iProtean—The Way Medical Care is Organized is Changing

Atul Gawande, M.D., celebrated for his thoughtful article about the quality of care in U.S. hospitals/systems, recently wrote that “the way medical care is organized Is changing—because the way we pay for it is changing.” (Atul Gawande, “Big Med,” The New Yorker, August 13, 2013)


The goal of many large health systems, Dr. Gawande said, is to move to large-scale, production-line medicine to improve quality and lower costs.  Public and private healthcare reforms have focused on linking financial rewards with clinical performance, and this means physicians and hospitals must work more closely together—getting into each other’s business—to achieve excellent, consistent results.  Payment based on results is a radical shift, Dr. Gawande said, and uncomfortable for some because it means intrusion into the practice of medicine.  But standardization is the goal.


“The idea is to study what the best people are doing, figure out how to standardize it, and then bring it to everyone to execute,” Dr. Gawande quoted—not from a physician or hospital executive, but from a regional manager from . . . The Cheesecake Factory.  Yes, Dr. Gawande used the production process of The Cheesecake Factory, a well-known, successful restaurant chain, as the starting point for his investigation into how to improve the way medical care is organized.  He noted that standardization and “scaling good ideas,” implementing good ideas quickly and widely across the medical system, have been some of the “deepest problems in medicine,” and that neither regulation nor insurance-company reviewers have been much help in producing good medicine.


New methods and, importantly, new technology (including remote ICUs with doctors and nurses trained to assist those providing hands-on care) must be part of the new delivery system, Dr. Gawande said.  Command centers for ICUs—and emergency rooms and surgery centers also—may soon become state-of-the art.


All of this implies “super-regional” healthcare systems.  Dr. Gawande admitted that mixed feelings about the transformation to these large systems are unavoidable.   “For the changes to live up to our hopes—lower costs and better care for everyone—liberals will have to accept the growth of Big Medicine, and conservatives will have to accept the growth of strong public oversight,” he said.


[A link to Dr. Gawande’s article, “Big Med,” appears later in this blog.]


In the iProtean courses The New Healthcare Business Model and Mergers & Acquisitions, experts Ken Kaufman, Lisa Goldstein, Dan Grauman, Michael Irwin, Kit Kamholz, Jeff Bauer, Ph.D. and Anjana Patel, Esq. discuss in detail the implications of the upcoming changes to the delivery system.


Ken Kaufman, Kaufman, Hall & Associates

Consolidation tends to move at a faster pace when you’re in the midst of business model changes, so we have a business model change going on in healthcare.  And that is one of the factors that is now pushing consolidation—many organizations begin to look for a partner because they can’t handle the transition from one business model to the other, and that makes perfect sense.  If you’ve been in business for fifty or sixty or seventy years and you’re very accomplished under one business model, it’s not obvious to you that you’re going to be accomplished under another business model.  Just think of Joe Smith who owns the steel company and then he sees this huge business model change because of low-cost steel in China and low-cost steel in India and his best feeling about how to continue his firm may be to consolidate it with another firm because he may feel that there just isn’t the talent or the cash flow necessary in order to manage his steel firm in another business model.  And that, of course, is very analogous to what’s happening in hospitals.


Secondly, scale is self-reinforcing and this is very important for board members to understand.  Large organizations tend to have higher cash flow. They reinvest that cash flow back into the competitive cycle and it becomes what economists call virtual circle and that is that big organizations get bigger.  They get bigger cash flow.  They reinvest and that causes more consolidation until the market is or the industry is completely consolidated.  And we are seeing that self-reinforcing process going on in healthcare right now.  In addition, large organizations tend to be more market relevant. If you’re a payer and you can pick a market, you know there are certain very large powerful organizations in that market and as a payer you can’t ignore them because if you’re going to go out to the six or seven very big industries in the area and try to sell your health plan, they’re going to say, “Is big hospital X in your plan, because all of my employees want to go to big hospital X.”  And if big hospital X isn’t in your plan, then you’re going to have trouble selling it to those companies.  This is true; as the organization gets bigger and bigger it gets more relevant . . .


