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November 4, 2003

Dear Colleague:

I am writing to provide you with a summary of our performance in executing the Annual Operating Plan for Fiscal Year 2003. 

The creation and implementation of the AOP has provided us with a valuable “road map” during the preceding 12 months.   First, through a series of meetings and conversations, we identified the Medical Center’s most important goals as Quality and Service Excellence, Capacity Development, Volume Growth, and Financial Performance.  We then proceeded to define a series of objectives and tasks under each goal.  This iterative process involving management and medical staff leadership identified key interdependencies and potential obstacles as well as a means to organize and align individual priorities throughout the organization.  Finally, we developed a series of performance metrics to measure our progress on these goals in order to focus and adjust our efforts as well as to facilitate accountability and performance-based evaluation.  One of the valuable outcomes of this process was the AOP monthly report that provided data in a standard format to our Board of Directors, the Medical Executive Committee, the Operations Council, and the Leadership Meeting.  These reports enhanced our ability as an institution to achieve a common understanding of where we were, where we were going, and how we were progressing toward our goals.  This is a substantial achievement for an enterprise with over 8000 employees, about 1800 members of the medical staff, and an annual budget of $800 million!

It is now time to look back over the year and assess how we did.  The good news is that we were quite successful in recruiting key physicians and specialists, hiring and retaining nurses, and developing an effective referral network through relationships with community hospitals and multispecialty groups.  As a result, our inpatient volume increased by 2.7%, the largest gain since the early 1990’s.  The resultant growth in net patient services revenue plus the growth in our research indirect cost reimbursement resulted in a 5.8 % growth in overall revenue.  When combined with attentive management of our labor costs and energetic and innovative medical/management collaboration on supply chain and clinical resource utilization management, the FY03 operating loss of $14.6 million line bested our financial target of a $15.2 million loss by $600,000.  This represented a 50% decrease in our operating loss for the second year in a row.  Finally and most importantly, we were able to hold steady or improve our measures of the quality of care.  Our care was patient-centered, effective, efficient, safe, timely, and equitable, and we achieved these milestones while moving steadily towards financial stability and health. 

At the same time, the bar continues to be raised. The competitive and reimbursement environment continues to become more challenging.  Having largely addressed the limitations of the nursing shortage, we now face the limitations of our physical capacity of licensed and built beds.  Having reduced our operating deficit by 75% since FY01, we now have the goal of achieving a break-even performance and profitability.  Having built our inpatient volume by 2.7% last year, we now have a goal of 5% growth for inpatient discharges.  These and other challenges in quality, service, customer and employee satisfaction, and medical/management partnership are addressed in our FY04AOP. 

The remaining pages of this booklet provide an annotated copy of the FY03 AOP and individual sections with more detailed discussions of each goal plus supporting material.  I hope that you will find the material useful and that you will share it with your colleagues to enhance our common understanding of our mission and the work that is necessary to achieve it.

I am proud of what we accomplished together in FY03, and look forward to addressing the new challenges together. 

Michael F. Epstein, MD

Executive Vice President and Chief Operating Officer


FY’03 Clinical Operating Goals

Goal #1: Capacity: Ensure sufficient inpatient bed capacity to accommodate FY03 budgeted volume.       

Objective 1:  Achieve adequate RN and allied health staffing levels

a)      Hire 205 new RN’s.

b)      Reduce nursing turnover from 14%/annum to 10%/annum.

c)      Fill critical vacancies in allied health professions

Superb job with over 250 nursing hires and a reduction in turnover to 7%/annum.  Hiring of 20 FTE’s in Radiology reduced the vacancy rate to <10%.  Vacancies in clinical labs were significantly reduced and have been consistently below the goal.

Objective 2:  Identify and implement key facility solutions to optimize in-patient care and patient throughput.

a)      Co-locate key inpatient med/surg, critical care, and support units to optimally provide patient care and minimize duplication of staffing, equipment, supplies, etc.

b)      Develop OR, radiology, and other functions to support the med/surg and critical care units on each campus.

c)      Reduce the necessity of moving in-patients between East and West campuses.

