19Th Annual Health Care Systems Leadership Retreat

Proceedings 19th Annual Health Care Systems Leadership Retreat September 19-20, 2002

“Systems Leadership and Values”

Background

The new century finds us in the midst of profound shifts in health care business management. Quality of care, technology, and access to capital issues continue to impact significant corporate and individual behavior. Simultaneously, issues of workforce and physician relationships challenge our abilities yet offer opportunities to design workplaces and workforces that acknowledge these changes.

This year’s 19th Annual Health Care Systems Leadership Retreat focused on these topics and carried on the tradition of American Hospital Association (AHA) health system colleagues networking and learning with their peers, as well as advising the AHA Health Care Systems governing council and the AHA Board of Trustees on key system-related policy and advocacy strategies. The theme of this year’s Retreat, Systems Leadership and Values, was intended to state an imperative for systems’ leaders to focus attention internally—on their workforces and workplaces—and deliberate a future course of action that exemplifies superior human capital management. The outcomes of the Retreat dialogue were to benefit all health systems, as well as the broader work of the AHA Board.

Objectives of the Retreat discussion were to: 1. explore how organizations develop the capabilities of thriving in difficult times; 2. discuss leadership strategies on valuing health care leaders and caregivers; 3. discuss the importance and implementation of system-wide organizational performance measures; 4. discuss the use of information systems and technology to enhance health care; 5. identify key system strategies and ideas as models for other systems; and 6. recommend advocacy, policy development, education and/or services AHA might consider to help members address these issues.

The Retreat’s format included presentations on strategy and innovation in this age of revolution and on major challenges and opportunities facing today’s hospitals in human capital management, quality and patient safety management and information technology. Seven health system executives showcased initiatives underway in their systems. Highlights of the Retreat presentations and dialogue follow. A more detailed summary of the proceedings can be accessed at www.aha.org/member_relations/health_care_services_main_page.html.

Leading the Revolution Gary Hamel, Visiting Professor of Strategic and International Management at the London Business School and Chairman of Strategos, an international consulting company, kicked off the Retreat with remarks on strategy used by many of the world’s most successful companies. Mr. Hamel began with an acknowledgement of enormous empathy for the leadership challenges faced by health system leaders, stating that he knows of no other industry or institution where leaders face the kind of perplexing, complicated set of challenges faced in health care. Accepting this, his message was not one of advice but of sharing how organizations can thrive in extraordinarily difficult times. Reinventing U.S. health care is one of the toughest jobs in the world and it is not made any easier by the fact that, right now, we are in the midst of what will be, or already is, the toughest business climate in at least three generations. With no immediate uptake of the stock market or quick rebound in site, we have the challenge of the industry atop the challenge of the economy as a whole. Additionally, health care is facing an unprecedented degree of turbulence – more things are changing and challenging our traditional business model than ever before. Organizations are enormously stressed because they were not built for this kind of a world, a world that is becoming more turbulent faster than most organizations are becoming more resilient. The reality is most organizations were built for perpetuation, not for this kind of a world.

One question to ask ourselves is, “Are we thriving or merely coping?” If we ask our employees from top to bottom, what would they say? Are we struggling to keep our heads above water or does it feel like we are thriving in this new world? Concern about the vitality of our hospitals is wrapped up in a much bigger problem—the viability of the whole U.S. health care system, with deep issues of cost, trust, patient satisfaction and changing attitudes of increasing concern.

What we have is a systemic problem, with an enormous list of reasons for why this is so difficult to address and why we have gotten ourselves into this problem. Mr. Hamel argues that we need to think dramatically differently if we are going to address how to build organizations capable of dealing with systemic challenges and capable of innovating in ways that allow us to rise above this. He recommends breaking the challenge down into two pieces, perhaps oversimplified:

 How do we take an enormous amount of cost out of our health care system without ending up in forced rationalization or simply depersonalizing the delivery of health care? We know that scale does not correlate at all with profitability, in any industry studied. Research in the commercial world shows that what correlates highest with a merger is a loss of market share by the merged companies. This is not to say that consolidation is not wise (for instance, in health care this has been a logical way to deal with over capacity), but it must be recognized as a one-time gain, a few economies of scale, and not a long-term strategy for dealing with cost problems. Correlated with cost structure challenges have been access limitations, incentive alignment issues, and a far greater emphasis on standards. Reality is that the cost challenges are going to get more and more pronounced with people living longer and with an expanding definition of entitlement. In order to stem the rising tide, the industry needs to focus on unexplored, creative cost structure innovations.

