Health Partners is a fully integrated health system which includes a 1.2 million member health plan, a large multi-specialty physician group and several hospitals. For the last two years they have been measuring physician group performance in what they call “taking the triple aim to the next level.”
Health Partners leaders have developed a model which they have posted on the Health Partners website- http://www.healthpartners.com/public/tcoc/ which involves comparing physician groups on cost and quality. The quality data is developed from the Minnesota Community Measurement public reports and the cost data comes from Health Partners health plan. They use an ambulatory care grouper(ACG) methodology developed at HP to compare risk adjusted performance by individual physician group. The NQF has endorsed this approach.
Another unique feature is that actual contract prices are part of the total cost of care analysis. Physician groups receive reports on multiple acgs as do the public and can compare across many acgs both cost and quality outcomes.
This methodology appears to be breakthrough in comparing apples to apples physician performance data in a way that can help providers focus on the biggest areas for improvement hats off to health partners.
Professor Len Berry from Texas A and M spent the entire fall semester of 2011 embedding himself in three Wisconsin healthcare delivery organizations: Gundersen Lutheran, ThedaCare and Bellin. A few years prior to that he had embedded himself in the Mayo Clinic. On Tuesday, he facilitated a panel discussion with the 4 CEOs from these organizations. Mayo’s CEO was from the Mayo Health System’s Luther Middlefort in western Wisconsin.
The discussion was lively and Dr. Berry asked a number of questions regarding the cultural aspects of creating organization focused on high performance. Each of the four health systems are in the top 15 hospital referral regions in the nation for cost and quality with ThedaCare leading the pack at No. 5.
When Len Berry asked the group, “How did you get there?” Jeff Thompson of Gundersen Lutheran said, “It starts with the understanding that everything we do will be built on excellence.” ThedaCare’s Dean Gruner commented that “our success is based on our ability to develop our people.” Randy Linton of Luther Middlefort explained the process of integration of a small system into the big Mayo system and how that’s made them better as an organization. George Kerwin discussed Bellin’s community focus.
When asked, “What do you wish you had done that you didn’t?” Jeff Thompson said, “More transparency of physician and organizational performance.” He mentioned the Wisconsin Collaborative for Healthcare Quality was a significant driver for their improvement activity because they could compare themselves to the state’s other great organizations and visit them to learn. Dean Gruner said he wish they had started their lean journey earlier. This despite being one of the first organizations in the nation to apply lean principles in health care starting in 2003.
The interesting thing is that each organization is a high performer but Gundersen and ThedaCare have leveraged the lean methodology whereas the other two have a home grown set of processes to improve results.
I have had a lot of conversations lately with health care leaders from around the world about whether the lean methodology is truly replicable across the industry. Two of the four highest performing health systems in the country are using it as well as more than 50 others who are in various stages of implementation (http://www.createvalue.org/delivery/hvn/members/) which suggests that the methodology is replicable and scalable across the industry.
I think the reason most healthcare leaders aren’t applying lean is they don’t really understand it’s a method to create a high performance health system. Because of this, I am publishing two papers in early 2013. One is titled, “The Promise for Lean in Healthcare” which will appear in The Mayo Clinic Proceedings in January. It outlines the principles of the lean in healthcare. The other article will appear in the ACHE journal Frontiers of Health Services Management. In this article, I will describe the entire management system required to support the lean transformation. This management component is what is missing at most places that I visit and has not been codifed well. I think these two additions to the literature will be timely and help describe the details of the methodology so that CEOs and physician leaders have a road map to follow. Links will be posted on our web site when the articles are published. In the meantime the most important thing for everyone to do is just get started and learn by doing. For a detailed description of this, I refer you to my book “On the Mend” the final chapter addresses how to get started.
“Fortunately, although the barriers to payment reform can seem daunting, they can be overcome. A new report from CHQPR – Ten Barriers to Healthcare Payment Reform and How to Overcome Them – describes many of the biggest barriers that physicians, hospitals, health plans, employers, and policy-makers are facing in implementing payment reforms, along with strategies for solving them. For example, the report describes:
How “shared savings” payment models can actually be a barrier to significant changes in care delivery because they make no real changes to the fee-for service system, and how only true payment reforms, such as episode-of-care payments, condition-specific comprehensive care payments, and global payments can allow win-win-win approaches for providers, payers, and patients.
The ways that payment systems can be structured to give providers accountability for the types of services and costs they can control, but protect them from risks associated with costs they cannot control.
Why payment reforms and Accountable Care Organizations are unlikely to be successful unless physician compensation systems are also changed to reward value instead of volume.
