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Zero-Based Budgeting

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Hospital transformation through zero based budgeting

PowerPoint presentation. The Board of Directors of Windsor Memorial Hospital has hired you to be their zero-based budget consultant. Specify how Windsor Memorial Hospital can implement a zero-based budget and provide your recommendations to the Board of Directors of the Hospital. Explain the benefits of implementing your recommendations and justify why you are making these specific recommendations.

Your paper must include an introduction, thesis, and conclusion. Your paper must be four to five double-spaced pages in length (excluding title and reference pages) and formatted according to APA style as outlined in the Ashford Writing Center. Utilize three scholarly and/or peer-reviewed sources (excluding the course text) that were published within the last five years. Cite your sources within the text of your paper and provide complete references for each source used on the reference page.

Hospital Transformation through
Z B d B d tiZero Based Budgeting

Windsor Regional Hospital
Medical Programs/Departments Orientation Session
June 18 & 19, 2008

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AgendaAgenda

Project Background & ObjectivesProject Background & Objectives

Organizational Transformation Through ZBB

Improving Performance of the Organization

Medical Programs/Departments Workshops/Workbooks

Project Organization

Project Schedule

Questions

BackgroundBackground

U d t d th i i ti t l t ffi d Unprecedented growth in programs, services, patient volume, staffing and
facilities; now $270 million in revenues and activity

Growth has resulted in operating losses and a working capital deficit of
i l $55 illiapproximately $55 million

WRH has worked hard to significantly reduce operating costs:
− From 26% higher than expected cost per weighted case five years ago
− To only 10% above expected cost per weighted case currently
− But, this is still a problem for negotiations with LHIN and MOHLTC

WRH must continue to transform operations to achieve efficienc

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breakthroughs that will provide additional cost reductions

Zero Based Budgeting (ZBB) provides a tool to rethink approaches to service

delivery to reduce costs

Zero Based BudgetingZero Based Budgeting

Historically hospital budgets have been set based on adjustments to the Historically, hospital budgets have been set based on adjustments to the
budget for the prior year

After several years, budgets don’t necessarily reflect what is currently needed
if they are based on:if they are based on:
− Past operating characteristics
− Past technologies
− Past inter-departmental interactions/interdependenciesPast inter departmental interactions/interdependencies

Year over year adjustments:
− May not reflect changes in processes, practices and need
− May be based more on relative success in negotiations during budget processes May be based more on relative success in negotiations during budget processes

rather than on relative need

Building a budget from zero, rather than adjusting last year’s budget:
− Allows it to reflect current requirements and conditions not historical anomalies

Allows it to reflect current requirements and conditions, not historical anomalies
− Provides an opportunity/stimulus to incorporate more current and best practices

Objectives for Transformation Through ZBBObjectives for Transformation Through ZBB

1 Re-think methods of providing care1. Re-think methods of providing care

2. Create more efficient processes; restructure inefficient processes

3. Eliminate unnecessary activityy y

4. Balance workloads; better balance workload with staffing

5. Improve quality of worklife for employees

6. Reduce costs without compromising effectiveness of delivering those
services.

7 A l h l ‘E d C 7. At a minimum, result in hospital operating at ‘Expected Costs per
Weighted Case’

Organizational Transformation
through ZBB

Organizational TransformationOrganizational Transformation

Focus of approach to transformation is to deliver four key results:

Accelerate realization of vision

− Outstanding Care, No Exceptions!

Improve quality of care and customer services

Improve quality of worklife

Reduce service costs

Key Assumptions For BudgetingKey Assumptions For Budgeting

P ti t l ( d i i d f ) ill b i t i dPatient volume (measured in episodes of care) will be maintained:
− No decreases in necessary care
− No increases in elective activity

Patient days will be the same or be reduced:
− More outpatient care in place of inpatient care
− Shorter lengths of stay

Patient mix will be the same

Range of medical services will be the same

W k t t i d f ill b th d dWork content per episode of care will be the same or reduced

Departmental workload will be the same or reduced

No reductions in salary or wage rates for staff

Improving the Performance of the Improving the Performance of the
Organization

Zero Based BudgetingZero Based Budgeting

ZBB f b ildi b d t f “b tt ” th th “t d ”ZBB focuses on building budgets from “bottom up” rather than “top down”

ZBB involves completely rethinking services and requirements rather than
using incremental changes from prior years

ZBB at WRH will involve rethinking and designing anew the approaches to
providing and supporting care so as to:
− Minimize unnecessary activity
− Balance workload and staff

ing

− Maximize efficiency
− Maintain or improve quality
− Minimize costs

New budgets for new approaches to providing and supporting care

Process for ZBBProcess for ZBB

ZBB workshops will be held in 2 streams:ZBB workshops will be held in 2 streams:

