My Goals for Fiscal Year 2008

Because I believe strongly in total transparency, and since I have already shared CHRISTUS’ overall goals, I thought it would be appropriate to share my goals for the current fiscal year.

In September or October, when our Board of Directors completes my evaluation, I will share my self-evaluation, and measure how I believe I’ve met my goals for this fiscal year.

My goals for this year are:

1. To achieve and sustain improvement in the Business Literacy Metrics
a. Reach or exceed the budgeted operating income of $50 million.
b. Achieve and maintain days-in-cash of 190.
c. Sustain present bond rating of both Standard & Poor’s and Moody’s.

2. To achieve and sustain improvement in the Service Delivery Metrics
a. Patient Satisfaction:
i. Inpatient – 90 percent
ii. Emergency Department – 70 percent
iii. Outpatient – 70 percent
iv. Ambulatory Surgery – 75 percent
b. Associate satisfaction – 80 percent
c. Associate engagement – 80 percent
d. Physician satisfaction – 60 percent

3. To continue to develop and fully implement a program to increase cultural competency throughout CHRISTUS, including the continuing support and participation in the CHRISTUS leadership academy, our Center for Management Excellence and our coaching and mentoring programs.
a. Continue the Mentorship program with 50 percent of mentees being ethnically
diverse.
b. Continue the CHRISTUS Academy, maintaining current diversity at 46 percent, or an increased percentage.
c. Continue to provide career advancement opportunities for CHRISTUS Academy graduates.
d. Continue to increase the number of diverse candidates—ethnic, gender, age and capabilities—on the regional leadership teams, both in the U.S. and on the Senior Leadership Team, as openings occur.

4. Acquire and integrate McKenna into the San Antonio region and create a new region by partnering with St. Vincent Health System in New Mexico.
a. Definitive agreements will be signed.
b. Leadership teams reporting to the Senior Operational Officer will be in place and functioning.

5. Recruit and fully integrate a new Senior Vice President for Mission, Ethics and Spiritual Care into the Senior Team and CHRISTUS Health
a. Oversee search process that must formally commence by September 2007.
b. Final candidate must be identified by February 2008, with a start date of April 2008.
c. Oversee two-month orientation and transition with Sister Theresa McGrath, who currently holds the position.

6. Commence and be a full participant in the Futures Task Force II
a. Read all pre-session material.
b. Attend all sessions.
c. Participate n Learning Journeys as deemed appropriate.

My Expectations as we Travel to our 2009 Summit

As we review our past nine years, it is clear that we will need to raise our expectations in order to accelerate our Journey to close the gaps between our present levels of success and those “stretch” goals I identified in my last post.

This will include the following 10 focuses on our behaviors. I expect these from our CHRISTUS family as we travel to our June 09 summit:
1. A greater sense of urgency;
2. Less patience;
3. More focus on the need for results;
4. More sharing of best practices;
5. More persistent and positive in the face of setbacks;
6. Consistently producing positive and measurable outcomes in our Four Directions to Excellence, Advocacy and Philanthropy;
7. More rapidly enhance quality and service outcomes;
8. More rapidly using patient, Associate and physician feedback to identify and act on opportunities for improvement;
9. More quickly develop and embrace efficient and effective models to care for the uninsured and
10. Sustain our number 1 position in community value as we continue to live our Mission.

We can no longer benchmark ourselves against our historical progress or our peers. Instead, we must know our new competitors, which now include retail pharmacies like CVS, technology vendors and the retail world at large. We must become increasingly skilled at predicting the “toxic side effects” of change, and more comfortable with the controversy change can cause. We must continue to innovate and change ahead of the curve if we are to provide high quality, excellent health care to our communities and continue on our path to becoming a national influencer.

In order to ensure this timely transformation, we must:
• Increase CHRISTUS Health’s capacity for early change by more deliberately fostering continuous renewal as part of every day operations.
• Generate confidence in early change by sharpening CHRISTUS Health’s business acuity through comprehensive market sensing and responding capacities.
• Change from “being in the health care business serving people” to “being in the people business doing sacred work by delivering excellent health and wellness care.”
• Accelerate the behavioral changes needed to start and sustain transformation by using leading-edge tools and techniques for sensing and responding to organizational change barriers and opportunities.

