McEvoy Discusses Building a Culture of Quality

Continuing our series on excerpts of interviews with iProtean experts, we feature Larry McEvoy, M.D., on driving a sustained culture of quality.


Interviewer: What are the essential tenets of a culture of quality?


Larry McEvoy: I have a formula that simply describes the tenets of a culture of quality: MLN.


M is motivation. Quality is something that should be omnipresent. In other words, people have to be motivated around it.


If you ask most healthcare people, it doesn’t matter if they’re an executive or a physician, an ER nurse, a pharmacy tech, it doesn’t matter, “Do you want to be really, really good at what you do?” Almost all of them say, “Yeah, sure we do.” So motivation is not a problem initially, but once people get into organizations and they start getting exposed to politics and policy and things that can’t get done, and all the tasks and distractions they have, it is really easy to get demotivated.


High quality results from very energized, motivated people who don’t give up. As a board, you want an army of really motivated people who don’t give up on quality. They don’t give up on Mrs. Jones in the middle of the night or on Tuesday morning. And they don’t give up on it systemically.


How do you foster human motivation to sustain this kind of culture? This idea of motivation is a cornerstone that should concern every board. And we do know some things about human motivation. Motivation boils down to mastery; that is, helping people define and pursue what is important for them to be good at. And let’s face it, this is a great thing for quality.


Mastery depends on autonomy, that is, the ability to choose. It doesn’t mean separateness or do what you want. It means the capacity to choose. You want to create environments where teams and individuals can choose how to design as much of their work as possible so that they’re delivering high quality.


Motivation also involves purpose. People really gravitate around meaning, purpose, and connection to the patient, connection to their work, connection to why they want to be in health care. And this is a good thing.


L is learning. People love to learn. They get bored if they just go through the motions every day. The brain likes novelty; we know this from neuroscience. And we learn best when we’re rewarded for taking on a challenge, for effort, even if the effort is not successful, and for getting ready to take on another challenge.


So, this learning environment is something you want in every little interaction you have. If every time a nurse and a doctor, or a team, get together to huddle, or a board gets together, you should ask, “How have we strengthened motivation here? How have we strengthened learning?” If you continue this way, you will be in good shape.


N the exponent. N means that the more times you can create collisions, where people are colliding and they’re increasing their motivation and they’re increasing learning, they will come back.


I talk about this as the casino effect. In Las Vegas, they have all sorts of games, and they have two key aspects to those games. One, it’s an enjoyable experience. It’s an addictive one. It released dopamine in our brain and we say, “I want to come back.”


The other one is, every time they create a collision between you and the casino, there’s a high probability, or some positive probability, it will result in a return to the casino. So they don’t worry about every interaction. If you keep coming back and hitting, sooner or later, money goes to them.


Quality should work this way, too. Every collision should be positive motivation and learning. If you keep colliding, you will get a return in the organization. So, leaders should examine culturally, how do we multiple collisions?


Interviewer: What are the most important things leaders can do to lead cultures from both a modeling standpoint and a design standpoint?


Larry McEvoy: As a healthcare leader, a board, you’re thinking about how to lead a cultural evolution, if you will, an epidemic of better quality thinking and acting. And yet, as the board, you can’t be everywhere all the time. You have to wonder how to “master the math.” Two answers.


Number one is to actually model your own journey. Don’t be a distant board that just sits there and stamps things. Let people see your own journey. “We were pretty results-oriented before; we’re still after results, but we’re learning more and more about what a culture of quality means, how we model our own behavior and how we sponsor that in others.”


Modeling your own behavior as a board means public learning. For example, “We went to a conference; here’s what we learned. Oops, didn’t know that two years ago. Probably if we knew that now, we would do this, this way. We as a board are curious. We’re interested in not being just experts, but learners. And we’re asking other people to learn publicly as well.” This is a powerful, powerful signal from the board.


Number two: the board should start to investigate the architecture of epidemics and movements. Typically in organizations, we have a ruling somewhere from a committee. We pass an edict and then we promulgate it with policies and emails and repetitive things. That is not necessarily the best way to get things going.


There is a whole body of science around how epidemics work and spread, and how networks influence people. And I think it’s worthwhile for the board to get interested and educated about how network science—how the structure of networks actually allows things to travel—and how complexity science—in chaotic circumstances, how things can self-organize and diffuse very rapidly—and how neuroscience—how humans learn and participate—can become something in their organization.


Now those are some heavy topics: network science, complexity science, neuroscience. The goal is to start to understand them in terms of simple practicalities such as how do we understand the networks in this organization and how influence moves. How can we tailor our quality culture to the neuroscience of human learning, human motivation, human contagion of passing things back and forth. Because gossip works for a reason. It’s attractive and sticky and it moves. Quality should be that way as well.


