CEO Strategy Considerations: Thoughts on Current Issues Sick of ACO Red Tape? Focus Teams on Doing Something Important - July 14, 2011 If you haven't yet seen the brilliant parody of how healthcare leaders are receiving the Accountable Care Organization push from Washington, don't miss the video. Endless rounds of complex regulations and financial engineering can produce a bunker mentality. But when the world wants to get lost in bureaucracy, strong leaders can profitably redirect their teams to focus on the underlying intent - and the underlying opportunity. In this case, every American hospital and its immediate customers and suppliers has vast pockets of potential to create much more value for patients, at far lower cost. The leaders in patient satisfaction, patient outcomes and profit margin don't let the tail wag the dog - they root their business cases in the endless quest to challenge how they could do things better for patients, with less waste. That policymakers are beginning to catch up and shift more of the reimbursement mix to support this quest is welcome. But in the meantime, the leaders capture the value to be had, rearranging incentives if need be in their own communities. How to Generate Sustainable Value For Patients & The Health System In Seattle, a challenge from Starbucks prompted Virginia Mason to take a hard look at how they cared for back pain. From long delays to be seen, delays in starting the most high impact therapy and frequent use of expensive, less helpful tests, the health system realized it was providing inferior value to the patient and the folks paying the bills. "About 90% of what we did was no help at all," said their CMO (Kenney, Transforming Health Care: Virginia Mason Medical Center's Pursuit of the Perfect Patient Experience, Chapter 8). They went to work, devising and implementing an ideal pathway for the 80% of back pain that was uncomplicated, and quickly achieved same day scheduling and immediate initiation of physical therapy, producing dramatic gains in patient satisfaction and outcomes, more rapid return to work, and dramatically lower costs. Key insurers agreed to better compensate for the right care (physical therapy) in recognition of the value improvements. Talking to your customer to truly understand their needs is a great way to get focused on doing something truly important. So is directly witnessing the experience of your customers through their eyes. With a short orientation, health care leaders can be trained to do direct observations of their own processes using the most powerful operations principles. Large quality, safety and hard-dollar cost savings opportunities immediately surface. Examples we have been involved in recently include: Two hospital systems working with a dominant insurer to observe the inpatient care authorization processes from both sides and realizing that none of it produces value for the patient or employer. A radical paring of wasteful steps has been initiated. A major community hospital system realized it doesn't base medication purchases on actual patient demand - nor does it link any of its other supply processes to actual demand. It used this insight to drop inventory levels and inventory waste by millions of dollars while improving medication safety. The highest performing organizations call this getting "eyes to see." Once you have them, great improvements for patients and the bottom line come clearly into view. That's a useful way to design your ACO strategy to produce real and lasting value. And no matter how Washington's payment reform programs turn out, there's plenty of opportunity on the table right now. Lead your people to it. Deep Lean for Hospitals Implementation Strategy Exercise for Leaders - October 18, 2010 Value Capture offers a powerful one-day experiential overview of the Toyota Production System, customized for health care. "I had read a lot about lean and 'pull systems' over the years," said Vin Sahney, MD, the pioneering former senior executive of the Henry Ford Health System, "but through this exercise I now really understand it." Jan Jennings, President and CEO of Ohio Valley Medical Center and East Ohio Regional Hospital in Wheeling, WV, called a seminar centering on this exercise "a career altering event." Structure The seminar alternates discussions of key leadership concepts with applying the ideas "hands on" in a series of business process sequences. Thus it allows leadership teams to literally experience how world-leading organizations achieve dramatic and simultaneous gains in quality and safety, cost reduction, and decreased lead time / increased patient throughput. Key Concepts The flow of the day is constructed to teach hospital leaders how lean leaders think about implementation, including where to start and why, and what sequence of implementation steps leads to success. Lean concepts covered include: How to understand customer and business need as Toyota does The underlying values and principles that allow the "tools" of lean production to succeed (most organizations never grasp the values and principles and thus make little headway with the tools) Lean ideas and tools including:       5S (an early-stage technique for stabilizing work processes)       Continuous flow       Just-in-time       Leveling       Real-time problem solving Excitement The energy level and excitement through the day creates fertile ground for team building and shared learning. At the end of the session participants will have a solid foundation from which to guide further learning and begin to apply some of the critical components of the system to the core business case of the hospital or health system. Logistics Up to 21 learners CEO