Tuesday, August 31, 2010

Do Retail Health Clinics Complement Or Compete With Primary Care Physicians?

This is the same question that has been faced by many hospitals looking to start up an urgent care center. The primary care physicians usually express outrage that the hospital would compete with them. I have seen this first hand when our hospital contemplated such a move. Never mind that the hours of our center were in the evening and weekends when physician offices were closed. Also never mind that at 5pm the physician's phones shut off and patients got an answering machine that said they were unavailable and that any serious condition should be seen in the hospital's emergency room. I guess that EDs don't present the threat that urgent care centers do.

Well now there is a school of thought that supports the idea that these centers do not actually compete with primary care physicians, but actually help them. Although there may be some patients who use urgent care centers or retail clinics when available that otherwise would have gone to the primary care physician, many more are referred into primary care physicians for followup after an urgent care visit. Also the mix of patients in the clinic is different. Only 40% of these patients even have a private physician compared to 80% in the general population. Finally, because of the hours of operation, many of these patients would be going to an ED as an alternative, not waiting for the physician's office to reopen.

Overall these clinics and urgent care centers are seen as cheap, convenient and providing a high level of patient satisfaction. Maybe the physicians should not be so threatened and view them as a potential referral source that gives patients a great after hours alternative.

More on this later.

Mark Brodeur

Monday, August 30, 2010

Is There A Future For Public Hospitals?

The current economic climate for hospitals has been described as Darwinian. I think this is a fair assessment considering the current level of performance for many small, rural, community hospitals. Many of these are public hospitals that were developed years ago to provide needed healthcare services to isolated communities.

A recent article in the Wall Street Journal has identified that their current bad credit ratings combined with the expected government cuts under healthcare reform, will further cripple public hospital's access to capital needed for health IT and other infrastructure needs. In other word, banks don't lend money to hospitals that really need it, particularly after the recent banking industry crisis.

Two other characteristics of public hospitals work against them as well. Most are small and stand alone. This gives them less of an edge when negotiating purchasing and managed care contracts when compared to the larger systems. As we move to adopting more "Centers of Excellence" again the stand alone public hospital will have a disadvantage. Finally, those hospitals that have been relying on tax subsidies by their local communities will face strong pressures to see these go away completely and have no prospect of any increases.

Some public hospitals have gone from public to private in the past with no problems. I oversaw one transformation in the early 90's. The move did nothing but benefit our hospital and the community. Perhaps more hospitals will be looking at this or even face a much more devastating alternative.

More on this later.

Mark Brodeur

Friday, August 27, 2010

Admitting Medical Errors: One Hospital's Experience

Imagine a hospital that actually encourages its employees to not only admit medical mistakes but tell the patient and family the details of the mistake. In addition, if they find that a treating physician was at fault for an error related injury, they offer the patient and family financial compensation. This sounds crazy and is a bolder move than I would have been willing to try, but apparently it works.

This is not a true study since it is the experience of only one hospital and there was no control group. But according to the Annals of Internal Medicine, the University of Michigan Health System tried this and saw the following outcomes:

1) Overall legal costs went down
2) Number of claims requesting compensation went down
3) Number of claims actually compensated went down
4) Time to resolve a claim decreased

I have heard for years that being open about medical errors with patients and family is the way to address them. But the extent of information shared by this hospital as well as linking it directly to an offer of compensation is something new. I would like to see more studies but University of Michigan Health System's experience certainly supports this approach. The hospital was on a downward trend for claims before this was implemented. But claims dipped well below the tend after this program was put in place so there is clearly a connection.

The message here is that a full disclosure with offer program will not drive up liability costs as one might suspect. In this case at least it had a very positive impact in the other direction. Certainly this is worth serious consideration.

More on this later.

Mark Brodeur

Wednesday, August 25, 2010

The Cost of Medical Care Actually Dropped Last Month

Maybe its too early to get really excited because one month does not make a trend and the cost of healthcare only dropped one tenth of one percent between June and July. But still, a decrease in the cost of healthcare is a big deal. This has been the one constant in the economy that everyone could count on. Healthcare costs will always increase from month to month. We have only had a decrease like the one last month six times in the last 63 years. Maybe longer since records only go back to 1947. And the last time it happened was 35 years ago.

On the other hand maybe it is time to celebrate, at least until the August numbers come out. Of course I would feel better if we knew exactly why there was a decrease. No one seems to be able to explain that. All we know is that healthcare did buck the overall trend which showed a consumer spending increase increase of 0.3% between June and July. The Obama administration has not yet claimed this as a victory for healthcare reform. Nor have the Republicans stated that this is the beginning of Americans abandoning our current healthcare system out of fear. People like us at Compirion would like to think it is because we are helping hospitals improve their operating metrics. But the truth is that the decrease is too small to be statictically significant, at least based on one month's data.

Lets continue to look at this and see what the future months bring.

More on this later.

Mark Brodeur

Monday, August 23, 2010

Six Keys To High Performing Hospitals: Key #6

Today I finish out the list of keys to high performing hospitals as put together by Lawrence Prybil, Ph.D. and Samuel Levey, Ph.D. To say last but not least is an understatement. Today's key is perhaps the most important of all of them.

6) Healthy organizational culture

This concept has not been traditionally discussed, perhaps because it is a bit more difficult to see and measure. In fact in the study, it was cited in only 6 out of the 10 high performing systems interviewed. The culture in these systems was described as having a broad-based commitment to excellence in patient care and operating performance. It was also stated that this culture was not always with the organization but rather had to be developed over time. The culture must embrace the organization's core values and commitment to high performance.

Changing culture in an organization is a marathon, not a sprint. This is something that we work with everyday at Compirion Healthcare Solutions. To assist an organization in changing its culture requires an intense effort over an extended period of time; at least six months. Anything less than this will not have a sustained impact. Managers frequently put a spotlight on a problem area for a short period of time and are gratified to see almost immediate improvement. What they fail to do is follow up a few weeks later to see if the improvement has continued.

This list of six keys is not meant to be inclusive. There were a number of other keys mentioned such as prudent investment in facilities, services and new technology. But these six were considered the most influential on the high performance. If you achieve these six you will have attained a high level of performance.

More on this later.

Mark Brodeur

Friday, August 20, 2010

Six Keys To High Performing Hospitals: Key #5

The fifth key to high performance may seem obvious, but when looking at hospitals that are struggling on their bottom line, it is not so obvious to them.

5) Defined organizational objectives, targets and metrics.

The only surprise to me in the study is that only 6 out of the 10 high performing hospitals in the study mentioned this. It relates to the popular axiom, "If you can't measure it, you can't manage it". All hospitals have great financial measures, quality standards and customer service scores at an organization wide level. These are usually included in a monthly dashboard shared with the Board. But what about at the department level? Does your facility have metrics to track all key performance areas? And how often is this data collected?

We at Compirion Healthcare Solutions often find this kind of data lacking. And if it is collected, it is not done on a frequent enough basis. The Board level dashboard concept must be applied at the department level (and interdepartment level) for all operations. The data should be monitored on a daily basis. Looking at last month's data will not show all of the performance fluctuations that occur. Plus it is too old to be useful for making the needed adjustments.

Gathering daily metrics is only part of the necessary action to achieve high performance. Knowing where you are today is important, but you must also set the appropriate and achievable benchmark for where you want to be. There are plenty of standards out there, some of which may seem unachievable. We have found in working with hospitals that they are surprised at the high levels of performance that they can achieve. We now resort to sharing the risk and providing them a money back guarantee if together we don't achieve this level of improvement.

So first you meed to measure where you are today, then set the benchmark for where you want to be and track your progress with daily measurement. How you get from A to B is an intensive process that is a whole subject on its own.

More on this later.

