Case study: How Hill Country Memorial linked quality and finance
Frugal spending and an academic approach to planning helps hospital earn high honors.
Photo of Hill Country Memorial Hospital from Facebook
Mike Reno, chief operating officer at Hill Country Memorial (HCM)—an independent nonprofit hospital in Fredricksburg, Texas—says no specific initiative resulted in his hospital receiving a 2014 Malcolm Baldrige National Quality Award. Rather, he said, “multiple initiatives done around financial, quality and service came together” and helped the organization win awards like Baldrige.
“We’re wise stewards of money. This is a nonprofit. We make sure to be strategic and careful about how we spend money. We spend frugally. Better quality patient satisfaction and financial results produce better cash flow,” he explained.
[Also: How Baldrige winner Baptist Health uses predictive analysis]
Chief financial officer Mark Jones agrees and says the hospital’s continuous improvement efforts presaged the Baldrige Award. “We’ve looked at methodologies and best practices for 10 years. Baldrige defines a process to do this in multiple areas.”
Indeed, Baldrige Award criteria outlines seven processes in leadership, strategic planning, customer focus, measurement, analysis, knowledge management, workforce and operations focus. A study of six organizations that won two Baldrige Awards pegged the median revenue and job growth between awards 93 percent and 66 percent, respectively, with job growth significantly higher than average.
Strong core metrics
HCM bases its financial measures on seven elements including net operating income, return on investment, days of cash on hand, equity financing ratio, cash flow to total debt, average age of patient and replacement viability. From 2010 to 2013, the hospital’s cash-flow-to-debt ratios went from 50 to 60 while cash- and investments-to-debt ratios more than doubled from less than 1.5 to more than 3. Net income to $20 million and in-and out-patient market share during the same period.
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Named to Truven Health Analytics’ list of the “Top 100 Hospitals” for the past three years, HCM places among the top percent nationally in patient and physician satisfaction. The hospital also out-performs every Texas hospital for Value-Based Purchasing, the quality ranking of the Centers for Medicare & Medicaid Services.
“We’re data driven to ensure best results. We constantly review data and are not shy when there’s an opportunity to do better. We go after improvement when we’re not, at least, in the 90th percentile in quality and safety,” explained Reno.
Data keeps voluntary employee turnover at HCM in the top 25 percent of hospitals nationwide because, Reno said, “people want to work for a high-quality, process-based organization.” Added Jones “We share scores so (employees) feel engaged in the process.
Optimizing frontline staff increased HCM’s operating room capacity by almost 8 percent said Jones.
“We had daily huddles to identify issues—like instrumentation sets to be built or patient prep—little things that impact delivery of care. On the backside, we engaged employees in solutions to overcome barriers. Because we were more efficient, we were able to add more than 40 surgical days without adding resources,” he said.
Community provides the financial cornerstone for HCM, Jones said. “The community donated money to start this hospital. So, there’s a real sense of ownership. The focus on patients keeps us vigilant and gets us [high] patient satisfaction scores.”
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