 How do we create a system in which well-informed, value-conscious patients help to drive out inefficiencies and enhance services? Customer experience is on this side of the challenge, especially when customer service expectations have changed so dramatically over the last decade. One of the current real challenges is that we live in a world where customers have never had more power and authority, resulting in a new set of expectations. Ironically, however, it’s been the payers—the big employers and insurers —who have had the greatest influence over the health care industry in the last few years. There is no other industry in which people who are so far away from the consumer have had so much influence and power in defining it. Accordingly, cost reductions and creating great customer experiences are seen as mutually exclusive, assuming both are not possible. Many innovators, however, have managed to transcend the “either/or” choices that have been taken for granted in the past.

Case in point: Southwest Airlines has virtually zero customer service and has the highest rated customer satisfaction in the industry. Their market value is greater than United, American and Delta combined. It is the only air carrier that doesn’t have a fundamentally adversarial relationship with its employees. Its COO says, “We look at our employees as volunteers. We recognize that all of the additional thinking and imagination and initiative, above and beyond what they are contractually obligated to do—the gap between the baseline of what they have to do and what they can maximally do—is volunteer labor.” So we begin to ask ourselves, “what does it take to get you to volunteer?” Some simple things: you have to have something you care about emotionally; you have to be able to see some connection between what you give and the good it does; and you have to believe that people are not systematically getting in your way as you help them do better. Dell Computers and Target both represent examples of how systematically the cost structures of those industries are changing.

The problem to be solved is very simple: how does one develop the capacity to cope with fairly substantial changes in strategy and direction while minimizing the cost of those changes? The answer lies in expanding the innovation horizon. History tells us that most people who have changed an industry in a profound way came from outside the industry. You must ask yourself:

• Can you innovate with respect to the rest of the industry? Examples of innovation can occur at several different levels: the product level, the business model itself or the industry level. To be successful, innovation must violate traditional industry norms and surpass incremental innovation.

• Can you differentiate between incremental and radical innovation? What appear to be intractable problems always require radical innovation. Radical does not mean high risk or spending a lot of money; it means how you think. To understand radical innovation, you need to ask whether what you are doing has the power to change customer expectations, the power to change the basis for competitive advantage and the power to change industry economics. Along the way, resilience is imperative.

As organizations navigate through all this change, they face a fundamental paradox: optimization (e.g., scale, efficiency, diligence) on the one hand and innovation (e.g. agility, experimentation, variety, diversity) on the other. In a world of disruptive change, the latter values must be equally and deeply embedded in organizations. This will require us to think differently about the people who work for us and to think about innovation as a capability rather than an aberration. Innovation must be everywhere, all the time, not an exception.

Mr. Hamel offered the following foundational principles for organizations to consider with respect to innovation, stressing that every employee should have some shared voice in setting the destiny of the organization for which he is employed:  Perspective is worth 80 IQ points – give people opportunities to see things they’ve never seen before and teach them how to challenge the orthodoxies around them  Teach People to Find the Fringe – requires experiential, not intellectual, conviction so that people can compare to their base of experience  Live in the Customer’s Skin – start with the customer and re-make the system by working backwards  Variety is Good  Life is Resilient  Markets beat hierarchies – use the markets for ideas, markets for capital, and markets for talent. Generate variety and create an environment in which people can experiment. In closing, Mr. Hamel asked participants, “Who is responsible for fundamental change in strategic direction for your health system? Where is the market for ideas in your corporation? Where is the market for capital?” For the first time, at least in modern industrial times, we have the opportunity to create organizations where we let people bring all their humanity to work – their muscle power, brains, their imagination and passion.

