From losing millions to breaking even: Rochester Regional's cost transformation

Two years ago, Rochester (N.Y.) Regional Health was in a dire financial situation, losing around a million dollars per day.

Christopher Ragsdale, vice president and value-based care chief administrative officer, told Becker's that the system had no choice but to undergo a multiyear, significant cost transformation.

The financial and operational pressures largely came from labor shortages, medical inflation, payer relations and reliance on agency nursing. While a financial imperative, Mr. Ragsdale emphasized that the transformation was also a mission-driven commitment to preserving the community's access to care.

Rochester Regional Health is one of the two health systems in the city, so its collapse would mean losing half of the community's healthcare infrastructure. Mr. Ragsdale said that ensuring financial stability meant ensuring that Rochester Regional could continue to be a cornerstone of the community for decades to come.

The organization's strategy focused on improving productivity, efficiency and workforce development. Key initiatives included supporting physicians in meeting productivity benchmarks and optimizing length-of-stay metrics. The system also prioritized the recruitment, retention and talent development of the nursing staff to reduce reliance on agency nursing spending.

"There were nearly 100 initiatives across this transformation, across all settings, service lines and regions of our market," Mr. Ragsdale said. "There was really no part of our organization that was left untouched by this transformation."

As the initiatives were implemented, the transformation revealed significant gaps in the organization's data and analytics and its ability to monitor internal operations. To overcome this, the system built a new data infrastructure and hired personnel solely dedicated to creating new data capabilities. 

These capabilities were essential in identifying the biggest opportunities, tracking the progress of initiatives and monitoring operational changes. The new metrics enabled the organization to intervene when the transformation was off-track and course correct to ensure continuous progress. 

"The new analytics capabilities were table stakes for the transformation, but also for running a good operation," Mr. Ragsdale said. "They are what guided us through the transformation, but what will continue to guide our operations for many years to come."

The transformation helped the health system break even for the first time in years, shifting its focus toward population health and value-based care initiatives to unlock new sources of revenue. 

A major initiative of this new focus was the development of a robust HCC coding program. It has allowed the health system to streamline pre and post-visit workflows, offer coaching and education resources to providers and introduce new EHR workflows to make the coding process more efficient. 

Another ongoing initiative has been integrating the organization's post-acute services, such as long-term care and home health, into the population health and value-based care strategy. Efforts are underway to think more critically of the highest value setting of care after an acute event and enhance overall continuity across the care continuum.

Mr. Ragsdale said that the biggest strategy was creating a transformation management office, which has served as the "connector" or "central hub" for all incoming data and initiatives. The office consists of a team of project managers whose sole focus is to oversee and drive the transformation efforts within each department. He said the focus on managing progress and reporting results to each team has been critical to bringing everything together.

"Value-based care gives me hope, because it has the potential to make healthcare more affordable, improve people's experience and win back the trust of a lot of patients who have become frustrated with the healthcare system," Mr. Ragsdale said "What motivates and excites me every day is thinking about where value-based care and population health can take us in the future."

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