Skip to main content

How to Lead a Hospital to Better Outcomes

 |  By HealthLeaders Media Staff  
   October 16, 2009

Last week, I told you about the past nine years of Jim Anderson's 13-year tenure as CEO of Cincinnati Children's Hospital, which is coming to an end as the calendar rolls into 2010. During that time, he's made his fair share of mistakes, but perhaps his greatest success was initially seen as a mistake by many in the hospital. If not an outright mistake, most of the caregivers initially decided his initiative to do better on infection control and quality care was well-intentioned, but would cut his own financial throat.

That's because of the perverse incentives in healthcare that have received a lot of attention lately—chief among them that if complications ensue when a patient gets to the hospital, leading to a longer stay, the hospital does better financially. Before you besiege me with notes about how those perverse incentives don't exist anymore, both you and I know that much work still needs to be done on this front. Hopefully healthcare reform will take care of some of them, but last time I checked, most of healthcare, in terms of dollars, was still fee-for service. That doesn't mean that hospitals actively seek to injure or otherwise extend patient stays in order to do better financially, just that they don't have a lot of incentive to improve.

Set that debate aside for a moment, because as many of you have doubtless seen for yourself, here's where the sales job got difficult for Anderson.

"In early 2000, we were exposed to the idea of family-centered care," he says. "We got the notion that healthcare is dysfunctional and the opportunity to focus on processes to provide better value was a critical underdeveloped area filled with enormous opportunity."

Silly fool. What did this big-time lawyer and industrial company president (who was appointed from the hospital's board) know about how healthcare worked?

"I was unburdened by that knowledge and it was clear there was a dramatic difference in attitude and approach to quality. That was perplexing and intriguing to me, but I didn't know what to do with it."

He started, rightly, with the caregivers, selling them the idea that relying on evidence-based protocols and family-centered care was the right thing to do, regardless of the business implications. Problem was, many of them didn't trust his motives at first. Neither did his CFO. But he had an influential physician champion on his side and that helped get the ball rolling.

"Jim and the physician came in to show me how a significant portion of treatment we delivered was outside the evidence-based guidelines," says CFO Scott Hamlin. "I asked them if they realized I bill for such things. I thought we would be out of business."

Early on, Anderson and Hamlin joked about the initiative being a "faith-based investment," because some of the things in which Cincinnati Children's invested reduced revenue—but only temporarily.

"We found that those (now-empty) beds filled up with more complex cases and enabled us to build tertiary and quaternary care, allowed us to develop specialists, and expanded the geographic pull of the institution so now we're clearly a global enterprise," Anderson says.

Yes, it's a children's hospital, a vastly different business than running an adult hospital. But Anderson's initiatives at Children's have their origins in businesses outside healthcare, which is really different. Most importantly, these activities are implemented for better outcomes, he says.

"If you lose track of that, and get tempted into selling the cost reduction aspect, you lose the traction that is essential with front-line caregivers."

It's like dancing on the razor's edge, but I can't paraphrase what Anderson told me next about balancing the clinical case with the financial case any better than he said it himself.

"We thought that in conventional business terms that this would take cost out of the system. We made the argument that there was a great cost reduction opportunity. To all the business guys, that was music to their ears, but what none of us recognized is that the people you have to have doing it would understand the logic, but wouldn't necessarily change their behavior. Once we realized we weren't getting action, we decided not to talk about dollars anymore. Better outcomes and family experience was what resonated with docs and nurses. They thought we were just winking at that. We told them that actually, evidence-based protocols would reduce revenue and admissions, so we became credible on that issue. We were really in this for the outcomes."

So, what lessons can adult hospitals take from Cincinnati Children's journey? Again, Anderson says it better than I can:

"If I were leading an adult hospital, this has to start with the board and the CEO and they have to demand it and invest in it. Be willing to devote a disproportionate share of your time to making it happen. Without that, it's unlikely to occur downstream. The next piece is engaging on strategic planning to develop mission and action plans that embrace improved outcomes and value. Develop common ground with the broad organization. And lastly, you begin to invest in actions to make those things happen. Part of it is data collection and tracking. That's never been easier than it is today. No reason to reinvent the wheel there. Plagiarize them broadly and incorporate. Connect with organizations that are proven catalysts in transformational change. There are none better than IHI, which has lots of affordable mechanisms to begin to unleash this energy to improved outcomes, and then you follow the direction that's established by that preparation. Like Nike says, just do it."

Hamlin, the business guy in the room, anticipated my next question:

"How does that work when you're not in the tertiary business that can make up for more discipline by drawing patients from the outside to your tertiary programs? There are two choices. Let's say you are a community hospital that implements these and you take care of your community's population and it's not a growing population or it's shrinking. The principles are better utilization of the assets you already own, whether people or bricks and mortar. So now you've created extra capacity and you have two choices. Getting smaller and more profitable is a super win, but doesn't work in healthcare, obviously. So that excess capacity can be put to use for gaps in the community service that others won't provide. For us, we went into mental health. It's most underserved, it's not profitable, and it's not well received. Economics are such that no one wants to provide the service. We use what we've gleaned from our program to offer those services."

So no, it won't ultimately improve your finances. But it will improve your value to the community, and after all, if you're a nonprofit hospital, you're there to maximize the benefit to your community, right? Right?


Note: You can sign up to receive HealthLeaders Media Corner Office, a free weekly e-newsletter that reports on key management trends and strategies that affect healthcare CEOs and senior leaders.

Tagged Under:


Get the latest on healthcare leadership in your inbox.