Leadership Priorities for Healthcare Reform Survival

Throughout my career as a hospital executive, I've shared my belief that the transformation of our industry should actively embrace information technologies and process improvement methodologies to improving the quality of care and escalating cost. Since departing my last position, I have had the opportunity to remain engaged in a variety of provider environments without having to worry about day-to-day operational responsibilities. This distance has allowed me to watch the events of the past two years and put them into perspective about where hospital leaders should focus their priorities as reform (including both the HITECH Act and PPACA) is implemented. More than ever, I believe achieving total hospital efficiency is imperative to financial and operational performance in a reform environment.

Signed into law only 14 months apart, these two pieces of legislation represent the commencement of the most significant period of change hospitals may ever see. Together they create an environment that will force healthcare executives and system leaders to transform operations more quickly across more fronts than ever before. Throughout these changes, leaders will be called on to sustain financial performance while dealing with the continuing effects of the Great Recession, which negatively impacted reimbursements and dramatically altered the bond markets. 

To meet these challenges successfully, hospital executives must commit themselves to achieving a new level of hospital efficiency and quality performance. The successful approach will require the use of real-time logistics technology in conjunction with process improvement methodologies to create value across the entire enterprise. Too often, past efforts have focused on optimizing departments or single access points such as emergency departments at the expense of other functions. That silo-based mindset will no longer work as reform introduces new patients and new care and payment modalities.

It is also clear that a larger volume of newly insured patients will begin to access care at various points throughout the healthcare delivery continuum. This includes the emergency room, walk-in and urgent care centers, and primary and specialty care physician offices. In the end, more insured patients combined with an aging population assure that increased numbers of patients will be moving through the healthcare system. This increased census will strain a hospitals' ability to handle patient throughput unless total hospital efficiency becomes a priority.

Total hospital efficiency means the choreographing of all clinical and nonclinical patient movements and order execution in a manner that streamlines patient flow, logistics, and departmental handoffs, thus maximizing patient quality and safety. By achieving this choreography in all activities from admission to discharge, hospitals will be able to achieve predictive outcomes in an environment in which they have not existed previously. The end result is immediate, measurable and sustainable gains in system-wide operational performance and patient care results.

In short, total hospital efficiency moves from a focus of departmental process improvement to enterprise process improvement in support of system's overall vision, using the integrated workflow real-time feedback of a logistics technology platform.   This combination reduces the diffusion of logistical tasks that rob clinicians of time with patients, thereby improving the quality of patient care. As such, total hospital efficiency can transform a hospital's operations across numerous fronts.

Most dramatically, increased efficiency reduces the non-value-added wait times that patients experience throughout their stay. By eliminating unnecessary waits, patients move through the system more quickly and spend less time in the hospital. As every executive knows, reduction in average length of stay has dramatic implications on both financial performance and capacity. Not only does a shorter length of stay increase profitability and reduce resource consumption, it allows hospitals to utilize that patient bed more frequently, which adds capacity without construction or additional labor costs, further driving profitability.

Because payment and delivery reforms such as bundled and capitated payments will require hospitals to bear the financial risk of providing the right care at the right time, it is imperative hospitals achieve total efficiency prior to these changes being implemented. Doing so will enable hospitals to achieve a consistent level of quality and efficiency which performance and utilization risk requires. Conversely, failure to do so will put the hospitals' future at risk.   

As was recently noted in a HealthLeaders magazine column, Wall Street and traditional non-health companies like Stanley Black & Decker also see the opportunity in applying their expertise to reduce waste and improve efficiency in healthcare. Both PPACA and the HITECH Act require a new commitment among hospital leaders to optimize hospital operations if they are to succeed in implementing reform and establishing competitive advantages in a post-reform environment.

Jump-starting that process requires a commitment to adopting a new mindset that stresses achieving total hospital efficiency but it does not necessarily mean emulating companies whose expertise is building hammers, cars, or airplane engines. Instead, operations and clinical leadership need to engage established healthcare partners who understand that the goal is providing lower cost, higher quality care for patients who come to us in times of sickness and vulnerability.  

Wayne Sensor is a former health system CEO and is founder and CEO of Transformational Leadership Services. He can be reached at wayne.sensor@gmail.com.