Too big to fail? Too small to survive?

It seems that it takes generations for hospitals to close.  Predictions are made that beds are redundant and that hospital can't last and yet many hang on, a skeleton of their former selves, for years.  Most experts believe that may be a thing of the past.  A rapid period of acquisition, merger and closures may be the reality as both operating and capital dollars are stretched and consolidated in large integrated organizations.

As with the banking industry, the big got bigger and stronger (with the exception of the foreclosure bubble) and the small players couldn't survive the rapid need to accumulate capital and to compete broadly across service lines. The big became too big to fail and the small banks began failing at an accelerated rate. 

In healthcare, too big to fail may mean that they have the tools to survive, the systems, the ability to consolidate services in fewer facilities, the political clout and the expertise.  They may be able to make changes that survive in a more transparent era because of the demands of internal transparency.

Boards need to look seriously at objective data about the costs and timing of transforming the organization to integrated models that can compete.  For inner city and rural communities these questions will be very difficult.  Can you maintain the quality and cost competitiveness to capture a sustainable market?  What are the alternatives for your community?  What services could be consolidated with other partners in the community?  Are their "e-health" opportunities?  

As a small independent hospital, if you are planning on going it alone, read up on the banking industry!  You may want to rethink the strategy!

Accountable Care Organizations ... can you afford not to?

If you were to follow the advice of others on the 5 things you need to do to get your ACO off the ground, you will fast see an expense-side model ...expand primary physicians, hire mid-level practitioners, invest in EMR and utilization management software, marketing costs, facility costs, and "culture change"!  You would be right to be a bit dismayed.  So do you march forward loading on expenses?  How do you get the structure in place without the expense?

First, there is some analysis to be done, including:
1. Look at the size of the organization and the impact of a more effective primary care culture on the existing resources.  Gauge the unused capacity of the existing system as you transform. 
2. Put some of that potential unused capacity into the analysis.  If you can use it for dual purpose (physicians and facilities) it might help the transition; on the other hand that unused capacity in the short term could lose per unit income value as you move to ambulatory.  In other word, you could lose your shirt! 
3. If your transformation will not sustain the organization long term, the strategy is partnering and best use.
4. If the transformation is sustainable, it is time to be competitive on the primary care side.  What are some options.  Expand midlevel practitioners into existing practices and focus on educating existing primary care physicians on medical home best practices.
5.When broadening your primary care base, think structure before bodies.  A true medical home model has fewer patients per doctor, more time per patient, electronic communication between patient and doctor and all sorts of structures to keep utilization of expensive services down.

Can you afford it?  "It depends on what the meaning of 'it' is?"

The true meaning may lie in the risk on the medical loss ratio?  It doesn't matter your cost as long as you are making a margin.  This is a time when no margin no mission is very easy to see!

Primary care without exams?

No physical exams!  The following article comments on the fading focus on physical exams by many primary doctors in lieu of just ordering expensive tests.  Just as the effort to move to evidence based medicine has traction, we seem to be losing sight of the goal.  (See report attached. http://www.npr.org/templates/story/story.php?storyId=129931999).
The trend is evident to both patients and specialists and has raised some red flags.  The specialty referral system for instance at Cook County requires community physicians to document what data they have that prompts the need for a referral.  However, there is little communication between private specialists and primary care doctors that they are referring patients inappropriately without a proper work-up because of both culture and economic concerns tied to referrals. 
Patients should demand complete examinations before being exposed to dangerous testing.  CT scanning exposes patients to significant radiation and may be unnecessary for many patients.  My guess is that the number of negative findings are high. 
Primary care requires time for thorough physical exams and attentive listening.  Speeding primary care patients through the system to a more expensive and less wholistic testing system is a old mindset that healthsystems should pay close attention to.

Ten mistakes leaders don't recognize in themselves

You are good.  You get results.  You are smart enough to know where you want the organization to go.  Your Board was thrilled when you were hired!  So what could possibly be wrong with this scenario. 

Possibly nothing but unfortunately new managers and experienced managers fall into traps, patterns and activities that impede their effectiveness and may jeopardize their jobs.  And they rarely see it in themselves, causing stress and frustration for themselves and their organizations.

