Category Archives: Healthcare

Intervention While The Patient Is Still Healthy

Posted on May 24, 2012 by | 3 Comments

The following was first published on The TIBCO Blog.

In a previous article, Healthcare: You can’t improve what you can’t measure, we took a look at the Toyota Production System in Healthcare.

Going beyond Lean and TPS,  new-to-healthcare technology brings significant disruption to the traditional healthcare technology market for one simple reason, laid out in a recent article in TechCrunch, Money Ball for Medicine – Business Models for Healthcare: “By definition, the legacy HealthIT vendors have optimized their solutions around the legacy reimbursement and delivery models that have created the hyperinflation in healthcare crushing family, business, and government budgets.”

Lean and Six Sigma techniques, data analytics, business events and process technology will be used to break the reimbursement model and its attendant software norms.

This is a veritable sea change. What was locked into paper records is now being captured for the first time in electronic medical records (EMRs). By itself, this is simply shifting from paper to an electronic record. That won’t be enough. Smart healthcare will go further and manage many data sources simultaneously. It will be able to sort through this new avalanche of data to find the information, often a combination of data from multiple systems, which can predict problems and allow for intervention before an expensive crisis occurs. This borrows from the way banks detect credit card fraud and is easily applied to avoiding healthcare mistakes and intervening early.

Digital technology also underpins the collaboration necessary for cross-network accountable care described by Seattle Children’s Dr. Jeffries in Healthcare, You Can’t Improve What You Don’t Measure. The rise of social media means that what has progressed from paper to fax to email is now moving to enterprise social networks as the most secure and effective way to draw together the patient and a network of healthcare providers, or to connect health insurance to healthcare delivery. While reform was designed to reward cooperation, Medicare, Medicaid and insurers have the power to incent this to continue, even without legislation.

As Dr. Howard Landa, Chief Medical Information Officer at Alameda County Medical Center, and Association of Medical Directors of Information Systems President calls it, “…looking at the entire population and their health rather than focusing on the provision of clinical care.” Landa forecasts that, “…clinical decision support will extend beyond alerts and reminders to presenting information in a more efficient, timely and usable manner so that we can do the right things with the right information in the right moments that matter.”

Beyond technology, there have historically been limited methods for advances in process, treatment or technology in one healthcare organization to be readily compared, understood, and adopted elsewhere. Analytics performed for both improvement projects and patient care need to be “attached” to standardized healthcare work. This has been done in other industries through the use of frameworks like ITIL for information technology, SCOR for supply chain management and APQC’s PCF for enterprise-level process management. A healthcare framework is the key ingredient for communication. Responding to this, the latest requirements put out by the Federal Government’s National Coordinator, Dr. Farzad Mostashari, make it clear that collaboration must be available across organizational boundaries.

“The framework opens the door to process improvement, a structure for social conversations, and managing metrics and events. The organizations that understand this will be the leaders of the future,” says APQC’s Executive Director of Research Services Ron Webb. Webb is actively engaging healthcare professionals to bring about such a framework.

All of these changes go far beyond legislated reform and relate more to the healthcare dynamics that, as Dr. Landa says, “…are driven by an aging population, provider shortages and a burning need to align payment with quality.” Digitization is the reality of healthcare that has little to do with politics.

→ 3 Comments

Posted in Healthcare, Markets, Event Enabled, Disciplines, 2 Second Advantage

Healthcare, your process is your product

Posted on May 20, 2012 by | 6 Comments

Processes are how work gets done. They are a series of activities that convert an input into an output for the customer or next stage of work. Healthcare is fundamentally a service industry with processes as its product. Because efficiency has never mattered in a fee-for-service world, healthcare is overripe with opportunities to innovate.

Innovation through rigor

Most people think of innovation in terms of products:  Apple, Google, etc. We always hear about those game changing product launches that corner a market. While there are still plenty of innovations to be had for new treatment modalities and groundbreaking therapies, healthcare organizations are primed and ready to see major shifts in organizational performance by innovating their processes. What we, at APQC, refer to as innovation through rigor.

