Penn State Health: Cost Reduction, Efficiency Gains and Quality Improvement [Webinar Transcription]

December 5th, 2023

Scot - So let’s get our speakers introduced for today and Danny, I’ll ask you to go first.

Danny - Hi, good morning everybody. I’m Danny Yagoda, I’m the Chief Operating Officer here at Avant-garde Health and I’m very excited to be moderating today’s discussion with Dr. Davis who I’ll let introduce himself.

Chip - I am Chip Davis, I’m one of the joint replacement surgeons at Penn State Health, Penn State College of Medicine, and the Penn State Milton S. Hershey Medical Center. I’ve been doing that for a long time and I’ve been working with Danny and Avant-garde for I guess about 8 years now, Danny, we decided. And I have a real interest in the value analysis and understanding the processes and the backgrounds of what we’re doing. I’ve been using the Avant-garde information that we get for those purposes.

Danny - So, before we jump in here, I just wanted to share a little bit of an overview of the types of things we’re going to be talking about and the conversation today. So, you know, as Chip had mentioned, this is something that they’ve been working on for quite some time and over the years have been tackling different types of opportunities to drive value within their organization. And so the types of things that we’re going to be covering off today are around OR efficiency, throughput through the floors and the PACU and improving length of stay, getting patients out sooner, talking about supply cost improvements and also as it relates to value-based care and alternative payment models, opposed to acute care utilization as well. So we’re going to be covering a lot of ground and with that I just want to also share some information that we can pass along afterwards as part of the case study that we’ve worked on previously with the team at Penn State Health but you know this work has led to significant changes across a lot of different domains and you can see some of the results here in aggregate you know we’ve calculated all of the savings associated with these changes as well as others and it’s you know well over $5,000 a case and so kudos to the team at Penn State Health. We’re now going to jump in and talk a little bit about how they’ve achieved this and again, just wanted to thank Chip for joining us today. I’m going to ask you the first question Chip, which is, let’s hit rewind a little bit and go back in our time machine to when we first started working together - tell us a little bit about what it was like getting data to do this kind of work before we started this partnership. Shed a little light on what that process was like before now.

Chip - Yes so we really, there was no regular data that we were getting. So we really had no cost data to the surgeon, on cost of the implant, cost of their cases, really didn’t have length of stay data, we have kinda a rough idea but not really good data, not data that we could particularly act on. And so I think there was a big data deficiency at that time. I particularly and I think my team has a big interest in improving value so we wanted to figure out both sides of it really. We wanted figure out how to manage our costs but we also wanted to figure out how to have better patient recoveries which would translate into length of stay, discharge disposition, so it was about both sides of that given the cases were better experience and then also trying to improve the cost sides and it also kinda coincided with the CJR program so I think all those things really came together to generate interest but at the time, we didn’t I think have big deficiency in having data certainly data that was distributed to the surgeon teams.

Danny - Great, thanks Chip. And kinda now hitting the fast forward button a little bit, we were talking just before the webinar and you were discussing how, you know, you share data with the providers today and you had sent me some of the reports that you distribute to the providers and share with them each month. Tell us a little bit about how you guys are doing that right now.

Chip - Yes, so right now, we’ve worked with Avant-garde and the administrative assistants, my administrative assistant has access to this data, so she and I have met and we’ve talked about what data we want to have pulled and so she pulls this data every month for us and circulates it to the surgeons. This is just one example, this shows the supply costs per case for total knee replacements by physician - everything is identified right there is no deidentified data for us so everybody knows what everybody else’s numbers are. This is a year data but we also do by month. Yea and so you know for example, my supply cost is as you can see in the center is about $3,100 but I have some additional supplies so that I ended up being a little less than Dr. Mason, Dr. Hanes is a little bit more and Dr. Nichol - I don’t use this to beat anybody up right but I’ve provide this data to the surgeons so they can kinda see where they are and perhaps you know make some changes in what they do and what they use based on that data. And we also get the percentiles within the cohort for Avant-garde to kinda let us know how we’re doing relative to other Avant-garde institutions. And so that’s really how I use it, again I provide it to everybody and we talk about it but there’s no beating anybody up about it.

Danny - Chip, let's just jump over for a moment and talk about the big picture. Why is this data so important? What is going on within the organization that really requires you to be vigilant and to be looking at this information to drive these types of improvements? And what I've pulled up here is a chart showing your shift from inpatient to outpatient - talk about what the implications are of this. You guys went from 100% inpatient total joints, now you're at only 8% inpatient total joints. Talk about what's going on in the big picture and why this is why looking at this data is so important.

