Saving Health Care From Hospitals
Eugene Litvak may be the Stealth Bomber of the U.S. hospital industry.
Litvak, a former Soviet industrial engineer and Harvard adjunct professor, has been flying under the national radar for more than a decade with his tough-love message of efficient hospital operations management and focused process improvement.
Litvak and his Newton, Mass.-based Institute for Health Care Optimization (IHO) have been warning employers, payers and hospital executives that recent federal quality and patient safety projects are doomed to fail unless hospitals change their core culture.
That’s an unpopular message when the federal Centers for Medicare and Medicaid Services (CMS) is laying $218 million through its Hospital Engagement Networks (HENs) project. The HENs project is a public-private partnership supporting 26 hospital organizations that represent 4,100 U.S. hospitals in their efforts to reduce hospital-acquired conditions by 40 percent and cut unnecessary readmissions by 20 percent over two years.
Litvak believes that understaffed hospital wings are fertile grounds for medical errors. He contends that unless hospital overcrowding, emergency department overcrowding and the stress on they put on overworked nurses and physicians are addressed, advances made in reducing catheter line associated bloodstream infections, pressure sores and other hospital-acquired conditions cannot be sustained.
The Health Research and Educational Trust of the New Jersey Hospital Association, one of the 26 HENs, has concurred with Litvak's strategies and hired him to apply his methods on a broader regional scale.
Litvak estimated that if his methods were adopted in all New Jersey hospitals, they could save $300 million to $6 billion annually. Nationally, he predicts that if U.S. hospitals embraced his practices, they could reap annual savings of $150 billion, about $1.5 trillion over 10 years. Much of that is Medicare money.
“That’s more than the cost of health care reform,” he said. “There is no need to truncate Medicare if we do this.”
Medicare, which serves 49 million beneficiaries, is projected to spend $566.7 billion in fiscal year 2012, according to the Congressional Budget Office. In 2011, Medicare accounted for 29 percent of total national spending on hospitals and hospitals accounted for 35 percent of all Medicare spending. Medicare payments for inpatient hospital care are expected to grow by nearly 5 percent this year and Medicare payments to hospitals for outpatient and inpatient services are expected to rise to $175.6 billion.
Harvey Fineberg, M.D., president of the Institutes of Medicine, wrote in the New England Journal of Medicine in March that waste continues to plague hospitals. Fineberg pointed to an IOM report estimating that health system waste totals $765 billion annually, or about one third of total health expenditures.
He wrote that hospitals need to rely more on systems engineering and operations management research to smooth the flow of patients and cited Litvak’s IHO as an industry leader. “Hospitals that apply systems engineering to scheduling and resource use can save many millions of dollars individually and billions in the aggregate, reduce overcrowding, and improve staff satisfaction and performance.”
Survival of the Fittest
While the CMS has required HENs to address core culture issues that could slow or prevent the rapid adoption of infection reducing practices, Litvak said he doesn’t believe those requirements go far enough.
“New Jersey was the only hospital association that chose to tackle this,” Litvak said. “The others didn’t want to touch this hot potato. They’re leaders in the country in many measures already. But they said they cannot fully achieve their goals unless they stop putting their systems under stress. That’s why their HEN application was absolutely different. Too many hospitals believe they can have their cake and eat it, too.”
While Litvak’s company has achieved impressive results at some of the nation’s top hospitals--Mayo Clinic Florida, Johns Hopkins Hospital and the Children’s Hospital of Cincinnati--he’s far from an industry name. That could change, through, if he is successful in his work with New Jersey hospitals.
If the world of hospital operations science was a TV crime procedural, then Eugene Litvak would play Lt. Horatio Caine, only with a thick Ukrainian accent and fewer cheesy one-liners than his red-haired “CSI Miami” counterpart. Like CSI’s Caine, Litvak, 62, and his IHO probe for clues to solving mysteries. Only the IHO operations management experts plumb hospital practices for obstructions clogging the smooth flow of patients. No DNA samples are taken.
For decades, American hospitals have grappled with capacity issues that manifest themselves in varied ways: crowded emergency rooms with long waits, patients leaving EDs without being treated, ambulance diversions and a lack of hospital beds when ER patients require admission.
And for years the solution seemed clear to hospital executives and boards: hire more doctors and nurses, build bigger emergency departments and add more inpatient rooms. So hospitals went on a record building boom at a cost of $1 million to $2 million per bed. But facing escalating costs, tight capital and declining reimbursements from government and commercial payers, building their way out of bed shortages is no longer an option for many hospitals.
In addition to the ED troubles, hospitals also face nurse burnout, high overtime costs and dissatisfied patients hammered by long waits and escalating health care costs.