Why lack of access to data on utilization and costs can prevent healthcare providers from offering to deliver care in ways that will save money for employers, Medicaid, Medicare, and health plans, and how data and analysis can be made available to support successful payment reform.
The ways that health plan benefit designs as well as payment systems need to be changed so that patients have the ability and incentive to work with physicians and other healthcare providers to improve quality and reduce costs.
The need for more comprehensive, outcome-based measures of quality to accompany payment systems that are designed to control costs.
The importance of having all payers using common approaches to payment reform, and the specific strategies that can be used to encourage and facilitate alignment of payment systems in a community.
The unique challenges hospitals will face as part of efforts to reduce costs, and the kinds of actions both hospitals and payers can take to address those challenges.
How regulatory, accreditation, and payment policies favor large provider organizations in ways that can lead to higher costs, and the policy changes that are needed to foster more effective competition among providers.
The need for community mechanisms to ensure there is coordinated action in all of these areas, and the important role that Regional Health Improvement Collaboratives can play in supporting implementation of needed payment and delivery reforms.”
Gopesh Anand and Dilip Chhajed, are professors of business administration at Illinois.
“The research, co-written with Luis Delfin, a former graduate student, advances three arguments on how employees’ commitment to continuous improvement in the workplace can be enhanced:
The day-to-day work environment needs to be perceived by employees as autonomous.
As continuous improvement involves making changes to the very practices that frontline employees use in their day-to-day work, trust in leadership is critical.
A higher degree of trust in leadership further leads to proactive behaviors by frontline employees, encouraging them to use the autonomy in their day-to-day jobs to seek out and make systematic improvements to work practices.
The researchers tested their hypotheses on data collected from individual employees working for Christie Clinic, an outpatient health care organization based in Champaign, Ill., that has actively engaged in continuous improvement based on lean management principles over the last six years.”
This research is quite consistent with what I observe in great lean companies. If you are implementing lean successfully quality improves, costs go down and staff engagement goes up.
The lean community knows the best way to derail continuous improvement is to remove waste from a process and lay someone off. Unfortunately, this action is typical in industry and healthcare. It’s easy to lay people off and get short term financial gains. The long term consequences,however, are devastating.
Scripps and ThedaCare have had this philosophy for years. It’s allowed these organizations to develop a culture that is constantly focused on improvement and it has led to some pretty impressive results. At ThedaCare they have doubled cash on hand to 215 days equating to almost 400 million dollars. At Scripps they have had 60-75 million dollars of improvements year over year. At ThedaCare they have had zero medication reconciliation errors for 5 years in a row and customer satisfaction near 100% 5 out 5. ThedaCare employs the lean operating system and has for almost a decade.Lean has a basic tenet which is “respect for people”. The ultimate respect for people is to never lay them off. Great companies don’t.
The Ministry of Health in Saskatchewan has had a big vision for years: To make an entire provincial healthcare system produce 100% reliable results for citizens. Leaders carefully evaluated the approaches to achieving this goal and decided the lean operating system was the way to make it actually happen. They have been on the journey for a few years now transforming both inpatient and outpatient care processes.
The Ministry’s recent foray into using strategy deployment to get all staff members engaged across the province is unique. It’s a big hairy audacious goal and we love it. The following article describes the process and the thinking behind what leaders in Saskatchewan are attempting to do. We will be following this experiment carefully and stand ready to help where we can.
The Massachusetts Quality Contract has received a lot of attention. Similar programs in Illinois and Minnesota are ongoing as well. What are these contracts and what is their purpose? The following is an excerpt from a recent paper produced by BDC Advisors, a consulting firm:
“These contracts now cover approximately 500,000 lives-approximately 50% of Blue Cross’ HMO and Point of Service (POS) business in Massachusetts. The AQC contract has twin goals of improving quality and outcomes and significantly slowing spending growth.
The AQC is a “modified global capitation contract” in which payments to providers are based on an annual negotiated budget which covers the total health care services provided to Blue Cross patients, whether or not these services are provided within the provider groups’ network. In fact, providers participating in the AQC provide only 35% of the total care for the HMO members within their individual networks according to Blue Cross. Pharmacy, home health, nursing home care, emergency admissions, specialist visits, and elective maternity services all can occur out of network making coordination of the continuum a major health management issue.
The Blue Cross AQC agreements last five years and include an annual spending growth limit, incentive payments for improving quality, shared savings incentives, and technical support and grants to build the infrastructure of participating providers.”
In Minnesota and Massachusetts after the first year significant bonuses were paid to most providers. This is an interesting experiment to watch as we move further into the Medicare ACO payments world. I have spoken to many Healthcare Value Network members in these states and their concern is universal. Each payer has a different method of determining success. The provider organizations have to develop different infrastructure for each contract. This is very wasteful and frustrating for the providers. As CMS moves forward with ACO implementation it is important to begin to develop a common methodology for calculating shared savings and eventually risk contracting. I’m not suggesting common pricing but a set of common payment methods which we all play by. We don’t need to add more waste to an already bloated industry.