Facility solutions to the throughput challenges fell short of our goals as the decision to sell the Kennedy Building in February, 2003 altered facility priorities from rearranging patient care units and support space to decanting Kennedy in time for an 03 sale. The move of the Feldberg 7 unit to West as well as purchase of key capital equipment reduced our utilization of ambulances for West to East transfers by 9%.

Objective 3:  Identify and eliminate rate-limiting steps in patient throughput to optimize patient care experience as well as reduce staff stress in key parts of the system (e.g. ED, PACU).

a)      Achieve a deeper understanding of and tracking system for patient flow from entry to exit from the Medical Center in order to improve performance in key areas.

b)      Implement innovative approaches to expediting throughput.

c)      Improve effectiveness of and partnering with support services on inpatient units to optimize productivity, enhance throughput, and reduce stress on the nursing staff. 

d)      Develop and implement clinical care guidelines for individual diseases to reduce variation, improve quality of care, and improve efficiency.

Initiatives to improve teamwork and clarify responsibilities in the TICU/SICU as well as the PACU have been successful in reducing stress and improving throughput.  In addition, Medicine has altered their house staff work schedule to expedite discharges. The Inpatient Operations Executive Committee (IOEC) has served as an effective collaborative forum for PCS and Operations to identify and eliminate bottlenecks around supplies, transport, etc.  Despite these steps, LOS (adjusted for case mix) and median discharge time remain relatively unchanged and are indications of continued difficulties in achieving efficiency and optimizing patient care experiences both upstream and downstream.

Goal #2:  Volume:  Ensure achievement of FY03 budgeted volume and service mix.

Objective 1:  Develop and implement a uniform and highly functioning planning process to develop and implement business plans for key clinical programs and initiatives, integrating medical staff and administrative personnel and processes. 

Business Planning and Clinical Resource Utilization Management groups were effective means of organizing administrative and medical staff leadership efforts in a prospective way to define programs, understand the market and financial issues, and define expectations for the Medical Center and medical staff before initiating resource commitments.  Successful efforts include the recruitment and launch of the bone marrow transplant program expansion with Dr. Miller, the recruitment and launch of the new Orthopedic Surgery Chief, Dr.Gebhardt, and the coordinated application of new resources to support the growth of transplantation.

Objective 2:  Measure and monitor clinical volumes in key inpatient and ambulatory areas to provide early warning of volume shortfalls to enable focused understanding of cause/effect and to take rapid and effective corrective action.

a)      Refine weekly dashboard of clinical volume reporting

b)      Review monthly and quarterly results with key medical leadership

Continued weekly review of inpatient activity at OPS and monthly reporting of volume by Department at Ops, Chiefs, Leadership, Finance Committee and Board of Directors provided close scrutiny of our performance in this area. Mid course adjustments in several programs (heme/onc, cardiology, GI, neurosurgery, transplantation, urology) supported a 2.7% increase in discharges over FY02, the largest discharge increase in the past five years.

Objective 3:  Develop a marketing and communication plan that informs the physician and patient community about our key programmatic growth initiatives

In FY03, we implemented a plan to better align marketing and communications initiatives with the strategic priorities of the medical center, particularly by focusing on specific clinical areas and supporting physician-to-physician outreach. Major activities included: a complete overhaul of the Find-a-Doc on line directory, a new printed referral guide, and the launch of the new external web site.  Individual program materials were created for area physicians on Minimally Invasive Surgery Center, Interventional Pulmonary, Dialysis Access, the Radiation Therapy Center in Waltham, PET /CT Imaging, the Stroke Center, the enlarged surgery department, and others. Special support was given for affiliate relationships, including Joslin, BIDH-Needham, and Milton. Media coverage on clinical programs and the medical center’s financial condition was overwhelmingly positive. Broad initiatives, including the WBUR radio sponsorship campaign and the Red Sox partnership enhanced the Medical Center’s image and improved employee morale.

Objective 4:  Establish and enforce access standards for ambulatory referrals including telephone access, appointment availability, leakage from BIDPO providers, and PCP referral patterns to individual programs.

Access was systematically evaluated through “mystery shopping” and data on the impact of the lost opportunities were quantified. Based on this information, access standards for telephone scheduling were adopted by MEC and implementation plans were begun in key areas.  Leakage from managed care populations in HCA and APG continued to decrease, and referrals from important new relationships (PCCL) as well as traditional community based physicians (BGM, MetroWest, Essent, etc) increased or were stable.

