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Finding the Untapped Potential in Ambulatory
Programs: How to Position and Operate for
Strategic and Financial Success
Carolinas Society for Healthcare Strategy and Market Development
May 4, 2011
Learning Objectives
X Learn why ambulatory services are the new frontier in the health
care industry
X Learn how to assess current programs and develop growth
strategies that leverage organizational, market-based strategies,
and opportunities
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Industry Trends
Observation #1
The definition of ambulatory care
is evolving
Ambulatory Care Defined: What is Ambulatory Care?
X Current definitions
X
Ambulatory care is all diagnostic and treatment
services provided in a setting that is neither
inpatient nor residential(1)
X
Outpatient care is the hospital-based
component of ambulatory care services
X
Ambulatory care is for vertical patients; inpatient care is for
horizontal patients
More health care services are being delivered
in the outpatient setting and the definition is
getting broader
(1) Zuckerman, 2000
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5
Ambulatory Care Defined: Who Provides It?
The ambulatory care market place is fragmented and crowded
Hospitals
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Physicians and
physician groups
6
For-profit/
niche firms
Observation #2
You need to be in the game:
Ambulatory care represents a
significant and growing component of
health care services
Factors Driving Growth in Ambulatory Services
Advancements in minimally
invasive technologies and
treatments
Aging of the population and
longer life spans
Expanded screening
protocols
Increased focus on
prevention and wellness
services
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Favorable margins
8
Trends in Inpatient and Outpatient Utilization,
1987–2009
2,500
2,000
1,500
1,000
500
0
Inpatient Admissions/1,000
Inpatient Days/1,000
Source: AHA Trendwatch Chart book, 2010. Track in Inpatient Utilization in Community Hospitals.
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Outpatient Visits/1,000
Distribution of Outpatient vs. Inpatient Revenues,
1987–2009
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Gross Outpatient Revenue
Gross Inpatient Revenue
Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2010, for community hospitals.
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Health Care Reform’s Impact on Ambulatory Care
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Why is Ambulatory Care Important
to Health Systems?
X Represents a major growth opportunity for the system’s future
development
X Provides points of access to all of the system’s services
X Offers a lower cost setting relative to high-acuity services
X Typically, high(er) margin financial returns
X Opportunity to collaborate with physician partners
HOWEVER,
Most hospitals do a poor job in the
provision of ambulatory care…
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12
Critical Success Factors for
Ambulatory Care
Delivery
Ambulatory Care – Five Characteristics of National
Leaders in the 21st Century
Market Presence
Market-Aligned Mission
and Values
X
X
X
X
X
X Patient expectations
X Cost position
X Image
Efficient, Effective
Care System
AMBULATORY
CARE
LEADERS
X Patient-centric facility design
X
X
X
X
X
and environment
Accessible and convenient
Efficient as well as competent
clinicians
Quality complementary to
efficiency
Physician and staff incentives
Dedicated management
oversight
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Primary care base
Geographic dispersion
Strategic alliances
Comprehensive range of services
Clinicians with new capabilities
Aggressive, Anticipatory
Behavior
X
X
X
X
Provider Integration
X Physicians
X Related organizations
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Shift of patients to ambulatory care
Diversification of revenue base
New and distinctive clinical services
New knowledge through research
Goals of Ambulatory Care Development
Community Hospitals’
Primary Goals
fAlign with physicians
fProvide care in a lower
cost setting
fIncrease outpatient
revenues; enhance financial
position
Common Goals
fGrow volume
Academic Medical Centers’
Primary Goals
fIncrease geographic
presence
fDecompress inpatientcentric campus
fCreate a new point of
access
fIntegrate clinical care and
research
fTarget attractive
populations
fDevelop a gateway to high
margin inpatient services
fSet a new standard of
service excellence
fIncrease faculty productivity
fService line development
Goals for ambulatory care development vary by provider
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Ambulatory Care Considerations
Consumer
Demands
Technological
Advances
Physician
Alignment
.