participation strongly recommended (TPS is a leadership system) Delivered on-site, minimizing travel costs and time invested for executives Taught by a team of 2-3 Value Capture principals with a minimum of 10 years experience applying these ideas to support hospital CEOs and their teams 1 day (9 hours including lunch and breaks) Cost is $4,000 plus travel expenses Why Value Capture? Value Capture helps health care CEOs transform the performance of their organizations to match the quality, safety and profitability of the world's leading companies. Anchored by the groundbreaking safety and profit achievements of our non-executive chairman, former Alcoa CEO Paul O'Neill, for over ten years we have helped select health care leaders achieve many of the industry's most dramatic safety gains in safety and financial performance. A list of references and recent clients is available upon request. To schedule a seminar, or for more information, please contact: Kenneth T Segel, Principal Value Capture / Value Capture Policy Institute email 412-445-0024 Helping Hospital CEOs Lead Deep Lean Transformations - August 26, 2010 In our experience, many hospital leaders are trying to figure out if and where "lean" fits in their organizations. Although there are many examples of successful lean improvement projects, there are very few cases where lean has become fully integrated into the overarching business strategy. The few organizations that have successfully made the underlying principles behind lean "the way we do business" have achieved a trifecta for a healthcare organization - dramatically improving quality, financial results and satisfaction among both patients and staff. Value Capture works with leaders at each stage of development and deployment of a performance and cultural change strategy tethered to the following anchor elements: Tie the goals of lean implementation to core organizational values that are held deeply and shared by every employee. This provides the kind of deep energy that staff need to achieve and sustain change. The lean journey then becomes a process of producing clear evidence that the values are true and being lived out across the health system every day. Tie the lean journey explicitly to the attainment of measurable business goals, with simultaneous bold objectives for quality/safety, cost reduction, and lead-time/throughput improvement. The point is to produce great business outcomes via great processes, and Value Capture excels at helping CEOs keep the focus of their organizations on measureable results for customers. Providing deep exposure to the simple but powerful principles that underlie lean, in addition to the tools of lean that are built from those principles, so that the tools can be successfully adapted to your particular and changing needs. Most organizations simply seek to learn the lean tools (and are accommodated by their teachers), and therefore find that the tools don't produce uniformly excellent results in their environment. Helping CEOs and their leadership teams understand and manage the task of unleashing the hearts and minds of everyone who does the work, every day, by assuming the visible position of "lead learners" in the lean journey, every day, and adapting their strategic and daily management framework to fully lead this work. If you would like to learn more about Value Capture, we would suggest a two hour meeting in which we listen to you and other senior leaders to more deeply and explicitly understand your needs and the set of underlying goals, experiences and beliefs that have led you to select a lean journey as the way forward. We are also willing to perform a value analysis with you utilizing your current patient safety events (i.e. infection rates, etc.), worker injury statistics and certain financial statements. This is not meant to represent the totality of what is possible, but can provide you with a basis point to facilitate decision making. An additional way to learn more about lean as the anchor of a business strategy is Value Capture's two-day seminar "Leading the New American Hospital" taught by CEOs who have achieved some of the most significant results with these ideas inside and outside health care, thought-leader Steve Spear, Ph.D. and Value Capture principals. Click here for more information about the next Seminar. Is Lean for Us? - August 12, 2010 Properly executed as a core of a complete business strategy, "Lean" or "Deep Lean" can produce a trifecta for a healthcare organization - dramatically improving quality, financial results and satisfaction among both patients and staff. However, most hospital "lean" implementations fall far short of what is possible, and some work labeled "lean" ignores key principles needed for success. This issue of CEO Considerations will help you evaluate Lean and identify the keys to sustained gains. What is "Lean" and What Results Can We Produce With It? "Lean" is the too-simple label applied to the ideas, principles, and operations tools developed first in post-war Japan by Toyota and then competitors that have spread across the globe and from industry to industry. When well executed, "deep lean" engages everyone in the organization around a set of principles that allow them to design and improve all processes to have the stability and structure to meet customer need without error, without waste, and with the least possible lead time (leading to greater throughput). Is Lean A Quality Improvement Methodology or A Business Strategy? Most early hospital efforts failed for predictable reasons - chiefly that leaders thought Lean was something to be implemented solely in operations, below leadership levels, as a series of quality improvement