Goal #3:  Quality and Service:  Provide superior quality patient care as measured by specific outcomes and achieve a high level of “customer” satisfaction for patients and their families, referring physicians, as well as our own medical staff and employees.

Objective 1:  Redefine institutional measures of clinical quality

a)      Develop specific quality measures for each Department, adopting the Institute of Medicine framework of performance in six key dimensions of care.

b)      Develop and implement data collection and reporting methods for each quality measure.

c)      Report quarterly on all quality measures to MEC and PCAC.

Specific quality measures for the Medical Center were defined in the six domains of the IOM framework and were reported on monthly to Ops, MEC, Leadership and the Board as well as providing the basis of the quarterly PCAC meetings. Quality dashboards were successfully developed and launched for surgical and critical care areas. In nearly every case, quality measures exceeded targets with especially strong performance in overall patient satisfaction and efficiency (excess days). The strong impression is that quality was maintained or improved while we were achieving financial stability.

Objective 2:  Reorganize the Medical Executive Committee’s subcommittee structure and membership in order to improve their ability to execute their responsibilities in the areas of quality improvement, utilization, credentialing, appointment and privileging, and setting practice standards.

The MEC moved to twice monthly meetings, reorganized all their subcommittees, and heard regular reports from each subcommittee at least once during the year. All subcommittees were given written charges and chairpersons began to be paid through MD Admin funds. The MEC’s new effectiveness was evident in action taken around GME, radiation safety, pharmacy and therapeutics, and other areas where Medical Staff has oversight and responsibility.

Objective 3:  Develop an institutional program for regulatory preparedness that identifies annual objectives and achieves high performance levels in the dimensions of quality, safety, and service and promotes an institutional culture of consistent attention to regulatory compliance

Energy and time were focused on patient safety (educational session with Board, Ops, and MEC with Don Berwick, launch of executive patient safety walk rounds, HELP rounds on inpatient units) as the Medical Center began to move from a triennial JCAHO focus to an “all the time” performance in these important areas.  Continuing discussion characterized concerted attempts to resolve the tension between punitive and open/supportive approaches to quality assessment and assurance.

Objective 4:  Continue to set target goals for customer/patient satisfaction in inpatient and ambulatory settings and measure, distribute, analyze, and act upon the outcome of these surveys in order to achieve the highest level of satisfaction possible as agreed to by the PCAC. 

Patient Satisfaction surveys of patients discharged from the inpatient facility continued to show strength and placed BIDMC in the 98th percentile of peer groups. The monthly review of data allowed early identification of two periods during the year when performance was declining which in turn allowed renewed energy around current programs as well as new ideas to surface to enhance patient satisfaction. Overall scores for the year were stable to slightly improved in the

face of ongoing work to achieve financial stability. Ambulatory service performance around phone answering and appointment access, however, remained below our targets.

Objective 5:  Continue to measure, distribute, analyze and act upon the outcome of employee satisfaction surveys in order to improve the workplace environment for staff and physicians. 

After the adoption of the AOP, we decided to discontinue the employee satisfaction survey during FY03 since the results from prior years had not provided useful data for improving our performance in these areas.

Objective 6:  Develop methods to measure performance and customer satisfaction of our referring physician community.

Referring physician satisfaction was measured anecdotally through personal contact via the Network Development Office. The impression is that utilizing a survey tool in a more organized manner would provide useful baseline data.

Goal #4:  Financial Performance:  Achieve or reduce the budgeted deficit of $15.2M through a shared responsibility of every employee and member of the medical staff to reduce expenses and enhance revenue while maintaining quality and service levels. 

Objective 1:  Continue the revenue cycle initiatives to reduce denials and underpayments and improve third party contract performance, and identify new revenue opportunities.

Revenue cycle initiatives continued, with focus on reducing denials and underpayments and improving physician documentation for coding.  Approximately $10.6 million in additional revenue was collected through these efforts.  We are still going through various dispute resolution processes with four payors to recover additional revenue.  Copay collections exceeded the 80% target resulting in the collection of more than $2.5 million.

