University of MichiganPathology Staff Presentation

February 6, 2009

Presented by:

Doug Strong, Director & CEO, UMHHC

Benefit to the Community

Balance of Excellence

12/11/08

Financial Success

Preparing for the Future

Benefit to the

Community

Quality and Safety

Employer of Choice

Provider of Choice

3

Financial Success

• Solid Overall Financial Position

• Weakening Operating Performance

Financial Success

Note: FY07 – FY09 margins have been restated due to accounting changes.

HHC Net Assets

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09DecYTD

$s

in

Mil

lio

ns

Net Assets OPEB

HHC Operating Margin Trend

0.0%1.0%2.0%3.0%4.0%5.0%6.0%

FY04 FY05 FY06 FY07 FY08 FY09 DecYTD

Margin Goal Actual Margin FY08 w/out OPEB

4

HHC PAYER MIX BASED ON CHARGES (with Margin %)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

FY03 FY04 FY05 FY06 FY07 FY08

Blues/MCare

Medicare

Commercial

Medicaid/Uninsured

-.63% 2.10% 2.79% 7.14%

8.26%8.75%

.20% -0.08%-0.02% -4.40%

-13.71% -23.88%

17.46%24.69%

35.18%35.86%

34.87%-41.84%

-18.68%-25.23% -39.80%

-46.25%-39.52% 35.75%

UMHS Payer Mix Trends by Major Payer Category

UMHS Margin Trends by Public/Private Payer Category

HHC MARGIN PERCENT BY PRIVATE vs. PUBLIC/UNINSURED

-5.2%

-7.5%

-17.3%

-21.8%

6.4%

11.0%

13.7%

18.3% 18.3% 18.2%

2.3%

4.5%5.8% 5.9%

4.2%

-8.4%

-29.7%

1.4%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

FY03 FY04 FY05 FY06 FY07 FY08

Private Payers

Overall

Public Payers/Uninsured

2008 Gross Charges

$1,829 M

$1,567 M

$3,396 M

5

Outpatient Activity Projected to Grow Faster Than Inpatient

INPATIENT AND OUTPATIENT "CASES"

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

7

Financial Success: Pathology

Total Charges

Path Charges as a % of Total Charges

FY07 12.9%FY08 12.0%YTD Dec FY09 11.7%

8

Quality and Safety

• Finalist in AHA-McKesson Quest for Quality Prize Competition, 2008

• Goal to be known as Safest Hospital in the Country

• Growing national reputation for quality and safety

• Leader in many Michigan quality improvement

collaboratives

• Michigan Quality System

Quality & Safety

9

Quality and Safety: Catheter Associated Bloodstream Infection Rate

Trendline

Data includes: NICU, TICU, CCMU, SICU, CICU, TBICU, PICU, PCTU

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Jan-07

Mar-07

May-07

Jul-07

Sep-07

Nov-07

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Rat

e p

er 1

000

cath

eter

day

s

10

Quality and Safety: Ventilator Associated Pneumonia

Data includes: NICU, TICU, CCMU, SICU, CICU, TBICU

Trendline

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Jan-07

Mar-07

May-07

Jul-07

Sep-07

Nov-07

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Rat

e p

er 1

000

ven

tila

tor

day

s

11

Quality and Safety: Surgical Site Infection Rates

Inpatient procedures include: Cardiac Surgery, Peds Cardiac Surgery, C-Section, Ortho Spinal fusions, total hip arthroplasty, total knee arthroplasty, VP shunts, Peds VP shunts, Breast reduction, Colectomy, Craniotomy, and Peds Spinal fusion.

Outpatient procedures include: KEC Ophthy, LSC & EAA

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Jan-07

Mar-07

May-07

Jul-07

Sep-07

Nov-07

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Rat

e p

er 1

00 p

roce

du

res

Trendline

Trendline

12

Quality and Safety: Pathology

Avg=3.28

UCL=3.73

LCL=2.83

2.53

2.73

2.93

3.13

3.33

3.53

3.73

3.93

4.13

4.33

Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08

Mean

TA

T (

days)

Lead (“Turnaround”) Time for All AP Patients Affected by August 2007 Project

Anatomic Pathology

13

Quality and Safety: Pathology

Sample Turn-Around Time (TAT)Percentage of Time TAT not met

August 2007 - December 2008

05

101520253035

Aug OctDec

Feb Apr Ju

nAug Oct

Dec

Aug 07 - Dec 08

Per

cen

tag

e o

f ti

me

TA

T

no

t m

et

RT - 2 hrs IP Stats - 45 mins

OP Stats - 45 mins Total Stats - 60 mins

Chemistry Lab

Target 5% or

less

14

Provider of Choice

• Consistent increase in activity

• Improving patient satisfaction scores

• Strong HCAPS scores

• Improving referring physician satisfaction

Provider of Choice

15

Target: Patient satisfaction mean scores on “care experience” at or above 90

Provider of Choice: Target/Results

Index based on 12-month

rolling average

Charge-Weighted Index including UH, Women's, CVC, Mott/Holden, Ambulatory, and ED

