Tuesday, July 29, 2008

Learning from Starbucks and Ford

I have recently been reflecting on discussions we have had at our annual leadership retreats over our 10-year-history regarding the characteristics of successful companies and great leaders. At our first leadership conference in June of 1999, I indicated that I believed Ford Motor Company and Starbucks were beginning downward spirals which, if not reversed, would cause them major difficulties in the future. Today, it appears this prediction was correct. Therefore, I think it might be beneficial for us to review why we predicted for the last nine years that these “Journeys to Mediocrity” would occur, and the continuous learnings and implications for CHRISTUS Health.

Based on my experience at the Henry Ford Health System and my early visits to the Henry Ford company, I saw and then reported that I had concerns about several things:
1. They were touting quality as “job number one," and yet were recalling about 400 cars a week for poor quality at that time (1993). The number of recalls have steadily increased since then. I have always been concerned that they were not being honest with themselves nor looking at the data which--even in the 1990s--was showing that Toyota and Honda were gaining market share in the U.S.
2. They were blaming all their expense increases on their health care expenses, and I reminded them that they should also be looking at what I deemed excessive benefits for their employees and retirees (i.e. 230 days of rehab services a year for alcoholics). I also reminded them that in 1996 they had an equal number of retirees and active employees with a significantly under-funded retirement program.

With regard to Starbucks, in 1994 I began to see a significant and rapid elevation of their charges (i.e. almost $3 for a cup of coffee which they reported only cost them 20 cents). I assumed that someone would finally be able to produce an even better cup of coffee and make the pricing much more reasonable. (We do that now in our Healthy Living coffee shops.) Their drive to increase their profits was based on their desire to open more and more stores in the U.S. and the world at large. My concerns were:
1. Their "family" was growing too quickly and they were not taking time to create the Starbucks culture in each of their new locations.
2. They were implementing the same price increases that we saw were slowly destroying health care. For example, a Complete Blood Count (CBC) now costs us 6 cents to perform, and we still charge between $12-$24 (and some heath systems charge much more). As these processes have become more automated, the cost to us has decreased, but our price has not. The rule that your pricing structure must in someway parallel your cost structure or eventually you will reach an impasse is being violated in this case.
3. Also, I saw Starbucks continuing to not only grow the family excessively but diversifying the family too quickly by getting in the food business and the music business and therefore losing focus on the Journey to Excellence in the coffee business.

So what are the implications and learnings for us from Ford Motor and Starbucks?
1. We must never decrease the intensity of our focus and work on our Journey to Excellence.
2. We must continue to be transparent with all of our metrics, both internally and externally. This means we must never think we are better than we are, and will give us an opportunity to continue to share best practices from the best performers and continue to develop actions plans to reach our outstanding goals.
3. Our work to diversify our portfolio to include 1/3 acute care, 1/3 non-acute care and 1/3 international care must continue with health care and wellness programs, making sure we have the diverse leadership and expertise to lead these ministries which all connect.
4. We must continue to seek further understanding of our cost structures and increase to parallel our pricing structures to them. We must remember that you can not continue to fund growth with prices that a majority of people will be unable or unwilling to pay.

As move toward our 10th Anniversary on Feb. 1, 2009, we must maintain our commitment to being a “learning organization,” making sure we continue to transition CHRISTUS Health to being one of the best and future-looking health care systems in the world. Pausing to reflect on our conversations about the Ford Motor Company and Starbucks over our 10-year-history and reflecting on where they are today and the resultant learnings is an important part of our continuing Journey to Excellence!

Tuesday, July 22, 2008

The Past Eight Weeks of CHRISTUS' Journey

As I have mentioned before, I have been out on the road since June with members of the CHRISTUS Senior Leadership Team on our regular visits to each CHRISTUS region. This year on our visits, we are gearing up for our 10th anniversary, which will occur in February of 2009 and delivering the message that CHRISTUS’ first 10 years have been marked by challenges, changes and progress.

After I have completed these visits to each of our regions, I will do a complete blog post on what we learned and what we need to do to get ready for our 10th birthday, which will coincide with our fourth governance conference in February.

In making these trips, it has become clear to me that in the last eight weeks of CHRISTUS’ journey, we’ve experienced the extremes of health care and therefore the extremes that test the mettle of health care leaders.

We have experienced the height of the mountain top with the separation of conjoined twins at CHRISTUS Santa Rosa Children’s Hospital, which received national and international recognition. We have also traveled through the lowest part of the health care valley when over a dozen infants received a higher-than-recommended dose of heparin used to flush their IV lines in the NICU at CHRISTUS Spohn Hospital Corpus Christi - South.

What does this period of time tell us regarding health care leadership? First, it demonstrates that leadership demands resilience, and second, it requires optimism.

