Wednesday, August 27, 2008

The Mountains and Valleys of Leadership

In a recent blog post, I discussed the implications of the mountain and valley that CHRISTUS Health experienced recently with regard to the separation of conjoined twins at CHRISTUS Santa Rosa Children’s Hospital and the heparin incident in our NICU at CHRISTUS Spohn South. In that post, I talked about the leadership requirements necessary to travel over mountains and into valleys.

The importance of this discussion was indeed re-emphasized to me on my visit to our Texarkana region recently. At our Touchstone awards in 2006, we presented a Leadership award to the Texarkana team because they had reached all their excellence goals for several years and had demonstrated that they knew how to sustain excellence in all four of our directions on our Journey to Excellence. (This was the first and only time we have presented this award to a team of regional leaders.) The Senior Leadership Team at CHRISTUS talked about them frequently, indicating that by improving clinical quality and service delivery while maintaining a strong emphasis on community value, they had proven that they could create business literacy throughout their region. We even said they had “cracked the code,” and we published several papers based on their performance.

However, as they moved through FY07, they had some major challenges, particularly with their business literacy, and therefore lost focus on their clinical and service measurements, causing their metrics to decrease. This obviously caused us to pause and ask the question, “Did they really deserve the Leadership award in 2006?” Did we think they had some of the right qualities for being an outstanding leadership team, but in fact were they missing some of the more important ingredients which we failed to notice?

These questions deserved and have received much reflection, because we as the Senior Leadership Team, the coaches and mentors of these regional leaders and many of the future leaders of CHRISTUS Health, must make sure that we are teaching the right leadership competencies to be successful not only today, but long into the future.

When I visited this region recently and specifically spoke about their successes in FY08, it was clear to us all that we had made the right decision in giving them the first and only Leadership award, because as a result of their outcome metrics in 2008, they are now once again the best region of the 13 in CHRISTUS with regard to our directions to excellence. They have demonstrated that an excellent team is able to reach the mountaintop, but can, if faced with a perfect storm, find themselves in a valley. When they find themselves in this valley, they can quickly reenergize themselves, develop and implement corrective action plans and move forward out of the valley to the mountaintop once again.

This team has demonstrated the resilience, the optimism, the strong integrated teamwork and the intense focus that is required to journey from the valley to the mountaintop once again. These are necessary in addition to the traditional competencies of financial knowledge, conflict management, strategic planning and others which are essential to be designated as an excellent team. These are the qualities that must be learned by all present and future leaders in health care both in the U.S. and internationally. These are the qualities that must be taught in our Masters of Health Care Administration programs and must be role modeled and be re-emphasized throughout CHRISTUS, including through our mentoring programs. These qualities need to be identified in the applicants for our management excellence and leadership academy trainees as we prepare the future leaders to succeed us in this future health system.

In summary, we were right. The Texarkana team had those qualities and deserved the Leadership award. And more importantly, they never lost those qualities when they found themselves in the valley.

Wednesday, August 20, 2008

The Value of Relationships

Having completed visits to six of the CHRISTUS Health regions as part of our plan to spend time in every region, site and business unit both in the U.S. and internationally as we move toward our 10th anniversary, I have been reflecting on the value of relationships in creating a culture of excellence in an organization.

In these last 10 years, before each trip to a facility or program the senior team has asked the question, “Are we doing the right thing by taking the time of the local leaders to facilitate our visits?”

We questioned whether they had more important things to do than planning an agenda for our visit, which obviously involves the time and efforts of members of their teams. And as much as we would hope they would not make special preparations, we always know that they will be made, and we will be fed well during our visits. Obviously, this is not only a time but an expense issue as well. So is it really worthwhile?

