The need to focus internally on cost management has largely replaced the revenue growth model of the past two decades and the external pursuit of opportunities for market and service expansion, according to Stephen R. Mayfield, DHA, senior vice president of quality and performance improvement for the American Hospital Association. Outside financial pressure from primarily uncontrollable forces—the potential bundling of Medicare reimbursements to hospitals and nonpayments for readmissions and adverse events, to name a few—have compelled healthcare organizations to spend more time looking inward to fine-tune existing capabilities. As a result, quality improvement is evolving into a strategy for fiscal stability as well as a critical priority in itself.

 

“Revenue is being peeled away by external forces,” says Mayfield. “It is imperative that we manage the internal costs, much of which can be attributed to inefficiency and rework. As a result, healthcare leaders are having to quickly absorb the tools and techniques that contribute to effectiveness in this realm.”

 

Healthcare Executive spoke with a cross-section of healthcare leaders to learn how they are tackling quality, efficiency and cost management in difficult times to improve outcomes, increase value to patients and remain financially sound.

 

The ability to create lasting improvement in patient care while reducing waste and managing costs has required nothing short of a cultural upheaval, according to John S. Toussaint, MD, president/CEO emeritus of ThedaCare, Appleton, Wis., a community-owned health system consisting of four hospitals, a large group practice and other health services, and, with 5,400 employees, the largest employer in Northeast Wisconsin.

 

“If you don’t have the fundamental cultural underpinnings at the heart of what you are doing, then you won’t transform the organization and achieve enduring change,” he says. “Anybody who is not focused on building the cultural aspects of a continuous improvement transformation will not succeed in bringing about quality improvement.”

 

 

At ThedaCare, the cultural conversion has been a major long-term journey that began several years ago, and the transformation is still not complete. At the heart of the change have been the systemwide adoption of the Toyota Production System manufacturing methodology and the core values of respect for people and continuous improvement on which that methodology is based.

 

The transition to a Lean culture has required, among other things, a fundamental shift from the traditional command and control healthcare leadership process to one of continuous improvement management in which senior management’s primary role is defining the purpose for which the organization exists and clearly communicating that purpose to every staff member, says Toussaint.

 

Real change in patient care quality and cost efficiency could not have taken place without this rudimentary alteration in mind-set, he says. “We’ve had to fundamentally change the way we think and behave.” The change has come more naturally to nurses because they are trained in problem solving, but everyone has been expected to make the leap. As a result of quality initiatives based on Lean, ThedaCare has achieved a 30 percent reduction in the cost of care, 50 percent reductions in Occupational Safety and Health Administration recordable staff injuries, and fall and medication reconciliation rates of zero on its redesigned inpatient Collaborative Care unit.

 

A critical part of senior management’s responsibility is the careful selection of a manageable number of quality improvement performance indicators at a time. A 10-page document filled with 100 different performance metrics does nothing to engage staff, Toussaint says; narrowing goals down to three or four targets is much more likely to win commitment.

 

Current quality performance indicators at ThedaCare, for example, include medication errors, productivity and implementation of staff ideas at the front line. Each business unit—clinic, hospital, surgery center, home care—has its own productivity metric. The system has an organization wide goal of 10 percent productivity improvement year over year, with each percentage point representing $2.5 million in improved operating income.

 

At ThedaCare, senior management’s ability to define meaningful organizational goals goes arm in arm with an intimate knowledge of care processes, says Toussaint. For senior management, acquiring that knowledge has required a commitment to on-site, hands-on participation. “In the new world, my job as a senior executive is to get at where the value is being created for the customer— the patient—and to deeply understand the business and the barriers to improving that process,” he says. “It’s really about understanding resource utilization at the frontline level. How can you know what’s going on in the ICU unless you go into the ICU and see all of the barriers our staff and physicians are facing?”

 

ThedaCare employs the concept of kaizen, the Japanese word for improvement, in its efforts to understand and improve care processes. In a Lean culture, kaizen is a model that humanizes the workplace and empowers employees to drive quality by looking for solutions and identifying and eliminating waste as part of their daily routines. During Toussaint’s tenure, senior managers at ThedaCare were required to participate in two kaizen events each year in order to earn bonuses. For caregivers and other employees, kaizen is woven into everyday work life.

 

Kaizen breaks radically with the traditional project approach to quality improvement that is ubiquitous in healthcare, Toussaint says, in which “we do a project over here, shine a light on this problem over there, and as soon as we take the resources off, the results go back to baseline.”