Third, it requires realism, recognizing that there will always be mountains and valleys, not only in life in general, but especially in health care since we operate in a highly technical and complex environment as we take care of patients’ lives. Fourth, it requires the ability to rapidly identify challenges and make change as quickly as possible to address these challenges. If progress is going to continue, we must be able to meet the demands placed on us by a host of stakeholders and plan to address challenges within this framework as we look toward the future.

Fifth, transparency is essential. Transparency was required in both cases—to the parents of the separated conjoined twins regarding the potential side effects and even survival rate of this rarely performed surgery, and to the families of children in the NICU as soon as the error was discovered.

Obviously, this time period in CHRISTUS’ history has proven that these five leadership qualities are essential in addition to the traditional core competencies I described in an earlier blog post.

I have concluded each presentation thus far in the regions by sharing the stories about the mountain top and valley that occurred on our journey recently. I indicate that the people in the room probably know very little or nothing about their other CHRISTUS family members who work at CHRISTUS Spohn South or CHRISTUS Santa Rosa Children’s Hospital. However, I also point out that they are all strongly connected because part of our system brand is our commitment to the Journey to Excellence, and that is what CHRISTUS Spohn, CHRISTUS Santa Rosa and their regions share in common.

Therefore, we can expect that both at the top of the mountain and in the valley, the CHRISTUS team was doing their very best to make sure that the issues were identified quickly, the proper procedures were undertaken and the patients and families being cared for were receiving the highest quality of care possible. Many companies with strong brands have experienced--and will experience--mountains and valleys, but it is the strength of the brand and the leadership qualities of people developing and sustaining that brand that gives them the ability to continue on the Journey whether they are at the top or the bottom.

Wednesday, July 16, 2008

The Role of New Technology in Health Care

In previous blog posts, I shared with you the significant findings from CHRISTUS’ Futures Task Force I. As a result of our scenario planning, we determined that the two most significant drivers taking us into the first decade of this century would be declining reimbursement, particularly on the inpatient side, and the rapid introduction of new technology which would give us the ability to move more inpatient treatment to the outpatient arena. We also predicted that the introduction of this technology was accelerating at such a pace that it would be disruptive.

Traveling through this decade, we are comfortable that these are, and will continue to be, the major drivers of health care change in the foreseeable future. In a recent article in the New York Times entitled, “Weighing the Cost of a CT Scan’s Look Inside the Heart,” the authors discuss two major issues associated with the introduction of technology. These two issues, which tend to be on the negative side of the equation, are 1)The overuse of this technology and 2)The cost of the technology when compared to the incremental value it brings in relationship to less costly, more standard procedures. While these treatments undoubtedly improve the health status of some, the overall value of the treatments themselves are called into question.

It is interesting to note also, that in our Futures Task Force II process, which is utilizing “learning journeys,” that in countries we visited (including Canada and India), the availability of technology is highly regulated. Specifically, there are significantly less CAT scans available in Canada than there are in the U.S. And one statistic that is often reported is that there are more CAT scans in Texas than there are in the entire country of Canada in the same time period.

Clearly, the issues identified above have caused hospital-oriented systems to attempt to develop guidelines for the appropriate use of these costly technologies. However, adhering to these guidelines is often challenging because patients and their families will often demand them because of public marketing which is done by vendors to persuade them that they need these treatments. Clinicians may also find it easier and faster to do a study rather than spending the time doing an extensive and complete history and physical. When complete histories and physicals are performed--as physicians were taught to do in medical schools--the correct diagnosis can often be made by supplementing these exams with simple laboratory or X-ray examinations.

There is no question that this requires time and a maintenance of physical examination skills, but it is readily known that there is no better knowledge about what is occurring to a patient than that that is gained from direct observation.

Another reason why these studies are often over-utilized is that they are--at least at this time in the U.S.--significantly reimbursed. Therefore, the financial incentive to deviate from the guidelines is present. Also, these technologies are often purchased by physicians and placed in their offices, where again, the financial incentive to use the expensive technology such as a CAT scan rather than a simple chest X-ray or abdominal film would be adequate. Because of these clear incentives to over-use this technology, we strongly support the utilization of the balanced scorecard, which we have discussed also in prior blogs. The purpose of a balanced scorecard is to balance at all times the value received from a financial, clinical service and community perspective. Only then will the correct guidelines for the use of these expensive technologies be adhered to appropriately.

And finally, with the use of these new technologies, we are now also recognizing that there are side effects. (Honestly, there have always been side effects present with any technology that has been invented in health care since the beginning of time.) Both CAT scans and MRIs temporarily alter the alignment of tissue particles or expose these tissue elements to high doses of radiation. Although these tests are done in a rapid timeframe and therefore necessitate minimal exposure to these side effects in each instance, if they are replicated and overused on any one patient, the accumulative effects will become evident.

