President Obama stands ready to sign a bill that will postpone the controversial 21% cut in physician reimbursement from Medicare. Finally. But it's not as simple as that. Included in the bill is a provision that would cause hospitals to at least partially fund the "doc fix," as it's become known.
By way of explanation, Congress has to jump through this doc fix every year to relieve themselves of a law they passed in the '90's, which automatically cuts physician reimbursement to fill the budget hole.
Those cuts are determined by the sustainable growth rate formula which is intended to keep Medicare cost growth at par with inflation. So much for that. With so many "fixes" to the SGR over so many years, the annual cuts have risen to ridiculous amounts. It would have been a 21% cut in reimbursement to physicians had Congress not acted. Incidentally, some of the supposed savings contained in the health reform act depend on the SGR being allowed to do its job, but that's another story.
What's interesting about this doc fix is that it will cut hospital reimbursement to pay for it, under a mechanism known as the 72-hour rule. The 72 hour rule states that hospitals will be reimbursed one amount for all related services within 72 hours of a patient admission, including the admission. Related is defined as having the same primary diagnosis. But under the new legislation, according to Rob Sutton, founding partner of IMA Consulting in Chadds Ford, PA, Congress wants hospitals to get one payment for all services within 72 hours—including those that aren't related.
Never mind that hospitals' median annual profit margin is 1% to 2%, which is not even enough to maintain staffing and technology needs. I suppose Congress sees that and assumes "they can afford it." Meanwhile, the pharma industry, which was the first to cut a "deal" with the president over healthcare reform, makes money hand over fist.
"Both physicians and hospitals should be paid fairly, and I understand the methodology, but what I struggle with is that the hospitals and physicians have little to no control over prescription drugs," says Sutton. "But pharma is not impacted at all, and they're making 60% profit margins and nobody seems to say anything about it."
On the lobbying front, the American Hospital Association did send two letters to Congress protesting that part of the legislation, but apparently their argument fell on deaf ears.
"Hospitals all of a sudden, if 30% of their business is Medicare, about 2% of that 30% is going to be impacted," says Sutton. "Now you're cutting a third of their profit margin.
Look, nothing is going to change the fact that people believe hospitals and physicians have control over much of healthcare costs. They don't. In large part, hospitals price things in order to stay in business. There are plenty of inefficiencies hospitals need to address as a group—that's true—but hospitals are inefficient in large part because of regulatory law. Nurses can only do certain things, for example. That specialization costs money.
"Does that mean the healthcare system is not broken? No. But there's no stopping the pharma and device manufacturers and surgical equipment manufacturers from charging whatever they want," Sutton says.
Politicians are great at finding and exploiting the weakest constituent in painful legislation that has the potential to affect all stakeholders. With few exceptions, hospitals' primary customer is not patients, it's physicians, so they don't want to be seen as the ones who are holding up the fix to the 21% physician pay cut.
In this case, hospitals are that weakest constituent. So they pay the price.
As many of you loyal readers know, I spent the early part of this week at HFMA's Annual National Institute in Las Vegas. One of the things I like to do at these shows is talk to vendors and their customers about what's bothering them and what's been successful in their efforts to improve their organizations—mostly hospitals and health systems.
One of the most interesting of those conversations came with Paul Weygandt, MD, who happens to be not only an orthopedic surgeon, but is also a lawyer with an MBA—and is a private pilot. Never mind wondering whether such a person is truly a human being and not a super-cyborg that never needs sleep, Dr. Weygandt has some most interesting theories about what activities and policies will increase patient safety while also putting more cash in the hospital's figurative pocket.
Weygandt is now vice president of physician services with Atlanta-based consulting firm J.A. Thomas & Associates, but he came to that job five years ago following a successful stint as the system executive for medical management at Conemaugh Health System in Johnstown, PA, as well as vice president of medical affairs at the system's Memorial Medical Center.
Weygandt has spent much of his career trying to navigate a healthcare system that as a whole has paid less than optimal attention to patient safety, as numerous statistics show. Perhaps those sobering statistics are why Weygandt has become such a big fan of the healthcare reform legislation, at least from the clinical side, as it makes healthcare providers accountable for quality and cost as the center of the accountable care organization concept that so many are rushing to try to figure out.
