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CHS SMI Brief _CONFIDENTIAL_ _2009-12-22_.ppt

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CHS SMI Brief _CONFIDENTIAL_ _2009-12-22_.ppt Powered By Docstoc
					“Supply Mix Index”
      (SMI)

      December 22, 2009
  Confidential and Proprietary
Our Objectives Were:
                                             CONFIDENTIAL



• Create a supply mix index (SMI) for the purpose of:
   – “Normalizing” hospital supply expense for benchmarking
   – Identifying key drivers in supply expense
• Easy to understand, use, and applicable to most hospitals
• Compare SMI to CMI
   – Run parallel with current CMI calculation
   – SMI to CMI correlation
• Compare Supply Expense / AD / CMI adj vs SMI adj
   – Instances where supply expense per CMI and SMI do not move in
     the same direction



                 Premier® confidential and proprietary and
            intended solely for the information and benefit of the
                                                                     2
                   immediate recipient and Premier, Inc.
Our Approach
                                             CONFIDENTIAL



• Patient account level detail from 244 Clinical Advisor
  Hospitals that use “procedure” based cost accounting
   – Combined supply, pharmacy, and DME cost
   – Eliminated “outlier” accounts (2 std deviations from the mean)
   – 3.7 million IP accounts were used grouped by MS-DRG
• Calculated supply cost derived SMI weights for each DRG.
• Calculated overall SMIs for ~470 hospitals in CA.
• Included an ability to continually refine / revise supply cost
  per DRG.



                 Premier® confidential and proprietary and
            intended solely for the information and benefit of the
                                                                      3
                   immediate recipient and Premier, Inc.
MS-DRG Case Cost and Relative Weight
                                              CONFIDENTIAL


      MS-DRG
Case Cost Components                                        MS-DRG Weight Calculation

                                   • The Medicare DRG “relative weights” reflect
  Lab, Rad, Other                    a DRG’s approximate average TOTAL cost
                                     compared to an overall average case cost.
                                   • Example:
     Supplies,                             – DRG X has an average total case cost of
     Rx, DME                                 $10,000
                                           – If average total case cost across all DRGs
                                             was $7,500 then
    Nursing Care                           – DRG X would have a weight of 1.3333



     $10,000

                  Premier® confidential and proprietary and
             intended solely for the information and benefit of the
                                                                                          4
                    immediate recipient and Premier, Inc.
MS-DRG Supply Cost
                                                  CONFIDENTIAL


      MS-DRG
Case Cost Components                                                      SMI MS-DRG Weight Calculation
                                                                    •     SMI DRG weights were designed to
                                                                          reflect a DRG’s average SUPPLY
  Lab, Rad, Other                                                         cost compared to an overall
                                                                          average supply cost across all
                                                                          DRGs
                                                                    •     However, DRG SMI weights are
     Supplies,                                                            based ONLY on supply cost per
     Rx, DME                                                              case
                                                                    •     Example:
                                   MS-DRG                                  – DRG X has an average supply cost
                                                                             per case of $3,000
                                Supply Cost Only
                                                                           – If, across all DRGs, the average
    Nursing Care                                                             supply cost was $2,000 then
                                      Supplies,                            – DRG X would have an SMI weight
                                      Rx, DME                                of 1.5000
                                                                    •     NOTE: SMI weights cannot be
                                                                          directly compared to CMI weights.
     $10,000                           $3,000
                      Premier® confidential and proprietary and
                 intended solely for the information and benefit of the
                                                                                                              5
                        immediate recipient and Premier, Inc.
A DRG Example => CMI vs SMI Weight
                                                CONFIDENTIAL



MS-DRG 473:                                                   MS-DRG 280:
(Cervical Spinal Fusion w/o CC/MCC)                           (AMI w/MCC)

 – Significant supply cost                                      – Minimal supply cost
   ($7,935 average)                                               ($1,586 avg)
 – MS-DRG weight of 1.9446                                      – MS-DRG weight of 1.7391
 – SMI weight of 3.8595                                         – SMI weight of 0.7714


                                    DRG 473 vs 280
                                      CMI 1.12x
                                      SMI 5.00x
                    Premier® confidential and proprietary and
               intended solely for the information and benefit of the
                                                                                            6
                      immediate recipient and Premier, Inc.
Hospital Composite (n=244)
                                               CONFIDENTIAL



              Volume and Supply Cost by Med / Surg Type

 • Surgery is 30% of IP volume                                • But 74% of supply cost
     Volume by Medical / Surgical                                          % of Supply Cost by Medical /
               Type                                                               Surgical Type
       SURG                                                                                       74%
                                                                       80.0%
        30%
                                                                       60.0%
                                                                       40.0%      26%
                                                                       20.0%
                                                                       0.0%
                                 MED
                                                                                  MED             SURG
                                 70%




                   Premier® confidential and proprietary and
              intended solely for the information and benefit of the
                     immediate recipient and Premier, Inc.
Hospital Composite (n=244)
                                               CONFIDENTIAL