And then finally, if we do have falling prices in healthcare, which we believe will happen, it’s going to make it very difficult for some organizations to support the fixed costs that they built up over many years.  And the way you support those fixed costs is by getting per unit scale and getting larger and larger organizations that can amortize those fixed costs over more and more market share, and the less market share you have the harder it is to amortize those fixed costs.  That’s another factor that’s pushing consolidation at this point in time.


Daniel Grauman, DGA Partners

A major imperative for hospitals and physicians working together  . . .  is for these providers who are treating patients day in and day out to have access to the right information.  You need to be able to manage the care of patients and have that information at your fingertips and different providers, different doctors, the primary care physician, the cardiologist, the surgeon, the hospital, the nurses in the hospital need to have access to that information so they can make the right decisions in a timely basis.  Hospitals by and large across this nation are ill prepared to handle that.


They have been investing in information technology but the reality is that hospitals and physicians are all over the place on this.  There are initiatives under way.  There’s the electronic medical record, the EMR that I’m sure you’ve heard about and Medicare has implemented a program to help physicians even pay for implementing EMRs in their office locations, but it needs to go beyond that.  Just because the physician is capturing the information in the electronic medical record instead of the old paper chart, that information still needs to be merged with all of the other relevant information about the patient, from the hospital from the outpatient testing and the like.  Hospitals and physicians, the entire provider industry is going to need to continue to invest significantly to get to the point where they have the proper IT infrastructure and the ready access to the information they need to manage the health of a population . . .


Investment in physician integration, clinical integration, and IT as the glue to bring all that together is going to need to be significant.  Typically hospitals think about capital investment and capital expenditure and they’re focused on bricks and mortar, the new tower, the upgrade to the emergency room, the ambulatory care facility, and those are important.  But there is no question that there will be competing demands on what is generally considered to be limits on capital by information technology . . .


For a complete list of iProtean courses, click here.


iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Monte Dube, Esq., Lisa Goldstein, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.


For more information about iProtean, click here.



To read Atul Gawande’s article, “Big Med,” click here.

iProtean—The Importance of Physician Leaders

As the federal and state governments continue to implement the provisions of the Affordable Care Act, experts express concerns about the lack of physicians to care for the expanded pool of patients.  “The Association of American Medical Colleges estimates that in 2015 the country will have 62,900 fewer doctors than needed.  And that number will more than double by 2025, as the expansion of insurance coverage and the aging of baby boomers drive up demand for care.  Even without the health care law, the shortfall of doctors in 2025 would still exceed 100,000.” (The New York Times, July 29, 2012.)


Health experts, including many who support the law, say there is little that the government or the medical profession will be able to do to close the gap by 2014, when the law begins extending coverage to about 30 million Americans.


The shortage has been described as an invisible problem; that is, patients still get care, but the process is often slow and difficult.  An additional concern is the lack of experienced physician leaders to manage the implications of the shortage over both the short and long term.


We asked Brian Wong, M.D., CEO of The Bedside Trust and iProtean expert, to provide his insight on the anticipated physician shortage and the importance of physician leaders.


iProtean:  There is a lot of talk about boosting physician leadership programs to help hospitals leverage existing physician resources in a smarter way. What are some practical actions administrators and physician executives can do to prepare for the anticipated physician shortage?


Brian Wong, M.D.:  My solution for this impending crisis is quite similar to the treatment plan that I have put into practice to prevent related symptoms such as poor physician relations, poor retention, disengagement, lack of physician collaboration, poor staff relations, etc.  Not only are these symptoms directly related to the shortage crisis, they carry substantial costs and impact care on a daily basis.


Allow me to rephrase your question in a more patient centered way:  ”How can physicians contribute as leaders so that we have a greater impact on care without adding more to our workload?”  The answer to this “ultimate” question positions your physicians to stop these recurring symptoms in your hospital community, while also addressing the root causes of physician shortage in our industry that led to diminished capacity:  a deadly combination of early retirements, practice restrictions (closed panels), shortened hours, and non-direct patient care career changes.


