Vanderbilt s Transformation Journey
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1 Vanderbilt s Transformation Journey David R. Posch, MS CEO Vanderbilt Hospital and Clinics Executive Director, Vanderbilt Medical Group August 14, 2014
2 Vanderbilt s Transformation Journey: Challenges: Economic, Health Care Reform, Health System Evolution Process: Evolve to Excel Grounding Principles Results, Learnings and the Future! 1
3 Financial landscape for VUMC has shifted dramatically over time There are a number of forces contributing to a decline in revenue at VUMC: US Budget Deficit and Sequestration State decisions ACA Aging demographics Shift to exchanges The total run-rate revenue reduction for FY15 is projected to be $ M Other institutions are experiencing these same pressures: Cleveland Clinic is cutting $330M from $6B budget (~2,500 jobs) Indiana University Health is cutting $1B from $5.7B budget In order to reduce our cost base to more appropriately match our reduced revenue, the Medical Center embarked on the Evolve 2 Excel (E2E) initiative which was comprised of cost savings in both non-labor and labor areas 2
4 VUMC set aggressive goal to address the financial gaps $ M target was established to match the reduction in revenue and align leadership across the medical center around the magnitude of the change Leadership determined a focused reduction period over 6 months in 2013 was preferable to an ongoing reduction process A focused effort would minimize continued uncertainty and should have a lesser impact on the Vanderbilt culture Consulted external partners (McKinsey & Co.) to initially assist in kicking-off the process and establishing meaningful benchmarks, before an internal VUMC team led the entire labor reduction effort 3
5 An internal, cross-functional team was created to leverage expertise across the medical center In under one week, a team was assembled to work full-time on the E2E project. The team was relocated from their every day areas and co-located in an area off the main medical center campus. The team consisted of: IT Quality Academic Dept Administration Medical Center Administration Systems Engineering Strategy Cross-functional team Human Resources Equal Opportunity, Affirmative Action and Disability Services Nursing Administration (Adult and Children s) Informatics Finance (academic and operational) Operations 4
6 Several guiding principles were reinforced for all VUMC leaders during E2E to ensure we preserved our culture At VUMC, Faculty are leaders in all that we do Display enthusiasm, respect & empathy Work for good of the whole, versus ourselves or our own operating units Accept ownership & accountability in public dialogue Role Model Mission Guiding Principles Our commitment to education, research, and patients care is top priority Restructure work in a manner that improves our effectiveness, impact, quality & safety In service to patients, deliver on our Promise & do no harm Trust Communicate effectively and frequently Be honest and transparent Maintain confidentiality Articulate decisions in a manner that displays integrity and fairness
7 Evolve 2 Excel thoroughly and thoughtfully evaluated our operations to improve efficiency and effectiveness Evolve 2 Excel Labor reduction Process Define units The Medical center was divided into a number of areas based on function. Each area was assigned a leader These leaders then determined how to divide their areas into units, based either on function or job code, resulting in 13,150 people mapped to ~450 units Map jobs to the Mission, Activities and End Products (MAE) for each unit Each unit created a robust catalog of the missions, activities, and end products that defined the work they do They then mapped each individuals time to each of the activities in the respective unit These were then summarized at the job code level for each unit Redesign work to create a new streamlined organization structure, carefully selecting roles for elimination More than a 100 leaders across the Medical Center used the MAEs to determine how work could be performed more effectively and efficiently These suggested position eliminations were documented, along with risk mitigation plans, and fully vetted with risk management, quality, other operators and medical center leadership Rank and select individuals in roles selected for elimination Unit leaders, in partnership with HR, assessed and ranked individuals in eliminated positions based on past performance evaluations, disciplinary records, special skills, and years of service 6
8 All proposed changes to workflow underwent extensive review and risk mitigation planning Operators partnered with quality and created risk mitigation plans for medium and low risk proposals. Changes to the work flow deemed high risk were not implemented Review day feedback by unit, Therapies example Stakeholders across the medical center met to discuss potential risks for an entire day, during an Opportunity Review session Equal Opportunity, Affirmative Action and Disability Services (EAD), Quality, Legal, and Risk Management reviewed all proposed work changes Each unit submitted an initial work re-design plan, which clinical chairs and other senior leaders commented on using post-it style feedback during Opportunity Review Day 7
9 Reduction effort, though strenuous, was successful Gap to target Planned, unmet target ($ million) 250 Stretch target Non-Labor September Reduction October Reduction December Reduction January Reductions February-June Commitments Gap FY 2015 savings target
10 Process strengthened VUMC capabilities E2E demonstrated the power of focused effort at the medical center the entire medical center was committed to obtaining results Engaging leadership in honest, direct communication created sense of trust The Project Management Office (PMO) structure used for E2E was new to the medical center, demonstrating the effectiveness of a dedicated, cross-functional project team Unparalleled decision rights given to the PMO PMO managed the traditional project management aspects of the project, while providing operational leadership and subject matter expertise Rank and Select process brought rigor and discipline to the downsizing process that will be incorporated by HR for future eliminations 9
11 10
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