uring the past two years, Emory University Hospital and Crawford Long Hospital have combined diverse cultures, tightened their financial belts, and in the process made some tough choices. The goal has been to integrate operations and help ensure the success of Emory Healthcare in a competitive health care market. The results have been remarkable, thanks to the hard work of faculty, staff, and management of the two hospitals. The two hospitals are only six miles apart, but at times throughout their histories, they might as well have been 100 miles apart. Yet, whatever their historic, geographic, academic, or community differences before consolidation, the hospitals faced similar challenges: older patient populations, more complicated cases, and shrinking resources. The possibility loomed of significant reductions in revenues that could seriously affect Emory's core missions in patient care, research, and education. Swift, but smart change was required. It began in 1995 with the appointment of veteran Crawford Long administrator John Henry to oversee both hospitals. Since then, the hospitals have reduced staff by more than 150 (mostly by attrition), halved the number of senior administrators, outsourced some functions, and brought others back in-house. Most departments have consolidated leadership and operations, while others have been redesigned. The hospitals continue to emphasize cost cutting by eliminating duplication and standardizing supplies, policies, and procedures. "We wanted to improve the efficiency and effectiveness of the care rendered in both hospitals, and to preserve the best of both cultures," says Henry. "Securing and maintaining excellence has been the motivation for every change made." These efforts have paid off. Many of the consolidated and newly created shared programs - from mirrored emergency departments to shared medical staff bylaws - have improved the quality of patient service. And they have provided flexibility and new opportunities for nurses and other health care staff. In addition, our hospitals are the first in the Southeast to be recognized for excellence as a network, receiving a 100% score from the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). As in the past, the hospitals individually also earned JCAHO accreditation with commendation, the highest rating possible. This prestigious award is earned by only 12% of the nation's hospitals. Most important, patient satisfaction surveys say we're doing a good job. Emory Hospitals' successes are helping secure Emory Healthcare's future. Not only are Emory Hospitals investing more than $35 million each year to upgrade both aging facilities, they are also investing in Emory Healthcare's unprecedented expansion. The hospitals are underwriting much of the system's needed growth, including primary care, that will enable Emory not only to survive, but thrive as the provider of choice for the full spectrum of health care services in Atlanta and the region. These investments are expected to return benefits manyfold.

"We wanted to improve the efficiency and effectiveness of the care rendered in both hospitals, and preserve the best of both cultures."  - John Henry, CEO, Emory Hospitals

as it been easy? Hardly. Mike Riordan, chief operating officer at Emory Hospital (and former administrator at Crawford Long), and Al Blackwelder, his Crawford Long counterpart, acknowledge that many employees were leery of efforts to consolidate the two hospitals. But the COOs insist that bringing the two hospitals together has been worth it. "We've accomplished much more together than we could have done apart," says Riordan. Both believe that the inevitable pain of change will be rewarded by the immense gain of making Emory Hospitals, and beyond that Emory Healthcare, one smoothly functioning system that competes effectively in today's market. Still, this is the most challenging and stressful time for medicine and hospitals that EUH Medical Director Robert Smith has seen in his 30-plus years of practice. "Reduced reimbursements, changes in practice imposed by managed care contracts, and the need to increase our market share in the region are causing an upheaval in medical practice that's affecting everyone," he says. Patient care dollars will not stretch as far as in the past as volumes increase, payments fall, and the hospitals care for sicker, older patients, he says. "It means fewer dollars for all needs of the medical center, not just physician and staff salaries, but also for residency training and research. And we're having to change some patterns of practice, such as the volumes that physicians are willing to handle. "There was a time," he recalls, "when hospitals could compensate for reduced income by raising day rates, but that kind of cost-plus reimbursement is no longer available." CLH Medical Director Harold Ramos agrees. "The new marketplace requires health care providers to be more cost-effective and more flexible. That means Emory Hospitals, like all other components of Emory Healthcare, have to continue to integrate, work smarter, and improve patient-centered services."

