I hope that you will study this excellent chart and think about what it says both in the context of your organizational experience and with the idea of what is most likely to be beneficial to your organization as you move to meet all of the challenges of the Triple Aim Plus One.
The second speaker was Larry Gold, the CEO of Children’s Hospital of Michigan. His talk was a terrific review of using Lean to create real value in new construction. At Harvard Vanguard we used Lean to design a new ambulatory facility and maximize the value of existing structures. Virginia Mason Medical Center and ThedaCare have both emphasized the benefit of Lean facility design and Mr. Gold demonstrated the enormous benefit of Lean design as deployed by Children’s Hospital of Michigan. Buildings are “generational” investments at a minimum and the flow and function of the physical structures can promote waste elimination and improved processes or they can reinforce the siloed nature of our current delivery system.
The talk that I had most eagerly anticipated was the presentation by Paul DeChant who is the Executive Director, Clinical Operations and Innovation for Simpler and the former CEO of Sutter Gould Medical Foundation in California. Paul’s mission is to “return joy to practice”. He is deeply concerned about the stress that everyone in healthcare is experiencing. I share his opinion that much of the pain of those in healthcare is derivative not of attempts to improve the delivery of care but because of the system’s dysfunction that disables productivity and adds extra degrees of difficulty to every task, every day. Paul’s presentation was in part analysis and in part case presentation as he mapped the road to greater satisfaction at Sutter Gould as Lean was implemented and pointed out the ways that Lean directly goes to the root causes of much that troubles clinicians and non clinicians alike in these very stressful times.
The last two presentations offered a little bit of a contrast. Joe Sluka moved from Regional Health in Rapid City, South Dakota where he had introduced Lean with great success to St. Charles Health System in Bend, Oregon only after the board at St. Charles promised that they would support Lean. Mr. Sluka’s presentation underlined once again the importance of the role of senior leadership in launching a Lean transformation. Senior leadership needs to embrace the personal changes that will facilitate organizational change. With his leadership and the experience that he gained the first time around in South Dakota, St. Charles is on a fast track to meeting the challenges that face its clinicians and its communities in Central Oregon.
The last place in the world that a skeptic might expect the flowers of Lean to bloom would be in the very bureaucratic and financially challenged clinics and hospitals of the massive New York Health and Hospital Corporation. Bellvue is only one of eleven hospitals and dozens of ambulatory facilities that stretch across the city. The system provides care to one out of every six inhabitants of the city and the percentage is growing rapidly. It has a budget of 7 billion dollars a year and 37,000 employees to do the job. Almost a half million of its patients are undocumented or have some other social reason for not being insured. Dr. Ram Raju was part of the management team at NYHHC when they began their Lean journey eight years ago. He left to become the CEO of Cook County Health and Hospitals in Chicago and was brought back to New York by Mayor de Blasio as CEO of NYHHC in January 2014.
I have had the privilege of speaking at Jacobi Medical Center in the Bronx a few years ago and was impressed then by going on a gemba walk in their outpatient practices that demonstrated not only the success they had achieved in a short time but also the enthusiasm of doctors, nurses, medical assistants, administrators and every employee for the opportunity that Lean gave them to contribute to the improvement of care. I was touched deeply by the evidence of commitment to service that I witnessed.
Dr. Raju focused on the strategic challenges ahead for NYHHC as it will be asked to see 25% of the population and has the expectation of declining resources per capita. Without Lean there would be only the expectation of chaos and decline. With Lean thinking and practice he and his team are enthusiastic and he is willing to bet that his face will not appear on the front page of the New York tabloids with descriptions of outrage and failure. Their focus will be on the benefits of evolving toward value as demonstrated by population health principles, patient service and operational excellence especially in the ambulatory practice, the emergency rooms and in behavioral health. Can you imagine what things would be like for them had they not had the insight to begin their transformation eight years ago?
This year’s conference was like a banquet and like all banquets each course complemented the others and there was a dessert. I was pleasantly surprised that the last speaker had nothing directly to do with Lean operations, leadership or transformation but there were plenty of connections to innovation and the rapid evolution of new technology that we all face and that Lean prepares us to meet. Kevin Davies, the author of The $1,000 Genome, gave a remarkable review of the history of our quest to sequence the genome beginning with Watson and Crick and their revelation of the double helix structure of DNA. He carried the story right up to the very latest application of our understanding of the genome to drug development and personalized therapies. It is rapidly becoming a new world.
