The Healthcare Management Council, Inc. Delivering Cost and Quality Benchmarks for your Hospital organization.

Is your organization too flat?

By Thomas Day

I recently read an entry in Paul Levy’s blog, titled “Is your organization too flat?” A pretty good question, and so I read it with interest. The various entries were a disappointment, actually, starting with one post suggesting that BP’s recent reorganization – which reduced their 11 layers to 7 – was suicidal, and then intimated that the recent deep-water explosion was the result. (IMO: 11 layers is ridiculous, and I sure wouldn’t leap to that conclusion).

Another post noted Toyota’s supervisory structures were notoriously heavy, and that’s good given their history of quality – except their recent troubles, which he suggests are not related. And the consensus, which makes perfect sense, was that form must follow function, so different types of decisions made in different departments call for different structures, and so on. The part that was troubling was that all of this was made to sound very complicated – almost mystical, and certainly unknowable without deep insight (and perhaps a mantra or two). Commentators turned phrases such as flat may be more “efficient, but is it more effective?”  Here’s the link so you can read it for yourself.

My own posted response follows:

I doubt that anyone is honestly advocating that BP’s 11 layers of management seems like it might have been the right thing, and moving away from such a structure required a great deal of study to sort out. And I also suspect that no one really thinks that removing front-line supervisors is flattening an organization, or, finally, that hospital work is so varied and complex that these things don’t have “boundaries” of reasonableness.

These questions can be made to seem so complex so as to paralyze common-sense approaches. My apologies in advance if I’ve read the above comments too harshly. But to imagine that layers of assistant department heads reporting to department heads reporting to assistant vice presidents reporting to vice presidents reporting to etc. may provide organizational flexibility, and that it requires study to sort out, doesn’t make sense to me. It seems obviously wrong, just as red is not green.

In a hospital setting, structures get calcified over time – especially when (non-acquired) FTE growth won’t accommodate career/responsibility growth. Thus promotions to really good people serve as rewards for a job well done – guaranteeing structures get complex and layered over time.

It’s pretty easy to measure where structures are not commonsensical and it’s also pretty easy to measure where front-line supervision is starved. And of course different types of work require different structures. Call me Shallow Hal if you’d like, but a great first step is to find these areas and clear them out.

Hospitals can eliminate off quality conditions

Sentara Williamsburg Regional Medical Center , an HMC client, has just announced its sixth straight year without a single case of Ventilator Associated Pneumonia (VAP).  This hospital-acquired infection (HAI) causes death and raises the  cost of care.  HMC has done extensive research on both HAIs and other hospital acquired conditions (HACs).  HMC found hospitals lose $2 million annually because of  HACs – and these HACs are also avoidable.  For more, read here.

Hospitals need to evaluate break-even point for Medicare

HMC has found that current conditions demand hospitals consider the Medicare break-even point (BEP) as a key strategy for profitability.  Medicare is typically the single largest hospital payer by far, covering 45 percent to 65 percent of all inpatient costs. HMC research of 40 facilities revealed only 10 percent of them were profitable with Medicare, and 10 percent were on the cusp of Medicare profitability. The large majority of hospitals lost significant money on Medicare work.

With the healthcare reform bill now law, hospitals face an even greater payment reduction risk. In light of this, HMC found its more successful clients proactively reevaluating their Medicare management and reimbursement strategies. For more on this, please see the HMC press release today.

Is “Best Practice” a noun or verb?

By Shelley Burns

One aspect of my job is to help hospital managers decode a set of performance benchmarks and develop action plans to address gaps the benchmarks uncover. As a result, managers ask me all the time:  “What is the best practice for (insert any hospital department or process here)?”

Many ask as if the best practice is an object, something to be acquired from an external source, or a shiny round solution to all problems – in essence, a noun. Grammar was not my forte, but I learned from “Schoolhouse Rock” that a noun is a person, place, or thing, and a verb is an action or state of being. It troubled me – why is a change or improvement to the status quo (the best practice) characterized as a noun?

I looked up the word practice in the Visual Thesaurus (love it!) and sure enough, it’s a noun.  However, some of the definitions describe verbs: “a customary way of operation or behavior”; “systematic training by multiple repetitions”; and “translating an idea into action.” I really like that last definition!

Scrolling down in the Visual Thesaurus, I see that practice is also a verb:  “carry out, as in job or profession”; “learn by repetition”; “engage in rehearsal”; and “perform.”  Now that makes more sense!

Treating the best practice as a noun – something you can import without consideration of organizational goals, environment, or talent – will lead to disaster or, if you’re lucky, no forward motion. I liken it to my childhood piano experience,  which was similar to that of many other people, I’m sure. I was required to “practice” for 30 minutes every day and I certainly did my time on the piano bench. However, I was a lazy practicer, much more prone to daydreaming about how much better I’d sound on a grand piano, instead of putting the hard work into my pieces so that I could actually improve. How many of us treat the best practice for our departments and processes the same way?