In summary, there is no question that the introduction of new technologies has been tremendous and has created life-saving opportunities for many patients who pass through our doors. Cataracts and gall bladders are removed much more safely today, and arteriograms done through catheters in the groin far surpass the dangerous situations that were created by the original needles that had to be inserted in the carotid arteries in the neck. The advantages of these technologies are clearly evident. However, the technologies that have been developed for diagnosis including CAT scans, are initially seen as extremely beneficial, but can quickly decrease in overall value because their ease of deliverance and their high financial reimbursement may cause them to become over-utilized. As this technological equipment becomes more affordable, their availability exceeds need and only accentuates the potential for their overuse.

So what is the answer? For CHRISTUS Health, we will continue to carefully monitor the development and introduction of new technologies. Through our capital allocation process, will make sure we are acquiring and locating appropriate numbers of these technologies in our various regions and business units which will provide adequate opportunities for these studies to be provided to our patients and families, utilizing appropriate guidelines and minimizing overuse.

Friday, July 11, 2008

My Thoughts About the Events at CHRISTUS Spohn Hospital Corpus Christi - South

As I’m sure you have heard, a medication error was discovered this past Sunday night at one of our CHRISTUS hospitals. The nursing staff at CHRISTUS Spohn Hospital Corpus Christi – South discovered that some of the babies in the Neonatal Intensive Care Unit (NICU) there may have received a higher than recommended amount of Heparin, an anti-coagulant used to flush intravenous (IV) lines of patients to prevent blood clots from forming in the lines. The Heparin was prepared in the hospital’s pharmacy for use in the neonatal intensive care unit. The hospital implemented corrective measures and immediately notified appropriate persons about the situation.

Babies who need care in a neonatal intensive care unit are there for specialized treatment due to illness or other life-threatening conditions. However, injury to or the passing of any small child is a tragedy that affects us all.

I can relate to the particular grief of losing a child, and my thoughts and prayers are with all persons affected and the staff caring for them. I realize that this is an extremely difficult time for all the families.

Officials at CHRISTUS Spohn Hospital South confirmed that the event occurred during the mixing process in the hospital pharmacy. While our pharmacies have very specific processes to follow in the preparation of medications, something went wrong in this case, and I am deeply sorry.

The staff at CHRISTUS Spohn Hospital South took immediate actions following the discovery of this error, including a review of policies and procedures with pharmacy staff and the implementation of an additional step to the verification process in the production of these medications.

We are committed to a culture of quality and the ongoing review of our policies and procedures will assist us in building better safeguards and strengthening our processes to ensure a safer environment for our patients.

In all my years as a practicing physician and even now as the president and CEO of an international health care system, I understand the great responsibility we are given by our patients and their families when they choose to place their lives and the lives of their loved ones in our hands.

In fact, I can remember the exact moment when the gravity of this awesome responsibility really became clear to me; I remember the day just like it was yesterday.

When I was a third-year medical resident, I was assigned to care for a 10-year-old child who had come into our emergency room. As I came out of room the child’s room after the examination, my attending physician must have noticed the puzzled (and somewhat shocked) look on my face, because he asked me what was wrong.

“Do you not know the diagnosis?” he said.

I told him that I knew the exact diagnosis, and had just finished telling the child’s mother that her child would require surgery. Her response was, “Alright, then. Do whatever you have to do to make him better.”

And then it hit me that this parent trusted me completely with her child’s life, and I was astounded by the awesome responsibility that accompanies the sacred work we do in health care.

Every day, patients come into our programs and facilities and put their health and lives—or the lives of their loved ones—into our hands. This is why I have always said that for CHRISTUS Health, excellence is a necessity, not a luxury.

CHRISTUS has been on a Journey to Excellence—which I have discussed extensively right here on my blog—since 2000, and we have made great strides in many of the metrics of our four directions to excellence (clinical quality, service delivery, business literacy and community value). This Journey requires the absolute commitment of each and every CHRISTUS Associate, physician and volunteer every single second of every single day. I will not be satisfied until we reach absolute excellence in each of our directions.

I realize that the members of our CHRISTUS family do work tirelessly each day to deliver high-quality, compassionate care to our patients and their families, and I recognize that they are the reason we have made such strides on our Journey. Therefore, I am thankful to each of them for their dedication to excellence.

I also cannot stress enough how thankful I am to all the experienced and dedicated neonatal staff and physicians at CHRISTUS Spohn Hospital South who have gone above and beyond the call of duty in response to this incident and always take extraordinary measures to deliver the best care possible to every baby in our NICU. I would also like to extend special thanks to our pharmacy staff, who worked with the nursing staff in response to the situation.