To be successful at expanding physician capacity without increasing workload, we must design a physician’s role so that it aligns with what matters most to patients, while creating the conditions for the team-oriented approach required as this shortage advances.  Organizations must be intentional when it comes to physician role design. Many of the hospitals that come to us for assistance seek improved physician involvement and higher levels of accountability to improve patient experience and care, but they lack the ability to clearly define and communicate the specific role physicians need to play.


iProtean:  Please clarify what implications physician role design has on physician leadership development and the specific issues it addresses for organizations.


Brian Wong, M.D.:  Having spent over 30 years of my career as a physician and physician executive, my point of view on physician leadership may surprise you.  Most physicians did not get into medicine to become leaders and have a less than enthusiastic response to leadership training.  Role design is a practical and concrete solution for organizations that need more physician involvement but realize the constraints of leadership programs that require a year’s worth of soft skill development and a binder full of initiatives.  Getting physicians to show up as leaders is possible when you connect their role with patient needs and what physicians are naturally good at.  It’s a simple business case:  every physician has a coaching role.


Most of the physicians with whom I work are natural coaches.  Unfortunately for the patient, coaching is not often treated as an organizational practice and a part of the culture as it is in medical school.  So why did it stop?  Once outside the academic setting, nobody reminded us of this important role, and our collective coaching acumen deteriorated into what physicians themselves might call “disuse atrophy.”  When physicians understand their primary focus includes fulfilling their organizational role as coaches, team performance improves dramatically and patients benefit.


One medical director I’m working with noted “When I ask my physicians to start thinking like a head coach of a team it gives them a specific role to play and the opportunity to set new standards for how we work as a team to benefit the patient.”


Role design is not a new business concept, nor a complex solution to these common challenges.  The most innovative consumer-facing businesses outside of healthcare leverage cooperative infrastructure models (role design), as opposed to using our current institutional carrot and sticks approach for improved physician collaboration and capacity.  In the healthcare industry, we have not taken the requisite steps to design a cooperative infrastructure with our medical staff.  Instead, we have resorted to an array of initiatives that target only the symptoms resulting in overburdened, disengaged physicians; higher operational costs; and inferior patient experience and quality.


iProtean:  What advice would you give to a leadership team looking to begin addressing physician role design-related issues?


Brian Wong M.D.:  Take time to help your team gain clarity on your current state, the costs your current state has on patient care, productivity, etc., and the results you require.  It’s important to guide conversations based on what matters most to your patients rather than the “do more of this and less of this” approach I’ve seen all too often. Consider these three patient-driven points as your discussion guide:

  • Patients expect us to work as teams.
  • Patient-centered teams need a coach.
  • Every physician has a coaching role.


These three tenets will provide the structure and focus for an initial discussion that will begin to better define the role physicians must play within your organization.


The first step in building a more cooperative infrastructure with your physicians begins with a few conversations. As the conversations build, consider a few of these road-tested questions that generate greater clarity and direction:

  • When it comes to designing collaborative relationships with physicians, is our institution an enabler or an obstacle?
  • Have we taken the steps to collaborate with our physician executives to develop a clear organizational definition of physician leadership?
  • Has this definition been accepted, well communicated and appropriately vetted by the medical staff leadership?
  • Do our physicians have an organizational role description that guides the type of physician involvement and teamwork we’d like to see in our community?
  • How might a more clearly defined role description affect job satisfaction and fulfillment for current and future physicians?
  • As we invest resources in physician leadership related activities, what are the expected outcomes; i.e., improved teamwork, improved staff relations, accountability to quality goals, etc.?
  • How might a culture based on physician coaching affect your goal of better care, better experience and lower cost?
  • What primary coaching capabilities and actions (formal and informal) can our physicians fulfill to have a greater impact on care daily?


Questions like these will help your organization begin to define role clarity for your physicians.  If you are going to improve the capacity and contribution of your physicians you must create a coaching culture.  Being intentional about role design will retain and attract physicians, create a more collaborative environment and, most importantly, improve the patient experience and quality of care.


* * * * * * * * * *


Brian Wong, M.D. appears in the iProtean courses Introduction to Quality, The Medical Staff, Improving Quality, New Delivery/Payment Systems and Hospital-Physician Alignment.  You can contact Dr. Wong for more information about collaborative coaching models and Coach+Leader tips at www.bedsidetrust.com.