Make the best practice a verb in your organization. Challenge managers to reset their activities between searching for the best practice and actually doing something, no matter how small, to improve the current practice. Research is necessary, of course, but it should follow the 80/20 rule. That is, 80 percent of your time, resources and energy should be spent in doing, repeating, measuring, tweaking, changing, improving – these verbs are the true characteristics of the best practice. Your own practice will improve each time you streamline a procedure or remove an inefficient step. And the more often you practice improvement, the better you’ll become. And pretty soon, the best practice will be the one you’ve built yourself.

Shelley Burns is director of knowledge management at HMC.

Can’t drive 55? Then pull over, baby!

By John Whittlesey

I’ve been reading the latest edition of Modern Healthcare (subscription required) and my blood started simmering again. Reporter Maureen McKinney’s excellent overview of what’s coming down the road with more CMS reporting requirements for hospitals to qualify for their annual full market basket adjustments gives us a sense of where the government is going to accomplish two overarching goals:

1) Improving quality of care across the country.

2) Generating significant cost savings by withholding Medicare payments for off-quality events. It’s a continuation of a philosophy that started with DRG fixed reimbursement in the mid-1980s: if hospitals won’t reduce LOS and resource utilization voluntarily, CMS will force them to contain costs and let market forces allow the strongest to thrive.

The roll out calendar looks a bit like this:

January 1, 2011: Ten new measures to be reported (eight hospital-acquired conditions, including blood incompatibility, UTIs and other catheter infections, and effects of poor glycemic control; plus two AHRQ patient safety indicators, including post-operative PE/DVT’s and post-op respiratory failure), with final approval pending.

2011: Thirty-five additional measures reported, but these would not be used to determine annual payment updates until 2013.

2012: Four more measures reported (two for ER throughput, two for immunizations) for annual payment updates in 2014.

Future: Twenty-eight more measures not required for reporting, but used for future rulemaking.

So naturally the bickering has started around how expensive it will be to collect the data, how accurate the data will be, how the measures aren’t rooted in science, how the reporting parameters aren’t clear, how rural hospitals will carry an undue burden, etc.  Blah, blah, blah. I revert back to my earlier observation of what the federal government’s long term strategy is: If you won’t do it yourself, we’ll force the waste out of the system and let Darwinian theory play out. Do you think CMS really cares about how you get there? You’re all smart people making nice salaries. You figure it out.

We’ve seen many HMC clients demonstrate major improvements between 2008 and 2009 in several AHRQ off-quality indicators, such as decubitis ulcers, post-op PE/DVT’s, and post-op respiratory failure. Yes, some may be from better documentation of present on-admission status, but most of the improvement stems from actually doing something about reducing the incident rates for these indicators. This translates into huge cost savings and better patient care. And it’s only happened because now they are at risk for losing reimbursement. It’s amazing what can happen when your survival depends on it.

The truth is that most facilities are already capturing the data for most of these indicators, and they have structures, databases, and resources in place to handle these and the additional measures. The fact that reimbursement will continued to be withheld for underperformers is no longer negotiable. These are events that for the most part shouldn’t be happening in hospitals anyway, so stop your whining and start figuring out how you’re going to improve care.

John Whittlesey is a principal at HMC.

New patient web site may offer lopsided view of care

By Thomas Day

So now there will be a website for patients to  share detailed views of adverse medical events.  The grandly named “Empowered Patient Coalition,” in collaboration with the Consumers Union Safe Patient Project looks to give voice to these patients and their loved ones.  I hope they’re not offended when I suggest this will not provide reliable or truly analyzable data, as it will be impossible to discern the crazy posts from the legitimate ones. How can I be *so* sure?

I had a knee replaced in September. The surgeon did a great job, the device fit great, the hospital care was spectacular, and I was given a home rehab program to help me heal well and strong. When I saw the surgeon for a follow-up visit, I told him, “Great job, you did your part and gave me a plan to do mine and everything works great!”

And then the surgeon took off. “I can’t tell you how many people blame the surgery procedure for their knee not working right,” he said. “They’re 200 pounds too heavy, didn’t do the exercises for strength or flexibility, and they complain to me about how their knee doesn’t work, and that I can’t expect them to lose weight, and that the exercises were hard. So many patients feel so little personal responsibility for their care and recovery, it’s discouraging.”

I can only imagine how that would look on this Empowered Patient Coalition website – posted anonymously, of course. While it has the patina of an egalitarian, high-transparency effort to bring adverse events out into the open, this looks more like Yelp, but with even greater extortion potential.

Thomas Day is president of HMC.

Watch for the “I-formation”

by John Whittlesey

HMC’s Span of Control Analysis (SOC) measures the efficiency of your departmental organizational structures. With it, we sometimes see the dreaded “I” formation.  It exists when there is a middle manager that reports to another manager or director, and that other manager or director has no other direct reports. It almost always generates an immediate flag for a potential span problem.

There may be logical reasons for this, such as a succession plan, or if one of the managers has specific content knowledge. But generally it means that one of the positions is redundant, and the questions become:

1) Do I need either or both of these positions?

2) Do I have an extra layer of management?

3) Does the under-spanned position(s) have the capacity and the skill set to take on additional responsibilities?

4) How does this structure help or hinder decision making?