Objective 2:  Continue and complete the split billing roll out in ambulatory areas.

Split billing was successfully implemented in all of Medicine’s specialty clinics that represent 25% of ambulatory visits. The transition of employees, rental payments, space assignment, billing and collection, as well as administrative efficiencies were successfully managed.

Objective 3:  Recruit a VP for development and launch major new fund raising initiatives for unrestricted funds as well as for research.

Kris Laping was hired in January 2003 and assembled a team of key senior managers.  By year’s end, successful events had been held in Palm Beach and Boston, and staff had increased to 15 FTE’s.  By year’s end, over $12 million had been raised, over one third as unrestricted gifts that support operations.

Objective 4:  Identify at least four new key opportunities for work re-design to reduce labor and supply costs.

Work re-design projects around OR supplies, ambulatory administration, and a number of facility redesigns and relocations had been successfully implemented to achieve budgeted savings.

Objective 5:  Achieve FY03 supply chain goals and position organization to meet supply chain goals for FY04. 

Purchasing was successfully transitioned from CareGroup to BIDMC with the hiring of a Director of Purchasing and the implementation of a broad range of contracting actions to reduce costs as well as imitating regular reports to medical staff and administrative leadership.  Clinical Resource Utilization Management developed and applied criteria for evaluating new procedures and technologies. The MEC’s subcommittees on Pharmacy and Therapeutics, Critical Care, Core Clinical Services, and the Operating Room adopted and implemented resolutions regarding the appropriate use of pharmaceuticals, lab sendouts, disposable medical supplies, and surgical devices and hardware.  In each case, methods of measuring implementation of these policies/procedures were developed and applied to ensure accountability and compliance.  The net result was a drop in the rolling 12 month cost/adjusted case from $2,214 in June 2002 to $2,172 in September 2003, a drop of 2% in the face of significant inflation.

 


Goal #1: Capacity – Ensure sufficient inpatient bed capacity to accommodate FY03 budgeted volume

Summary of Results

One of the key limitations to achieving our volume and revenue goals in FY03 was the large number of vacancies in RN positions in our medical/surgical patient care units, the critical care units, and the operating rooms. The BIDMC’s situation was perhaps the “perfect storm” for nursing shortages, coming on the backdrop of the worst national nursing shortage in decades upon which was superimposed on the increased turnover following the Hunter engagement.   The resultant vacancy rate of over 16% threatened our ability to achieve our Recovery Plan goals.

To address this critical limitation, we established “stretch  goals” for both hiring and retention.  We established a hiring target of 205 RN FTEs and a goal of reducing turnover from 16%/year to 10%.  By the end of FY 03, we had surpassed both of these goals hiring 265 RN’s, reducing turnover to 6%, and achieving a vacancy rate of <5%.  

The success in eliminating staffing as a major obstacle resulted from a number of initiatives. An excellent collaborative partnership between the leadership of Patient Care Services and Human Resources enabled the development and implementation of an innovative and creative recruitment program, including our " Destination Boston" program, designed to attract staff that live beyond an 85-mile radius of Boston.  We established a new advertising partner and created an innovative ad campaign.  We recruited many staff through our employee referral program.  We were also pleased to convert 22 travelers to our own employees because they enjoyed their experience here!

Our focus on retention of staff is also a key factor.  Several workgroups are making progress in improving the workplace environment and ensuring that the clinical staff has adequate supplies and support services to care for patients. Town Hall meetings continue with the CEO and SVP of Patient Care Services.  New scholarships were awarded and ongoing educational opportunities were enhanced. Additional Clinical Nurse Specialists were hired to support the new graduates throughout the medical center.

In addition, efforts to improve patient throughput have been another major focus.   These include the move of a patient care unit from the East to the West campus, decreasing ambulance transfer costs.  In addition, the creation of standardized clinical pathways by anesthesia, surgery, and nursing have shorted the length of stay in the Shapiro PACU.   Finally, computerized dashboards were developed to assist the admissions facilitators in identifying beds for transfers. Improving utilization of inpatient beds and patient throughput is a major goal for FY04.


Goal #2 Volume: Ensure achievement of FY 03 budgeted volume and service mix.

