Category Archives: Strategy

Support Pesonnel

Does everyone who collects a pay check in health care really understand the mission and their individual role?  Rhetorical.  It seems that over the recent decades the health care system has been more about the industry itself and less about what it was designed to do.  A lot of self-serving interests.

An organization begins to die the day it begins to run for the benefit of insiders and not the benefit of the outsiders.”  -Peter Drucker

Just in case anyone has forgotten.  The mission is to deliver health care to patients.  Financial success is important to sustain this mission but the bottom line must be secondary.  Competing with the health care system across town is important but if you focus on the mission you will win the competition.

The engine of health care is the interaction between patients and their physicians.  The physicians guide and drive the care.  And the best health care occurs where the best doctors practice.  All others in a health care organization are support personnel.  If you have never been face to face with a person asking for help for a potentially life-threatening illness then your job is to support the person who does that job.  If you have never been in an operating room attempting to correct a life-threatening problem then your job is to support the person who does that job.

This is not about elitism.  This is more about reality, good business principles and how to create a successful health care organization.  Everyone in a health care system presumably was hired to do a job that was important to patient care.  Every employee, from hospital CEO to parking lot attendant, needs to simply realize why patients walk in the door and who they walk in to see.

The New C-Suite in Health Care

Health care version 1.0, run by physicians and other providers, did not work due to an unrestrained utilization of resources.  Health care version 2.0, run by corporate forces, also has been a failure.  For the past several decades the focus in health care has been about the business of health care.  A model of corporate medicine has emerged and proliferated and it only works well for those whose job it is to manage the bottom line.  Now we are told (finally) that the future of health care is value.  And we are told that the numerator and denominator of value are quality and cost respectively.  In theory this will be a transformational change in health care that will require a complete overhaul in operations.  But unfortunately nothing is happening at the front lines.  Most likely because those currently in charge know nothing about quality but rather are business people.  A meaningful change in health care will begin with a substantive change in leadership.

  1. CCO: Chief Cultural Officer.  The most important person in the C-Suite.  The CCO will be the relentless agent of change.  The CCO will establish the environment where quality care happens.  A Donabedian disciple of quality who realizes that structure and process guarantees nothing.  Care will always be patient focused.  Care will always be evidence based.  Sets the standards and acts as a role model for providers at every level of the organization.
  2. CAO: Chief Alignment Officer.  The CAO will serve as the intermediary between quality and cost.  Understands the importance of the bottom line which is second only to great care.  Will interact with and align the providers with the payers and others whose job it is to maintain the bottom line.  Will share information between the two sides on an ongoing basis so that the value equation is maximized.
  3. CPO: Chief Practice Officer.  Possibly the most difficult job on the list.  The CPO will be responsible for transforming the practice of medicine.  The current model will be deconstructed and rebuilt.  The medical staff will first and foremost be dedicated to evidence based practice and will be provided with all of the time and resources to do so.  All unnecessary and ineffective processes will be eliminated so that providers can use that time for better purposes.  It’s not about compliance anymore.  The future will be about a medical staff that is self-motivated to be the best that they can be and doesn’t need high-priced babysitters to follow them around checking boxes on paper.  The CPO will make sure that their medical staff is functioning at the highest possible level.  The CPO will also assure that they medical staff will make every decision based upon the patient’s best interest.  Always.

There will be additional new and innovative positions designed to completely change health care.  These positions will all be held by physicians who have demonstrated a selfless commitment to patients and the profession.  They must be innovators.  Incremental change won’t work.  Lastly, they must be courageous.  For several decades health care has been shaped and managed by non-physician administrators who now will need to be displaced.  Someone will need to help them see how little they actually contribute to the process of delivering health care.  They won’t go quietly.  There will be an incredible amount of self-preserving rhetoric.  Keep the focus on patients, quality and care and the good guys will persevere.

The new C-Suite will meet regularly with community members to receive feedback and assure that the new model is meeting the needs of the people that they serve.

So hopefully a complete change at the leadership level will result in the transformational change in health care that is necessary: The transition from the emphasis being placed on volume to the emphasis being placed on quality with the result being value.  This isn’t bad news for everyone currently in the C-Suite.  Will keep the CFO.  Someone needs to understand how to depreciate equipment 🙂

The Trickle Down Patient Experience

The “patient experience” has become a hot topic among health care providers.  Why did it take so long?  This initiative seems similar to the “patient focused” health care efforts which have been talked about for some time.  Hasn’t it always been about the patient and their experience?  Or more appropriately shouldn’t it have been always been about the patient and their experience?