You see, Weygandt is on a crusade to try to reconfigure the way doctors and the rest of the care team works together. And his model doesn't require the physician to be the dictatorial head of the patient care team, through whom all decisions, even minor ones, must flow. Instead, he advocates a cultural change similar to what has gone on in the airline industry over the past few decades, which has dramatically reduced the workload of commercial pilots-in-command. In fact, Weygandt contends that this metamorphosis is the number one contributor to increased flight safety over the past 30 years.
Similarly, he advocates reducing the workload of physicians whenever possible, even if the doctor thinks he or she doesn't want that. I'll let him explain:
"The key way to decrease the workload of the physician is not the electronic health record," he says. "The physician can't monitor everything. We need to do away with the notion of the physician being the dictatorial captain of the team members on the ship. The physician is the leader, but the most important thing is not the leader, it's the team."
An example is physician documentation, Weygandt says. Proper documentation not only ensures the hospital is being paid correctly for what is being done to the patient, but also is critical to patient safety and every other variable that determines effective, safe and efficient patient care.
"I want air traffic control for the physician," he explains, using another concept borrowed from aviation. "The pilot has to follow the instructions of the air traffic controller or risk endangering not only his passengers but himself."
Similarly, Weygandt, a surgeon himself, welcomes questions and expertise from team members, from case managers who know how to navigate the continuum of care and ensure patient safety, to clinical documentation specialists who can translate physician language into codable language that ensures both the doc and the hospital get paid what they deserve for services they perform for patients. Even the housekeeping staff should feel comfortable pointing out issues that may interfere with safe patient care.
"These people need to be assertive though," he says. "Even the housekeeping staff can be some of your biggest patient safety advocates."
Not even close to all doctors would share that attitude, clearly, but Weygandt's theories make common sense, and he estimates that if every hospital had such a collaborative team-based approach to patient care, we could shave 20% from the cost of healthcare. Regardless of whether that estimate is ultimately valid, in an industry beset by patient safety issues now and potential revenue problems in the future, it's the only way to fly.
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It didn't take me long to come up with a recurring theme of the Healthcare Financial Management Association's Annual National Institute here in Las Vegas: efficiency.
Hospitals are going to have to get a lot more efficient under healthcare reform, there's no question about that. The main reason is that there is no reason to believe that reimbursement is going to get any better than it is right now. We may have finally reached the breaking point for three key stakeholders: the government, the patient, and the employer.
As I walked around and talked to people, in the exhibition hall and at the breakout sessions here, efficiency of one kind or another is all anyone wanted to talk about. Getting your length of stay down by using hospitalists was one person's crusade. From another, overcoming the challenge of collecting the patients' portion of the bill when they present for service.
Another, the use of self-serve patient kiosks to improve satisfaction and cut back on staffing needs. Still another, the use of huge amounts of data on physician practice patterns that allow management to have difficult conversations with physicians and arm them with the information that proves some docs are much less efficient than others. Still another person wanted to talk about expanding the use of physician extenders to do more of the routine patient care work, freeing up docs to do more high-value work.
There are dozens more ways vendors and educators are trying to move the needle on hospital efficiency. As I moved through the Venetian/Palazzo complex to get back to my room to write this blog, I marveled at perhaps the epitome of efficiency, the Vegas casino, in this case, the Venetian/Palazzo. Huge numbers of people come through this place every day. And everything you see, do, and hear around here is aimed at most efficiently separating you from your money.
It's a different kind of efficiency, sure, but don't think that every piece of your experience here is aimed at getting you from one place to another quickly and with as little effort on your part as possible.
From a bank of eight elevators serving every 15 or so floors here, to the ease of purchasing tickets to shows, to the slot machines that are everywhere, they want you to spend, and spend fast, and their mission in life here seems to revolve around removing any possible impediment to your spending that money. They know they only have you here for a short time, so any time spent waiting in line or getting from one place to another is time you won't be spending money. So they make everything easy.