Chip - Well from a cost per perspective side obviously the reimbursement went down, certainly the Medicare reimbursement went down as patients were shifted from inpatient to outpatient and so that meant the margins went down right so we needed to try to be able to maintain the margins and part of that was understanding where our costs were and figuring out how we could do a good job with reasonable costs and some of that's variation between surgeons, some of that's renegotiating with vendors for better costs but that was really you know as we as the shift to outpatient especially knee replacements but also eventually hip replacements, that was part of the thought process that went on was the the reimbursement was less and so we had to be conscious and aware and responsible about the margins while still being able to provide outstanding outcomes to the patients.

Danny - The other thing that I think this chart shows that I think is quite fascinating is just the volume has increased and I think you know hospitals nationally are trying to figure out both how to manage the cost and how to grow the volume to address both the revenue side of the equation and the cost side of the equation. In order to be able to grow volume as you guys have done, as you said you needed to be thinking about the cost as well as the processes and you guys have done a lot of work around driving improvements in length of stay and throughput in order to accommodate the ability to take on all of these extra patients so that you can keep the financials in order. I'm going to turn to another slide here talking about some of the improvements you guys have made around length of stay and throughput - there's a few of these slides in here - can you talk a little bit about how you guys were able to achieve these improvements with respect to throughput as well?

Chip - The issue with the length of stay, honestly for me I think, it really became about how to give the patients a better recovery and a better experience and that then translated into those changes. But I wouldn't say that while we wanted to do that I wouldn't say that was the real focus - the real focus was how can we give the patients a better experience and a better recovery. And that included involving our anesthesia teams to do blocks, managing pain control better, having more committed nursing care units. We have a great relationship with a physical therapist - so we were able to get the therapist to stay late to see the patients on the day of surgery so those patients who were done later in the day would still get therapy on the day of surgery and then they even came early on the day after surgery and that was how we started to get some of these patients home earlier in the day - you know that was helpful because that then made additional routes to get patients out of the recovery room, so we had fewer OR delays and fewer PACU backups because we had made beds available. So I think what we really focused on was how can we get the patients to recover quickly. The pre-op planning, we did more emphasis on managing their diabetes, pre-operative class - all those things that most people are doing but the goal was let's have the patients have a great experience and then they'll be ready to get home sooner and in all those ways we translated both to getting more patients to go home and to reducing the length of stay and we didn't do any cherry picking about who's in the mix and we didn't move patients to other places. This is all the same group of patients that we have had and actually all in a traditional academic hospital, so not an ASC or anything like that, these are all done in a traditional academic hospital so that's kind of what we've focused on. We have a dedicated anesthesia team for the joint replacement folks now and we've worked a lot with them on how to manage the anesthesia and the pain control and that's all made a big difference.

Danny - That's great, thanks so much Chip. I mean at this point you guys are discharging patients 12:30 p.m. the day after surgery - where would you ideally want to see that go? I mean I know you guys set goals on this all the time and are constantly looking at this information and raising the bar each time - where do you see that headed?

Chip - Yeah I'm really shooting for around 10 am. And that's what I tell patients the night before. And this is a hard, it's a hard process to get a grasp on honestly because trying to figure out the time that they're really ready to be discharged and the time that they're actually discharged, that's not data that's recorded anywhere and that's that's an area that I think there's some room for trying to work the process better. You know my goal is they get a good therapy session on the day of surgery, they get a good therapy session the next morning early in the morning you know 7:30 / 8:30 and then by 10 o'clock, many of them would be ready to go home. So as you can see we haven't quite achieved that part of that was that COVID interfered a little bit, we had trouble staffing some of the therapy positions so it was harder for them to come as early in the morning and to have as many therapy folks available - so that's a process that we're definitely still working on but I would love to see it between 10 and 11.

Danny - All right well you started at 2, you're around noon, your goal is 10 so you're about halfway there.

Chip - Yeah, there's definitely still work to do no question

Danny - Yeah and I just wanted to quickly pull up as well the one view here that we had pulled in which is the PT on day of surgery and just kind of highlight that this is one of the other metrics that you and your team have been tracking using our data and you know I think over several years that has come up quite a bit, I know that it does waiver a little bit and sometimes you know you have to kind of keep an eye on it - it comes back down and then you have to correct again and that can be due to changes in staffing on the PT side or changes in scheduling of how the OR set up, so it is one of these metrics I think that requires you guys to kind of come back to time and time again and make sure that you're continuing to deliver the PT on the day of surgery.