Valuing Ourselves, Our Co-Workers and Those We Serve Sister Mary Roch Rocklage, chairperson, Sisters of Mercy Health System, and Chairperson, AHA Board of Trustees, presented a framework for major challenges and opportunities facing today’s hospitals in the work place environment, recognizing that whatever we want to achieve in health delivery relates to ourselves and to those with whom we serve.

The words ‘Those we serve’ are the driving force about how we do the rest. In order to develop a framework that gives us the imperative to act, to change, to pass from one state or form to another, we have two requirements: to identify the core that must be addressed in order to move from one form/state of being with one another in the work environment and to be willing to suffer as leaders to bring this about.

The questions to ask ourselves are the following: “If we, the leaders of our institutions and systems, cut our hearts out, what would we find? What do we really value about ourselves as leaders? What we say that we value, is that what our co-workers believe we value? Do our actions belie what we say we want to do? What kinds of culture do we have in our organizations? And what does our system stand for in its heart?”

Sr. asked why our communities should support us. Do we work for community health versus the health of our institutions? How do we convey that and do we get it across? We need to define our core issues, identify the causes of disconnect, author a vision about what we believe about ourselves, and then develop accountabilities to live that vision.

One of the greatest challenges to people in leadership is that of being called to be great listeners —to listen to what our co-workers (those with whom we serve) are saying, articulate back to them, say we believe the same thing, and then say how we hold ourselves accountable. This is called the power paradigm. Authentic leadership is not only initiating the change but sustaining the pain of the change and the transformation for the long haul. This is not a quick fix; however, a visionary organization does the same thing over and over and functions on the cutting edge in order to help shape the future.

Sr. identified AHA’s call as several fold in this area: (1) to determine how to help nurture and strengthen leadership, to define what it means to be a leader versus a manager, and to help leaders articulate it in their value system; (2) to help address the issue of designing, not re-designing, the new work environment, by challenging leaders to think out of the box; and (3) to find out how to improve health care’s image and how to market that improvement. Much work needs to be done at the local and regional levels, in conjunction with AHA, to find new designs so that, all together rather than individually, health care as an enterprise will benefit.

Small Group Discussions: Leadership Strategies to Improve Human Capital Simultaneous breakout sessions then explored successful initiatives being used to foster development, cultivate internal leaders, and address ongoing recruitment and retention of numerous caregivers. Presenters included: Jeffrey Barber, Dr. P.H., President and CEO of North Mississippi Health Services, Inc.; Michael Dowling, President and CEO of North Shore-Long Island Jewish Health System; and Thomas Giella, Andrew Zaleta and Bill Westwood from Korn/Ferry International. Participants then used this information as a springboard for joint dialogue and discussion on ideas at work in their systems.

Valuing System-wide Organizational Performance Dennis Barry, President and CEO of Moses H. Cone Health System, and Chair-Elect, AHA Board of Trustees, addressed the importance of the need to focus on a system-wide commitment to improve quality and patient safety and the national need for consistent, standardized and meaningful quality performance measures.

Three key points underlie the discussion:  Safe, high quality health care is our mission and what our organizations are all about  Faith in our ability to provide quality care has, more recently, been shaken  Focus on achieving system-wide improvements in quality and patient safety across the entire health care system is needed, along with tools (e.g., standard measures, dependable and timely information) on what changes are likely to improve quality and safety

Safe delivery of high quality care is our main mission and goal. The questions are, “Have we lost the leadership initiative on this front to other organizations like Leapfrog or the JCAHO? Do we, in fact, need them to decide what we can, should be and should do to improve our patients’ outcomes?” The professionals with whom we work everyday consistently state that they entered health care because it is a caring profession. We are, indeed, organizations of dedicated people taking care of people. The stories we tell about our own organizations reflect our pride in helping patients get better and sometimes reflect the pain we feel when we’re not successful at getting the very best care to our patients at the right time. We want our communities to see that we are committed to achieving high quality. We post banners in our lobbies to reflect the fact that we have won quality awards or are amongst US News & World Report’s 100 Best.