Some of the best representations of these principles come from the Toyota Production Systems (TPS), or the Toyota Way. The basic principles of TPS go to the core of what healthcare has purported for years and drive straight to the center of why many healthcare organization were created in the first place. The principles of TPS are:

  • Continuous improvement
  • Respect for people
  • A long-term philosophy
  • Belief the right process will produce the right result
  • Developing your people and your partners adds value to the organization
  • Continuously solving root problems drives organizational learning

When I read through this list, I am amazed at the parallels I see to the mission and purpose of the healthcare organizations I’ve been a part of over the last 20 years. Why, then, is there a disconnect between most healthcare organizations and the concepts of continuous process improvement.

Binary focus

It comes down to a singular, binary focus of many organizations. Healthcare organizations tend to focus all their energy serving the patient. Now, before you lambast me, let me explain.

I’m NOT promoting that the patient shouldn’t be a key focus of any healthcare organization…far from it. It should be the central focus; it is why you the organization was created. I’ve found that some healthcare organizations (and many non-healthcare organizations) take on a hero’s mentality to serve the patient at all costs, which ultimately leads to very convoluted and at times unsuccessful approaches to serving patients. The exact opposite of what they have intended.

Instead of thinking about how to treat THIS patient the right way, the organizations innovating through process are figuring out how the treat ALL patients the right way. Thus creating an organization innovating patient care through the way they work with patients, not just the technology, treatment, or modalities they apply to a single patient.

Falling short

When I look at the principles of process innovation noted above, I think healthcare respects people, does focus on long-term solutions, and focuses on developing people. I think they tend to fall short on their continuous improvement focus, focusing on how they work vs. who they work on, and stepping back to understand and solving their root process problems.

We’re already seeing examples of the use of continuous process improvement and process innovation within healthcare at organizations like Virginia Mason, ThedaCare, and others. They are able to apply these process innovation principles to impact the real outcome for all patients, showing us all that it isn’t an either/or problem. Stronger, more innovative processes will result in better patient outcomes, better financials, better HCAHPS scores, or whatever process outcome you choose to measure. The key is taking a more holistic, process approach vs. a binary vies creating tradeoffs between the care of patients and other outcomes such as financials or patient satisfaction. That is not a place any organization wants to find itself.

→ 6 Comments

Posted in Continuous Improvement, Disciplines, Healthcare, Markets, Process Management, Strategy

Urgency, leadership, vision and culture…does Healthcare have this?

Posted on May 17, 2012 by | 9 Comments

Hearing Virginia Mason Health System’s CEO, Dr. Gary Kaplan, speak today at the WCBF Lean Six Sigma Healthcare Summit makes it quickly clear why Lean is the growing undercurrent for a move to accountable healthcare. Virginia Mason was in trouble in 2000 and losing money, its best people, and potentially, their vision.

The clues were found across the organization from publicized mistakes to low worker morale. Virginia Mason had strong indicators that poor quality was catching up not only with an industry that consistently registers a 3% error rate, but with their healthcare network in particular. But what do you do in a system that is in decline because the system is failing not just patients, but doctors and nurses, too?

They needed a leadership change…and even more importantly, a new management system.

Culture change

They had the benefit of being a neighbor to Boeing, where Lean and the Toyota Production System were being used to make remarkable progress in bringing the time to produce aircraft down to less than half while increasing quality. Mistake-proof processes done in standard ways were Boeing’s answer and Virginia Mason suspected that healthcare needed a similar solution. They needed to standardize work and become a more efficient, safer organization.

But to get there required a tectonic shift. Nothing could change until the organization and its physician leadership understood that the real customer of healthcare was not, in brutal reality, the patient, but the doctors and senior staff who make up the care system. Kaplan gives evidence that everyone can understand: The number of discharges on the weekend, which drop significantly as the 5-day-per-week medical staff sets the release rules, which mean “if not Friday, then Monday.” If that isn’t staff-centric, what is?

Virginia Mason developed a plan that put the patient at the top of a pyramid of supporting concepts that include vision, mission, values, strategies and foundational elements. All of this sits atop the production systems (the base layer of the pyramid): Vision and values first, systems later.

The Compact

But change comes slowly, especially when the people involved are some of the smartest and best educated in the marketplace. Doctors aren’t ‘raised’ in a culture of collaboration or shared vision. The Hippocratic Oath doesn’t say much about leadership. A physician-centered world view prevailed in a ‘Traditional Compact‘ of protection, autonomy and entitlement. It had to switch to the needs of society, competition, and the organization’s strengths. They had to create the Virginia Mason Medical Center Physician Compact. This new system of ‘gives’ and ‘gets’ was foundational to change.