Our greatest challenge as CHRISTUS Leaders is that we must find a way to get 28,000 full-time and part-time Associates and 9,000 physicians, in multiple countries from multiple cultures, to think in similar terms about the purpose of our ministry and what they individually must do to accomplish that purpose and be aligned. We must all share the same mindsets, and we must believe that nothing is impossible.

CHRISTUS Health’s Journey to our 2009 Summit

My discussions of the various aspects of CHRISTUS’ Journey to Excellence in previous posts should make clear CHRISTUS’ belief that if health systems are to reach excellence, they must have clearly defined goals accompanied by metrics which incrementally increase over reasonable time periods based on the previous improvement.

This is critical, because most changes in health care do not occur in a straight line or linear fashion, but rather have very slow improvement in their initial phases, then hit a tip-point and have more rapid improvement over the following several years. This clearly has been our experience in measuring our improvement in our four Directions to Excellence as part of CHRISTUS Health’s Journey to Excellence over the last 9 years. This can be easily seen in the map of our Journey below:


However, a Journey to Excellence often requires a leadership team to deal with present operational issues which are more often dealt with in a “crisis mode” of intervention. In order help us sustain our vision of the potential and rapid changes that can occur post-tip-point, we believe it is important to set clearly-defined stretch goals with metrics to be reached every three years. In CHRISTUS, we call these our “summits” on our Journey to Excellence, and these parallel governance conferences where we bring in our key board representatives from both the U.S. and Mexico, along with the regional and business unit CEOs to not only review our successes, but to lay the expectations for the next summit.

By doing this, we recognize what changes might be needed in the organization to successfully complete the next leg of our Journey. During the conference, we can then present workshops filled with the right learning experiences and new tools to aid leadership to reach these higher expectations.

For June of 2009, our next summit, we have outlined specific goals which we have been talking about for the last three years in particular, and several of them have been our focus for the last 9 years. Two have to do with our metrics for our four Directions to Excellence, advocacy and philanthropy; three are related to our internal and external audiences and three are related to recognitions we hope to achieve.

The first category, those related to our four directions, include reaching all of our Journey to Excellence goals in each direction. Our performance on these metrics must be at or better than the 90th percentile of similar-sized organizations, both in the U.S. and Mexico. For philanthropy, our goal is to achieve fundraising which will be equal to 1.5 to 2 percent of our net revenue. Regarding advocacy, we will continue to measure the number of issues we have brought to the attention of our local, state and national governments, and how much money we have saved in the form of reimbursement in regard to the specific issues we have advocated for.

In addition, we recognize that not only reaching these metrics is critical, but sustaining the gain over long periods of time is really the ultimate goal. Therefore, sustaining excellence is a second goal for our 2009 summit. We discussed previously that there were two periods in CHRISTUS’ history where we did not make the planned progress in all of our directions to the degree that we had hoped. Those periods were our Fiscal Years 2002 and 2007. Although we had good reasons and explanations for this lack of progress, an excellent organization will hardwire their processes in place to mitigate these periods of stabilization or even decline in improvements.

Hence, sustaining excellence and learning the best practices to make this happen, which is evident in many of our facilities at present, is a must for our entire organization by June 2009.

The three goals we have for both our internal and external audiences include educating all of our Associates, physicians, patients, residents and their families so they might understand the best ways to deliver excellent health care and the best ways of incorporating excellent health into their practices of daily living. We also wish to influence both our internal and external audiences to make sure that when they ask themselves, “Where is excellent health care delivered?” they immediately think of CHRISTUS facilities, programs and clinics. A specific example would be embedded in our hopes that we would be invited to the discussion that the new president of the U.S. will have on determining the best ways to redesign U.S. health care. Our third goal under this category is to provide appropriate rewards to both our internal and external constituencies so as to appropriately stimulate a culture of excellence and innovative thinking.

With regard to the award category, we are hoping by 2009 to enhance the locations where we are considered to be the employer of choice, because we know that if our Associates (employees) and physicians are happy and choose to work with us, they will most likely provide outstanding service to everyone who enters our doors. This will, of course, help us attain our metrics in our service quality direction. And because we have done a comparison of our Journey to Excellence goals, the Joint Commission goals, Magnet status and the Baldrige award, and found their goals and requirements to be almost identical, we are hoping to expand the Magnet nursing status to a majority of our acute, inpatient sites and at least apply for the Baldrige award for our entire system on or shortly after we reach the June 2009 summit.