And then there’s this idea of how the board can work with executives and other leaders to understand how to create optimal collisions, and lots of them, so those collisions are sticky, they’re attracted to people, and that those collisions travel and travel and travel. So, instead of asking people to come to a quality meeting, people are joining a quality movement that they find energizing and they can see the results in micro, and they can also see it bloom across the organization as everyone begins to do this.



For more from Larry McEvoy, M.D., watch the iProtean courses Board Mindsets to Drive Value and Physicians and the New Healthcare Business Model. His upcoming course on board’s role in leading quality, will be published later this year.



iProtean subscribers, the advanced Governance course, Committee Effectiveness, is in your library. This course features Barry Bader and Pam Knecht, who cover committee structure and task forces, ideal committee size and composition, independent members, the committee charter, information and reports, and committee evaluation.


And watch for our upcoming course, Population Health and Alternative Payment Models, featuring Marian Jennings and Dan Grauman.


For a complete list of iProtean courses, click here.



For more information about iProtean, click here.


Jennings, Grauman Explain Bundled Payments

We recently interviewed Marian Jennings and Dan Grauman on bundled payments. What follows are excerpts from those interviews.


Dan Grauman: A bundled payment is a new payment mechanism called for in the Affordable Care Act, the Bundled Payment Care Initiative (BCPI). Essentially, it is a payment for a specific episode of care over a specific amount of time. Think of it as a budgeted dollar amount that a hospital, physicians and other providers will get for an episode of care. An episode is typically defined as an event that takes place around a hospitalization, beginning with treatment usually three days before the admission, all the way through either 30, 60 or 90 days post discharge.


So there are two determining factors that define an episode of care. First and foremost is the type of procedure, or type of condition, or illness, and always focused around a hospitalization. The second key determinant is time—whether it’s 30, 60 or 90 days.


The payer, Medicare in particular, has a lot of historical data about what has happened to patients with those conditions or those particular illnesses. So the payer can define a target amount based on the history of what it has paid for that type of patient over, for example, a 30-day period. This is essentially the only way the payer can practically define an episode and expect a group of providers to work to that target.


Of course, the financial incentive in a bundled payment program is to try to provide care in a more efficient, coordinated way so the total costs add up to less than the pre-established targeted amount. Providers can’t really do that unless they themselves have historical data they can examine to see how they have been treating these patients.


Significant Shift from the Traditional Payment Model


Marian Jennings: In the historical fee-for-service model, physicians were paid separately from the hospital for services. We’re moving to a model where physician and hospital payment is becoming integrated, such as in a bundled payment. This really changes the fundamental relationship between the organization and its physician enterprise or its physicians. The relationship changes based upon the fact that these parties now need to work together in new ways in order to reap financial rewards for performance.


Under the new models, the ability of the hospital to be cost effective and the ability of the physicians to have a care protocol that is efficient and effective and high quality for the patient are both necessary ingredients for financial success. So, the underlying predicate of how do you make these relationship work has to do with building trust with your physicians. We can no longer view them as just a consumer or members of our medical staff, we have to view them as partners in redesigning care. This requires that the parties get together and acknowledge, embrace the fact that everything is up for discussion: how we would have to change; how do we deliver a high quality product to patients at a lower cost.


Right now it’s difficult for the hospital and physicians to get together, identify opportunities to reduce cost, and reward the physician for it unless you have a particular gain-sharing program in place that has been approved by the payer. So it’s a very cumbersome process and most organizations have not pursued it. The bundled payment allows the hospital and physicians to work together, to find ways to deliver more cost effective quality care, where the physicians can partake in the bonuses that accrue based upon that performance.


But there are a number of underlying conditions that are required. One is that the hospital and the physicians are able to generate the necessary information, concurrent information, to be able to effectively manage the care of patients. They must have information available and shared by and with partners in the doctor’s office, the hospital, home care agencies, long term care facilities, rehab facilities, or others to manage the cost of the care across a 30 or a 60 or a 90 day period.


So, it is a fundamentally different mode of payment because the organization, the hospital and the physicians working together, are now at financial risk for managing care for up to a 90-day period, including a whole array of providers, some of which may be independent from the hospitals or physicians themselves.


Many hospitals and health systems have been mandated by Medicare to use a bundled payment at least for comprehensive joint replacement, in 2016. You may not be one of those hospitals, but that doesn’t mean you shouldn’t be considering how to work with physicians in new ways to prepare for such payment. It is clearly coming down the pike. Medicare alone has more than 48 different episodes it is considering bundling. It has demonstration projects in place—everything from congestive heart failure to diabetes. Many people think things like obstetrics, certainly coronary disease, as well, of course, orthopedics, and others, are ripe for this bundling approach.


