took two years evolve and mature.

The single purpose? To understand a patient’s needs as much as possible. Before he or she leaves the hospital, at the time of admission to home care, and throughout the care episode. Clinicians at every step are skilled at interviewing patients in person and over the phone about their health care concerns and medications. Telemonitoring is just one part of the process that can provide reliable data that add to understanding each patient’s needs.

Creating value for hospitals, clinics, and physicians

With the data HHP produces, owns, and can provide, participants in healthcare delivery across the continuum gain a better perspective about what sends patients to the hospital. Perhaps even more important, what keeps patients from being hospitalized. Imagine information specific to care provider, by age, gender, location, case mix weight, to name a few.

Evolving from a home health care business to a telehealth company for disease management

Data over time showed that the percentage of patients classified as having a chronic disease grew from 30% to 67%. That change had to lot to do with how HHP’s telehealth program was built. Historically, most home telemonitoring programs place monitors in homes of patients with specific diagnoses. It was not long before HHP discovered that patient health issues should be the driving factor.

When approached from a patient needs perspective, the entire care delivery model shifts from putting a box in the home for a particular diagnosis to providing a patient with access to an experienced clinician. Telehealth clinicians are required to have a substantial amount of critical care experience. Ms. Brown clarifies, “It is not about triaging [numbers]. We expect our clinicians to be confident in their decision-making skills.”

Telehealth clinicians at the Vital Station (where data is delivered) are skilled healthcare coaches and include nurses and respiratory therapists, working collaboratively. Each has clinical expertise and the necessary self confidence to work through a patient’s health issues without precipitating an unwarranted trip to the ER. Or, just as much confidence to advise when to go to the hospital.

Case in point: It is not about the numbers but what you do with the data. Reducing rehospitalizations is about connecting patients with health issues to experts with advanced clinical decision making skills to assess, advise, and coach the appropriate health care behaviors.

Where will the data lead?

Medicare home care patients are not the only chronically ill population contributing to unnecessary hospitalizations. Brown stressed, “You don’t need to have home health to make telehealth work. We’ve just used home health as our laboratory.” HHP is moving beyond program implementation and early outcomes monitoring.

The next phase, Phase II, is taking this incredible amount of data and working with an academic institution to validate the data and produce corresponding papers. From there, validated data can be used to build predictive models. What better way to affect preventable hospitalizations? Keep Home Healthcare Partners on your radar.

Sylvia Talkington is a senior consultant with Telehomecare Applications and former clinical subject matter expert for CMS, where she was a member of a development team for the design, development, pre-post production of a web based training targeted to the home health segment.

Eliminating fraud requires a completely different effort from the one needed to battle waste. In the case of fraud, a criminal posing as a home care provider may stretch the truth regarding a patient’s diagnosis, ability to function and need for certain services. These folks are not beyond outright lies. In certain parts of the country, people have been caught making cash payments to Medicare beneficiaries in exchange for the use of their Medicare number. They follow this with claims for services that were never provided, to patients who are not sick. The proper response to this problem is to find these people, close their operations and throw them in jail.

In the case of waste, the cure is civil rather than criminal. Here you have honest home care providers serving patients in need of care but not properly documenting the care they provide or not clearly delineating the medical necessity for providing it. To the eye of the RHHI, and eventually the Administrative Law Judge, these payments must be denied but the perpetrators are not criminal. They are simply overworked, improperly trained or lazy.

The proper response to this problem is to educate agency management. Home health agency owners who allow such a situation to exist unchecked need to be convinced to either provide an ongoing staff training program or to ease off on their productivity requirements so that clinicians have adequate time to document properly. Payment denials should be a good way to get their attention.

The buck stops at the owner’s desk
CMS, the Center for Medicare and Medicaid Services, has no mechanism for dealing with waste differently than they deal with fraud. Fines and punishment are the only arrows in their quiver. Solving the problem by helping clinicians learn better documentation skills is the responsibility of the owner of the agency, not the payer. Yes, CMS does provide some training services. It is still up to management to make sure those courses reach the staff.

Judging by the increasing number of Medicare payments denied because of lack of medical necessity — which in practice actually means “lack of documented medical necessity” —  training has not been a priority for too many home health agencies. In fact, the problem of inadequate documentation is rampant in home care. Comprehensive training for home care nurses and therapists is far below the level needed, in spite of the fact that live and online opportunities abound.