An experience is a global perception of an event.  There are usually both objective and subjective components that shape the global experience.  The objective component of the health care experience is the provision of evidence based care which is now down to the molecular level.  Sterile, complicated, cold science.  It is the most important aspect of the health care experience and falling short here can not be made up elsewhere (see: “It’s Whats at the End of the Patient Experience that Matters Most“).  The subjective component of health care is comprised of all the factors that humanize the process.  It is a reflection of the culture of human interaction that exists at a health care entity.  Physicians obviously must be in charge of the objective component of the health care experience.  While there are many individuals that are now actively involved in the subjective component of the health care experience  HCR believes that physicians are in fact the best to lead this aspect of health care as well.  The culture that is the foundation for the patient experience must “trickle down” from the top.

When applied to economies the concept that wealth at the top will “trickle” down to others below has not been shown to be an effective strategy.  However, in the field of human anthropology the concept that behavior patterns start at the top is well established.  Leaders (and yes physicians should lead every aspect of health care) can shape behaviors as role models.  It has been documented that people identify and attempt to emulate those who they believe are good role models.  So an enthusiastic medical staff that values evidence based health care and realizes the importance of treating patients, colleagues and staff with respect is the single greatest step toward the perfect patient experience.  In fact it is an absolute necessity.

Redesigning the profession of Medicine to create a culture that optimizes the patient experience won’t be an easy task.  An overwhelming majority of physicians don’t enjoy their profession anymore and project this both consciously and subconsciously to all those around them.  It has become a constant struggle for them for many reasons.  They are burdened with an ever-increasing amount of bureaucracy little of which has been demonstrated to positively affect patient care.  There also seems to be an ongoing and worsening adversarial relationship between providers and administrators despite an outward message of alignment.  Physicians need to be empowered.  The hours spent on paperwork (or computer work) need to be minimized.  They need to be able to refocus all of their attention on mastering evidence based guidelines.  They need to work in a non-contentious and non-rushed environment so they worry only about the care they deliver.  They need to be able to recognize the importance of every colleague and team member and contribute to a positive work environment so that everyone can always put the patient’s needs first.

The nay-sayers will protest that all of these actions designed to make the practice of Medicine better for physicians will have no benefit to patient care.  However the enlightened will realize that the path to the ultimate patient experience is in fact a redesign of the profession of Medicine.  The benefits will trickle through colleagues, staff and ultimately to the patient.

Evidence Based Medicine. Evidence Based Reform?

Years ago physicians took the easy way out and allowed non-physicians to manage their profession.  Probably seemed like the right thing to do at the time.  Let someone else worry about the bottom line.  Patient care was less complex.  There were adequate resources and everyone was happy.  However, this complex model grew and continued to devour health care resources.  As resources became more limited the tensions grew those who were once in charge of managing health care finances now were impinging on the practice of medicine.  Their solutions were predictable.  They showed up in physicians offices on a monthly basis with a profit and loss statement.  Physicians were told to see more patients and do more.  With no sense of what was best for patients and the profession and with no strong leadership physicians took the path of self-preservation.  And now we have a crisis.

In the practice of medicine the most important guiding principle should always be evidence-based practice.  Decisions regarding patient management are/should always be based on what the data shows is best.  This strategy will optimize patient outcomes and minimize cost.  The result is value.  With so much at stake shouldn’t the same standards be applied to health care reform and management?

In November 2013 a publication in the Journal of the American Medial Association titled “The Anatomy of Health Care in the United States” provided insight into the demographic and economic realities and trends over the past decades.  HCR encourages the interested reader to obtain a copy and read the entire article so that HCR is not accused of “cherry-picking” select pieces of information.

One of the most telling pieces of data is in Figure 2 which looks at trends in health care expenditures by category.  From 2000-2011 the category with the highest growth rate is in fact administrative costs with an annual compound annual growth rate of 5.6%.  This was followed by hospital and other care facilities at 4.2%, prescription drugs and equipment at 4.0% and professional services at 3.6%.  So the sector with the largest growth in cost over the past decade was a sector that had no direct connection to patient care.  Was this growth used to make care better or more accessible?  Doesn’t seem so.  Rather, these data show that we have invested in making the system more complex than it probably needs to be.  How efficient do these administrative costs perform?  Figure 13A shows the inefficiency of health care in comparison to other industries.  Health care utilizes @ 800 revenue cycle FTE’s per $1 billion of revenue.  This appears to be anywhere between 4-10x that of other industries.  Does this administrative excess adversely affect patient care?  Most likely.  Figure 13B show that @ 13% of funds spent on physician care is related to billing and insurance related costs.  The money in this case isn’t even the biggest problem.  Instead, if we currently spend $70B (13% of total costs) on billing and insurance related costs for physician care just think of the wasted time involved.  Time that could be utilized toward making care better.  Why won’t some leaders acknowledge the administrative cost and burden on health care?  Naive?  Threatened?