Recently, people have begun to lose faith in our ability to deliver the best that medicine has to offer each and every time they need care. An IOM report, To Err is Human, made headlines around the country. Organizations like the Leapfrog Group have begun to insist that we implement certain changes like instituting computerized physician order entry, using intensivists in our ICUs, and referring patients who need complex procedures to hospitals with high volumes in those areas which are statistically linked to better outcomes. In addition, reports of harm to patients have appeared in a wide variety of papers. A recent Kaiser Family Foundation and AHRCQ study found nearly half of the representative American group said they were very concerned they or their family members would be injured by an error when receiving health care in general and when receiving hospital care in particular. Clearly, that is cause for our concern.

This fear underlies the response to another survey question on people’s views of how medical errors that result in serious injury or harm should be handled. Seventy-three percent responded the government should require health care providers to report all serious medical errors to make sure this information is publicly available. These fears have been sustained by continuing reports of problems with quality and safety in our facilities, such as the IOM report, Crossing the Quality Chasm, in which the IOM concluded the health care system as currently structured is “incapable of providing the American public with the quality of health care it deserves and expects.”

The fear is enhanced by many reports, such as in the Dartmouth Atlas and NEJM articles, of the variations in care that cannot be explained by patient characteristics. Despite the commitment of many leading health care organizations, serious and significant barriers to improving quality continue. Some of these include the following:  Reluctance by physicians and other professionals to accept protocols and guidelines for care that have been developed based on the best available scientific information  Lack of national standardized outcomes measures  Reluctance among managed care organizations and employers who are focused on price rather than quality in contract negotiations  Need for information systems and other technologies that will provide the sophisticated decision support mechanisms needed to enable clinicians to use evidence-based medicine and avoid many of the types of errors that result in patient harm  Diminution of our ability to share information with each other about poor quality and errors that have been made or could have harmed patients and strategies that we are developing and employing to minimize those due to the threat of malpractice litigation  Threat of mandatory public reporting

We need a system-wide focus to generate quality improvement, in part, because in learning together, we will learn faster about what works and what doesn’t work and, in part, because the failure of any part of our system to deliver quality care makes the public question the quality and safety of the entire system. Standardized measurement could and would facilitate these efforts; standard measures would decrease the burden of collecting and reporting to various payers and oversight organizations which would help free up resources to use on quality improvement. It would also give us the capacity to know which processes are leading to improved outcomes and enhance our ability to track the impact that changes have on quality over a period of time. We would know if we are making improvements, as opposed to just making changes. Standardized measures may also give the public the ability to compare and understand differences in quality in particular conditions among our facilities.

Information about what has been tried, what has worked and what hasn’t worked to improve performance is needed. What were the unanticipated, as well as the anticipated, results? Only then can we make truly informed decisions about what to do in our institutions for our patients. The authority about staffing decisions and mechanisms to improve quality should in fact rest with the hospital and medical staff leadership, not with outside purchasing coalitions.

As we make these decisions, we must also realize in this new era of accountability in the business world, there will be increased public scrutiny of our decisions and we will be called upon to be accountable for those decisions. Additional challenges faced include the following:

 Using data from national measures and other sources to create a system-wide dashboard of quality and patient safety indicators to guide decision-making in organizations  Being ready to accept the results of our measurement efforts when we discover the results are not as good as we thought they ought to be or hope they would be. This includes helping our organizations accept them and challenging them to improve  Having the necessary workforce to improve the care we provide  Challenge of helping our staff undertake changes needed for improvement, recognizing that as humans we generally do not like change  Challenges with respect to technology advancement, including linking decision support systems with current scientific information, technology that enables access to relevant patient information and voice recognition systems from other fields to the medical field to capture orders accurately  Creating a culture of improvement by installing needed infrastructure and by implementing incentive systems that reinforce quality improvement  Find the necessary resources to support the needed changes, in an era when health care costs are re-emerging as a significant issue for both politicians and employers. Small Group Discussions: Leadership Strategies for Excellence Performance Concurrent sessions were led to explore aspects of system-wide care delivery through monitoring performance outcomes, clinical and organizational improvements, and physician partnerships. Presenters included: Paul Convery, M.D., Executive Vice President/Chief Medical Officer, SSM Health Care; Kenneth Clark, Network Director, VA Desert Pacific Health Network; and Jim Lifton, Principal Consultant, PSI Arista. Participants then used this information as a springboard for joint dialogue and discussion on ideas at work in their systems.

