Health Care
Project instructions:
Can good management fix the health care delivery system as it exists? Why? Why not?
Can good management practices help the system convert to a new way of doing things? If so, how?
Read the below article and answer the above questions:
Included with this collection:
www.hbr.org
HBR SPOTLIGHT
ARTICLE COLLECTION
1 Turning Doctors into Leaders
by Thomas H. Lee
11 Health Care Needs a New Kind of Hero
An Interview with Atul Gawande
14 Fixing Health Care on the Front Lines
by Richard M.J. Bohmer
23 Premium Price, Poor Perfo mance
by Jeff Levin-Scherz
25 What Drives High Health Care Costs?and How to
Fight Back
by Jeff Levin-Scherz
Fixing Health Care
Reprint 12773
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www.hbr.org
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Turning Doctors into
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by Thomas H. Lee
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Included with this full-text
Harvard Business Review
article:
Idea in Brief?the core idea
2 Article Summary
3 Turning Doctors into Leaders
Medicine is in for a radical
change as the old guard gives
way to performance-driven
teams.
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Idea in Brief
COPYRIGHT ? 2010 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
Health care delivery is fragmented and chaotic,
principally because of an explosion of
knowledge and technological advances.
Taming this chaos requires a new breed of
leaders at every level.
Health care?s new leaders must organize
doctors into teams; measure their performance
not by how much they do but by
how their patients fare; deftly apply financial
and behavioral incentives; improve
processes; and dismantle dysfunctional
cultures.
By organizing care delivery around patients?
needs?an idea more radical than it
sounds?the leaders of cutting-edge
health care organizations are raising the
quality, efficiency, and value of the services
they provide.
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harvard business review ? april 2010 page 3
COPYRIGHT ? 2010 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
Medicine is in for a radical change as the old guard gives way to
performance-driven teams.
The problem with health care is people like
me?doctors (mostly men) in our fifties and
beyond, who learned medicine when it was
more art and less finance. We were taught to
go to the hospital before dawn, stay until our
patients were stable, focus on the needs of
each patient before us, and not worry about
costs. We were taught to review every test result
with our own eyes?to depend on no one.
The only way to ensure quality was to adopt
high personal standards for ourselves and then
meet them. Now, at many health care institutions
and practices, we are in charge. And
that?s a problem, because health care today
needs a fundamentally different approach?
and a new breed of leaders.
Most recent discussions of health care have
focused on its rising costs, but these financial
challenges are really just a symptom. What is
the real ?disease?? The usual suspects have surprisingly
small roles. Greed and incompetence
surely exist, but economists agree that they
don?t account for double-digit annual cost increases
on their own.
The good and the bad news is that the biggest
driver of rising costs is medical progress:
new drugs, new tests, new devices, and new
ways of using them. These tools are frequently
marvelous and complex, and their use requires
increasing numbers of personnel trained in
narrow fields. Patients with complicated conditions
end up seeing a variety of physicians who
are often spread across several institutions.
Of course this progress is welcome, and at
times it seems miraculous. The Red Sox pitcher
Jon Lester was diagnosed with lymphoma in
September 2006, but he reported to spring
training in 2007 and pitched a no-hitter in
2008. Steve Jobs is still on the job. Many patients
diagnosed with heart failure can now go
back to work after receiving a new type of
high-tech pacemaker.
But this explosion of knowledge is going off
within a system too fragmented and disorganized
to absorb it. The result is chaos. In my
own organization, Partners HealthCare, a poignant
example involves the widow of a young
man who died of cancer. In the last days of his
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final six-week stay in the intensive care unit,
she demanded that all his doctors have a meeting
with the family. The family didn?t really
need the meeting, she said?the doctors did.
She wanted to be sure that the various physicians
were actually talking to one another, because
she so often received inconsistent or
even contradictory messages from them. The
confusion she described does more than distress
families, of course. It leads to redundant
care and errors that raise costs and threaten
quality.
Tough Medicine
To effectively attack this chaos we need a new
kind of leadership at every level of the health
care system, from large integrated delivery systems
like Partners to hospitals to physician
practices. The specific kinds of work and performance
measures may differ from one setting
to another, but the key responsibilities of
leadership are the same. To understand what
they are, leaders must first absorb three painful
messages:
Performance matters. Most clinicians are
hard workers, but the quality of their work
should not be measured by how many patients
they manage to see or tests and procedures
they call for. What matters is their results.
This is controversial, because comparing
outcomes is notoriously complicated. After all,
how well patients eventually do depends
heavily on how sick they were to start with.
Nonetheless, the bottom line is how patients
fare. How often do they survive their illnesses
and recover from their disabilities? How frequently
do they get infections and other complications?