The results are dramatic and industry leading. Virginia Mason Medical Center is the post child for excellent healthcare, patient satisfaction, and staff engagement.

Seeing is believing

Kaplan is about to embark on his 13th trip to Japan. Seeing is believing and they’ve learned that organizational buy-in is everything. These trips are a key part of how they change culture in the organization. Staff see standard work in action and its remarkable results. But does a process focus stamp out positive change in the organization? Kaplan answers that age-old process challenge with, “Without standard work, there can be no creativity and innovation.”

→ 9 Comments

Posted in Continuous Improvement, Disciplines, Healthcare, Markets

Accountable healthcare: Can ya get there from here?

Posted on May 16, 2012 by | 3 Comments

Today is Day 1 of the WCBF Annual Lean Six Sigma and Process Excellence in Healthcare Summit.  This isn’t a new organization nor is Lean or Six Sigma a new discipline. There are things, however, that are on the horizon that make this a very important place to be at this moment in the US healthcare saga.

Accountable healthcare is coming. There’s simply no way we will continue to throw money at a system that doesn’t have accountability to the patient, payer or society. Yes, there are three customers of healthcare, each with a different agenda, each just as important in the healthcare story. If we can’t serve two masters…how will we serve three?  Getting to accountable care won’t be easy.

Learning curve

Humans have to go through a process to get to what works. The question becomes, “How much can that learning curve be accelerated?” At ThedaCare in Wisconsin, they’ve made a remarkable journey in Lean healthcare but it has taken twelve years. They’re ready to be accountable as quickly as the market asks them too, but does our system have the time and patience to wait twelve more years to be in ThedaCare’s position?

At Kaiser Permanente, the Health Maintenance Organization model is now two decades old and providing evidence that accountable care exists on a large scale, but they built an organization from the ground up around this model. The rest of industry obviously can’t start over or from the ground up.

Roadmap to accountability

What healthcare needs is a roadmap. That roadmap needs to be in the form of a process framework that helps us to get from here to where healthcare needs to be. A framework isn’t a new idea…it has been around in other industries for a while and has a long-standing reputation for accomplishing the following:

  • Standardizing the language of accountability
  • Defining a target future state for new services
  • Allowing for gap analysis and prioritization
  • Defining touch points for the accountable network
  • Providing a place to ‘hang’ metrics
  • Defining the way jobs are restructured and redesigned
  • Benchmarking in an apples-to-apples way between organizations
  • Tackling waste and inefficiency so that ACO ‘works’
  • Keeping compliance intact through organizational seismic shifts
This roadmap can be adopted in part or whole, and can be initially overlaid as a reference model before it becomes an operational one. Most importantly, we need to get started on this model before everyone is forced to reinvent the wheel. 

→ 3 Comments

Posted in Disciplines, Healthcare, Markets, Process Management

Moving at the speed of software

Posted on May 13, 2012 by | 1 Comment

The following was first published on Call IT Anything.

Your company, regardless of industry, is now controlled by software.

People are still the underlying foundation of any company, but the best people can be no better than the software they use to perform their jobs.  You can only move and adapt as fast as your software can move and adapt.

Likewise, if you are building bricks and mortar facilities, they too must be adaptable to the changes in business models that are being driven by the Speed of Software.  In other words, heavy investments in bricks and mortar can inhibit the ability of a company or industry from leveraging the benefits of delivering their products and services through rapidly adaptable software.

Building barriers?

I was touring a healthcare organization recently that is building a beautiful new “Cardiology Services Tower” in anticipation of the aging baby boomers and their needs.  The thought that kept running through my mind as I reviewed the plans:  You are building an enormously expensive structure here that will last at least 40-years, but is based upon the old way delivering healthcare, including the relatively new and already outdated notion that a hospital should be a 5-star resort.

Agility

The future of all industries is defined by software, not bricks and mortar.  Don’t buy software that can’t adapt, and don’t build buildings that paint you into a corner and that can’t leverage the Speed of Software.