CHRISTUS Health: Nine Years of Change, Nine Years of Progress

On Friday, Feb. 1, CHRISTUS Associates, physicians and volunteers around our system celebrated the ninth anniversary of the formation of CHRISTUS Health on what we call CHRISTUS Day.

As we, the CHRISTUS family, embarked upon our ninth year since the formation of CHRISTUS in 1999, we paused to reflect on the awesome role and responsibility that each of us share as health care Associates and physicians. Accepting and striving each day to fulfill our mission – to extend the healing ministry of Jesus Christ – means that each of us is on an extraordinary journey.

Our Journey to Excellence, which began in 1999, is a profound, awesome journey on sacred ground. On the occasion of our ninth anniversary, it is my prayer that each of us was energized and would recommit ourselves to be an excellent CHRISTUS healer. We must use this coming year to accelerate our Journey to Excellence as we travel to our 2009 summit.

I asked the leaders in CHRISTUS to start deciding what they are going to do differently to make that happen. I think we share the same commitment to excellence, the impatience in not reaching or sustaining some of our metrics and the desire to accelerate our Journey. Our patients and residents and their families are depending on us to make this sacred CHRISTUS Ministry excellent in all of its aspects. The celebrations of our ninth birthday are the time to reignite our passion and refuel our accelerated action plans!!!

CHRISTUS Health is a large family, and size itself can at times be a barrier to creating excellent, consistent and predictable behaviors, as well as practices and processes which reflect the CHRISTUS Health promise. However, the true advantage of our large family is the wealth of knowledge, experience, kindness and compassion that our Associates, physicians and volunteers bring to our patients and residents each day. Because we know excellence can only be delivered by excellent Associates and physicians, we have consistently committed much time and money to educational and enrichment programs for our CHRISTUS family. The birthday celebrations that were held throughout our system are part of that educational and spiritual enhancement process.

In addition, we have a myriad of educational opportunities available for all, including:
• GED programs
• Tutoring
• Tuition reimbursement
• Center for Management Excellence
• Touchstone best practice program
• Councils for shared learning among affinity groups
• Senior Leadership Academies
• Leadership enrichment training
• Ethics Institute
• Leadership retreats
• Governance conferences

Each one of us, in some way, is a formal or informal leader. By our daily actions we are role models for those we serve as well as those with whom we work. Committing to life-long learning and excellence in all we do is essential for creating the passion required to extend the healing ministry to all we touch each day.

Yes, the complexities of health care will always create new challenges for us as we continue our Journey to Excellence. But we must never forget that our dreams will come true if we live each day truly believing that nothing is beyond our reach if we reach out together. Para nosotros. . .nada es imposible!

Business Development vs. Budget: Is There a Difference?

Because CHRISTUS is on a July 1 to June 30 fiscal year, January is the beginning of our formal budgeting process. As I reflected on this process for FY 09 (July ’08 – June ’09), our 10th anniversary year, I felt the need to compare our old methodologies of budgeting to our new processes, which require an intense focus on business development in order to create business literacy.

In a lecture last week to a large audience of health care administrators and financial officers, I recalled the metrics I used over 20 years ago to make sure that operations were sound. I indicated to them that although I used traditional data and measurements for the budgeting process and for evaluating our monthly financial performance, in reality, I depended on two daily measurements which included, 1. how many cars were in the parking lot, and 2. how much aspirin was sold in our outpatient pharmacy.
These measurements were truly the best indicators for our volume of outpatient and inpatient traffic, which paralleled our growth in revenue and--because of our cost reimbursement--drove our bottom line. This bottom line, then, of course, determined our variance to budget which in those times of cost reimbursement was usually positive.

Of course, managed care reimbursement and DRGs were the two major reasons why these measurements were no longer useful and, in fact, could give you a false sense of security. Both payments for managed care patients and DRG reimbursements incentivized hospitals to get patients out quickly, and therefore a packed parking lot and high aspirin sales began to become the indicators for less positive financial performance.