Mark Brodeur

Thursday, August 19, 2010

Six Keys To High Performing Hospitals: Key #4

Continuing my commentary on the list of keys to high performing hospitals based on a study by Lawrence Prybil, Ph.D. and Samuel Levey, Ph.D., today's topic deals with the ultimate authority for a hospital's operations.

4) Committed and engaged Board of Directors

With the hospital's CEO being the one in the spotlight, not everyone realizes the critical role that the Board of Directors plays. In fact, if they are doing their job well, they will remain somewhat in the shadows as the hospital excels. Usually Board members are only in the news when a hospital is in some kind of turmoil. A high performing Board is proactive, well informed and collaborates closely with the CEO and the Medical Staff. This was identified as a must by 8 of the 10 high performing Boards in the study. I think the other 2 just failed to mention it.

It is interesting that many of the high performing Boards spoke of the journey they took to get where they are today. It is clearly a development process. They spoke of the past when they were more passive and had a limited awareness of their environment and the importance of maintaining strong relationships. I remember dealing with a Board member who was strongly opposed to physician representation on the Board. His attitude was that the hospital would run a whole lot smoother if we did not have to deal with the doctors. This kind of thinking will hold a hospital back regardless of what other positive things are happening.

So how did the transformation happen for these Boards? It starts with education and a commitment by all Board members to be engaged in the process. The hospital can not afford to have valuable Board seats occupied by members with their own agenda or passive individuals who just occupy a chair and enjoy dinner. It also involves having the Board be clear on its role versus the role of the CEO. All high performing Boards understood this distinction. Having a strong trusting relationship with the CEO is essential. Finally, much of the work of strong Boards is done through effective committees. Most Boards are too large to have the kind of in depth discussion needed for many issues. Also there are just too many issues to deal with. So having committees that do most of this before the Board meeting is important. At the main meeting, the in depth work of the committees can be summarized rather than totally rehashed. This allows input from everyone without getting bogged in the details.

The Board is the ultimate authority for a hospital. This is not to say that it is more important than a strong CEO or cohesive Medical Staff. But without this third leg of the stool, the hospital will not excel.

More on high performance tomorrow.

Mark Brodeur

Wednesday, August 18, 2010

Six Keys To High Performing Hospitals: Key #3

I have previously commented on strong value based CEO leadership and a clearly articulated mission, vision, and values. Today I want to move on to the critical importance of clinical excellence and the leadership it takes to achieve it.

3) Strong clinical leadership and capabilities

Eight of the 10 high performing systems interviewed mentioned this as essential to their success. This actually touches on several subjects. The first is my favorite mantra "quality first, finances follow". The second is the critical importance of having a competent and supportive medical staff. To achieve both of these you must have strong physician leadership. No hospital can achieve enduring success without it.

I have seen hospitals that have dissension within the medical staff and conflict between the medical staff and the board. This makes for a dysfunctional environment and will certainly hold the hospital back from becoming a high performer. The analogy that a hospital is a three legged stool comes into play here. It is supported by the Board, the Medical Staff and the CEO. If one of the 3 is missing, the stool falls over. This often requires some give and take on both sides. Some of the high performers mentioned the value of joint ventures with their physician groups. While some Boards may not be willing to share revenue with their physicians, the high performers have learned that sacrificing something in the short run will pay larger dividends down the road when strong relationships have been developed.

Strong clinical performance also extends beyond the medical staff to include nursing which is the backbone of the care provided as well as the other clinicians who provide care and support. Effective leadership in these areas is also key to high performance.

One final thought. With the advent of healthcare reform, there will be a stronger push for fully integrated care systems that include prevention, primary care, outpatient services and hospitalization under a single billing structure. Maybe we will finally see that capitated payment system that we all got ready for in the late 90's. Either way, systems that have all of these elements integrated will excel.

More on high performing hospitals tomorrow.

Mark Brodeur

Tuesday, August 17, 2010

Six Keys To High Performing Hospitals: Key #2

Yesterday I discussed the importance of strong, value based leadership to a high performing hospital. Today I comment on my experience with the second key which involves setting a clear direction at the hospital that others are inspired to follow.

2) Well understood mission, vision and values

This was covered in my previous series of posts on what makes a great leader. But it is certainly worth repeating. There is a reason it is listed under attributes of a great leader as well as keys to high performance in your hospital. When surveyed, trustees from 8 of the 10 high performing systems that were identified for the study stated the importance of a meaningful mission statement, compelling vision for the system's future, and a clearly stated set of core values. It is important that they not only be understood but also supported by all key stakeholders both internal and external.

I have seen firsthand the difference that that a clear, concise and internalized set of mission, vision and values can make on an organization. There is no right or wrong message to convey. But it must be true to the real purpose of the hospital. More importantly it must be lived by everyone in the organization. In some hospitals the mission is just words on a dusty plaque. In a high performing hospital it is the daily motto that actually motivates employees. All key stakeholders from Board members to front line staff should be able to state the essence of the hospitals mission, vision and values from memory because they have been exposed to it every day.

This does not happen easily, nor can you change the culture overnight. It takes months if not years of repeated effort to "spread the mission". I found it useful to post these widely throughout our hospital; to make them a laminated page at the beginning of every Board meeting; to begin every new employee orientation with a thorough explanation of them; and to remind employees every day why we are here.

We talk about, "no money , no mission". I add to that, "no mission, no purpose".

More on high performing hospitals tomorrow.

Mark Brodeur

Monday, August 16, 2010

Six Keys To High Performing Hospitals: Key #1

In an intensive study conducted by Lawrence Prybil, PH.D. and Samuel Levey, PH.D. which covered 123 hospitals in 40 states, they determined the short list of factors that made the high performing hospitals able to achieve that success. This study included interviews with key leadership at 10 high performing health systems. In today's post and subsequent ones I will provide my commentary on these factors. You will note that there is clearly overlap with this list and the ten key aspects of great leadership covered previously. This is no surprise, rather an affirmation of the bond between great leadership and high performance.

1) Strong values based leadership

Nine of the ten systems interviewed stressed how important it is to have strong leadership skills from the CEO. Leadership is different than management. It includes attributes such as commitment to the system's organizational mission and values, stellar communications and relationships with the board and medical staff, expertise in financial management and cost controls, a passion for continuous improvement and strategic vision.

It was also noted that the strong leadership must extend beyond the CEO position to all of the senior management team. Each of them brings their own area of expertise to the organization. Having a top leader who can attract this kind of talent and bring them together as a cohesive team is vital for the high performing hospital.

I can tell you from experience that this is more difficult than some people may assume. First you must create a culture that will be attractive to high performers. Even in today's economy with many people looking for work, high performers are difficult to attract. Then you must get these strong individuals to work as part of a team with other strong willed types. This part can be just as difficult. For some of these types, playing as part of a team is new to them. But it can be done and it must be done to achieve superior performance.

Ultimately though, it falls on the CEO to put this team together and to get them working collaboratively. If it is not happening, it is the Board's responsibility to make the necessary change in the top position.

More on keys to high performing hospitals tomorrow.

Mark Brodeur

Friday, August 13, 2010

Smaller Rural Hospitals Provide Surgical Care That Is Just As Safe As Larger Urban Hospitals

A new study released in the July issue of the American Journal of Surgery compared the compliance of hospitals to the latest safety standards. It showed that smaller community hospitals were as responsive or even more responsive to new safety standards than their larger urban and tertiary care counterparts. It shows that you do not have to go to the big city to have a high quality, safe surgical experience. This is very important since currently 40% of Americans have their surgery in centers that are not large, urban, or tertiary care facilities.

In my years of experience I always knew this to be true, but it is nice to see it documented in a study. Most previous studies have bypassed the care given in the smaller and rural community hospitals. This has helped perpetuate the myth that for the best surgical care you must go to the large teaching hospital with cutting edge, expensive technology. If your surgery is that specialized that you need this type of care you will be referred there. But for more routine operations it was found that the smaller hospitals more quickly adopted new safety standards because there are fewer bureaucratic levels to cut through.