I, along with the CHRISTUS family of almost 30,000 Associates, am dedicated to our mission of extending the healing ministry of Jesus Christ every day. We understand and take very seriously the awesome responsibility of caring for the health and lives of our friends and neighbors. We pray for all who were affected by the event at CHRISTUS Spohn Hospital South as well as for all of our Associates, physicians and volunteers as we work together to continue our ministry in the U.S. and Mexico.

Wednesday, July 2, 2008

Redesign of the U.S. Health Care System

I recently gave a presentation to the Healthcare Financial Management Association (HFMA) about health care reform in the U.S. HFMA is the nation's leading membership organization for healthcare financial management executives and leaders, who consider HFMA a respected thought leader on top trends and issues facing the health care industry.

I know that focus on our country’s broken health care system will only continue to grow in the coming months and years, especially as we approach the impending presidential elections, and thought the rest of you might be interested in my latest thoughts on health care reform as well.

Changing the health care system in the U.S. is a high priority for government, business and patients and their families. As I mentioned above, the new president will have a mandate to facilitate a redesign process, so some change (hopefully positive) is inevitable.

In reality, we know that the U.S. health care system is highly fragmented, and many of us recognize that we are all to blame. It is my belief that many constituencies bear the title of “bad guy” because we have all contributed to the current state of affairs. Bad government, greedy insurers and vendors, arrogant administrators, rich doctors and inept boards have gotten us to the broken system we now must heal. In reality, even the desires and values of many American patients and their families have added to this state. Many patients continue to clamor for independence and the ability to choose when, where and how they receive care, and these desires have a direct effect on the system itself, as it struggles to balance the desires of patients with the realities of the day.

Data from various sources confirms that the constituencies I mentioned have focused on health crisis management instead of managing health. The focus on preventative medicine has been historically lacking, so when chronic conditions are identified, they have generally progressed much farther and done more damage than if they had been caught and managed from an earlier stage.

However, the fact remains that health care reform is far too critical for the welfare of Americans for it to be held hostage by the politically motivated or the profit-minded. This means that all of us must accept the need for some form of national health care, along with a collaborative willingness to pay for the appropriate services in the appropriate settings. This redesigned system must avoid excessive administrative costs and significant control by an ultimately rigid and unwieldy governmental, insurance, industry or vendor bureaucracy.

In light of these realities, we have done our best to respond in complete and proactive ways. For CHRISTUS, these responses include our Journey to Excellence, deliberate and structured futures planning (Futures Task Force I and Futures Task Force II) and our reorganization of our portfolio to one-third acute care, one-third non-acute care and one-third international entities.

Because of our belief that excellent health care is a necessity, not a luxury, CHRISTUS’ goal on our Journey to Excellence has been to develop processes and programs which reach global benchmark performance in clinical quality, service delivery, business literacy and community value. On this Journey, we have learned that:
• We must listen to the voices demanding change
• We must be aware of the signs of failure
• We must embrace outstanding health care governance
• Developing, sharing and rewarding best practices are critical success factors
• Effective teamwork is critical
• We can never be satisfied
• Unlimited optimism is paramount
• Use of a balanced scorecard approach is essential
• A high level of accountability must be sought
• Incremental victories must be identified and celebrated
• Great dreams do not occur overnight—where CHRISTUS is today is no accident
• Our theological and ethical foundations do make a difference
• Future thinking and monitoring of innovations are important
• Change management is difficult, but a required CHRISTUS leadership competency

The completion of Futures Task Force I in 2001 reinforced the value of scenario planning and solidified our belief that the major drivers of change in our industry would include declining reimbursement; disruptive, non-invasive technologies and the healthy aging of seniors. The Task Force’s recommendations also helped CHRISTUS to consider the structure of our system that would provide the highest quality of care at the most affordable cost to as many people as possible, regardless of their ability to pay. This, of course, requires a full understanding and integration of the continuum of care, which we continue to study.

In addition, Futures Task Force II includes learning journeys to New Orleans, Canada and India; technology reviews and tours of innovation centers. It is our belief that the work of this Task Force will allow us to articulate and apply Futures Task Force I’s recommendations more fully as well as develop new recommendations for the next 10 years.

As a result of all this work, CHRISTUS is in a transition of our portfolio to include one-third acute care, one-third non-acute care (including post-acute, community health services, clinics, senior services and retail) and one-third international entities (including robust sharing of best practices and a healthy Medical Travel program).

It is clear to me that change in the U.S. health care delivery system must occur, and CHRISTUS Health desires to embrace those changes and to be at the redesign table to share our learnings and best practices. The new model for health care must be evidence-based, must not let the “physician voice” become overwhelming, and must learn to balance individual vs. community focus.

I firmly believe that a successful redesign of the U.S. health care system is possible if we partake in the process with the central idea that health care is a noble humanitarian tradition of helping those who are suffering. Therefore, the welfare of every person must be of the highest priority.