Archive for Hospital and Health System CEOs
by Scott MacStravic
May 7, 2008 at 8:46 pm · Filed under Hospital and Health System CEOs, Business of Health
In a previous article on the move toward increasing the places where health care is delivered, I noted a wide variety of additional locations where health care organizations (HCOs) are making care available. But the trend is even greater than I indicated. As reported in another earlier article by George van Antwerp, at least one new organization is offering health care at anyplace a person desiring it happens to be at the time.
American Well functions as a “broker” of physician services, once consumers have signed up as clients with their health history and payment information, and physicians have signed up to offer care in the form of online consultations. It offers consumers information on the qualifications of physicians relevant to the problems they describe, along with ratings of patient satisfaction among consumers who have consulted with them previously through this online service.
This means that consumers can obtain consultations at their home or workplace, or thanks to wireless communications devices, anywhere they and their devices happen to be. Phone communications can be arranged to accompany the online interactions, adding live audio communications to real time online transactions. American Well advertises itself as creating the same “transaction” opportunities as online shopping services such as Amazon.com and Expedia.com in the retail and travel realms.
It also notes that the care consumers get in this manner can be integrated into other sources that consumers use, including their personal physician, where they have one. Extensive records of the online transaction patients have had with American Well can be communicated to such physicians, with the patient’s permission, of course, as soon as the consultation is completed.
This service also includes information on the prices that will be charged by physicians offering the service, and enables such physicians to link their fees to the level of quality and past patient satisfaction they can demonstrate. Physicians can log on to the service when they wish to be available for consultations, and log off when they do not, meaning they control the amount as well as timing of their availability, based on their personal preferences.
Dr. Robert Shoenberg, co-founder of American Well has noted that current health care web sites offer consumers information, but not any opportunity to turn what they learn into transactions, i.e. actually obtaining care. By signing up both consumers and physicians, and enabling consumers to identify who is available to serve them online at a time and place they wish a consultation, American Well enables them to carry out a transaction in essentially the same way they buy from online retail or travel sites.
Consumers who log on to the American well site are walked through a process of indicating their problem or concern, identifying who is available to serve them, getting advise on how they can get the most benefit from their discussion, select a physician meeting their recorded preferences regarding age, gender, languages spoken, etc. They can access “five-star” ratings of each physician available based on previous consumer ratings of each, and determine the price of the transaction set by each physician.
Physicians can determine what topic(s) the consumer wishes to discuss, and offer the option of seeking care from a different specialist. Patients can see the responding physician online, and augment the online consultation with phone contact through the same computer, while enabling the physician to access an online medical record previously created. Each transaction is followed immediately by a feedback survey of the patient, and clicking a button to send the record of the transaction to the patient’s personal physician, including any needs concerns not addressed during the transaction that the personal physician can take care of at the next face visit.
Insurers can exert some control over use of the service by varying co-payment requirements according to the volume of use for individual plan members. In practice, the ready availability of physician online consultations wherever and whenever members wish them should reduce the unnecessary use of emergency rooms and face visits of other kinds. As such, the online service adds to retail clinics as alternative sources of care that can be coordinated with patients’ regular source of care. Nurses at retail clinics could use the online service as an immediate source of consultation when patients present with a problem where physician input is desirable.
This same service can easily become part of a more consumer-driven approach to health management, where consumers lack resources and programs offered by their employer, insurer, or physician. Ideally, insurance plans will come to appreciate the advantages of online health management consultations, in addition to sickness care transactions, and include coverage for them where they prove to be cost effective. [L. Dunbrach & R. Shoenberg “Health 2.0 – The Transformation to Online Care,” HealthIndustryInsights.com Webinar]
In any case, this is one example of a method for consumers obtaining care and physicians delivering it that falls into what is normally espoused as the “new consumerism”. Consumers have far more control over when and where they get care, while able to select physicians with considerable transparency as to qualifications and performance, as well as price. Dr. Shoenberg considers it to be a truly disruptive innovation. The rest of us will have to wait and see.
by Scott MacStravic
April 23, 2008 at 10:44 am · Filed under Hospital and Health System CEOs, Business of Health
When I began my healthcare career at Michigan Blue Cross many years ago, the hospital relations division where I worked made the discovery that appendectomies, hysterectomies and cholecystectomies in one modest-sized community in that state were unusually common. Staff investigators visited the community and discovered that its hospital’s only surgeon claimed to perform them prophylactically, to prevent problems, rather than wait to cure them.
