Budgets are the nemesis of almost everyone in healthcare. This blog post from HBR highlights how Group Health of Puget Sound and ThedaCare eliminated them.
We all know that budgets are obsolete the minute after they have been completed. So why hasn’t any healthcare organization gotten rid of this wasteful activity. Actually, Park Nicolet in Minneapolis has been without for a few years. Recently two other network members have joined them and many more have become curious. The following well written synopsis by Brad Power is a description of what has replaced budgets at ThedaCare and Group Health – http://blogs.hbr.org/cs/2011/10/in_my_last_post_i.html
Recently, one of the Healthcare Value Network member CEOs asked a series of world renowned Lean experts what they felt the most important leadership behaviors are in a lean organization.
Here is what Paul O’Neill had to say.
Dear Dr. ,
Here is my prescription for Leadership for any organization interested in achieving habitual excellence:
1. A leader who establishes cultural norms for the organization so that everyone in the organization can say “yes” to three questions, every day, that will define the organization:
a. I am treated with dignity and respect by everyone I encounter, every day. (Without regard to my ethnicity, my title, my pay grade or rank, the duties I perform, my educational attainment, or any other distinguishing characteristic.) Everyone is accorded exactly the same high level of dignity and respect.
b. I am given the things I need; education, training, tools, encouragement, and protection from risk so that I can make a contribution to the work of the institution, that gives meaning to my life.
c. I an recognized for what I do.
2. A leader who causes the creation of an institution-wide system of continuous learning and continuous improvement that engages every employee as part of the problem solving team. Necessary conditions for such a system to work are: real-time identification of everything gone wrong; an associated root cause problem solving process and institution-wide sharing of problems identified and solutions implemented. Total transparency is an essential element of this process.
3. A leader who articulates and establishes aspirational goals for the institution By aspiration, we mean goals that are set at the theoretical limit of what is possible. For example, zero nosocomial infections, zero medication errors, zero patient falls, zero work place injuries for all employees, zero wasted time spent hunting and fetching, zero duplicative or repair work for things not done correctly the first time, i.e., lab work or imaging studies. (Setting goals at theoretical limits sharpens the understanding of the size of the opportunity relative to current performance. Benchmarking against national averages or even better performers can create the illusion of success or satisfaction with “good enough”.)
4. A leader who systematically takes away all of the barriers and excuses as to why points one, two and three are not possible. For example, we can’t afford to be perfect, we don’t have enough people to do these things, accidents are inevitable, etc.
5. A leader who takes personal responsibility for everything gone wrong.
As a starting point for change and as a proof of concept, a “would be” leader should establish a goal for the institution that makes zero work place injuries a “pre-condition” for the institution, (not a priority, a pre-condition) and then implements the steps above beginning with the creation of a real-time safety data system, with data available to all employees 24 hours each day, detailing incidents, causes, changes in practices to be adopted across the system the same day. Ensure that everyone within the organization can say “yes” to the following question, every day:
a. Is my personal safety and that of my colleagues a precondition?
Starting institutional change with work place safety gives substance to the sentiment that says, “our people are our most important resource”. Virtually every institution professes this sentiment; very few can demonstrate it is true by operating in a way so that no employee is ever hurt at work.
Learning and using the tools and behavioral practices necessary to move along the path to an injury free work place are exactly the same as those required to achieve major progress on making health care safe for patients.
The Center for Medicaid and Medicare Innovation released the following initiative which appears promising as a way to further payment reform.
CMS, through its Center for Medicare and Medicaid Innovation, has announced its next opportunity for partnership between private payers, Medicaid, and Medicare. Known as the Comprehensive Primary Care Initiative, this solicitation has some exciting potential to support the good work that the Partnership for Healthcare Payment Reform is engaged in.
Here are a few highlights:
WHAT: CMS will make enhanced payments to primary care practices in the context of a collaborative, multi-payer environment within five to seven defined geographical markets. CMS is seeking applications for participation from private and other governmental payers who commit to providing (or who are already providing) enhanced support, above and beyond visit-based fee for service payments, for primary care practices in their networks. These multi-payer compensation strategies must be designed to support 5 comprehensive primary care functions:
Risk-stratified care management
Access and continuity of care
Planned care for chronic conditions and preventive care
Patient and caregiver engagement
Coordination of care across the “medical neighborhood”
In addition, CMS seeks to use this initiative to drive enhanced, accountable payment, including accountability for the total cost of care, continuous improvement driven by data; and optimal use of health information technology.
CMS is looking to establish this initiative in 5 to 7 markets nationwide.
WHO: Payers are invited to respond individually to the solicitation with a non-binding letter of intent. Payers eligible to respond include: commercial insurers, Medicare Advantage plans, states (Medicaid, state employees/retirees), Medicaid managed care plans, state high risk pools, self-insured businesses and administrators, self-insured groups. In addition, CMS expects that this initiative will stimulate market-wide conversation among payers, providers and community quality collaboratives, and it encourages those conversations to take place before a response to the solicitation is made.
