CHRISTUS Health on the Right Journey as Health Care Reform Initiatives Accelerate

Clearly, the CHRISTUS Health goal to continue our journey to become one of the highest quality and lowest cost providers both in the U.S. and internationally appears to be the key to success for the for the minds of those driving health care reform, including Sen. Kennedy and President Obama.

The proposed plans emanating from the White House and Congress have several key strategies in common, including:

• All persons will have health insurance
  
  
  
  • Those who can afford such will buy private insurance
  
  
  • Federal and state governments will approve waivers and subsidized insurance for the poor
  
  
  • Large employers will be required to continue to support health insurance for their employees
  
  
  • Small employers will be subsidized to support their employees
  
  
  
  
• Providers will be paid parallel to their quality and service metrics


• Utilizing evidenced-based medicine protocols to minimize overuse of technical studies and procedures will be rewarded


• As the poor and underserved are covered by insurance, the DSH payments will be reduced


• Pharmaceutical companies will be forced to reduce prices

Clearly, the American Medical Association, American Hospital Association and Catholic Health Association are advocating for no reductions in payments until a feasible reform plan is developed and implemented. Unfortunately, as CHRISTUS Health leaders have been saying both to our internal and external audiences, there is no more money in the treasury, bad debt in health care is increasing and costs must be reduced immediately as fast as possible while the health care reform plans are being debated. Therefore, our leadership team has growing concerns about the Associations’ pleas for more money. Our approach is to offer concrete solutions which we have evolved over our first decade of CHRISTUS Health to increase our clinical and service quality, reduce our costs by enhancing our business literacy, while maintaining our leadership role in providing care for the poor, both in the U.S. and Mexico – our Journey to Excellence.

Clearly, many businesses, organizations and individuals have their eye on health care. Because we have had numerous discussions about the Wal-Mart organizations as we have opened our convenience clinics in partnership with them, I thought it would be appropriate to share a recent editorial written by Mike Duke, the president of Wal-Mart.

You can access the article at http://thehill.com/op-eds/wal-marts-eye-on-healthcare-2009-06-15.html.

As always, I hope you find the article to be informative and enlightening.

New Financial Reality Accelerates our Journey to Excellence

For CHRISTUS Health, the global economic crisis has prompted the need to proactively accelerate our Journey to Excellence, striving to more rapidly improve our clinical and service quality while reducing costs. Driven by our Futures Task Force II recommendations as they are incorporated into our three-year rolling strategic planning process, we know our future strategic initiatives must be affordable, given the new financial reality. Hence we have enhanced our planning process with use of two new tools for our acute, non-acute and international ministries. These are an operational algorithm and Strategic Portfolio Analysis (SPA).

In addition, we know that organizational risk must be managed more intensely and therefore have developed and implemented a comprehensive, system-wide Enterprise Risk Management program. We have prioritized 19 high-risk areas, and are systematically developing action plans to mitigate these risks as we move into the future.

Additionally, to become more business literate as we continue our Journey to Excellence, we must continue to enhance our business development process, creating a more viable and stable financial plan going forward. To do this, we are securing--under the best possible terms--our debt structures and intentionally slowing our capital appetite in comparison to the expenditures we approved in our first decade of existence.

And finally, because of the goals embedded in our four directions to excellence, guided by our balanced scorecard approach, we continue to see advances in our clinical and service quality metrics while our labor and supply cost have showed significant declines.

As leader of CHRISTUS Health, I can tell you that we would have done all of this regardless of the recent financial crisis. But there is no doubt that these financial challenges have intensified our focus and accelerated our progress on this journey. Luckily, this means we are well-positioned to continue fulfilling our mission far into the future.

Verification of our strategies and focus

We recently reviewed data on where health system revenue is being generated and a chart showing the increasing shortfall in payments relative to costs for Medicare and Medicaid. This reaffirmed for CHRISTUS Health that our strategy to transition our portfolio to become one-third acute care in the U.S., one-third non-acute care in the U.S. and one-third international, is undoubtedly the right direction.