This, then, was the stimulus to really cause the financial planning model to move from traditional budgeting to intense business planning. What, then, are the differences?

Budgeting, in the traditional sense, is mainly driven by past history. Based on, for instance, the last five years of history for the rise in inpatient volume, the following year is predicted, and generally incorporates an average increase based on the prior five years’ performance. Traditional budgeting also utilizes prior revenue statistics, i.e., the revenue for an ambulatory visit or the revenue for occupied bed and then multiplies this revenue by the increased volume that is projected and gives you a sense of the growth in revenue that you might expect. However, because of the changes outlined above, and based on our experience over the last five years, it is clear that past history is no predictor of future performance. And consequently, these traditional formulas no longer work.

This was never clearer to us than looking at our FY 07 financial performance when, in fact, our actual volumes were approximately 5 percent below our budgeted volumes. It was quite clear that this would result in a much lower bottom line than was projected. This was made even worse by the fact that expenses often rise parallel to revenue growth, and when the latter does not occur, the first will even cause a greater deterioration in one’s bottom line, which was our exact experience.

To prevent this, then, business development and business planning have to be the new methods of predicting financial performance. Business development requires us to be disciplined sufficiently to do a service-line analysis which takes into consideration the evolving technologies which we have described on prior blog posts as being the major motivation to move many of our inpatient services into the ambulatory care setting. Business development requires us to stay extremely current, and even futuristic, in predicting what governmental reimbursement and reimbursement from private insurers will do to these various service lines over at least the next budget year, but hopefully over several forthcoming years.

In addition, business development requires one to trend environmental changes, economic changes and utilization changes, all of which will be significant predictors of how health care will be utilized and paid for by future patients.

Business development also requires us to do careful analysis of revenue and expenses, both in the current year and several years forthcoming, in order to determine the ultimate return on investment of both our operational and capital expenses.

And finally, business development entices you to take a long-term look at your capital and operational budgets as far out as 10 years--particularly when one invests in facilities and large pieces of capital, which often depreciate over a seven-to10-year period and therefore must create value for this period of time if they are expected to enhance one’s business literacy.

Yes, we can pine for the “good ol’ days” of using the parking lot and aspirin sales to predict our future. They have served us well, but if utilized today in a traditional budgeting process, they will only continue to give us a false sense of security. The traditional methods of budgeting must be replaced with the new, more focused and data-driven analytical processes embraced in business development.

CHRISTUS Health on the Leading Edge

Two articles published in the November/December 2007 journal The Corporate Board reaffirms once more than CHRISTUS Health is on the leading edge of benchmark governance practices.

In the first article, titled “Non-Financial Metrics and Boards,” the author indicates that corporate boards are increasingly recognizing the value of both financial and non-financial performance metrics. At this time, more board members are more sophisticated in their use of financial information, and are often not provided consistent, high-quality non-financial information. The article concludes by stating that this non-financial information is often that which provides the greatest insight into what ultimately affects the long-term sustainability and growth of their business.

With regard to this article, CHRISTUS Health, since its inception nine years ago, has supported the development and implementation of a Balanced Scorecard, which has clearly defined metrics with goals updated annually. These metrics, driven by our mission and our four Directions of Excellence, advocacy and philanthropy, are reviewed at all board meetings at both the system and regional business units. By using metrics driven by national benchmark and industry-wide comparisons, governance has a clear sense of where CHRISTUS Health ranks in relationship to the “competitors.” And the article agrees with our published data in that “sooner or later your non-financial performance and action plans to improve have to translate into tangible, financial returns.

The second article, “Developing a Global Board Room,” begins with the statement, ”…as the U.S. economy becomes even more deeply part of the greater world economy, American boards have lagged behind in building global expertise.” It continued by stating that “…all companies operating in international markets could benefit from having at least one international executive director with relevant skills and experience on the board.”

With this knowledge in mind, particularly stimulated by the Future Task Force II recommendations, a Mexican national, Pedro Martin, was added to the CHRISTUS Health system board in 2005. And since its inception, the CHRISTUS Muguerza regional board has had American representation. Being “ahead of the curve,” we believed that international board representation would fulfill the following goals:

• By bringing a richer set of experiences, a foreign director increases the diversity of thought on the board, and should provide for a more robust discussion;
• A foreign director should know his or her home markets, and likely others, in much more detail and have a clear understanding of the facts;
• The director should provide access to new and different resources and networks, particularly political;
• He or she can inform the board on best practices in corporate governance in other geographies.