Once markets and payers are selected by CMS, primary care practices will be invited to apply to participate. Preliminary practice eligibility criteria include:
having at least 60% of revenues generated by payers participating in the initiative
having a minimum of 200 non-institutionalized Medicare beneficiaries who are eligible for Part A and enrolled in Part B, but not enrolled in Medicare managed care
using an electronic health record system or electronic registry
HOW: Although payers are asked to respond individually to the solicitation, proposals that demonstrate alignment around payment methodologies (“methods of support that are not segmented by payer”) will be favored. In addition, payers are expected to propose compensation arrangements that include the possibility of shared savings, and to align around methods of sharing data and measuring quality.
BY WHEN: Individual payers must respond with a non-binding letter of intent by November 15, 2011.
The Joint Commission published an article by Kim Barnas, VP at ThedaCare regarding her work in developing the lean management system at ThedaCare.
I have done gemba (going to where value is created for the patients) at 91 hospitals in nine countries, most recently in the Netherlands. Each time I see a lot of energy and ideas regarding improvement but almost uniformly there is no underpinning management support for the improvement. This became clear to the hospital management team at ThedaCare several years ago and it was the force behind the development of the Business Performance System (BPS) which ThedaCare’s lean management system.
The focus of any lean management system is to support the front line workers to identify and solve problems. In this article Ms. Barnas brilliantly describes how ThedaCare does just that. Using leader standard work the front line staff is taught how to use PDSA thinking to improve and sustain processes.
The Medicare and Medicaid Innovation Center (CMMI) announced a new payment program which is focused on acute care episodes paying providers a single fee for all the services required to deliver a patient’s care episode.
Yesterday the Innovation Center announced they are willing to partner with health systems and conveners of multiple health systems to pay them with bundled payments. This is a welcome turn of events for organizations that are working on payment reform but aren’t interested in becoming an Accountable Care Organization (ACO).
The options for this initiative vary as to whether the health system wants to bundle both inpatient and outpatient components of a care episode or just the inpatient episode. Organizations can work with conveners of participating healthcare providers such as the Partnership for Healthcare Payment Reform in Wisconsin or directly with CMMI. The good news for Wisconsin is there has already been a great deal of work done on bundling and the CMMI proposal may help support many of the providers already involved with it.
In a prepared statement CMMI says: “To help facilitate health care innovation, recognize the diversity of provider organizations, and cultivate strong provider partnerships, applicants are asked to submit their own episode definitions and bundled payment proposals. CMS will provide historical Medicare claims data to potential applicants planning to apply for Models 2-4. The data are intended to enable potential applicants to develop well-defined episodes and discount proposals based on the experience of providers in the applicant’s area”.
Two types of payment are proposed, in the retrospective method “CMS and providers would set a target payment amount for a defined episode of care. Applicants would propose the target price, which would be set by applying a discount to total costs for a similar episode of care as determined from historical data. Participants in these models would be paid for their services under the Original Medicare fee-for-service (FFS) system, but at a negotiated discount. At the end of the episode, the total payments would be compared with the target price. Participating providers may then be able to share in those savings”. In the prospective method, CMS would make a single, prospectively determined bundled payment to the hospital that would encompass all services furnished during the inpatient stay by the hospital, physicians and other practitioners. Physicians and other practitioners would submit “no-pay” claims to Medicare and would be paid by the hospital out of the bundled payment”.
Obviously, many details and questions remain but overall a good start for an important payment reform initiative from the federal government.
Don Berwick, CMS director, visited western Wisconsin on Thursday August 18th touting the low cost high quality care La Crosse, Black River Falls and the Eau Claire communities have achieved.
Coming off the heels of Dr. Richard Gilfillan’s visit to Appleton last month Wisconsin is getting a lot of attention for leadership in clinical care redesign and payment reform. Both ThedaCare and Gundersen Lutheran have been applying lean principles to clinical care for years and it so happens La Crosse and Outagamie counties, where Gundersen and ThedaCare are the main providers, rank No.1 and No.2 in the state in lowest total cost per Medicare enrollee. This also puts both places in the top 10% of lowest cost for the country.
Berwick acknowledged that the federal programs need change, namely a Medicare reimbursement system that pays hospitals based on the number of procedures they perform instead of how successfully they treat patients” wrote the La Crosse Tribune reporter. We have been espousing this concept for years and are doing something about it. The Partnership for Healthcare Payment Reform which has been supported by the center is introducing two major payment reform initiatives this Fall, one of which Gundersen has agreed to participate in. It’s ironic that although most commercial insurers plan to participate Medicare is not, at least not yet.
