Majority of U.S. Hospitals Showed No Appreciable Change in Hospital-Wide Performance Since 2000

Select Hospitals Significantly Improved Patient Outcomes, Efficiency and Growth

EVANSTON, IL — May 1, 2006 — A new study by Solucient has found that while a select group of hospitals across the nation have shown a clear ability to improve across their entire organization — resulting in better clinical outcomes and efficiency, increased financial strength, and growing patient volumes — the hospital industry's overall ability to improve performance over time has been limited.

The Solucient 100 Top Hospitals®: Performance Improvement Leaders, 3rd Edition study recognizes U.S. hospitals and their leadership teams that made the greatest progress in improving hospital-wide performance over five years (2000-2004). Awards were given in five categories, based on hospital size and teaching status. The study was published in the May 1 issue of Modern Healthcare.

"Five years of steady, well-aligned improvement means that these 100 Performance Improvement (PI) Leaders have enormously increased the value they provide to their communities," said Jean Chenoweth, senior vice president, performance improvement & 100 Top programs, Center for Healthcare Improvement at Solucient. The study found that PI Leaders made the following gains between 2000 and 2004:

• They have fewer than expected complications, deaths and adverse safety events despite starting five years ago with higher than expected incidence.
  
• They improved financial stability going from being barely profitable to achieving a healthy positive profit margin of 5.8%.
  
• They discharge patients two-thirds of a day earlier than five years ago.
  
• They increased expenses by only 8%, while their peers' expenses increased 20%.
  
• They grew their patient volume 5.3 percent, while their peers lost 1.5 percent of their patient volume.

"Solucient's Performance Improvement Leaders study is a statistical analysis that shows how these hospitals have achieved better alignment in key measures in five areas, reflecting hospital-wide performance," stated Chenoweth. "Management teams at these winning organizations have set national benchmarks for consistent improvement in clinical outcomes, safety, hospital efficiency, financial stability and growth."

This year's PI Leaders are far better aligned for improvement across the entire organization than their peers and have been able to improve at a significantly faster rate. "These winning hospitals are well positioned to continue to improve at a faster rate in the future," added Chenoweth.

Solucient PI Leaders have made consistent improvement on clinical measures including lowering patient mortality and complications, reducing adverse safety events, and shortening patient length of stay. For example, winning hospitals showed significant increases in survival rates over the five years of the study, improving their risk-adjusted mortality index by nearly 28 percentage points, going from about 12 percent more deaths than expected in 2000 to about 15 percent fewer deaths than expected in 2004. In comparison, non-winners, or peer hospitals, improved their risk-adjusted mortality index by about 14 percentage points.

In addition, the study showed that PI Leaders manage higher volumes of emergency department (ED) patients who are significantly sicker than patients at peer hospitals. Winning hospitals are also reducing low-acuity patient volumes in the ED, possibly by offering alternative care sites. This finding is particularly encouraging in light of increased crowding seen in EDs during the past decade and a 30 percent rise in Medicaid ED visits from 2000 to 2004.

PI Leaders have improved their financial position as well. After starting with an operating profit margin of 0.86 percent in 2000, PI Leaders maintained a solid operating margin of 5.8 percent in 2004. Non-winners, on the other hand, experienced a much smaller increase in profitability, going from 2.30 percent operating profit margin in 2000 to 2.53 percent in 2004.

In growing patient volume, the study showed that PI Leaders also performed considerably better than their peers, moving from a 2.18 percent increase in 2000 to a 7.51 percent increase in 2004. In contrast, non-winners experienced a decline in growth rate, dropping from 5.25 percent increase in patient volume in 2000 to a 3.74 percent increase in 2004.

Nationally, the majority of hospitals are not showing substantial improvement on the measures studied. During the study period, more than half of the hospitals studied have not been able to control expenses significantly and approximately one-third had increasing expenses. Overall, about 87 percent of all hospitals in the study showed no significant change in profitability. More than one third of the hospitals studied (35 percent) showed significant improvement in patient survival, however, only a small portion — 11 percent — were able to significantly improve patient complications, and even less — 5 percent — were able to make significant improvements in patient safety.

The statistics clearly show that healthcare executives face many challenges in aligning their organizations for continuous improvement. "Those hospitals that have successfully accomplished this goal are clearly deserving of this award," said Chenoweth. "This study objectively proves that the answer to achieving the maximum rate and the greatest consistency of improvement is to align performance improvement goals across the organization — not just in one area, such as quality or finance."

Small (25-99 beds) and medium-sized (100-249 beds) hospitals have been the most successful at effecting organization-wide performance improvement, at least in the short-term. "In the years studied, small community hospitals and medium community hospitals showed the lowest increase in expenses, the greatest rise in profitability and the greatest gain in patient volume, in comparison to their non-winning peers," noted David Foster, Ph.D., chief scientist at Solucient.

On the other hand, major teaching and teaching hospitals have struggled the most to effect change. "These hospitals have faced an increasingly severe caseload, in addition to the reimbursement constraints, rising costs and staffing difficulties that all hospitals have endured since 2000," explained Foster. In these groups, both winners and non-winners increased expenses drastically though winners saw increases (about 10 percent) well below those of their peers (more than 20 percent).

The study looked at all U.S. hospitals licensed to treat Medicare patients. Nine performance measures were examined at each hospital: risk-adjusted mortality and complications, average length of stay, expenses, profitability, cash-to-debt ratio, growth in patient volume, tangible assets and risk-adjusted patient safety index. The study used publicly available Medicare cost reports, MedPAR data, and Center for Medicare and Medicaid Services (CMS) outpatient data from 2000 to 2004.

About Solucient
Solucient® is an information products company serving the healthcare industry. It is the market leader in providing tools and vital insights that healthcare managers use to improve the performance of their organizations.

By integrating, standardizing and enhancing healthcare information, Solucient provides comparative measurements of cost, quality and market performance. Solucient's expertise and proven solutions enable providers, payers and pharmaceutical companies to drive business growth, manage costs and deliver high quality care. For more information, visit www.solucient.com.

Small Community Hospitals (20)
Community Hospital, Tallassee, AL
Navapache Regional Medical Center, Show Low, AZ
Colorado Plains Medical Center, Fort Morgan, CO
Hart County Hospital, Hartwell, GA
Chestatee Regional Hospital, Dahlonega, GA
Starke Memorial Hospital, Knox, IN
Coffeyville Regional Medical Center, Coffeyville, KS
DeSoto Regional Health System, Mansfield, LA
Olmsted Medical Center, Rochester, MN
Hedrick Medical Center, Chillicothe, MO
St. Anthony Community Hospital, Warwick, NY
Spruce Pine Community Hospital, Spruce Pine, NC
Lexington Memorial, Lexington, NC
Stillwater Medical Center, Stillwater, OK
Goodall-Witcher Healthcare Foundation, Clifton, TX
CHRISTUS Spohn Hospital Beeville, Beeville, TX
Brownfield Regional Medical Center, Brownfield, TX
Brattleboro Memorial Hospital, Brattleboro, VT
Island Hospital, Anacortes, WA
Holy Family Memorial, Manitowoc, WI