Preparing for Bundled Payments


Marian Jennings: What should you think about doing as an organization if you have not been mandated to accept the bundled payment? You should look for a demonstration project, whether you go to the federal government, through the CMS innovation project, or whether you actually approach Blue Cross or Aetna, or Humana or whatever private insurer you have in your market. Let them know you want to experiment with a bundled payment and ask if they will be your partner. They may say no, but they may say, yes.


One of the benefits is that it allows you to gather data on the cost of an episode of care that you do not have on your own. That is, you only know what happened at the hospital and with your physicians. You wouldn’t know if the patient went to a provider affiliated with your competitor, or went to home care, or went outside of your organization to receive another related service during the timeframe involved. So through collaboration with a payer, you get information and you can start to educate yourself. You can start to work with the physicians to see the patterns and identify best practices.


The idea of experimenting in a way that is relatively safe, meaning that the likelihood of a financial disaster is little, is really a very, very important approach in thinking about accepting a bundled payment in the future.


How the Payment Mechanism Works


Dan Grauman: One of the complexities in fully understanding the bundled payment concept is that sometimes the providers continue to get paid on a fee-for-service basis, even when they’re operating under a bundled payment model. This is just a practical consideration. Providers submit bills and Medicare adjudicates them. And then, retrospectively, Medicare does the accounting. It adds up what it actually paid on a fee-for-service basis, and it compares it to the pre-established target amount for that episode of care. Medicare then determines whether there was a gain or a loss.


However in the BPCI Program that was baked into the Affordable Care Act, there was an option to get paid a prospectively determined fixed dollar amount for the entire episode. So if the hospital sponsored the program it would get the full amount for a certain episode of care ahead of time, $30,000, or $40,000 or $50,000, and then it would have the latitude as to how to pay the providers when the episode was triggered.


So it was a fixed amount up front. Not many sponsoring hospitals have chosen this method. Most chose to just get paid on a fee-for-service basis, and then retrospectively do the accounting, determined by how they performed relative to the targeted amount for that episode of care.


Impact on Care Protocols


Dan Grauman: The bundled payment program provides an opportunity for physicians and hospitals to treat patients in a better, different way than perhaps than they did in the past. Sometimes it’s driven by the hospital, where the hospital executives have a keen interest in trying to provide care in a more practical and efficient way. The hospitals are often a sponsor of the program, so they’re kind of driving the process and they have typically the most upside financially if gains are generated when compared to that targeted price.


There are other times, however, where physicians may be the drivers and the sponsors of the program. They have a keen interest in generating savings and participating in those savings. In all situations, it provides a great opportunity for all of the stakeholders and the participants in making the decisions about how and where the care is provided. It provides great opportunities for those folks who sit around the table to review those data, and together decide how to modify and alter the care protocols and the patterns of care that are rendered to these patients.


Marian Jennings: If you think about the incentives for the hospital and physicians and any collaborative partner around a bundled payment specifically, they are to find the most cost effective setting that will address the patient’s need. So, in addition to saying, well, we want to anticipate and have predictability around care, particularly post-hospitalization care, we also need to get out of our old paradigm that care needs to be delivered face-to-face, and identify what could be provided virtually. What could be provided in home care versus rehab? What could we do with what’s called pre-hab, preparing the patient, strengthening them before they actually have the encounter so that their need for services after their hip replacement, for example, are minimized?


So, virtual care, new models of care, lower cost alternatives, use of a nurse practitioner versus a physician, really the need to redesign the entire care along that whole episode, will be paramount.





iProtean subscribers, the advanced Governance course, Committee Effectiveness, is in your library. This course features Barry Bader and Pam Knecht, who cover committee structure and task forces, ideal committee size and composition, independent members, the committee charter, information and reports, and committee evaluation.



For a complete list of iProtean courses, click here.



For more information about iProtean, click here.

PHM & APMs: What Comes First?

This blog/newsletter features an excerpt from an upcoming iProtean course featuring Dan Grauman from Veralon. Dan discusses the concepts and payment mechanisms that gained traction from the Affordable Care Act.


As is often the case during times of changes in health care, many terms and concepts are used. Population health management is conceptual. It’s an idea where you take responsibility in a more holistic way for all the care for a population. You can define that population in different ways.


On the other hand, accountable care organizations (ACOs) and bundled payments are actually payment mechanisms. These are specific, defined contractual arrangements between a group of providers and the Medicare program or a commercial insurer. These contracts dictate financial incentives, payment arrangements and provide incentives consistent with population health management.


Why Population Health?

Population health management has become important since the passage of the Affordable Care Act. That legislation set forth a clear mandate, a doctrine or incentive if you will, for hospitals and doctors to take greater responsibility for the care provided for the population.