During these visits--as we have done in the past--we instruct the local teams to utilize our time as effectively as possible, making sure they know we are available as early as 6 a.m. and want to fill our day completely until 9 or 10 at night. We ask them to make sure that as we come to give our updates, they create forums for us to reach as many Associates, board members (both governance and foundation), physicians (including medical leadership) and volunteers as possible. For our visits over the last two months, they have done just that. In our most recent regional visit, I had the opportunity to interact with over 2,500 Associates, 12 governance board members, 20 foundation board members, 30 members of their medical staff and over 200 volunteers. I was amazed at the attendance at the various forums, the attentiveness during my presentations, the thoughtfulness of the questions posed during the dialogues and the constant comments by many of how beneficial these interactions were.

These comments included:
* “I can’t believe you spent the time to come and visit us.”
* “I cannot believe that you know our journey so well that you can speak to it without looking at notes.”
* “We are truly appreciative of having a better knowledge of what the entire CHRISTUS system is doing.”
* “It is great to understand how we as a department, business unit or clinical service fit into the regional strategies and how that strategy then fits into CHRISTUS Health system strategy.”
* “We are so proud of being part of the CHRISTUS family because we now know better what other family members are doing, particularly as you shared the stories of Santa Rosa and Spohn as being at the top of the mountain and in the valley in the last several weeks as well as the work occurring in the CHRISTUS Stehlin Foundation in Houston.”
* “We are pleased to see your passion and enthusiasm, which gives us the energy and the focus we need to continue the Journey to Excellence in our specific areas.”

In the past, if you asked many CEOs in health care what their major role in their organization was, they would tell you it was to be the external face of the health care system. That would mean that they thought most of their time should be spent in Washington, at the state government, attending national and state association meetings and addressing local groups such as Rotary and Lions clubs regarding the status of the health care system they were leading.

Although these external activities are still important today, with the challenges we are facing in health care, it is my belief that much more attention must be placed on creating the internal face of the leadership team for all the Associates, physicians and volunteers who are part of the CHRISTUS family. It is clear to me that the Journey to Excellence is only attained if the people believe and work in a culture of excellence. And it is more clear to me than ever after six of these regional meetings that the culture of excellence can only be created, energized and sustained if the CEO and the leadership team are there to speak to it and to demonstrate by behavior that it is a way of life in CHRISTUS Health and not a mission, vision and value statement framed on a wall or embedded in a series of policies in a book that is rarely read by anyone.

We all know at CHRISTUS that these trips take an enormous amount of time and effort on the part of the leadership team, the communications team who plans the agenda and the local leadership team who carries out the implementation. But at the end of each trip, the value of these efforts are reinforced and remind us that although we might believe that our greatest asset in health care and particularly in CHRISTUS Health may be the $4.7 billion we have on our balance sheet which represents the amount of buildings and technologies that we own and operate, in reality our greatest asset is our people. And people are motivated by people who have developed relationships with them and who demonstrate by the way they walk and talk that they are committed to excellence. This can only be transmitted by face-to-face forums through these regional visits, and must be seen as one of the most important things we do. So often we attempt to resolve crises in health care quickly and efficiently and fail because we have not established the appropriate culture or relationships prior to the occurrence of the crisis.

The challenges in health care are great and the changes we must make to address these challenges are even greater, but at the end of the day, if we expect to make the progress necessary to provide excellence for every person who comes through our doors, we must believe that relationships and the culture of excellence that comes from them is the essential ingredient to be sure that our people create an excellent environment in both clinical and quality services so that the care that is rendered is worthy of the CHRISTUS brand.

Wednesday, August 13, 2008

Competition and Collaboration

I’m sure that many of you have read the recent article published by the American Hospital Association in which they predict that 1,200 of the 5,200 hospitals in America will most likely go bankrupt in 2009. One would expect our first response to that news to be elation, in that some of these hospitals may be in our markets and this would eliminate our competition and make our Journey to Excellence easier.

However, this first impression may not, in reality, be the ultimate effect of these closures. In CHRISTUS Health, we are living out this experience in real-time as hospitals in two of our regions in the U.S. have announced bankruptcy, and one of the two is being auctioned off in the next several weeks.