Much has been written about Collaborative Care recently. This review by AHRQ continues to show this is one of the true break through innovations in healthcare today. The following summary from AHRQ:
“Getting Started with This Innovation”
Apply model to local environment: While it is imperative that those adopting this model use a process redesign methodology (e.g., Lean), the specifics of the ensuing redesign will vary significantly across organizations. In other words, though ThedaCare’s inpatient model cannot be directly adopted by other health systems, the concepts can. Each organization should define its ideal state of care delivery, identifying what gaps/obstacles exist and then allowing frontline staff to redesign care and implement solutions that match its ultimate goals.
Adopt new model incrementally: Do not “go live” with the model in all units at once. Rather, adopt it slowly, allowing adequate time for training on each unit prior to implementation. This approach allows “experienced” staff members to act as mentors to those on adopting units.
Assign project manager: Assign one person to be the project manager, overseeing overall development and implementation of the model.
Involve frontline staff and patients: Frontline staff and patients should drive the redesign by making suggestions and providing feedback throughout the process.
Sustaining This Innovation
Monitor progress versus performance objectives: Set performance objectives for the new model, and monitor and share progress against them on an ongoing basis. This information will help stakeholders stay focused on improvement.
Monitor financial implications: Under Medicare reimbursement mechanisms, hospitals may receive less than the full diagnosis-related group payment per case for those patients discharged to other care settings (e.g., rehabilitation units or nursing homes) rather than their homes. Because the Collaborative Care model often allows for more prompt discharge to these settings, ThedaCare estimates that it loses approximately $2,000 in revenue on some patients; nevertheless, the overall financial health of the health system has improved since implementation of the model.”
As I have stressed in my book Potent Medicine and in other articles I have authored payment reform is one of three critical factors required to transform health care. In this issue of Health Affairs, there are several opinion pieces describing what we need to do next. This includes getting capitation right. In the article by Frakt and Mayes Beyond Capitation: How New Payment Experiments Seek To Find The ‘Sweet Spot’ In Amount Of Risk Providers And Payers Bear lessons learned from the 90’s capitation experiences are discussed. In their words “We offer lessons learned and assess the extent to which these lessons have been applied in the development of contemporary forms of provider cost sharing, particularly accountable care organizations, which in effect constitute a search for the “sweet spot,” or appropriate place on a spectrum, between providers and payers with respect to the degree of risk they absorb”. This is the critical point in ACO development; where does the risk reside? In the 90’s we learned that having primary care providers take financial risk for the entire patient experience was a disaster. Experiments to understand what level of risk is appropriate for ACOs are clearly what is required. At the moment most of these experiments involve only shared savings. But there are some early adopters of a more aggressive approach.
In an experiment in California global payments to ACOs appear to be promising. Here’s the abstract from an article by Paul Markovich entitled A Global Budget Pilot Project Among Provider Partners And Blue Shield Of California Led To Savings In First Two Years. “Health care plans and providers in the private sector are developing alternative payment and delivery models to reduce spending and improve health care quality. To respond to intense competition from other organizations, Blue Shield of California created a partnership with health care providers to use an annual global budget for total expected spending and to share risk and savings among partners for providing health care. The patient population consisted of certain members of the California Public Employees’ Retirement System in Northern California. Launched in 2010, the pilot accountable care organization in Sacramento provided a framework for operations and established goals and financial risk arrangements. The model shows early promise for its ease of implementation and effectiveness in controlling costs. During the two-year period, the total compound annual growth rate for per member per month cost was approximately 3 percent, or less than half the rate at which premiums rose over the past decade. Some of the savings stemmed from declines in inpatient lengths-of-stay and thirty-day readmission rates. Results suggest that the approach can achieve considerable financial savings in as little as one year and can gain wide acceptance from reform-minded providers”.
Of course the key is “reform-minded providers”. In our experience I would say it is also true that reform-minded insurers are also required. Insurers are reluctantly getting into the payment redesign game in some cases coming kicking and screaming. In Wisconsin Anthem Blue Cross, WEA Trust, WPS, Unity, Physician’s Plus and Dean Health Plan are leading the way.