→ 1 Comment

Posted in Disciplines, Healthcare, IT Strategy, Markets, Strategy

Healthcare: You Can’t Improve What You Can’t Measure

Posted on May 11, 2012 by | 2 Comments

The following was first published on The TIBCO Blog.

As shown in Healthcare Reform That Can’t Be Stopped, the Toyota Production System has found a home in healthcare. The Wisconsin-based TPS pioneer, ThedaCare, has been employing Toyota’s industrial efficiency principles in its hospitals to great effect for more than 10 years. Thedacare is now seeing great interest from other organizations, as the healthcare industry moves to reap the rewards of its move to digitize information. So much interest, in fact, that it has created the ThedaCare Center for Healthcare Value to help other organizations realize the promise of continuous performance improvement. Its head, former ThedaCare CEO Dr. John Toussaint, doesn’t mince words when he talks about what’s bringing all those organizations to his door — and it’s not federal legislation.

“Healthcare performance was and still is unreliable,” he says flatly. “Those who are honest about what they’re doing recognize that. Twelve years ago, ThedaCare compared manufacturing and healthcare quality and found healthcare to be far worse: 90,000 to 100,000 defects per million opportunities [versus the three defects per million norm in manufacturing]. That’s quite frankly still how U.S. healthcare performs. A 2010 HHS Study said we were killing 15,000 Medicare patients per month with medical errors. The NIH’s Crossing the Quality Chasm in 1999 showed the same thing. When you peel back the onion, we’re doing really lousy; maybe it has even gotten worse. Those of us who have been in the business of quality improvement have been trying to understand why that is and implement processes to change that.”

As proof of the effectiveness of its data-driven reform efforts, Dr. Toussaint points out that ThedaCare’s Collaborative Care has reduced medication reconciliation errors — that is, errors from incorrect or conflicting orders for medications — to zero and maintained that number for four years. Toussaint also points out that their published thirty-day readmission rate of under 9% is less than half the national average.

Whether reform is repealed or not, Toussaint says, “The reform initiatives in the private sector have already begun and there’s no going back because there just isn’t any money left. Healthcare delivery organizations are going to learn to live with less revenue. We have big problems that won’t be solved by throwing more money at them. We can either cut the healthcare workforce by x percent while reducing quality or we can use data and a proven methodology to make it less expensive and maintain quality. This transcends whatever happens in Washington.”

Does the Toyota method work in smaller, specialty healthcare? Seattle Children’s has been focused on the need to reduce variation in care. Dr. Howard Jeffries is the Medical Director of Continuous Performance Improvement and a practicing cardiac intensivist. He believes that regardless of the outcome in Washington, hospitals will be required to assume risk in the form of bundled payments models where both government and commercial insurers will pay a fixed amount for a specific treatment cycle. “The only way to survive is to predict cost. We can’t negotiate these rates until we know what our costs are, so our goal is to reduce variation as much as we can.”

Jeffries states that Seattle Children’s wants the only variation in process to be around the patient’s response to treatment. “What’s unique about us is that other care providers are trying to standardize as much as they can around the patient visit in peripheral ways, but we’re standardizing what we’re doing when we’re making clinical decisions for seeing a patient. We’re also looking at standardizing all other aspects of care from how you move through the system to what types of medication you’ll receive, including discharge and follow-up visits.”

Jeffries’ data-focused approach has the goal of standardizing care for 50% of Seattle Children’s patients within five years, up from the current 18%, but far higher than the 8% they discovered when they started one year ago, a number very common in the industry. They’ll need to tackle increasingly challenging care paths as the laws of diminishing returns kick in.

Asked how they create standards and reduce variation, Dr. Jeffries says, “We talk about it a lot, about the goals and why doctors practice. Are you a doctor to do what you want or to provide good care to your patients? The only way you can know is to measure and to have a standardized practice. If you don’t have a standard practice, anything you do differently is just noise.”

Dr. Jeffries also expects the rise of the Accountable Care Organization (ACO) where healthcare will be paid a fixed amount to manage a population of patients, including their outpatient needs. “This will require efficient networks of providers working with tight collaboration toward a common goal.”

Up next: Intervention While The Patient Is Still Healthy

→ 2 Comments

Posted in Continuous Improvement, Disciplines, Healthcare, Markets, Process Management

Tagged

Shifting Finance from controlling to improving

Posted on May 9, 2012 by | 2 Comments

The following was first published on the Harvard Business Review.