No data is perfect and it should all be scrutinized.  Data is by definition historical so one must always incorporate some prognostication and educated guesses into decision-making.  In addition one can not be dogmatic and rigid and allowances for situational discretion must me made.  But data should always be the starting point.  Leaders in the health care industry must address the issue of administrative excess.  Not doing so means losing an opportunity for significant savings.  It also calls into question priorities and motivations.

It seems that significant cost reductions can be achieved by reducing administrative costs.  Eliminating people and processes that have done nothing but sustain the status quo must be a priority.  This will result in an entirely new dynamic between providers and administration.  Changing the culture is the only pathway to success.

The Best Health Care Occurs Where the Best Doctors Practice

Another hypothetical for consideration.

So imagine two competing health care systems.  One is top-heavy with MBAs who view health care as another commodity.  Honestly can’t blame them.  It’s what they were taught in school and it’s all they know.  In addition, it has been the strategy to win the bottom line grind of corporate health care over the last few decades.  Every major decision is made by people who have never been in a room face to face with another human being facing a potentially life threatening illness.  They can’t make decisions based on the best care because they don’t know care.  And while there may be a message to the public that the organization is led by physicians this is simply a marketing ploy.  The physicians are simply chess pieces.  The only feedback from administrators is monthly profit and loss statement.  There is no channel for feedback from the front lines.  The relationship between physicians and administrators becomes contentious.  How could it not?  A few physicians have the fortitude to fight the good fight.  The majority, however, simply begin to dislike their work environment and question their career decisions.  If they don’t enjoy their profession what would motivate them to become better at their work?

Across town at the competing health system a new visionary leader has just been put in place.  This new leader knows that if health care hasn’t hit rock bottom it is pretty close.  This person realizes that the successful health care system of the future will look very different from the those of today.  The focus will finally be on quality and not volume.  This new leader acknowledges that you can’t administrate quality.  Rather, the idea is to recruit a medical staff committed to quality and then provide the physicians with the best possible environment to practice medicine.  A culture evolves.  Financial data will be shared freely with physicians so that they can also practice cost-effective quality health care.  With autonomous physicians the administrative payroll can be slashed realizing a significant cost savings.  The administrative staff that remains will be committed only to helping clinicians deliver better care.  They are renamed facilitators.

The new system becomes a great success.  Physician from all over apply to be part of this change.  More importantly, patients come from all over to experience quality and cost-effective health care.  This new system is a winner simply because it has the best doctors practicing the best and most cost-effective medicine.


Planning vs. People

First and foremost it’s always about the people.

Remember the quote from Avedis Donabedian in a previous post titled “Quality, Evidence and Avedis Donabedian”:

“Systems awareness and systems design are important for health professionals, but they are not enough. They are enabling mechanisms only. It is the ethical dimensions of individuals that are essential to a system’s success. Ultimately, the secret of quality is love. You have to love your patient, you have to love your profession.  If you have love, you can then work backward to monitor and improve the system.”

Leaders facing problems or embarking on new initiatives spend a great deal of time and resources researching and planning.  It is an absolute necessity to optimize the likelihood of success and minimize risk.  At the end of the review a strategic plan is created.  This plan looks great on paper.  Just like every plan.  Fool proof.  Can hand this off to a room full of monkeys right?  Good luck.

One thing that no strategic plan on paper accounts for is the people factor.  And there is no industry more “people intense” than health care.  There are now over 7 billion people in the world.  Biochemically it has been estimated that we are all about 99.9% similar.  But from a behavioral, cultural and social perspective we might as well be 7 billion different species.  Frustrating to an MBA who is taught to plan and then force conformity.  This was the model for corporate driven health care.  However, it is not the model for quality driven health care.

The focus should at all times be placed on empowering the people who are providers to deliver the best care to the people who are the patients.  Health care is a people industry and if you don’t account for the people factor your plan won’t work.  The people factor always begins with good recruitmentof those who will provide care.  In fact, if an organization recruits well there is often little else to do other than provide the appropriate environment (read: culture).  If an organization doesn’t recruit well and/or doesn’t have the appropriate environment (yep, culture) then a great antagonism is created that diverts a great deal of energy and resources toward “management” and away from patient care.

So plan away.  Do the reseach and gather the data.  Analyze the data and make educated projections.  But the most important planning is always keeping the focus of any health care organization on the people.