Specifically the study focused on how well hospitals implemented the expanded surgical time out procedure. The basic time out occurs before the patient is put under for surgery to verify that it is the correct patient, the correct surgery and the correct site. The expanded time out has a long checklist of additional safety items to check. Major surgeries such as hip and knee replacements, hysterectomies and colon resections were looked at for the study. It showed and overall compliance rate of 97% for the smaller hospitals with clinicians showing an extremely high standard of care.

So unless a patient needs a Cyberknife or DiVinci device for their care, they should feel comfortable going to their community hospital for surgery even if it is not listed in the U S News and World Report's Best Hospitals in America list.

More on this later.

Mark Brodeur

Thursday, August 12, 2010

Paying Hospital Based Physicians Must Be Contingent On Far More Than Productivity

The pendulum that swung away from making physicians hospital based ten years ago has clearly swung back. Hospitals are moving away from contracting with independent groups for many services and returning to salaried arrangements. But this time the payment arrangements are far more complex. It appears the hospitals have learned from mistakes made in the 90's when hiring physicians was last popular. In that era many physicians benefited from the naivete of hospitals in negotiating these arrangements.

I know of one hospital that plunged headlong into hiring physicians not just for hospital based services but they also set up a large primary and specialty care group. This new practice was largely responsible for the subsequent year's $5 million dollar profit for the hospital. The problem was that the practice itself lost $11 million that year.

There is also the case of two primary care physicians who sold their practice to a large hospital chain and made a big windfall. The chain kept them on seeing their same patients for a nice salary. This continued until the chain decided to dispose of all owned practices and paid these two doctors another nice windfall to take responsibility back for their patients, which they did. They are now back to where they started except they have pocketed two nice checks in the meantime.

Well this time the hospitals have started protecting their investment with payment tied to performance measures. It started with simple productivity measures. Physicians get paid for the number of patients they saw. Then it was discovered that not all patients took the same amount of resources, so RVUs were developed. It soon became obvious that there were other duties involved and time spent in a physician's day can be far more complicated than this.

According to Hospital Review, the following are key factors in payment formulas for salaried physicians today:

-Clinical services provided
-Administrative duties performed by the group
-Call coverage
-Quality measures, which still tend to be process oriented
-Measures tied to strategic objectives
-Professional fees

There are many factors driving physicians and hospitals toward salaried arrangements in today's environment. Clearly hospitals do not need to repeat the mistakes made 20 years ago. But the contracts will need to be based on a number of factors that include volume, complexity, quality, customer service and strategic initiative indicators.

More on this later.

Mark Brodeur

Wednesday, August 11, 2010

A Pilot Project For Tort Reform That's Worth a Try

One of the major areas for reducing healthcare costs that is being largely overlooked by the Obama administration and the new healthcare reform law is tort reform. This is not a popular subject with the Democratic majority because of the support they receive from from all of the trial lawyers. Nevertheless it is an important area to address in today's economic climate and at least one initiative snuck through with some federal funding.

According to the Wall Street Journal there is a pilot program in New York State that looks promising and deserves some wider attention. Rather than allowing many of the cases to just go to trial which occurs under the current system, they are taking a different path using judge-directed negotiations.

Five hospitals in New York City are participating in the program. They are looking to reduce their malpractice costs by revealing any medical mistakes early, quickly offering settlements and using special health courts that have been set up where judges can negotiate agreements before they go to trial.

The pilot is being funded by the federal government for three years at a cost of $3 million. But the goal is to reduce the $1.4 billion spent each year in New York State on medical malpractice premiums. Some of the savings will come from quicker and hopefully more reasonable settlements, but the big savings will be from reduced attorney's fees for both sides. Obviously the trial lawyers association is not behind this pilot project.

Some will argue that we already have a mechanism in place to negotiate settlements and many cases end that way. Hospitals will argue that most of those are nuisance suits that are settled just to avoid the cost of going to trial. This process with a judge directed health court to hear cases should get the nuisance suits thrown out entirely.

I applaud New York State for this pilot and the Federal Government for funding it. I will be anxious to see the results.

More on this later.

Mark Brodeur

Tuesday, August 10, 2010

When Addressing ED Throughput, Don't Forget To Check The Back Door

Yesterday's post covered the anticipated increase in ED visits for most hospitals because of the impact of healthcare reform. As hospitals prepare for this they will most certainly look to improve ED throughput, which is certainly what I would recommend. Many efforts I have seen hospitals attempt focus on the front door of the ED to get patients into the system faster. This is important but it is usually only part of the solution to faster throughput in the ED.

A number of approaches have been tried to get patients into the treatment cycle faster. Door to doc time or door to treatment time is a metric we all look at. Some innovative approaches have been used to shorten this. Some of them work and some of them don't. For example, hospitals have tried a policy of not using the waiting room unless absolutely necessary. The idea is to have enough treatment rooms in the ED to whisk new arrivals instantly into a room. This gives them the idea that treatment has begun. But the plan backfires when a patient waits an hour in a room without seeing anyone. Its like entering a crowded restaurant and immediately getting a table only to wait an hour for the waiter to show up. To improve throughput you need to begin service earlier.

But while many hospitals do effectively reduce waiting on the front end, fewer recognize the impact of the backlog on the back end of the ED. I'm talking about the patients waiting to be admitted upstairs. Disposition to Admit time is the metric to look at. Admit is defined as the patient has left the ED and is in an inpatient bed on a unit. Not all EDs recognize the significant impact this can have on ED throughput, patient satisfaction, ED productivity and ultimately new ED business.

The primary reason that ED patients who need admission remain in the department is the lack of available beds upstairs. We sometimes see a lack of cooperation from nursing staff to accept new patient in available beds, but usually its because the beds are full. And often they are full with patients who have been medically ready to be discharged for hours. They just haven't left yet. This is often because they are waiting on a family member who works or because the attending physician makes rounds late. These are both challenging issues but they can be addressed. We have helped many hospitals do it.

So when focusing on improving ED throughput, don't forget to address the inpatients lingering in the beds upstairs. Your ED bottleneck may well be bigger at the back door than it is at the front.

More on this later.

Mark Brodeur

Monday, August 9, 2010

Prepare for Increased ED Usage Under Healthcare Reform

Healthcare reform will provide insurance coverage to millions of Americans who are currently uninsured. Many of them seek access to healthcare only through Emergency Departments. The initial thought would be that once they get health insurance coverage under the new reform law that they would immediately stop using the Emergency Department inappropriately and go instead to primary care physicians thus causing ED visits to decline. But actually just the opposite will likely occur. There are a number of factors that point to a surge in ED volume under healthcare reform. These include:

1) It is a misnomer that the uninsured use the ED more than insured patients. Many of them (though certainly not all) are wary of accumulating large bills. Suddenly having coverage will more likely drive them to seek healthcare. Since they have not established a relationship with a primary care physician or clinic, they will likely begin by going instead to the nearest ED to flash their new health insurance card.

2) Currently the biggest users of EDs are Medicaid recipients. Under reform, their ranks will increase by nearly 16 million. Their trend of using the ED to access the system will continue at least for a significant period until stronger primary care access is established. The new recipients will be much more prone to visit their local ED than they are today.

3) The new healthcare reform law does address improving access to primary care providers over time, but unfortunately it is much more effective in increasing the demand first. There is funding and incentives to create innovative models of care such as medical homes. But first of all these will take time to get approved and developed. Second they will take time to get staffed. And third, it will take time to shift usage patterns into these settings. In the meantime, EDs will stay busy.

Massachusetts has frequently been looked to as a model of what will happen under healthcare reform because they have had a law since 2006 requiring health insurance for almost everyone. They reported a 7% increase in ED visits between 2005 and 2007. Their increases may not be overwhelming but they still remain above the national trends.