Much of what stresses our hospitals, our practices, our clinicians and our managers does not come from the ACA. It comes from the need to incorporate all the new things that we are learning and developing into a sustainable program of care. Science offers wonderful new tools and therapies that we all want for ourselves and our families. It also presents huge challenges in the finance and distribution of those benefits. It was good to see what is coming to a theater near us sooner than we probably will be ready to effectively receive.
Some Articles You Should Read
I have said before that I am a big fan of the “Perspectives” section of the NEJM. The September 24th issue had two great articles on the new Medicare payment processes that will replace the infamous SGR. I am convinced that the ACA will survive because too much progress has been made. I hope that the attention it gets in the future will be about how to improve it; not how to repeal it. No matter what happens to the ACA, the SGR is gone and its death is one of the more concrete expressions of the movement from volume to value. Meredith Rosenthal who is a medical economist at Harvard explains all in her terrific piece “Physician Payment after the SGR — The New Meritocracy”.
The SGR had been a major factor in physician compensation since the passage of the Balanced Budget Act of 1997. Rosenthal describes the law passed this last spring that did away with the SGR as “an elegant compromise from a political point of view, crafted to end the tyranny of annual delays in physician-payment reductions but also to balance the need for public accountability against the profession’s interest in implementing a reasonable and predictable payment system”.
She gives us a very readable description explaining the ins and outs of the new Merit-Based Incentive Payment System (MIPS) that will be phased in over the next five years. She focuses on what it will do. I added the bolding for emphasis:
The replacement of the SGR with the MIPS marks a fundamental shift from setting annual fee levels on the basis of macroeconomic indicators (overall growth in Medicare spending relative to the sustainable growth rate) to relying on individual-physician- or group-level indicators of cost and quality. This change overcomes the “commons” problem that was inherent in physician incentives under the SGR. All physicians together were supposed to be accountable for the volume of services that drove Medicare spending, and all, regardless of their specialty or practice pattern, risked facing fee cuts when spending growth exceeded the target rate. That arrangement ensured that the SGR was only an accounting mechanism designed to force spending control after the fact (i.e., if price times quantity exceeds a given value, decrease price) rather than an incentive program — no individual physician had an incentive to reduce spending.
She points out that there will be choices for physicians. They can be viewed and judged as individuals or as a part of a practice or organization like an ACO. No matter what their choice they:
“will be judged on the basis of four domains: quality of care, resource use, meaningful use of electronic health records, and participation in clinical practice improvement activities. Improvement in performance year over year will also be considered in physician assessments...The poorest performers will face fee cuts of 4% in 2019, 5% in 2020, 7% in 2021, and 9% in 2022.”
She logically concludes:
The new law should encourage participation in alternative payment models, including those associated with accountable care organizations and patient-centered medical homes. Professionals who receive a substantial share of their Medicare or all-payer clinical revenues through qualifying alternative payment models will receive a 5% bonus in each year from 2019 through 2024 and will be exempt from payment adjustment under the MIPS. This component of the law may well result in reaching an important tipping point in the take-up of voluntary alternative payment models in Medicare — and could potentially have a larger effect on value based purchasing than the MIPS itself. When it is implemented, the MIPS will become the largest physician pay-for-performance scheme in the world and the first to create a single value-based purchasing framework covering the full spectrum of physician specialties.
Perhaps it will take a while for the importance of these changes to sink in for many who are still struggling with how to move from a FFS mentality where success is measured on volume. That day is in its final few minutes. Many physicians are unlikely to read or process what Dr. Rosenthal has written, but in a very succinct article their favorite “throwaway” journal Medical Economics says exactly the same things and practically points to the need that every physician has to begin to change the way they think about medical homes, ACOs, population medicine and the consideration of cost and patient satisfaction.
http://medicaleconomics.modernmedicine.com/medical-economics/news/mips-vs-apm-4-things-physicians-need-consider
I would predict that over these next few years as the sun sets on volume based reimbursement and the bright light of value breaks the dawn, many organizations will realize the need to quickly learn what they have avoided. Some may even consider what Lean may offer as they try to come up with survival strategies. They may even realize the benefits of managing waste out and quality into their processes rather than focusing purely on the objective revenue generation.