 

And when the organization reaches goals, it doesn’t forget about them. Indicators continue to be tracked after the decision is made to move on to another area of performance. If the indicator reappears as a significant abnormality, the appropriate staff carries out a root cause analysis and corrective action plan. Using Lean methodology, ThedaCare has reached a laboratory specimen tube labeling error rate of 3.4 per million, a level that achieves Six Sigma quality. “If it stays at that level, then there is no need to work on it because there are many more problems to deal with,” Toussaint says.

 

ThedaCare has begun to share the lessons it has learned through the nonprofit ThedaCare Center for Healthcare Value, which Toussaint leads as CEO. The center facilitates collaborative networks of healthcare leaders “to accelerate the learning curve of organizations committed to looking at business in a transformative fashion and moving from an antiquated to a new management process,” Toussaint says. “What’s missing in healthcare is the widespread use of a methodology to achieve 100 percent reliability for patients. We’re trying to get people interested in learning from each other to change their organizations.”

 

Banner Health, a Phoenix-based system with 22 hospitals in seven states, improves the quality of care and generates value for patients by understanding current best practices and then spreading those best practices uniformly across the organization. The large provider adopted a systemic approach to quality management that treats all of its sites as part of a single, cohesive entity.

 

“We attempt to attack every element of organizational performance, both clinical and financial, as a single enterprise and implement change across the organization so that we’re performing as close to identically as possible across the company,” says John Hensing, MD, executive vice president and chief medical officer.

 

“Everyone is incentivized on the basis of how Banner performs,” he says. “As much as we can, we want to be one organization delivering services at 22 acute-care sites.”

 

Hensing notes that Banner has had the advantage of starting with this organizational structure rather than having to reinvent itself. “One of the drags for many other not-for-profit providers is their inability to act as a single organization,” he says. “It’s not that we’re smarter, but because we’re a relatively new organization that came together in 1999, we were able to start with a clean sheet of paper and structure ourselves differently.”

 

Notes Peter S. Fine, FACHE, Banner’s CEO: “We have done an excellent job of linking organizational financial health to clinical outcomes. This has been done by moving the organizational mind-set from being a healthcare delivery company to a clinical quality company. We have accomplished this by using our strategic initiatives and management incentive program to stimulate the change in thinking.”

 

At Banner, organizational structure and management incentives are set at a system level. Chief financial officers, chief medical officers and other senior leaders (with the exception of chief nursing officers) at the hospital report to a corporate leader and have only a dotted-line reporting relationship with the CEO at their institutions. A single governing body has both fiduciary and quality accountability for the entire organization.

 

This model serves as “a framework upon which we can build a variety of team-based structures, including a care-management council, an objective metric to determine our success, and a balanced scorecard of management incentives and facility performance that drives how our managers are paid and how the board assesses our organization,” says Hensing.

 

 

Patient-care-quality goals are also set systemwide. Banner has begun rolling out an electronic medical record (EMR) with a uniform order set on a single platform located in its Phoenix data center, for example. Says Hensing, “All 22 hospitals are currently operating on our EMR with six hospitals having implemented computerized order entry with the full paper-light conversion and the remaining 16 scheduled to be on board within the next 24 months.

 

“There really are differences in facilities,” Hensing says. “Tertiary pediatrics, for example, is not offered at all locations. But as much as we can, particularly for services provided at multiple sites, such as obstetrics and cardiology, we strive for as much consistency as possible. That gives us the platform from which we can change our order sets and identify areas for improvement. It also lets us operationalize change across the organization in a much more efficient fashion.”

 

Several years ago, Banner recognized that two of its five cardiac surgery programs were not performing as well as the other three units, although these programs met national benchmarks. The system brought together leading cardiac surgeons from each of the five programs to sift through volumes of data that had been collected over several years. After evaluating countless variables related to surgery, anesthesia, ventilation time and other areas, the group could not find any identifiable explanation for the differences.

 

“We ended up concluding that the best way to improve would be to forget about trying to find the reasons behind the variability and to look instead at best practices and whether we were complying with them,” Hensing says.

 

The system adopted the 14 best practices for cardiac surgery of the American College of Cardiology on everything from skin preparation for surgery to postoperative antibiotics. “We ended up actually reducing mortality rates at all five cardiac surgery programs,” Hensing says. “It taught us that we shouldn’t be looking for poor performers; we should be looking for a standardized approach of adopting well-established, evidence-based principles across the entire organization. It isn’t a matter of finding Nurse Jones or Doctor Smith as an underperformer. It’s how reliably we comply with evidence-based practices and avoid patient injury. That is quality.”