How do you prepare for the anticipated increase in patients? A surge plan is certainly beneficial, but we have found it to be much more effective to focus on streamlining your current daily operations. Reducing ED throughput and facilitating earlier discharges has never been more important. We at Compirion Healthcare Solutions have assisted many hospitals to achieve amazing improvements in these areas and would be happy to meet with you to help your hospital prepare for the changes ahead.

More on this later.

Mark Brodeur

Friday, August 6, 2010

Public Opinion Seems Strongly Against Healthcare Reform

This week Missouri voters drew national attention by solidly passing a measure that would ban one major aspect of healthcare reform; the requirement that everyone purchase some type of insurance. The measure is largely symbolic since federal law will take precedence over state law in this case, but the Missouri voters were well aware of this when they voted. In fact it was publicized by some that voting for this measure may jeopardize some federal funding down the road because of the embarrassment it would cause the Obama administration. That didn't seem to matter to Missouri voters who passed the measure with a more than two to one margin.

The Missouri Hospital Association weighed in on the matter with a mailer to all Missouri residents strongly opposing the measure. They made a very good point. If there is no mandatory health insurance coverage then who pays for the services consumed by the uninsured who certainly can't afford to self pay. Voters don't want it covered through taxes. So I suppose it is to fall on the shoulders of the providers to eat these costs. The MHA argues correctly that this could threaten the very existence of some struggling community hospitals.

The Tea Party and others also make a compelling argument that we want less government intrusion into our personal decisions. This certainly may fall into that category. But I argue that being able to provide needed healthcare services to someone regardless of their ability to pay supersedes that personal decision. Will that person who decides not to purchase health insurance also decline any medical treatment that might possibly be needed? I don't think so, nor should they.

Right now healthcare services are available when really needed for anyone. By putting our heads in the sand and saying we will not pay for some will not make those costs go away. Yes, healthcare costs are too high and yes, there are ways to improve the efficiency of service delivery and payment. But just ignoring the cost of the uninsured will not address these issues.

More on this later.

Mark Brodeur

Thursday, August 5, 2010

Ten Aspects of Strong Leadership: Point #10

Today I finish up my commentary on the ten aspects of leadership that were put together by Chuck Lauer. He has done a good job of covering all the bases for distinguishing strong leaders from weak ones. The final point sounds like an entreaty to all leaders.

10) Have courage

There is no safe comfort zone for leaders particularly in trying times like we are seeing now. A leader must be willing to take risks that will ultimately benefit the entire organization. At the same time he or she may be putting their own career on the line, but that's what it takes. To paraphrase a popular saying, 'When the going gets tough the leaders start leading'. This does require courage even if you have solid information to base decisions on. In the real world, the proper direction to follow is rarely that clear cut.

At this point I would like to recap the 10 aspects of strong leadership.
1) Leading is not the same thing as managing
2) Don't live in a bubble
3) Cherish and respect employees
4) Choose a clear mission
5) Demonstrate integrity
6) Be transparent
7) Embrace responsibility
8) Share credit
9) Leadership isn't for everyone
10) Have courage

This is a pretty comprehensive list, but it does help to define who is a strong leader in the healthcare field. How do you measure up?

More on this later.

Mark Brodeur

Wednesday, August 4, 2010

Ten Aspects of Strong Leadership: Point #9

We are nearing the end of the list from Chuck Lauer on important aspects of leadership. But there are still several important points to make.

9) Leadership isn't for everyone

There is a saying that leaders are born and not made. You need to have that intestinal fortitude it takes to deal with the pressures of leading. In my CEO days I can't even recall how many times people came up to me and said, "I sure wouldn't want your job. Its too much stress". Of course this doesn't include the physicians who were convinced that the job was a cake walk and anybody could do it.

Most of those who do not have this inner strength needed recognize that fact and do not pursue a leadership role. Unfortunately there are some who are missing this key element but pursue the career field anyway. They usually get chewed up by the pressures and stress of the job. While no one enjoys the negative and stressful aspects of a leadership position, the strong leaders can cope with these and move on to the more positive aspects.

And that is the other side of being born to lead. Strong leaders derive great internal satisfaction from the accomplishments that a leader can help direct. While doing this he or she remembers that they did not do it alone. I forget the movie where a character says, "I love it when a plan comes together". But that is the satisfaction that a great leader feels. I have felt a strong sense of accomplishment over the years for the things that our team has achieved. This more than offsets the other stresses that come with the job.

Leadership is an opportunity that is also filled with a great deal of responsibility. Strong leaders live for this.

Tomorrow we will wrap up the series on leadership.

Mark Brodeur

Tuesday, August 3, 2010

Ten Aspects of Strong Leadership: Point #8

As we begin to wrap up the ten aspects of leadership, there are still some important ones to cover. Today's topic is recognizing the efforts of those around you as your organization moves forward.

8) Share credit

This skill like some others is linked directly with being secure as a leader. I have seen insecure leaders over the years be quick to grab credit for anything positive that happens. It seems they need to justify their existence by claiming responsibility. A few delusional ones even believe that they did it alone. I know someone who felt that he alone was irreplaceable. Everyone else around him was inconsequential and could be easily replaced. This is the antithesis of a strong leader.

Chuck Lauer states that a leader is best when people barely know he exists. This is tough for some leaders for many of us are drawn to the spotlight. But sharing it with all the people who make good things happen is extremely important. Recognizing someone publicly is a powerful motivator for them. We all want recognition. It may be the strongest reason why many people do what they do. One of the best bits of advice I got was to recognize employees who did something particularly well by sending a thank you note extolling their virtues to their home. This way it is seen by their spouse and family. It also is more personal and heartfelt.

The other side of publicly sharing the glory is stepping up and taking the blame alone. To publicly admonish employees in public will not achieve the desired result. It will destroy morale. Praise in public and criticize in private is a very true axiom. Everyone will realize the part they played in a failed initiative. A true leader is someone who takes it for the team and moves on.

More on leadership tomorrow.

Mark Brodeur

Monday, August 2, 2010

Ten Aspects of Strong Leadership: Point #7

Moving on with Chuck Lauer's list of leadership traits, today I want to cover one that can be clearly seen in many leaders but is even more obvious when it is lacking. Not everyone who is elevated to a leadership position has everything that it takes to lead. A leadership role is very demanding and you must be willing to take on these challenges.

7) Embrace responsibility

There are two aspects of taking on responsibility and decision making. The first is making that enlightened decision in a timely manner and the second is standing by it under pressure. Regarding making the right decision, it must be fair and balanced taking into account all the factors in play. These are usually contradictory so the decision making is much more difficult. Responding without knowing all of the facts can be bad, but being frozen with indecision during critical times is certainly worse.

Great leaders actually enjoy the challenge of taking on responsibility and making the tough decisions. These are people who thrive under stress. Not that they go about purposely creating stressful situations. There are some people who do that. But great leaders derive an inner strength under stress and find a way to show peak performance. They do not waffle under challenge of their decisions. Any tough decision, even the right one is bound to have some challenges to it. Making the right decision in the first place is a leadership skill. But sticking with it under challenge is just as important.

Clearly this is not for everyone. I have seen people in leadership positions who freeze under pressure or back away from tough decisions hoping that they will resolve themselves. Obviously these people do not survive long term in a leadership position. The organization is looking for someone to take charge and take a stand. Even if they do not personally agree with a position, many people will follow a leader who clearly articulates his or her position.

It is during times of crisis that strong leaders clearly differentiate themselves.

More on leadership tomorrow.

Mark Brodeur

Friday, July 30, 2010

Ten Aspects of Strong Leadership: Point #6

Up to this point a number of key attributes for leaders have been discussed, with yesterday's discussion on integrity being the most important one in my opinion. But integrity alone will not make you a great leader. I have seen some truly ethical and well intentioned people in a leadership position fail because they did not possess the other skills required. Today we will cover one of those skills.

