President Obama has offered a few olive branches to Republicans reluctant to vote for health reform as it has been constructed by congressional Democrats. Not that his proposed changes are likely to attract many GOP votes—he clearly still hopes a law can be passed using the reconciliation process. Still, he's included a few interesting ideas to the mix.
One of the more intriguing ones is the idea of initiating so-called health courts as demonstration projects to determine whether they would help alleviate both the practice of defensive medicine as well as the filing of truly frivolous medical malpractice lawsuits. Such mechanisms are used in other countries, are fair to both sides, and have proven a less expensive alternative to jury trials.
There are a lot of different ways to structure them—from compensating certain types of injuries outside the tort system to creating a voluntary program that links error disclosure with structured arbitration and a predictable process for determining damages. Either of these innovations would be leaps and bounds better than the current "ad-hoc" treatment of medical malpractice cases as they move through the existing court system.
Currently, two cases with the exact same facts might be decided differently by different juries. And under the current system, forget about consistency with damage awards or accumulation of any institutional knowledge about fair judgments for common complaints.
Prospects for this idea actually making it into law, however, seem dim for a couple of reasons. First, Republicans seem unlikely to cross the aisle for healthcare reform now, as the process has become a pollster's nightmare for Democrats. A political cynic might say, 'why let them off the hook when you have them where you want them?' And why would Democrats include such sweeteners if they don't entice Congress members to come to their side? This kind of political ping-pong is one reason why nothing of substance ever seems to come out of Congress anymore. It's more important to "get" the other party than to compromise, but that's another story for another day.
Forward-thinking healthcare organizations have done as much as they can to reduce their potential exposure to malpractice lawsuits that can blow huge holes in their balance sheet. Many—not all—large healthcare institutions are self-insured, so they effectively set their own rates.
As such, they spend a lot of time and effort trying to prevent the kinds of mistakes that lead to big payouts. Smaller institutions who pay for malpractice coverage from outside companies also do this, but all could take lessons from Arizona's Banner Health, which I profiled in a case study for the most recent HealthLeaders Media Breakthroughs report.
Banner has reduced its malpractice reserves significantly over the past few years thanks to investments in quality and patient safety that ensure physicians practice under evidence-based guidelines, or that they justify their departure from those guidelines. As a result, Banner's malpractice expenses have been cut in half, long term, says chief financial officer Dennis Dahlen. Five years ago, Banner started implementing a decision support system for its obstetrics department, which has radically reduced variability and poor practices of OB care in its hospitals.
"Our claims losses are miniscule now in the obstetrics area, whereas they used to be the largest share of our annual claims pool," he says. "We didn't expect it to be as marked a decrease as we've seen, but we're of course very pleased."
Banner's actuary has been watching claims fall more than expected for the past three years, and finally proclaimed the reduced claims rate sustainable, thus allowing the system to reduce its reserves significantly.
"The net result for 2009 is that our malpractice expense will be almost zero," Dahlen says. "I expect it to go up to probably a little less than three-quarters of a percent or 1% of revenue and that'll be our normal run rate."
Given those results, do you think health courts would reduce malpractice rates, frivolous lawsuits, and the practice of defensive medicine? Or is putting a good idea into a demonstration project another way of pushing a nagging problem under the rug?
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One well-known saying in poker is that if you don't know who the sucker is at the table, it's probably you. The same could be said for healthcare reform. And after looking over my colleague Janice Simmons' reporting earlier this week on what's in the president's agenda on healthcare (better late than never), the taxpayer is the clear sucker, but I don't want to take my analogy too far. There are others.
Because it appears the two bills passed in 2009 will have a difficult time being reconciled thanks to the Republicans' January Senate victory in Massachusetts, the president has reopened the bidding, as it were. As I've written before, the concept of shared sacrifice and a focus on improving efficiency and cutting costs was missing from those bills to begin with, and whatever cost cutting or sacrifice that was in them has been slowly gnawed away by skilled lobbyists. It's still all about coverage, though it remains to be seen how good that coverage will be. Don't count on that changing much following yesterday's conference with Republicans.
The president welcomed the minority party into the discussions with hopes that refining the two bills will bring on enough Republican support to pass some version of health reform this year. At least that way, during elections, members of Congress can point to something, however gutted, that they've actually accomplished over the past two years.
