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A Message to Community Hospital Leadership

R. Daniel King, for HealthLeaders Media, July 16, 2008

The future for hospitals is not dependent on getting more dollars in the door to offset revenue restrictions but to focus on stopping dollars from going out the door. The Centers for Medicare & Medicaid Services' pain-for-gain revenue policies drive hospital leadership to pursue new revenue streams to relieve the pain, rather than reduce operational inefficiencies and preventable medical errors—each of which CMS continues to reward through cost reports and increasing DRGs, respectively.

On October 2008, CMS will tweak its traditional pain-for-gain policies in the inpatient prospective payment system and not reward reimbursement for select preventable medical errors. This contradicts prior CMS statements. On May 18, 2006, a CMS press release stated, "Reducing or eliminating payments for ‘never events' means more resources can be directed toward preventing these events rather than paying more when they occur." This is true for commercial insurers, not for Medicare, which usually pays less for healing than the cost of prevention. Even though CMS promotes Medicare benefits that cover a broad range of services to prevent diseases, it lacks a policy to do so for preventable medical errors. Hospitals should not be surprised that IPPS will not include the promised prevention funds that could be financed with a portion of projected savings unless CMS has an epiphany or a crisis of conscious.

Whether you chose to respond with new services or not, focusing on operational efficiencies, which are the rails quality travels on to achieve excellence in patient and financial outcomes, will keep dollars in the bank. It is what CMS wants you to pursue, but is clueless in how to manage the transition with less pain, so it remains committed to utilizing revenue pain-for-gain policies. You have to be committed to achieve excellence, pain or no pain. You can do this with little financial investment, but a major personal investment in using your leadership skills to inspire staff to execute the basics flawlessly.

My suggestion to leadership is simple to state but mentally hard to pursue. Start listening to your physicians, nurses, patients, and support staff —especially those you are actively avoiding. Rather than rounding with a "hi and good-day" approach, start engaging the staff throughout the hospital on a daily basis and become known as the barrier slayer. You are not there to go to meetings; you are there to facilitate the meetings of minds, ideas, and outcomes throughout the hospital. Implement a survey where all hospital services—from volunteers and housekeeping to the executive suites —are rated by other services in meeting their needs and identifying what barriers prevent them from achieving their goals. Be relentless in identifying all barriers every service feels or knows inhibit them from being efficient and quality driven. Learn to let the facts take shape and put feelings on hold before decisions are made. Create an environment where individual anxiety is to elevate excellence, not to compromise it. Inject comfort zones with large dosages of accountability. Inspire all leadership levels to be the force behind an efficiency evolution by adopting these tactics.

Remember that the No. 1 operational disease in hospitals is the communication breakdown that usually exists in the black hole of an information chasm under the oversight of complacent leadership. These characteristics do not inspire reflection, inquiry, and collaboration, which are critical to an efficiency evolution. Leadership, information, and communication are the three piers necessary to build the foundation for a culture of excellence in the shifting sands of the healthcare delivery system. If these piers are structurally weak, you limit the number of "pillars" your hospital can support, if any.

How will I know that you are in the midst of an efficiency evolution? When I enter your hospital and approach a housekeeper who has the emergency room looking exemplary and compliment him or her and then ask, "Do you know the CEO?" and I see a face light up with an affirmative response. I then look to the waiting area in the ER where patients look anxious but not angry, and I think, "This place is busy!" But my senses tell me this is not organized chaos because every staff member is moving with purpose, uninhibited by the sense of disorder that operationally inefficient ERs cultivate. And this affirmative response towards you and a sense of purpose by employees is repeated throughout my tour. Then I know this is a hospital in the continuous pursuit of excellence, because the people know that leadership believes in them and that they are the only means to make a hospital quality-driven, profitable, and great--no matter what pain CMS inflicts.


R. Daniel King is a retired healthcare consultant in Tyler, TX, with a background in operational, financial, and crisis-management for hospitals, medical practices, and skilled-nursing facilities.

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