Communities Fix Leakage

Medical homes and neighborhoods are becoming popular models for quality and cost-effective health care.  The concept is right on track.  A connected group of health care providers discussing cases, sharing information and working together for the best interest of the patient.  But not everyone gets it.

Recently an organization in the midst of creating a new health care integrated delivery system recognized that patients were being sent out of the system for referrals to specialists or testing.  Can’t ignore that this is a problem.  Their answer was to assign administrators to physicians to carry out daily interrogations.  Seriously!  No vision.  No thoughtfulness.  If these are the leaders charged with creating the strategy for the future there could be big trouble looming.  But what else would you expect?  It is the way of corporate medicine led by non-providers.  Band-aids and goon squads.  A short-term, rather than long-term, view of the bottom-line.

It’s easy to be critical.  But if criticism is genuinely intended to make a situation better an alternative must be offered.  Enter the concept of community.  Community can be defined in many different ways based on context.  But the most applicable here is that a community represents a group of unified individuals with shared values.   A community completes the home and neighborhood theme.

If the above mentioned integrated delivery system truly had visionary leadership they would have recognized that the fix for leakage is community building among the providers.  A referral from a physician to another physician for specialty services or to a site for testing is first and foremost based on trust.  In turn, trust is based on relationships.  A patient who has a bad experience with a referral holds the referring physician accountable even if they don’t vocalize their displeasure.  If a physician has had a good experience with a specialist why would they want to change and risk a bad experience for themselves and their patients?  How do you help them transition?  It’s not with daily interrogations.  The better way is to help them build relationships within the community of providers within the system.  It’s a process of an introduction followed by assimilation.

Community building.  Like culture this concept will make some nervous.  The most nervous will be the ones that think interrogation is the answer to leakage.  Communities, like culture, evolve and emerge.  Wouldn’t it be great if all of the physicians in an organization could meet even every week to discuss issues?  Yes it would but the reality is this can’t happen.  However, for the past 20 years technology has helped to form communities.  Could this be the better answer for leakage?  Not just a static web page for physicians but rather a site that allows for community building.  One that includes robust communication channels between physicians.  A site that includes forums where voices are heard.  A site that forms the foundation of collegiality and trust among the providers so that referrals can be made voluntarily and with confidence.

So the leakage problem is one of many that new health care entities need to address.  Some will bring out the rusty tools and grind.  Not a working brain in the bunch.  Others will sit and think before they act and listen to the voice of the soldier on the front line – the physician.  It should be obvious which approach is more likely to be successful in the long run.

A Service Industry

If you change how they think then you will change how they act.

In this case, “they” refers to physicians.  Many of the posts here at HCR have been critical of the cost, inefficiency and ineffectiveness of corporate health care and the non-providers who are in charge.  However, the most important posts at HCR are those that ask physicians to look in the mirror, reassess the state of the profession and take charge of reforming the system.

What is the best pathway to change and reform the activities and behaviors of a profession?  One can apply external positive and negative reinforcement to good and bad behaviors.  Alternatively, one can change the thinking that leads to behavior.  In other words, one can change the culture!!!  As mentioned in previous posts the concept of culture is at times difficult for the bottom line grinders to appreciate.  Difficult to define, measure and manage.  However, it is the unwavering belief of HCR that establishing a new culture for physicians and other providers is easier than it may seem and is the only pathway to meaningful change in the health care system that results in an improvement in quality and a reduction in cost.

Organizational culture has been defined in various ways by many management experts and anthropologists.  One of the common themes in the definitions of culture links thoughts to actions.  The thought components have been described as values, norms, and beliefs.  HCR is constructing a framework for health care culture that will define the important values and priorities for physicians and other providers.  At the same time HCR will develop the strategies necessary to allow the values and priorities to evolve into a culture with measurable improvements in quality and cost.

One of the most important values to establish in the health care system is that of service.  Health care is above all else a service industry.  Perhaps the most important service industry.  Health care needs to prioritize and value service above all else.  For physicians there is a service obligation to many but most importantly there is a service obligation to patients to provide evidence-based, humanistic and cost-effective health care.  Physicians also have a service obligation to their colleagues and other providers to be an effective part of a multidisciplinary team.  There is a service obligation for physicians to educate and mentor those in training and there is a service obligation to the general public to be productive citizens.

Service is one of the principle values/priorities on which HCR will create the successful cultural change in health care.  While others look to change behavior through process HCR will change behavior by changing the way physicians think.