Ambulatory Care
Services
Financial
Performance
Facility
Requirements
Operating
Model
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What Should Your Distribution Network
Look Like?
vs.
X Location(s)?
X Scope of services?
X Physician integration?
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.
Selecting a Location:
Potential Ambulatory Services Location
Evaluation Criteria and Process
Evaluation Process
Potential Criteria
X Population density
1. Assign each criteria an
appropriate range
relative to your
location/market
X Projected population growth
X Daytime work population
X Median household income
2. Break criteria ranges
into three categories;
positive, neutral, and
negative
X Average outpatient expenditure/person
X Market inpatient commercial payor
X Inpatient market share
X Patient origin
X Primary care physicians/1,000 population
X High volume outpatient referring physicians
X Customer perception of potential locations
X Accessibility/traffic/drive times
X Major competitor locations
X Affiliate locations
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3. Allocate point values
for each category (i.e.,
positive=3, neutral=0,
negative=-3)
4. Sum point values for
each potential location
Selecting the Scope of Services:
Potential Criteria for Evaluating Services
Criteria
Definition of Performance
Current market
position
X
X
X
Green: Current market share is greater than 25%
Yellow: Current market share is 18% to 25%
Red: Current market share is less than 18%
Opportunity for
growth
X
X
X
Green: Projected growth in the service area demand is more than 15%
Yellow: Projected growth in the service area demand is between 10% and 15%
Red: Projected growth in the service area demand is less than 10%
X
X
X
Green: Intense competition based on proximity and number major competitors in the
service area
Yellow: Moderate competition in the service area
Red: Less competition in the service area
Physician interest
X
X
X
Green: High department/faculty interest in developing presence at selected location
Yellow: Moderate interest in developing presence at selected location
Red: Little interest in developing presence at selected location
Likely to shift market
share with increased
capacity/access
X
X
X
Green: Market share growth assumptions are 7% to 8%
Yellow: Market share growth assumptions are 5% to 6%
Red: Market share growth assumptions are 3% to 6%
Likely financial impact
X
X
X
Green: Likely to generate/achieve positive financial impact
Yellow: Likely to generate/achieve neutral financial impact
Red: Likely to generate/achieve a negative financial impact
Existing presence/
affiliations
X
X
X
Green: Little or no shift of patients from existing sites
Yellow: Moderate shift of patients from existing sites
Red: Major shift of patients from existing sites
Level of competition
(1) Based on HS&S experience.
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Physician Integration:
The War Over Ambulatory Services
Hospital
Services
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Ambulatory
Care
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Physician
Services
Physician Relationships:
Physician/System Alignment Continuum
Parameter
Traditional
Transitional
Highly Evolved
f Independent; many
splitters
f High autonomy
f Moderate
interdependencies
f Individual physician
autonomy diminishing
f Accountable for the
continuum of care (e.g.,
service lines)
f Practice focused
f Both practice and hospital
focused
f Employed physician
creates linkage to
institutional vision
f Shared system vision
f Aligned incentives
f Few (if any) integrated or
employed physicians
f Some physicians
integrated through
employment or similar
models
f Most physicians
integrated through
employment or similar
models
Economic
relationship
f Low
f Moderate
f High
Physician
leadership
f Elected volunteers
f Investment in leadership
training
f Physician executives with
significant influence
Information
technology
(IT)
f Financially based
f Clinical focus
f Fully integrated EMR
f Fee-for-service
f Pay-for-performance and
quality bonuses
f Bundled payments
Physician
relationships
Physician
orientation
Physician
integration
Payment
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The Continuum of Alignment Models
HIGH
Physician Employment
w/o Acquisition