         Average Supply Cost and SMI by Med / Surg Type
 • IP Surgery supply cost per      • Weights – Simply another way
   case is 6.75 times greater than   to represent averages.
   the medical average.
         % of Supply Cost by                                                    SMI by Medical /
        Medical / Surgical Type                                                  Surgical Type
   $6,000                         $5,102
                                                                       3.0000                 2.4815
   $4,000
                                                                       2.0000
   $2,000     $756
                                                     Same              1.0000      0.3678
      $0                                                               0.0000
              MED                  SURG                                            MED        SURG




                               So What?
  By converting dollar averages to weights we can make comparisons
  across hospitals.
                   Premier® confidential and proprietary and
              intended solely for the information and benefit of the
                     immediate recipient and Premier, Inc.
Hospital Composite (n=244)
                                                                                         CONFIDENTIAL


                               Inpatient Supply Cost by Service (i.e., MDC)
                          54% in Circulatory (MDC 5) and Musculoskeletal (MDC 8)

                                                          % of Overall IP Supply Cost by Major Diagnostic Category (MDC)


30.0%                               27.8%                 27.4%

25.0%

20.0%

15.0%

10.0%
                             5.9%           6.6%
        4.3%                                                                                                                                                                                                             3.8%
5.0%                                                                              2.5%                    2.7%                            3.2%
                                                   2.3%                   1.8%                    1.5%                            1.5%
                                                                  1.2%                    0.5%                    1.3%    0.8%                    0.6%            0.7%            1.0%    0.5%                   1.2%
               0.1%   0.4%                                                                                                                                0.2%            0.0%                       0.2%
0.0%




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                                             Premier® confidential and proprietary and
                                        intended solely for the information and benefit of the
                                               immediate recipient and Premier, Inc.
Hospital Composite (n=244)
                                                                                                                                                                                                          CONFIDENTIAL


               Inpatient Supply Cost by Med / Sug - MDC
    • Within MDCs are both Medical and Surgical DRGs.
    • The Surgical DRGs within MDCs 5 and 8 represent 51%
      (24%+27%) of total IP supply cost.


                                                                                                                                                                         % of Supply Cost by Med / Surg Flag by MDC

30.0%
                                                                                                                                                                                                                                                                                                                                      27%
                                                                                                                                                                                                                                                                                                        24%
25.0%

20.0%

15.0%

10.0%
                                                          5% 4%                                                                                                                                                                                                                                                   4%                                                                                                                                                                                                           4%
5.0%                                                                        2%                                        2%                      3%
                               2%                                                    1% 1% 1% 1% 1% 0% 0% 1% 1% 1% 1%                                  1%                                                                                                                                                                   1%                              1% 1%
        0%                              0% 0%                                                                            1% 0% 0% 0% 1% 0% 0%    0% 0%                                                                                                                                                                                          1% 1% 1% 0%       0% 0%
                                                                                                                                                                                                                                                                                                                                                                        1%
                                                                                                                                                                                                                                                                                                                                                                           0% 0% 0% 0% 0% 0%
                                                                                                                                                                                                                                                                                                                                                                                             1%
0.0%




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      SURG-OR Proc Unrelated
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               SURG-PRE
        **-OR Proc Unrelated
                               MED-01
                                        MED-02
                                                 MED-03
                                                          MED-04
                                                                   MED-05
                                                                            MED-06
                                                                                     MED-07
                                                                                              MED-08
                                                                                                       MED-09
                                                                                                                MED-10
                                                                                                                         MED-11
                                                                                                                                  MED-12
                                                                                                                                           MED-13
                                                                                                                                                    MED-14
                                                                                                                                                             MED-15
                                                                                                                                                                      MED-16
                                                                                                                                                                               MED-17
                                                                                                                                                                                        MED-18
                                                                                                                                                                                                 MED-19
                                                                                                                                                                                                          MED-20
                                                                                                                                                                                                                   MED-21
                                                                                                                                                                                                                            MED-22
                                                                                                                                                                                                                                     MED-23
                                                                                                                                                                                                                                              MED-24
                                                                                                                                                                                                                                                       MED-25
                                                                                                                                                                                                                                                                SURG-01
                                                                                                                                                                                                                                                                          SURG-02
                                                                                                                                                                                                                                                                                    SURG-03
                                                                                                                                                                                                                                                                                              SURG-04
                                                                                                                                                                                                                                                                                                        SURG-05
                                                                                                                                                                                                                                                                                                                  SURG-06
                                                                                                                                                                                                                                                                                                                            SURG-07
                                                                                                                                                                                                                                                                                                                                      SURG-08
                                                                                                                                                                                                                                                                                                                                                SURG-09
                                                                                                                                                                                                                                                                                                                                                          SURG-10
                                                                                                                                                                                                                                                                                                                                                                    SURG-11
                                                                                                                                                                                                                                                                                                                                                                              SURG-12
                                                                                                                                                                                                                                                                                                                                                                                        SURG-13
                                                                                                                                                                                                                                                                                                                                                                                                  SURG-14
                                                                                                                                                                                                                                                                                                                                                                                                            SURG-16
                                                                                                                                                                                                                                                                                                                                                                                                                      SURG-17
                                                                                                                                                                                                                                                                                                                                                                                                                                SURG-18
                                                                                                                                                                                                                                                                                                                                                                                                                                          SURG-19
                                                                                                                                                                                                                                                                                                                                                                                                                                                    SURG-21
                                                                                                                                                                                                                                                                                                                                                                                                                                                              SURG-22
                                                                                                                                                                                                                                                                                                                                                                                                                                                                        SURG-23
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  SURG-24
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            SURG-25
                                                                                                   Premier® confidential and proprietary and
                                                                                              intended solely for the information and benefit of the
                                                                                                     immediate recipient and Premier, Inc.
  Hospital Composite (n=244)
                                                                                                                                  CONFIDENTIAL