Hospitals aren't sitting on their collective hands waiting for healthcare reform to take a bite out of their bottom lines. In less than 24 hours at the Healthcare Financial Management Association's Annual National Institute in Las Vegas, I've heard nothing but a constant refrain about efficiency, value, and cost cutting. Hospitals aren't yet sure how to get there, but they know they must as they prepare for the gradual implementation of the healthcare reform law over the next several years.
They know that they will slowly be getting less reimbursement per patient over time even as more patients are covered. That means they must demonstrate that their services provide long-term value for patients.
Glenn Steele, MD, CEO of Geisinger Health System in Danville, PA, set the tone with a presentation about Geisinger's journey toward better value for patient care. That's famously been described, including in the pages of HealthLeaders magazine, as Geisinger's warranty, which means the hospital committed to paying for any readmissions within a guaranteed amount of time for cardiac procedures, initially.
They're rapidly working on more.
Steele, concerned that medical price inflation might mean eventual price controls unless a market-based solution is found, conceded that Geisinger had certain advantages over other hospitals in that it is an integrated delivery system, complete with a health plan. That allowed Geisinger to take these risky bets with procedures without jeopardizing its financial well being.
A telling quote: "If we had a magical technique for extracting that suboptimal care, and redistributing that, there would be plenty of resources out there to cover people who haven't been covered. So how do you extract that? There's no relationship between quality and costs. If we can attack that lack of relationship between quality and cost, we've got a lot of potential.”
But the best part is that the initiatives worked. Patients were healthier, they got better care, Geisinger made more money, and the health plan's costs went down.
So is Geisinger's example that "magic” formula that can be replicated across the country? Sadly, probably not. But that doesn't mean there aren't other solutions out there, if healthcare will just innovate in improving its processes. So, other than amorphous healthcare legislation whose rules are still being written, what incentives do you have to innovate? In other words, what happens when you're still getting fee for service payment and still trying to get ready for a shift to being paid for value, and getting paid for keeping patients out of your hospital?
I don't know, and neither does anyone else. But you're charged with finding your own way.
Some of Steele's suggestions for process re-engineering and innovation:
Unjustified variation
Fragmentation of caregiving
Perverse payment incentives (outcome irrelevant)
Patient as passive recipient of care
A huge amount of Geisinger's re-engineering is having non-docs do things that docs used to do. It frees up the docs to do other more valuable things that frankly docs enjoy doing, says Steele, a doctor himself. Quite often you get improvement in quality as well as increased value if you really redesignate who does what,” he adds.
EMRs aren't the only answer. Neither is greater patient participation in their own health maintenance. Neither are dedicated physicians or even interesting demonstration projects. But they're all part of a whole. The answer is there is no holy grail.
But such experiments and process re-engineering are necessary, even vital, if we don't want to face price controls in the future, says Steele.
We'll have more comprehensive reporting from HFMA-ANI tomorrow. Stay tuned.
Several of us were meeting recently about story ideas in HealthLeaders magazine. A story idea I mentioned about nonprofit status was discussed in our conference call, and I speculated that given the increasing levels of insured patients, that some people might get the idea that tax breaks are no longer necessary for nonprofit hospitals and health systems.
Undoubtedly, some will get that idea, especially in an era where the federal government beholds huge deficits as far as the eye can see, and no easy way of raising additional revenue, otherwise known as raising taxes. My point was that if hospitals are no longer having to spend huge amounts covering charity care and bad debt write-offs, will they be seen as a potentially big source of revenue not only for the feds but for state governments as well?
My contention was that they would. Another idea postulated as we discussed that story idea was that many hospitals, especially of the local, government-owned variety, might consider ditching their nonprofit missions entirely and move toward a for-profit business model. Most of us shot that down as extremely far-fetched, though some wags might argue that many nonprofits operate like for-profits as it is, with the high executive salaries and focus on the bottom line that characterize such institutions.