 

Since then, Banner has used the same approach for pneumonia prevention and a host of other performance improvement initiatives. In obstetrics, for example, the system convened a consensus group of obstetricians from across the organization to evaluate claims data. Based on the findings, the group implemented a sophisticated clinical decision support-based EMR exclusively for obstetrics patients. “Now we have an electronic platform from which all obstetrics caregivers receive e-alerts about drug reactions, patients eligible for c-sections, changes in fetal monitoring and other factors that drive improvements in obstetric care,” Hensing says. Liability costs have declined as a result and are now third behind surgery and emergency claims. The group continues to meet, has recently adopted a standard approach for the administration of oxytocin, and is implementing the protocol systemwide.

 

 

When a problem arises at one hospital, the facility performs a root cause analysis and shares what it has learned with the rest of the organization. The lesson learned may have potential for application across Banner, in which case it will be used to drive continuous improvement. If root cause analyses do not have global implications, however—and many do not—they are not adopted systemwide. Still, the ability to share lessons across the system is inherent in the organizational structure.

 

Each year, senior management adopts about a dozen strategic management initiatives that do have systemic implications, takes them to the board of directors for generic approval and then runs them through a process of metrics approval. Management incentive plans hinge on those initiatives. One recent initiative focused on the variability of costs associated with pneumonia care across the system. Banner designed a metric to reduce variability and drive costs at each of the hospitals closer to a mean consistent with its most highly efficient providers. “We targeted our own best performance,” says Hensing.

 

Some goals may take two or three years to reach, so initiatives often are carried over to the following year. Others are taken off the list when goals are reached, but results continue to be monitored and reported to the board. “We want to maintain the gain,” says Hensing. “They’re no longer strategic targets, so we no longer focus the same level of resources on them. We work hard to keep the number of strategic initiatives down, and once we achieve our goals, we move on. There are too many things to work on.”

 

Moses Cone Health System, Greensboro, N.C., expects a range of clinical safety and quality initiatives emphasizing avoidable harm to yield cost savings this year along with significant improvements in patient care. Goals include 15 percent reductions in MRSA infections, ventilator-associated pneumonias, sentinel events, wound infections and readmissions.

 

The system embraced Six Sigma six years ago, and the process improvement tool “gives us the ability to focus talent in areas (where we see problems),” says R. Timothy Rice, FACHE, president and CEO.

 

Currently, a Six Sigma team is drilling down into the data to find root causes of and new strategies for reducing MRSA infections, and an incentive plan based on the system’s ability to reach these goals is in place for senior management.

 

While focusing internally on quality improvement to increase value to patients, Moses Cone has built strong relationships with the larger healthcare community; looks frequently to it for ideas, resources and support on quality-and safety-related issues; and generously shares its own lessons with other providers. The system collaborates closely and transparently shares data with other VHA hospitals in the region. Members communicate regularly about best practices and new findings, and Rice teleconferences with other CEOs in the region on what is and is not working at their institutions.

 

Central to Moses Cone’s quality initiatives is its participation in the Just Culture program of the North Carolina Hospital Association and the North Carolina Board of Nursing. A just culture holds individuals accountable for gross misconduct or negligence but recognizes that caregivers and other frontline employees should not be held responsible for systemic problems beyond their control.

 

The system recently had an H1N1 case that made national news in which a respiratory therapist who contracted the virus potentially exposed 33 neonates (none of whom were infected). “We were very public about it, but I don’t know who the respiratory therapist was,” says Rice. “It wasn’t her fault, and I have no interest. The error was in our processes at that point around H1N1.” The system’s openness and willingness to accept responsibility for correcting a process rather than assigning blame to an individual illustrate a just culture in action, Rice says. “How you handle these situations lets the rest of the employees know how you want them to behave.

 

“It is important that leaders can articulate the linkage of all of these various efforts. For instance, how does a just culture lead to improved quality or reduced errors, and how does that translate into not only better care, but cost savings to our community? We need to be able to make those connections and to articulate them to employees and our community.”

 

The realization that “cost efficiency and quality can and should move in the same direction” began to replace the traditionally inverse relationship between the two variables about a decade ago, observes Bruce D. Cummings, FACHE, president and CEO of Lawrence & Memorial Hospital, a 280-bed, nonprofit, acute-care provider in New London, Conn. But the knowledge within healthcare that “better care can be delivered at lower cost”—and that higher quality actually can drive cost reductions—has grown particularly strong within the past couple of years, he says.

 

Lawrence & Memorial’s commitment to reducing the cost of care and improving quality has taken several forms within a relatively short time. Chief among them is the hospital’s participation beginning this past year in a national collaborative of 165 providers spearheaded by Premier hospital alliance and the Institute for Healthcare Improvement known as QUEST (Quality, Efficiency, Safety, Transparency): High Performing Hospitals.