Medical Programs/Departments

Hospital Functional CentresHospital Functional Centres

ZBB for Medical Programs/DepartmentsZBB for Medical Programs/Departments

W k ith di l d d i i t ti l d hi f di l Work with medical and administrative leadership of medical
programs/departments to define anew the hospital’s approach to providing
an episode of patient care

I i i l i id i i ZBB WRHInitial session to provide an orientation to ZBB at WRH

A series of 5 workshops with leadership of all medical
programs/departments:

1. Identifying best practices
2. Service delivery models, content of care
3. Workflow, delays, discharge planning
4. Materials content of care and sourcing
5. Review

Following each workshop, representatives of each program/department will

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complete a workbook related to workshop content

Medical Programs/Departments Participating in
ZBB WorkshopsZBB Workshops

Emergency Medicine
Family Medicine
Medicine

Oncology
Ob & Gyn
Paediatrics

CCU
ICU
Surgery

NICU
Psychiatry
Rehabilitation Surgery

Anaesthesia
Rehabilitation
Continuing Care

Other Heads of Service / Medical Directors will support
Programs/Departments in completing workbooks and/or will
support Functional Centres in budget development.

ZBB for Functional CentresZBB for Functional Centres

Work with hospital departments to rethink approaches to service delivery Work with hospital departments to rethink approaches to service delivery,
service interdependencies, staffing and costs

Start with initial session to provide an orientation to ZBB at WRH

A series of 7 workshops for 5 groupings of managers:
1. Identifying best practices
2. Considering services offered
3. Considering service delivery models
4. Considering derivation of departmental workload
5. Considering benefit hours, sick time, etc.
6. Considering materials content and sourcing
7. Defining actions to implement zero based budgets

Following each workshop, Department Managers will complete a workbook

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related to workshop content

Groupings of Functional CentresGroupings of Functional Centres

Patient Care ServicesPatient Care Services

Therapeutic Services

Diagnostic Services

Support Services

Administrative Services

Medical Programs/Departments g p
Workshops/Workbooks

ZBB Workshops/Workbooks for
Medical Programs/DepartmentsMedical Programs/Departments

ZBB will consider all elements of the hospital’s care processes, including:p p , g
− Admission decisions
− Most responsible physician models
− Service delivery models
− Process of care
− Content of care
− Materials content of care and sourcing

W k fl − Work flow
− Delays in care
− Discharge planning

Discharge − Discharge
− Post discharge care
− ALC days

New/changed patient care processes will provide new ZBB estimates of

New/changed patient care processes will provide new ZBB estimates of
workload for hospital Functional Centres

ZBB for Patient Care Programs/Medical DepartmentsZBB for Patient Care Programs/Medical Departments

A series of 5 workshops with leadership of all medical programs/departments:p p p g p
1. Identifying best practices;
2. Service delivery models, content of care
3. Workflow, delays, discharge planning
4. Materials content of care and sourcing
5. Review

Workshops will be led by Hay Group consultants Dr. Isser Dubinsky and Adam Topp

Following each workshop, representatives of each program/department will complete
a workbook related to workshop content

Program/department leadership will be supported by hospital administrative staff

Initial data to support process developed by Hay Group using:
− Discharge Abstract Data/NACRS Data
− Management Information System Data

− Extant literature

Workshop/Workbook 1:
Identifying Best PracticesIdentifying Best Practices

In the first workshop/workbook you will be asked to:In the first workshop/workbook you will be asked to:
Identify the characteristics of high performing medical
programs/departments that might be emulated by WRH

To assist in this process we will provide you with:
Data comparing the performance of WRH medical programs and
departments with high performing hospitals across Canada

Advice on how to contact and query high performing medical programs and
departments to identify best practices that have contributed to their
exemplary levels of performance.

Advice on how to identify examples of best practices from the medical and
administrative literature that can contribute to improved quality and
efficiency of patient care

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Workshop/Workbook 2:
Considering Service Delivery Models & Content of CareConsidering Service Delivery Models & Content of Care

I thi k h / kb k ill b k d tIn this workshop/workbook you will be asked to:
Identify best practices in service delivery that reduce resources used in an
episode of patient care

Determine if care delivery models are optimally using outpatient care as an
alternative to admission (e.g., considering more use of outpatient surgery,
more use of day hospital care, use of clinical observation/decision units rather
than admission for ED patients, rapid follow up clinics/diagnostics for ED
patients rather than admission, etc.)

Continued on next page

Workshop/Workbook 2:
Service Delivery Models & Content of Care ContinuedService Delivery Models & Content of Care – Continued

Determine if the content of an episode of care at WRH is optimal:
− What services are required for all patients?
− What services are required only for selected patients?
− Are there services being provided to patients that might be reduced or

eliminated?

