Business challenge

Amid a period of rapid growth, Nor-Lea Hospital District suspected overstaffing and overspending in certain areas but lacked impartial, real-time data to help inform productivity decisions.

Transformation

With IBM ActionOI and IBM ActionOI Practice Insights solutions, the Nor-Lea leadership can precisely measure organizational performance, helping ensure administrators properly staff existing and new services.

Results

Saves USD 600,000 per year

by using accurate, real-time data to address overstaffing issues

Reduced supply costs by more than USD 3 million

to boost its standing among peers nationwide from the 79th to 30th percentile

Empowers frontline administrators and doctors

to increase productivity while helping ensure patients receive high-quality care

Business challenge story

In pursuit of excellence

A nonprofit healthcare organization serving residents of Lea County, New Mexico, Nor-Lea sought to improve its organizational effectiveness and financial performance. Toward this end, the Nor-Lea leadership team enrolled in the Baldrige Performance Excellence Program, a public-private partnership that offers an integrated framework for assessing performance data and comparing it with nationwide standards. The team’s participation in the program depended on its ability to accurately capture and analyze a wide range of performance measures. Given Nor-Lea’s existing benchmarking tools, the task proved more difficult than the team initially imagined.

The organization’s recent and rapid growth compounded the problem. In the span of just five years, Nor-Lea added multiple services and brought its magnetic resonance imaging (MRI) department in-house. Leaders suspected overstaffing in certain areas but lacked the measurement capabilities to confirm that suspicion.

“The data provider we worked with no longer provided us with updated figures, so our benchmarking wasn’t current,” says Lynda Davis, Financial Management Director at Nor-Lea. “That made our organizational decision-making processes very difficult. We felt like we were overstaffed in certain areas, but we couldn’t validate that concern. We wanted to dive into how we were going to budget and staff, specifically when we added a new product line, but without real-time data, we couldn’t do that.”

Misgauging staffing needs can not only result in higher costs but also reduce reimbursements and affect the patient experience. “As a rural health provider, we have to see 2.05 patients per hour worked by our doctors, and that’s a metric that we have massive incentive to hit based on how we are reimbursed as an organization,” Davis adds. “But what’s more, we want to be able to ensure that our patients have a better experience and are getting a higher quality of care.”

By holding our frontline employees more accountable, we can … ultimately provide better care to more people. That’s a real game changer.

Lynda Davis, Financial Management Director, Nor-Lea Hospital District

Transformation story

Indisputable data

To get an accurate reading, the Nor-Lea team required up-to-date data. It also needed to ensure that its benchmarking was both relevant to how the organization operated and applied impartially without any influence of its department heads. That led Davis to ActionOI Practice Insights and ActionOI solutions.

“What we learned throughout this process was that for our benchmarks to be valid, we had to do three things: one, to measure ourselves against peers that were measuring the same way, and two, to ensure the data was current, and finally, to have an impartial way to run and interpret that data so that it couldn’t be manipulated to justify a specific manager’s request, like overstaffing a specific department,” Davis says.

The ActionOI solution provided Nor-Lea leaders with access to one of the industry’s largest databases for comparative benchmarking. “ActionOI allowed us to customize our reports so we could focus on the metrics that not only were the most relevant to our organization but that were indisputable, which would provide a clear path to accomplish our goals,” explains Davis.

Once Davis received these figures, she quickly noticed an opportunity to curb extraneous spending on supplies.

“We discovered our supply costs were way too high. We were in the 79th percentile across the board [as compared with other hospitals in the ActionOI database],” Davis says. “Whether it was us not getting the proper pricing because we weren’t holding the group purchasing organization accountable, or because we were overordering and having products expire and go to waste, we were spending far too much. Once that became clear, we were able to reduce those costs and drop our spending down to the 30th percentile.”

But not every opportunity for savings was as easy to navigate as refining supply orders. Staffing decisions are notoriously sensitive, both for the affected employees and the managers who politic hard to ensure their departments don’t end up short-staffed. Clear and up-to-date reports generated by ActionOI Practice Insight tools allowed Davis to be fully transparent with the organization’s department heads, which helped quickly get them on board with her efforts.

“We met with all the team leaders and showed them all the benchmarking data, which, in turn, set all the staffing goals. That was huge as far as getting the managers buy-in, because the first response we usually hear is, ‘I can’t do this with fewer people,’” Davis says. “Being transparent with our managers and letting them see the reports to understand how they’re staffing — whether it’s the number of their full-time employees, how many contract hours worked, how many overtime hours worked — makes them part of the process, and more likely to see where their department will benefit.”

Results story

Smarter staffing

Once Davis got buy-in from Nor-Lea’s team leaders, the benefits became clear. Since beginning to use ActionOI Practice Insights tools, the Nor-Lea team curbed its overstaffing issue, saving roughly USD 600,000 per year. In addition, the organization reduced supply costs by more than USD 3 million. Able to more realistically assess and staff physician practices, administrators help doctors make the changes needed to see more patients per work hour.

“The most important facet of ActionOI Practice Insights is that it brings transparency into the process; each stakeholder can see everyone else’s reports and those of peer hospitals, so that they understand specifically how we can increase productivity and what role they are playing in the process,” Davis explains. “By providing a clear road map, we can not only alter employee behavior, but with the incorporation of unimpeachable benchmarking data, we can foster a willingness to be more productive in everyone, from department managers to frontline employees.”

It’s easy to implement significant, culture-changing initiatives with the noblest of intentions and still fail. In the real world, administrators often struggle to implement meaningful changes to things like staffing ratios, use of overtime and hospital resource utilization when confronted with operational resistance to change.

That process becomes a lot easier when the administrators have bulletproof data to show nurse managers, physicians’ practice leads and business managers exactly how and where their peers are delivering results at a fraction of the cost.

With that transparency into their detailed performance, Nor-Lea administrators were able to better educate employees and deliver sustained performance improvements.

“By holding our frontline employees more accountable,” Davis concludes, “we can ensure our patients don’t experience long wait times, and ultimately provide better care to more people. That’s a real game changer.”

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About Nor-Lea Hospital District

Nor-Lea operates as a nonprofit, community-based healthcare organization that offers residents in Lea County, New Mexico, quality care delivered with respect. Established 40 years ago in Lovington, it employs more than 450 employees across its healthcare network, which includes a hospital, medical and walk-in clinics, home health services and several specialty centers.

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