6) Be transparent

This sounds easy to do, almost a passive exercise. But in reality it is a challenge for most leaders. It goes against many people's natural instincts. Some leaders, particularly insecure ones feel threatened by others. They live by the adage that "Knowledge is power". Actually this is true. But rather than empower all those around them with knowledge, some leaders feel this gives away their power. The more confident leaders tend to share information readily.

Now this can be taken too far. For example I do not agree with the speaker I alluded to in an earlier post who suggested that hospital CEOs conduct their business in the hospital lobby in front of everyone. There are sensitive and confidential issues discussed which must occur in private. But key decisions affecting the organization should be readily shared with all employees on a timely basis.

I used to hold a management meeting for all mid level managers and above the morning after each Board meeting to share all the important issues discussed and decisions made. I also met with all employees at least quarterly (this means covering three shifts) to share the organization's performance measures, both good and bad. Employees loved it. They were surprised sometimes that some not so good news was being shared. But they also took ownership in these performance metrics and improved their overall performance.

By sharing information with all employees you empower them and build their trust. A few may abuse this trust, but they probably didn't belong in your organization in the first place.

More on leadership next week.

Mark Brodeur

Thursday, July 29, 2010

Ten Aspects of Strong Leadership: Point #5

As we continue with Chuck Lauer's list of key aspects of leadership, today I want to cover the one that I consider to be the most important.

5) Demonstrate integrity

Being a strong leader requires having a number of skills but none of these mean a thing if they are not based on a foundation of solid ethical standards. How a leader acts in this regard not only directs his or her behavior but also the behavior of all those who are faithfully following. The most dangerous combination is an inspiring and charasmatic leader who pursues an unethical path to quick gains.

Successful leaders are quick to recognize that they do influence the behavior of others who are following them. With this comes an enormous responsibility. It is not alright to say that we have to bend the ethics of the organization to survive in today's environment, or that this is what the competition is doing. Being a leader means you have to stand up for what is truly ethical and setting an example for the organization.

Throughout the years I have seen a number of leaders who posess questionable ethics. They do not all crash and burn. This is not Hollywood. In real life some of these people succeed in the business world. Keep in mind that many of them possess other strong leadership skills. But they are still not doing right for their organization or the community they serve. A few end up on the cover of Modern Healthcare in handcuffs but many other operate under the radar.

At the end of the day a leader must be able to look in the mirror and ask, "Did I do the right thing?".

More on leadership tomorrow.

Mark Brodeur

Tuesday, July 27, 2010

Ten Aspects of Strong Leadership: Point #4

In the previous posts, the leadership traits have focused on the ability to interact and motivate people. But just as important for a strong leader is the ability to provide a clear direction for the organization and a sense of purpose.

4) Choose a clear mission

Healthcare is very mission oriented. In fact some organizations in the past have focused so much on mission that they did not keep the financial realities in proper perspective and threatened their organization's very existence. Obviously a balance is needed. The old adage "No money, no mission" is very true. So it is up to the strong leader to identify the proper mix of services that will support the organization while fulfilling its overall mission.

This all starts with the organization's mission statement which should be to the point and clear to everyone that reads it so that it can be internalized. I once came to an organization with a mission statement that was a page and a half long. If you read the whole thing it sounded very nice but it did not convey a clear sense of purpose to the organization. Working with the Board we shortened our mission to a single sentence that still expressed what we are about.

But the job of establishing mission awareness only starts here. Once you have a statement that will inspire and direct people, the real work is to make it a living, breathing part of the organization. Everyone from the Board members to all front line staff should not only be aware of the hospital's mission but also see it as a guiding principle for their everyday activities. I had our mission, vision and values framed and hung on the walls throughout the hospital including the Board Room. I had them laminated and put in as the first page of the Board book every month. I went to every new employee orientation and gave a 15 minute talk about what our mission, vision and values meant to us. Even with all of these efforts, there was more that could have been done to make the mission completely internalized in the hospital.

Selecting the appropriate mission that balances meeting community needs with protecting the long term financial viability of the hospital is a daunting task. Getting this mission completely internalized in the organization is even harder.

More on leadership tomorrow.

Mark Brodeur

Monday, July 26, 2010

Ten Aspects of Strong Leadership: Point #3

The third aspect of strong leadership overlaps with the second point that was covered on Friday. It addresses how effective leaders deal with employees.

3) Cherish and respect employees

The first thing that a real leader recognizes is that you can not do it all by yourself. You must rely on others and get your work done through other people. The key is how to properly motivate them. Not everybody gets it.

I once worked under someone who clearly thought that employees were an expense to the organization rather than an investment. His idea of employee loyalty was, "You work hard for me for two weeks then I give you a paycheck and we're even". That was it. No connection beyond that. This was not the enlightened thinking of a great leader. Clearly he thought that employees were totally replaceable. Even in a tough job market like today with many people looking to jobs, this is not the way to inspire employees to put their heart and soul into their work.

As Chuck Lauer says, "Employees who get respect will produce at their highest capacity and make their leader look good". My philosophy has always been to surround myself with the best people I can, Give them the resources they need to do their job and stay out of their way except to support them as needed.

As for front line staff, doing the MBWA that was covered last week is important, but not the most important thing. Letting them in on what is going on and seeking their input is invaluable. For an employee to be able to go home and tell his or her family about some new service coming to the hospital before they read about it in the paper makes them feel empowered and alligned with the organization. This is the kind of employee who will do anything to help the hospital succeed. That is a great gift. Make sure they know how much you appreciate it.

More on leadership tomorrow.

Mark Brodeur

Friday, July 23, 2010

Ten Aspects of Strong Leadership: Point #2

Continuing with commentary on Chuck Lauer's list of leadership traits, today I want to focus on being connected.

2) Don't live in a bubble.

Great leaders listen to their people to gain a variety of perspectives. Some leaders don't realize that they don't need to know everything themselves. I have seen over the years that the best leader is someone that knows what he doesn't know and is not afraid to admit it. The great leaders surround themselves with other smart people and listen to what they have to say.

But getting out of the bubble is more than just this. The great hospital leader needs to leave his office and be visible in the hospital. I heard one speaker advise that the hospital CEO should not even have an office. He should set up at a table in the hospital lobby to be visible to all. Personally I think this is going way to far. But the point is valid.

The term Management By Wandering Around (MBWA) became popular some years ago, and many CEOs spend a portion of their day making rounds to interface with employees as well as patients and visitors. But usually when schedules get busy, this is the first thing to go. Also in a large organization that operates around the clock, it is difficult to be visible to everyone. I had a Board Member once chastise me for not knowing the first name of all our employees. He knew the name of all eight employees at his bank. I reminded him that it is a little tougher with 1,200 employees, some of whom work nights and weekends only.

One final note on being visible to employees. It is not just talking in the hall about kids and grand kids. Employees want to know what is going on and want to know that their feedback about the workplace is being listened to. Making time for this is the really important thing.
Properly respecting employees will be the subject of the next post on Monday.

More on aspects of leadership next week.

Mark Brodeur

Wednesday, July 21, 2010

Ten Aspects of Strong Leadership: Point #1

In today's tough economic and competitive environment with more scrutiny from all sides than ever before, it is extremely important that hospitals have strong leadership. Just what is it that makes someone a strong leader? What qualities are necessary to be effective as a leader?

Chuck Lauer who for many years was publisher of Modern Healthcare, a prolific author, public speaker and career coach in the healthcare field, offers up his views on what it takes to be an effective and strong leader. Over the next series of posts, I will share these along with my comments based on my personal experience as a hospital leader and my observations of many in the field. Just by paying attention to others you can learn what to do but more often learn what not to do.