Enhancing Health Care through Information Technology Richard Umbdenstock, President and CEO of Providence Services and a member of the AHA Board of Trustees, articulated the importance of national standards across health care IT systems and discussed how we must lead this effort.

Two years ago, the AHA Board retreat focused on a discussion about reforming health care and what fundamental issues need to be addressed as an industry and as a society. The issues are common and well understood by all: improving quality and patient safety, expanding coverage and access, resolving a growing workforce crisis, looking for relief from regulation, and securing adequate payment. What the Board determined was that the transfer and sharing of information is critical to each of these issues, so effective IT systems will be critical. As the additional topic of disaster readiness came before the Board, the same requirement was apparent.

Rich noted that the quest for an electronic medical record has been underway for the past decade and we have all held out the hope during that time that it’s achievement “is just around the corner.” But connectivity has been lacking within hospital systems and across the other healthcare sectors. The framework for health care IT standards looks like the pieces of a puzzle that we are trying to solve together around systems that affect and facilitate the delivery of care, the coherence of patient identifiers and coding language, the assurance of security and privacy, and taking better care of the patient. Each one of the pieces of the puzzle contains complexity and a multitude of features and functionality, and productivity in each can be improved with system standards.

Under AHA’s leadership and guidance, 250 organizations came together in late June, 2002, in Washington under the banner of the National Alliance for Health Information Technology (NAHIT). This was a day when a group of broad-based organizations participated and supported the idea that IT standardization can and needs to be done, and they committed to working together to get it done. Group testimony was provided by NAHIT before the FDA within 30 days on the need for health care bar coding. The Alliance now has 75 members, including many provider organizations, suppliers, and vendors.

In late August, 54 of 72 participating members met on organizational issues and started work on an initiative to promote bar coding on healthcare products. Potential future priorities include: connectivity and networking technology, C.P.O.E. and medication administration, electronic medical record, universal patient identifiers, claims processing/transaction standards, and standardized nomenclature. All Retreat participants were invited to join the Alliance. Additional information about the alliance can be found at www.nahit.org.

Mr. Umbdenstock’s remarks segued into an Information Technology panel discussion where initiatives being employed to increase efficiency, improve quality and productivity, and further business goals were shared by: Rich Umbdenstock of Providence Services; Glenn Steele, Jr., M.D., President and CEO of Geisinger Health System; and Ellen Zane, Network President of Partners HealthCare System. A Unified Health Care Policy for the United States A member dialogue followed the Information Technology panel discussion, where Sister Roch solicited feedback on a draft policy paper and set of principles designed to create coalescence among diverse interest groups in renewing a national discussion on the need for a unified health care policy in the United States. The AHA Board’s plan calls for the association to take a leadership role as a convener of stakeholders to stimulate thought that would lead to the creation of a shared vision for a unified health care policy – a vision around which broad-based support for a renewed effort for change could be created.

In tandem with this effort, the AHA is participating as a national sponsor, along with the White House and other major health care stakeholders, in an initiative called Communities Shaping a Vision for America’s 21st Century Healthcare, a series of community listening sessions across the country designed to listen to communities’ views of desirable characteristics and values for an American health care system, trade-offs, and challenges in making the vision a reality. The effort will be synthesized in the creation of a shared vision and will culminate with a national summit in Washington.

There was general agreement that the paper lays out a powerful vision and that the AHA Board should be applauded for taking responsibility to address these issues. Members felt the timing was right for this national conversation to occur.

Recognition and thanks were given to the Retreat sponsors, Merck and Roche, for their generosity and to all the Retreat’s presenters, discussion group leaders and participants.