By now you've probably guessed I'm no fan of the process, nor of the horse-trading that goes on when Congress attempts to tackle legislation of substance.
So who's the sucker in healthcare reform? You are, in a couple of different ways, but the main way you're a sucker is in the "individual responsibility" area of Janice's story.
Under the president's new plan, all individuals would be required to obtain insurance coverage. But "require" is such a weasel word.
For those who don't, the President's proposal follows in part the Senate approach, but lowers the penalty that individuals would pay—from $495 (in the Senate bill)—to $325 in 2015; and from $750 to $695 in 2016. Subsequent years would be indexed to $695.
In other words, you can go without insurance, but it'll cost you the amounts I just listed. Seems like a bargain to pay the penalty—something many Massachusetts residents quickly discovered when their state attempted universal health insurance two years ago. But even if you've figured out how to game that system, you still get nailed as a taxpayer.
Here's why. The consumer protections in the president's proposal ban the exclusion of individuals with pre-existing conditions. That means I can get insurance at any time. So why would I choose to pay thousands of dollars a year in health insurance premiums if I could pay the minimal fine each year and get insurance—no questions asked, essentially—when I got sick? I wouldn't, and neither did loads of people in Massachusetts when a similar low penalty was enacted.
The result is that nearly everyone will be "covered" whether they're insured or not. They'll be treated, and someone else will pay the cost. That's the way it is now, and that's the way it will continue to be if these bills pass—just under a different mechanism. Premiums from commercial insurers will be sky-high, if commercial plans even continue to exist long-term. What better way to get the deeply unpopular public option back in the mix in a few years?
And even if commercial insurance doesn't go away, it certainly won't be cross-subsidizing the government payers' underpayments anymore. So then there's no other option but the public one, which, oh yeah, has supposedly been taken off the table. Forgive me for seeming cynical, but some of these regulations, it seems to me, if enacted, will leave no other option long-term than—you guessed it—the public option.
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Listen to Michael Young talk for a little while, in his rapid staccato bursts, and you would be forgiven for thinking he leaves a little something to be desired in the "heart" department—and I'm not talking about bypasses or stents. But the CEO of Atlanta's Grady Health System is a man on a mission, and that mission is keeping the city's safety net institution from falling irrevocably into ruin.
He makes no apologies for the tough choices he's had to make over the past 20 months.
"Since we didn't have any money, getting money was our primordial focus," he says. So he looked at payroll and purchasing as two areas that could offer quick rewards. Grady faced a common problem among big safety net institutions in that its public perception was even worse than the very real and terminal financial problems it faced.
"The hospital was so bad no one wanted to work here," he says, while adding—all in the same breath—that given the right resources, his team was able to recruit 450 nurses in 12 months.
That allowed them to start with big costs first: As part of the nurses initiative, Young's team went after the $18 million Grady spent annually on "agency spend," services that provide temporary nurses, ultimately cutting it to $2 million. Agency nurses cost at least twice as much, hour to hour, than hiring nurses to work for you full-time—to say nothing of the inefficiencies—and patient safety issues—that are more likely to result from using nurses unfamiliar with the institution or its physicians.
Undercompensated by main payers Medicare and Medicaid, and neglected by elected politicians who seem to think big-city hospitals should perform double-duty as jobs warehouses, many safety net hospitals have become too far gone to save over the past 20 years or so. But Grady's not there yet. So Young has gone crazy. His team has partnered with IMS' S3 Management and Consulting Group to streamline the flow of instruments between the central sterile processing department and operating room, while dramatically improving communication between the two areas.
He's also gone so far as to install a modern Kronos labor management system that allows employees to clock in only by fingerprint.
"Mysteriously our overtime dropped," he says, quickly switching subjects, as is his wont. "The question I ask is would my mother come here as a patient? I know I'd come here now, and we just changed health plans so our employees are incentivized to come here."
You've seen teams hire nearly entire coaching staffs in football. In a football-mad state, that's just what's happened at Grady. Young brought his chief financial officer and chief information officer (who will permanently remove Grady from paper processes with an EMR implementation beginning a year from now) with him from Buffalo in a package deal. The big problems at Grady allowed him to take big risks.
