An Ambitious Plan to Save Costs

At a time when hospitals are being pressured to do more with less, St. Luke’s Episcopal Hospital, an 864-bed teaching hospital in Houston, is taking steps to improve its operational efficiency, which it expects will allow it to realize significant cost savings, better manage the length of patient stay and improve patient satisfaction. (The hospital is working with GE Healthcare Performance Solutions, Barrington, Ill., in a collaboration that will expand GE’s Patient Care Capacity Management (PCCM) solution that is aimed at improving hospital utilization and capacity management.)

Margaret M. Van Bree, DrPH, CEO of St. Luke’s Hospital and senior vice president of St. Luke’s Episcopal Health System Corp., says that in the era of healthcare reform, health organizations have to change their cost structure. She sees the project as an opportunity to change its fixed cost structure and improve its operational costs. St. Luke’s is early in the process, which began in March and is expected to be completed by late 2012.

While the project is still in the early stages, the hospital has begun to take steps that will allow it to operate more efficiently. It is focusing on factors that affect the patients’ length of stay, the way the hospital purchases equipment, and the ability to operate at a higher percent of occupancy.

For example, the hospital is being wired for a real-time location system that will enable tracking of equipment and patients. This can lead to a reduction of purchasing of hard assets, but also, will give physicians information they can use to make better decisions in how they use their time. “Physicians are busy,” Van Bree says. “If they are going out in the morning to visit their patients and they miss the patient, they will return that night. But that is a lot of time in between.”

In another initiative, the hospital is working on smoothing out the variability of its operating room schedule for elective surgery. Somewhat counter-intuitively, the hospital discovered that operating room schedule had six times greater variability than its emergency room use. ‘We’re trying to smooth out those peaks and valleys, because we staff for a full operating room whether the cases are there or not, and that is a lot of cost,” Van Bree says.

The ability to get a better handle on equipment use and staffing needs will translate into significant cost savings, which St. Luke’s expects to be in the neighborhood of $10 million. But Van Bree says that equally important is patient care quality. More timely patient care will reduce the length of stays, she says, adding that ultimately, this will make the hospital attractive for both physicians and the patients’ families.