Are their informational and emotional
needs met?
?Value? is not a bad word. When employers
and insurance companies use the term, many
providers suspect that it?s code for cost reduction.
But Michael Porter, of Harvard Business
School, and others have been pointing out for
years that in health care, ?value? means something
else: achieving good outcomes as efficiently
as possible. It may never be expressible
as a numerical ratio (quality divided by costs)
that allows meaningful comparisons among
providers. But measuring outcomes and costs
does allow providers to push for improvement?
and to learn from their competitors.
Improvements in performance require
teamwork. Individual clinicians and hospitals
have only limited control over the fate of their
patients. At any organization that provides
health care, superior coordination, information
sharing, and teamwork across disciplines are required
if value and outcomes are to improve.
Many leaders of providers can pinpoint the
moment when they realized that their world
was changing; often it came when someone
outside the organization started measuring its
performance. Although few providers welcome
this development, it provides context for a new
breed of leaders. Traditional health care leaders
try to buy time, fend off change, and maximize
revenue under the existing payment system
while they can. The new leaders focus on
outcomes and use performance measurement
as a motivating tool to organize their colleagues
and drive improvements.
The challenges are similar whether these
leaders are working in a large integrated delivery
system, a hospital, a large multispecialty
physician group, or a small physician practice.
Although their tactics will vary from one setting
to the next, the broad roles that leaders
need to assume will not.
Articulating Vision and Values
The reorganization process starts with articulating
the rationale and goals for change.
Change is hard in any field, and medicine?s altruistic
core values actually reinforce practitioners?
resistance to disturbing the status quo. My
generation?s traditionalists know that they are
good people who work hard, and they have the
courage of their convictions as they point out
the risks of change. So the vision expressed by
leaders in health care must convey both understanding
and resolve. It should acknowledge
the importance of what clinicians currently do,
but make explicit that they have to work differently
in the future. It should be direct about the
measures by which they must succeed. And it
should be both optimistic and realistic, expressing
the beliefs that care can get better and that
delivering superior care is the best business
strategy.
An effective vision helps people accept inevitable
changes and put information and events
into context. For example, many physicians
and hospital leaders have a viscerally negative
reaction to public reporting on the quality of
care they provide. They know the limitations of
the data and are appalled that providers might
be ranked numerically on the basis of inade-
Thomas H. Lee
(thlee@partners.org) is
the network president of Partners
HealthCare System, in Boston, and a
professor of medicine at Harvard
Medical School. He is a coauthor, with
James J. Mongan, of Chaos and Organization
in Health Care (MIT Press, 2009).
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quate, easily misinterpreted information. Their
typical reaction to a decision to release data on
provider quality: Civilization is coming to an
end.
In contrast, consider how the cardiac surgeon
Delos M. Cosgrove, who became CEO of
the Cleveland Clinic in 2004, folded the imperative
for performance measurement into a
broad vision. If the clinic was committed to the
idea of ?patients first,? he argued, it had to not
only make a serious commitment to measuring
patient outcomes but also demonstrate
that commitment to the world. Cosgrove immediately
took the measurement systems that
had evolved in one part of the organization
and disseminated them throughout the clinic.
At first the new data were available only to insiders;
now they are published, warts and all,
on the clinic?s website. Physicians were indeed
uncomfortable with these changes, but seeing
performance measurement as a tool to help
(and attract) patients, rather than as just a carrot
or a stick, brought them along.
Leaders at Seattle?s Virginia Mason Medical
Center made a similar commitment to the notion
of patients first, but they took it a step further
by making explicit its clear corollary: Physicians
and everyone else come second.
Whereas patients in most cancer centers do the
walking?to the laboratory, to doctors? offices,
to chemotherapy infusion rooms?patients visiting
Virginia Mason?s new cancer center are
ushered into well-appointed rooms where doctors,
nurses, and lab technicians come to them.
These rooms are filled with natural light from
large windows; the physicians work in windowless
cubicles in the floor?s interior.
Virginia Mason?s cancer center embraced its
patients-first vision so zealously that some of
the doctors on the staff left. But those who remained,
despite some grumbling, have helped
engineer the center?s financial turnaround and
rise to national prominence.
Organizing for Performance
Focusing on performance in health care is
more radical than it sounds. In the era now
waning, the conventional wisdom has been
that true quality can?t be measured. Thus performance
has generally been gauged by the
volume and profitability of services delivered.