"What we've done here is we've implemented five years of change in 20 months. Someone said if Custer had a cliff behind him he might've had a chance," he says, alluding somewhat hyperbolically to the life-or-death struggle he sees facing Grady. "And we had a cliff behind us."
Meanwhile, he's also cut back on some programs that have vocal support, most notably a dialysis program in which many of its users claim they have nowhere else to go to get care.
Sometimes, tough choices need to be made—especially when caretakers have done nothing with an institution other than paper over serious long-term viability issues. Grady isn't being paid to be all things to all people. Would those who are making so much noise about Grady's cuts be happy to use up the system within a few years, forcing the hospital to close?
And don't say it couldn't happen. The fact is it's happened in dozens of cities as large as Atlanta. And New York is on the ledge with St. Vincent which, while not a public institution, it still has all the problems and serves the patients no one else wants. A failure of Grady as an institution would affect many more people than the few dozen who can't afford dialysis treatment.
So let Michael Young work.
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Here's a statement that should get your attention: CEOs are less concerned about quality and patient safety this year than last year. Actually, that broad conclusion is tough to draw from the data contained in the HealthLeaders Media Industry Survey 2010, which went live on our site yesterday. But what's clear is that long-term goals are dropping in importance in favor of initiatives that can bring near-immediate returns.
Without a doubt, CEOs are spending more of their intellectual capital this year on patient experience/satisfaction as well as cost reduction, according to the survey.
CEOs, obviously, drive their organizations, so what they say about their priorities carries a lot of weight. We actually asked CEOs to rank their top three priorities for the next three years, and what came back showed us that CEOs, perhaps in light of the turbulent economic times, are trimming back the importance they give to quality and patient safety (only 39.5% selected it this year, compared with 69% in 2009) while patient experience/satisfaction (33.98% vs. 25%) as well as cost reduction (35.36% vs. 19%) recorded big increases.
Interestingly, physician recruitment and retention dropped from 43% in 2009 to 35.36% for 2010. So what conclusions can we draw from this data? Perhaps CEOs feel like after years of concentration, their quality levels don't need as much attention. Perhaps more of them have achieved their short- and medium-term goals with physician recruitment.
But in the bigger picture, quality still leads the herd, and physician recruitment isn't far behind. They just have much less of a commanding lead than they did before. I think some areas simply have improved so much that they aren't highest priority anymore, at least at the top levels of the organization. That certainly seems true for revenue cycle, for example, which only 7.73% of CEOs ranked as among their top three priorities for 2010, compared with 23% in 2009.
But I think there's something else at work here. Short-term thinking has invaded the decisions emanating from the C-suite.
On first glance, that seems myopic. But it's not necessarily a bad thing: Sometimes a crisis requires you to dramatically shift your priorities, and if 2009 wasn't a crisis year with the recession and healthcare reform looming on the horizon, I don't know what would qualify. For example, physician recruitment is a long-term investment in a single human being. Improving quality also takes time, and while it generates an ROI, its ROI doesn't flow directly to the bottom line.
Banner Health, for example, spent big bucks on driving quality at their organization. They don't regret it. In fact, their quality scores in the obstetrics department recently meant they could reduce their reserves for malpractice to near zero for 2010. But it took at least three years of low or no claims to make the actuarial team comfortable with reducing those reserves and letting them flow to the bottom line.
CEOs in 2010 don't necessarily have that luxury of waiting for results, no matter how impressive they might eventually be. And that's the key for CEOs in 2010. They want to expend their energy on initiatives that bring immediate or near-immediate return because frankly their jobs, the jobs of others in the organization, and in some cases, their hospital's existence, are on the line.
Obviously, this is just very narrow snapshot of the wealth of information available in our survey. I encourage you to spend a half-hour on it in the next week or so. We've broken the results down by pillar, meaning there's one for CEOs, one for quality, one for CFOs, etc.
I've focused here on one question from the CEO pillar and have been able to draw several conclusions from it. But there's a story behind every question and knowledge to be gleaned from every pillar. Delve into the survey's findings now. You won't be sorry.
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Where Congress fails, can the healthcare industry succeed?
It can, and it already is.