Equity Joint Venture
Medical Home
EVOLVING
MODELS
Accountable
Care
Organization
Medical Foundation
Information System Assistance
Prevalence Key:
Management
Services
Organization
Co-management
Agreement
at
er
h
ig
H
od
Challenge
M
w
Lo
e
Medical
Directorship
Recruitment Assistance
Target Group Key:
Any
Acquisition w/o Employment
Independent Physicians
Real Estate Partnerships
Employed Physicians
New Physicians
Selling/Contracting
Outpatient Services
Clinical Leadership Councils
Joint Operating Agreement
LO
W
Degree of Alignment
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Retiring Physicians
Office-Based and HospitalBased Physicians
HIGH
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Hospital Best Practices for Ambulatory Care
Collaboration with Physicians
X Highly efficient operations and systems
X High-quality and innovative patient care
X Superior nursing and other clinical support staff
X Accessible, advanced information systems
X Formal, multi-faceted physician outreach program
X A culture that supports medical staff involvement
in decision-making and planning
X Leadership roles for physicians
X High prevalence of high quality physicians
X Economic value of formal partnerships
X Evolution
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Additional Best Practices for Strengthening
Relationships with Primary Care Physicians
X Access to hospitalist programs and services
X Easy to use communication links with the hospital and with
specialists (especially if hospitalist program is in place)
X Timely referral tracking and results reporting
X Convenient access to high quality specialists for consults and
procedures, with appropriate return of patients
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Ambulatory Care Operating Model Characteristics
Characteristic
Model
Result
Service line orientation
► Multidisciplinary mix of
physician and ancillary
services that cover
spectrum of care in a
featured service line
► Enhances quality of care
► Contributes to greater
market recognition
Co-location of services
► Co-locate diagnostic and
treatment service and
related retail with
physician offices
► Provides one-stop
shopping to patients
► Improves financial
performance
Physician presence
► Top-notch physicians with
significant commitment to
the site are preferred to a
mix of part-timers
► Maximizes accessibility to
providers
► Stability and quality of
services
Private practice
efficiency
► Limited teaching
► Emulation of private
practice set
► Enhances service to
patients
► Increases operational
throughput
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Ambulatory Care Operating Model Characteristics
(continued)
Characteristic
Model
Patient-focused
scheduling and delivery
► Extended operating hours
► Open access schedule
► Customer-focused service
► Increases access and
patient satisfaction
Flexible, shared space
► Standardization and
sharing of patient care
rooms and staff to
optimize productivity
► Enhances overall
utilization
► Reduces operating and
capital costs
IT integration
► Integration of information
systems
► Seamless access to
medical records
► Results reporting
► Increases continuity of
care and access to
information throughout the
patient experience
Shared support services ► Shared support functions
such as reception, billing,
and call center
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Result
► Reduces inefficiencies,
space requirements, and
operating costs
Critical Facility Implications
X What facilities do you need to develop your desired ambulatory care
distribution network?
X What current ambulatory assets do you have that may be
underutilized?
X How should the space be configured to optimize the patient care
experience and efficient operations?
X How will you reuse the space that will be vacated?
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Ambulatory Room Utilization Benchmarks
X Maximize productivity to minimize capital and operating costs
Outpatient Service
Minutes/Visit(1)
Room Type
Benchmark
Visits/Year/Room
25
3,600
45
2,000
X-ray
15
6,000
CT
20
4,500
30
3,000
45
2,000
75
1,250
Physician office
visit
MRI
Exam room
Imaging room
Ultrasound
Surgery
Operating room
(1) Includes room turnaround time, which is the time it takes to clean and setup a room for the next patient.