It’s difficult to get senior executives who have been successful managing a particular way to realize that they need to change their approach. Yet this is exactly the challenge facing leaders of the finance function who are asked to help their organization improve the way that work is done. As finance shifts its focus from controlling costs to advising managers on improvement activities, CFOs must change their thinking and behaviors.

Consider for example CFO Ric Magnuson of Group Health Cooperative, a nonprofit health care system in Seattle with 10,000 employees, who started out as a skeptic on the process improvement activities his company launched in 2008. He had not been exposed to the approach his company chose (“Lean”), and all the tools and concepts were new to him. “I didn’t get it. I saw a lot of money being spent. I was against it.” But along the way he switched from being a skeptic to being an advocate. He gives credit to mentors who helped him. “We had Orry Fiume (one of the founders of “Lean Accounting”) come in a couple times. (Lean Accounting redesigns a company’s performance measurement system so that it encourages continuous improvement.) I got a mentor (“Lean Sensei”) who became my shadow, 40% of their time through the first seven months, helping me through. Then I became an advocate. I had to throw out 25 years of learning. Getting the CFO on board is key. Now I know that.”

CFO Tim Olson of ThedaCare, a healthcare system in Wisconsin, went through a similar conversion. “Before I came to healthcare, I was at a manufacturing company and a trucking company. There it was all about the shareholder. It was about handling ups and downs in the economy, including laying off employees. The culture here at ThedaCare is different. People are treated with respect. I’ve learned to balance customers, quality and safety, people, and cost. Even though when I get up and talk, because it’s my role, I talk about finance, I’m always thinking about the impact on customers, quality and safety, and employees as well.”

How did the finance function at Group Health, ThedaCare and others make the transition from business policeman — focused on oversight, surveillance and compliance — to coach and adviser on improvement activities? In four main ways:

  1. Provide information managers and the front line can use. Most accounting information is prepared by finance for external use. Internally, finance typically facilitates centralized goal setting and then drives financial targets down into departmental plans and budgets. However, to support improvement, financial information needs to be presented in simple terms that everyone, especially frontline workers, can understand and use. For example, as described in the book Real Numbers, CFO Jean Cunningham revised the reporting at her manufacturing company, replacing accounting code words like “variances” and “ROI” with simple language so that everyone could participate in monthly reviews of operations. Finance became a coach and educator on the financial view of the organization and helped manage improvement activities.
  2. Balance the financial view with customer and employee views: While speaking for the financial (shareholder) view, finance should always keep the employee, customer, and quality views in mind. For example, at ThedaCare they use a triangle to think about the benefits of improvements. At the center is the customer. On the three points of the triangle are safety/quality, employee engagement, and financial stewardship. They try to impact all positively with any change they make.
  3. Streamline financial processes to focus on improvement. As I described in my last post “Stop Budgeting, Start Improving,” ThedaCare and Group Health eliminated their budgeting processes and replaced them with rolling quarterly reviews. Many other companies, such as Boeing and Parker Hannifin (a $12 billion manufacturer of motion and control technologies), have adopted similar approaches that reduce time spent on budgets (and other bookkeeping and accounting activities) and engage cross-functional teams in discussions of improvement activities. (For more on the Boeing and Parker Hannafin stories, you can see webinars at BMA, Inc.)
  4. Get help. Both Group Health and ThedaCare had advisers work with them who had been through a finance transformation. CFO Ric Magnuson had a personal coach working with him for seven months.

Having grown up with a mission of controlling the expenses of the organization, measuring performance, complying with regulations, and focusing the organization on shareholder value, CFOs need to unlearn command-and-control thinking before they can learn how to help lead improvement. They need to develop their ability to see the way to profit through improvement activities, not through manipulating financial quantities. The best way to do this is to get out of the stands — keeping score — and onto the playing field — helping improve operations.

Question: Have you seen CFOs and finance organizations shift their time and activities from controlling to improving operations?

→ 2 Comments

Posted in Continuous Improvement, Disciplines, Finance, Healthcare, Markets

Tagged , , , ,

10 essential vendor behaviors in today’s market

Posted on May 2, 2012 by | Leave a comment

The following was first published on Call IT Anything.