While the president started 2009 with a promise to reform healthcare, that process seems as though it's on life support. I've detailed many times in this space the shower of good ideas for improving quality and cutting cost in healthcare that have hit the cutting room floor as the healthcare reform debate devolved into an exercise in trying to cover the uninsured—a laudable goal, but definitely not healthcare reform. Now, thanks to a yearlong process that has disillusioned voters, even that goal has seemingly been discarded as a legislative attempt to solve healthcare's many woes seems as far away as ever. Not that covering the uninsured isn't a laudable goal, but healthcare reform should be about sustainability.
That's why the Quality, Efficiency, Safety, with Transparency (QUEST) program, a joint project with the Institute for Healthcare Improvement and the Premier Healthcare Alliance, is a ray of light in the darkness. QUEST helps hospitals to do what they have trouble doing alone by establishing a framework and data center that allows hospitals to compare themselves against each other, and a way to collect data and pool knowledge in such a way that sustainable cost and quality improvements can be made more quickly than if they were attempted by a bunch of hospitals operating individually.
Even though Premier has more than 2,000 hospital members, it's owned by a group of about 200. Many of those 200, including Arlington-based Texas Health Resources, have become guinea pigs for QUEST, which benchmarked participating facilities using data from Premier's clinical database to determine the "baseline" level of performance in cost, mortality, and evidence-based care delivery. Its goals are to:
Save lives: Eliminate avoidable hospital mortalities.
Safely reduce the cost of care: Reduce the costs for each patient's hospitalization.
Deliver the most reliable and effective care: Ensure that patients receive every recommended evidence-based care measure.
Improve patient safety (year two measure): Prevent incidents of harm in more than 30 categories, including healthcare-acquired infections and birth injuries.
Increase satisfaction (year two measure): Improve the patient's overall care experience and loyalty to the care providing facility.
Twelve of THR's 14 hospitals are participating in QUEST, with the goal of reducing unnecessary deaths and cutting costs.
"We believe this is helping us set metrics that focus specifically on how our hospitals can reduce the cost of care and deliver more reliable evidence based outcomes," says Doug Hawthorne, THR's president and CEO, and a former board chairman at Premier. Hawthorne says the QUEST program alone, through its focus on evidence-based medicine guidelines and its cost metrics, has saved its participants $800 million and saved 8,000 lives in its first year (QUEST is now in its second year). Hawthorne says those results are credible based on what he's seen in cost savings in his own 12 QUEST-participating hospitals.
Participating in QUEST helps standardize patient care protocols as well as equipment and supplies, he says, helping THR's strategic goal of achieving "systemness." That means he's able to present data to insurers that convey THR's story across the system, rather than by individual hospital. He also says QUEST indirectly will help THR save $8 million over the next few years through process improvement exercises that allow THR to contract as a system for electricity and gas, for example, and to pursue the viability of long-term strategic possibilities like an integrated health campus model as opposed to a hospital-centric one.
Put simply, it helps hospitals—even those under the same corporate umbrella—to work more closely together. It makes sense. If two heads are better than one in helping solve a problem or group of problems, 200 are even better. More than 30 new hospitals joined the QUEST program recently.
What are the other few thousand waiting for? An act of Congress?
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The rumor mill has President Obama naming Geisinger Health System CEO Glenn Steele as the new chief of the Centers for Medicare and Medicaid Services, a position that has been vacant since before the Bush administration left office. At this point it's still only a rumor, and most people close to him are denying it, but some were speculating the President would even announce the nomination during his State of the Union address.
That didn't happen, but things change fast, and if he's planning on making Steele the nominee, it could happen as soon as the vetting process is complete. People have been wondering what Obama has been waiting for, assuming he was thinking Congress would pass a health reform bill that a new director could help implement. That justification doesn't hold much water for me. I don't think any argument could justify why an agency that controls 20% of the entire federal budget has been vacant for a year, but none of our elected leaders—even those in the opposition—are making a big deal about it.
Though the healthcare reform bills have little to do with cost control and much to do with expanding coverage, Obama has long touted the type of clinical integration offered by systems such as Geisinger and other systems that are vertically integrated. That such systems often do a good job of providing quality coordinated care at low cost is not the key question, rather, the issue is whether such systems are duplicable under the current or even under a reformed healthcare payment system.
But now that the healthcare bills are in serious jeopardy because the Democrats lost their congressional super-majority, many are speculating that the president will now focus on pushing his value agenda through CMS, since Congress has so far failed to act in any dramatic way on healthcare reform, on either the coverage or the value front—and time is growing short.