Obviously, during this period of time, the institutions are rapidly downsizing their census, and many of their patients are being seen in our facilities. But because both of these hospitals are in two of our most challenged regions where the number of uninsured or underinsured is extremely high, the shift of patients to our facilities is not paralleling a significant rise in collectible revenue, but is increasing our expenses significantly. Consequently, these closures are ultimately having a negative effect on our bottom line. It seems that this scenario will be the most likely one playing out in all of the markets where these bankruptcies may occur, given that bankruptcies are most likely to take place in challenging markets that have a higher-than-average number of uninsured and therefore a large bad debt.

If, then, our response is not elation and we expect negative results, what should our response be? First and foremost, in good times and bad, we should always work to develop open communication with our competitor to make sure we are meeting the needs of the community in the best possible way. In fact, if collaborative planning was always a high priority for health care delivery systems, perhaps the appropriate services could be separated into each of the facilities in a community, preventing unnecessary duplication and causing each hospital to be much more profitable or at least to absorb fewer losses. Unfortunately, most economists and governmental officials in the U.S. seem to believe that a competitive model that works in other industries will successfully work in health care, which is truly a service industry open 24 hours a day, 365 days a year, where all those who seek treatment must be served (at least for emergencies).

Unfortunately, because of the highly regulated nature of health care, the fact that the majority of our payments are provided by the cumbersome governmental entities of Medicare and Medicaid and the polarity between physicians/providers and hospitals/health systems, theories from Economics 101 have never and will never work. In fact, the competitive nature that has resulted between different providers in the same community all over the country has caused an extreme duplication of services and technology, which ultimately do not create profitable product lines and may even result in the overuse of treatments and procedures.

Although we offered to collaborate with the hospitals in the two regions I mentioned above, our offers to have those conversations were never accepted, and the resulting outcomes are evident. Therefore, we are now faced with the closure of these hospitals, and must determine the best way to quickly absorb an increased number of patients and hopefully develop efficiencies and effective processes to do this in a way that will minimize our losses and eventually produce business stability along with these increasing volumes.

But because this cannot be done in a proactive way over a defined period of time, but rather has to be done in reaction to a crisis, bankruptcy or foreclosure, often the initial solutions create short-term challenges which require significant effort to turn into positive values in the long-term.

The reality is that what might seem like a joyous occasion initially actually becomes a significant issue and often a burden when the realities of the situation are fully understood. So as we stand here in this moment in time, it would be best to reflect upon the best ways to prevent these foreclosures and bankruptcies from occurring, rather than being forced to stand idly by while the additional nearly 1,200 closings occur.

Wednesday, August 6, 2008

Could segmented health care be part of the solution?

It is obvious that the major agenda topics for the new president will increasingly come into focus prior to the elections in November, and we hope that the redesign of health care will be high on this agenda. We all know that the health care system in the U.S. is broken, based on all four aspects of our Journey to Excellence: the overall quality is mediocre, the service delivery recently reported through HCAHPS is lacking, the business literacy is in jeopardy as the AHA predicts 1,200 hospitals will go bankrupt this year and the community value as represented by the level of charity care provided by non-profit hospitals and health systems is under scrutiny by the IRS and congress as we speak.

We all know that the redesign of American health care will most likely be evolutionary rather than revolutionary. However, it is imperative that all of us who are working in this industry spend significant time looking at the pieces of the puzzle that could be put together to create a new delivery process which would easily be able to significantly improve the low scores in the four directions outlined above. As I am in the midst of my travels to CHRISTUS regions, I have spent time in planes and sitting in airports reflecting on some of these pieces more thoroughly, and today I’d like to share what I think may be the most important one.

I am proposing that we need to get increasingly comfortable with segmented health care as one of the primary solutions to our dilemma. Our experience in Mexico with segmented health care gives me even more reassurance that this would be most helpful, but it is only added to the knowledge and experience I‘ve gained by reflecting on my medical school, internship and residency training experiences where I practiced in segmented delivery systems.

First, what do I mean by segmented?

For me, segmented health care means that you provide the health care in different settings and with different amenities according to the patient’s or family’s ability to pay for such services.