Are there consequences? Absolutely. As Medicare’s need to cut costs grows more urgent, good clinicians offering good care with inadequate documentation are just as plum a target for auditors and investigators as full-fledged criminals. And their employers’ fates will be the same, regardless of criminal intent. Agencies unwilling to invest in ongoing, comprehensive training will see their revenue stream decrease by an amount that will dwarf what they would have spent on a comprehensive training program.

Consultants have ethical limits
Recently, we came across a shocking example of what can happen when agency owners make no effort to improve clinician skills. A consultant who has asked for anonymity, for himself and his client, shared with us a letter he wrote, explaining to a regular client why he could no longer represent them before their RHHI and the subsequent appeal levels, QICS, MACs and ALJs.

This agency had been hit with an unusual number of payment denials recently but dediced that the reason was its location within a region CMS has targeted as a high-fraud area. In spite of repeated warnings, the consultant found himself unable to make the client understand why he was able to win back payments in some cases but not in others. “Sometimes,” he told RAC Assistance, “the ALJ is right. The only evidence I can present is the clinical documentation I have been provided. When it truly is inadequate, no amount of legal argument, no matter how skilled or eloquent, can convince a judge to overturn a denial.”

With permission, and with both consultant and client identities masked, we reprint this letter in our next article: “Consultant Fires Client Over Inadequate Documentation.” Following that, under a separate headline, we also reprint some specific examples of the kind of documentation problems the consultant presented to his former client, along with his suggestions of how this client’s staff might have documented differently.

After our long relationship as consultant and client, please know that I care for you and Mr. Smith and your business. Otherwise, I would not have gone through this much effort to draw your attention to a situation that I consider critical to your agency’s survival. I would ask that you examine this document very carefully, try to separate facts from feelings, and take action.

I am deeply concerned for the well being of your home care agency. I have been representing you before your RHHI and the ALJ but I can no longer do so if your slow, progressively terminal condition is left unchecked. Apparently, my representation has been welcome as a cure to your problems but my recommendations for future prevention have not been heeded. You are at risk for yet another post payment review but my attempts to head it off have been repeatedly thwarted.

For the past two years, I have been begging you to make changes in the way in which your nurses and therapists document patient care. My recommendations are based upon various decisions handed down by the ALJ on your payment denial cases. I must begin to sound like a broken record. In spite of my urgings, I have seen no improvements. Whether this is due to a refusal to change documentation practices or inability to change them really does not matter. The harm on its way to you will be the same.

When I have addressed this with your Director of Nursing, she becomes defensive of her clinicians and, at times, displays a rather arrogant attitude in a “what do you expect me to do about it” tone. She appears to be afraid of hurting clinicians’ feelings or losing them to another agency. Considering the number of payment denials due to inadequate documentation with which you have been plagued, I am not certain losing certain ones of them would be a net negative development. If they refuse to learn proper documentation habits, perhaps you are better off letting them work for your competitors.

I do not believe your administrative team fully appreciates the changing conditions under which we currently engage the court, nor are they taking these changes to heart. If further ignored, this situation will lead to significant financial pain; there simply is no other direction for it to go.

You know that Medicare has established standards. I do not understand why, despite my repeated pleas, your clinicians and contractors are not meeting those standards. I have detected an attitude among your clinical staff that they believe their practices are in line with “what other nurses and therapists are doing.” This is a dangerous attitude since they are not acquainted with nurses outside their immediate geographic and cultural community.

There is a vast difference in clinical practice and commitment to practice from state to state and region to region. Not only do the judges who decide your payment denial reversals know this but they have lately been moving around. I know of at least two ALJs who have recently moved from the Midwest to your region. When they look at your charts, they measure you by what they are accustomed to seeing from other parts of the country, not on “what other nurses and therapists are doing” around here. Fair or not, this method on the part of all ALJs is becoming increasingly prevalent; they are not persuaded by the argument that what they see in your charts is common practice in this area.

As an example, we recently lost a payment denial case with which you are quite familiar. You told me I could have and should have won it for you. The ALJ agreed that the patient needed all of the care you provided but noted that the nurse’s practice of doing ”checkbox charting” was fully insufficient to show what actually took place during each and every patient encounter, or any other compelling, convincing reason to pay for the care provided.