In the traditional world, medicine is organized
around what doctors do rather than
what patients need. For example, hospitals
often have separate units for cardiology, cardiac
surgery, cardiac anesthesiology, and radiology,
each of which includes doctors and
other clinicians who contribute to the care of
patients with heart disease. Every unit has a
physician leader and an administrative staff. At
many hospitals the various units independently
submit their bills (?claims?) to insurance
companies and patients. That?s why patients
are so often confused by multiple bills.
These clinicians may actually work well together
in caring for individual patients, but increased
costs and dysfunction are inherent in
separated administrative structures. The units
are staffed by people with good intentions, but
they all have turf to defend?and in the mainstream
of American medicine, threatening
someone?s turf is a quick path to destructive
conflict. In the absence of compelling reasons
to change this arrangement, inefficient structures
remain stubbornly in place. And for clinicians
to embrace a radical redesign of care delivery?
well, that would be an unnatural act
when they are organized according to their
specialties and contented to remain so.
This fragmentation often goes deeper than
the organizational division of physicians. At
many hospitals relationships between doctors
and administrators are downright antagonistic,
and financial interests are poorly aligned or
even in direct conflict. For instance, hospitals
want to shorten lengths of stay because they
receive a lump sum for a patient?s entire admission,
but doctors are paid for each visit on each
hospital day, so the sooner patients go home,
the less they make. Under most insurance
plans, neither is rewarded for doing the extra
work that might prevent a readmission to the
hospital.
Organizing to deliver high performance
(rather than units of service) can help break
down all these barriers. As performance starts
to matter, for example, some providers are
moving toward structures for the delivery of
care that are defined by patients? needs. In
many cases, the first step is colocation?putting
the various types of physicians who provide
most of the care for a patient population
in one place. Sometimes an opportunity for
colocation is created by the construction of a
new facility dedicated to patients with specific
conditions, such as cardiac disease or cancer.
More often, institutional leaders must move
groups around in an elaborate multiyear effort
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to bring physicians from different disciplines
but the same patient population closer to one
another.
But colocation alone can?t guarantee a wellcoordinated
effort to improve patient outcomes.
That?s why Delos Cosgrove abolished
the Cleveland Clinic?s traditional departments
and replaced them with ?institutes? defined by
patients? conditions. He realized that as a cardiac
surgeon, he needed to collaborate more
with cardiologists than with surgeons who operated
on other parts of the body. So he
brought together the clinic?s cardiologists, cardiac
surgeons, and vascular surgeons in the
new Heart and Vascular Institute, and started
capturing and publishing information on how
its patients have fared.
In similar facilities, such as the Head and
Neck Center at Houston?s M.D. Anderson Cancer
Center, physicians remain members of
their various departments, but they?re in close
proximity on two adjacent floors. Over time
they have come to identify more with their
cancer-center roles than with their departmental
affiliations.
The work of organizing care around the
needs of patients instead of physicians? turf
and politics plays out on smaller scales as well.
Within many leading hospitals today, physicians
from the departments of surgery, medicine,
and radiology work together to perform
hybrid procedures (such as simultaneous openheart
surgery and abdominal aneurysm repair)
that previously would have been performed
separately.
Large-scale organizational changes like these
require strong leaders and a cultural context in
which they can lead. For obvious reasons, such
leaders gain additional leverage if they are physicians
and their organization employs its doctors.
At the Cleveland Clinic all physicians are
on one-year renewable contracts, which sends
a powerful message about the importance of
team spirit.
Not every institution will have the leadership
wherewithal to undertake such transformative
change. But even when integrating departments
of clinicians seems unrealistic,
strategically chosen performance measures can
spur progress.
Developing a Measurement System
The first challenge in creating a performance
measurement system is getting everyone
across an organization to use the same ?language??
that is, to measure the same things in
the same way. Otherwise it?s easy, and understandable,
for resisters to challenge the validity
of apparent differences. But once providers
believe that apples are being accurately compared
with apples, peer pressure and other incentives
will help spread best practices. (See
the sidebar ?Using Peer Pressure to Improve
Performance.?)
Consider this example of the importance of
a common language, which comes from my
own organization. Bloodstream infections are
a serious and frequent problem in patients
who have indwelling catheters in their arteries
and veins, and in January 2008 the Massachusetts
state government announced plans to
begin public reporting of each hospital?s rate
of such infections. Knowing that reporting was
coming, my colleagues began including data
on bloodstream infections in the internal quality
report cards that are shared with our board
and other senior leaders. These reports revealed
apparent differences in the rates at two
of our hospitals, but meaningful comparisons
were hindered by their differing methods of
detecting the infections.