There is a second NEJM Perspectives article I want you to read. This one has immediate importance for many hospitals and health systems.You might remember from last week’s Cost Trends Hearings that there was a lot of discussion about bundled payments. On the Internet broadcast I could see my friend and Atrius board member, Rob Mechanic in the audience. In the October 1st NEJM Rob gives us a terrific discussion of the new mandatory Medicare bundles for hip and knee surgery. Those organizations that have process improvement capabilities like Lean and also understand the principles of team based care will probably respond more effectively to this challenge than those that do not. Rob’s article is appropriately entitled “Mandatory Medicare Bundled Payment — Is It Ready for Prime Time?”.
http://www.nejm.org/doi/full/10.1056/NEJMp1509155
Rob writes:
The program would establish bundled payments for total hip and knee replacements, covering hospitalizations, professional fees, and all clinically related Medicare Part A and Part B services for 90 days after discharge, including skilled nursing facility care, home care, and hospital readmissions. CCJR is similar to another model CMS is testing called Bundled Payments for Care Improvement (BPCI), but whereas BPCI is voluntary, hospitals would be required to participate in CCJR. CMS proposes implementing the 5-year program in 75 metropolitan statistical areas with approximately 750 hospitals beginning January 1, 2016.
Rob is a Senior Fellow at the Brandeis Heller School for Social Policy and Management where he works closely with Stuart Altman the Chair of the Health Policy Commission of Massachusetts. He is an economist and is also an authority on the pros and cons of various payment mechanisms. He has published many articles on the AQC and bundled payments and in this new article points out:
CCJR is CMS’s first proposed mandatory bundled-payment program extending across multiple providers and settings. Such a proposal was probably inevitable, given the new goal of shifting 30% of Medicare spending to alternative payment models by the end of 2016.” Bundled payment appeals to policymakers because it can cover a much wider spectrum of providers than models such as the Pioneer ACO, in which organizations need a large base of primary care physicians and strong capital reserves to participate effectively. Moreover, CCJR would require that participants accept a 2% discount on their bundle prices, guaranteeing Medicare savings that would be scorable by the Congressional Budget Office.
The economic reasons behind the decision at CMS are staggering since hip and knee surgery consumes billions in resources:
In 2013, more than 400,000 Medicare beneficiaries received hip or knee replacements at a cost of more than $7 billion for hospital stays alone. The initial hospitalization accounts for only about 55% of total episode costs; Medicare also spends about $6 billion during the 90-day post-acute period. Medicare spends about $26,000, on average, per joint replacement episode, but the wage adjusted average ranges from $16,500 to $33,000 among the 196 metropolitan areas considered for the demonstration. Joint-replacement surgeries are elective, relatively standardized, and subject to relatively low spending variation — factors that make them a good starting point for testing mandatory bundled payment.
I will not try to reproduce all of the explanations and theory that Mr. Mechanic gives us but I found the article to be an in depth discussion of the pros and cons of this action that CMS is taking. He makes some excellent suggestions about how the program might be improved and it is not too late for CMS to make some changes. He believes that the experiment with hips and knees is a manifestation that cost has become a serious barrier to the future we collectively desire and that CMS believes that mandatory experimentation in a bold search for effective ways to improve cost and quality is justified and overdue. You should read the whole article. Each of the articles I have referenced from the NEJM is less than 1500 words so the time investment to read them both is well worth the return.
October Is Great!
As the picture in today’s header suggests, my neck of the woods is in the midst of a color explosion. The leaves are not quite at peak color but they are changing by the hour. What is also a pleasure is that the color of other things like the blue of the lake seem to be equally enhanced. Everything is dazzling and every walk is a trip into a wonderland.
When you think about baseball and October it gets even better. The initial round of the baseball playoffs has produced the high dramas that accompany the sudden reversal of fortune. Who said baseball was boring! I am eager to see what happens as the Cubs face the Mets in the National League Championship Series. To my New York friends I apologize; but GO CUBS!
The days are getting cooler and the sun sets sooner. It will not be long until winter is upon us. Be sure to get out and soak in as much of the flavor of fall as you can this weekend. I am headed to North Carolina where summer may be lingering now that the heavy rains are over. The Lindseys are gathering to celebrate the recent marriage of my father and his new bride. He will be 95 in six weeks but sees life as a continuing adventure and he has great expectations for the future. Why not be hopeful? He has great healthcare. I wish everyone enjoyed the benefits that he gets. That is the goal of the Triple Aim Plus One.
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