Historically, because of the way our healthcare, delivery and financing system has evolved, it has become siloed and fragmented, especially where it’s highly specialized. But the needs of the entire population have fallen through the cracks. We needed to take a broader perspective about those needs and to coordinate care in a better way between hospitals and physicians.


The rate of increase in care costs has just been astronomical. Those who believe population health management is important are focusing on trying to improve the coordination, delivery and quality of care, while trying to abate the rate of increase in health care costs.


Alternate Payment Models

There are various payment models that hospitals and physicians are experimenting with, and that Medicare and other health insurers are experimenting with during this transition towards population health management.


Providers embracing the population health management concept have a keen interest in gaining experience with these different payment models, called alternate payment models or APMs. The options may be participating in bundled payment programs, in the ACO program, or what’s alternatively referred to as the Medicare shared savings program (MSSP), pay-for-performance programs where you have the opportunity to earn bonuses when you hit certain quality or clinical metrics or goals. Finally, the most difficult and most challenging is capitation—providing care for a person irrespective of what he/she will need over an entire year, and doing so under a fixed budget. However, there certainly are hospitals and doctors willing to experiment with capitation.


Just to clarify, ACOs are for all the care needed for a patient throughout the whole year, regardless of setting—hospital, doctor, outpatient, radiology—it doesn’t matter. A bundled payment program is really for a defined episode of care, typically around a surgical or an inpatient experience or procedure for a defined period of time—a few days prior to admission to the hospital and 30, 60 or 90 days post discharge. And global payment involves being paid on a per enrollee per month basis, completely disconnected to the services that are provided. And, of course, fee-for-service, the other end of the spectrum, is still with us and will be for a while.


During this transition period, where hospitals and doctors are experimenting with different payment models, as is Medicare, we are actually adding some administrative complexities, and requiring hospitals and physicians to have things in place they haven’t had before—coordination, information technology and the like.


Eventually, once we’re through this transition period and these payment models evolve and some of the shakeout happens—because they won’t all stand the test of time—it’s certainly anticipated there will be administrative benefits and savings and economies of scale. But I think we are a ways away from being able to conclude that that’s the case.





iProtean subscribers, the advanced Governance course, Committee Effectiveness, is in your library. This course features Barry Bader and Pam Knecht, who cover committee structure and task forces, ideal committee size and composition, independent members, the committee charter, information and reports, and committee evaluation.



For a complete list of iProtean courses, click here.



For more information about iProtean, click here.

Competition for Physicians Increases in Urban Areas

Note: iProtean will be at its annual symposium next week. The newsletter/blog will resume the following week.


More recruitment for physician employees occurred in urban than rural and suburban areas in 2015. Compared to all placements in 2015, nearly 37 percent were recruited in urban areas compared to 25 percent in 2013, according to a report from a national physician recruitment firm.


“The change was the latest sign of increasing competition in the healthcare industry, which underwent a historic hiring surge in 2015,” said Rich Daly from HFMA. (“Physician Recruitment Competition Spreads to Urban Areas: Analysis,” HFMA Weekly, February 26, 2016)


Physician recruitment firms have been marketing to larger communities recently compared to small, rural areas and medium-sized communities. One such firm noted that 40 percent of its physician and advanced practitioner search assignments occurred in communities of 100,000 or more.


Increasing competition for physician employees paralleled an overall hiring boom in health care. Hospitals added 172,200 positions in 2015; the industry as a whole added 474,700 jobs.


Some of the most notable trends in physician hiring highlighted in the report include:


  • 69 percent were hired as hospital employees; 25 percent as employees of physician groups; 5 percent were employed in unknown or “other” practice settings.
  • 92 percent of the 2015 placements were in employed settings; 8 percent in private practice.
  • Primary care clinicians represented 36 percent of all placements in 2015; surgical specialties 17 percent, medicine subspecialties 16 percent, and hospitalists 13 percent
  • Within primary care, family practice represented the highest volume of placements in 2015, with internal medicine ranking second.
  • Rapidly growing roles were seen for both doctors of osteopathic medicine and non-physician advanced practice providers in 2015.


The benefits of physician employment have been noted as fostering greater clinical integration, cost efficiency and enhanced quality of care. However, one recruitment expert wrote in a blog that the employment shift has brought challenges including increased turnover, decreased physician productivity, potential financial losses on some acquired physician practices and a change in the essential character of the medical profession. (“Physician Recruitment Competition Spreads to Urban Areas: Analysis,” HFMA Weekly, February 26, 2016)




iProtean subscribers, the advanced Governance course, Committee Effectiveness, is in your library. This course features Barry Bader and Pam Knecht, who cover committee structure and task forces, ideal committee size and composition, independent members, the committee charter, information and reports, and committee evaluation.



For a complete list of iProtean courses, click here.



For more information about iProtean, click here.