Take a look at the example below. The director of supply chain management only has one report; the supply chain manager has 6.8 direct reports. Technically, both positions are under spanned (the director should have about four DREs and the manager should have about 16 DREs). The department is too small to support its existing management structure. So, one of the positions is redundant, and one of the positions could take on additional responsibilities – such as patient transport, valet, security, sterile processing, or the print shop.

So now it’s up to the senior team to evaluate the skill sets and abilities of the two management positions and make a decision. “Do I get rid of the director, or do I get rid of the manager?”

John Whittlesey is a principal at HMC.

Better than nothing

By Thomas Day

AHRQ (The Agency for Healthcare Research and Quality ) recently issued a report about infections patients acquired while receiving healthcare treatment. The agency asserted that efforts to lower these infections had met with little success. True, the report used data through 2007, so it’s dated. And efforts since 2007 have surely been ramped up, given the success of checklists in their prevention and the focus of professionals on the problem.

Three societies – the Society for Healthcare Epidemiology of America, the Infectious Diseases Society of America, and the Association for Professionals in Infection Control and Epidemiology – went further. In a statement, they criticized the reliance on administrative billing and coding data from the CMS,saying it “paints an inaccurate picture of healthcare-associated infections for the public.”

Not so fast!!! Assembling these data has been a giant step forward in providing a much higher level of transparency to the issue and ranking the performance of healthcare providers in their prevention. To criticize the use of billing and coding data  is a bit like criticizing economic analysis built from income tax returns. Income tax returns are also prepared for a different purpose, are self-submitted under penalty of misrepresentation, and submitters are optimizing their own data within the limits of law. If billing data is being mis-submitted and overstates infections – well then I’d have to wonder why… and expect the now-harsh spotlight on the infections reported would certainly fix things for the better.

Surely, I’d feel more comfortable if these groups offered their own comprehensive assessment, didn’t cherry pick a few encouraging stats, and provided a method that could be replicated across the board. Absent that, it sure sounds like unproductive whining to me. Give me that CMS data any day. It’s better than nothing.

Thomas Day is president of HMC.

HMC: AHRQ quality report too little too late?

By Shelley Burns

I am a hospital. Unless I have my head under a rock, I know that healthcare quality is a hot-button issue for the government, the public, think tanks and the media. I am taking flak from all sides: Medication errors are killing 100,000 annually. Methicillin-resistant Staphylococcus aureus (MRSA) and other infections are rampant. We have been woefully unprepared for the swine flu epidemic. People complain that my bills are too high – but I know my margins are thin, payments are often delayed, or they are less than my costs.

To help cure healthcare’s quality ills (a good thing), the government publishes a report where I can learn how to fix quality problems. It cites increases of post-operative sepsis and post-operative Catheter Associated Urinary Tract Infections (CAUTI) through 2007 as an indication of how well (or how poorly) efforts to reduce hospital-acquired infections have been?  Please.

In the 28 months since the last data bit was captured for this report, a lot has changed. Almost 18 months ago, the Centers for Medicare & Medicaid (CMS) stopped reimbursing for a long list of hospital-acquired conditions and infections, including CAUTI. In 2007, billing and coding data were not required to carry a Present-On-Admission (POA) flag – making it difficult to readily ascertain whether an infection was due to hospitalization or, oddly enough… present on admission. It’s required, now.

More importantly, in the past 28 months, we hospitals have made big changes internally. We’ve had a paradigm shift – we know that good quality healthcare costs less and that variation – in cost, in practice, in utilization – is cause for investigation. We’ve improved our tracking programs, implemented electronic medical records (EMRs), posted our quality data to multiple sites, and beefed up our technology and education to help us eradicate our quality issues. We’ve done a lot in 28 months.

So how about giving me some data I can use? Help me identify my quality issues, how big they are and what I might do to fix them. Give me a recent and repeatable picture of the quality at my hospital so I can set goals and measure my progress. Give me real time dashboards so I can see when my quality issues get out of control. Just don’t tell me my quality isn’t improving based on what I was doing 28 months ago.

Well, I have a suggestion for the here and now. Want to see how your hospital cost and quality stacks up and whether you’re improving? Want best practices that are actually in practice (and not just on paper) at other hospitals? Want a dashboard to monitor quality events in real time? Call HMC.

Shelley Burns is director of knowledge management for HMC.

Much ado about nothing in proposed Medicare cuts

By John Whittlesey

On Monday, the Centers for Medicare & Medicaid Services (CMS) proposed to cut Medicare payments to acute-care hospitals for inpatient services by 0.1 percent year-over-year, or $142 million in fiscal 2011. This has created a bit of a groundswell, according to an article published Monday in Modern Healthcare.

However, 1 percent isn’t enough of a cut to spur administrators into action.  And, so often, these cuts get delayed or reversed from the budget proposal.  It’s often a shell game. The bigger issue is what will happen with the scheduled 21 percent decrease in Medicare MD payments in the next three months.

Will Congress allow the decrease to go through as projected in the health insurance bill, or will it renege? That would blow the projected cost savings over the next 10 years out of the water and give critics legitimate fodder to say that the bill didn’t work.

For more, see this.

John Whittlesey is a principal at HMC.