Uncategorized•
on April 6th, 2010•
By Karen Jorge
I had a doctor’s appointment the other day. While making small talk as he looked through my records, the doctor asked me what I do for a living. After I told him that I work in hospital performance improvement, he said that he was very concerned about healthcare reform, because it made everyone think that they had to provide an “impossible” combination of high-quality and low-cost care, with too much of an emphasis on cutting costs.
While this particular physician may have been correct that only focusing on cutting costs won’t improve care, he missed the point. High-quality care doesn’t have to cost more. It is in fact very possible to inexpensively provide high-quality care precisely because providing such care lowers its delivery costs. Poor quality is much more expensive, as it requires extra resources to fix problems, and results in longer lengths of stay and higher malpractice costs.
HMC has found that hospitals that provide the highest quality care are usually some of the lowest-cost performers. Driving organizational change through quality-improvement initiatives can ultimately lower hospital costs by avoiding expensive off-quality events, lowering length of stay, and making care more efficient. As an added bonus, approaching hospital performance improvement in this vein can be more valuable and palatable to physicians – who are primarily (and understandably!) concerned with providing the best possible care. It also can facilitate getting them on board with strategic improvement projects.
The relationship between cost and quality doesn’t have to be an antagonistic one that makes a hospital try to determine just how much money it can cut from the budget before quality suffers. Instead, by “leading with quality,” the cost drops will follow.
Karen Jorge is an HMC analyst.
Uncategorized•
on April 2nd, 2010•
By Pamela Paxton
New hospital construction – such as that ongoing in Baltimore, for instance – provides a perfect opportunity to go green at your facility. Not only are environmentally-sound practices good for the environment, they can reap big financial benefits, too. Read here about Metro Health’s successes with cost-saving green construction and practices.
Metro Health Hospital, the recent winner of the Practice Greenhealth award, has made great strides toward implementing eco-friendly practices (going green), which have afforded the hospital and its community many benefits, including increased patient safety and satisfaction, decreased costs, and a negative environmental impact.
Pamela Paxton is senior healthcare knowledge consultant at HMC.
Uncategorized•
on April 1st, 2010•
By Thomas Day
I read a very good article in the Harvard Business Review the other day, titled “Fixing Health Care on the Front Lines,” by Richard M. J. Bohmer. (While I’m not a frequent reader of HBR, a friend and former HMC’er sent it to me.) We hear lots of talk about “redesigning” healthcare, but until now, it has all sounded a little vague, very global, ill-defined, and often politically motivated to me. However, Bohmer puts together some very interesting frameworks for what a redesign actually means to providers and how to proceed.
Let me highlight some of the key insights I pulled away from the article. The very best one was the top level assessment, where he states health care providers must “excel at performing three discrete tasks simultaneously.” These tasks are:
*Rigorously applying scientifically established best practices for diagnosing and treating diseases that are well understood.
*Using a trial-and-error process to deal with conditions that are complicated or poorly understood.
* Capturing and applying the knowledge generated by day-to-day care.
Doesn’t this get at the core of the issue? Not every disease and patient requires Sherlock Holmes-levels of detective work, and these cases should be handled differently than those that are more confounding, variable, and complicated. Additionally, Bohmer notes that “more than a quarter of Americans over 65 suffer from four or more interacting diseases.” These sorts of complicated patients need different treatment processes and methods, “corralling their variability” from the more predictable patient cases.
Finally, he insightfully observes that medical knowledge comes from more than research and scientists. Rather, it comes from all directions in the daily practice of medicine. The consequence of this is far reaching – but it’s an open question about how you capture individual caregiver knowledge, synthesize it, and distribute it for use to all other caregivers.
Bohmer also offers excellent eye-opening examples, citing how “Intermountain has protocols on roughly 70 conditions that make up more than 90 percent of the caseload.” He notes how a “hospital in a hospital” can separate cases benefiting from a tight protocol from those that require careful and ongoing diagnosis, treatment, and monitoring.
All in all, this article is a real mind-bender.
Thomas Day is president of HMC.
Uncategorized•
on March 30th, 2010•
By Karen Jorge
I’ve been reading Atul Gawande’s The Checklist Manifesto: How to Get Things Right, which, as the book’s title suggests, discusses the surprisingly significant positive effects of implementing such a low-tech system (a checklist) in various fields.