The investigation concluded that the real reason for most of these procedures seemed to be related more to the surgeon’s need to pay off the mortgage on his expensive new home and boat, rather than to benefit his patients. With no other surgeons in on the hospital’s medical staff, there was no effective tissue or other peer review to hold him in check, but the investigation and resulting warnings to the hospital had the desired effect of significantly dampening the rate of surgery subsequently.
In a CBS Evening News story on April 21, the subject of bariatric surgery for obese patients was covered in some depth. One champion for this method of severe obesity reduction noted how much safer the surgery has become as its techniques have changed, and how much added benefit has been found in patients who have it. One surprise was the bypass of the stomach and attachment of the duodenum directly to the small intestine seems to “cure” diabetes virtually overnight.
A panel of eight patients had been assembled for this story, with all eight of them reporting that prior to their surgery, they were diabetes sufferers. But in some cases only days after surgery, and in all cases at some time afterwards, all eight no longer had the disease, and were no longer taking medications to control it. While the mechanism for this effect was not described, and may not be known as yet, even before they experienced any weight loss, which in most cases only took off about a third of the excess weight, they had gained a “reversal” of their diabetes.
It was also noted in the story that the success of stomach bypass surgery has a “success rate” in terms of significant reduction in obesity, and most particularly in keeping the weight off, of roughly 85%. This is roughly seventeen times the success rate for other methods of weight loss, where initial losses are common, but commonly associated with gaining most or all the weight lost within a year.
The combination of reducing patients from morbid or extreme obesity to mere “normal” obesity or even mere overweight status, i.e. of at least one BMI (body mass index) category, and keeping it off indefinitely, can be a big money saver for insurers and employers. Health care use and expenditures have been found to be roughly $382 lower for every BMI point of reduction. Since a BMI category equals five points, this would suggest annual savings, in medical, pharmaceutical, and disability claims alone, of five times as much, or $1910 per year for employers, and since the vast majority of these savings are paid by health insurance, they would be almost that much for insurers, as well.
The BMI connection with lower claims costs were amazingly uniform at all BMI levels, i.e. there was no “law of diminishing returns” in the levels of expenditure increase as BMI got larger. Moreover, the reported cost differences by BMI levels were reported seven years ago, using data that was even older. Given health care cost inflation since then, the savings could be twice that amount or more by now. [“The Impact of a Worksite Health Promotion Program on STD Usage” JOEM (Journal of Occupational and Environmental Health) 43:1, Jan 2001 25-29]
Since bariatric surgery costs roughly $25,000 (though insurers may pay significantly less if they cover it), the upfront costs of achieving such savings will be considerable. It is no wonder that insurers, in particular, are hesitant to pay for it, and commonly impose strict requirements as to how much overweight patients must be to qualify, and how long they must try to lose weight through other methods first. [K. Dunn “Bariatric Surgery at Tufts Health Plan” WorldHealthCareBlog.org, Apr 23, 2008]
Moreover, since insurers normally retain their members for only a few years, even savings of $5000 a year would not deliver a positive ROI in most cases for them. But employers might consider covering such surgery, given its higher success rate and far greater savings to them. They stand to gain not merely reductions in medical, drugs and disability expenditures, but savings in absenteeism and presenteeism as well, which are typically two to five times greater, altogether.
If even 50% of bariatric surgery patients gain a reduction of one BMI category and maintain that loss indefinitely, employers could save enough in just a few years to cover the costs of the surgery. Only predictive analysis based on their own workforce health and performance costs, and the contribution value of their employee assets, will enable them to make a reasonable forecast of their potential ROI and how long it would take to gain it, but employers, at least, might consider it a worthwhile investment.
As a long-term investment, it might even be justified by commercial and government insurers, as well. Commercial insurers might be willing to cover it based on how many of their members come to them from other insurers’ plans, and are already at lower costs due to obesity “cures” thanks to surgery. Medicare might consider the risk vs. reward potential of subsidizing or at least promoting bariatric surgery among populations soon to be their responsibility, rather than waiting until they actually are beneficiaries.
It is even possible that the combined savings potential in preventing both obesity and diabetes, to say nothing of other conditions, including cancer and arthritis, for example, that are far more likely among obese populations, could justify bariatric surgery as a preventive, i.e. prophylactic measure. Whether consumers would be willing to undergo such surgery merely to dramatically reduce their risks of obesity, diabetes, and their co-morbidities is open to question, though consumers have demonstrated a common preference for the “quick fix” compared to the rigorous lifetime self-discipline necessary to prevent weight gain or cure it after the fact.