Certainly there's a lot of revenue at stake if all such entities were taxed. But much of the hubbub about this subject has died down recently with the passage of healthcare reform legislation. That doesn't mean powerful people, like Sen. Charles Grassley, aren't still thinking about it. And little sandstorms of controversy periodically erupt over hospitals and their nonprofit status. Just this week, New Hampshire's attorney general launched an inquiry into salaries of CEOs at nonprofit hospitals.
So following the meeting, I started thinking a little more about that far-fetched alternative theory. As I said, we shot it down. I mean, what would be the motivation? But then as I thought about it more, I can see a few good reasons for doing so. Still, I can't think of any hospitals that would take such a drastic step willingly. Regulations for justifying that tax break would have to get a lot more teeth. And think about the negative public relations hit hospitals would take, for foregoing their tax-exempt status. And think about the hit they would take to the pocketbook, even though they would be relieved of the charitable contribution requirement. Still, I'd be interested in hearing from anyone who has a good argument for that course of action.
Regardless of what happens in our healthcare world, Congress will have to do something—really, several somethings—to raise revenue in the coming couple of decades. Certainly you've seen the aftermath of the debt crisis rocking European countries right now. Their method of easing the crisis is almost exclusively in instituting "austerity" measures that involve cutting back on the substantial individual benefits peculiar to the welfare state. The United States doesn't have that easy of an option. In the absence of quick and dirty austerity measures that have been instituted in Europe, stateside lawmakers might find that hospitals would make a sweet target as they have to spend less of their revenue on charity care and bad debt.
There are other attractive tax options for Congress too. They could start with the so called Bowl Championship Subdivision universities and their football conferences, all of whom have been acting, over the past several weeks, as though they share the charitable mission of Attila the Hun. They're "nonprofit" institutions too, after all.
The first rule of economics, a.k.a. "the dismal science," is that there's no free lunch. I'm afraid we're about to find out what that really means.
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"Anticipation, anticipation,
Is making me late
It's keeping me waiting . . ."
In case you can't put the tune to the words, or in case you're younger than me, those are the lyrics to the chorus of the old Carly Simon song, Anticipation. As I was reviewing my notes from a recent conversation with MedAssets Chairman, President, and CEO John Bardis, I found myself humming the tune after he told me about the general mood of hospital and health system CEOs at his company's recent Healthcare Business Summit.
Yeah, I'm weird. My wife tells me so all the time. But those lyrics make sense in the context of what's to come from the healthcare reform law.
The reason I was humming the song was not the well-known chorus, but the second verse of the song, almost as well known:
And tomorrow we might not be together
I'm no prophet, and I don't know nature's ways
So I'll try to see into your eyes right now
And stay right here, 'cause these are the good old days
These are the good old days
And stay right here, 'cause these are the good old days
These are the good old days
These are the good old days
These are the good old days
These are the good old days
Though Bardis certainly didn't use those words when we spoke, he said that the most consistently profound point that was raised in his conversations with hospital and health system leaders was the recognition of all the CEOs that current levels of payment might be the highest that they will ever be.
They believe reimbursement is on the way down, as do I. No other answer makes any sense for a sector that is one-sixth of the United States' economy, but for which costs are growing at up to four times the rate of inflation.
That leaves administrators to manage their clinical operating structure to respond to that while continuously focusing on quality clinical care and patient satisfaction. That's a pretty tough challenge, considering hospitals and health systems, if they're lucky, make a 4% margin these days.
MedAssets strives to help hospitals and health systems improve financial strength by implementing spend management and revenue cycle management solutions that help control cost, improve margins and cash flow, increase regulatory compliance, and optimize operational efficiency. Bardis contends that this law will break the "insurance and pharma cartels."
That might sound great if you're a hospital leader, but really, such fractures will bring more challenges to you, not less.
"In the past if you looked at the branded drug cartels and the insurance cartel, indirectly they benefited each other," he says. "As costs went up, those cost increases bounced off the provider and into the private pay pools. That private structure was able to pass those cost increases onto individuals, companies, municipalities and unions."
But that paradigm is passing away, he says. Recent unemployment levels have shown fractures in risk pools in states where elements of economic deterioration have been above the norm, like in California, with a 13.1% unemployment rate, as well as a drastic reduction in municipal and state jobs.