This judge almost begged me for a reason to pay you. All we had to offer was the chart the judge already had, and I had to agree it was seriously lacking. Imagine how frustrating this is! I was prepared to argue further but slick talk and lengthy briefs will never replace comprehensively composed clinical documentation.

Expect scenarios like this one to become the norm. Judges themselves are being reviewed on their decisions and must answer to their superiors just as we answer to ours.

Likewise, I myself am judged by my cumulative appeals success record. Your agency’s consistent failure to provide me with thoughtfully and comprehensively composed documentation when I go to court for you places me in a precarious position. I incur great responsibility in defending you yet am left in a position fully out of my control, one with the potential to defame my reputation as a successful appeals consultant. I am able to provide recommendations that would strengthen your agency but my recommendations are brushed off and ignored.

This is not merely uncomfortable for me. It is untenable. It leaves me crippled in my efforts to successfully defend your claims. Therefore, I must notify you that I am suspending my services until this can be resolved. If the situation cannot be resolved, permanent termination of services is the next step.

I do not make this decision lightly. You are aware that your retainer makes my house payment each month and for this I am grateful beyond words. However, I cannot in good conscience continue to take your money, knowing you do not have plans to rectify the situation.

Your clinicians need training and they need discipline. If you like, I can recommend a number of training programs and clinical consultants. I strongly advise you to engage one or more of them. Perhaps, after all of your clinicians improve their documentation skills, we can discuss my return as your appeals consultant.

I am sorry if this sounds harsh. If you know anything of me, you know I always speak my mind, whether what I have to say is popular or not. That is my job and I take it with greatest seriousness.

To help you deliver this message to your staff – and I hope you do – I have attached some specific examples of the kinds of documentation issues I have received from you and have had to present to various judges. Perhaps this can become the beginning of your training effort.

Sincerely,

The letter concludes with the consultant’s signature and an appendix with concrete examples of the agency’s documentation style, along with detailed explanations of what is wrong in each example. We reprint that appendix under a separate headline: “Real-world Examples of Documentation That Will Result in Payment Denial.”

PHYSICAL THERAPY
I typically work on appeals from various regions. The following is a compilation of what I have found in 38 different physical therapy charts. Compare them to what you are doing and please realize they are all being denied all the way to the ALJ level just like yours are.

Two agencies have on their evaluation forms checkboxes indicating many of the following maladies:

• Antalgic gait a limp adopted so as to avoid pain on weight-bearing structures, characterized by a very short stance phase.
• Ataxic gait an unsteady, uncoordinated walk, employing a wide base and the feet thrown out.
• Festinating gait a gait in which the patient involuntarily moves with short, accelerating steps, often on tiptoe, as in parkinsonism.
• Helicopod gait a gait in which the feet describe half circles, as in some conversion disorders.
• Hip extensor gait a gait in which the heel strike is followed by throwing forward of the hip and throwing backward of the trunk and pelvis.
• Myopathic gait exaggerated alternation of lateral trunk movements with an exaggerated elevation of the hip.
• Quadriceps gait a gait in which at each step on the affected leg the knee hyper extends and the trunk lurches forward.
• Spastic gait a gait in which the legs are held together and move in a stiff manner, the toes seeming to drag and catch.
• Steppage gait the gait in foot drop in which the advancing leg is lifted high so that the toes can clear the ground.
• Stuttering gait one characterized by hesitancy that resembles stuttering.

Your agency frequently creates notes such as the ones I received for one patient:

• “Was in hospital for bronchitis, had decline in function.”
  • Which functions? How can one tell?
• Living situation “capable”
• Pain: = 0
  • Why are we in this home?
• Prior Level of function: “Independent”
  • How does “independent” differ from “capable?”
• Posture: “Kyphotic”
  • To what extent? And how is it adversely affecting the patient?  This is never again mentioned in any note. Where did the posture issue go?
• Full weight bearing, with standby assistance.
• Quality/Deviations/Postures: “Decreased endurance with ambulation”

This is the logical place for any of the aforementioned abnormalities to be recorded. Detail on these brief notes would go far when it comes time to defend a denial of payment for this patient. Poor endurance with walking is the primary driver for the care to be delivered but I know that from talking with this therapist. I could not know it from these notes.