For example, WRH might consider: p g
− Less use of psychology
− More selective use of clinical dietetics, OT, Clinical Nurse Specialists,

diagnostic services, etc.
− More selective (and more intensive) use of discharge planning
− More use of more discriminating standard care plans

Workshop/Workbook 3:
Work Flow; Delays in Care & Discharge PlanningWork Flow; Delays in Care & Discharge Planning

In this workshop/workbook you will be asked to:p y
Identify best practices in work flow to reduce delays in care & reduce ALOS

For example, WRH might consider:
St d d d t / di l di ti th t i t d d t th − Standard order sets/medical directives so that care is not dependent on the
attendance of the physician

− Independent case finding by allied health professionals
A il bilit f ( l t d) di ti i 24/7− Availability of (selected) diagnostic services 24/7

− Priority (morning) access to diagnostic services by inpatients
− Rapid turnaround of test results for inpatients/ED patients

M i f i b h i i− More active care management of patients by physicians
− More immediate assignment of MRP
− Weekend and holiday discharges

− Follow up clinics for “unattached” patients
Continued on next page

Workshop/Workbook 3:

Work Flow; Delays & Discharge Planning – Continued

Id tif h t d i d l i di h ft l ti f

Work Flow; Delays & Discharge Planning – Continued

Identify approaches to reducing delays in discharge after completion of an
episode of acute care

For example, WRH might consider:
− Writing discharge orders that would expedite discharge
− Organizing care for ALC patients that would expedite discharge
− Utilizing a wider variety of post acute care destinations, etc.

Workshop/Workbook 4:
Considering Materials Content of Care & SourcingConsidering Materials Content of Care & Sourcing

In this workshop/workbook you will be asked to:In this workshop/workbook you will be asked to:
Consider the medical surgical equipment, devices, drugs and supplies that
are being used at the hospital:

Wh t i ll i d f ti t ? − What is really required for patients?
− Are there opportunities to be more selective in the use of supplies, drugs,

special diets, devices, etc.?
Are there opportunities to use lower cost medications? − Are there opportunities to use lower cost medications?

− Are there opportunities for standardization?
− Are there ways to reduce unit costs by consolidating ordering?

Workshop 5: Review SessionWorkshop 5: Review Session

Hay Group Consultants will summarize: Hay Group Consultants will summarize:

Actions identified and required to implement the new care processes

Impact of new processes on patient days and functional centre workloadsp p p y

You will be asked to:

Confirm initiatives and potential impact

Project Organization

HayGroup Project TeamHayGroup Project Team

Project Director: Mark Hundert

Medical Departments
Dr Isser Dubinsky

Communication

Project Manager: Irene Petersen Gray

Dr. Isser Dubinsky
Adam Topp

Functional Centres:

Alyssa Montmarquette

Workshop/
Workbook Design

Patient Care Services – Irene Petersen Gray,
Adam Topp

Therapeutic Services – Kelly Jennings

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Paula Kerr

Diagnostic Services – Adam Topp

Support Services – Robert Kimsto

Administration – Robert Kimsto

Administration Robert Kimsto

Project Schedule

Project ScheduleProject Schedule

Week Ending

23-M
ay

30-M
ay

06-Jun

13-Jun

20-Jun

27-Jun

04-Jul

11-Jul

18-Jul

25-Jul

01-A
ug

08-A
ug

15-A
ug

22-A
ug

29-A
ug

05-Sep

12-Sep

19-Sep

25-Sep

O
ngo

ing

Activity

1.0 Project Organization & Planning
2.0 Project Communication

2.1 Initiating Process

2.2 Communications Planning
2.3 Communications Delivery

3.0 Medical Dept. Zero Based Budgeting

3 1 Orientation Session

B
reak W

eek

B
reak

W
eek

3.1 Orientation Session
3.2 ZBB Workshops
3.3 Derive Departmental Workloads

4.0 Dept / Functional Centre ZBB

4.1 Orientation

4.2 ZBB Workshops
4.3 Inter-workshop activities

4.4 Refinement of ZBB

5.0 WRH Zero Based Budgets
5.1Consolidate ZBBs

5.2 Summarize recommendation

5 3 Review & approval

5.3 Review & approval

5.0 Implementation

Medical Programs/Departments
Workshop Dates & TimesWorkshop Dates & Times

Workshop 1: Wed June 25 0700 0900Workshop 1: Wed., June 25 0700-0900

Workshop 2: Thurs., July 10 0700-0900

Workshop 3: Tues., July 15 0700-0900

Workshop 4: Thurs., July 24 0700-0900

Review Workshop: Thurs., July 31 0700-0900

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