In addition, because we recognize that our ability to increase our revenue from “same-shore” business is virtually impossible, particularly from our Medicare and Medicaid books of business, our focus on becoming one of the high quality/low cost providers is clearly the best strategy to guarantee long-term sustainability for our health and wellness ministry.

Clearly, a major task for hospitals and health systems is striving to balance their revenue with their costs, an increasingly complicated task because of such factors as the continuing shift to outpatient care (which CHRISTUS has been predicting and planning for) and the expanding payment shortfall relative to costs for Medicare and Medicaid. In addition, CHRISTUS Health has many facilities and programs in Louisiana and Texas, two of the states with the lowest Medicaid payments. These findings are verified in the charts depicted below:




As we continue our Journey to Excellence, attaining our goal to be one of the highest quality, low-cost health and wellness providers appears to be within our reach.

Creating Value During this Economic Crisis

As July 1, 2009 arrives and marks the beginning of our new fiscal year, the Senior Leadership Team of CHRISTUS Health has been engaged in deliberate and thoughtful discussions on the services and related expenses we need to provide going forward. As a result, significant expense reductions are planned and are being communicated in several phases.

In addition, the team has been diligently reducing the CHRISTUS global corporate expenses throughout the FY09 fiscal year, resulting in actual expenses below budget of $8 million, plus an additional reduction of $6 million for Information Management services. This, of course, has provided a great starting point for the additional reductions in the coming months.

How have we decided which programs to reduce? Contrary to doing across-the-board cuts of the same percentage for all, the team reviewed the past budget, analyzed the value of projects and services provided to our regions and business units and considered advice provided by a Corporate Services Task Force as well as strategies and directions from our system governance board and Futures Task Force II.

This recent journey to enhance our position as a high quality/low cost provider was reflected in a recent article by the Korn/Ferry Institute entitled, “ ‘Fast Consolidation’: Creating Value in a Brutal Economy.” In it, they indicated that, unfortunately, most organizational leadership tries to promote fairness by using a “peanut butter” approach to implementation which requires all departments equal pain. We purposely avoided such by following four action plans that were articulated by the authors:

1. Initiatives prioritization and rationalization — taking a hard look at all the existing so-called “strategic initiatives” and stopping the ones that don’t unequivocally support the current strategy will create the expected pay-off.
2. Centralization and standardization of back-office functions — once the downsizing takes place, non-client facing functions should be the first candidates for centralization. Since process standardization can create short-term costs, leaders should have visibility over the cost-benefits analysis of standardizing processes.
3. Redefinition of roles and responsibilities — very often companies go through reductions-in-force but do not take the immediate necessary steps to redefine key roles and responsibilities across the enterprise. This job can’t be fully delegated to HR or organization design functions (even though HR should partner with business unit and functional leaders to make it happen), since it should be a leadership-led exercise.
In fact, once roles and responsibilities principles, criteria and guidelines are clear, the new organization blueprint and leadership selection should be relatively straightforward.
4. Clear and timely communication highlighting the path forward — the remaining workforce should receive clear and timely communication regarding the rationale for the actions taken, the path forward and the role that they are expected to play in the new organization. If not invited to be leaders as opposed to followers, the remaining workforce will likely take a passive and reactive approach. They need to clearly understand what commitments the leadership team can make to them but also what is expected from them in the times ahead.

As I have been repeatedly saying both to our internal and external audiences, CHRISTUS Health sees the global economic crisis as a rainbow in the clouds. It has given all of our regions and business units in our acute, non-acute and international divisions, as well as global corporate services, the opportunity to revisit our operating models, to as effectively as possible assess the value of each program and service we provide, and then eliminate or redesign what is maintained so we continue to strengthen our health and wellness ministries to assure long-term success as we continue our Journey to Excellence.