Summary of Results

FY 03 represented a year of significant volume growth in both inpatient discharges and ambulatory activity.  While falling short of budgeted targets, inpatient discharges grew by 2.7% over the prior year.  The largest growth was seen in Surgery (602 discharges, 8.3%), followed by Medicine (193 discharges, 1.2%), Neurology (119 cases, 15%), Orthopedic Surgery (45 cases, 5%), and Neonatology (28 cases, 0.6%).   Patient days increased by 2.8% as well, with average length of stay remaining stable at 4.5 days.  The Medicare case mix index, a measure of acuity or severity of our patient population, was unchanged. 

Ambulatory volume consists of Emergency Department visits, ambulatory clinic visits (both specialty and primary care) and outpatient procedures.   ED volume continued to show a multi-year trend of small decreases in volume with its 47,063 visits representing a 2.8% decline from FY02. 

Primary care visits to HCA numbered 87,718, a 2.5% increase over FY02.  The measurement of the overall change in specialty and off site clinic visits was complicated by changes in billing and administrative models, but the overall direction was one of continued growth.  For example, the visits in hematology/oncology increased by over 3700 visits, an increase of over 10%.  The total of all hospital and HMFP visits grew by over 28,000 visits representing a nearly 6% one year increase. 

This growth was paralleled by increases in outpatient radiology and cardiac cath lab procedures.  In contrast, the volume of outpatient surgical cases and gastrointestinal/endoscopy procedures declined.

The growth in our inpatient and ambulatory volumes were the result of a number of important initiatives during FY 03, including a major focus on network development, the re-energizing of our marketing and communications operation, and the launch of a uniform business planning process.

Network Development’s efforts led to the expansion of traditional relationships and the development of important new relationships with physician groups and community hospitals.   The result of these activities were significant increases in referrals from Bridgewater Goddard Park Medical Group, Primary Care, LLC, Nashoba Valley Medical Center, Metro West Medical Center, and BID Hospital-Needham.   While part of the volume increase is related to better capture of PCP/referring physician information on admission, the increased volume represents real growth in our referral network.  The signing of a new affiliation agreement with Milton Hospital and the successful completion of a joint venture agreement with the Joslin Clinic were other notable accomplishments in building a network to enhance patient care.  Continuing work is focused on specific clinical service lines with physician groups and hospitals through targeted relationship management for key affiliates including NVMC, BIDH Needham and Primary Care, LLC.  These efforts include physician meetings, referral volume tracking, implementation of key referral management initiatives (i.e. admission notification and discharge fax note), communication that is strategic and responsive to customer service issues, implementation of referral physician surveys, Clinical Program Steering Committees, and identification of CME opportunities at targeted or affiliate hospitals.  In addition, Network Development is pursuing clinical and/or tertiary relationships with several other hospital and physician groups in the South Shore, Cape Cod and Fall River areas.

Marketing and Communication efforts have been developed in support of physician outreach through the development of the “Information for Referring Physicians” packet, publication of the “Doctors@ BIDMC” newsletter and development of new physician announcements. Completed initiatives providing BIDMC-wide support include the printed Referral Guide; the expansion and updating of Find-a-Doc on the Web which now lists over 1000 BIDMC physicians; a redesigned Web site; a corporate capabilities brochure; and advertising in the Yellow Pages, on WBUR (NPR) radio and in various Red Sox-related outlets. 

In addition, specific clinical programs have been supported by the development of print materials, Web sites and physician outreach.  Brochures introducing new surgical recruits and marketing exciting new developments in our programs in vascular surgery, complex airway disease management, PET/CT scanner, the dialysis access, and the Stroke Center have been mailed to hundreds of physicians in the community.   Currently in development are more comprehensive marketing plans for the Transplant Center, Cancer Center, the BMT program, Neurosciences, Cardiology and Minimally Invasive Surgery. Major marketing and communications efforts have been put into the new Joint Venture relationship with the Joslin.

Finally, all of these activities have been supported through a new clinical program business planning effort that brings together clinicians, financial analysts, clinical resource utilization specialists, decision support resources, and other administrators.  This process has allowed a uniform approach to framing new programs in a manner that allows careful analysis of the strategic, market, financial, and clinical costs/benefits of new programs or programs that wish to expand.  As a result, the Medical Center has successfully invested in new programs in Endovascular Surgery, Minimally Invasive Surgery, Hematologic Malignancies, Women’s Health, Transplant Surgical Services and Congestive Heart Failure.