Along the way, Gawande discusses how in complex situations that demand expertise from many areas (e.g., medicine), it is often most effective to farm the responsibility for decisions to the most distal areas – to the people who are actually on the ground doing the work, instead of locating it in some central decision-making body. In one anecdote, he explains that one reason for governmental failures in the response to Hurricane Katrina was that nobody could decide who should be making the decisions. The only thing various levels of government could agree on was that some centralized body should be calling the shots, even though the central body was far removed from what was actually happening. The governments chose that approach instead of letting people on the ground figure out how to best respond and adapt to the constantly changing situation.
Interestingly, Wal-Mart Stores(!) staged one of the most effective responses. The CEO decided that each and every Wal-Mart employee be empowered to make decisions that they deemed necessary, and the employees certainly stepped up. Store managers distributed food, water, and supplies to first responders, created rudimentary but effective methods to systematically hand out goods to displaced citizens, and responded to the needs they saw. In essence, they identified problems and solved them, something that couldn’t be accomplished with higher levels of centralization.
This example came to mind when I was listening to the impressive presentation given earlier this week by Kathy McCoy, Dr. John Kaiser, and their ICU team at Sentara Williamsburg Regional Medical Center. They haven’t had a case of ventilator-acquired pneumonia (VAP) in six years, which is particularly notable because VAP is the most common hospital-acquired condition in the ICU, and occurs in almost one-quarter of patients on mechanical ventilation. Six years without a single case!
As they explained how they accomplished this feat, I was struck by how many of the elements of on-the-ground responsibility that Gawande espouses in his book were also integral to the success at Sentara Williamsburg. Notably, the impetus for this project didn’t come from some higher-level quality or performance improvement (PI) department, but from patient care providers themselves. A small group of nurses, respiratory therapists, physicians, dietary staff members, and pharmacists decided to form a council, listed a number of possible projects, and chose to tackle VAP. They created a plan, implemented it, and consistently evaluated it to make sure that it was: A) followed; and B) effective. By owning it at the “grassroots” level and educating other staff members to ensure they owned it, too, they were able to achieve significant results and solve obstacles they encountered.
Of course, you still need quality and PI departments. These departments often have the requisite clout, resources, and experience, as well as a mandate to make important changes in hospitals, and we’ve seen them be highly effective. However, if all of the innovation- and change-related responsibility is centralized in these departments – if they are the only ones empowered to take on problems and solve them – then care providers on the floor might abdicate responsibility. It can cause the classic “someone else will take care of it” mentality. In reality, these on-the-ground people often have the best view of what areas need change and how to get it accomplished. The flip side is that uncoordinated, independent players can create chaos. So developing a balance between grassroots and higher-level change is crucial, and can be accomplished through quality and PI departments actively supporting and encouraging grassroots-level innovation.
Karen Jorge is an analyst at HMC.
Uncategorized•
on March 29th, 2010•
By John Whittlesey
For some years, the surgical supplies cost category has remained a most frequently cited Top 10 excess function, and with the largest excesses. It’s a complex and problematic area to manage well. Just think of all the stock keeping units (SKUs) and contracts that materials management staff and the surgical team must track. Supply chain management (SCM) concepts have done great things to help streamline and consolidate inventory handling operations, and they can help provide insights into lowering costs for surgical supplies. But what happens when you’ve driven as far as you can down those SCM avenues?
A materials manager frequently thinks that once the contract is negotiated, their job is done. They will typically review the purchase orders and inventory to make sure that the orders are adhering to the contract, and that the payments are correct. But what about utilization? A contract doesn’t even try to address that issue. Even if a contract has tiered pricing for various levels of implants (joints, spines, or even pacemakers), as long as the SKU matches the price list, you’re compliant. But SCM needs to evolve to a second generation of improvement: effective utilization. Contract compliance doesn’t assist in utilization.
I often get blank stares when I ask surgical managers how or if they track which joint implant was used and why. The surgeons know what clinical conditions the patients have, what their activities of daily living (ADL) needs will be after discharge, their comorbidities, etc. These factors influence their decision about if they should use a low- , medium- , or high-demand knee system. You know for sure that the vendors understand that decision tree better than you do, and will try to influence those decisions to upsell whenever they can, or even go off-contract to get full price.
