Dennis Dahlen, senior vice president of Finance and CFO, Banner Health in Phoenix; Wayne Meriwether, COO, Methodist Hospital in Henderson, Ky., and Mike Alkire, COO, Premier healthcare alliance, discussed the challenges and opportunities in this time of uncertainty and what their organizations are doing to adapt and prepare.
Question: The healthcare environment today is characterized by a great deal of transition and uncertainty. How have you led your system during this uncertainty?
Dennis Dahlen: There are two things we try to keep in front of us from a leadership perspective. One is being very transparent with our workforce and communicating early and often the challenges we’re facing. The other is leading with courage, being deliberate and proactive during this period of uncertainty. Having a credible plan to meet these challenges is critical, and we communicate them to our workforce over and over again. We’ve found that it encourages our workforce when leadership seems to know what they are doing and explains their intent and direction. It gives them a sense of comfort in turbulent times.
Wayne Meriwether: Yes, there’s a lot of uncertainly, and we’re not really sure what’s going to shake out in healthcare reform. But, we can see there is going to be a pay-for-performance model we have to work toward. With that in mind, we focus on three key improvements: improving quality, improving patient satisfaction and lowering our costs. We feel like if we are able to accomplish those three things, it will position us pretty well with whatever shakes out with reform.
Q: How does your hospital’s strategy involve preparing for new models of care and payment?
WM: We believe all new models, whether it’s an ACO model or medical home model or some variation of those, will be centered around individual wellness and individuals being more responsible for their own health. We’re starting that type of initiative with our own employees and incentivizing them to meet certain health metrics. Once we better define this wellness program, we’ll roll that out to our entire community and service area in an effort to improve the wellness of our population and hopefully reduce cost.
DD: These new models of care are the core of our strategy. We’re walking very fast, if not running, toward a value-based revenue stream. We currently operate one of the larger Pioneer ACOs in the nation and have announced agreements with Aetna and Health Net for narrow networks with value-based incentives. We’ve found the health plans very receptive to moving to value-based models. They seem as anxious as we are to move toward aligned incentives, and werre hopeful our mutual interest will shorten the time of transition from fee-for-service to other models.
Q: A key component of clinical integration and coordinated care is HIT and technology that allows providers to share and mine data. How far along are your systems with the implementation of electronic health records and other HIT tools, such as computerized physician order entry?
DD: We’re fairly mature on the hospital side of HIT and recently reached HIMSS Stage 7 in 19 of our 23 hospitals. On the provider side, we’re about half way to completing our EMR rollout. CPOE is fully deployed on one standard database, and there are common order sets across the entire system. Our model is based on our experience that if you can standardize the EHR/EMR, it eases the roll out and makes it much easier to use. It also makes it much easier to roll out a change in an order set based on medical evidence across the enterprise if all the hospitals are on a single instance of the application.
One thing we’ve really come to find, though, is that while useful, EHR is really just the foundation. It’s not terribly helpful at all in managing a population’s health, for example because it is designed to support clinical care for one patient at a time rather than a population. There is a big gap in the layer above the EHR — the layer that should tie together the disparate systems to take bits of clinical data and make it useful for coordinating care. We recently have recognized this gap and are partnering with Aetna to use their tools to develop this layer more robustly.
Mike Alkire: To echo what Dennis suggested, EHRs are certainly critical to success but only one of dozens of needed IT assets. How useful would email be if you could only send messages within your company? Or a phone that only allowed calls to those in your home? So how can we be satisfied with EHRs that can’t track across all care setting or facilitate intra-team communications — these are functions central to accountable, patient-centric care.
So we worked in partnership with over 100 health systems and IBM to develop what we’re calling PremierConnect. It’s a virtual healthcare community allowing providers to connect with each other, both at a local system level and nationwide.
At the local level, providers can connect care across all their sites — hospitals, physician offices, outpatient clinics. They’ll know which patients are driving undesirable outcomes, which physicians have the highest costs or the poorest performance, and why these scenarios are occurring. They can also incorporate predictive modeling of patient risk to better profile an entire population, not just those who they have treated.
WM: We’re not as quite far along as Banner. We’re about three-fourths of the way through our implementation of electronic medical records. Like Banner, we started with the hospital and are now moving closer to bringing up CPOE for physicians.
One key takeaway I’ve learned from the process is as we’ve rolled out new systems like medication reconciliation and CPOE, is that it’s important to develop standard operating processes or instructions to make it easier for the end users. Another mistake we made was trying to automate our old processes instead of fully embracing the features of the new technology.
Q: How are your facilities dealing with pressure on reimbursements?
WM: We know the government is not going to give us any more money, so we’ve come to the realization that we need to learn to live on Medicare rates. To do that, we have to take as much costs out of the system as possible and maximize efficiency. We’re adopting Lean principles and tools across our organizations to help us achieve these goals.