The integration of network development, marketing and communications, business planning,  recruitment of key physicians, building or realigning facilities, and understanding the need for appropriate support and administrative services has been the key to the successful growth in our inpatient and ambulatory programs in FY03. 



Goal #3:  Quality and Service:  Provide superior quality patient care as measured by specific outcomes and achieve a high level of “customer” satisfaction for patients and their families, referring physicians, as well as our own medical staff and employees.

Summary of Results

In FY ’03 BIDMC made progress towards the goal of providing superior care and high “customer” satisfaction.  Objective measures of quality and service demonstrate that BIDMC achieved broad based excellence as well as improvement in quality and service. 

Many of the specific objectives in FY ‘03 related to redesign of the BIDMC infrastructure for performance measurement and improvement.  The institutional measures of clinical quality, as reported to the Patient Care Assessment and Quality (PCAC) Committee of the Board, were redefined in collaboration with departmental leadership, and key measures of quality were reported monthly to the Board of Trustees and hospital leadership.   Quality “dashboards” were also developed for Critical care services, cardiac services, and the department of Surgery.   The role of the Medical Executive Committee and its subcommittees in driving performance improvement was reinvigorated.  Measurement of patient satisfaction was expanded to ambulatory surgery areas, in a format that complements our existing inpatient satisfaction survey.   

Patient safety continues to be a focus both nationally and at BIDMC.  This year, BIDMC implemented Executive Walk Rounds, where members of the senior hospital administration regularly tour different parts of the hospital to learn of, and rapidly correct, the safety concerns of front-line personnel.    Numerous specific projects have led to safer practices, including:

·       Improved preoperative practices for identifying side and site of surgery,

·       Improvements in the timing and choice of perioperative antibiotics in vascular surgery,

·       Improved compliance with documentation during cardiac arrest and in the maintenance of code carts,

·       Improvements in daily evaluation of ventilated patients, and

·       Improved management of blood glucose among patients undergoing cardiac surgery.

Service quality at BIDMC made significant advances thanks to the efforts of the Service Quality Initiatives Group (SQIG).  SQIG represents a group of employees from a variety of departments who came together to create an institutional training program in service quality.  This training has now been provided to over 500 employees, who consistently report that it has improved the quality of their day-to-day interaction with patients.

We continue to report on measures of quality at BIDMC in relation to the six dimensions of care as defined by the Institute of Medicine:  effective, safe, efficient, patient-centered, equitable, and timely.   Of 18 measures reported to PCAC covering all of these dimensions, 11 demonstrate favorable performance in relation to FY 02, 5 have remained stable at acceptable levels of performance, and one showed an unfavorable trend.  The amount of information is more than can be presented here, but some highlights are summarized below (Table):

Effective:  Perioperative mortality (deaths within 48 hours of surgery) decreased to 0.4% in FY ’03 from 0.5% in FY ’02.  This improvement is more pronounced if the patient’s risk of death from surgery is incorporated into the analysis (Figure 1).     

Safe:  Occurrence of hospital-acquired bloodstream infections decreased slightly in FY03, and the occurrence of falls and medication errors remained stable at a rate below the national benchmark for these events.

Efficient:  Inpatient length of stay remained stable in FY 03, but when adjusted for the population of patients BIDMC appears to be using less hospital days of care than it has in the past (Figure 2).   The occurrence of delays in the hospital and at the time of discharge, as tracked by case management, has decreased.

Equitable:  No standard measures of “equitable care” exist, so we created our own that tracks the availability of appointments for non English-speaking patients. In 82% of cases, the need for a translator affected the wait time for an appointment by less than 10 days.  This is an improvement over the figure of 79% for FY 03.

Patient Centered:  BIDMC continues to place among the top 5% of hospitals using the same phone survey of inpatients, earning us a “five star award” from the survey vendor (Professional Research Consultants).  The percentage of inpatients stating an “excellent” likelihood that they would recommend BIDMC to friends or family has risen from 64% to 66%

Timely:  Constraints on inpatient capacity at BIDMC led to a worsening in the waiting time for admission from the emergency room.  34% of patients waited greater than 6 hours, which was an increase from the figure of 30% in FY ’02.  This has been identified as a priority area for improvement in FY ’04.