This fracturing of the risk pools explains commercial insurers' attempts to raise rates drastically—up to 30% in a year in some cases—attempted increases for which attorneys general and insurance commissions are not standing.
"This exposes [insurers' and drugmakers'] inflexible commitment to a business model that doesn't answer the questions the market needs today," he says. "The model has been my way or the highway, so it hasn't had the flexibility of the forethought to change meaningfully."
What this tells me is that we're at an inflection point in healthcare payment. The feds hold the line on what they'll pay you, so your only option as a provider has been to raise rates on the commercial sector. As I've mentioned, that's not working anymore. Cross-subsidization, the practice of having the commercially insured pay the freight for government underpayments and the uninsured, is failing miserably, and will continue to do so.
"The capacity to pass costs into the system without resistance is going to be very difficult especially in those states that have high unemployment and lower disposable income," Bardis says.
That means hospitals and health systems are going to have to "lean out" the clinical workflow like never before. Among CEOs who attended MedAssets' conference, Bardis says that "in the longer view, the hospital has to play a much more direct role in the health and wellness of the community beyond the acutely ill."
Leadership will be what sets apart the winners and losers as health reform and other unstoppable business trends take hold. I've heard repeatedly about the "haves and have-nots" in healthcare since I started covering it 10 years ago. I've always tried to figure out why that divide exists. The reasons had been myriad. Bad payer mix. Large uninsured population. Poor insurance negotiation skills. Low market penetration. But sometimes, those good reasons for lack of competitiveness can also become excuses. I've seen that some hospital CEOs, usually not the ones profiled in the pages of HealthLeaders magazine or on this web site, see their role as more of a public service appointment than as leaders who are responsible for making the business actually work. We still have the haves and have nots. Some hospitals are in serious trouble, while others are nowhere near in trouble.
Hospitals have long tried to be all things to all people. It might behoove you to specialize rather than consolidate, for example.
"In a tighter reimbursement environment, CEOs will have to make harder decisions. They'll have to cut service lines that don't make money," says Bardis.
A mantra might be helpful as you try to position your hospital or system for success in the coming years. Just keep humming that fade-out of Anticipation. It's hard to get out of your head.
"These are the good old days . . ."
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Why don't you fire your consultants? It's a provocative question and its tough to answer, but CEOs, you're part of the problem. In fact, when it comes to getting value from your multitude of consulting engagements, you're the main problem. The simple truth is that you don't often fire your consultants because you depend on them. They nurture that dependent relationship, in fact. It's just good business for them.
So says Gordon Perchthold, co-author of Extract Value from Consultants: How to Hire, Control, and Fire Them. Perchthold, a consultant himself, says overreliance on consulting talent can mean a lot of wasted money for the widget manufacturer as well as the hospital or health system. Overconsulting can as well mean lackluster results and lower morale from lieutenants and the rank-and-file. Right, you're saying. So tell me something I don't know.
OK, try this contention on for size: CEOs get addicted to consultants, and no matter how savvy they are, top executives often get roped in by tricks of the trade that sometimes stretch a consulting engagement for a relatively small matter into a years-long relationship that's more beneficial for the consultant's employer than for, you, the client.
Like substance abuse, says Perchtold, the first step to getting help is to admit you have a problem.
"Consultants do have a role," he says. "Organizations have execs who build up silos that work against change and consultants can help with that. But as soon as they are on board, consultants start working the relationship. They spend quite a lot of time to persuade the execs take actions that the consultants want and that usually results in follow-on work."
So why are Perchtold, and his coauthor Jenny Sutton, spilling the secrets of the trade? First, they do have a book to promote, and they've seen the way some consulting firms build long-term relationships with clients that may not serve the client as much as the consulting company. A lot of CEOs are former consultants themselves, so they might be familiar with "problem creep." That's the practice of consultants working to find engagements for their colleagues back in the office who are looking for billable gigs. But that makes consulting engagements inefficient at least and borderline unethical at worst.
"A lot of CEOs are former consultants and what happens is they bring in their former employer," Perchtold says. "We've challenged that because there's a conflict of interest in the selection process."