I mention this possibility at least partially with tongue firmly planted in cheek. But insofar as employers and insurers recognize the constantly rising costs of obesity and the co-morbidities associated with it, together with their negative impact on workforce productivity and overall performance, there may be some justification for at least giving its reactive use some thought, if not its proactive potential, as well.
by Lola Butcher
April 22, 2008 at 10:02 am · Filed under Practitioners, Hospital and Health System CEOs, Policy Makers, Chronic Care, Business of Health
Anyone interested in a new payment model for health care needs to keep
an eye on the High Value Health Care Project under way at Mayo Clinic.
Its goal: Support a new national model for high value care delivery.
Robert Nesse, MD, president and CEO, Franciscan Skemp Healthcare, Mayo Health System, reported on this important initiative at a breakout session this morning.
Mayo, using its 54,000 employees, retirees and dependents as a study cohort, launched the project about six months ago in conjunction with Dartmouth Institute of Health Policy and Clinical Practice and the Institute for Health Care Research at Intermountain Health Care. That’s a formidable team.
As you probably know, the Dartmouth Atlas of Health Care identifies Intermountain and Mayo as the benchmarks that everyone else should be chasing. And Peter Orzsag, director of the Congressional Budget Office, has his eye on benchmarking as a key to solving America’s health care cost crisis–which means this project is likely to inform analysis that is presented to Congress.
In the first phase of the project, five conditions are under the
microscope: congestive heart failure, diabetes, heart disease, low back
pain and depression.
The project seeks to understand high value care for these chronic illnesses:
- Document the quality and cost over time (not well understood by providers today) of best practice for selected patients with chronic illnesses
- Implement evidence-based best practice and patient shared decision-making for high cost, high prevalence chronic diseases
- Study new reimbursement models that support high value care for patients with chronic illness
- Improve the value of care for Mayo patients.
by Lola Butcher
April 21, 2008 at 4:39 pm · Filed under Insurance, Hospital and Health System CEOs, Chronic Care
You’re probably going to start hearing about “Deep Dive,” a huge randomized trial designed to compare an intensive patient-coaching program against a typical telephone-coaching effort.
Trial results, presented by David Wennberg, MD, MPH, president and COO, Health Dialog Analytic Solutions, indicate that more coaching contacts translate into fewer hospital stays, emergency room visits and physician appointments.
The savings? About 5 percent reduction in patient care costs–after the cost of the program–over the 12-month trial period.
Some audience members seemed a bit skeptical, but Wennberg’s co-presenter, Lance Lang, MD, national vice president, Health Net Inc., was not among them. Health Net members were subjects in the trial; after the trial ended, Health Net signed up to have Health Dialog’s intensive coaching intervention for all members who qualify.
Who makes money if intensive coaching becomes commonplace? Health Dialog or whoever provides the coaching, and the payers. Who loses? Physicians and hospitals, for whom a 5 percent reduction in revenues may seem rather daunting.
by Scott MacStravic
April 11, 2008 at 2:31 pm · Filed under Hospital and Health System CEOs, Pay-for-Performance
The Patient Charter for Physician Performance Measurement, Reporting and Tiering Programs, developed by the Consumer-Purchaser Disclosure Project reflects one of the larger coalitions pushing for value-based purchasing, by all those who are customers of medical care. Aetna recently announced its support of the effort, which aims at combining transparency by or about medical care and providers, as well as improving the performance and value of the healthcare delivery system. [“Aetna Supports Patient Charter for Physician Performance Measurement, Reporting and Tiering Programs” Aetna Apr 1, 2008]
I recall when I was a hospital system executive in my last position before retiring what was meant by physician performance from the system’s perspective. My marketing/strategy division was, at that time, responsible for the system’s “physician relations” program, which relied mainly on a handful of “account representatives” who visited physicians on the medical staff to make sure things were working well for them when they admitted or referred patients to our hospitals.
We measured the success of this relationship management program entirely through the numbers of patients that the physicians involved admitted or referred. Initially, we lacked the ability to determine how profitable such patients were, but the intent was to learn, in effect, how profitable the physicians were, given the profitability of the patients they admitted. With such profitability increasingly in question now, thanks to physicians developing their own competing hospitals and ambulatory surgery or care centers, this is an even bigger issue today.
Within physician practices, particularly large, multi-specialty group practices, similar measures of the profitability, as well as quality performance of members are typically included in measurement efforts. Productivity, measured in terms of total billed charges and procedures, as well as adherence to evidence-based medicine and payer-sponsored “pay-for-performance” (P4P) criteria, are also logical measures.
I recall one interesting performance measure that a medical group I consulted with had used. If any subspecialty physicians within the group proposed that it invest in an expensive piece of equipment for diagnosis or treatment, the physicians who proposed it would become responsible for making sure the investment paid off. If the revenue they produced through use of the equipment failed to cover the costs of having it, the physicians would be “fined” the equivalent of the losses when it came time to split the practice’s revenue among its members.
