The Oncology Practice of Tomorrow: Optimizing Operating Efficiency

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The Oncology Practice of TomorrowOptimizing
Operating Efficiency

• Barry Fortner, PhD
• Christian Baldwin
• John Ogle

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How will Oncology PracticesRespond To

• increasing patient populations?
• decreasing available MD and RN time?
• declining oncology reimbursement?
• Analyses of many of todays practices show
  potential of hidden expenses, revenue leakages
  and lost opportunities when instituting more
  frequent chemotherapy regimens
• All points lead to the importance of
• PRACTICE EFFICIENCY

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Why is Efficiency Important?

• Efficiency allows an oncology practice to
• Maintain current revenue despite declining
  reimbursement
• Increase revenue by increasing capacity without
  capital outlay
• Maximize net revenue from increased capacity
• Enhance patient convenience and quality of life

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What Should You Do Now?

• Know your practice revenue and costs
• Develop a reference table of chair/nurse time by
  treatment/procedure
• Analyze time and motion by procedure
• Identify scenarios that perpetuate high cost
  lower revenue
• Low revenue service visits (i.e., EM visits,
  administration fees)
• Identify and eliminate activities that promote
  non-revenue generating service visits (e.g.,
  proactive use of anti-nausea agents and growth
  factors)
• Consider scenarios that maximize revenue
  efficiency and create opportunity
• Stacking up tests and procedures during single
  patient visits
• Synchronizing growth factors with chemotherapy
  visits

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Getting Started

• Cost model and key analytic concepts
• Regimen selection informed by efficiency
• The patient as a resource
• Operating efficiencies

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Operations Building Blocks
Encounters
Scenario
Encounters
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Practice Efficiency

• Productivity Factor
• The resource unit considered to be the key
  rate-limiting factor for the production of
  revenue
• Total human resources, chemotherapy-related human
  resources, chemotherapy nurse time, chemotherapy
  chair time and physician time are all examples of
  potential productivity factors
• Resource Expenditure
• The amount of productivity factor (e.g., MD time,
  RN time, chair time) expended

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Revenue Productivity Rate(RPR)

• Revenue Productivity Rate
• The amount of net revenue gained per unit of
  resource expenditure

RPR Net Revenue ? Resource Expenditure
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Practice Efficiency

• Opportunity Cost
• The lost potential net revenue when a decision is
  made to perform a task which has less revenue
  potential per unit of resource expenditure

E F F I C I E N C Y
E F F I C I E N C Y
N E T R E V E N U E / R E C O U R S E U N I T
C A PA C I T Y
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Practice Efficiency

• Relative Opportunity Quotient (ROQ)
• A multiplier that can be used to equate 2
  treatment options in terms of resource
  expenditure
• ROQ Adjusted Net Revenue (ROQ-ANR)
• Calculation of potential net revenue gained when
  one treatment option is equated with an
  alternative option in terms of resource
  expenditure

ROQ Resource Expenditure A ? Resource
Expenditure B
ROQ-ANR ROQ x Net Revenue
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Practice Efficiency

• Opportunity Cost
• The lost potential net revenue when a decision is
  made to perform a task which has less revenue
  potential per unit of resource expenditure

Opportunity Cost ROQ-ANR of Option B Net
Revenue of Option A
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Getting Started

• Cost model and key analytic concepts
• Regimen selection informed by efficiency
• The patient as a resource
• Operating efficiencies

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Factors Impacting Chemotherapy Regimen Decision
Drug Toxicities
Patient Quality of Life
Gross DRUG Reimbursement
Gross SERVICE Reimbursement
Decision
Opportunity Costs
Human Resource costs
Practice Efficiency
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Erythropoietin Event
(Fortner et al, 2004. MASCC Data from 20
practice sites)
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Erythropoietin Encounter
(Fortner et al, 2004. MASCC Data from 20
practice sites)
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HR Time and Cost Per Encounter
(Fortner et al, 2004. Community Oncology Data
from 20 practice sites)
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Neutropenia Management Costs
1 Assumes 5.2 days of outpatient IV antibiotics
for the national sample 2 Assumes 4.7 days of
hospitalization for the national sample 3 Assumes
6 days of filgrastim for the national sample
(Fortner et al, 2004. Community Oncology Data
from 20 practice sites)
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Case Study
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Revenue-Productivity Rate (RPR)
Difference in productivity rate
Difference in absolute net revenue
Consideration of RPR leads to a different
conclusion when evaluating the advantages of
21-day dosing vs. weekly dosing. The higher RPR
in the 21-day regimen indicates a higher
net-revenue potential per patient.
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Revenue Opportunity Quotient (ROQ)
ROQ Resource Expenditure Weekly ? Resource
Expenditure 21-day 7.5 hours ? 2.6 hours
2.88
The higher the ROQ, the higher the practice
productivity rate for a 21-day regimen
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Opportunity Cost
Opportunity Cost ROQ-ANR for 21-day -
ROQ-ANR for Weekly 1,307 - 735
572
The higher the positive opportunity cost, the
greater the advantage of 21-day therapy. A
practice, therefore, must consider its capacity
for seeing more patients.
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Getting Started

• Cost model and key analytic concepts
• Regimen selection informed by efficiency
• The patient as a resource
• Operating efficiencies

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Power of the Patient

• Patient-centric information system at the
  point-of care
• Collects information directly from patients
• Delivers information directly to patients
• Generates clinical symptom and QoL data
• Can integrate with a variety of clinical
  information sources