For a complete list of iProtean courses, click here.


iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Monte Dube, Esq., Lisa Goldstein, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.


For more information about iProtean, click here.

iProtean—New Tax-Exemption Rules under ACA Clarified by IRS

“The Affordable Care Act added a new section to the Internal Revenue Code called Section 501(r), which sets forth the additional requirements that tax-exempt hospitals have to meet.  Many of the 501(r) requirements are really process requirements.  You must conduct a community health needs assessment.  You must have a financial assistance policy.  You must make it available.  You must take certain actions before you try and collect on people that you may know are not able to pay. Section 501(r)  also has other requirements about what you can bill those who qualify for financial assistance.”  (Elizabeth Mills, Esq., iProtean course Tax-Exempt Status & Community Benefit)


Proposed regulations specific to Section 501(r) were released last month, and they provide guidance in meeting requirements for financial assistance and emergency care policies, and billing and collections.   (The IRS currently is considering comments received in response to an earlier notice regarding the community health needs assessment requirement under Section 501(r), and it plans to address these in a separate guidance.)


A hospital’s financial assistance policy (FAP) must include: eligibility criteria and whether assistance includes free or discounted care; a basis for calculating amounts charged to patients; a method for applying for financial assistance; if an organization does not have a separate billings and collections policy, the actions the hospital may take for nonpayment; and measures to widely publicize the policy.


The proposed regulations do not mandate any particular eligibility criteria and require only that a FAP specify the financial assistance, including all discounts and free care, available under the FAP and all of the specific eligibility criteria that an individual must satisfy to receive each such discount, free care or other levels of assistance.  “However, the FAP must be widely publicized; this includes posting the FAP on the hospital’s website, making copies available at the hospital, and displaying the FAP inside the hospital. There must be a ‘plain language’ summary of the FAP with very specific information, and the hospital must reach out to the community it serves.” (Elizabeth Mills, Michael Peregrine, Proposed 501(r) Regulations on Tax Exemption for Hospitals and Continuing Congressional Oversight, AHLA Practice Group Email Alert, July 18, 2012)


A hospital is required to provide care for emergency or other medically necessary care to individuals regardless of their eligibility under the FAP.  Hospitals must limit the amount charged for emergency or other medically necessary care provided to individuals eligible for financial assistance to not more than the amount generally billed to individuals who have insurance covering such care.  The use of gross charges is prohibited.


A hospital must make reasonable efforts to determine whether an individual is eligible for financial assistance before it engages in extraordinary collection actions.  Patients must receive a plain language summary of a hospital’s FAP before discharge, and that summary must be included with the patient’s first three bills.  If the patient is deemed eligible for financial assistance, the hospital must refund any excess payments and reverse any collection actions already underway.


In the iProtean course Tax-Exempt Status & Community Benefit, Elizabeth Mills, Esq., Robin Nagele, Esq., Monte Dube, Esq., and Anne McGeorge discuss the additional requirements for tax-exempt status under the Affordable Care Act.


Robin Nagele, Esq., Post Schell

One of the important things for board members of not-for-profit hospitals to keep in mind at all times is that they have the benefit of their tax-exempt status.  That is a special status that the IRS and the government affords them because of the general concept that what community not-for-profit hospitals do is good for the community and it fulfills an important community service and a community need.  Therefore, to promote that socially desirable activity, the IRS provides them this special status, which is that they are exempt from federal income taxes.  It is important as a board member to keep this in mind because the tax exemption is a touchstone that affects the way in which the hospital operates and impacts every decision that’s made.


It is important for board members to know and understand the standards the hospital must adhere to as an institution to maintain tax-exempt status . . . And those standards have actually changed significantly over time.


Elizabeth Mills, Esq., Proskauer

The expectation is that tax-exempt hospitals will provide care and health services to the entire community regardless of people’s ability to pay. It doesn’t mean you have to bankrupt yourself, because then the community would lose the benefit of what you are able to do.  It does mean that you need to keep track of what you are doing, do the best that you can in a process way to make sure that you are not harassing people who can’t pay and forcing them into debt, bankruptcy, medical bankruptcy, the things we read about in the paper . . .


