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February 20, 2013

Going 'horizontal' transformed a health system

Daily Briefing

Friday's Daily Briefing included a story on Chris Van Gorder's path from security guard to Scripps CEO. Today's issue examines how a new management approach at Scripps has led to major improvements in efficiency.

Scripps Health's new horizontal co-management model has helped the San Diego-based health system save $141 million in just two years, U-T San Diego reports.

According to Scripps CEO Chris Van Gorder, Scripps' five hospitals "were all independent hospitals at one time that, over a period of time, came together as one system, but in many cases they never merged their independent practices." As a result, the hospitals ended up with substantially different approaches to supply purchases, care delivery, and other practices.

Seeking improvement, Van Gorder says, prompted leaders to wonder "what would it look like if we cut our company in half horizontally and took a look at variation." Scripps tabbed several vice presidents to review the organization across all five hospitals, rather than via a traditional top-down approach, and "compare and contrast" how services like cardiac surgery were handled at each facility.

The "bold" shift, which Scripps implemented on Oct. 1 2010, divided the system into four separately managed operational divisions:

  • Corporate Medical Division (includes nursing, quality, research and medical management and physician co-management);
  • Clinical Operations Division (includes clinical support, clinical ancillaries, and clinical service lines);
  • Support Services Division (includes surgery, pharmacy, and supply chain management, facilities design, and construction and support services); and
  • Administrative Services Division (includes finance, human resources, legal, audit and compliance, information services, physician services, community benefit, project management, government affairs, marketing, communications, and philanthropy).

When the model launched, leaders in each of the four divisions began to identify unnecessary variation and redundancies throughout the system—including variations in staffing, practice, use of supplies, patient quality, and physician satisfaction.

For example, the new structure helped Scripps change the way it ran its EDs, which ultimately improved patient triage and saved the system $19 million over three years. In addition, a new, streamlined clinical laboratory to replace two older facilities is expected to save $6 million annually.

Altogether, cutting variations and redundancies generated $141 million in savings over two years—or 2% of the system's total expenses.

Van Gorder credits the system's doctors for much of the progress, noting that physicians have been encouraged to take responsibility and collaborate to ensure care quality (Sisson, U-T San Diego, 2/19).

More from today's Daily Briefing
  1. Current ArticleGoing 'horizontal' transformed a health system

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