But who's watching to make sure the client is the one who's benefitting from the relationship? In many cases, no one, Perchtold says. He's careful to note that he's not trying to denigrate the profession or to contend that something illegal or unethical is going every time a certain group of consultants gets ingrained into an organization's culture. Consultants are often brought in to cure inefficiencies or find ways to cut costs. The irony is that the consulting budget may be among the most bloated and inefficient of all categories of spending within an organization.
Perchtold contends that a few large organizations have such a poor grasp on how much they're spending on consultants across the board that they sometimes have to hire a consultant to figure that out.
"A lot of times the consultants will be one of the highest-spend categories, but they do all they can to minimize the truth that they are one of the major categories," he says.
The issue with a lot of consulting spending is that the employees who are doing the work with them in the organization come from the operational side.
"They never learn about managing the consultants, and what you have is inexperienced operations people matched up with consultants who come from the best business schools and who manage their own consultant colleagues every day. The result is that they are good at managing clients for their own objectives."
The idea isn't that you're being swindled, rather that most consulting firms will deliver something, but not as much as they could, because they have "leveraged" themselves into activities over which they have less and less knowledge over time.
"That's how they drive up their own revenue," he says.
It's difficult to distill a lot of the lessons Perchtold and Sutton have for those who hire consultants based on a half-hour conversation, but the essence is that most clients haven't stepped back and analyzed whether they're getting the most value out of the engagement. The authors have some fairly simple rules to follow when purchasing consulting time and talent:
1. Define the problem yourself
Too often, executives leave it up to the consulting firm to define the problem. But consulting firms will view each client's problem through the prism of their own capabilities and solutions. Executives must understand the desired results of the project and ensure the consultants are focused on finding the specific solution to their problem.
2. Dictate how to structure the project
Consulting firms will always attempt to maximize the consulting headcount for the projects they propose. Commonly, buyers complacently accept the project structure that comes along with the proposal. However, most projects underuse the resources in the buyer's organization. From the first draft of a proposal, buyers need to analyze what is being offered, look into their own organization for dollar-saving opportunities, and challenge the proposed approach and team composition with their own recommended changes.
3. Oversee the execution of the project with adequate direction
Consultants should be managed just as any other team reporting to the manager, and should not be allowed to reschedule work, redefine scope, substitute resources or make significant decisions without the knowledge and agreement of the client manager.
4. Ensure the desired results are achieved before consultants walk away with all their fees
Without proper management and evaluation, consultants too often get paid for just putting in the work hours instead of producing the results. In today's economic climate, there is greater expectation and governance surrounding pay for true performance over the mid to long-term. Buyers must create a stronger tie between fees paid to consultants and the benefits a business receives over the mid to long-term to ensure they are receiving maximum value.
Further, you need a check on your employees who might hire consultants, including yourself, Perchtold says. It's good practice to form an independent review committee to make recommendations about consulting work, chaired by the chief financial officer, who should know exactly how much the organization is spending on consulting as well as have some idea of the value gained, independent of any analysis the consulting firm is conducting. It's also never a bad idea to have a board member on that committee who understands consulting and value.
Second, never sign a contract for follow-on work to an existing consulting engagement without putting it out for competitive bidding. Watch out for consulting firms that define your problem, rather than having a relationship that starts with you or your people defining the problem and bringing it to the consultant in the search for solutions.
After all, it's your organization's money. Don't depend on a consultant to tell you whether you're getting the right value in spending it.
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You remember 2009 right? It was a tough year, economically, and hospitals weren't spared.
Cost savings were the order of the day. Many, many hospitals responded with innovative cost cutting strategies, including asking their employees to identify waste and help save jobs. For some, that tactic wasn't fast enough. Many other hospitals and health systems responded to the economic crisis by laying off workers. Many times, they were able to avoid laying off people in the clinical space in favor of administrative layoffs.