This was intended to ensure that group physicians were on the conservative side when it came to proposing investments. It also had the natural tendency of such physicians to make sure their “hammers” were used, making even more patients’ conditions look like “nails”. Whether it promoted overuse, unnecessary use, etc. cannot be known without careful analysis, but the potential would certainly be there.
With payers involved, P4P measures of performance tend to reflect adherence to evidence-based quality in physicians’ care of patients, but often more importantly, their “efficiency”. This may tend to give too much weight, in overall ratings of and bonuses paid to physicians, on how low physicians keep the costs of care that insurers must pay, and physicians have typically bridled at such a payer-serving definition of performance.
Some insurers, with Regence Blue Shield in the Pacific Northwest coming to mind, have been working on measuring, reporting, or rewarding physicians based on how well each manages the health and particularly the diseases of patients. Such an approach to P4P might well serve primary physicians especially well for their “medical home” performance, and remove some of the pressure on them to see as many patients and deliver as many billable services as possible just to survive.
It is clear that however payers, consumer groups, and physicians, themselves, define, measure, and reward or punish performance will have a great deal to do with how medical care is delivered. One can at least hope that paying for and publishing performance measures will first and foremost serve the best interests of patients and the community, though it will also have to serve the interests of payers and physicians. The challenge is to align the incentives and performance measures used by all stakeholders.
by Scott MacStravic
March 26, 2008 at 10:59 am · Filed under Health Plan/Payer CEOs, Hospital and Health System CEOs, Business of Health, Marketing
When I began my career in healthcare marketing in the mid 1970s, I thought I was making a significant positive difference to the inaccurately labeled “health care system”. Back then, essentially nobody did, wrote, or even said much about things like patient satisfaction, patient-centered care, etc. nor spent anything remotely resembling the kind of current marketing budgets. In essence, there were no marketing budgets, no marketers, and no marketing in healthcare at all.
I was lucky enough to get in on the early wave of its development and implementation, with two books and a host of articles, as well as some delightful consulting engagement. With nobody else marketing, it was a simple matter to achieve dramatic improvements in market share, revenue, and profits for my clients, simply by doing pretty basic marketing stuff, like devising more convenient and satisfying patients experiences, and doing the same for physicians where referrals were needed.
To describe the prevailing situation back then would make it sound like the Dark Ages, compared to the emphasis on patient and physician experience management, direct-to-consumer (DTC) advertising, the thousands of people now engaged in marketing efforts, and the awareness among executives of the necessity for significant spending thereon. We have come a long way, though I confess, not necessarily in the direction I had anticipated back then.
My original aim was to combine doing a better job of identifying and meeting patients’ and physicians’ needs, wants, and expectations as a way to achieve a truly WIN/WIN result for the healthcare organizations who did so earliest and best. My first consulting engagement in 1974 or thereabouts turned around a failing hospital-sponsored primary care center into what became a highly successful “chain” of such centers and a major boost to the fortunes of the hospital involved. But this was due to making the product, place and price elements of what the clinics offered dramatically better and more attractive/satisfying for patients, not through expensive advertising, which did not even exist at that time.
Since then, marketing has taken off dramatically in health care, and hardly any provider can afford to ignore it. I made an excellent living at it, and have been able to retire in comfort to a life of “freelance scholarship”, with a lot of research and writing, and frequent enough consulting engagements to keep up with its present developments. But it is clear that marketing in health care has had a lot of unfortunate effects that I never considered or anticipated, and we are all suffering from them.
As is pointed out concisely and persuasively in another blog, ”Health Status Is Not the Only Predictor of Medical Costs”. I recall reading about this back in graduate school before the marketing idea emerged, thinking it was an interesting factoid, but not really connecting it to an opportunity that marketing can address. But it is clear that the natural drive for healthcare providers, drug manufacturers, and other purveyors to succeed, has led them to exploit this potential, and not entirely to the benefit of patients.
The blog reminds us that only about 20% of healthcare use is explained solely by health status, though the correlation between status and use is strong, particularly at extreme levels of good or bad health. But people with similar levels of health/illness overall do not use the same levels of care. Their use, the other 80% at least, is more reflective of individual attitudes and preferences, insurance coverage, provider (“supply-based) effects, and economic incentives that apply to remaining at work vs. taking time off. [W. Lynch & H. Gardner “If We Only Consider One Possible Cause, We Will Be Left with Only One Type of Solution” Health as Human Capital, Mar 2, 2008]
Numerous studies have shown that economic incentives and geographic variations in the supply and care philosophy of physicians have yielded enormous variations in how a given patient with a given condition will be treated. Such variations come with very little evidence that more treatment is better, and a lot of evidence that over-treatment makes the patient worse, to say nothing of the added costs that all of us end up bearing, one way or another. And marketing clearly has a lot to do with promoting over-treatment.