I know that many people initially react to this idea by asking, “Dr. Royer, are you proposing different levels of health care for the poor and the rich?” Obviously, based on what you have read in my blog before and knowing that I am the team leader for a Catholic, faith-based health care system that is founded on incarnational spirituality, that is not the case. We have proven in Mexico that you can provide equal clinical quality of care and service delivery while providing different locations and amenities for various populations based on their economic status. So in reality, my proposal is to provide equitable health care for all from the clinical and service perspectives, but not providing equal amenities to all.

It is clear to me now as I have reflected on my early years in health care and have reinforced these experiences with my observations in Mexico in the last seven years of our Journey to Excellence that our failure in the U.S. to control our costs and to reduce our bad debt is primarily from the fact that we are providing amenities/private rooms, flat screen TVs, free telephone access, free internet connections, menu selections and private bathrooms to people who cannot afford them. These amenities obviously have to be built into our overhead costs for providing health care, and therefore have increased our expenses. As a result, we are increasing our revenues to potentially address these expenses, but because people cannot pay, the prices that are driving our revenues are increasing as well as our bad debt.

This is in reality also what has happened to Starbucks, which I mentioned in my post last week. I indicated that they significantly increased their prices for a 20-cent cup of coffee in order to have the monies to rapidly expand their shops throughout the world. But they, like health care, have reached a point where the differentiation between the price and the cost are so distant that the value added is no longer present.

I am sure that many people reading this blog would say “Can we safely go back to ward medicine or four-bed suites with the infectious disease issues facing us today and with the expectation by most Americans that they need the private room and the amenities described above?”

To me, the answers are clear. We will need to continue to undertake a re-educational process for American citizens to inform them that we are committed to equal quality and service, but just as in any other industries, you cannot buy amenities associated with your purchase if you cannot pay for them. By creating a segmented system, we will thereby be able to decrease the cost for health care and better care for the large number of uninsured who are getting no care in the U.S. We will need to remind them that clinical and service quality are what they need and want, and that for the short period of time they’re in our outpatient, inpatient, senior campus programs or hospice and palliative care programs, the amenities add no value to their care and certainly can be minimized and not missed during those episodes.

A key example of this would be when we go into a car dealer to buy a car. Adequate transportation is the expected outcome. But indeed, some of us can only afford a used car, and some can afford a luxury automobile. But transferring this analogy to health care, I believe we are giving sunroofs, high-class stereo systems and GPS systems to everyone, even those who can only afford the cheapest of models. Therefore, we are creating a cost structure that has proven to not be sustainable, and if we continue it, we’ll fail in the future.

Again, we must remind people over and over that we are not sacrificing quality or service, but in fact the package in which that care is delivered will need to be wrapped differently for different people based on their ability to pay or not pay.

Second, with regard to patients who need special care either because of the intensity of their illness or infectious issues, we had the answers years ago, and we still have them today. If the severity of their illness is significant, they can be moved to our cardiac care units of ICUs, whose physical layouts I would suggest need not be changed, since the value of the amenities there are mainly focused in the high technology required or the visibility required by the nurses and physicians who are caring for them. With regard to infections, we always had this issue in ward medicine in the 1960s and ‘70s, and that’s why we created infectious private rooms close to the wards where these patients could be placed when they needed to be isolated. Because these rooms were different, my belief that we may have paid even more attention to the infectious disease and isolation precautions than we do today.

Because everyone is now in a private room which can be changed to an isolation room by merely putting a sign outside the door, I wonder if we are not as diligent to our infectious disease precautions because, in fact, that room does not look that much different from any other room that we might have. Segmented medicine requires that different types of care will be rendered in different settings, and this may in fact positively affect the level of care delivered.

In closing, I readily admit that this proposal as one piece of the puzzle for health care redesign may seem radical and may be interpreted by many as a step backward rather than a step forward. But based on significant reflection on my training and the segmented system in Mexico where those who can pay are treated in one series of our hospitals and clinics and those who cannot pay are treated in another network of short-stay hospitals and clinics, I am convinced that a segmented health care system is at least worth putting on the table for reconsideration by the task force for health care redesign.