 

Key Measures of Performance


Dimension


Measure

Direction of “Good”

FY02 Rate

FY03 Rate

Effective

Perioperative Mortality

0.5%

0.4%

Safe

Bloodstream Infection Rate (per 1000 pt-days)

2.2

2.1*

Safe

Patient Falls (per 1000 pt-days)

2.9

2.7*

Efficient

Length of Stay
(Med-surg)

4.8

4.8

Efficient

Delay days
(percent of inpatient days)

5.4%

5.0%*

Equitable

% outpatients accommodated with translator within 10 days

79%

82%

Patient Centered

% inpatients reporting “excellent” likelihood to recommend

64%

66%

Timely

% Emergency room patients waiting > 6 hours for admission

31%

34%





Goal 4:  Financial Performance:  Achieve or reduce the budgeted deficit of $15.2M through a shared responsibility of every employee and member of the medical staff to reduce expenses and enhance revenue while maintaining quality and service levels.

Summary of Results:

In a year of significant growth and change, the Medical Center successfully accomplished its Financial Performance goal of achieving a consolidated operating loss of no more than $15.2 million.  The good news is that we bettered that goal, closing the year at a loss of $14.6 million from consolidated operations.  The term “consolidated” refers to the fact that this is the sum total of operating performance for three entities:  the BIDMC, the Affiliated Physicians Group (APG), and the Beth Israel Deaconess Hospital-Needham.   In 2003, these three entities had a consolidated operating loss of $14.6 M, $600,000 better than budget and $11.4 M better than FY02.  (Fig 1and 2)

The key to achieving the reduction in our operating losses was a major increase in net patient services revenue (NPSR), largely due to the 8.3% growth in our surgical discharges.  

While NPSR was nearly $30 M higher than FY02, delays in some key physician recruitments as well as some adverse environmental changes (e.g. expansion of cardiac catheterization programs and angioplasty to community hospitals), resulted in a $6.8M shortfall from budgeted NPSR.   On the positive side, revenue cycle improvements continued to yield positive results as evidenced by a continued fall in the days in accounts receivable (Fig 3).  In addition, overall revenue exceeded budget due to better than expected performance in direct and indirect research revenue as well as “other operating revenue” which includes parking, cafeteria sales, and unrestricted philanthropic donations. 

On the expense side, our labor costs exceeded budget largely due to the costs of filling nursing vacancies in the first half of the year with traveling nurses who command as much as a 25% premium over regular employees.  Supplies and expenses were $1.0 M over budget (less than 0.5%) which represents the balance between the rapidly increasing cost of new drugs and technology and the combined efforts of our physicians, administrators, and purchasing around clinical resource management and supply chain improvements.   Moreover, several key facility changes and major work redesign efforts yielded substantial cost savings.   Standard measures of productivity, including FTE’s/occupied bed and cost/casemix adjusted day continued to show year-to-year improvement and compared favorably to local and national benchmarks  (Fig 4 and 5). 

When combined with an “on budget” performance from APG and an operating loss from BID-N that was $600,000 worse than budget, the consolidated operating loss of $14.6 M was on target with the second year of the Recovery Plan and was the second year in a row where the prior year’s operating loss decreased by nearly 50%. 

Another perspective on the financial performance is often referred to as the “bottom/bottom line”.  This number represents the sum of the operating bottom line and certain “non-recurring” events.  In FY 03, the major non-recurring event was the sale of the Kennedy Building.  This sale yielded a net of $25 M which provided important support for meeting our debt covenants.  The ability to successfully complete the sale of Kennedy in a timely manner allowed us to meet these debt covenants while maintaining our cash reserves and committing needed dollars to capital investment in equipment and facilities.

While it is difficult to celebrate another year of operating losses, we are pleased with the “on budget” performance and with the second consecutive year of “beating our numbers”.  We feel that the lessons learned in FY03 and the trajectory of the clinical growth and expense management position the institution well for a return to financial stability and health.