SKILLED NURSING
This example leaves a judge not only with a suspicion that this nurse was practicing documentation cloning but also that the patient’s welfare was placed in jeopardy due to the nurse’s lack of response .

Skilled nursing visit dated January 18, 2009 9:00 AM
the skilled nurse focused on the new diabetes regimen with the change doses three times a day with the insulin, and assess compliance and effectiveness of the antibody therapy that was completed on January 17 to assure that no side effects or adverse reactions occurred. Blood sugar of 180 MG/DL, which is approximately 80 points higher than the normal range. It is to be expected that the patient’s blood sugar will come down with the new medication regimen but an infection and the stress of being in the hospital can elevate blood sugars and is a very common side effect of the patient’s illness.

Skilled nursing visit January 20, 2009
demonstrates the blood sugar is now 216 MG/DL, which is 116 points above normal, and the patient is hypertensive at 184/94. Before leaving the house, the patient’s blood pressure was reported as being 150/80.

Skilled nursing visit January 22, 2009 at 10:15 AM
blood sugar continues to climb at 289, which is 189 points above normal. Blood pressure is 170/80 in the right arm left arm records 165/80.

Skilled nursing visit January 27, 2009 8:00 AM
the patient is still experiencing difficulty with blood sugar levels as level as noted to be 305MG/DL

Skilled nursing visit January 30, 2009 10:30 AM
the patient continues to have challenges with the diabetic regimen, blood pressure 159/76 as noted in the right arm and left arm 155/80. Skilled nurse continues to check the patients for signs or symptoms of hyperglycemia yet the patient states that she is feeling fine, the caregiver verbalize that she is comply with blood sugar checking in insulin management has ordered. The skilled nursing instructed the caregiver on the purposes and action of humulan insulin and reinforced the need to monitor the diet and the blood sugar to achieve optimal results with the new medical regimen.

Skilled nursing visit February 3, 2009 9:30 AM; the nurse notes the blood pressure to be elevated at 165/99; when queried the patient denies symptoms of hypertension, the nurse reported the findings to the case manager and M.D. The M.D. decided not to deliver any new orders.

Skilled nursing visit dated February9, 2009 12:00 PM; patient’s blood pressure continues be 156/578 on the right arm 155 are in the left arm with a blood sugar of 280 mg/dl.

Skilled nursing visit dated March 1, 2009 1:15 PM; blood sugar of 264 milligrams/DL.

Analysis: This nurse admits in this six-week narrative that she waited until February 3 to alert the physician of a patient who had been spiraling out of control since January 18. My conclusion not enough was done for this patient. This type of documentation is rampant in your agency’s notes but is not being managed by case managers or the QA staff. As owners, you must ask why not.

It is this type of documentation that leaves you wide open for a continuous series of post payment reviews. Medical necessity is not clearly defined; patient’s conditions are not being responded to; yet bills for services continue to be submitted. Every agency that allows this to go on has a limited life expectancy. I fear yours is nearing its end unless ownership attends to these patterns.

For a home health care provider’s sales and marketing department, the implications are significant. There is no point telling the hospital they should use your services because you will help them shorten their average length of stay. Instead concentrate on promoting your ability to keep patients from returning. For administrators, make sure you can perform according to your marketing staff’s promises.

These findings have been around since published in 2000 by P.A. Taheri, D.A. Butz and L.J. Greenfield of the University of Michigan Health System, Division of Trauma Burn and Emergency Surgery. Because of possible mis-information about how home care saves costs to payers, it is worth reviewing their findings. We have reprinted here an executive summary. The complete report is available online. Go to http://www.journalacs.org/inpress and search on the author’s names.

BACKGROUND
Hospital cost containment, cost reduction, and alternative care delivery systems continue to preoccupy health care providers, payers, employers, and policy makers throughout the United States. The universal metric for gauging the success of these efforts is hospital length of stay (LOS). Reducing the LOS purportedly yields large cost savings. The purpose of this study is to assess precisely how much hospitals save by shortening LOS.