Still Doing It Better While we are trying to figure out how to reduce our costs, we need to remember what Emory Healthcare does so extraordinarily well - provide quality medical care for very ill patients. Medicare data from 1995 (last available year), when adjusted for severity of illness using Dun & Bradstreet's risk adjustment model, show that inpatient mortality at Emory University Hospital was 17.6% lower than would be expected with our patient mix. Mortality within 30 days of admission (even if patients left the hospital after one or two days) was 16.1% lower than would be expected. At Crawford Long, inpatient mortality was 7.2% lower than would be expected, and 12.1% lower for mortality within 30 days of admission. What these figures mean, for instance at EUH, is that almost one in every five people survived who normally would have been expected to die before they could leave the hospital, based on how ill they were when admitted. This figure was statistically significant, meaning it could not have occurred by chance.

ight years ago, there was virtually no managed care in this region, Medicare and Medicaid reform was minimal, and "life was good," says Jimmy Hatcher, chief financial officer for both hospitals. "But as all of that changed, we had to streamline where we could. And if we hadn't started as early as we did to make changes, the hospitals would be in a serious situation today." To improve financial performance and patient services, the administrative team launched initiatives at EUH which mirrored some steps taken at Crawford Long four years earlier. Aggressive benchmarking - looking outside Emory to see what our peers with similar teaching missions and acuity are doing - continues to be a basis on which our hospitals evaluate their progress. "We try to focus on what the industry is doing because managed care is going to pay us the same thing they pay any other hospitals, academic or nonacademic," Hatcher says. "If our cost structure is out of line for whatever reason, we're going to have a hard time competing. We have to see where our costs are high and figure out why." He cites the hospital's business office as a prime example. Three years ago, 100 people (including outsourced staff) in EUH's business office were doing the same job as 50 were doing at a benchmark hospital. Under Emory Hospitals Finance Director Shirley Carmichael, costs have been halved, mostly by greatly reducing outsourcing, emphasizing prompt charging of patient accounts, and decreasing days receivable. "We're working smarter," Hatcher says. "If you replicate that kind of approach in more than 160 cost centers, you start having dramatic impact." Other functions have been centralized, such as food and nutrition services, which now has one director serving both hospitals. In the past, Emory's campus hospital maintained three kitchens. Now food is prepared only in the main cafeteria at EUH and transported to other sites. The EUH pharmacy has consolidated selected floor satellite pharmacies, and CLH has installed a new computerized system to order drugs. In the midst of all this change, staff at all levels at both hospitals have experienced significant stress. Henry and the senior staff anticipated this reaction and have worked to develop and implement a change process that is inclusive and participatory. "We've tried to involve as many people as possible in the transition," says Chief Nursing Officer Alice Vautier, who oversees a combined workforce of about 2,000. The redesign of the patient transportation system at EUH, which has saved the hospital $350,000, was one such example. Co-chaired by Judy Smith, director of nursing medical services for both hospitals, and Bill Torres, EUH vice chairman for radiology clinical services, the transport task force met for months, gathering data such as patient transport patterns, peak transport times, and even the length of time a discharged patient waits in the motor lobby for his or her ride home. "We benchmarked with other hospitals that had decentralized patient transport, including Crawford Long, which had eliminated a centralized system nearly 10 years ago," Vautier says. "Eliminating positions was one of the most stressful and difficult results of the redesign. Our human resources department worked hard to offer staff the options of transferring to another position, retraining for another job, or accepting a severance package."

Nurse Kelley Myers usually spends two days a week at CLH and two at EUH. She works with a wide variety of patients, such as Fred Brockman of Smyrna.

hile every open position at the hospitals is now reviewed, some new jobs have been created by bringing previously outsourced functions back in-house. For example, housekeeping at EUH, which was provided by an outside company for more than 25 years, is now performed by the hospitals' environmental services staff. On the other hand, mail services at the hospitals and The Emory Clinic were outsourced. On the clinical side, inpatient dialysis services were outsourced to the nation's top provider of such services, to give the hospitals increased access to patients and managed care contracts. "Overall, we have gained more jobs than we have lost by outsourcing," says Henry. "Most hospitals outsource food and nutrition services, maintenance, and other activities, but we feel that with 1,100 licensed beds in our two hospitals, we ought to be able to attract and retain skilled people to manage these functions and reduce costs." Rather than outsource supplies, the hospitals have entered into deeply discounted contracts through the nation's largest group-purchasing organization. Through standardization, the hospitals have realized substantial cost savings and efficiencies, largely by reducing the number of items physicians and staff must be familiar with. For example, the hospitals have boosted their purchasing power by ordering fewer brands of cardiac catheters and orthopaedic prosthetics from fewer vendors.