Steele would be an excellent choice from the perspective that a health system CEO who has implemented the types of integration that drive down cost and boost quality. So from that point of view, Steele should be attractive to the administration as well as to many others (myself included) who want better value for what we spend as a nation in healthcare. However, one big concern is that the Geisinger model is difficult, if not impossible, to duplicate on a large scale.
I talked to Steele last summer for a HealthLeaders magazine cover story on so-called "bundled payments” that are aimed at better coordinating care, which many think is a key step to better value in healthcare. What he said to me a year ago might offer some insight to how he would work to improve value as the head of CMS. An excerpt:
"Right now there are legal issues that would have to be changed in order to do so-called bundled payments and there would have to be very precise tools, not [yet] in existence . . . to figure out how to distribute components of payment," he says. "So it's pretty complex, and most of us have argued although it is the right kind of change, we probably ought to have a system where we can innovate rather than a defined set of new rules."
Steele argues that doing trials that experiment with a wide variety of payment and quality initiatives outside of "very special places like Geisinger" to a much more fragmented real-world situation would ensure a greater chance of reducing costs and increasing quality.
"You don't want to screw everything up all at once," he says.
There's the matter that a payment system would require a massive overhaul that would be beyond the scope of even the power of the CMS head to implement and would likely require congressional action. Additionally, how would Congress react to what could be perceived as an end-run around the admittedly excruciating legislative process? They would have to confirm him, after all.
It will be interesting to see how all of this shakes out. If Steele is the nominee, it's about time.
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That sound you heard late Tuesday night coming from the Northeast was a great sigh of relief for the opponents of the Democrats' approach to healthcare reform.
You'd think from hearing from all the talking heads on the news channels over the past few days that healthcare reform as we think we know it (has anyone actually read all 2,000 pages in this bill?) is dead—thanks to the victory of Republican Scott Brown over Democrat Martha Coakley this past Tuesday in the race for the Massachusetts senate seat once held by uber-liberal Ted Kennedy.
So are they right?
I highly doubt it.
In reality, healthcare reform has likely been delayed, not defeated. That's because outside of the political shouting matches into which the healthcare reform debate has degenerated, we still have a huge problem. Maybe you don't agree with the way the Democrats, with their Congressional super-majority, have attempted to fix the long-term challenges surrounding cost, access, and quality for healthcare consumers.
I certainly have outlined my problems with their approach in this column over the past year or so. But I've also had the privilege over the past few days of talking with a number of smart, highly placed senior financial executives in hospitals and health systems. If they hated the bill, they aren't celebrating. If they loved the bill, they don't despair.
The bottom line is we still have a healthcare inflation rate that's at least three times the rate of inflation and at least three times the rate of wage growth in this country. That can't continue.
But the problem is so immense that it's like the argument over our ever-expanding national debt. None of the potential solutions are palatable. We can continue to slowly borrow our way into oblivion, or we can stop living on our collective credit and crater the economy. Perhaps there's a middle ground.
In the same way, we can continue to live in the fantasy world that the Medicare trust fund won't go bankrupt somewhere around 2018, or that commercial health insurance premiums won't rise so high in price as to put more and more people in the "uninsured" camp and make more and more companies unable to compete with those in other countries. Perhaps there's a middle ground there too. Meanwhile, ignoring or papering over problems with meaningless or harmful bills is an outcome at which Congress, as a group, seems best suited.
All of this frustrating back-and-forth while problems grow ultimately leads me to a positive outlook for meaningful healthcare reform—eventually. Perhaps Democrats will move toward a group of solutions that include good ideas from the other side of the aisle.
Here are some ideas for our representatives:
After a year of debate, you should be familiar with most of the details of various proposals for healthcare reform, so you don't need help from lobbyists to craft the bills.
Let's get companies out of the provision of healthcare
Let's make sure people have incentives to purchase health insurance if they can afford it.
Let's bring the marketplace to bear, where appropriate, on the cost of healthcare.
Simpler is better.
Vote on separate proposals for healthcare reform on their own merits (instead of loading everything into an omnibus bill that encourages pork and waste—the very thing our representatives claim to be trying to eliminate in healthcare reform).