1) Leading is not the same as managing

We often use these terms interchangeably but they are dramatically different, just as management and administration are different things. It has often been said that leaders do the right thing while managers do things right. Management entails working within the organization doing things correctly and efficiently while leadership involves setting that course for the managers to follow. Both functions are necessary for the successful operation of a hospital. But a well managed hospital will not succeed if it is not headed in the right direction. A leader is necessary to set the strategic plan for the organization.

The other aspect of this is the ability to get others to follow you once you have set the course. This means that you must be able to inspire others to act. The willingness of others to follow you is dependent on two things: 1) the message itself must be believable and consistent with others values 2) having the charisma to properly convey the message is just as key. Strong leaders handle both of these well.

More on leadership tomorrow.

Mark Brodeur

Tuesday, July 20, 2010

Ten Practices for Increasing Hospital Profitability: Tip #10

Today we finish commentary on the list of profitability practices put together by Becker's Hospital Review. As stated in the previous posts, the list focuses heavily on physician involvement to improve your bottom line and grow business. Today's tip deals with the managed care side of the business.

Tip #10: Renegotiate managed care contracts

For many hospitals managed care patients represent a significant portion of their business or at least a significant portion of their bottom line. Even though managed care companies have become far more resistant to subsidizing the losses hospitals endure from Medicare and Medicaid, it is essential that hospitals maximize this portion of their reimbursement. Clearly there is no opportunity for improved reimbursement from Medicare and even if Medicaid improves substantially it will just decrease the loss.

As has been previously stated, hospitals must focus heavily on cost reduction. But this alone will not get you where you need to be. You also need to maximize reimbursement. According to Nate Kaufman a well recognized national speaker on this subject, hospitals should be getting 130-140% of costs from their managed care providers. If your hospital is not large enough or strong enough in the market to get these kinds of rates, then you should look at merging with a larger facility or system to improve your negotiating clout.

Managed care contracts should be looked at on a regular basis even if they are not due to expire. A profitability analysis should be conducted by payor and by procedure to find the real winners and losers from a financial perspective. Then focus on renegotiating the losers and get carve outs where needed to things such as orthopedic implants.

When you face managed care providers to improve reimbursement in certain areas do not expect a receptive audience. Despite the significant profits many of these insurers are making compared to hospitals, they will not make concessions willingly. You must know your market clout and be prepared to walk away from the table without an agreement as long as you are in a position where they need it more than you do. They will eventually return to work out a deal.

In closing this series of posts on profitability, there are many worthwhile practices on the list. In today's market it is essential that a hospital explore all possibilities. We are now longer in the era of profitability that some of us remember where sloppy practices could be tolerated and still give you a solid bottom line. Today it is clearly survival of the fittest.

More on this later.

Mark Brodeur

Monday, July 19, 2010

Ten Practices for Increasing Hospital Profitability: Tip #9

As we wrap up the list of profitability practices today and tomorrow, we once again turn to a tip involving the role of physicians. Many hospitals have turned to using hospitalists to manage a significant number of their inpatient admissions, and with great success if handled right.

Tip #9: Consider hiring hospitalists to manage inpatient care

The utilization of hospitalists has grown significantly over the last few years. At first, hospitalists were used primarily at larger institutions. Now you will find them everywhere including small community hospitals. Their use has increased because they help hospitals deal with two important issues: 1) minimizing length of stay and unnecessary testing 2) addressing lifestyle issues of primary care physicians who prefer an office only practice.

Many studies have shown that effective hospitalists can save a hospital millions in costs and generate additional revenue through their practices. Their availability inhouse helps facilitate admissions through the ED. They can significantly lower length of stay and reduce the amount of inpatient testing. Further they can enhance revenue through thorough and appropriate documentation that allows the hospital to maximize coding.

But this assumes that the hospitalist is a skilled acute care provider. I have seen hospitalist programs fail to deliver these returns because the physicians filling this role are the same inefficient providers that they were in their private practice. The point of a hospitalist program is to have the inefficient providers turn their care over to someone effective at managing acute care. Many times the physicians who seem to get lost providing inpatient care are happy to do this and appreciate the opportunity of having a hospitalist. But there are those physicians who refuse to turn over any aspect of their patient's care (inpatient or out). The only advantage of having a good hospitalist program for these physicians is that it provides a good internal benchmark for comparison. If you can show them that their case mix index is lower than the hospitalist's patients yet their length of stay and test utilization is higher, this provides a strong argument to influence their practice patterns.

The second benefit of a hospitalist program is that many of the primary care physicians, particularly the younger ones, prefer not having to deal with inpatient care. I had a family practice physician tell me that he needed only three more office patients a day to match the revenue he got by following inpatients which took over 2 1/2 hours of his day. For him, the decision to support a hospitalist program was easy. Unfortunately for me, he was also a very efficient inpatient provider. But the point is that you can generally improve the efficiency of your inpatient care while making life easier for a number of primary care physicians.

One last note, starting a hospitalist program is usually not free. Most hospitalists do not fully support themselves through billing alone, particularly in small hospitals. There is usually a subsidy involved to get the coverage needed. This must be weighed against the benefits gained to determine the financial feasibility. Most hospitals, including small ones, are finding this worthwhile.

More on the last profitability tip tomorrow.

Mark Brodeur

Friday, July 16, 2010

Ten Practices for Increasing Hospital Profitability: Tip #8

As we approach the end of the profitability practices list, today I want to focus on adding profitable service lines. The key to this is not only knowing their general profitability in most markets but also how they will perform in your particular market.

Tip #8: Consider adding profitable service lines

Building profitability is a combination of becoming more cost efficient and adding new business. You must do both if you are to succeed. Sometimes adding new business to your existing services is not a real option. In that case the only way to get additional business is to add new service lines. Any service provided by a hospital must either meet a critical community need or add to the hospital's bottom line. Ideally a service will do both. But when looking to add new service lines you must not only know that they are profitable in general, but that these needs are not already being met in your market.

Some profitable service lines like bariatric surgery, plastic surgery or hyperbaric oxygen therapy may not be seen as supporting the main hospital mission. But actually they do. It is the profit from these services that help finance those under-reimbursed core services and allow you to treat uninsured patients in your community.

When looking at new service lines, determine what the market needs and where you will get the referrals from. Again you need to be talking to your physicians about their needs and the number of cases they may be referring to the new service line.

Even in an era of shrinking reimbursement for services, there are still some service lines out there that can boost your bottom line. You may just have to look a little harder to find them.

More on profitability practices on Monday.

Mark Brodeur

Thursday, July 15, 2010

Ten Practices for Increasing Hospital Profitability: Tip #7

As we proceed through the list of profitable practices, the trend of working with physicians continues. Four out of seven practices involve physicians.

Tip #7: Grow case volume by attracting new physicians to your facility

It is fairly straightforward that new physicians will bring in more cases and grow your profits. Depending on your market this may mean attracting new physicians to live in your community or just getting existing physicians who live in your community to support your hospital rather than the competition. To accomplish this you must really impress the physician with what you can do for them and their patients.

Getting the physician loyalty is not just a matter of throwing money at them. First of course there are Stark issues with paying physicians. But even those hospitals that have directly employed physicians physicians have gotten into financial trouble by not properly structuring their employment contracts. An extreme example is the hospital that built a large hospital based physician practice paying very attractive salaries to recruit top notch physicians. This resulted in a $6 million positive bottom line for the hospital. The problem was that the separate physician practice corporation that paid all the new docs lost $11 million the same year. Needless to say, the corporate structure could not sustain the net $5 million loss and there were dramatic changes the next year.

Attracting new physicians and building their loyalty is a complex and difficult process. Not all physicians are looking for the same thing. But it is safe to say that most of them today are looking for lifestyle over money as long as the money is still well in the market range. Many physicians today also want the security of employment. They are not trained in business and don't want the headaches and uncertainties of hiring staff and doing their own billing. This is why the pendulum has now swung back to more physicians entering an employment arrangement rather than going into private practice.

