BUSINESS

Karen Hartman

smart strategic planning

for cardiovascular services
Cardiovascular disease remains the top cause of death in the United
States. As the nations elderly population grows, the need for advanced cardiovas-
cular services, in both urban and community settings, v/ill rise exponentially over
the next decade. Hospital C-suite members should put smart strategic planning
for the cardiovascular services service line on the front burner. Hospitals that
implement a cardiovascular program strategic plan can avoid volume erosion and
maintain profitability.

Cardiovascular services can account for up to 4 0 percent of the net revenue of an

AT A GLANCE acute care hospital, regardless of its size or scope of services. Successful cardio-
vascular programs can help make up for revenue declines in a hospital's other
> Strategic planning for
service areas. Hospitals need to quickly react to industry changes by retooling
cardiovascular services
their cardiovascular programs to meet changing needs.
should include formation
ofacardiovascular
advisory committee The number of cardiac and vascular specialty programs is growing nationwide. As
composed ol key some states ease certificate of need regulations, and with continuing efforts to
stakeholders. ensure safe clinical practice in hospital settings, hospitals increasingly are provid-
> The strategic plan ing advanced cardiac and vascular care. As a result, industry competition for the
should include an profitable cardiovascular patient is on the rise. In fact. The Corazon National Survey
internal assessment, for Benchmarking Cardiac Program Performance shows that 64 percent of the 101
external market national participants plan to add services or programs to their cardiovascular con-
analysis, review of
tinuum over the next year, with many focused on the vascular and heart failure spe-
operations, develop-
cialties. The survey also found that 78 percent of respondents are planning new
ment of strategies and
space as a result of facility renovation or expansion. The most commonly identified
initiatives, and a finan-
expansions cited are catheterization labs and beds devoted to cardiac patients.
cial analysis.
> The organization's
mission and vision, as The Need for a Plan
well as its financial Considering the competitive environment and the difficulty involved with creating
situation, need to a progressive, but practical course of action for a large, complex clinical service
be considered in line such as cardiovascular, the best way to outdistance the competition and be on
formulating strategies.
the forefront of industry change is to have a smart strategic plan in place. Effective
planning is critical to the smooth functioning of this vital clinical specialty, espe-
cially when planning for major changes in service offerings or facility design. A for-
mal process can ensure that long-term investments for the cardiac continuum
produce lasting results. But this plan needs to be integrated with the financial plans
of the organization and/or the capital situation of the cardiovascular service line.

36 DECEMBER 2005 healthcare financial management

Hospitals' capital needs include additional hospital
capacity as the elderly population grows, IT upgrades,
and the required amenities o( future cardiac
patients—baby boomers.
Strategic planning should include the formation of a
cardiovascular advisory committee that includes key
stakeholders, such as representatives from adminis-
tration and the medical staff. This dedicated group
needs to commit to attending the facilitation sessions
and to actively and honestly contributing to the
process. This (eat can be difficult to accomplish given
the many opinions and potential barriers that can
arise v^hen a diverse group of administrators and
physicians come together on one project, especially
one that everyone may not support from the start. By
communicating openly and honestly the committee
can go a long way in generating trust and gaining sup-
port. Up-front communication with key stakeholders
can save time and effort and eliminate conflict. Ensur-
ing that all affected parties are informed of any
changes in responsibility and understand how a
change will affect them demonstrates that the leader-
ship is sensitive to everyone's ideas. Arriving at a con-
sensus and documenting the plans can keep a
program on an established path from year to year.
Strategic Planning Milestones
The most successful plans begin with a time line (usu-
ally three to four months) that includes key actions,
individuals accountable, and due dates. The following
milestones should be completed in the strategic plan-
External market analysis. A market share and utiliza-
tion data analysis defining the current cardiac service
area, trending utilization statistics for cardiac proce- LOOKING FOR
dures in the region, predicting population demo- MORE IDEAS?
graphics, and presenting mortality and out-migration
statistics should provide detail for the past three years Healthcare financial
and anticipated changes for the next five years. The executives discuss ways
to improve the hospital's
hospital should use this information to project utiliza-
revenue by improving the
tion and market share, taking into account practice
performance of clinical
and technology changes and population demograph-
service lines in the
ics. The projections should also include any changes
HFMA Executive
expected due to new competitors, outreach opportu- Roundtable Improving
nities, and physician staffing needs. Performance y^ith
Clinical Service Lines
(www.hfma.org/resource/
Integrating the internal and external analyses will
400420.pdf).
help the cardiovascular advisory committee project
volumes for expanded cardiovascular procedures.
Operations review. A smart strategic plan also should
include a review of current operations related to the
performance of cardiovascular services, including an
evaluation of the program and its components and a
The number of open-
review of floor plans to determine the impact of an
heart surgery programs
expansion. This process will identify opportunities for
and catheterization labs
(and sometimes barriers against) change, including
across the United States
staffing, organizational structure, technology, and
has risen dramatically
equipment. The operational assessement should also over the past two
take into account how any changes in services will decades.
GROWTH OF OPEN-HEART SURGERY PROGRAMS, 1985-2002 ^
• OHS S:CathLabs • UPCI

ning process.