It is easy to put a lot of blame on pharmaceutical advertising, which has promoted widespread perceptions in new “diseases” such as “restless leg syndrome” as well as new ways of dealing with old problems, such as “erectile dysfunction”. When I began my career, the only intent in marketing was to win more patients to the providers I worked with, not to drive up demand as a whole.
But to a great extent, it is impossible to separate the two. If healthcare becomes more attractive and satisfying for patients and physicians, it is bound to be used more. And all providers can benefit when a “rising tide” of increased demand “raises all boats” among providers of care. After many years of promoting the ER as a source of convenient care, with guarantees that patients will be seen within 30 minutes, for example, we now have a serious problem of overuse of ERs.
There is a “marketing” solution to this problem, of course, and many hospitals as well as the natural workings of the market have resulted in some significant “solutions”. Hospitals, themselves, along with insurers and employers, have “de-marketed” ER use with information campaigns, (“de-advertising?”), and the creation or support of alternatives, such as “fast-track” options to ERs on hospital campuses, “retail clinics”, and “urgent care centers”, though these often have trouble competing with the overwhelming market advantage that ERs have for patients of not being able to turn away non-paying patients.
The authors of the blog piece noted that they had used regression analysis to “predict” or account for medical costs in a large population, based on age, gender and general health ratings of its members. This combination of demographic and health factors achieved an R2 predictive success of only 11%, meaning that 89% of variations in use were due to other factors. It also predicted the differences in medical costs for employers with two different sets of incentive dynamics, but similar populations and illness. The expected costs of one, based on high-deductible health insurance and a consumer-directed health account, a culture of communicating the costs to employees of their employee benefits, and shared responsibility for time away from work, were over $2000 less per employee per year than costs for the other.
Perhaps more important, even when the second firm has a more educated workforce and more wellness programs, the differences in costs persist, because of the strong impact of the economic incentives on employees’ behaviors. While wellness programs and other efforts to improve employee health have been shown to save significantly through improved productivity and performance, apparently economic incentives can counter or at least reduce their effects.
To the extent that marketing promotes positive attitudes toward health care use over self-management of health and prudent management of one’s healthcare use, along with making one provider more preferred than another, it is part of the problem. But it is likely that altering economic incentives, along with the effective marketing of health and good self-health-management, will be necessary to “solve” the health care cost crisis. Efforts to make health insurance coverage universally available will not solve, but exacerbate this crisis, unless they are accompanied by ways to “de-market” unnecessary and avoidable health care use and expense.
by Scott MacStravic
March 11, 2008 at 12:56 pm · Filed under Employer CEOs, Hospital and Health System CEOs, Pay-for-Performance
There are a number of advantages available in a pay-for-performance approach to worker compensation, at least for as many workers as it can reasonably be applied to. It has been shown to, by itself, increase performance in two different ways, for example. First, it tends to motivate workers who have been performing at less than their best, due to lack of motivation and reward/recognition, to increase their performance, often dramatically, compared to what salaries or hourly wages.
This has been most clearly illustrated in a case study of a windshield repair firm, where the first year after shifting from an hourly wage of roughly $15 per hour, or $600 per week, average productivity increased by almost 40%, while overall compensation increased only 10%, i.e. a minimum $4.00:1 ROI ratio for the added pay (probably more since only the revenue per windshield was considerably greater than the pay given to workers for each one). [E. Lazear “Performance Pay and Productivity” American Economic Review 190:5 Dec 2000 1346-1361]
One of the advantages of paying for productivity in general is the fact that it directly and visibly affects their “life assets”. By my count, there are five such assets that are both important to individuals and affected by what their employers do. These are:
- Health – combinations of well-being, energy, physical strength, etc. that affect what we can do with our minds and bodies
- Power – the extent to which we can control/manage our environment and behaviors, perhaps influence others, but at least maintain some degree of autonomy
- Talent – capabilities, attitudes, motivation levels, etc. that determine what we are able to do and accomplish
- Time – both the sheer amount available to use and the portions of it we allot to specific necessities and discretionary use in our lives
- Wealth – personal and real property, liquid assets and investments that greatly determine what we can afford to do with our lives, particularly “discretionary” income and assets
Others may add to this list, but this is the set that I have found highly useful when dealing with attempts to influence human behavior in the contexts in which I have worked, in both marketing and management. And each offers an avenue to influencing behavior by enabling people to achieve gains or reduce costs related to one or more of these assets. Other approaches may work as well, but any strategy that does not take into account all five and the gains vs. costs relative to each involved in making behavior change is likely to be less effective.