projects - all of which lead to limited and decaying impact. Lean inexorably reveals problems and waste and tensions the organization to work differently as a complete system to eliminate those conditions - if leaders aren't keenly focused, managers are forced to "dumb down" and weaken lean as a matter of self-preservation. Even worse, many leaders "deploy Lean" solely to achieve cost savings, without providing the staff involved with professional safety. This poisons the well for far-larger ongoing gains in quality and cost. Happily, in recent years, a few health systems have undertaken much more significant performance transformations, centered on Lean principles, with leaders "leading the learning" and anchoring it to their business case in all dimensions. Not surprisingly, they are achieving more significant and durable results. Results Between 2003 and 2009, Thedacare in Appleton WI improved its quality measures while moving its operating margins from 2.5% to 6%, increasing its bond rating from A2 to A1, and increasing cash on hand by $105 million. At Thedacare, deep lean is not a project, it is the way work is done. Denver Health, a public hospital system, reports improved quality, improved morale and $45 million in documented savings that have allowed it to avoid a single layoff during the current recession. At the Hospital of the University of Pennsylvania, work supported by Value Capture but driven by the nurses and physicians of the oncology units saved 28 lives and $2.2 million and was documented by CNN as a model for what "true health care reform" should be [link to video]. Where Should Lean Fit As Part of a Comprehensive Hospital Strategy? Deep Lean is most powerful when it is deployed as part of a comprehensive plan to sharply increase the performance of a hospital or health system. Chances for success are increased dramatically when leaders build a foundation for Lean first, with such building blocks as values-centered goals to anchor the process for staff, transparency to create the right culture for problem solving and rapid knowledge transfer, and giving everyone "eyes to see" waste and problems in process design. (This leadership framework is the focus of a series of two day seminars for CEOs and those who wish to become CEOs offered by leaders from Thedacare, Penn, Value Capture and thought-leader Steve Spear.) What Are a CEO's Keys to Success With "Lean"? 1. Frame it in your mind as a whole-organization leadership system, not a set of quality-improvement projects and tools. 2. Be eager to "lead the learning." Thedacare's President Kathryn Correia says "How Can I lead what I don't know." Being in front of the learning lets you be more confident about what to do next, and also models the core behavior you need from everyone. 3. Define the measures of success (quality/safety, cost and lead time/throughput) and maintain the focus on customers and business value on all those dimensions. Lean correctly focuses on radically improving the processes that produce the results, but the leader has to make sure people are paying attention to the results, through regular checks, reviews and consultations. 4. Go to "Gemba" say the Japanese - where the work is actually done. Lean will help you focus the whole institution on where the value is actually produced in the organization, the front line, but only if you consistently model getting there and seeing, asking, listening, learning and coaching. 5. Focus on maintaining a safe environment - emotional, professional and physical. Lean forces a lot of problems into the open that normally just "flow on by." Each layer of management below you will be very threatened if you are not actively generating positive energy around the problems "surfacing" and modeling the energetic engagement with Lean principles-based problem solving. 6. Be deeply involved. Obviously, there is a lot of "doing" that others will lead, but no staff person should have cause to think you have "delegated" Lean. This is a critical mistake most hospital CEOs make. Paul O'Neill, our chairman, says "show me a company that brags about its equal opportunity office, and I will show you a company without equal opportunity." The same is true for Lean - it needs to be "the way we are learning to run our business, starting with me." 7. Coach, encourage and support - especially your direct reports (all of them need to be deeply involved). The feel in the executive suite should be of you putting your arm around each member of your team, saying "this is the way we are going. It's not going to be easy, but we're going to get there together. Now let's have at it." 8. Establish an incentive system - recognition first (and always maintained); and shared financial incentives once you can confidently base them on true value creation vs. gaming and sub-optimization. 9. Regular communication, usually with a concrete teaching and support focus. 10. Always work to draw more people and areas into the doing. And nurture the ideas of the doers! Opportunity To Learn More With Peers: A Few More Slots Open for September 21-22 CEO Seminar For leaders who want to learn more about deploying Lean as a complete hospital business strategy, and prefer forums with a small group of peers, there are 6 seats left at the two-day seminar "Leading the New American Hospital" taught by CEOs who have achieved the most significant results with these ideas inside and outside health care and thought-leader Steve Spear, Ph.D. The Seminar is being held at the Hospital of the University of Pennsylvania. Click here for more information. Sign up for CEO Considerations, Value Capture's take on issues of critical concern for CEOs, and notice of CEO-level seminars.