Internal assessment. Members of the executive team,

2009
2000
board of directors, medical staff, and management
team should be interviewed by an unbiased party (i.e., 165(
1545 ^

1 • I
an outside consultant) as early as possible regarding 1500
their ideas about the facility's current market situa-
tion, the unique characteristics of the cardiovascular 1079 •
978 •
•I
program, and opportunities for cardiac service line 1000
891 •
•
•1 11
growth or expansion, any operational issues, and

• 11
65ol
commitment to planning goals. These interviews can
•• ••1 •• •II•
help leaders understand the diverse viewpoints
involved. An evaluation of the current competition,
the external market, and internal cardiovascular
500
•1
II 11 •1
11 11 97
operations and a discussion about program goals and
0 - 1=11. •• HH H r—^"^ — 1 — ^ " ^
initiatives should also be addressed with this group. 1985 1992 2000 2004

h i m DECEMBER 2005 37
BUSINESS

affect capacity needs, including beds, cardiac cath
labs, and operating rooms.
This approach is unique because the information con-
sidered relates to volume and uses a formula for cal-
culating capacity lor cardiovascular areas, including
inpatient beds, cardiovascular operating rooms, and
cardiac cath lab. It is important to complete capacity
models for these areas using proiected volumes,
lengths of stay, and any resources required for patient
turnover. The result should be an accurate estimation
Over the past several years, the availability of many
new practices and technologies have led to the redi-
rection of cardiovascular programs. For instance, new
and expensive technology such as 64-slice imaging
equipment and drug-eiuting stents are being
adopted, angioplasty is replacing open-heart surgery
in some cases, an influx of capital is being received
from physician investors (to specialty hospitals in par-
ticular), and angioplasty is becoming available at hos-
pitals without on-site open-heart surgery. With these
market dynamics, some cardiovascular programs are

IMPROVEMENT ol facility levels. For example, the equation for deter- finding their market position has changed dramati-
STRATEGIES mining the space needs and facility design for a car- cally over the past few years.
diac cath lab is:
Strategies for improving (number of procedures X procedure time in As hospitals develop a plan and set a direction, they
performance in cardio-
miriules) + (number of procedures X room need to continually reflect on the committee's vision.
vascular surgery are dis-
turnover in minutes) X inefficiency factor/ What goals are to be accomplished? What is the
cussed in HFf^A's report
cardiac catb lab operating hours per year in desired end result of the initiative? A vision such as
Improving Clinical,
Operational, and Financial
minutes — cardiac catb fabs required attaining top 100 status for cardiovascular services has

Performance in for a goal not only award status, but also optimal clinical
Strategies and initiatives. Aggregated findings from the
Cardiovascular Surgery care, operational efficiency, and patient satisfaction—
interviev/s and evaluation of market, program, and
(www.hfma.org/ and the program's financial performance can con-
operations should be presented to the cardiovascular
Featured Topic/ tribute to or benefit from these positive achievements.
advisory committee. This information then should be
resource/performance_
cv.pdf). analyzed in conjunction with financial plans and used
Identifying a goal is often easier than achieving it.
to develop a strategic plan for cardiovascular serv-
How to reach a goal can be a daunting task, both
ices that includes:
financially and operationally. If cost did not matter,
> A validation of all planning assumptions to gain
most goals would be easy to attain, but given increas-
consensus
ing price tags for technology, qualified staff, and facil-
> Endorsement by key constituents of the hospital and
ity improvements, cost always has to be considered.
medical staff
Indeed, operational and fiscal performance are
> A draft plan for deliberation of strategic direction
closely linked; thus, the strategic plan must be in sync
and priorities
with the capital plan to align a program's financial and
> A comprehensive final plan that reports all findings
operational or performance goals.
and defines the goals, priorities, and recommenda-
tions for the development and growth of the cardio-
Financial analysis. An analysis of costs related to imple-
vascular program
menting the strategic plan is key, so the monetary
> An implementation work plan noting key actions,
commitment required and the ROI should be detailed
costs, and time frames for the endorsed strategies
in a comprehensive pro forma. The pro forma should
integrate the market, operational, and financial
Cardiovasular program strategies may include areas
parameters of a cardiovascular program expansion,
such as leadership, market outreach, physician and
which helps to accurately define the financial invest-
hospital partnering, space planning, and potential
ment required to meet the recommended market
new services. The immediate focus should be on lead-
and strategic objectives. The pro forma uses market
ership, which can be an administrative component or
information, capacity needs, operating requirements,
a physician component or both. Strong leaders are
recommended staffing levels, and the financial
needed to begin addressing strategies and imple-
parameters in tandem with the strategic plan.
menting initiatives.