Chip - No question and it's also you know an anesthesia side of things right, so I'm having discussions with the anesthesiologist about how long the spinal lasted and the spinal lasted six hours so we couldn't get the patient up for therapy or you know they had GI upset or they were hypotensive and so I have those discussions, that's just another part of it - I have those discussions with the anesthesia team on a regular basis and we're fortunate that we have a good relationship there and so I can have those discussions and the you know the leaders will go back and look at the case and say well maybe we need to do this differently or that differently or maybe there was nothing to do differently but we have those discussions because that's another part of how fast the patients can get up and be moving around. Danny - Excellent and you know I think as a result of this work and that you just described, I mean not only have you guys moved the needle in terms of discharging patients earlier in the morning the day after surgery or earlier in the day the day of surgery but we've seen that kind of impact the overall length of stay and certainly it's been decreasing steadily which is really nice to see. You know I think you and I have talked about this before but I mean overall like where would you guess it will land with patients being able to go home same day for total joint replacements?

Chip - Yeah that's tough to know I think it does depend a little bit on your setting right. I think if you're an ASC you know, obviously your number is going to be higher for where we are, I think it could get to 60% - 50 or 60 percent - part of that's patients kind of just getting accustomed to it, part of it's us continuing to make improvements in the patient recovery and having a better sense of exactly which patients can go home, but I don't know exactly where the top of this is, I'm kind of thinking 50 to 60 percent range but I would say I've been pleasantly surprised at how quickly we've ramped it up already so maybe it'll go higher higher than I think.

Danny - It'll be interesting to look at our benchmarks going forward to see what other organizations are doing with respect to sending patients home same day and I think that'll hopefully help us inform you know where is that plateau - I think this view right here shows you know not just one surgeon but every surgeon has been increasing their rate of sending patients home same day within your organization and currently you know you're at 34% but there is still some variation across the physicians with one you know reaching 50%, so I think having the comparative data kind of helps us figure out where the goal could be and it's amazing to think about the fact that you know it wasn't too long ago that patients were staying in the hospital several nights for this surgery - and now they're going home same day and at first you know people probably said ‘oh it can't be done’ and you know seeing other people do it and having that proof of concept kind of helps transform everyone's thought around what is possible.

Chip - That's absolutely true and both for myself and the therapist, it was a little bit like ‘all right we're going to take the jump’ and you know with it was your best patients, then so you take your best patients and you'd say okay, we're going to make the jump and hopefully it works out and then by now nobody really questions it anymore - and so definitely that's a change over time. But your system also makes a big difference in how you look at these numbers, you have to be a little bit careful, so it may be that a better approach is to have an ASC or an outpatient surgery center where most of your outpatient surgeries are being done - so it may be that you don't pay as much attention to that in the hospital, you still want to have the recoveries be as good as possible and as effective as possible so patients could go home soon, but maybe, you know, at your main hospital going home the day of surgery is not the biggest thing because maybe you're moving those patients to outpatient areas or ASC. So it is going to depend on how your system is set up when you do this but I think the overall sense that many of these patients are capable of going home on the same day now is true everywhere.

Danny - Yeah and I think you raise a good point which is, how do you look at this kind of data as you begin to evolve your system with more sites and be able to track this holistically? Do you guys do, can you talk a little bit about how you're thinking about that piece of it?

Chip - Yeah we are adding new hospitals and I think one of the big things that we have to figure out over the next few years within our system is - do we want to try to localize for example most of primary joint replacements at one hospital that's functioning better. And I think that's where having this data for our whole health system can be very helpful - we're still working on that process but we're hopeful that we can begin to get this data at different hospitals - that allows you then to compare your different hospitals, figure out which one's more efficient, understand why they're most efficient, maybe adapt their practices to other hospitals and you know I guess as I envision the future, it may be that our complex medical patients or our complex hip and knee replacement surgery are being done here at the academic medical center and that we have a more efficient community hospital where the primary hip and knee replacements are being done and I think having the data that we're seeing from those different sites will permit us to make the optimal decisions and try to optimize the process. So that's I think one of the exciting things going forward for us and again we're not there yet with that but that's, I think, one of the opportunities.

Danny - Thanks Chip - and yeah I think to that point I'm going off script a little bit here, but I just want to show a quick view from the software. This is actually just demo data but as the number of organizations grow here and you're looking to track additional sites, I mean we can basically be putting all of the different hospitals side by side on one view so that you know when you're trying to say okay how are we doing on this at facility A versus facility B versus facility C, they're all on one page and you can quickly kind of whatever metric you're looking at, whatever procedure you're looking at, quickly pull that up and see okay, what's the variation look like, who's the best, how do we learn from that organization as you've said to get everybody up to the same level of performance. So I think what you just described makes a ton of sense and certainly having this data to help facilitate that exploration and set of conversations is, you know, key to what systems are doing at this point to help move that forward.