We believe strongly that Medicare should be participating in payment reform pilots across the country when they are led by qualified and credible organizations such as The Partnership for Healthcare Payment Reform in Wisconsin. These types of pilots are occurring around the country and will allow Medicare enrollees to have access to better quality lower cost care. We are hopeful that CMS can partner with us on these important initiatives.
The Healthcare Value Network members visited the University of Michigan Medical Center the end of July. We saw good evidence of the application of the lean methodology in patient care. We also learned how they are changing medical education to instill continuous improvement principles and practices.
A chief resident who is trained as a lean leader? Yes, that actually is happening only one place in the country and that’s in Ann Arbor, Michigan. Dr. Jack Billi has been developing improvement leaders at the University of Michigan Medical School for years (see PowerPoint file at the end of this blog).
The beauty of what U of M is doing is to take the best of the engineering school, which has included teachers such as John Shook and Jeff Liker, and integrate this thinking with medical school leaders like Jack Billi. The result is an educational experience unlike any other for medical students and residents. When they leave Michigan they have both clinical skills and improvement skills which give them a big advantage in today’s world of emphasizing both cost and quality in medical care.
As if this wasn’t enough for an academic medical center to be focusing on, U of M is now taking the lean approach to more than 100 private medical clinics around the state with the Michigan medical home demonstration. This is sponsored by Michigan Blue Cross a leader in innovation on cost and quality.
No doubt we will be learning a lot from the work at Michigan. The leaders there have taken their role seriously in transforming American Healthcare. Let’s hope other academic medical centers will follow suit, transforming American healthcare starts with transforming how we educate the future healthcare leaders.
The following is a letter Dr. Dean Gruner CEO of ThedaCare, sent to all employees and physicians recently. It is inspired by Paul O’Neill and his quest for zero defects in healthcare.
I was a speaker at the ABIM foundation yearly meeting July 31st. Uwe Rheinhardt and Donald Berwick spoke before me. The following is my reflection on the conversations that followed.
As the nation was hurtling toward a possible default (which was averted thankfully) America’s healthcare leaders including Don Berwick, CMS administrator, Peter Lee from the office of health reform, Uwe Reinhardt an economist and Princeton professor, Glenn Hackbarth the chairman of the Medicare Payment Advisory Commission along with dozens of other healthcare leaders throughout the United States were meeting in a retreat sponsored by the American Board of Internal Medicine foundation.
Throughout two days of thoughtful discussions in small groups and during breaks it is my opinion that we really have only two choices in American Healthcare; cut costs by cutting payment or redesign care delivery removing waste and paying for that redesigned care differently. Government accountants are pretty black and white and don’t “score” anything from a budget perspective that doesn’t involve reducing payments or increasing revenue. I think it is safe to say that most of us favor redesigning care rather than slashing cost but most admit they have no knowledge as to how to do it. Their biggest concern is that it is going to take too long to work.
I was the only presenter who had actual real examples of organizations that had both reduced cost and improved quality. These examples come from the members of the Healthcare Value Network and were published on this site last month (see below).
The ensuing discussions with these leaders have made it absolutely clear to me that building a community of healthcare lean leaders throughout America is really the choice we have to come to. We at the Center for Healthcare Value are committed to helping facilitate the transformation of any healthcare organization in America interested in building a lower cost higher quality system. We have many examples and many teachers in the healthcare industry that have applied the lean principles successfully and we need many more. The alternative? Being paid less and less and eventually being forced to ration care, let’s be more proactive than that!
The Center is focused on three core concepts; developing payment systems that reward value,making healthcare performance transparent to patients, and redesigning care delivery to remove waste.
The CMMI officials visited Appleton to develop a better understanding of the work that has been done in Wisconsin to deliver on these important aspects of health reform.
We discussed the importance of publicly reporting data both on quality and cost. The Wisconsin Health Information Organization and the Wisconsin Collaborative for Healthcare Quality are now capable of reporting both cost and quality data.
We also discussed the Partnership for Healthcare Payment Reform (PHPR) pilot using bundled payment for knee joint replacement and a shared savings program for chronic disease care. CMMI is also creating the rules for how Medicare might agree to participate in bundled payment pilots. We at PHPR are sharing all of the details of our payment reform initiative and look forward to working with CMMI in addition to CMS on payment that rewards value not volume.
Finally, these officials including Dr. Gilfillan were able see first hand the ThedaCare Improvement System in action when they visited one of the inpatient Collaborative Care Units and Encircle Health, a large integrated ambulatory care center. They were able to examine defect huddles, daily improvement boards, see a Collaborative Care team interact together,really see the difference between traditional medical care delivery and what the future holds.
The issue facing CMMI now is what to do to support ThedaCare and many of the Healthcare Value Network members to continue to innovate resulting in improving quality while at the same time reducing cost. We recently published on the home page of this website a compendium of spectacular results achieved by network members implementing lean go to www.createvalue.com to review. We need a lot more double wins as this article suggests and CMMI officials know that is possible now.
You can review our slide presentation to CMMI last week below.