What’s wrong with everyone else knowing that? I encourage the joint teams to sit down with the surgeons, include materials management staff, AND even the vendors. The group should establish the clinical criteria about what particular joints would be best used in which type of patient. Cost is a secondary byproduct here. Develop a decision grid, listing all the clinical criteria on the left side, and at the top, include the grade knee or hip system. Then track usage for a month, aiming for 80 percent compliance to the clinical criteria that the surgeons established.
At the monthly joint team meeting, talk about the results and why certain patients or physicians didn’t meet the criteria. If the criteria need adjustment, fine – if behavior needs adjustment, even better. The costs will drop and you’ll be in good stead for the next contract cycle.
John Whittlesey is a principal at HMC.
Uncategorized•
on March 25th, 2010•
By John Whittlesey
More and more, hospitals are finding themselves trying to figure out how to improve quality, not only for quality’s sake, but to minimize financial exposure. The U.S. Centers for Medicare and Medicaid Services (CMS) has laid the path by denying reimbursement for a host of Present On Admission (POA) conditions. If private insurers haven’t already followed suit, then shame on them.
One of the glaring holes that I see lies between a typical hospital’s quality management department and the finance department. Aside from setting the annual budget, very few managers in either area even speak to each other outside of the cafeteria line. Periodically, I ask either manager if one knows about the other’s annual performance improvement plans and goals. I also ask how these goals and plans may relate to the overall facility strategic plan. Then I get the proverbial deer-in-the-headlights stare. Intuitively, the different managers know their departments should be more integrated, but in the absence of a higher plan set by the senior team, it just doesn’t happen.
So I encourage hospitals with large cost, quality, and utilization issues to establish an annual – I’d love quarterly! – strategic summit with quality management and finance staff present to review individual strategic plans and see how they support each other. They can also look at ways to integrate their plans with initiatives meant to overcome the financial and clinical challenges facing the hospital.
Here’s a “top secret” tip: the HMC Benchmark gives you the answers, and we’d be happy to discuss it.
John Whittlesey is a principal at HMC.
Uncategorized•
on March 24th, 2010•
By Thomas Day
Okay, as the histrionics of the legislative process start to fade, the question remains: “So what went down, anyway?”
I’m sure we’ve all read that hospitals will benefit. The theory is that there will be fewer uninsured people and insurance companies will no longer be able to cap or deny coverage. More business means more profit, right? Well, more than if you didn’t have that paying business, sure. So that’s a boost. But a remarkable fact is that the majority – actually the large majority – of hospitals lose money on their Medicare and Medicaid funded business. Some lose a lot. While the hospitals need the volume to survive and cover overhead costs, these patients bring in substantially less revenue for the same work than privately insured patients.
Many CFOs are figuring out what their core cost structure needs will be to come close to a financial break even on Medicare patients. The CFOs believe that this will be increasingly important as the country ages, and Medicare represents about half their hospitals’ business and it’s growing fast. Medicare and Medicaid reductions figure highly in the CBO’s cost impact analysis. Further, the ED still has to treat illegal immigrants, who are not allowed to buy coverage on the insurance exchanges. And if you are a Disproportionate Share Hospital, you can count on losing as much as half that Medicare and Medicaid money.
So again: will hospitals thrive? That will depend entirely upon their ability to deliver high-quality medicine while reducing unnecessary cost. Is Healthcare Reform legislation a boon to hospitals? You tell me, as the jury has yet to return a verdict.
Thomas Day is president of HMC.
Uncategorized•
on March 23rd, 2010•
By John Whittlesey
Are you speaking with your physicians?
I mean really talking to them, face to face, honestly, and letting them know how they are performing? When I’m on the road doing presentations to clients, talking about clinical excess, the cost of off-quality, or physician variation, usually there aren’t any physicians in the room. And if there are, most will have absolutely no idea what benchmarking is. Nor that the hospital is participating in comparative analysis, or that the doctors’ clinical costs are even being evaluated. So, needless to say, getting buy-in on performance improvement projects from the physicians can be tough.
I always encourage senior management teams to show their physician leaders the data, talk to them about the quality of care issues in the organization, profitability (or lack thereof), and engage them to find a solution. The data that we use for the Clinical and Quality benchmark is straight from the facility’s own databases – though I might recommend blinding it to protect the guilty.