A while back, a noteworthy healthcare consulting firm asked for input that they could pass-on to vendors that would help those vendors understand the relationship imperatives that are critical to a healthcare CIO, right now, in today’s market. After giving this topic a few days of background thought, I concluded two things: (1) At least 60% of the imperative relationship advice that I give today, applies at any time in history; and (2) My current Cerner account representative, Lisbeth Fabiny, was a great source of reference. I found myself asking, “Why do I value Liz’s support so much? What does she do that makes her feel so valuable?”

It is worth noting, I have nothing to gain by offering meaningless compliments to Liz or by association, Cerner. Cerner and Liz will both tell you that I can be very demanding and uncompromising in my expectations and criticisms of products, services, and expenses. But, it’s also important and proper for me to praise the positive, not just complain about the negative, and in that vein, Liz Fabiny is a role model for vendor support and customer relations. The best I’ve ever had in my 30 year career.

Here are the Top Ten:

1. Help Me Compete: Help me build my “Annual Report for Information Technology” as if my IT organization were a separate, stand alone business that could be outsourced.

2. Help Me Hire: The market for healthcare IT employees has never been more competitive. If you know I’m having a hard time recruiting for a critical position that is important to the success of your product in my organization, help me find a great match.

3. Help Me Measure: The Age of Analytics in healthcare is just beginning. Our industry is way behind in the proper use of data to drive costs down and quality up. Help me address my short term analytic needs, but do so within the scope of a longer term strategy.

4. Help Me Save: Simplify your licensing, billing and contract administration. Make it as easy as possible for me to manage my expenses with you, and especially make it easy to predict and budget for increases in prices due to inflation, increased number of users, transactions, etc. When you give me new contract to sign, put a face sheet on it that summarizes the key issues and terms. Don’t make me read 15 pages of legal jargon. Likewise, if you know of a creative way for me to reduce licensing fees, try to be motivated by our long term relationship instead of your immediate potential loss of commission. You will win more of my business, easily.

5. Help Me Listen: Be proactive in extracting the ROI and value from your products. Help me look good and thus make your product look good, too. If you know that I’m under-utilizing your products or have them configured improperly in some way, pester me until I fix it. I’m busy and juggle lots of priorities. Be the squeaky wheel until I listen.

6. Help Me Expand: Annual conferences and blogs are not enough for me to keep up with everything going on in healthcare right now. Help me build close relationships with a limited number (3-4) of peers or mentors who have a similar organization, product mix, and profile so we can learn from one another. Force us to meet and hold a conference call every once in awhile. Facilitate the meetings. Help us reuse strategies, policies, and technology as much as possible.

7. Help Me Plan: Help me build my strategic roadmap by overlaying the needs and culture of my organization with your products and the future outlook of the industry. Look ahead for me and pester me until I build that roadmap with you. I am particularly concerned about the growing sophistication of cyber attacks. And I’m also concerned that I’m not leveraging mobile computing as well as I could. Push me on these two issues, please.

8. Help Me Migrate: Help me build the cheapest, safest, quickest path to ICD-10 adoption for my company and critical partners in the insurance industry.

9. Help Me Prove: Help me build the cheapest, safest, quickest path to Meaningful Use qualification for my company– And don’t charge me anything extra because this is something that you should have done for every customer, a long time ago. The Meaningful Use legislation forced it, but like HIPAA, we should have been doing this all along.

10. Help Me Evolve: ACOs are coming; one way or another. Even if they are nebulous right now, we know that there are certain characteristics that will survive, regardless. In particular, you better have a product strategy for engaging patients in greater accountability for their own care, and the changes in the revenue cycle required for managing the risk of bundled payments.

→ Leave a comment

Posted in Disciplines, Healthcare, IT Strategy, Markets

Will a system approach heal medicine?

Posted on April 30, 2012 by | 5 Comments

This is an outstanding TED talk by Dr. Atul Gawande, physician and author of The Checklist Manifesto on how to heal medicine.

“The most expensive care is not necessarily the best care, and vice versa, the best care often turns out to be the least expensive; it has fewer complications and people get more efficient at what they do. What that means is there’s hope.”