There are other considerations also such as the amount of call and whether or not hospitalists are available. Again, the physician may be willing to sacrifice some income to have more evenings and weekends available for his or her family. Also do not overlook integrating the physician to the hospital and his or her family to the community. It has often been said that to recruit the physician, you must win over their spouse. You want to not only bring the new physicians to the community but keep them satisfied with their decision for years to come.

More on profitability tomorrow.

Mark Brodeur

Wednesday, July 14, 2010

Ten Practices For Increasing Hospital Profitability: Tip #6

Continuing with the commentary on Hospital Review's list of practices to increase profitability, we return for the third time to a tip involving working with physicians. I think I see a pattern here.

Tip #6: Consider partnering with local physicians to reduce competition for outpatient cases

Joint venturing with local physicians to develop a surgery center has become commonplace. If you have not done it yet, the prime opportunity has probably past. Changes in reimbursement are making these centers far less attractive financially than they have been in the past. And they have been very lucrative for investors in the past. Hospitals need to be open to sharing procedure and testing revenue with medical staff members that years ago had been exclusively the domain of the hospital. I have seen first hand the consequences of trying to keep control of these services in today's market. The physicians will open up their own center and take business away from the hospital completely. Part of something is better than all of nothing.

Hospital must develop a comprehensive outpatient strategy for all services that recognizes its physicians as key partners for its long term viability. In these lean economic times it seems contra intuitive to be sharing profitable outpatient services. This would be true if there were no alternative for competition. Unfortunately the threat of competition is real making it better for everybody including the community for hospitals and physicians to cooperate rather than compete.

More on profitability practices tomorrow.

Mark Brodeur

Monday, July 12, 2010

Ten Practices for Increasing Hospital Profitability: Tip #5

We continue this week with the discussion on practices that can make your hospital more profitable. Key areas like data based staffing decisions, managing vendors, OR utilization and physician involvement were discussed last week. Today I want to focus on the appropriate use of outsourcing or partnering for certain hospital activities.

Generally there is a reluctance to go outside for management of any area. These companies will come in and take a fee off the top to manage your area so that must be made up first before the hospital will see any financial benefit on the bottom line. Yet some of these companies can still produce a significant net increase in profitability because of the economies of scale they have particularly when dealing with smaller hospitals. I have used services like these in the past for areas such as dietary and pharmacy and have seen their benefit.

One additional motivation that drives hospitals to consider outside management is the ability to delay capital expenditures by using the management company's capital. A laundry facing the replacement of major equipment may be outsourced thus eliminating the need for new equipment. Dietary management companies have access to capital at attractive financing rates to assist with the purchase of new kitchen equipment.

With today's sluggish economy many hospitals, particularly in smaller communities, want to keep as many jobs as they can inside the hospital. Outsourcing is a last resort. Yet in some situations it may still be the best option. When considering this option it is important to make sure that each party knows why it is entering into the agreement and there is a mutual benefit. The benefit to the hospital may be directly financial through reduced cost of supplies and equipment, or it may be indirect by providing hard to recruit positions like ED physicians or anesthesiologists.

One final thought before you enter into any management agreement, make sure that you would not significantly improve the department's profitability through internal streamlining. Organizations such as Compirion have helped hospitals attain significant and sustained savings while working with existing hospital management and staff.

Outsourcing can make sense if done for the right reasons.

More on profitability practices tomorrow.

Mark Brodeur

Friday, July 9, 2010

Ten Practices For Increasing Hospital Profitability: Tip #4

Continuing the discussion on practices that will increase your hospital's profitability, today I want to comment further on physician involvement. Yesterday I talked specifically about surgeons, but you must involve all your key physicians in these areas to maximize your profitablilty.

Tip #4: Involve physicians in cost reduction efforts

There are many other areas besides surgery where physicians can play a key role in helping the hospital reduce costs. Conversely, physicians who are not at all aligned with the hospital can prove to be very costly. I have seen this more often than I care to admit throughout my career. The key is to build mutual benefits for the hospital and physician for cost saving measures. Remember that the physician's pen is the most expensive instrument used in your hospital. Efficiency in ordering tests can save millions over a year while thorough documentation to maximize coding can add millions in collections.

Many hospitals do not properly engage physicians in the cost reduction process. There may be an assumption that physicians strictly follow their own interests and will not be flexible to consider benefits to the hospital. For some physicians this may be true but it is not a valid assumption for dealing with the entire medical staff. The hospital can not make major changes in supplies and equipment without involving physicians. There may be reasons beyond the clinical ones why an orthopedic surgeon demands a particular brand of implant and changing may make great clinical sense. But it must be done with his or her involvement and eventual endorsement of the switch. It is amazing how negotiable pricing from vendors becomes if they do not have the physician lined up to boycott any product but theirs.

The same holds true for developing patient care protocols designed to standardize treatment thus benefiting the patient and saving costs from unnecessary tests. These can not be just imposed, but must be developed with the involvement of key physicians with peer review followup for those physicians who refuse to go along.

There must be incentives for the physicians beyond "this is good for the hospital". In a true partnership they will benefit as well. With the trend swinging back to more hospital employed physicians and inpatient care being done by hospitalists, it is much easier now to align incentives than it was a few years ago. Physicians are your partners. Treat them that way.

More on profitability practices on Monday.

Mark Brodeur

Thursday, July 8, 2010

Ten Practices for Increasing Hospital Profitability: Tip #3

I have been commenting this week on the 10 practices for increasing hospital productivity published by Becker's Hospital Review and adding my take on them based on my experiences as a CEO and as a consultant helping other hospitals improve operating metrics. Today I want to comment on effective OR utilization. This is a challenge faced by almost every hospital I know of.

Tip #3: Ensure that your OR is used by physicians efficiently

Boy, that seems easy enough to say yet every hospital struggles making this happen. The OR should be a profit center for the hospital and surgical patients should make up 40% of the hospital's total patient mix. But we often see that this is not the case anymore because of several factors at play.

First of all, the more profitable outpatient surgeries are now funneled off to a separate ambulatory surgery center. Only very small hospitals still do all inpatient and outpatient surgeries in one location. In most instances, the outpatient business goes to a for profit physician owned center from which the surgeons get very nice financial returns. But as one surgeon told me, the real financial benefit to him is that he can do twice as many surgeries in the same amount of time at the center versus the hospital. Time is money and OR turnaround time is key. We helped one hospital reduce its room turnaround time to 13 minutes. Now that rivals an ASC and did a lot to promote physician loyalty.

The loss of the outpatient surgery business impacts hospitals negatively in two ways. First they are losing the most profitable surgeries and second, the reduction in overall business makes many hospital ORs less efficient. It is critical that hospitals adjust to the current volume of business and do what they do efficiently. That surgeon may be taking his best business away from you, but his satisfaction with your OR for the cases he brings is critical to the hospital's success. Here are some steps to take:

1) Start your cases on time. At least 75% of first cases should be on time
2) Reduce cancelled cases. Better and timely preadmission testing can get this near 0%.
3) Reduce room turnaround time. I like 13 minutes as a goal.
4) Reduce PACU time to under 1 hour. This really saves overtime at the end of the day.
5) Improve block utilization. 70% should be you goal
6) Track and improve surgeon and surgical patient satisfaction. We have seen a hospital with a 95% satisfaction rating from their surgeons and patient satisfaction at the 94th percentile.

OR is a critical for your hospital's bottom line and is sometimes challenging to address. We at Compirion have had some significant success assisting hospitals to help themselves in this area.

More profitability tips tomorrow.

Mark Brodeur

Wednesday, July 7, 2010

Ten Practices For Increasing Hospital Profitability: Tip #2

Yesterday I began a series of posts on how to make your hospital more profitable and covered the art of making data driven staffing decisions. Today I want to move on by discussing how to reduce supply costs.