When a momentous election loss like Coakley's happens and throws a wrench into what many of us thought was a done deal, it reminds me of what Winston Churchill said about Americans while Great Britain was the only bulwark against Nazi Germany and hoping for American intervention: "You can always count on Americans to do the right thing after they've tried everything else."
At the risk of sounding trite, here's why I'm optimistic about healthcare reform: We've already tried just about everything else.
Healthcare has been in growth mode as long as most of us can remember. Part of that is because demand for healthcare services grows along with the population. Healthcare follows demographic trends as much as any other industry. Volume demand also grows with leaps in technology, and some have even posited—with good evidence—that the mere presence of more facilities in which to obtain healthcare services promotes growth in and of itself.
But many experts say that growth is part of the problem. Actually, it's not the growth due to population increases that's the problem, it's the ever-increasing growth in cost per capita that has been outpacing GDP growth and inflation for a couple of decades now, with no interruption.
That's not sustainable long-term, but you knew that already. In fact, that's why healthcare reform has been on legislators' front burner all of last year and into this one. But you knew that too. You also know that your business of providing healthcare is in the crosshairs for cost and quality. Here's something you may not know though. Hospital leaders, at least the ones we talked to for this month's cover story in HealthLeaders magazine, still think healthcare is growth industry.
One reason is that people are still demanding more healthcare, even as it's grown more expensive in terms of their budget. And for all the government's jawboning about cutting costs and improving efficiency in healthcare, the healthcare reform bill is really mostly about guaranteeing coverage for a significant portion of the population that is underinsured or uninsured—not cutting the cost curve. So things might not be as bleak as they seem for your bottom line under healthcare reform. At least for now.
I talked to Dennis Vonderfecht, President and CEO of Mountain States Health Alliance for the story, but that interview ended up on the cutting room floor, so to speak. So I'll share his thoughts with you now.
Much of healthcare's growth in the coming years won't come from the traditional hospital inpatient sector, he says.
"For our system, there really isn't much horizontal growth with respect to hospitals," he says. "However, we have over 200 employed physicians and that number will dramatically grow as physicians and healthcare systems see the need to be a more integrated force."
Another area of growth for Mountain States is the ambulatory and retail side.
"More healthcare organizations are going directly to the patient to sell various items. In terms of our revenue, a bigger percentage will become outpatient versus inpatient."
Vonderfecht says Mountain States is well positioned with its network of ambulatory surgery centers, diagnostic centers, and urgent care clinics.
On the other hand, growth is far from the only method he's using to better compete under a reimbursement system that shows signs it may shrink, despite the lack of focus on cost control in the healthcare reform bills being reconciled right now.
"On the expense side, we're dramatically reducing our costs through a regular review of key leadership in any areas that have opportunities for expense reform—from consolidating two behavioral health hospitals into one to consolidating services or eliminating them entirely."
For Mountain States, one area where significant expense savings can be realized is through elimination of obstetric services in "smaller hospitals that may not need to be duplicated all over the place like they usually are."
So growth is possible and should be pursued, according to some of the top senior leaders at a variety of institutions we've profiled in the cover story, but it has to be balanced by selective cost control where possible, and elimination of services in some facilities that might better be consolidated at one institution.
When I hear about this type of reorganization, I'm reminded that healthcare's not nearly as far along as other industries in taking advantage of economies of scale. Perhaps 2010 will be the year of smart growth through consolidation and efficiency. If so, that's not a bad place to start, and best of all, it doesn't require a legislative effort to achieve.
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St. Joseph, MO, would hardly be the place that many would think could provide a model for healthcare value in the new decade. They said the same thing about Danville, PA (home to Geisinger Health System), yet during the healthcare reform debate, that system has consistently been referenced as an example of how coordinated patient care can be delivered at a value price with high quality.
St. Joseph's Heartland Health, an integrated delivery system with 351 staffed inpatient beds, boasts a similar "best in value," pedigree, yet received little of the national spotlight afforded to Geisinger, Cleveland Clinic, and Mayo as government, payers and consumers look for ways to incentivize quality at lower costs. But that may be changing. In fact, Heartland Health just won the Malcolm Baldrige National Quality Award in the healthcare category for 2009, in part because of process improvement implementation techniques that have helped it reduce waste, costs, and errors. The system's performance management program incorporates goals from the organizational to individual level and provides incentives to employees through a rewards system.
