At a Glance
Over the course of 35 weeks working with Renoir, a hospital achieved the following results:
- Reduction in Length of Stay by more than 9%
- Savings more than USD 1 million in Supply Chain
- Behaviour change in management, from passive to active supervision
- Reduction in inventory level by at least 15%
Background
The client is a private, tertiary care hospital, which has distilled around forty years of experience in hospital operations and administration. Its world-class healthcare complex serves some 40,000 inpatients and 380,000 outpatients a year with a medical staff comprising over 1,000 physicians, all of whom are experienced, recognised and established experts in their various fields of specialisation.
The Challenge
Although the client had enjoyed a healthy growth and margin for several years, they wanted to ensure a stronger position as a leader in a highly competitive market. They also wanted to challenge themselves to achieve a superior return on investment for its shareholders.
As a result, Renoir Consulting was engaged to lead them through a project that dug into areas such as Operations Excellence, Supply Chain, Case Mix and a hospital-wide Management Control System.
Renoir’s analysis found that core elements of many of the client’s processes were in place, but not well managed – for example, its admission and discharging processes and shop floor control systems. In addition, the findings concluded that:
- Systems lacked productivity and cost efficiency indicators
- Management lacked proactive supervision
- Span of control was low in crucial areas
Additionally, cultural findings concluded the following:
- Individuals attached very little importance to understanding and meeting the requirements of customers – both internally with staff and externally with patients
- Low accountability among departments resulted in problems being seen as caused by other teams and not as their own responsibility
- Inefficient organisation structure led to problems with decision-making, a lack of clarity of responsibilities among departments and poor collaboration
What We Did
The project was a 35-week program, with a commitment of a minimum financial improvement of close to USD 1 million. The project structure was comprised of a steering committee headed by the client’s President & CEO along with five ‘Management Action Teams’ (MATs) focused on Operational Efficiency, Supply Chain, and Hospital Management Control.
Supply Chain
With Renoir’s help, the client repositioned purchasing to actively pursue cost down opportunities and vendor agreements resulting in improved supply chain performance. Additionally, it installed a management control system to ensure sustainability of these results long-term.
It improved department issuance planning and stock availability, and improved communication between functional departments to ensure stock outs were addressed to prevent occurrences. Guidelines were also established for the purchasing of new capital expenditure equipment to actively identify cost down opportunities. A committee was then installed to review equipment return on investment and marketability, ensuring the hospital’s best interest would always be protected.
Length of Stay
Installation of a Management Control System was completed to monitor and identify operational issues that were affecting care plans, with corrective actions to address the root cause. As a result, the hospital achieved its lowest length of stay in over three years.
Hospital Management System
Together with the Renoir team, the client installed Monthly Departmental Balanced Scorecards throughout the hospital to improve visibility and accountability of its departmental KPIs. Targets, actual data, variances and action items on variances were also readily available on the scorecards.
Case Mix
We established market share, market growth and an index of average revenue per procedure as compared with competing hospitals. The project also established a matrix which enables the user to prioritise which cases or groups of cases to attend to first. The use of the data and the prioritisation matrix now facilitates the creation of strategic action plans.
The Results
In summary, the client’s project with Renoir has established a control and review framework within the organisation, with an emphasis on effective management that focuses on cost savings and productivity. This structure not only captures and manages the tangible indicators, such as clinical audit and compliance to formulary, but also the intangible indicators such as information organisation and human capital.
Prime business processes for excellence with a Management Control System.