Hospital A monitored for infections by drawing
blood samples through the indwelling catheters?
an approach that was painless and easy
but more likely to lead to contamination or false
positives. Hospital B checked for infections by
drawing blood through fresh needle sticks. Hospital
A usually had higher rates of infection, but
its physicians always argued that this was simply
a false finding resulting from their particular detection
method. After they finally adopted Hospital
B?s method, however, they found that they
still had a higher infection rate. With both hospitals
measuring in the same way, claims about
the source of the difference ended. Infectioncontrol
leaders became very interested in what
else Hospital B did differently.
When data are uniform and reliable, leaders
can push for the standardization of best practices
throughout an organization. For example,
clinicians at all the hospitals in our system
have agreed to attach colored tape to catheters
inserted under less-than-ideal conditions in the
emergency department. The tape tells doctors
and nurses in the intensive care unit to change
those lines as soon as possible once the patient
is stable?a practice that we expect will further
reduce our infection rates.
Rule of Thumb
Generally speaking, the number of
people an organization needs to
train in process improvement is the
square root of the total number of
personnel.
Thus, if you have 100 people,
you need to train 10; if you have
10,000, you need to train 100. Most
organizations have a long way to go
to reach this goal.
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Using Peer Pressure to Improve Performance
by Kelly W. Hall
Financial incentives in health care, as
in any other industry, are necessary
but not sufficient to optimize people?s
performance.
If, for instance, they are linked to too
many or very complex targets, or if the
performance standard is unrealistically
high, their effect is blunted. In the
worst case, physicians just throw their
hands in the air and ignore them,
viewing the pain of achieving the targets
as greater than the potential gain.
Peer pressure can provide incentives
that financial rewards can?t. As one
group-practice medical director put it,
?Doctors are very competitive and
want to be A students, so I use those
two characteristics as levers to motivate
behavior change.? When providers
are shown data on measures such as
infection rates, hospital readmissions,
diabetes control, and test utilization?
especially if their own performance
falls short and colleagues can see it?
they will often try to improve simply as
a matter of professional pride. But for
peer pressure to work, group members
must have a fundamental respect for
the integrity of the performance data.
Otherwise the data may fuel anger and
recrimination rather than improvement.
For example, if an organization?s
physicians react to confidential performance
reports with skepticism and denial,
their responses to similar data
presented publicly are likely to be even
more extreme. Or if discussions of
other practice-related matters quickly
devolve into argument, that?s probably
a sign that the group isn?t ready to
handle the emotionally charged issue
of comparative performance.
Many physician groups within Partners
HealthCare combine peer pressure
and financial incentives. At Hawthorn
Medical Associates, a large
multispecialty group near New Bedford,
Massachusetts, physicians know
exactly how they compare with their
peers, both locally and across the network,
on specific pay-for-performance
measures. Those with the lowest rankings
meet with medical directors to
discuss strategies for improvement.
Those with high rankings are invited
to comment on the data and suggest
reasons for their success. All data are
presented to the practice in a group
setting, with doctors? names clearly
visible.
Orders for radiology tests fell
by 15% in one group of
physicians after they saw
how they compared with
colleagues on test use.
One performance report showed
dramatic variation across a group of
physicians in their use of radiology
tests such as CAT scans and MRIs.
When faced with such data, Hawthorn?s
medical director says, doctors?
reactions ?can be anything on the
K?bler-Ross spectrum from anger to
denial to resignation.? To mitigate negative
effects, he follows up immediately
with physicians to tell them exactly
how they might improve. ?That
way,? he says, ?it isn?t just sharing bad
news but giving people hope and
something to work on…and gently reminding
them that similar data will be
shared during next month?s meeting.?
In this group radiology test use fell by
15% in the first year and has held
steady since. These physicians have
also made progress in diabetes management
and clinical outcomes using a
similar approach.
Charles River Medical Associates, a
50-physician multispecialty group outside
Boston, takes the combination of
peer pressure and financial incentives
to an even higher level. Each physician
is assessed approximately $10,000 a
year to create an internal incentive
pool for promoting various elements
of ?citizenship.? For one element?patient
satisfaction?the group uses data
to rank physicians from top to bottom
and shares the results with the whole
group. Financially, it?s a zero-sum
game: Those who score above average
receive a bonus, and those who score
below average pay a tax. The further a
physician is from the mean, the more
money is at stake.
The typical response to the ranking
list is ?a bunch of e-mails and calls
from the people at the bottom,? according
to Charles River?s practice administrator.
But ultimately, he says,
?they want to know why they?re bad
and what they can do to fix it.?
Kelly W. Hall
(khall@pchi.partners.org)
is the executive director of strategic
planning at Partners Community
HealthCare in Boston.