My top ten observations are the following:

1. Losing track of the vision and big picture - managers that begin to focus on anecdotal evidence when quantitative evidence identifies a problem are on a slippery slope.  Addressing a piece of data or a declining metric with a reflective "what processes are driving this" and "what do we need to correct in the process" will keep you out of the weeds and on course.  Seeing each metric as a need for blame and explanation loses the focus.  The turnover of several managers that drives the rate upward might be addressed as an issue with screening or it might be a problem with the job description.  Focusing on "the candidate wasn't the right fit after all" or that your VPs "are bad at interviewing" will not resolve a thing.

2. Believing that your unique program idea from several years back is still working.  Everyone has the new idea to really move the organization forward and we are so proud of those accomplishments.  However, as time goes on, and if your tenure is long, you will need to look at your former bright ideas with some distance and humility.  They may be the new opportunity to cut back.  They may not be sustainable.  A leader has to be as open-minded and attentive to his/her tired ideas as to the next bright ones.

3. Believing that certain problems are fixed once and for all.  There is nothing so challenging as fixing a process.  It is hard detailed work and needs to be hardwired.  There is nothing quite as embarrassing as claiming "Mission Accomplished"  only to find that the process has unravelled again.  Ongoing monitoring and evaluation of process improvements needs to be hardwired into the management team.

4. Seeing your staff as increasingly obstructionist, lazy or intellectually limited.  Times are stressful and you are working so hard to bring your team along on the latest challenge.  You cajole, you threaten (carrot and stick) but you are walking away from meetings unable to contain your frustration.  You just think that they don't know how great they have it, and "why aren't they going along".  Your superiority complex is showing through.  And they see it.  And they don't think that the cajoling and lectures are helping.  The trick is to step back, articulate the problem, the drop dead dates, the critical success factors and give it over to them.  Be as clear as you can on the must-haves and leave the rest to them.  If they can understand what progress means, they will get it done.

5. Seeing your board as increasingly inquisitive, overarching and demanding.  This one is scary, because you may be the rare person who is right, but generally if you have a problem with your board and how they are reacting, they have a bigger problem with you.  It is the CEO's job to deal with the board, not vice versa.  The CEO must tee up the questions that the organization needs addressed.  That means straightforwardly articulating problems, challenges, what has worked and what has not.   Co-opting the Board as your partner is essential to your longevity.

6. Micromanaging the process to achieve an outcome at all costs.  Similarly to the number 4 above, this represents a CEOs inability to let go of the solution and letting the team get the work done.  But even more so, its the manager who pushes the process or idea beyond where it seems feasible, and creates an environment where no one will tell you when its time to turn back.  Think BP.  Think surgical mistakes.  Think capital projects gone awry. 

7. Losing directness with staff in order to engage them more.  Just tell them what you want them to do.  "I need this".  "I am being held accountable for that".  You will be held accountable for this performance, this project, this outcome.  I need it by Friday.  You can be perfectly friendly and still be clear.

8. Lack of follow-up.  When an issue comes up, followup on it or it will be very clear to all that its not important.  If you don't care to ask, they won't care to do it.  The easiest way to follow-up is for weekly updates.  Discipline is the first thing that goes with a management team over time.

9. Lack of accountability management and relaxed controls.  How you develop an accountability structure to hold others accountable (beyond what they themselves report, is key.  It can't be the last thing on the agenda.  It has to be the first.  Goals, timetables and rewards need to be crystal clear and fair.  CEOs who have found a discrepancy in finance or another area often cite that they "didn't see it coming, they had worked with the person for a long time, how were they to know".  Controls, audits, checklists, mandatory vacations are key to keep everyone out of trouble.  This leads to the last.

10. "The Rules don't apply to me".  This can land you in jail!  But in the least case, it creates an arrogance that is intolerable for the organization.  It could be the hypocrisy in not following work rules that others need to follow.  Or it could be more dangerous, in deciding that budgets and timetables aren't working, so we just ignore them.  Policies that the board has set aren't working, so instead of revisiting them with the Board, you just do it your way.  This is a slippery slope, and one that no one admits to, but people often fall prey to.  Not keeping good expense records.  Not following hiring policy.  These are the things that make you look quite silly when uncovered and lose respect from your staff while its going on.