But even those layoffs appear to have taken their toll, as a recent consumer satisfaction survey reveal. According to the American Consumer Satisfaction Index, which measures consumer satisfaction for 10 economic sectors, while many other economic sectors improved their customer satisfaction rates, hospitals were not among them. In fact, between the first quarter of 2009 and the same period in 2010, hospital satisfaction dropped 5%. Only the energy sector provided company in falling customer satisfaction.
Given that sector's recent woes, that's not good company. And it's interesting that inpatient satisfaction recorded the biggest drop. In fact, ambulatory care actually recorded a 1% increase in satisfaction compared to last year.
It's not unusual for customer satisfaction to drop in a recession, but this data point should be a warning sign to senior leaders in healthcare. Why? Because patients are getting wiser toward customer service, and so should you. Customers (otherwise known as patients) will be voting with their feet sooner or later. My bet is on sooner. Yes, you'll be judged by payers on outcomes, but you'll be judged even more harshly by patients on their experience while in your hospital.
What does customer service have to do with a hospital stay? Well, to start with, it signifies a shift in the way hospitals should view their patients. As I mentioned, they are customers, just like in any other business. They deserve to get what they pay for, even if they pay for it indirectly.
The results are puzzling, if only because our own 2010 HealthLeaders Media Industry Survey shows that many CEOs have made patient satisfaction one of the top strategic goals for their organizations in recent years. For example, improving patient satisfaction was the second-highest ranked priority for the next three years in this year's survey, while more than 38% selected it as a top priority this year, compared to 26% in 2009.
Perhaps that means improvements are in the pipeline, and the American Consumer Satisfaction Index will show better results this time in 2011. In the meantime, these are the most recent results, and they're not so good.
In such a broad survey as this, it's difficult to see the trees for the forest, as it were. In other words, some hospitals are assuredly making the important investments in patient satisfaction. But more than a few saw investments in patient satisfaction take a back seat to what were seen as more pressing priorities, like refinancing debt or otherwise cutting costs.
But you can't slash your way to success. Investments in patient satisfaction require more commitment than cash. In fact, relative to other investments hospitals have to make, such as high-tech imaging systems, new patient towers, and new operating suites, patient satisfaction improvement is instead based on clean rooms and hallways, better, hotter food, better service, and more eye contact, among other, seemingly simple fixes.
Those things improve with culture, and as the CEO, there's no more effective person to drive that culture. Are you rounding each day? Do you talk regularly with patients and their families to find out what's dissatisfying them? Do your top lieutenants do these things as well? Can you stop a worker in the hallway and get a good answer for how that person is helping improve patient experience?
If not, some reassessment of priorities may be in order. Your customers are demanding it, and your organization's long-term success depends on it.
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Let's stipulate, before I go on, that I don't know much about technology or how computers work. I can run routine maintenance on my computer, but that's about it. In fact, a good (and patient) friend of mine is coming over tonight to help me hook up my wireless internet router, which really isn't all that difficult for him, but gives me hives just thinking about it. Give me a lawnmower engine to rebuild or a set of brakes to change, and I'm your man. Give me a computer to work on, and you'll get a blank stare in return.
I'm guessing many of the readers of this column fit the same mold, minus perhaps, the car repair abilities, and plus the overwhelming responsibility of being in charge of a health plan, a hospital, a physician practice or health system. No, you're not likely a computer security guru, but given the almost weekly news item about embarrassing and costly patient health information breaches in healthcare, it's appropriate to remind those of you who are in charge of your hospital, health system or physician practice: protecting this data is YOUR responsibility. I know you depend on delegates to get these jobs done, and you pay them well. You can't micromanage this stuff.
After all, what healthcare CEO doesn't have an expert in charge of the organization's finances or its information technology needs? But what you can do is make sure your deputy, the CIO, has encrypted all the organization's laptop computers. The buck stops with you, as Harry Truman wonderfully put his take of the chief executive's responsibilities.
According to my colleague Dom Nicastro, the problem of protected health information loss can most often attributed to unencrypted laptops that are stolen from hospital or health plan employees. Let's leave behind the question of whether patient health information really needs to be stored anywhere other than on computers that stay on the organization's physical property. I understand that sometimes employees need to take their work home, and that some of that work involves working with patients' protected health information.