STUDY DESIGN
We reviewed the cost-accounting records of all surviving patients (n = 12,365) discharged from our academic medical center during fiscal year 1998 with LOS of 4 days or more. Actual costs were identified through the University of Michigan cost-accounting system. Individual patient costs were broken out on a daily basis and then decomposed further into variable direct, fixed direct, and indirect categories. The population was analyzed by determining the incremental resource cost of the last full day of stay versus the total cost for the entire stay. The data were also stratified by LOS and by surgical costs. An analysis of all trauma patients was then performed on all patients discharged from the hospital’s adult level I trauma center (n = 665). Costs were determined on specific days, including admission day, each ICU day, day of discharge from the ICU, and each of the last 2 days before the discharge day.

RESULTS:
The incremental costs incurred by patients on their last full day of hospital stay were $420 per day on average, or just 2.4% of the $17,734 mean total cost of stay for all 12,365 patients. Mean end-of-stay costs represented only a slightly higher percentage of total costs when LOS was short (e.g., 6.8% for patients with LOS of 4 days). Even when the data were stratified to focus on patients without major operations, the $432 average last-day variable direct cost was only 3.4% of the $12,631 average total cost of care. A focus on the trauma center helps to explain this phenomenon. For our trauma center, variable direct costs accounted for 42% of the mean total cost per patient of $22,067. The remaining 58% was hospital overhead (fixed and indirect costs). The median variable direct cost on the first day of admission is $1,246, and the median variable direct cost on discharge is $304. Approximately 40% of the variable costs are incurred during the first 3 days of admission.

CONCLUSIONS
For most patients, the costs directly attributable to the last day of a hospital stay are an economically insignificant component of total costs. Reducing LOS by as much as 1 full day reduces the total cost of care on average by 3% or less. Going forward, physicians and administrators must deemphasize LOS and focus instead on process changes that better use capacity and alter care delivery during the early stages of admission, when resource consumption is most intense.

My agency developed a mechanism to measure our market share and now revisits it annually. Along with marketplace insight, it has shown us how regulatory and policy decisions affect our referrals and admissions. We can see patterns emerging from market conditions, competitive pressures, new sales and marketing programs and management decisions. Most importantly, we now know the size of our market opportunity and can better develop targeted marketing initiatives to grow our referral base.

Our original efforts were initiated in response to a decline in referrals and revenue. Management wanted to know if the lower numbers meant there were fewer patients in our area or if we were losing to increased competitive activity. Available data told us everything we wanted to know about the patients we admitted but nothing about the ones we didn’t.

We discovered that all area hospitals must report detailed, annual discharge information to a state regulatory agency. The data includes information about the setting to which each patient was discharged.
I obtained the data from the state and extracted discharges to home care.

Now we knew total discharges to home care (or hospice) to specific zip codes from each area hospital. It was a simple step to match those numbers against the total number of patients that we admitted and learn our market share. It turned out not to be possible, or necessary, to drill down to individual patient names. We were also unable to know which of our competitors got “our” patients but we know knew how large the pie was and how much of a slice we were earning.

Additional demographic data allowed us to analyze by payor, race, DRG, diagnosis, location, etc. Although the information was typically one year behind, we considered the value of the information significant enough that we were willing to live with this shortcoming and begin to turn the information into an action plan. We found that the exercise required good skills in MS-Access, Excel and PowerPoint.

Our first step was to calculate the overall increase in the Medicare population and use it as a baseline. We were sure to take Medicare Advantage enrollees into account in order to get an accurate number from data available on the CMS web site. Using our in-house Information System, which offers a robust query and reporting tool, we began to compare hospital data to our own.

Figure 1 depicts the total number of patients discharged to a home care setting from 2002 through 2006. Again, the data shows a steady increase in the number of patients available for admission.

Figure 1

Our next step ( Figure 2) was to drill down to the specific number of these patients with Medicare as their primary payor.

Figure 2

Finally, (Figure 3) we drilled down to view only patients in our primary service area.

Figure 3

These three charts show similar trends, a fairly consistent growth in the number of patients available for admission to our agency. Hospital discharges to home care grew by over 20% and Medicare discharges to home care by a remarkable 35%. We hoped to see a corresponding increase in our admissions over that same time period.

The next step (Figure 4) was to analyze the data from our internal sources and compare our admissions to the hospital discharges.