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Strategies to Increase Room Utilization
Strategies for
improving room
utilization
Maximization of
ambulatory care space
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Case Study: Beth Israel Deaconess
Medical Center (BIDMC)
Ambulatory Care Development
Plan
Beth Israel Deaconess Medical Center Profile
► Major academic medical center located in
Boston, Massachusetts
► Affiliated with Harvard Medical School and
Harvard Cancer Institute
X Hospitals
X
681-bed medical center includes East and West campuses located in
Longwood Medical Area surrounding by four major medical centers
X
BID – Needham is community hospital located Southwest of Boston
X Ambulatory care sites
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X
Main Campus: Shapiro and Lowry Medical Office Building (LMOB)
X
Off site: Lexington, Chelsea, and Waltham
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Initial Situation
X Merger of two hospitals in 1996 created bimodal campus
X Two ambulatory care buildings at medical center including
X
Lowry MOB: Surgical specialties in aging and inefficient 1950’s
facility
X
Shapiro: Medical specialties/primary care in fairly contemporary
building
X Ambulatory services growing 4% per year; parking and access had
become an issue
X Patients want care in the suburbs to avoid downtown Boston
X Growth projected in long range plan and inability to expand existing
site downtown meant some (non-tertiary) services had to be
relocated
Therefore,
Therefore, BIDMC
BIDMC planned
planned to
to build
build aa big
big new
new building
building
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BIDMC’s Ambulatory Care Goals
X Development of suburban strategy for ambulatory care
X Decompress East and West campuses to relieve existing capacity
constraints and accommodate future tertiary care growth needs
X Grow incremental volume to the BIDMC enterprise
X Develop and position BIDMC off-site ambulatory care centers (ACC)
with same quality of care as provided at BIDMC downtown
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New Ambulatory Care Strategy
Initial Concept: Monolithic
New Plan: Decentralized and Tailored
Decompression Site Themes:
fSurgical services
fRelated D&T and support
Southwest Themes:
fSenior care (primary and
specialty)
fOncology
fRelated D&T and support
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Northwest/Lexington
Themes:
fPrimary care
fMusculoskeletal
fOther selected specialties
fRelated D&T and support
Site Options Estimated Costs
Site
Size
Decompression
100,000120,000 GSF
Southwest
40,000 GSF
Lexington
50,000 GSF
Estimated
Construction
Costs-Range
Estimated
Construction
Costs-Total
Soft Cost
Allowance(1)
$350-$400/SF
$42-$48M
50%
$250-$300/SF
$10-$12M
$250-$300/SF
$12.5-$15M
40%
40%
Estimated
Project Costs
$63-$72M
$14-$16.8M
$17.5-$21M
The
The strategy
strategy called
called for
for new
new construction
construction and
and expansion
expansion with
with
aa potential
potential cost
cost of
of $110M
$110M
(1) Excludes land costs.
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Operational Data Showed….
X Analysis showed that the utilization of the existing ambulatory care
sites was low
X
Existing measures that determined room utilization using
scheduled vs. kept visits overstated actual room use and
understated capacity for growth
X
Productivity at the main campus was hampered by existing
operating model (e.g., uneven scheduling, little/no sharing of
rooms between departments) and inefficiently designed clinic
modules (especially in LMOB)
X
Utilization at the off-site ambulatory care centers (Chelsea and
Lexington) was low largely due to lack of incentives for faculty
to see patients at satellite locations
IfIf BIDMC
BIDMC has
has capacity
capacity to
to grow
grow in
in their
their existing
existing facilities,
facilities, why
why are
are they
they
spending
spending $110M
$110M to
to expand
expand or
or build
build new
new sites?
sites?