Chip - And again I don't think it's just on the cost side right so we can monitor readmissions, discharge disposition, you know length of stay, all those kinds of things and then we can begin to look at the quality and see if we need to be focusing on quality at one place or another to make some changes.

Danny - Chip, there's a question that came in from our audience. I'll just jump in and ask it so that we can address that question kind of in real time but the question says, do you prioritize certain cases to be first case to increase the chance that they can be discharged same day?

Chip - Yes absolutely. So if we have patients, we have the discussions in clinic and we identify those patients who we think might go home the same day and then we try to make those patients first or second case of the day. So yeah we absolutely do that.

Danny - I think we'll turn to another topic, Chip, we've kind of talked a little bit about about throughput - can you talk a little bit about your supplies a little bit and what you guys do to try and decrease your supply costs and I'm going to bring up one of the views in the software here that I know you guys have been using each month. Tell us a little bit about what we're looking at here and how you use this information.

Chip - Yeah so this is a per case cost and each of the bars is some component of the supply cost case and in this view you can see, I don't know if we can see it on this slide, but you can see what each component is and so at every month, when I meet with the teams and review the data, I look through all the expensive cases to say why was this case so expensive and lots of times it was just a really complex case that needed revision components and that's why the case was more expensive and that's fine. But sometimes there are, you know, someone is using a more expensive component all the time, we have a discussion about that again, I let people do what they think is the right thing to do, but we review all that, we try to understand why we're getting some more expensive cases, a really detailed level, to say how can we manage this better or how can we avoid some of these complex cases. And again a lot of them it just turns out that they were very complicated hip or knee replacements that needed specialty implants and that's fine, that's what we do but that's how we do this, so I do this on an every month basis, it doesn't take that long in our practice, it's five or six or eight a month and so we go really into depth on that.

Danny - And in addition to, you know, looking at this type of variation across cases, you then kind of track some of the progress on certain supplies and look at it over time - tell us about what we're looking at here in terms of trending and you know what this is about.

Chip - Yeah so this is about knee replacements and the cement that's used to fix the knee replacement to the bone and whether or not there's value to adding antibiotics in the cement that you use. And the reason it's important is because antibiotics, sorry cement containing antibiotics costs about five times more than cement without antibiotics - so cement with antibiotics, it might cost 250 dollars per pack, you use two packs, so that cost is five hundred dollars, whereas two packs of the main plain cement might cost a hundred dollars - so a substantial cost difference there per case. The data to support that antibiotics in the cement decreases the infection rate in most primary total knee replacements is weak to non-existent - but if a patient gets an infection it's a really big deal - so there's a tendency to kind of move into adding the antibiotics even because they don't necessarily help all that much but we think they might help an infection is a big deal. So we've tried to kind of have that discussion and say maybe we need to reconsider when we use antibiotics in cement, use it in the most extreme circumstances but maybe not use it as regularly as we do if there's really no data that is providing benefit and so that's how this discussion went. And you can see that over time the usage of plain cement has gone up and the usage of cement with antibiotics has gone down- now there are still differences right I have one partner who never uses,it, I use it a little bi,t and I have another partner who uses it a little bit more - so we haven't, we've let people do what they think is right but I think that just educating them and having the discussion has resulted in some change in behavior which I think has improved value

Danny - Thanks so much Chip, I think, you know, this type of information in terms of being able to see the differences and what people are using has certainly been something that's been, you know, something that comes up every month when we talk and I think it's one of the great things you guys are so disciplined and in looking at this data and having these conversations, it's really inspirational to see this data kind of come to life through those conversations. I want to turn quickly because we only have a few more minutes and talk a little bit about, you know, the value-based care alternative payment models you mentioned CJR - can you talk a little bit about what that program's about and I'm going to turn to this slide which kind of shows, you know, some of the information that I think is relevant to that program in terms of getting patients home - tell us a little bit about your experience there.