Hospitals, which account for 34 percent of the $2.6 trillion in annual health care spending, also are treating growing numbers of uninsured patients and face declining reimbursements and tight access to capital.
But Litvak proposes neither funding cuts nor building booms as potential solutions. He and his IHO partner, anesthesiologist Michael Long, M.D., were among the first to discover that the capacity problems in hospital EDs had less to do with unexpected surges of emergency patient volume and more to do with an intransigent hospital culture.
Surgeries are among the most profitable hospital business lines and support less lucrative ones, so hospital executives always aim to appease surgeons. Most surgeons perform procedures only one or two days per week, often clustering their patients on Tuesdays or Wednesdays. It’s on those days that hospital EDs get overcrowded, because those planned surgery patients are taking up beds and operating room space that prevent newly admitted ED patients from getting a bed. And often the reverse occurs, with scheduled surgeries getting canceled or postponed by arriving emergency patients, causing backups and delays downstream.
“Hospitals are becoming like parking lots on a concert night: they’re full, but the traffic’s not moving,” he said. “That’s because we’re sending our cars out in clusters instead of steadily.”
Litvak said when patient demand exceeds capacity it stresses the entire system. “When that demand is less than capacity, we have waste. Our hospitals are moving constantly from waste to stress and stress to waste,” he said.
And patients are left to suffer the consequences.
John Chessare, M.D., president and chief executive officer of the Greater Baltimore (Md.) Medical Center, said hospitals need to resolve staffing issues or face greater scrutiny from health care regulators and plaintiff attorneys for patient injuries and deaths. Chessare said a 2011 New England Journal of Medicine study found up to a 6 percent increase in patient mortality when a hospital unit is understaffed for an entire day, a risk that grows to nearly 20 percent if that patient is hospitalized for three days in an understaffed unit. “When nurses are overloaded, statistically patients will do less well and mortality rates will rise,” Chessare said.
Litvak and IHO work with hospitals to smooth scheduling and make staffing more predictable, efficient and less costly. He recommends spreading out surgeries throughout the week, rather than clustering them on a few days and recommends that hospitals offer separate operating rooms for planned and emergency surgeries.
Litvak’s schedule smoothing methods have been endorsed by the Joint Commission, Institute of Medicine, American Hospital Association and the Leapfrog Group, as well as several provider associations. So where did Litvak hone those skills?
He is the only child of a Kiev electrical engineer and an attorney who earned his doctorate degree in operations management from the Moscow Institute of Physics and Technology, the “M.I.T. of Russia.” He was a Soviet ‘refusenik’ who was fired when he and his computer programmer wife sought exit visas to leave his homeland in 1978. The Litvaks waited and struggled for 10 years before permission was granted.
His work is testimony to the old adage that just because an idea is good it doesn’t mean it will become quickly accepted. He said working within the onerous Soviet bureaucracy prepared him for the entrenched bureaucracies of American health care.
“I understand how they think,” he chuckled.
Litvak employs process improvement techniques long championed by carmakers, hotel and fast food chains to manage their businesses more efficiently. His brand of operations management improves patient flow, a term called “throughput.”
Using terms like “queuing theory” and “artificial variability,” he can easily sound like the low-level Soviet apparatchik he once was. But his assumptions have been tested in the marketplace, from surgical operating rooms to emergency departments.
Pamela Thompson, president of the 8,000-member American Organization of Nurse Executives (AONE), said what Litvak brings hospitals is the science of industrial engineering from a productivity perspective.
“He understands the interplay between the science behind appropriate staffing and the people trying to do the work.”
The 500-bed Cincinnati Children’s Hospital Medical Center, produced dramatic results using Litvak’s methods. Scott Hamlin, the hospital’s chief financial and administrative officer, said Litvak demonstrated that overcrowding had very little to do with seasonality and everything to do with hospital practices.
“He helped us see that our operating rooms, intensive care unit and emergency department are all connected and bottlenecks in one lead to delays throughout the hospital.”
Hamlin said his hospital saved roughly $137 million in avoided construction costs, grew revenue by $100 million through savings and efficiencies and cut operating room overtime, all while growing patient census from an average of 76 percent to 91 percent.
Inefficiency and waste in hospitals impact Medicare spending, but also tax employers.
Helen Darling, president and chief executive officer of the National Business Group on Health, said employers can no longer afford to subsidize unlimited hospital expansion. Darling said the U.S. already has the most expensive health care system in the world.
“It’s riddled with flaws and inefficiencies,” she said. “And it’s killing business and driving jobs out of the country. Dr. Litvak has been very successful in some great hospitals with his process re-engineering.”
--By Mark Taylor/For The Medicare NewsGroup