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Leveraging Patient Tools

• Cancer / Patient Care Monitor TM
• Pre-visit patient interview tool
• Collects demographic and symptom data
• Provides a complete review of systems
• Cancer Support Network TM
• Patient education system
• Provides patients with medical information
• Integrated with their care

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Cancer / Patient Care Monitor
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Cancer / Patient Care Monitor

• Complete review of systems
• Oncologist and nurse (chemo visit)
• E and M coding
• Symptom G codes
• QoL an ongoing clinical indicator
• Versus point-in-time research measure
• Link symptoms to information
• Integrated with other clinical data and systems
• Generates unique clinical information

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Getting Started

• Cost model and key analytic concepts
• Regimen selection informed by efficiency
• The patient as a resource
• Operating efficiencies

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The West Clinics Simulation

• Simulate
• All Processes
• Resources
• Schedules and Costing Information
• Create a dynamic software tool from the diagram
• Project Implementation
• Working WITH Focus Groups to arrive at the best
  solutions
• Analyzing the system, data, and the output to
  form recommended improvements

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The West Clinic Uses Modeling To

• Experiment with treatment schedules and treatment
  resource assignmentswhich combinations are
  optimal?
• Help determine
• What is the best scheduling solution for The West
  Clinic?
• What is the best way to handle the patient
  volume?
• Optimize human resource assignments
• What is the best way to assign clinical staff
  during peak times of the day?
• How many of each staff should we have during each
  time of the day?

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The Model is Also Used to Study

• Pharmacy
• Phlebotomy
• Parking
• Wait Times
• Staff analysis (utilization and labor costs)
• Physician Standardization
• Resource Utilization

• Patient Satisfaction
• Research
• Education
• Phone Call Routing
• Medical Records
• Lab
• Radiology
• Improving Research Accruals

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Flow Diagram
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Engineering Process Diagram

• Development of comprehensive flow chart
  representing
• Patient flow
• Paperwork/chart flow
• High level analysis of process inefficiencies and
  bottlenecks
• Understanding of process inter-relationships

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1st Floor Chemo Process
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Physician Areas
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Chemotherapy Utilization and Phlebotomy

• Phlebotomy time (with vitals taken) 8 minutes
  11 seconds
• Phlebotomy time (without vitals) 6 minutes 15
  seconds
• Bottom Line Result Reduction of 1 FTE
• High First Floor Utilization
• Low Second Floor Chair Utilization
• Lab is a bottleneck for chemo treatment areas

Average Utilization
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Scheduling and Acuity Levels

• Easy Testing Platform
• How much staff is needed
• What level of staff is needed
• What is the best way to group them
• How should the acuity level and treatment length
  be entered and scheduled for optimal utilization,
  patient quality, and cost
• Construction is planned how can we prepare for
  the new flow?

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Where Should You Start?

• Examine Your Goals and Objectives
• Start with an Operations Analysis and Process
  Diagram
• Initiate Simulation Model
• Become Involved for Immediate Benefit and Results
• Plan for Success with Efficiency

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Optimizing OperatingEfficiency - Examples

• Optimizing Spending
• Vendor relationships
• Reduced pricing even a reduction of 1 helps
• Target areas medical supplies, office supplies
• Vendor contracts
• Volumes, payment terms, discounts
• Consider hiring a purchasing manager
• Centralized processes increase efficiencies of
  others
• Can negotiate better pricing

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Efficient Processes

• Regimen Analysis
• Capacity Analysis
• Staffing Analysis
• Scheduling Methodologies
• Identifying Opportunity Cost

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Staffing Considerations

• Processes
• Moving 2 minutes per patient from phlebotomy
  resulted in saving the time of 1 FTE (31,907)
• Do More With Less
• Do not fill vacancies
• Get more from your existing employees
• Bonus for meeting goals
• Transcription, under XXX minutes
• Business office, one day behind on charges and
  all money posted within 24 hours

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Results at The West Clinic
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Ancillary Providers

• Internal Medicine
• Treat common complaints
• Round at the hospital
• 7,790 additional net income per medical
  oncologist
• Nurse Practitioner
• Treat common complaints
• Lower end visits (level 2 and 3)
• 26,387 additional net income per medical
  oncologists
• Hospitalist
• Round at hospital

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Result Increased Productivity
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Increased Productivity Increased Capacity
Increased Profitability
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Is an In-house Lab Efficient and Profitable?

• COA survey showed the average clinic with an
  in-house lab lost 3.66
• Many practices refuse to do this in house because
  it is not profitable
• Or Is It?

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Benefits of In-house Lab

• Better Patient Care
• Physician can have the results the same day and
  address issues immediately
• More efficient to make decisions (e.g., change in
  treatment plans) on the same day than to bring
  the patient back another day or call the patient
  at home
• Both options require using a resource when you
  would not have used it if you had an in-house lab
• Nurse time
• Physician time
• Appointment slot

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Brief Thoughts on Scheduling

• Schedule chairs
• Schedule consults at the end of the day
• Chemo patients can get to the chairs sooner,
  resulting in better capacity utilization
• Reduced wait time
• Physician can spend more time with patient
• Higher quality patient care

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Practice Efficiency Conclusions

• Human Resources (HR) costs of treatments related
  to medical visits and neutropenia are substantial
• Becoming more efficient may be a means for a
  practice to
• Maintain current revenue despite declining
  reimbursement
• Increase revenue by increasing the practices
  capacity without capital outlay
• Maximize net revenue from that increased capacity

Bottom line . . . A complete financial analysis
must consider NOT ONLY gross revenue, but also
costs, opportunity and capacity. A key
opportunity in todays reimbursement environment
is to emphasize PRACTICE EFFICIENCY.