Tip: #2 Reduce supply costs by better managing vendors

Yesterday we talked about the largest expenditure that hospitals deal with, staffing. Today I want to cover another significant expenditure, supplies (particularly medical supplies). This involves not only working with vendors but also getting your physicians on board to make fiscally responsible supply choices. It has often been said that the costliest instrument to a hospital is the physician's pen. Of course that has now been replaced by his or her keystrokes on the CPOE system. Working with vendors will go just so far if they have they physicians tightly aligned with them.

In dealing with vendors, do not be shy about demanding additional discounts due to the harsh economic times the hospital is facing. Although the medical supply business is also experiencing a downturn in profits, most are still faring a lot better than hospitals. They certainly will not provide discounts you don't ask for, and probably will still be reluctant until you threaten to take your business elsewhere. Keep in mind that this threat only works if it is real. That is why you need your physicians aligned with you before you start.

Experts have always talked about a partnership with vendors and this is a laudable objective which can only be achieved with totally aligned incentives. I don't think that really exists in today's cutthroat world of medical sales. I know of too many experienced reps who have had long term relationships with physicians and hospitals compromised by corporate demands for more sales whether it is the right product or not for that patient.

Many hospitals have had success by reducing the number of vendors they deal with and limiting the variety of inventory. Again this requires physician support. Another key area is to require purchase orders 24 hours in advance for any equipment or implant that is not already covered by a negotiated written agreement. Vendors must sign a statement that if they fail to do this, the item they provided is free to the hospital. This aligns the vendor's financial incentive with yours for that partnership.

Finally, in dealing with physicians, they truly must be treated as partners. Forcing changes on them for medical supplies or equipment will just not work. They must be involved from the start and both parties must ultimately be ready to make compromises. Sometimes it is better to give in on the cost of an item if it will secure the loyalty of a physician down the road.

More on profitability practices tomorrow.

Mark Brodeur

Tuesday, July 6, 2010

Ten Practices for Increasing Hospital Profitability: Tip #1

In the webinars I present on preparing for the impact of healthcare reform and developing a highly functioning ED there is a common theme to survive in the current climate of economic recession, growing uninsured, cuts in payments and increased competition: You must focus on reducing costs AND increasing reimbursement. Over the next series of posts I will cover 10 best practices in these two areas to make your hospital stronger and more profitable.

Tip #1: Reduce staffing costs based on data driven decisions.

There is an old adage that if you can't measure it you can't manage it. Well since labor is the single largest expenditure for any hospital it is critical that it not only be measured in great detail on a timely basis, but that this information be used instantaneously to adjust staffing levels. Understaffing can be just as financially devastating in the long run as overstaffing.

Since workload in hospitals tends to be flexible in most areas, the staffing in these areas must be flexible as well. Some areas, such as the ED have some rather predictable flexibility in patient volume based on the time of day. In other areas the seasonal variation is somewhat predictable. But no matter how good a forecasting model you use for long term, you must still be prepared to make daily (or more often) adjustments. Some high performing hospitals look at their census and projected admission and discharges every 8 hours and make staffing adjustments accordingly. This may be beyond the scope of some hospitals to perform. But suffice it to say that reviewing staffing only after every pay period will not be adequate.

Flexible staffing also works very well for areas such as the OR. Look at staff starting times versus actual case start times. Also consider the typical mid-day slump for the number of cases being performed versus the staffing levels. Most ORs are busiest in the morning and late afternoon with a down time in between.

We at Compirion have found that significant salary savings can be had through improving efficiency. This does NOT mean that the staff have to do more than they are already doing. It means that you can provide better care for patients while having your staff actually do less. Increasing ED throughput, decreasing OR turnaround times and shortening length of stay are common areas that we find can be further addressed. By taking this approach rather than just laying off employees you can have the added benefits of increased employee morale, higher patient satisfaction and stronger physician support for your hospital. The key is to involve your employees and physicians in streamlining the operation.

One last warning: Do not start with the bottom line and work backward with mandatory cuts based on the savings needed. This may result in cutting necessary resources from already efficient areas while allowing inefficiently operating areas to continue that way just with less staff. Focus on the operating areas individually and streamline the procedures. We have walked into many hospitals that feel their ED throughput and LOS are as good as they can get. That seldom turns out to be true.

I stated that staffing is your greatest expense which is true. But they are also your greatest resource. So work WITH them in improving efficiency and make them part of the process.

More on profitability practices tomorrow.

Mark Brodeur

Thursday, July 1, 2010

Actuaries Speak Out On How To Reduce Healthcare Costs

Two surveys by the Society of Actuaries concerning healthcare have recently been released. One survey was of actuaries themselves, the other one was of consumers. I was anxious to find out what keen insights the actuaries might add to reducing healthcare expenditures. While some of their suggestions were fairly obvious, not all of the findings were what I would have expected.

90% of the actuaries surveyed felt that reducing the number and severity of medical errors would reduce costs. This is pretty much a no brainer and I wonder why the number isn't 100%. 88% believe that fighting fraud and abuse in the system will lower costs. Again this is an obvious conclusion. But only 8% of the actuaries recommend making quality information of provider care more available to patients. Clearly this group does not believe as I do that it is quality first then finances follow.

The major suggestion from the actuary group was that there be more transparency between providers and patients concerning cost of care and treatment options. 86% recommend making prices for treatments more available and 79% recommend educating consumers on the efficacy of care. Their conclusion is that as consumers know what the cost of treatment is, they will be less likely to utilize services at the current level. This is a good thing if you assume that there is a lot of unneeded care being delivered. But what about the studies that have shown that patients do not seek out needed care just because they can not afford it. All this does is delay care that is ultimately needed and usually results in a much costlier hospitalization down the road.

Their other suggestion was that we pay consumers to be responsible about their own health. 90% feel that offering consumers financial incentives through their insurance plan can be at least somewhat effective in helping them make better choices as patients and live healthier lifestyles. If we are talking about discounts for patients who practice good health habits, I am all for it. But if we are talking about paying patients to take their medications when prescribed (the subject of an earlier post) I object. People need to take responsibility for maintaining their own health.

Overall, I am disappointed with the insights offered from these actuaries who will certainly be playing a role in developing the healthcare reform that is underway. There are a lot of cost saving ideas that were not addressed here.

More on this later.

Mark Brodeur

Wednesday, June 30, 2010

Are We Appropriately Treating Dying Patients?

We have the best healthcare system in the world for treating patients with serious injury or disease. We don't do so well keeping patients healthier in the first place but that has been covered in a previous post. The problem with out current treatment system is that we do not know how and when to appropriately turn it off and allow a dying patient just to pass on in comfort and peace.

Dr. Martha Twaddle, Chief Medical Officer of the Midwest Palliative and Hospice Care Center in Chicago states that doctors usually know when an illness is incurable yet they continue to practice exhaustive medicine on these patients until there are no treatment options left. It is only when the patient is adamant they they wish to die in peace that the comprehensive arsenal of technology and drugs are withdrawn.

Even though over 80% of patients with progressive chronic illnesses say the want to avoid hospitalization and intensive care when they are dying, most do not get their wish. A study of Medicare patients shows that hospitalizations have risen over the last 10 years for these patients during their last six months of life. They also found that nearly one in three Medicare dollars is spent on patients treating chronic illnesses during their last two years of life.

I think that the suggestion of stopping appropriate medical treatment for a patient with two years life expectancy is going too far. But clearly we can declare patients as hospice candidates earlier than we are doing now. While the number of end of life hospitalizations has increased, the average time spent in hospice has gone down. One in three hospice patients had it for only a week or less when they died. This is a shame because hospice stresses comfort and quality of life which for the incurable is far more important than extending the body's physiological functions with machines.

It will probably be a cost cutting initiative that will reverse this trend rather than doing what is really best for the patient. Either way, we can be proud of our life saving technology and drugs, but lets use them on the lives that can truly be saved.

More on this later.

Mark Brodeur
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