Seal of Approval Emory Hospitals were among the first in the nation to set the standard in network accreditation late last year with a 100% score from the Joint Commission on Accreditation of Healthcare Organizations. JCAHO looked at how the two hospitals work together in areas such as continuum of care, education, information management, and leadership. Individually, Emory University Hospital scored 98 and Crawford Long Hospital 96 during on-site surveys. (The national average is 87.) JCAHO's "seal of approval" indicates that an organization meets certain standards and provides quality patient care in a safe environment.

s the two strong hospital families have blended, one challenge has been to overcome a "we" versus "they" mindset. But Henry believes that many cultural differences were more perceptions than realities. "We've spent a good deal of time making sure that people understood that the future has to be different from the past. However, we wanted to retain the best of the past at both facilities, and learn from each other about how to become even better caregivers and stewards of our resources." To meet that challenge, quarterly combined managers retreats, weekly department managers meetings, and combined leadership meetings have become standard. The auditoriums at both hospitals were linked for video teleconferencing. "Now we can hold monthly meetings at one time for more than 200 managers and supervisors, which is essential to effective communication and ongoing team building," Riordan says. Efforts to communicate change to staff have stepped up through publications and employee forums. While staff at both hospitals express some sense of loss of their former identities, most agree that the hospitals have come a long way toward consolidating and improving quality of patient service. Each hospital has benefited from the other's experience. For example, because congestive heart failure is one of the five highest disease-related hospital admissions in the country, CLH opened a center for heart failure therapy to mirror EUH's program. And EUH's former "treatment room" evolved into a full-fledged emergency department based on Crawford Long's highly successful model. A major accomplishment has been coming up with one set of policies and procedures as well as medical staff bylaws for both hospitals. "Many people said we couldn't do that because we had community physicians practicing at Crawford and not at Emory and because professional service committees worked differently at each facility," Henry says. Unified operations and clinical processes are providing new opportunities for nurses, notes Vautier. Many nurses are now being cross-trained to work at both hospitals in areas such as cardiac care and the OR. A resource pool (the hospitals' internal "temp" agency) directs staff to areas in the hospitals that need extra help. "This allows us to be flexible with our staffing and send nurses from a unit with a lower census to the other hospital where that same unit may have more patients and need more staff." Collaborative clinical pathways (care plans) for various types of patients have also helped standardize practices, improve patient care, and reduce costs. Physicians, nurses, therapists, and specialists at both hospitals have helped develop these plans.

Materiel handler Scott Lathrop stocks fewer items than in the past at EUH.

hange still permeates every aspect of the hospitals. It parallels trends at other academic medical centers nationwide, all of which are dealing with fewer inpatients, more outpatients, shorter stays, and today's paradigm of keeping people out of the hospital as much as possible. Cost-containment initiatives continue at Emory Hospitals, as does the combining of cultures. "We're working against a lot of forces," Henry says. "This year is sure to bring more and more managed care patients through our doors. Many of today's cost savings will be eaten up by annual inflation. Supply costs are going up, as are utilities and insurance. In addition, pressure for capital is still high as our buildings age and our competitors continue to build and renovate facilities. "But the biggest challenges are the dramatic impact of managed care, anticipated reductions in Medicare reimbursements over the next few years, and the costs we're sure to incur as we respond to new and more complex federal regulations." Fifty percent of the hospitals' business comes from Medicare. The federal balanced budget agreement means a substantial reduction in Medicare reimbursements over the next few years. As more Medicare recipients shift to managed care, which reimburses at an average of 53 cents per dollar billed versus 70 cents for Medicare, reimbursements will decline sharply. As an academic health center, Emory has extra built-in costs for the support of our critical core missions in research and education that other providers don't have. In a fiercely competitive market, extra costs are a disadvantage unless they add significant value. Emory's added value in the market comes from the many ways in which Emory's academic missions enhance our excellence in patient care. In addition to streamlining staff and faculty to compete with other good hospitals and caregivers in our region, the hospitals must be leaders in health services innovation. "We have to demonstrate that an academic medical center has more desirable features than our competition for people to make the extra effort to come here and pay more," Smith says.

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enry emphasizes that faculty and staff at the hospitals are key to adapting to the changes in health care today. "If we are going to succeed as Emory Healthcare, then the clinic, the hospitals, and individual physicians must all succeed together as one unit." In his State of the Woodruff Health Sciences Center address earlier this year, Michael Johns, center director, singled out the hospitals' faculty, staff, and management for particular praise. "We are in a formidable transition time when there is much uncertainty and much uncharted ground to cover," Johns said. "Your work and the positive results of that work are not only providing great care to patients, you are creating models for others to emulate. You are at the cutting edge where the work is always toughest. But your success is providing all of Emory Healthcare with the wherewithal to aspire to and achieve great things. I hope each of you feels the pride and satisfaction in that, as well as in the work that you do day by day." --Marlene Goldman