November 2007

The following are highlights from this month's edition of SMCS Physician (view entire newsletter here):

A Message from Tom Gagen, CEO

Providing high quality, affordable health care for our patients is our main focus at Sutter Medical Center, Sacramento. Quality with our medical staff certainly is not an issue at SMCS. In the recent issue of Sacramento magazine, more than 80 SMCS physicians were recognized as being the best doctors in the region. That’s more than one-third of the 211 physicians recognized in the magazine. Out of 37 categories, 15 Sutter physicians were crowned "Top Doc" in their respective fields. I want to congratulate all of you for your dedication to your profession and patients. This is very impressive.

In order to provide quality care to all of our patients now and in the future, we must follow sound business principles. By this I mean that we must produce a product that the customer wants at a price they can afford and that is available when they need it. If we were a for-profit organization, we would return our earnings to the shareholders. As a not-for-profit, community-based organization, we reinvest any earnings back into our community and our organization. These critical dollars help us to continue our mission to care for all patients regardless of their ability to pay, to renovate and construct new medical facilities, and to add new technology to enhance patient care. In order to do these things, we need to be good financial stewards.

One particular area that SMCS is focusing on in order to meet our goals is lowering the cost per adjusted patient discharge. Currently it stands at $11,306. This number is derived by taking all the costs it takes to run a hospital and dividing it by the number of patient discharges, adjusted for how sick patients are and outpatient activity.

SMCS’s goal is to lower that to $10,000 by December 2008. We know this is achievable because we met this target in 2006. This target would also place us in the middle of the pack when compared to other similarly sized California hospitals.

Why focus on cost per adjusted discharge? It’s quite logical, really. Many of your current efforts will help lower the cost per adjusted discharge, i.e., our Better, Safer Care Quality initiative, and our challenge to decrease Length of Stay. By working more aggressively to achieve these goals, we stand to incur more cost savings. A simple example is our Quality initiative to eliminate the incidence of ventilator-associated pneumonia. No one can argue that this elimination is great for our patients. It also reduces our costs dramatically. It is estimated that a single case of ventilator associated pneumonia costs us more than $50,000 to treat. The win-win is we improve quality and reduce our costs.

In meeting our $10,000 target, the basic elements necessary to run our organization, such as regulatory requirements, will not change, but all other costs must be examined. We will focus on expense reduction and revenue growth, which includes maintaining CMS (Medicare) core measures and quality, building referral sources, patient, staff and physician satisfaction, etc.

But this is a team effort. What can physicians do during this time to help lower the cost per adjusted discharge? Consider identifying ways to reduce supply costs or make processes more efficient. Reduce Length of Stay by following patient care plans. Every little bit helps, and together we can do it.

Thank you very much for your help. And, again, congrats on being some of the best doctors in the region.