80

81

82

83

84

85

86

87

88

89

90

Jan-04

Apr-04

Jul-04

Oct-04

Jan-05

Apr-05

Jul-05

Oct-05

Jan-06

Apr-06

Jul-06

Oct-06

Jan-07

Apr-07

Jul-07

Oct-07

Jan-08

Apr-08

Jul-08

Oct-08

We

igh

ted

In

de

x

88.1

16

Provider of Choice: HCAHPS Scores

Source: Hospital Compare, August 2008 release

HCAHPS

Discharges from October 2006 to September 2007

UMHS National

(N = 2,578)

COTH Hospitals

(N = 218)

Median 75th Percentile

Median 75th Percentile

How do patients rate the hospital overall?

Patients who gave a rating of 9 or 10 (high)

71% 63% 69% 63% 68%

Would patients recommend the hospital to friends and family?

YES, patients would definitely recommend the hospital

78% 68% 74% 70% 76%

17

Summary Measures of Referring Physicians' Attitudes toward UMHS, 2006 vs. 2008

72.0

80.6

78.777.2

84.984.0

65

70

75

80

85

90

Q17. Your overallexperiences referring

patients to UMHS

Q19. Likelihood to continuereferring patients to UMHS

Q20. Likelihood torecommend UMHS to peers

for their patients

Mea

n S

core

In

dex

(0-

100

Ran

ge,

100

= B

est

Po

ssib

le)

2006

2008

2006: n=10242008: n=1124

Interyear differences are statistically significant at 95% level of confidence

Provider of Choice: Referring Physician Satisfaction

18

Provider of Choice: Pathology

Mlabs Total ChargesFY06 $23,209,575

FY07 $29,639,777

FY08 $28,547,310

19

Employer of Choice

• Successful recruitment and retention,

especially faculty and nurses

• No change in staff satisfaction scores

Employer of Choice

20

Employer of Choice: Successful Nurse Recruitment and Retention

2,517 2,667 2,8683,143 3,292

2,312

0

500

1,000

1,500

2,000

2,500

3,000

3,500

FY04 FY05 FY06 FY07 FY08 FY09

Data reflects all nurses at UMHS (both UMPNC and MVN)

UMHS – Nursing FTEs

21

Target: Employee satisfaction scores will improve by 10%

Employer of Choice: Employee Satisfaction

Mean Score based on 7 point scale

Prior to 2005, scores based on 5 point scale

69.9 70.070.4 70.3

64

66

68

70

72

74

76

78

80

2005 2006 2007 2008

Willin

gn

es

s t

o R

ec

om

me

nd

De

pa

rtm

en

t (M

ea

n S

co

re)

UMHHC Employees’ willingness to recommend department

22

Employer of Choice: Pathology

Pathology Employee Engagement Survey Results

Q36. Willingness to recommend work area to someone looking for a good place to work

•May 2007

•Mean Score = 61.5

•N = 275

•March 2008

•Mean Score = 59.8

•N = 527

23

Benefit to the Community

0

50

100

150

200

250

300

Charity Care &Bad Debt

Unpaid cost ofgovernmentprograms

(Federal, State ,Local)

SubsidizedHealth Services

Programs forthe community

Support ofresearch and

educationmissions

Total

Co

ntr

ibu

tio

n i

n $

Mil

lio

ns

MHA FY06

MHA FY07

10% increase

12% increase

14% increase

37% increase

17% increase

8% increase

Community Benefit using MHA methodology

Benefit to the

Community

24

Benefit to the Community: Pathology

• Pathology Family Charity• Calendar 2007, raised funds to provide $1,000 checks during the holiday season to

31 needy families referred to us by UMHS social workers• Calendar 2008, despite harder economic times, pathology provided, 33 $1,000

checks!

• Pathology sponsored American Red Cross Blood Drive• This year, sponsored a blood drive that generated 66 units of blood, well above our

goal of 58 units. Many of the donors were Pathology employees.