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In this case, standards were not dictated
from the top of the organization. What did
come from the top was pressure to collect data
in the same way at all hospitals and use it to
improve care. Innovation occurs at the front
lines of health care; our senior managers
would never have thought of using colored
tape on catheters. But they could and did create
the environment in which such ideas
spread.
Finally, an effective measurement system requires
clear metrics that detail costs and outcomes
for episodes of care or even entire patient
populations. These data can be wielded in
ways of varying impact. Although workers in
any environment, medical or otherwise, will
respond to negative motivators (?Reduce the
infection rate or you will be humiliated?), positive
ones (?Reduce the rate because you want
to provide the best possible care?) can be more
effective. Such value-oriented performance
measurement should become the focus of internal
improvement efforts?before measurement
is forced upon leaders from the outside.
Building Effective Teams
Working in teams does not come easily to physicians,
who still often see themselves as heroic
lone healers. Nonetheless, developing
teams is a key leadership function for health
care providers of all types.
Consider how teams at Pennsylvania?s Geisinger
Health System (where I sit on the board)
have helped cut hospital readmissions by half.
In the United States about 20% of Medicare
patients discharged from the hospital are readmitted
within 30 days. These ?bouncebacks?
should be seen for what they are?failures of
the delivery system to meet patients? needs.
Even in retrospect many readmissions seem
unpreventable, but others result from confusion
about what medicines the patient should
be taking, what signs might suggest that a complication
is brewing, when the patient should
go back to which doctor, and so on.
In that confusion lies an opportunity for
well-organized providers. The obvious ingredient
in Geisinger?s recipe for success is placing
nurses (?care coordinators?) in the offices of
patients? primary-care physicians. The care coordinators
stay in close touch with patients
whose cases are complex, particularly when
they are about to be discharged from the hospital
or have recently gone home. They figure
out which patients need to see which physicians
and when.
The more subtle ingredient in this model?s
success?the secret sauce, as it were?is a culture
in which care coordinators can actually coordinate
care. It requires that physicians be
both team leaders and team players. Not long
ago, in the strict hierarchy of medicine, nurses
were largely regarded as technicians whose job
was to follow orders. No decision was made
without a physician?s knowledge and consent.
The notion of a nurse as a critical contributor
and independent decision maker on a clinical
team would have seemed absurd.
That?s changing, because providers that deliver
care in the traditional way simply can?t
match the performance of Geisinger and other
organizations where physicians work in teams
with care coordinators. In these organizations
the coordinator?s role is something like that of
a point guard in basketball, with the physician
acting as a combined general manager and
player-coach. Leading these teams requires
physicians to hand off considerable responsibility
to nurses. The payoff is improved performance
on the metrics that matter most to
them and their patients.
Team building is a critical competency for
leaders of physician groups, particularly the increasingly
common groups of 25 or more that
include doctors from a range of specialties.
Most of these doctors joined their groups not
because they wanted to work collaboratively
with others to improve performance but because
they wanted to be in a big organization
where someone else would worry about administrative
hassles, they?d find some safety in
numbers from market forces, and it would be
possible to make additional revenue from ancillary
services such as radiology and laboratory
testing.
But the fortunes of these groups and others
in all areas of medicine will depend on leaders
who can improve performance by inspiring (or
requiring) teamwork. In many markets insurers
are incorporating costs and quality in insurance
product design, so that patients pay more?or
aren?t covered at all?if they want to see physicians
in more-expensive, less-efficient, or lowerquality
groups. If patients don?t come, the
groups will fail. The ability to build high-performance
teams confers competitive advantage.
Working in teams does
not come easily to
physicians, who still
often see themselves as
heroic lone healers.
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Improving Processes
Health care teams can?t view their purpose as
time-limited or focused on one project. The
day will never come when readmission rates
are low enough, heart-attack treatment is fast
enough, or all the processes of care delivery
are efficient and reliable enough. Thus leaders
must work relentlessly to reduce errors and
waste and improve outcomes?for example,
by preventing bouncebacks or reducing the
time between a heart-attack patient?s arrival
in the emergency room and the opening of his
or her blocked artery. To do so they need a culture
of process improvement and the disciplined
use of its methods, such as lean management,
data collection, brainstorming,
intervention, and impact analysis?and a
long-term commitment to applying them.
That culture and experience can be ingrained
in a variety of ways.
The now classic health care example comes
from Virginia Mason Medical Center, which a
decade ago was in danger of losing market
share and its best physicians to the numerous
outstanding hospitals in the region. In 2001 the
center?s president, J. Michael Rona, happened
to sit next to John Black, then the director of
lean management at Boeing, on a plane