Dr. Gawande talks about how the best healthcare is a systems, not a combination of components (like drugs, technologies and specialists). A system has inputs, outputs and processes. It has a focus on standard work and checklists. The following are what define his system approach:

  • The ability to recognize success and failure. A specialist doesn’t see the end result, but a system has an end-to-end view.
  • It can devise solutions. Forget more training or technology, solutions have standard work in process/checklists that make experts even better.
  • The ability to implement ideas by getting colleagues to go along even when it involves humility, discipline and teamwork.

Please take the time to watch and comment. Thanks.

→ 5 Comments

Posted in Continuous Improvement, Disciplines, Featured, Healthcare, Markets, Process Management

Tagged , , , ,

The Healthcare Reform That Can’t Be Stopped

Posted on April 28, 2012 by | 1 Comment

The following is an expansion of what was first published on Harvard Business Review.

There are few more personal, passionate, and political topics than health care. The reasons for this are clear: Health care spending has reached 17% of the U.S. GDP, outcomes are worse than in other developed countries, and an attempt to fix the system through the Affordable Care Act (ACA) now sits in the hands of the U.S. Supreme Court. But regardless of ACA’s legal prognosis, the Pandora’s Box of true health care reform has already been opened — and it happened before most of us realized.

It happened in the throes of the recent Great Recession when Congress passed the American Recovery and Reinvestment Act of 2009 (better known as the bailout). Nearly $800 billion was targeted to create new jobs, save existing jobs, and spur economic activity. What many don’t realize is that as part of those funds, the incentives created to digitize medical records were massive — amounting to $40,000 to $65,000 per physician and $11 million per hospital for the “meaningful use” of health information technology.

Just as important as the financial carrot was the accompanying stick wielded by the Centers for Medicaid and Medicare Services, the largest single payer in the United States — the threat to reduce payments to physicians and hospitals by 1% per year if they fail to submit invoices electronically. For an industry typically operating in the low single digits of profitability, this is a heavy stick indeed — prompting many organizations not to wait to see if the bill gets struck down before taking the necessary steps to comply.

The upshot of the big carrot and the big stick has been a rapid shift to digital health care, notwithstanding the well-known and well-documented debilitating effects of the current system’s fee-for-service model that rewards health care providers by the procedure.

That fee-for-service model is being disrupted not only by the shift to digital health care but also by an early effect of the ACA, which laid the groundwork for an accountable care model that is very attractive to employers. This less-talked-about part of the legislation aims to reduce unnecessary hospital readmissions through readmission penalties and by funding accountable care organizations that are rewarded not for doing procedures but for keeping a population healthy.

The introduction of this fee-for-outcome model kicked off a change in health care that many believe is irreversible. One of them is Dr. David Burton, CEO of Healthcare Quality Catalyst, a Salt Lake City-based health care technology company focused on a data-driven approach to continuous improvement. Dr. Burton was an integral part of the early data revolution in health care when he was a physician and executive at Intermountain Health Care, the largest health care provider in Utah. “There is a groundswell that is trying to move from fee-for-service and its perverse incentives,” he says. “At some level, it doesn’t matter too much what happens with ACA because the fuse is already lit.”

And no wonder since employers — the forgotten player in the health care conversation — are the ones footing much of the bill. The move to fee-for-outcome payment models holds so much potential to lower costs and improve the quality of care for their employees that it’s hard to see employers letting up the pressure on the health care providers to move in that direction, no matter what the fate of the ACA’s government mandates in the courts.

With incentives reformed, the potential to apply efficiency techniques that work so well in other industries will have a chance to scale up, and initiatives begun long ago will have new life. Burton and Intermountain Health Care, for example, began working with electronic data in the mid-1970s, long before runaway costs prompted any national discussion of health care. Intermountain has also long been a strong supporter of the data-centric Toyota Production System (TPS) that was so effective in disrupting the automobile industry through its focus on data-driven continuous improvement.

Intermountain Healthcare CEO Dr. Charles Sorenson summarizes their successful approach this way: “We end up having less waste (expressed in our business as fewer medical errors), and that reduces cost. Even more importantly, we have the opportunity to not do things that don’t add value.”

Up next: Healthcare, You Can’t Improve What You Don’t Measure

→ 1 Comment

Posted in Healthcare, Markets