We clearly have found these reasons to justify international representation, which has also enhanced CHRISTUS Health’s cultural competency.

Optimizing CHRISTUS Health’s Performance

Based on some discussions at the recent meetings of the CHRISTUS Health Board of Directors, it seems appropriate to articulate the Senior Leadership Team’s approach to optimizing performance. Utilizing our Journey to Excellence, we have attempted to answer the right questions which should result in positive performance trends over time and ultimately facilitate the achievement of excellence – the CHRISTUS Health vision. These eight questions include:

1. Has CHRISTUS Health clearly established what is important?
Answer:
Journey to Excellence
Advocacy
Philanthropy
Sponsoring Congregations’ Goals
Board Goals

2. Has CHRISTUS Health determined expected performance levels for all four Directions to Excellence and other critical success factors?
Answer: Benchmark metrics have been determined and in place since the formation of CHRISTUS. These are reviewed and updated annually.

3. Has CHRISTUS Health developed a balanced measurement system?
Answer: CHRISTUS Health has used a balanced scorecard since its formation, which is also used by all regions and business units.

4. Has the current CHRISTUS Health performance been assessed?
Answer: The performance measurements are reviewed monthly, and improvement plans are continuously refined to attempt to move the scores from good to great. The measurements are shared with all levels of governance.

5. Has the business case for performance improvement been clearly established?
Answer: Our data has been studied for the last eight years, verifying that clinical service and patient satisfaction improvements drive improvements in business literacy (financial operations).

In addition, capital budgets have been driven by the sum of depreciation and operational margins and philanthropic donations.

Capital constraints have been put into place during periods when operating performance is not satisfactory.

6.Are departments/ functional areas aligned with the CHRISTUS system’s organizational performance expectations?
Answer: All regions and business units have goals which support the four Directions to Excellence.

Pay-at-risk is driven by annual metrics from the four Directions to Excellence.

The “success sharing” program for Associates is driven by the clinical and service quality goals.

7. Are priorities for process improvement identified?
Answer: The monthly CAP calls review the action places and progress year-to-date.

Specific focus is given to discussing improvement plans for those areas not attaining or sustaining their goals at the “excellent” level.

8. Are appropriate tools and methods used to bring about successful change and improved performance?
Answer: CHRISTUS Health uses a select number of tools, and uses “crosswalks” to make sure they are integrated sufficiently to accelerate the Journey to Excellence. These tasks primarily include:
•External surveys including Joint Commission, including U.S. and international lab, rehabilitation, community benefit and trauma centers.
•Journey to Excellence in the four Directions and the “must haves” that are known to create success in each.
•Magnet status for nursing
•State quality awards
•Malcolm Baldrige National Quality Award
•Six Sigma
•Toyota production system/ lean management

I have talked previously about the importance of external surveys, the four directions on the Journey to Excellence, Magnet status for nursing and the state quality awards mentioned above. Hence, you will fine below a brief summary of Six Sigma and lean management tools, which are being utilized in our revenue cycle and supply management programs, and the Malcom Baldrige National Quality Award, which we hope to apply for as a system some time between 2009 and 2011.

About Six Sigma

Origin: Six Sigma was developed by Motorola in the early 1980s as a means to eliminate defects in the manufacturing process and ultimately improve customer satisfaction.

Core Tenet: Six Sigma is a data-driven quality improvement methodology that is designed to eliminate variation from a process. To achieve Six Sigma quality, a process must produce fewer than 3.4 defects per million opportunities.

Key Components: The major components in the Six Sigma improvement framework are: define, measure, analyze, improve and control.

The Process: Six Sigma requires significant leadership commitment because of the executive education mandates and extensive employee training and orientation framework. Organizations must select and train managers as Black Belts – employees with extensive knowledge and training in Six Sigmas who work full-time directing Six Sigma projects. Projects are carried out by Green Belts, employees who manage projects from conception to completion. Yellow Belts are employees who are trained in Six Sigma techniques but have not yet completed a Six Sigma project. Six Sigma projects averaged about five or six months from conception to completion.

