Temple University Health System, located in Philadelphia, Pa., used Healthcare Solutions from Thomson Reuters to aid in its launch of a multi-year cost reduction and clinical service line growth strategy. The results were staggering: Both programs reduced costs and revenue enhancement was $128.7 million from 2004 to 2007. The health system is on target to achieve over $50 million in additional financial impact this year. Plus, its net income went from a loss to a $34.7 million gain in fiscal year 2007.
How did they do it?
Although Temple is a major academic-based health network with a $1 billion operating budget, it is also located in some of the poorest neighborhoods in north Philadelphia. Nearly 80 percent of its revenues come from Medicare and Medicaid, and the system struggles to achieve razor-thin margins.
In 2004, the health system initiated the first phase of a two-pronged strategy - to improve its financial position through disciplined operational improvement. The health system leveraged the ACTION O-I® operational benchmarking solution through budget targets and quarterly benchmarking reviews; tying management incentive compensation to annual goals and objectives; and providing leadership education. All of these steps helped strengthen Temple's financial base.
The second phase was to increase revenue through a comprehensive growth strategy. By supplementing in-house expertise with the Market Expert® strategic planning solution, Temple planners were able to define markets, pinpoint their competitors for specific services, and spot trends - at the ZIP code level. They were also able to identify areas to strengthen payer and case mix, and refine results using the State Data Analyst and Demographic Expert modules of Market Expert. Based on this local market data, Temple is working to grow six clinical services lines to compete with the major academic centers of excellence in the Philadelphia area.
The thoughtful and measured execution of Temple's two-pronged strategy paid off. "Leveraging Thomson Reuters strategic planning and operational tools was key to the strategy that led to the results and financial improvement that allow us to continue to be the premier health system in the communities we serve," said Robert E. Pezzoli, executive vice president and chief operating officer.
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