I recently talked with its physician CEO, Mark Laney, MD, who is a believer in the Mayo model, and is incorporating parts of it at Heartland. A pediatric neurologist, he trained at Mayo, and is even president of its alumni association.
HealthLeaders Media: Tell me about yourself and Heartland's journey toward winning the Baldrige award.
Laney: I started on Aug. 1, 2009, so I'm new, succeeding Lowell Kruse, who had been here for 25 years. One of the interesting substories of the Baldrige journey is a good news/bad news situation. The good news was that after I had been here between six and eight weeks, we were selected for a site visit. The bad news was the visit was in three weeks. I went into intense "Baldrige school," self taught, not wanting to let the organization down. But it was one of the best things happened to me in my first 100 days because I had to do a deep dive into the guts of the organization at a much faster pace. That sped up my knowledge and understanding.
HM: What did you do at your prior jobs that intrigued the search committee at Heartland?
Laney: Prior to coming here, I'd been in Fort Worth, TX, at Cook Children's Hospital, and had been a pediatric neurologist for eight years. I had spent last 12 years as head of the hospital's multispecialty physician group, which consisted of about 300 physicians and 120 nurse practitioners. My biggest initiative, I guess you could say, is that we integrated our physician practice into Cook Children's. I was one of the first three doctors who joined and we grew it. I personally recruited about 120 of them.
HM: Was it important to the search committee that they hire a physician to head the system?
Laney: There were eight candidates brought to interview for the Heartland CEO position. Two were physicians. They didn't necessarily target one, but they were interested in the possibility. The theme that came out through the search process was the future importance of improving quality and safety and aligning physicians with a hospital or system. Because of my past experience I was a really good fit for where they were. They were financially very stable, so they weren't looking for that guy. They really wanted to improve relationships with physicians and looked at the future of healthcare and where it's going, and if a person had both a medical and business background that would be a good combination.
HM: Value is growing in importance to healthcare consumers and payers. What are the ways Heartland is demonstrating value and what do you still have to improve upon?
Laney: We are the only hospital in our community, but our main competition consists of the hospitals in Kansas City, which is 50 miles away. We have patients from Kansas, Iowa and Nebraska, so we have a large regional draw in a rural area. We have a health plan, but it is in a run-out. We had about 30,000 lives and had fantastic customer satisfaction but never got enough lives to get over the hump of risk. But what's interesting is we're transforming the staff that ran it to something called Community Health Improvement Solutions, which will sell wellness strategies to local companies to help them manage their employee healthcare costs.
Demonstrating value goes back to our mission statement. We've promised the right care at the right place and at the right time with outcomes second to none. We want to be in the top decile for quality and safety measures, but bottom quartile for costs. We want to provide the community great care at less cost than others are--which is really the stated goal of healthcare reform. So we've used our Baldrige tools and expertise to improve processes across the hospital to save money. Where we can save money, we don't have to raise our rates as much. This year, we got a hospital value index award. St. Joseph is a town of about 75,000 and stable, and it's made up of hardworking families. We feel like we need to work hard for the best interests of the community.
HM: why do you think Heartland is best positioned under an environment that rewards outcomes and not procedures?
Laney: The Baldrige journey has to do with providing world-class quality and commitment to excellence. It forces you to plan how it's structured and working. That value proposition and attention to detail runs through the whole culture. My predecessor brought in talented individuals who were experts in Six Sigma and lean who can consult with divisions across the hospital and help them redesign processes. It's like having an internal consulting firm. Process improvement is something we do really well. We're a vertically integrated system where we have 125 physicians who are employed via the medical center--about 70% of our medical staff. Heartland Foundation is different from most in that it really isn't a fundraising vehicle. It's an entity that works on improving the health of the community by trying to reach children at a young age on things like character building and community involvement. So we're investing in those kids 50 years before they have health problems so they don't need the hospital as much.
I truly believe in my heart that an integrated system with a hospice and foundation and clinic are all working together to provide seamless medical care. That is the best model to manage a population's health. We're structured in a way to meet what I think are going to be changes in reimbursement and law coming down the pike. When they recruited me, they told me Heartland was a jewel, but it's a diamond. We've talked a lot about teamwork and group practice, and we put the needs of the patient first.
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