Figure 4

Clearly, our admissions were falling while available patients were on the increase. We found about a 16% decline in our admissions from the hospital segment over these five years. Next, (Figure 5) we looked at how the Medicare segment of our total admissions faired during this period of time and found a lesser decrease but still a decrease, approximately 7% over the time period observed.

Figure 5

Our final analysis of this data set (Figure 6) looked at a segment located within our core service area.

Figure 6

Again, pretty much the same picture! This segment measured a decrease of 6% over the five year study.

To summarize our findings so far, we saw a 30% increase in available patients in our core service area while our admissions decreased by 6%. Even if our admission rate had only kept pace with the increase in available patients it would have meant at least 2,000 more Medicare PPS episodes than we actually had, representing as much as $5,000,000 or more of additional revenue over that period of time.

Even a modest 6% decrease in admissions is cause for concern. However, with the ability to analyze missed opportunity the true scope of the problem began to reveal itself.

MARKET SHARE

As indicated earlier, basic market share in home care can be defined as the percentage of admissions compared to total number of available patients discharged to home care Keep in mind that we are still only looking at the segment of our business that comes from our hospital referrals within our core service area. For the purposes of this discussion, I will focus the actual market share analysis in this core service area.

Figure 7 compares hospital discharges to home care versus our agency’s admissions. Clearly we can see that as the overall market increased our rate of admissions decreased.

Figure 7

Viewed as a market share diagram (Figure we can clearly see the erosion of our business over this five year period.

Figure 8

At the beginning of the period, 2001 through 2002, the agency was admitting just over 40% of patients discharged to home care from area hospitals. Even as late as 2003, our percentage was keeping up. The net change through 2006 was a negative 31%, with a corresponding 25% market share loss.

Before we turn our attention to possible reasons and what initiatives we put in place to address this issue, let’s first take a look at one of the individual hospitals that make up some of these numbers.

Figure 9

If, as they say, “a picture is worth a thousand words,” look at the same data as a market share diagram.

Figure 10

To our dismay, we learned that we went from capturing nearly 6 out of every 10 home care patients from one particular hospital to a point where we were losing a significant number of patients to other agencies over the course of five years.

Though we had a sense that our referrals and admissions were decreasing, it was only with the added benefit of the data analysis that we learned how many referrals were actually available. We simply had no appreciation for the scope of the problem.

The tough work ahead of us was to analyze the data, determine the root causes and develop strategies and initiatives to address the problems. The data gave us a good place to start. What happened in 2004 to turn the tide? The only significant change we found during that time period was the introduction of point-of-care software running on laptop PCs. They were introduced to our clinical staff in the second quarter of 2004 and into 2005.

As clinicians worked hard to master the new documentation system, their productivity decreased and, as a result, managers scaled back their expectations. We actually began telling hospitals that we did not have the resources to admit as many patients as before. Hospital discharge planners reacted by routinely referring patients to other agencies, sometimes without checking with us first.

Agencies in a position to take every patient available got called first and we got less and less. Such a trend quickly becomes a habit and is very difficult to change. We did not need a market share analysis to tell us we had a problem but it did provide us a perspective that we had not seen before.

Certainly there were other things going on in the marketplace in those years, such as mergers and acquisitions and, more importantly, the entry of hospital based systems. We were confident, however, that we could have been able to compete successfully in that environment had we had this type of information available to us.

Armed with the new information, we developed a strategy to “find a way” to accept all referrals from our major referral sources. Our clinicians were now well versed on their laptop software and could handle more admissions. We looked to restructure our intake department to make it more customer service oriented and hired a VP of Marketing to manage the message to our referral sources. Another strategy was to direct more energy at physician offices, rehab hospitals and nursing homes.

Conclusion

Perhaps we became too complacent when business was good, though we were probably not unlike the rest of the industry. We developed literally hundreds of reports on the business to make sure that we had as much control over things as possible. We even developed marketing initiatives to address what we thought were weaknesses in our portfolio but we never had the luxury of actually knowing what amount and type of business was available. With the discovery of this data source and these techniques, we finally had the ability to see the full picture. We used that viewpoint to develop more effective programs to deliver to the marketplace the services that it needed.

Our latest annual market share analysis showed that we are making progress. Management is committed to continuing its annual analysis and responding with further adjustments as necessary.