Benefits: Six Sigma helps eliminate variation, thereby reducing the likelihood of errors, streamlining processes and ultimately reducing costs.

Challenges: Implementation is resource-intensive, requiring significant financial investment and employee commitment. Availability of personnel and long project cycle times can limit the number of projects that are undertaken at a given time. The investment of training Black Belts, etc., can alienate some employees who don’t feel part of the process.

Best Applications: Six Sigma can be applied to almost all hospital processes, including medical error reductions, business operations, patient case management and patient satisfaction.

For more information, visit www.motorola.com/motorolauniversity.jsp.

About Toyota Production Systems/Lean Management

Origin: The development of the Toyota Production System (TPS) began after World War II as a means to improve quality and streamline processes.

Core Tenet: TPS is a business philosophy that seeks to improve quality and efficiency by identifying and eliminating waste (“muda” in Japanese) from processes. TPS identified seven common types of waste defects, including excess motion, inappropriate processing, overproduction, transporting unnecessary inventory and wait times.

Key Components: The basis of lean management is determining the value of a given process by breaking it down and identifying the value-added steps and the non-value-added steps. By eliminating non-value-added steps, processes become streamlined and more effective. A central element is “stop the Line,” which allows any employee to stop a process when a defect is identified or suspected. By fixing mistakes early in the process, the final product will have zero defects.

The Process: Lean management begins by identifying so-called value streams within an organization. These processes support principle services, such as an emergency room visit or an inpatient stay. Mapping out the process as a whole helps identify where improvements can be made. This is done by bringing together involved individuals for a kaisan, an intensive four- or five-day event that analyzes the process and implements change. Individual roles and responsibilities or expectations are outlined at the end.

Benefits: TPS allows for quick identification and improvements. Successful lean implementation can have a positive impact on throughput, cost, quality and productivity.

Challenges: Implementing lean requires workers to identify waste in the jobs they perform regularly, a task that may draw initial resistance. Leadership commitment is critical to break down traditional silos within the organization because many processes are carried out or affected by multiple departments.

Best Applications: TPS/ lean management can be applied to many types of processes within a hospital, from administrative functions to direct patient care.

Visit www.ihi.org/IHI/Results?Whitepapers?GoingLeaninHealthCare.htm for more information.

About the Malcolm Baldrige National Quality Award

Origin: The Malcolm Baldrige National Quality Award, created in 1987, is handed out by the U.S. National Institute of Standards and Technology. It recognizes organizations for performance excellence in six categories: manufacturing businesses, service businesses, small businesses, educational organizations, health care organizations and nonprofit organizations.

Core Tenant: Baldrige is a results-oriented performance management system with a basis in measurement, analysis and knowledge.

Key Components: The Baldrige health care criteria are a set of 18 performance-oriented requirements that are divided into seven categories: leadership; strategic excellence; focus on patients, other customers and markets; measurement, analysis and knowledge management; workforce management, process management and results.

The Process: Applying for the Baldrige Award is a two-step process. Organizations must first submit an eligibility certification package to the Baldrige National Quality Program, followed by an award application package. The applications are reviewed by the board of examiners and scored on a 1,000-point scale. Each organization receives a feedback report at the end of the review process. The examiners select organizations for site visits based upon their scores. Depending on the quality of the applications and the results of the site visits, a winner may or may not be selected.

Benefits: Extensive leadership requirements help ensure leadership involvement and buy-in. The program can help organizations align resources with performance improvement methodologies, such as Six Sigma.

Challenges: Adopting the Baldrige criteria requires extensive cultural change. The self-examination and continuous monitoring and reporting bring transparency to an organization, which may result in some push-back from staff.

Best Applications: Baldrige is a framework for an organization’s performance management system, overseeing all aspects of organizational performance.

For more information about the Baldrige Award, visit www.quality.nist.gov.

To reach the CHRISTUS Health Journey to Excellence goals and sustain them for each and everyone who enters our doors and turns their lives over to us requires that all 28,000 Associates and 9,000 physicians in the CHRISTUS family declare excellence a necessity and not a luxury. We must live in a CHRISTUS culture that will not let us slow down until we reach excellence in carrying out our sacred work in the CHRISTUS Health ministry.