 

“This universe of hospitals came together out of the shared belief that we can have better quality, safety and cost with transparency,” Cummings explains. The three-year program provides innovative data-mining software tools for reducing errors, mortality and inefficiency and improving patient safety and satisfaction. Hospitals then share their data and benchmark against individual and national results. In the first year, participants saved an estimated total of 8,043 lives and $577 million, according to Premier.

 

At Lawrence & Memorial, “we’ve used QUEST as a way to help organize and animate our own philosophy of providing better quality at a lower cost,” says Cummings. “We thought we’d be more likely to do that if we were working in cooperation with other hospitals as opposed to doing it on our own.”

 

Among the shared tools whose potential Lawrence & Memorial has begun to tap is a system that generates “robust, comprehensive, physician-specific information on costs, outcomes, complication rates, antibiotic usage, device usage” and countless other variables, Cummings says. “We can organize this data in a way that allows us to show individual physicians how they compare with their colleagues here and their peers in hospitals across the United States.”

 

Installed a year ago, the system is being implemented in phases to help physicians become comfortable with the process. At present, physicians can view their own data and that of their peers but are unable to access reports. Eventually, the medical staff will be able to view the reports, which will give them the opportunity to see how they are doing in relation to each other. “Right now, we’re in the phase of inviting physicians to critique the tool. Ultimately, it will be used as an adjunct to the Joint Commission’s requirements. We are some distance away, but that is the trajectory,” Cummings says.

 

Because of the system’s newness, legitimate technical questions about accuracy have arisen. If doctor A admits a patient, but it’s doctor B who follows that patient and doctor C who writes the discharge order, “we’re having to scrub the data to be sure we’re able to match the right data with the right physician,” he says.

 

Morbidity and mortality and resource utilization are of particular interest. “This is where cost comes into play,” Cummings says. “Is doctor A ordering a lot more tests or choosing drugs at variance with what his or her peers are doing? Is length of stay higher or lower on a physician-specific or diagnosis-specific basis?”

 

Cummings is confident that the system will drive change because “physicians are trained in the scientific method, so they respond well to good data. If you can show them that the implant they’re using is three times as expensive but doesn’t get better results, they’ll pay attention to that.”

 

Lawrence & Memorial also has embraced the process innovation methodology of the Toyota Production System. “Our bias is that if we automate a system or install a new system based on an old process, we run the risk of automating a bad process. So we’re deliberately taking longer to do this front-end work,” Cummings says.

 

This front-end attention has led to several improvements. Changes made using the process innovation methodology, for example, have enabled the organization to move from the lowest 5 percent among hospitals in the United States to the top 73 percent in patient satisfaction around emergency room waiting times, according to data collected by Press Ganey. Although the hospital had a fast track for patients with minor ailments, patient flow remained slow after triage. Patients with minor complaints now go directly to an emergency physician in triage rather than a triage nurse.

 

To improve patient flow, including the movement of patients from the emergency room to the units, the hospital implemented a tele-tracking system, which provides real-time information about bed availability on the floors. But because the hospital had not gone through process innovation first, “we discovered that we still had problems,” says Cummings. Not everyone used the system consistently because “we didn’t spend the necessary time training everyone.” After employing the Toyota Production System methodology, the hospital determined that the best solution would be to add a bed management nurse who uses a mobile tablet and physically checks to make sure tele-tracking reports are consistent with what is happening on the floors.

 

Patient discharges before 11:00 a.m. have since risen to 50 percent from 10 percent, and the number of calls to locate inpatients has decreased to five calls per shift from 40.

 

 

According to Cummings, the improvements in patient flow have had less to do with the teletracking tool itself than with the process of “deconstructing these very complex processes with many moving parts and players and then improving them in segments. As a result, patients are getting out of the ER faster, discharges are earlier, length of stay is shorter and costs are going down.”

 

Process innovation—and a major shift in thinking—has enabled the hospital to lower its incidence of pressure ulcers to less than 1 percent from 13 percent. A similar approach, including rigorous training in the consistent use of new patient lifting devices, enabled the hospital to reduce back injuries among caregivers to just two in one year from 160.

 

“All of these imperatives around quality, safety and cost need to be owned by senior management,” Cummings stresses. In the patient-lifting initiative, for example, “the inspiration to reduce back injuries came from clinical personnel, but until senior management got behind it and said ‘Let’s make a substantial investment in high-tech lifting devices and hire an RN-led firm to train all of the nurses and patient transporters until it’s firmly embedded,’ it probably wouldn’t have happened.”