                                   MDC 5 - Surgery
                    SMI by DRG for the surgical DRGs within MDC 5
         Many circulatory surgery DRGs have above avg supply cost (SMI >1.0)

                                                                                                                           SMI for MDC 5 Surgical DRGs

30.00
        28.4



25.00




20.00


                                                  15.2
                                                         14.614.6
15.00                                                                      13.5
                                                                    12.7          12.9


               10.0
10.00                             8.8
                      7.4                                                                                  7.6                                                                             7.4
                            6.6         6.7 6.5                                          6.5
                                                                                                                 5.7 5.3
                                                                                               4.4                               4.7         4.7                           4.5                   4.4
 5.00                                                                                                3.9                   3.9                     4.1                           4.1 3.9
                                                                                                                                       3.4                                                                                                               3.3 2.8
                                                                                                                                                         2.6                                           2.9 2.9                                                   2.5
                                                                                                                                                                                                                 2.1 2.3 2.0 2.3 2.1 1.7
                                                                                                                                                               1.5                                                                       1.4 1.0                       1.3 1.1 0.9 1.4
                                                                                                                                                                     0.8                                                                           0.5
 0.00
        215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264




                                                                 Premier® confidential and proprietary and
                                                            intended solely for the information and benefit of the
                                                                   immediate recipient and Premier, Inc.
   Hospital Composite (n=244)
                                                                                                      CONFIDENTIAL


                                             MDC 5 - Surgery
                            % of Cardiac (MDC 5) surgical supply cost by DRG
                        DRGs (227, 247) represent 27% of cardiac surgery supply cost

DRG 227 - CARD DEFIB IMP WO CARD CATH WO MCC
DRG 247 - PERC CV PROC WDRUG-ELUT STENT WO MCC                                     % of Total MDC 5 Surgical Supply Cost by DRG

 0.18

 0.16                                                                                                                                                        15%


 0.14
                                                                  12%
 0.12

 0.10

 0.08

 0.06                                                                                                                                                                   5%
                                                                                                4%                4%                          4%        4%
 0.04                       3% 3%                                                          3%             3% 3%                          3%                                       3%
             2%                                              3%
                                              2%        2%                                                                          2%                                                 2% 2% 2%
                                         1%        1%                                                2%                                                            2%
 0.02             1%                1%                                                                                                             1%
                                                                        1% 1%                                          1%                                                    1%                                                1%
        0%             0%                                                       0% 0% 0%                                    0% 0%                                                                 0% 0% 0% 0% 0% 0% 0% 0% 0%
 0.00
        215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264




                                                        Premier® confidential and proprietary and
                                                   intended solely for the information and benefit of the
                                                          immediate recipient and Premier, Inc.
A Premier Member vs Hospital Composite
                                                                                      CONFIDENTIAL


      Example Hospital volume by MDC vs Hospital Composite
• Example Hospital SMI ~ 1.14
• Orthopedics (MDC 8) represents a much higher percentage of the
  example hospital total volume (blue bars) than the composite.
• However, hospital has a much lower relative cardiac (MDC 5) volume.

                                    Member Hospital % of Total Volume vs Hospital Composite by Major Diagnostic Category (MDC)
                                                               (Note - Displayed by MDC# - SMI Weight)




18.0%
                                    15.5%
16.0%
14.0%                                                                                               12.8%
12.0%                                                                                                       10.8%
                             8.7%                         9.2%
10.0%                                       8.3%
8.0%
        5.6%
6.0%                                                                           3.9%                                                      3.8%
4.0%                                               2.7%                 2.9%                                                      2.7%
                                                                 2.1%                        2.2%                                                                    1.8%
                      0.9%                                                                                          1.0%   0.8%                 0.9%   1.3%
2.0%           0.1%                                                                   0.6%                                                                    0.0%          0.2%   0.2%   0.5%   0.4%
0.0%




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                                          Premier® confidential and proprietary and
                                     intended solely for the information and benefit of the
                                            immediate recipient and Premier, Inc.

				
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