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Identified Operations Improvement Strategies
► Change operating model, align physician incentives with
organizational goals, and better leverage existing assets by:
4/27/2011
►
Fully scheduling reserved clinic time, sharing or allocating
unscheduled rooms to other providers, targeting more level
scheduling across the week, and reassigning the space if target
utilization is not being met
►
Continuing efforts to reduce the no-show rate and address
patient arrival issues by actively assisting patients to keep
scheduled appointments
►
Incentivizing faculty to schedule more sessions off-site and
requiring faculty to make up cancelled sessions
►
Reconfiguring facilities as necessary to enhance efficiencies
(e.g., aggregation of smaller clinics)
37
Data-Driven Room Use Methodology
Exam
Rooms
Exam Room Utilization
Practice
FY 09
FY 10
Clinic A
9
39%
43%
64%
Clinic B
22
57%
61%
62%
Clinic C
64
52%
55%
60%
Clinic D
14
60%
61%
60%
Clinic E
10
56%
54%
59%
Clinic F
21
43%
43%
55%
Clinic G
17
49%
51%
54%
Clinic H
18
56%
56%
54%
Clinic I
8
53%
53%
53%
Clinic J
15
40%
41%
51%
Clinic K
4
13%
39%
47%
Clinic L
13
46%
46%
45%
Clinic M
10
43%
39%
44%
Clinic N
6
27%
37%
36%
3
33%
32%
32%
234
46%
48%
52%
Clinic O
Shapiro Subtotal
Room Utilization Range
>60%
Growth Potential
Cannot add sessions
Limited ability to add
sessions
Room for growth
Action
Approaching maximum use - request space and or implement decompression opportunities
50% TO 60%
Optimal space utilization - usage that adjusts for peaks and allows for urgent add on sessions without difficulty
40% TO 50%
Reasonable use but with potential for growth or sharing underused sessions
< 40%
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FY 08
Under use - consider consolidation with other services
38
Increasing Utilization Increases Financial Success
Improvement Over Current
Utilization by 5 Ppt.
Site
Northwest ACC
North ACC
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Exam
Rooms
Avg. Min./ FY 09 Kept
Visit
Visits
FY 09
Room Util
Incremental Visits
Needed for 5 Ppt.
Increase in Utilization
On Site Incremental
Estimated Contribution
Margin
Achievement of 55% Utilization
Annual Visits
On site Estimated
Added Visits Over
Needed for 55%
Contribution Margin
FY 09
Util
from Added Visits
32
30.8
40,885
33%
6,219
$672,000
59,897
19,012
$2,053,000
31.5
32.2
28,457
24%
6,165
$518,000
67,813
39,356
$3,306,000
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Progress To Date
X Clinic visits have increased nearly 8% in last two years
X Ambulatory care contribution margins have increased
X Room utilization at existing sites has increased
X Southwest satellite in planning stages with affiliate partner and focus on
oncology services
X Deferred $90M in capital costs
X The distribution of services allows patients to be treated closer to home
X Space planning and decision making process for ambulatory care services
is data-driven
BIDMC
BIDMC has
has enhanced
enhanced its
its ability
ability to
to provide
provide the
the right
right care,
care,
by
by the
the right
right provider,
provider, in
in the
the right
right setting,
setting, at
at the
the right
right time
time
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Firm Profile
X Health Strategies & Solutions, Inc., is one of the leading health care
strategy firms in the United States. We are committed to serving our clients
with excellence and distinction, and ensuring that the benefits they realize
from our services are substantial and significant.
X Health Strategies & Solutions’ consultants are nationally recognized
experts and industry thought leaders in strategic planning, merger and
acquisition planning, leadership strategies, program planning, physician
strategies, and facility planning and development.
X Our consultants have served as trusted advisors for more than 300
community hospitals, multihospital systems, academic medical centers,
physician groups, and specialty organizations across the country. Twothirds of our consulting engagements are with existing clients—a key
measure of the trust and confidence our clients place in our skills and
expertise.
X We are committed to sharing our research and knowledge with those within
the field. Our consultants have written eight books and over 100 articles,
and have conducted more than 300 educational presentations.
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Presenter Profile
X Tracy K. Johnson, FACHE, is vice president of Health Strategies &
Solutions, Inc., and has over 25 years of health care consulting
experience. She leads the firm's ambulatory care consulting
services including strategy development, market assessments,
facility planning, operations improvement and configuration,
satellite development and feasibility studies. She is also
experienced in master planning, clinical program planning, demand
forecasting, capacity analyses, space programming, and capital
prioritization projects. Tracy writes and presents on a variety of
health care topics, including aspects of ambulatory care planning,
facility planning, capital prioritization, and demand forecasting.
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Tracy K. Johnson, FACHE
Vice President
Health Strategies & Solutions, Inc.
Philadelphia, Pennsylvania
(215) 399-1859
[email protected]
43