Adaptive Leadership and Health Care

Honestly.  Did no one really see this coming?  Did those in leadership positions just chose to ignore the signs?  Maybe they saw the warning signs and just didn’t know what to do.  The story might be comparable to the auto industry here in the US.  Ignored external pressures.  No willingness to change or adapt.   Anyway here we are.  Our health care system is now in full crisis mode.  The system doesn’t deliver care as well as it should.  The two most important stakeholders, patients and physicians, are very unhappy and fed up.  And now the external environment has changed dramatically with the Affordable Care Act.  In all likelihood the current health care crisis was preventable if there were thoughtful leaders in place.

Adaptive leadership is a strategy that dates back to a 1994 book titled “Leadership Without Easy Answers” written by a Harvard professor by the name of Ronald Heifetz.  Professor Heifetz has studied and written about leadership, adaptation, systems and change.  The publications describing his work are available at his website (  The foundation of adaptive leadership is change that enables the capacity to thrive.  The concept is analogous to the process of evolution.  A quote from Charles Darwin at the website states: “it is not the strongest who survive but those who are most adaptable”. Professor Heifetz notes that we are in an ever-changing environment that requires leaders to appropriately respond.  He states that one of the key issues that enables the capacity to thrive is the ability to distinguish technical problems from adaptive challenges.  Technical problems are those that can be solved with an organization’s current structure and processes.  Two + two equals four.  Technical problems can be fixed by an organizations existing authoritative expertise.  An adaptive challenge is significantly different.  As the title of his book suggests there are no easy answers.  The solutions to adaptive challenges involve “changing people’s priorities, beliefs, habits and loyalties”.  To HCR this sounds like a culture change.

Some of the key points of adaptive leadership outlined by Professor Heifetz may be uncomfortable for traditional leaders.  The first is that organizational adaptation occurs through experimentation.  Not too many leaders responsible for a bottom line are comfortable with experimentation but when you think about it every new initiative is an experiment.  Second, adaptive change takes time.  This is another way of saying that we need to plan for the long-term not just short-term profit and loss statements.  Other key points of adaptive leadership would seem to be less stressful for traditional leaders.  Adaptive leadership does not require a complete overhaul of an organization.  Leaders must identify and preserve what is working and identify and change what is not working.

Health care take notice.  The leadership of the health care system in the US has spent decades applying technical fixes to adaptive challenges.  Leadership did not see, or chose to ignore, the adaptive challenges that were in front of them.  It is now time for thoughtful leaders to make adaptive change that will allow the health care system to thrive.

The Long View on Health Care

Quality endures.  Investing the resources necessary to establish a solid foundation always pays off in the end.  Always.  The foundation of health care is the delivery of health care services from a physician to a patient.  Over time layers of excess have been added to the foundation.  The layers did not strengthen the foundation but rather weakened it.  The additional layers not only weakened the foundation of health care, the doctor-patient relationship, but added cost with little in return.  As layers of excess were being added to the foundation the external environment was changing as well.  The system was appropriately deemed no longer financially sustainable and cut backs in funding were implemented.  A disastrous situation.

Enter the corporate model of health care management.  While there are some institutions in the U.S. that are managed by physicians (actually the more successful ones) in most health care systems the top 5 layers of leadership have never practiced medicine because they were trained to be business people.  They don’t know what its like to be face to face with another human being who has just been diagnosed with a terminal illness.  That is not and should never be looked at as 15 minute new patient visit.  They have never experienced the frustration and self-doubt that follows when a physician has apparently done everything right and a patient still has a bad outcome.  They have done nothing to fix the broken foundation of health care because they were never trained to do that and don’t know how.  Rather, the corporate model of health care knows one thing: fix the bottom line.  So for years health care administrators have had a singular focus.  They have spent decades, as the saying goes, putting lipstick and perfume on the pig.  The focus has been on how to make this month’s balance sheet look better than last month’s balance sheet.

Now it would be naive to think that there was no fat to be cut out of the system.  And one can never discount the importance of operational efficiencies.  But for years the crumbling foundation has been ignored, layers of waste have been added to the foundation and the focus had been simply on making the bottom line look better.  No one saw this coming?

Every decision in health care now has to be made with one question in mind:  How is this going to help physicians provide quality health care to their patients?  And the layers of weight on the foundation need to be reassessed.  Is there value there?  Re-establishing the doctor-patient relationship requires re-establishing the culture of health care.  The profession of medicine must be redone.  Physicians should first and foremost realize that they in the business to provide a very important service to society not purely for self enhancement.  Physicians should be encouraged to read, read and read some more rather than work, work and work even harder.  Isn’t that one of the key differentiators between a profession and a trade?  The patients need to become more engaged and set the bar higher for their physicians.  They should expect an encounter with a highly educated professional who does as much listening as they do talking.  The encounter should be educational.  It should be personal.

Health care doesn’t need more myopic fixes on the bottom line.  Someone needs to have a plan with the long view.