The best example of a collaborative executive-physician discussion I’ve seen happened a few years ago. It was at OSF St. Anthony Medical Center in Rockford, Ill. I was asked to come in for a special session with their orthopedic surgeons. The management was trying to build a case to go to capitated pricing for joint implants. They assembled a nice array of national, internal, and HMC benchmarking data to prove that the hospital was losing money on each joint case. That data also demonstrated the facility’s comparative cost per case was higher than the national averages, and the sales reps were would soon be making more per case than the hospital would. The management didn’t want to limit the vendor list, since each surgeon used a different product line, but they needed them to not side with the sales reps when the letters went out demanding capitated pricing. It worked beautifully, and they’ve moved from one of the highest cost per case facilities in the HMC database to being consistently one of the lower cost per case peers, all without a significant change in vendors or product offerings. They’ve replicated this dialog- based strategy with their spine surgeons and cardiac surgeons, as well.
So whether you’re using our benchmarks or your own internal data, there’s really nothing wrong with posting comparative cost and or quality results for your medical staff in conspicuous places, such as the physician lounge or the surgery lounge. You do it all the time with your own quality or PI results, so why should the physicians be exempt? I would also recommend developing your own internal physician dashboards or scorecards. This would not be specifically for credentialing purposes, but more to provide an opportunity to have an open, honest conversation with doctors about a multiple of indicators (e.g., cost per case, LOS, off-quality cases, variance reports, profitability, problematic DRGs, et cetera). Physicians are very data-driven and generally don’t like to be outliers. But if they have no idea how they stack up against their internal peers, how can you expect them to participate in PI initiatives?
John Whittlesey is a principal at HMC.
Uncategorized•
on March 18th, 2010•
By Thomas Day
In a prior article, we noted what “Should-Not-Happen Events” cost a typical 200-bed hospital. So the question now becomes: “How can I reduce these events at my hospital?” The answer seems easy – it’s just a matter of funding quality management departments adequately, right? Ummm, well, maybe not. Traditional quality management functions ensure that your hospital is a safe environment for healthcare, and that most cases proceed without problems.
However, the most expensive off-quality cases can happen from specific events – and from specific hospital process failures. You can see this by looking at the Quality Percentile rankings (AHRQ results) for facilities in comparison to what they spend for traditional quality management functions. In the chart below, the more spent on traditional quality management (further to the right) should correspond to better quality (further up), or fewer “Should-Not-Happen Events.”
However, that’s not what you see below – it’s as if we need to go through the Looking Glass to see the world of quality as it really is. On the other side, what we do see is that out of thousands of cases, a relatively small number of problems – five to seven percent of the total – along with a handful of physicians – five to ten percent – cause millions of dollars of off-quality spending. To address this problem requires more than the traditional solutions – they require such things as Performance Improvement campaigns or the steady monitoring of hot spots. But more on that next time.
Thomas Day is president of HMC.
Each circle represents a hospital with the size of the circle representing the total $ spent on Quality Management. The vertical scale measures quality performance---the best performers having a higher aggregate percentile ranking. The horizontal scale measures quality spending per adjusted admission.
Uncategorized•
on March 17th, 2010•
By Thomas Day
Every now and then you have to scratch your head and wonder who’s the editorial watchdog at the Boston Globe. According to this article, just fixing a hospital’s process flow magically solves the major problems of healthcare! Ok, here’s how we know that: Let’s pick a place (ED) where a random number of people with random illnesses enter a hospital, and where wait times are complex, and we’ll improve that flow. We’ll extrapolate by suggesting this is a new and largely untried idea and multiply it by huge numbers in favor of the process flow solution. Then we can say: “ Voila! Mission accomplished! Hooray! We can pay for our new healthcare for all.”
Well, maybe not. This fix still won’t address the fact that large provider systems such as Partners Healthcare monopolize price negotiations with their insurance plans. Nor will it make hospital-acquired infections disappear, insure that drug pricing is fair and rational, render tort reform unnecessary, suddenly cover the uninsured, or minimize the fact that some hospitals need to account for as many as 650 different insurance plans. Nor will it stop the legions of bacteria, such as MRSA, in their relentless march towards total antibiotic resistance.
It will make the ED move quicker, however, and of course that isn’t a bad idea, but really now….
Thomas Day is president of HMC.