The health reform act added a new section to the Internal Revenue Code called Section 501R, which sets forth the additional requirements that tax-exempt hospitals have to meet.  It doesn’t replace the community benefit standard.  It supplements it and many of the 501(r) requirements are really process requirements.  You must conduct a community health needs assessment.  You must have a financial assistance policy.  You must make it available.  You must take certain actions before you try and collect on people that you may know are not able to pay. Section 501(r) also has some other requirements about what you can bill those who qualify for financial assistance, and also requires that you attach your financial statement, your audited financial statement, to the Form 990, which again is available to the public.  This is something that you haven’t had to do before.


Section 501R(r) requirements are effective for most hospitals right now.  What that means as a board member is that you should ask, “Are we complying with the requirements of 501(r)?  How are we doing that?  Have we reviewed our financial assistance policies to make sure that they have all the things that the IRS wants to see?”


For a complete list of iProtean courses, click here.


iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Monte Dube, Esq., Lisa Goldstein, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.


For more information about iProtean, click here.

iProtean—Back to the Future: Strategic Planning

Blog submission by Jeffrey Bauer, Ph.D., an independent consultant and speaker based in Chicago.


Years ago I defined strategic planning as a purposeful response to anticipated change, consistent with mission and values.  My colleagues excelled at teaching mission and values, so I decided to specialize in anticipating change and preparing for it.  I’ve subsequently spent nearly 40 years looking in a crystal ball, figuratively speaking, and helping providers decide how to approach the realm of possibilities under increasingly uncertain conditions.


Strategic Planning Is Back Because the Future is Different


Although I continued to focus on anticipating change and preparing for it, providers largely abandoned strategic planning after the federal government and most states began dismantling mandatory health planning laws in the 1980s.  By 2000, many hospitals and health systems did not have a formal, carefully structured, written document to guide their decision-making.  Return on investment (ROI) replaced long-run strategy as the main driver of resource allocation.  Clinical programs, new facilities, and the latest technologies were acquired it they promised to pay for themselves, with little consideration about anticipated changes in supply and demand for health care and fundamental questions of mission and values.


Fortunately, I perceive that health care’s leaders are renewing their interest in approaching the future as a range of fundamental choices to be made—a refreshing change from the past decade. Why is strategy coming back?  Because the business of healthcare delivery is being restructured by four revolutionary trends:


1)    The clinical foundations of medical science are being transformed from a one-size-fits-all approach to personalized care models that tailor diagnosis and treatment to differences in genetic characteristics of diseases and in epigenetic factors that define individual capacities for health.  The principal mission of health care delivery will correspondingly shift from treating acute disease to managing chronic conditions—that is, preventing latent health problems from progressing to acute illness and injury.


2)    Information and communications technologies now enable the automation of many care functions that machines can do better and less expensively than human health professionals.  In particular, a growing array of networked, computer-based devices are liberating clinicians and patients from the traditional confines of time and place and allowing providers to surpass the limits of the paper trail.


3)    A substantial, unprecedented portion of responsibility for paying the bill is being transferred from third parties (governments and employers) to individual consumers (patients and their families).  Indeed, the latest health reform law effectively makes medical insurance “affordable” by reducing the benefits of a basic health plan and increasing the co-payments and deductibles.  Consumers are increasingly expected to “have skin in the game,” with dramatic implications for change in the ways health care is provided and priced.


4)    Multi-stakeholder partnerships will increasingly differentiate winners and losers.  The impending end of economic growth in the medical marketplace—in other words, competition as a zero-sum game where one provider’s gain is another provider’s loss—will require providers, payers, purchasers, and patients to form functional, outcomes-driven systems that allow all to share in the benefits of becoming truly efficient and effective.  Vertical integration encompassing delivery, finance, and demand will be essential.  Horizontal cooperation across providers will not be enough to ensure success in the future.