DD: I agree. We’re not delusional and believe we’re going to get paid more for what we’re doing, so we’re focused on the cost side of the equation to create lasting performance improvements. We’re currently on a three-year journey to become profitable on Medicare. Last year we lost about six percent on our Medicare book of business, so while we have challenges ahead, they aren’t insurmountable. We’re focusing on reducing our cost per unit with considerable focus on labor. We’ve had a lot of singles, but not many home runs. It’s about holding managers accountable for their staffing plans shift by shift, providing information for managers to meet those plans, finding and retaining the best staff possible.
We’ve worked a lot with Premier on supply chain savings and last year won an award from Premier for our efforts. However, most of these savings have been the result of reduced prices on supply items. We are just now starting to get some traction on the utilization side. We’re doing some very beneficial things in collaboration with our medical staffs, like being smarter about which supplies we use, how many we use and how many we waste. There is tremendous opportunity for us in utilization management based on our experience.
WM: We also place a high emphasis on supply chain management as well as our other major expense, with that being labor. In an effort to be as efficient as possible, we have implemented productivity improvement initiatives and try to be in the top 25 percentile for productivity compared to other hospitals, and we’ve met that in most areas across our hospital.
MA: Health systems know they can’t just cut their way to the future. Instead, they need to make across-the-board improvements. Key to this is eliminating costs that aren’t leading to better outcomes. The reality is that the financial pressures facing hospitals won’t allow for 1-2 percent reductions. We need massive reductions, and that requires information so that we make those calls in a way that is smart and that has clinical benefit to patients. This includes information to consistently review the appropriate uses of resources, value analysis and clinical decision making.
Premier is operationalizing our data assets to serve as proof points so our members buy only supplies they need, conduct only needed procedures, and aren’t admitting patients into an acute-care setting when they’d be better served going through primary care. We’re making data actionable by making it easier to mine information and support business and clinical decision making. We’re also making this information available so that others can replicate it and achieve similar results.
Data in isolation has a lot of use. But it is the capacity to learn from others, tinker with the idea, and build upon success that has the power to initiate meaningful change.
Q: If you had to boil the challenges your organization is facing right now to the top one or two, what would they be?
WM: I’m interested to see if mine, from a small system perspective, will differ from Dennis’. It’s hard to pinpoint just one, but as we become more aligned with our physicians, we’ve had some challenges making sure their goals match our organizational goals. Along with that is the high cost of employing and managing physicians and their practices. We often say we’d be doing so much better [financially] if we didn’t employee physicians, but we feel like we’re in a situation where ” we can’t live with them, can’t live without them.”
The second is the increase we’ve seen in uncompensated care. This has grown steadily in the last few years to the point it really worries us.
DD: Similar to Wayne, I’d also point to two things, or rather, two parts. First, it’s really the uncertainty — whether it’s federal legislation or state funding — there is just an unprecedented amount of uncertainty. And, really related to that is the speed of this transition. The transition to DRGs in the 1980’s changed things in many ways, but these current changes we’re facing are, on order of magnitude, much bigger than that, and there are just a lot of moving parts. The kinds of physicians we need in the future will be different than the ones today, and health systems will have to change as well both in terms of how we relate and compensate physicians and how we interact with patients.
Q: Enough doom and gloom. What one thing makes you excited to be a healthcare leader today?
WM: We don’t think it matters if the Supreme Court finds ObamaCare to be constitutional or not. We feel that our current healthcare model is unsustainable, so with that in mind, we have this one chance in a lifetime or you might say one chance in a career to really make a positive change in our healthcare system. We look at it as being an exciting time to be in healthcare.
DD: I completely echo Wayne’s comments. This isn’t a time for healthcare leaders that want to be caretakers. It’s a time for leadership in every sense of the word, and in many ways is analogous to the transition in our country over a century ago from a craftsman model to mass production. We’re moving from that craftsman model in healthcare to more of an industrial model as it is related to population health management. It’s about being outward-looking rather than inward. The challenge ahead is really much closer to why many of us went into healthcare: to improve the health of the nation. It’s really an exciting transformation from a business perspective as we move from how we’ve practiced in the past to something that will deliver greater value to our communities in the future.
MA: There is so much good work going on in healthcare today, and systems like Banner and Methodist and our alliance members across the board are proof of that. A recent New York Times editorial covered a number of successful healthcare cost and quality improvement programs. It suggested that “if enough providers adopt their already proven techniques, this grass-roots movement could transform the entire system in ways that will benefit all Americans.”
We need to keep building on these and other success, and if we do we can become resilient enough to withstand government and market changes thrown at us in the future.
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