Chip - So the CJR was a bundled hip and knee replacement program through CMS and what that meant effectively was that you got one fee to cover the surgery in the 90 days of post-surgical care and it was roughly around twenty two thousand dollars per Medicare patient to cover those costs. And if your costs exceeded that then you had to pay back some part of that to Medicare and if your costs were under that level, you were reimbursed some of the savings as an extra incentive payment from CMS. The biggest cost driver for that program was readmissions and patient discharge disposition - so the patient went to a rehab or nursing home in the first 90 days, that cost was considered part of the bundle cost and if they went home then you obviously spent less as part of the bundle cost because you didn't have the rehab and the nursing home costs. So again the incentive was to improve the patient's experience and the patient's outcomes so that more of them would be able to go home. You also got penalized for readmission so if you just sent everybody home regardless and they had a bad outcome and they got readmitted then that actually probably cost you more. So the real approach here was how to make the patients have a better experience so that they would recover better so that they would be able to go home and so that was reflected here in the discharge-to-home rate which went from about 75 percent up to 95 percent. So that meant a few of our patients were going to SNF or rehabs, that improved the cost structure and once again we monitored our readmission rates during this to be sure that readmission rates weren't going up as well. But that's part of the whole bundle concept and where the cost savings, I think, are in bundling and I think it's better for the patients to come as well because there's some data that would suggest if equivalent patients go home versus a SNF or rehab, they have a lower major complication and readmission rate, so for lots of reasons it's better for patients to go home and so that was the focus here.

Danny - Thank you so much Chip. There's one more question from the audience that came in that I'm going to ask it said - focusing on human behavior, what is done to get the surgeons engaged in lowering hospital costs, is there a type of savings sharing type structure that incentivizes surgeons to make, you know, costs lower, supply costs lower if you will?

Chip - Yeah that's a really good question that's hard to answer, to be honest, being in an academic medical center, we don't have opportunities for incentive payments, you know, we're not financially linked directly to the performance, so it was really about showing people what their partners are doing, trying to get people to act responsibly, for their health system, for themselves, make their judgments but again that's why we have not mandated anything by just showing folks what their partners are doing, that creates enough of an incentive to make some change. Could you make some additional change with more incentives, I think that's possible but again we have not done anything financially - none of the CJR money came back directly to the physicians, there's no reimbursement to physicians based on costs, we try to get some of that back to the department sometimes but nothing comes directly back to the physicians. So it's really trying to establish best practices of what our partners are doing and convince people in that way.

Danny - Thank you Chip.

Chip - Danny while people are answering, I will say that I also use this data for our hospital leader so I take this data and I show it to our Hospital leaders, to show the kinds of things that we're doing, to show the opportunities for improvement, I've taken some of it for example the time of discharge and I've gone over it it with the nurses in the same day units to try and say, you know, what are the things we can do better, what do you think the opportunities are, so I also spread this data to obviously in the institution.

Danny Excellent thanks Chip and for the record you have no disclosures related to your work with Avant-garde, correct?

Chip That's true I have no disclosures of any kind. Danny - Other than you're going to a Cubs - Red Sox game this afternoon.

Chip - Tomorrow.

Danny - Yeah and said you would be rooting for the Red Sox so.

Scot - Good man, all right, how about a couple more questions for Dr. Davis - here's one, it says once opportunities for cost reduction are identified, what do you commonly see as the greatest challenges to realizing savings?

Chip - Yeah I think a lot of it is as people have pointed out to changing physician practice. Sometimes it's easy because they say you know it's obvious but other times I think it's that's the biggest part of it's not so much the hospital side I don't think, I mean we do try to negotiate with the vendors and get cost reductions but in terms of changing what people are using, or changing practices and I think showing data, I really am a big believer in showing the data, so especially if it's a practice thing the improvements to go home, things like that I really try to find data so that I can show that to people but I think that's the biggest challenge.

Scot - All right thank you, so one more here it looks like we've probably got time for so across your ORs and your procedures, have you seen areas that consistently have the most potential for cost reduction? This probably goes back to your example with the different types of cement - do you see others that are frequent areas for?

Chip - Yeah I think it's, well this is hard for people maybe who don't know hip arthroplasty, but there's something called dual mobility for example that reduces the dislocation rate. Dislocation rates are low but it's a lot more expensive than a standard joint articulation - so while I don't think anybody has a high dislocation rate, some people are a little bit more nervous about that so they'll use that a lot more often so I think that's definitely an area, I think we have opportunities in, because we have pretty wide discrepancies in OR times and I say that being the slowest one in the group right, so I'm the one that where my cost is higher and you know I try to look at what my partners are doing, so I've gone in their operating rooms, watched what they're doing but I think that's another area within the operating room - but the whole discharge part of it, outside of the operating room, that's perhaps where we've made most progress is improving the recovery, getting patients home sooner, I think that's where our and more same-day patients going home, I think that's where our biggest cost opportunities have actually been.

Scot - Excellent yes thank you so much. So Chip I know you've got another commitment that we need to let you move on to, so we very much appreciate you taking the time with us today to share your insights. So Danny before we wind down, any closing comments?

Danny - No thank you Scot and thank you Chip and thank you to all of the folks who joined to listen in. We really appreciate it and feel free to reach out if you have any questions - I'm sure Scot will be following up so you'll have the ability to reach back out to us, thank you again.

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