The above firm soon discovered that paying for productivity alone brought with it two negative side effects, not anticipated when the P4P system was introduced. In order to maximize their “wealth asset” gains, workers tended to be somewhat slipshod in terms of the quality of their work, making it necessary to have the windshield re-installed in many cases. After assigning the job to whoever was available, the firm switched to making the original installer do it over, thus ensuring that there was no reward, indeed a penalty in added time asset costs without any added wealth asset gains. This took care of the problem.
But workers also leaned toward less care in ensuring that customers would be satisfied with their work. When the original windshield had been broken, and glass strewn inside the car, for example, workers were often a bit lax in ensuring that all the glass pieces were vacuumed up. To address this decline in service quality, the firm instated a customer satisfaction dimension into the P4P scheme. By combining the sheer output (numbers of windshields installed) with both technical and service quality dimensions, the former “Pay for Output” (P4O) system became a true Pay for Performance system.
This was accomplished by adding two more levels of incentive pay. For employees who increased their output from the original 2.5 average windshields installed per day to as much as 3.8 per day, a 52% increase, provided they also maintained an average customer satisfaction rating in surveys of 95% satisfied, they would get an additional $2.00 per windshield. This amounted to at least 3.8 x $2.00 = $7.60 per day or $38.00 per workweek. If they increased to 4.5 windshields installed per day and 97% customer satisfaction, they could get another $4.00 per windshield = $18.00 per day or $90 per week.
While their normal P4P compensation was reflected in their weekly paychecks, the extra output/satisfaction-based payments were accrued and paid out as a bonus twice a year. Since this bonus could be as much as $90 x 26 = $2340, it was far more significant when paid in a separate check than when added in smaller amounts to weekly paychecks. It felt far more significant to workers, who could use it for purely discretionary splurge purchases if they liked. [B. Hall, et al. “Performance Pay at Safelite Auto Glass” Harvard Business School (Case Studies 9-800-291 & 292) December 6, 2001)]
The P4P system gave employees boosts in at least three of their “life assets”, namely power, time, and wealth. By favoring high performers, who came close to doubling their personal compensation counting all incentives, it made a dramatic positive difference in their wealth account. Because it enabled them to control how much they earned by managing their own time and effort investments, it added significantly to their personal power and autonomy asset. It added to yet another asset, namely their time account, by enabling them to adjust the number of days or hours per day they worked according to their personal and family needs, while still ensuring an adequate income.
By combining three of the five life assets, such a P4P system can significantly enhance the effects of altering how employees are paid. It also adds an opportunity for employees to track and report, or at least to enable employees to track and remind themselves of how much better off they are for their added performance. By accruing a portion of the incentive payments into twice-yearly bonus checks, it gave employees a visible and more powerful reminder of their improved situation.
Had the employer simultaneously worked on its workers’ health asset, through worksite wellness or other employee health management efforts, or added training of some kind to enhance their talent assets, it would have maximized the number of life assets addressed and involved in its overall strategy. But involving three of the five proved highly effective in this case.
by Scott MacStravic
February 27, 2008 at 1:51 am · Filed under Health Plan/Payer CEOs, Hospital and Health System CEOs, Business of Health, Medical Tourism
A recently published story in Wichita, Kansas describes how its local Galichia Heart Hospital will begin charging a flat fee of $10,000 for coronary artery bypass graft (CABG) surgery for patients where there is little chance of complications. Patients with risky co-morbidities, such as diabetes, or who have had this surgery before, are not eligible for this price.
Since the usual and customary fees for CABG surgery run in the $35,000 range, this is a major example of price cutting by a hospital. With growing numbers of consumers covered by high-deductible insurance and using their own health savings accounts, this should be a welcome option. It might even help stem the flow of patients overseas for this surgery, given the added costs of flying to India, Thailand, or Brazil.
It is also the first of what may be many shots across general hospitals’ bows from free-standing specialty hospitals in the battle to win the lion’s share of this usually very profitable service line. And with roughly five tenths of one percent of the population looking for this surgery each year, this is a big market to gain a share of. The hospital has admitted its intention to capture the attention of insurers, as well as consumers, with this low price.
Surgeons at Galichia perform about 200 CABG procedures a year, and hope to increase that to 300, according to its CEO. The two major general hospital systems in Wichita – Via Christi Regional Medical Center and Wesley Medical Center enjoy most exclusive contracts with insurers, including Via Christ-owned Preferred Health Systems and Blue Cross/Blue Shield of Kansas.