Another interesting experiment is focused on getting patients involved in the decision of choosing their providers using quality and cost data. Here’s the abstract from the article entitled Payers Test Reference Pricing And Centers Of Excellence To Steer Patients To Low-Price And High-Quality Providers. “Hospitals frequently exhibit wide variation in their prices, and employers and insurers are now experimenting with the use of incentives to encourage employees to make price-conscious choices. This article examines two major new benefit design instruments being tested. In reference pricing, an employer or insurer makes a defined contribution toward covering the cost of a particular service and the patient pays the remainder. Through centers of excellence, employers or insurers limit coverage or strongly encourage patients to use particular hospitals for such procedures as orthopedic joint replacement, interventional cardiology, and cardiac surgery. We compare these two types of benefit designs with respect to consumer choice and how they balance price and quality. The article then examines their potential role in the policy debate over appropriate coverage and cost-sharing requirements”.
The biggest problem with this effort is clearly the data. Most insurers do not have enough data to make statistically significant comparisons on cost or quality of provider performance. In Wisconsin and a few other states an All Payer Claims Data Base has been created in which 75% of the states resident claims data is aggregated. From this robust data base accurate comparisons can be made on cost and utilization. But this isn’t a quality data base. The Wisconsin Collaborative for Healthcare Quality(WCHQ) reports quality outcomes on the physician groups in the state. WCHQ has recently partnered with Consumer Reports to build a consumer friendly quality report which accurately depicts physician group quality outcomes. Our goal at the Center is to build this robust reporting system throughout the country at which point we will have the data to differentiate care on the basis of better value defined as Quality/Cost.
Finally, the voice of employers is heard in this article.Large Employers That Have Lived Through Transformation Say Payment Reform Alone Won’t Cut Costs And Reengineer Care.Martín J. Sepúlveda and Helen Darling point out “In this commentary we discuss large employers’ perspectives on three particular challenges that payment reform alone, as important as it is, may not be sufficient to address: high health care prices, inefficient and complex systems, and an outdated work environment ill designed to meet the pressing goals of better health care at lower cost”.
Of course, what health care organizations require is a proven operating system that improves efficiency and creates a modern environment for delivering care. You guessed it the authors are pointing to lean in healthcare. Most employers must deliver on operational excellence every day to stay in business. For some reason healthcare has avoided this with devastating effect.
I think these four articles in addition to others in the September addition of Health Affairs support my contention that we need payment redesign,transparency of quality and cost performance data, and delivery redesign using a proven operating system called lean healthcare. With these in place we will be in a position to mend a seriously ailing industry.
I was asked by the I.O.M. to review this extensive document. For the most part I think they got it right. There are some weaknesses in this review and, although the final document is not actually released, I have a couple of concerns.
First, there is too much emphasis on technology as the answer to the health industry ills. I have visited 116 hospitals in 11 countries in the last seven-plus years and I find two problems almost everywhere I go. As long as hospital leaders and doctors think they have the latest and greatest bar coding system or EMR or other technology they are doing everything they can to deliver patient safety. That thinking could not be further from the truth. Technology is only a tool that may or may not help to support care delivery processes. I find most organizations have no clue what the current state of the process is. They haven’t mapped out the patient experience and the process is generally in chaos because there is little or no standard work in place. In addition, I also find there is no “system” in place to assure problems are identified on a daily basis and solved by front line staff. Most organizations have a typical top down management structure that Deming called “management by objectives.” In fact, a continuous improvement culture is supported by what Deming described as “mangement by process” (Out of the Crisis 1983). I can count on one hand the number of health systems that have a management by process system in place.
The second weakness is the lack of focus on the principle that 99% of the problem in healthcare today is faulty processes not faulty people. In the 1960s the FAA took the airline industry by the horns and mandated fail safe process implementation. This was at a time when there was a plane crash every other week with hundreds dying at a time. Aviation is now known as one of the safest industries because they have adopted processes that prevent human error. This is what we are fundamentally missing in healthcare. Standard work for care processes leads to zero errors. Members of the Healthcare Value Network prove this every day. Using standard work St. Jude’s has had zero ventilator associated pneumonias for three years in a row. Mercy Hospital–North Iowa has had zero lab specimen tube errors for two years. ThedaCare has had zero medication reconciliation errors for 5 years running.
I have published extensively including in my new book Potent Medicine the three things required to fundamentally transform American healthcare: payment that rewards value, redesign of care processes using lean, and public reporting of provider performance. I would have liked to have seen the I.O.M. report emphasise public reporting more strongly. It did mention this in several sections.
Despite my above criticism I think this report is a welcome addition to the literature on the problems facing healthcare and a good set of recommendations to address them. I am particularly happy with the clear focus on building a continuous improvement culture. I’m also in complete agreement with the focus on the unnecessary deaths occurring every day in our hospitals. These unnecessary deaths should be the only confirmation required for healthcare leaders and boards to sprint to change. As this report points out we have so much to do to make healthcare safe but we also have a direction ahead.