• Laboratory Services provided to Small Community Organizations• Provide laboratory services to numerous small University affiliated organizations and

other community groups where there is no profit margin to justify participation. Where possible, patients insurance is billed, but absent insurance services are provided gratis or at a dramatically discounted cost. Groups supported include:

• Regional Alliance for Healthy Schools (Formerly Health Place 101). 4 schools• University of Michigan Nurse managed Clinics or Related Groups. 7 entities• Washtenaw Community Support & Treatment Services (formerly Washtenaw Co.

Mental Health)

25

Preparing for the Future

• CareLink

• Restructuring of FGP

• New Ambulatory Care Model

• Facility Expansion

• Strategic Facilities Planning

• Destination Programs

• Administrative Integration

Preparing for the Future

26

Preparing for the Future: Pathology

• Replacement and expansion of clinical laboratories

• Expansion of research space

27

Summary of Strategic Positioning

• Focus on mission balance and synergies

• Quality of patient care is differentiator

• Quality of GME is differentiator

• Geographic diversification of sources of patients

• Geographic diversification of location of care provided

• Modify go-it-alone approach

• Increase clinical research disproportionately

• Physical resources will not be the major barrier

• More unified decision-making/prioritization

• Culture of collaboration

Relation to Scope of VisionStrategic Emphasis Depends on

Scope of VisionArea Current Scope of Vision Future Scope of Vision?

Research Education Patient Care

Research Education Patient Care

Local

SE MI

MI

96% MI

Midwest U.S.

U.S.

Global? ? ?

Degree of change will vary by service based on current scope

29

Conclusion

• Strength and progress in most areas

• Financial results need to improve

• Building well for the future

Employer of Choice

Preparing for the Future

Benefit to the Community

Provider of Choice

Quality and

Safety

Financial Success

Financial Success

Preparing for the Future

Benefit to the

Community

Quality and Safety

Employer of Choice

Provider of Choice

30

Appendix

31

Major Factors Influencing Operating Margin

Expense per case

Revenue per case

Activity

Operating

Margin

32

Overall Strategic Questions

1. How large should each of our missions be? What is optimal balance among them?

2. What quality and cost/value positioning will succeed? How can we best demonstrate value?

3. What should be our areas of strategic focus (geography, severity, specialty)?

4. Should UMHS continue a centralized strategy for inpatient beds in Ann Arbor or geographic dispersion of beds?

5. Should UMHS continue “go-it-alone” strategy?

33

Overall Strategic Questions

6. Given planned growth, what alternative models of care are necessary to support it?

7. What strategies of workforce planning should we use to be employer of choice and to recruit and retain best faculty and staff?

8. What emphasis should be placed on clinical research and how can it be nurtured?

9. What emphasis should be placed on innovation and how can it be nurtured?

10. What actions should we take to best prepare for the future (given assumed certainties and uncertainties)?

34

Benefit to the Community

Balance of Excellence• Successful physician and nurse recruitment and retention• Commitment to improve staff satisfaction scores

• Consistent increase in activity

• Improving patient satisfaction scores

• Strong HCAHPS scores

• AHA McKesson Quest for Quality Prize Finalist

• Growing national reputation

• Michigan Quality System

• CareLink (CPOE)• Restructuring of FGP• New Ambulatory Care model• Facility Expansion• Destination Programs

• Solid overall financial position• Weakening operating performance

• Direct patient care for uninsured and underinsured

• Community health programs/services

Financial Success

Preparing for the Future

Benefit to the

Community

Quality and Safety

Employer of Choice

Provider of Choice

35

Michigan Quality System

A uniform process improvement approach to create value from the customer’s perspective by enhancing:

Quality Safety Efficiency Appropriateness Service

Major Areas of Focus

1. Improve access and maximize capacity in all our patient care areas 2. Enhance clinical quality and safety performance 3. Enhance key workforce planning strategies 4. Increase parking and transportation options for employees 5. Improve ambulatory care experience in partnership with the Faculty Group Practice 6. Provide the Ideal Patient Experience

Targets/Results

SERVICE: Patient satisfaction mean scores on “care experience” at or above 90 FINANCIAL: Operating margin at 3% or better QUALITY CARE: Quality and safety measures at or above the 90th percentile of select benchmarks ACADEMIC: All Graduate Medical Education programs will have five-year accreditation; 10% annual increase in clinical

PEOPLE: Faculty/employee satisfaction scores will improve by 10% COMMUNITY: Partner with the community to improve the health of the population

U

MH

HC

Goa

ls a

nd

Ob

ject

ives

Ideal Patient

Experience

Ideal Clinical Practice

Experience

Ideal Faculty and Staff

Experience

research funding

36*Hospital Acquired Infections include: SSI, ICU-Acquired Infections (BSI, VRE), hand hygiene

(C.Diff)

Major Areas of Focus