Success Requires Strategy


Responding successfully to these dramatic shifts in the medical marketplace will require making major trade-offs, actions taken independently of the Affordable Care Act.  Providers cannot count on health reform laws or economic growth to allow them to do everything they have done in the past, and only a very small number of today’s provider organizations will be able to go it alone in the future.  Health care’s leaders must approach the future strategically—evaluating options and making tough choices that produce healthier Americans for no more than 17% of the GDP.  The good news is that the emerging realm of opportunities provides a solid foundation for building world-class health systems in the United States.  Providers and their partners that collaboratively reallocate local resources with creative vision will accomplish real health reform.


Health futurist and medical economist Jeffrey C. Bauer, PhD is an independent speaker and consultant based in Chicago. (jeffbauer@mindspring.com; 773-477-9339)  In the mid-1970s, Dr. Bauer joined the faculty of the graduate program in health administration at the University of Colorado Health Sciences Center, where he was asked to develop a curriculum for teaching strategic planning at academic health centers in response to the federal certificate of need law.  With no existing teaching materials to adopt, his initial task was to develop a health-specific definition of strategic planning and then build a course around it.


Dr. Bauer is featured in the iProtean courses The New Healthcare Business Model, Introduction to Mission & Strategy and Strategic Planning.


Jeffrey Bauer, Ph.D.

What’s the number one thing that needs to be done for US healthcare to really develop the system that provides a top quality product at a price we can afford?  We’re going nowhere if we try to do it on paper records.  We have hit the limits of our abilities to improve efficiency and reduce cost on the paper trail, so we have to digitize the healthcare delivery system.  That means establishing the infrastructure to provide data for an electronic record, from the laboratory, from the floor, from the nursing. It really has to be seen as an integrated information system.  Every other industry in this country, in the last two decades, got off the paper trail and everybody else now is web enabled—all of the industries that have survived the onslaught of international competition and even competition among themselves . . .


I see dramatic changes coming, and that’s where the board sits as deciding what the organization needs to do to be responsible for that future. As a trustee I think that the responsibility is to look at the best possible use of the resources and that means change.  Now, strategy to me is the purposeful response to anticipated change and nobody but the board and the chief management of the hospital has that responsibility.  And in the long run the issues of terminating a program or reallocating resources, moving in new clinical directions, developing partnerships, those are really the responsibilities that come from the people who are asking the big questions, what changes can we make.


I tell board members, let the people you hired do the management.  Let them deal with the tactics.  Tactics is dealing with the resources you’ve got at hand.  So let your chief nursing officer or your pharmacist do the best they can with the nurses that showed up for work that day or the drugs that are on the shelf.  Those are tactics, finding out how to do things right with the resources you’ve got at hand.


The board on the other hand deals with strategy, looks at the realm of possibilities, asks the “what if” questions, imagines a different future.  Instead of the tactical issues surrounding “doing things right,” strategy focuses on doing the right things in the future, re-envisioning the future and imagine things being different.  As a trustee you are responsible for imagining how to reallocate the resources and become something new and better . . .


The strategic plan, regardless of the methods it uses, must have some quantifiable goals that will be met at a specific point in time.  If it is a two-year plan or a five-year plan, it will look that far into the future and say, “two years out we will have this market share or two years out we will be well underway in establishing our patient-centered medical home or have our telemedicine plan up, and running five years from now we will have affiliated ourselves with a major payer network.”  There are lots and lots of different possibilities.


I think you have to define the ways you are going to measure yourself.  A strategic plan doesn’t provide just generalities, and broad statements.  I see this rather often: “We’re going to provide the best possible healthcare for the community.”  Rather, it should say, “two years from now or five years from now we will be known for three areas of clinical service, we will be in the top 25% of all hospitals nationally for our care in these three clinical areas.”


The second aspect of a strategic planning process that to me is critical is that it be a written document.  And then number three that to me is critically important is it must be an ongoing process.  Because the realm of possibilities is constantly expanding, the environments in which you work are constantly changing.  So have objectives, have them written down and keep fine tuning them.  The idea of a fixed plan is absolutely out the window.  The only way you’re going to survive in the 21st century is to have a perpetual strategic planning process.


For a complete list of iProtean courses, click here.


iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Monte Dube, Esq., Lisa Goldstein, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.


For more information about iProtean, click here.