The $10,000 rate is better than any of the local general hospitals’ rates, according to Galichia’s CEO, so this dramatically lower rate may win some converts, at least when current exclusive contracts reach their renewal dates. It is unclear how much such a lower fee might change physician referral patterns, particularly to other physician-owned facilities, but it might attract business at quite a distance.
Galichia is running ads in Canada and the UK, for example, where long waits for such surgery tend to be common, in competition with other “foreign” countries already advertising similar savings and immediate service. Timely Medical Alternatives and North American Surgery founder Rick Baker in Canada is quoted as saying that “The price…is absolutely stunning.” His firms connect patients with specialty hospitals that perform surgeries at low, contracted rates.
With such a low price in the US, it seems at least possible that other hospitals may have to rethink their charges, or lose considerable business to those who have done or will do so in response to their rivals. It might at least prompt some efforts by insurers and patients to seek to negotiate new rates with hospitals they already do business with. [A. Atwater “Galichia Heart Hospital’s $10k Bypass Jolts Industry” Wichita Eagle Feb 24, 2008]
by Nick Jacobs
February 24, 2008 at 9:30 pm · Filed under Hospital and Health System CEOs, Hospital Administration
Eleven years ago our hospital was confronted with what seemed to be an overwhelming situation. We had a rotating door as employees came to our medical center, finished their certifications and left to work for the three hospitals near us that had higher pay scales.
Employee morale was very low and the employee turn over rate was extremely high. Our first decision was to become a Planetree Hospital, and worked to become the employer of choice for our region.
We began by meeting individually with each and every employee. The result was simple; pay attention to their concerns, their fears, their needs and their dreams. We immediately instituted an administrative Open Door Policy, produced a regular and now web based Newsletter, monthly Birthday Pizza with the President State of the Hospital meetings, quarterly Town Hall Meetings, a recognition program entitled Caught You Caring and a senior leadership policy of Management by Wandering Around.
Then we did something very dramatic. We made arrangements for 37 employees and 11 highly qualified physicians to LEAVE because they were bullies. Bullies have not been tolerated at this facility for over ten years, and our medical staff ensures that they will never again be accepted here.
We began to pay attention to our employees’ health needs by offering them the following programs: an Osteoporosis Program, Smoking Cessation, Eat Well for Life with personal nutrition counseling, StrengthTraining, Cardiac Rehab and Dean Ornish Coronary Artery Disease Reversal Program. We also offered Healthy Choice Meals (fat and trans fat free vegetarian) and Healthy Vending Machine selections.
Then we added staff members to offer the following to our patients, staff and volunteers: pet, aroma and music therapy, acupuncture, drumming and massage. We built walking trails, labyrinths, and made available a ten dollar a month payroll deductible admission to our workout facility for all employees and physicians. Included are classes in aerobics, water aerobics, yoga, tai chi, ai chi, spin classes, kick boxing and added over seventy pieces of workout equipment, an exercise pool and a walking track.
On the personal side we took away sick, personal and vacation days and gave back in a block that gave the employees freedom to use their time as personal time. We also permitted our employees to donate PTO days for their fellow employees in their time of need and offered additional grieving time for the loss of in-laws and grandchildren as well.
We added fresh flowers from our own greenhouse, a relaxation room, healing gardens, gazebos, counselors and clergy. We began baking bread on each floor, carefully placed artwork and decorative fountains throughout the campus. We also placed a popcorn machine in the main lobby. Just for good measure we added skylights, plants, fish tanks and two functional fireplaces. During times of extreme patient activity we began having ice cream socials, special pizza and grinder’s days. We now provide a trip to a professional baseball game, tickets to the symphony, the opera, local theater, hockey games, and plenty of fund raising dinners.
Finally, we enhanced our employee recognition dinner, initiated a hospital week cookout and put thousands of extra dollars into a holiday party. We increased our training and input into the employee assistance program, stress reduction classes, DisneyTraining, EQ2/Emotional Quotient training, Planetree and Dale Carnegie training programs.
This work has resulted in nearly a tripling of our business, our infection rate is below one percent and our length of stay is approximately 3.4 days as opposed to the 4.6 days that is the norm for hospitals our size. Oh, yeah, and the new low turnover rate . . . Priceless.