38 DECEMBER 2005 healthcare financial management

BUSINESS

r SAMPLE CAPACITY GRID

Cath Lab Capacity

Cath Lab Hours of Operation Available Hrs Available Minutes

per Week per Year
Monday 8.0 24.960
Tuesdav 8.0 24.960
Wednesday 8,0 24.960
Thursday 8.0 24.960
Friday 8.0 24.960
Saturday 0.0 0
Sunday 0.0 0
Total Time Available 40.0 124,800

Procedure Times Average Time per Time

Case (Minutes) Lab Cases
Required
Cardiac
Cardiac Cath 35 300 10.500
PCI 90 100 9.000
EP Studies
EPStudv 180 40 7.200
Pacemaker Implants 120 90 10.800
Pacemaker Replacements 60 20 1,200
ICD 150 10 1.500
Peripheral Vascular Procedures
PVDiaqnostic 60 400 24,000
PV Interventions/Diagnostic 180 50 9,000
Total Volume/Time Reauired 1,010 73.200

Room Turnaround Time Average Time per

Case (Minutes)
Total Cases 30 1.010 30.300
Total Time Required - New & Existina Procedures 103.500
Inefficiency Factor 20%

Summary Of Cath Lab Capacity Yearl

Cath Suites Required - Cardiac 0.30
Cath Suites Required - EP Studies 0.25
Cath Suites Reauired-PV 0.45
Total Suites Required 1.0
Assumptions:
> 30-minute room turnover time
> 20% ineHiciency factor applied
> 8 hour per day cath lab, M-F

An operational assess-
ment of cardiovascular
services should take into
account an organization s
capacity needs for each
affected area.
With each initiative that the organization endorses to
the strategic plan, any additional revenues, operating
expenses, and capital investments should be esti-
mated and placed in a pro forma so that the financial
considerations can be tracked. A strategy may
require a separate cost/benefit study to determine
whether it is the right next step for the organization.
For example, if during the planning process, the car-
diovascular advisory committee endorsed partnering
with physicians as an objective, and many options for
partnering existed, the committee would need fur-
ther evaluation ol the type of venture that meets the
vision and the operational and financial needs of both
parties to make an informed decision.
Once a plan for reaching an identified goal has been
developed, the initiatives to be implemented should
be organized along a time line, from the easiest task
to the most complicated. This plan should be reviewed
and updated continually to ensure that the organiza-
tion is on track with the plan, the budget, and the car-
diovascular environment. The cardiovascular
program should be monitored for not only the extent
to which it meets the plan's goals, but also the finan-
cial viability of the service line.

40 DECEMBER 2005 healthcare financial management

 BUSINESS
CASE STUDY: PROVIDENCE HOSPITAL
Like many other acute care hospitals, Providence Hospital, Columbia, S,C,, was
experiencing increased competition, physician changes, and the need for facility
upgrades, A four-month strategic planning process determined the impact of
changing market forces and the optimal positioning of the cardiovascular pro-
gram for future growth and viability and evaluated the existing program compo-
nents and space, along with the efficiency of internal operations and staff
utilization. The strategic plan for Providence Hospital's Heart Institute includes
market, operations, and financial assessments for the growth and development of
cardiac and vascular services at the facility. The financial investment required for
meeting the strategic objectives was established, and the plan was implemented
with realistic expectations and costs in mind.
One of Providence's key objectives was leadership that would commit to a car-
diovascular advisory committee. This committee provided a forum that would
engage the program's key stakeholders to regularly discuss and determine the
strategic position of the program, the clinical success, and any operational and
facility changes. Amid a highly competitive atmosphere for heart care delivery,
the hospital and physicians continue to gain recognition for excellence in cardiac
services. Providence is now the number one volume heart center for open-heart
surgery in the state.
42 DECEMBER 2005 healthcare financial management
Looking Ahead
Leaders need to think strategically, understand both
the big picture and the intricacies of their local mar-
ket, and assume national and local market conditions
will change continuously. Equally important, smart
strategic planning for cardiovascular services should
consider the organization's core mission and vision as
well as its financial situation. Only then can leaders
master the challenges of growing market share with a
cardiovascular service line that excels in clinical per-
formance, functions with sound fiscal results, and pro-
duces high customer satisfaction.
Stakeholders should not focus on planning to the
extent that they postpone implementation. As Gen.
Norman Schwarzkoff said, "The truth of the matter is
that you always know the right thing to do. The hard
part is doing it." Remember, hospitals that fail to plan,
plan to f a i l s
Karen Hartman i; president, Corazort Consulting, tnc, Piltsburgh,
and a member ot HFMA's Western Pennsylvania Chapter
(khartman@corazon-consulting,com).