But really, how difficult is it to protect laptops' security so that even if a thief gets his grubby hands on your organization's property, the information contained within is safe? Not very, apparently, making it all the more ridiculous that not even close to all healthcare organizations do it. It happens all too frequently to organizations that have loads of IT staff doing what they do. They just don't always get to the laptops, I guess.
Here's my point: Even if you're not a lawyer, you wouldn't think of entering a joint venture with a physician group that doesn't meet federal safe harbor guidelines. Those safe harbors protect you and your organization should anyone ever question whether such deals pass legal muster.
Similarly, you shouldn't wonder whether any laptops owned by your organization are protected by several methods of encryption that provide a similar safe harbor in case of a stolen laptop or other possible breach of PHI. The Office for Civil Rights, the enforcer of HIPAA's privacy and security rules, lists several methods of encryption that create just such a safe harbor.
So what are you, as the CEO, doing to make sure your organization is safe from any possible breaches from laptops? I'd love to know. The possible financial and legal headaches from such a breach are too severe to ignore this issue. I'm thinking a simple directive to the CIO should suffice. There can't be that many laptops that they would be impossible to track or to protect. And given the importance of this issue, shouldn't the CIO represent to you in some way that the laptops are protected?
If you aren't requiring your CIO to certify to you in some way that all laptops your organization owns are encrypted, well, you deserve your fate, which in the case of a stolen laptop, would be severe.
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One of the most depressed states in the country right now is Michigan, for a lot of reasons, and Detroit is the epicenter of that economic suffering. And this economic blight didn't start two years ago with the bursting of the housing bubble—Detroit's experienced economic malaise for a couple of decades now, not just a couple of years. So how is Henry Ford Health System thriving amidst all the economic carnage?
It's not easy. It's certainly not as easy as many competitors have made it by abandoning the city altogether for the relative economic safety of the suburbs. In fact, if you were looking for the worst place to situate a hospital, you couldn't do much better. Henry Ford, which made $30.4 million margin on nearly $4 billion in revenues last year, is investing right in the middle of Detroit's downtown, which hovers around a nearly 16% unemployment rate.
Sure, they have a presence outside the city as well at four different hospitals, but the flagship still sits downtown, an 802-bed beacon that proves the power of ignoring the naysayers and blazing your own path.
"Instead of getting caught up in the victim mentality, we have a lot of opportunity to make it better," says Nancy Schlichting, the health system's CEO. "Here in Detroit, for years, even in our own health system they said we can't make it downtown. That is hogwash."
Forgive me, Nancy, but the prevailing wisdom about making healthcare work in downtown Detroit seems fairly reasonable. But her contrarian instinct has served Schlichting well, especially given the system's nonprofit status, an advantage meant to help systems stay in locations where healthcare is needed, but where it's not necessarily profitable. That mission, however, is taken seriously by some and taken advantage of by many others. In other words, a charitable mission and broad tax exemptions haven't stopped many nonprofits from following the money. That's not a judgment; it's just fact.
"We've grown substantially in last few years by investing in Detroit," she says. "If the quality and service is second to none they will come downtown."
I've heard a lot from hospital leaders about quality and service lately in helping attract and keep paying patients. And this time, it doesn't seem as much like lip service as it once did. Maybe that's because the health reform legislation gives CMS some real authority to change payment based on demonstrable quality. I know, for all the posturing, we're still in a fee-for-service world, but the momentum is finally behind paying for quality, and senior leaders, sometimes pushed by their boards, are finding more of their salary based on quality measures.
Henry Ford is well set up for the new payment regime, in which the hospital or health system might well be the natural focal point for coordination of care. As an integrated delivery system with home care, a large physician group practice, a health plan, and other ancillary services, Henry Ford is ready to compete under a payment system that rewards quality and coordination of care—if it comes to pass. For now, Schlichting is as excited about the future as you might expect from someone who follows her own instincts.
"It's so important not to just follow the pack. You have to be thinking differently all the time," she says. "All hospitals have a lot to learn from non-healthcare organizations in this country."
In Detroit. I know. I wouldn't have believed it either.
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