I  could add a last one entitled "staying too long".  However, if you pay attention to the other pitfalls of senior management, you might be able to stick around for a very long time.  In general though, as Mayor Daley said in announcing his decision to not seek reelection "Its Time.  Its time for me and the city."  There does become a time when it is best for all, in terms of energy and enthusiasm, to move on.  So make that choice yourself by paying attention to the top ten. And seek support from outside the organization to keep perspective on the big (and small issues).

The operations storyboard

Its election season and the messaging gets shorter and shorter.  And focused on the least complex issues and never really going to the heart of the matter.  Frustration has set in among voters and they are happy to vote in the most outrageous person based on the clarity of the message.  And of course those clear messages are usually too simple to tell the whole story and are often going to get the nation nowhere.

How many executives in large complex organizations are beginning to find that their ability to communicate complex operations in sound bites is more critical than ever.  I think that maybe it has always been there; or as long as the Peter Principle has existed.  Many a manager has scratched their head wondering how that person got promoted.  Many a women manager has thrown back her shoulders in defiance of the fact that some guy who knew half as much got listened to and hence promoted.  Maybe the political sound bite problem was born in complex business units and not in politics.

How do executives move beyond or even embrace the soundbite?  A consistent, data driven and focused message can be crafted out of complex issues.  It takes discipline and a "storyboard" to frame what you want to get across and how you want to be remembered in the decision-making process (so that your access increases).  This in healthcare has been a particular problem for the safety and quality officer who has incredibly difficult process changes to explain; for the IT folks who need to steer the organization from the snazziest demo to a capital decision that balances long term goals and short term incentives.  And the manager who manages the unique (the poor persons clinic) or the mundane (revenue cycle) or the executive who needs to invest capital for safety and not for glamorous hi-tech marketing friendly toys. 

The story board needs to be graphic in that the message has to be seen, heard and understood immediately.  It needs to also educate the audience about the opportunity this complicated matter has to either move the organization toward success or save it from disaster.  Even the most mundane processes can be told in a way that the Board or top leadership team can see their success dependent on it.

I have had a client who was being relegated to the second tier of senior executives even though this exec had the largest budget and FTEs?  Why, because the SVP was a "team player", a workhorse and did not communicate the importance of their product/processes to the CEO proactively but only reactively.  Professional to a fault, this person was leading the team to potential budget cuts in some of the most complex and backbone operations because of this failure.

Disney designed the storyboard to hone their message.  Each frame tells the story and makes a clear impression.  Your storyboard can be bulletpoints but you have to know who the protoganist, antagonist, action and result are for each frame.  10 frames will tell your story.

Lessons for healthcare from entrepreneurs

Thompson and Macmillan in this months HBR explored entrepreneurs in developing countries. Their experience resonates with healthcare as we move from a mature market to one resembling a developing market.

"Entrepreneurs and others who want to launch businesses in... environments [where they lack reliable data] need to put together the best models and mechanisms they can, documenting their assumptions as they go. Critically, however, they need to systematically test each of the assumptions underpinning their preliminary models against a series of checkpoints and be prepared to change on the fly, redirecting their efforts through a process known as discovery-driven planning. In this way, they can act on emerging evidence instead of obstinately and blindly pursuing infeasible objectives."

Discovery-driven planning is a critical focus for healthcare executives who traditionally move down roads that are well paved and well paid but may now have to build as they go. Listen to McGrath and Macmillan in their 1995 HBR article on discovery-driven planning. "New ventures are undertaken with a high ratio of assumption to knowledge. With ongoing businesses, one expects the ratio to be the exact opposite. Because assumptions about the unknown generally turn out to be wrong, new ventures inevitably experience deviations—often huge ones—from their original planned targets. Indeed, new ventures frequently require fundamental redirection."

Their focus on discovery-driven planning, following a model where the newly acquired experience and data drive the design of the enterprise is a real opportunity for those who want to move to the head of the pack in the era of health reform.

Some thoughts on how to move forward to a Reform Agenda

Do you have a plan?  Is it more control over doctors, EHR and push back on any rate reductions?  These are some insights into ways to begin to move your organization toward a sustainable future.