If you would like your organization to stabilize and to improve morale with your employees and physicians while growing the satisfaction of your patients, just follow the road map above.
by Scott MacStravic
January 28, 2008 at 1:50 pm · Filed under Hospital and Health System CEOs, Business of Health, Hospital Administration
Fred Fortin’s posting on this subject on Jan 28 described how Leland Kaiser at the Center for Health Design described the “place” challenges facing hospitals as centers for transformation and healing. But it is an unfortunate reality of hospitals and the Center, itself, that they are both overly concerned about hospitals as places rather than things. Clearly, when any organization defines its mission and vision, it makes sense for it to indicate what it aims for, but also what it does not aim for, both hospitals and the Center seem concerned with health, not merely sickness.
The Center, for example, is clearly concerned with how the design of hospitals, as workplaces, affects the health of those who work there, in addition to the effect of place factors on the health of those treated there. It has published a report “The Role of the Physical and Social Environment in Promoting Health, Safety, and Effectiveness in the Healthcare Workplace”, for example. Another promoted a broad view of health including the total environment. “T. Schettler “Toward an Ecological View of Health” Kaiser, himself, has argued that hospitals must concern themselves with what patients’ do and experience before they are admitted to, and after they are discharged from the hospital.
While this concern may focus solely on the extent to which the “before” experience best prepares patients for their sickness care, and the “after” follow-up enables them to optimize their recovery, there are certainly added elements that could be included in follow-up care. Why shouldn’t hospitals concern themselves with preventing repeats of the same causes that led to the patient’s admission in the first place? It would certainly be in the best interests of that patient, and the community at large, if repetitions were avoided, or at least minimized.
When the cause of the original admission, as so many are, was an existing chronic condition, there are proven methods of reducing future crises, complications, and worsening of such conditions, for example, though the patients’ own physicians would have to be involved in this as well. Fortunately, a great number of hospitals own or have strong affiliations with primary physicians who can handle what they do best in preventing repetitions, while hospitals can focus on what they do best.
When the cause of the original admission is an acute illness or injury, hospitals also have the opportunity, with the help of patients’ physicians (if any) and patients, themselves, to discover what led to the illness and injury, and prevent repetitions of that. They could then use the same information about populations of patients to reduce the incidence of acute and chronic disease in the community, in a true, comprehensive, and proactive mission of protecting and improving health, not merely the reactive mission of treating disease.
Arguably, the Center for Health Design — despite the use of the word “health”, rather than “hospital”, “healthcare organization” (it has published papers on physician practices and long-term care organizations, as well), or even “healthcare” – may logically limit itself to “places”, and to healthcare places, at that. But hospitals, despite predictions of continuously growing sickness care demand, are only part of the problem, not part of the solution, when they restrict themselves to sickness care.
Fortunately, dozens, if not hundreds, perhaps even thousands of them (I know of no count made by their trade associations) are already engaged in proactive health efforts. These may be limited flu shot campaigns, health screening fairs, fitness center operations, executive health programs, etc. They may be workforce health management efforts aimed at their own employees, at the workforces of local employers, or in the case of Mayo Clinic, for example, the workforces of large employers throughout the country.
Hospitals deal with patients, plus family members, friends, and co-workers who visit patients, at arguably one of the best “teaching moments” that anyone concerned with promoting and maintaining health ever enjoys – a time when they are seriously ill, in most cases. This gives them a unique opportunity in their follow-up care, and in their before and during contacts, to learn about the causes of their patients’ sickness, and to approach them at a time when they might be most interested in learning ways to avoid repetitions thereof.
Hospitals, as places, are not usually the best places to carry on proactive health management initiatives. They are hugely expensive places, and severely limited regarding convenience of both place and time. But they could certainly be part of the proactive health solution, given their professional staff capabilities, diagnostic testing/scanning technologies, and teaching moment advantages.
Many have made at least a start, though usually only a toe-in-the-water beginning, and often as is commonly the case with occupational and proactive health services aimed at local employers, only designed as part of a strategy to attract more well-insured sick patients. But as more employers shift the costs, and even move their employees into individual vs. group insurance, this tactic will not work as well. And self-insured may not be nearly as profitable as those who have traditionally been members of group insurance populations.
Hospitals, even if they never get over their “edifice complex” focus on their places, have the capabilities to function as an important thing element of comprehensive, proactive health management strategies, tactics, and interventions. Doing so could mean significant cost savings in terms of their own labor costs, and improvements in their own workforce (and therefore their own) performance. It could certainly mean significant and potentially far more profitable revenue from local employers, since they can afford to be more generous to hospitals that become cost-saving vs. just cost-increasing centers.
Perhaps even better, proactive health management will go far more in hospitals’ and physicians’ avowed, though perhaps only rhetorical and PR commitment to community health than does their current dominant focus on reactive sickness care. If they choose, the Center for Health Design may even look for ways to make hospital places, and perhaps even people’s work and home places, more conducive to health, rather than solely to healing.
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