A Model to Measure Quality and Performance in Healthcare

As healthcare professionals across the US ponder the future of our profession, Michael Porter and Elizabeth Olmsted Teisberg point out why the industry is facing the predicament it is in.  We are engaged in the wrong kind of competition:

The challenge: how do we “operationalize” the theory that Porter and Teisberg propose?

As we pointed out in a previous post, cost cannot be the dominant criteria for performance – rather, we must measure value. Performance must be measured in terms of value which depends on outcomes and is organized around the patient (customer).

At the Physician Leadership Institute, we help healthcare organizations break the cycle of failure by re-evaluating their purpose.  We help them build an integrated performance framework that includes organizational strategy, standards, processes, execution, and measurement.  A very good starting point is a service quality model that has been around for some time.

The  service quality model (SERVQUAL) was originally introduced to us by Parasuraman, Zeithaml and Berry in their 1985 classic Delivering Quality Service; Balancing Customer Perceptions and Expectations.  It highlights the main requirements for delivering high service quality by identifying five ‘gaps’ that lead to unsuccessful performance:


SERVQUAL originally focused on 10 aspects of service quality, measuring the gap between customer expectations and experience. The basic assumption of the measurement was that customers evaluate a firm’s service quality by comparing their perceptions of delivered service with their expectations. SERVQUAL has its detractors and has been criticized for its complexity, subjectivity and statistically unreliability.  In healthcare specifically, there have been numerous attempts to measure the efficacy of the model.

The Physician Leadership Institute has modified the SERVQUAL model to create a usable model that allows healthcare organizations an integrated process of continuous improvement. Our version of the model covers strategy and execution, process optimization, outcome measurement and customer perception:

The original model introduced us to ten dimensions of quality:

  1. Competence is the possession of the required skills and knowledge to perform the service. For example, there may be competence in the knowledge and skill of contact personnel, knowledge and skill of operational support personnel and research capabilities of the organization.
  2. Courtesy is the consideration for the customer’s property and a clean and neat appearance of contact personnel, manifesting as politeness, respect, and friendliness.
  3. Credibility is the factors such as trustworthiness, belief and honesty. It involves having the customer’s best interests at prime position. It may be influenced by company name, company reputation and the personal characteristics of the contact personnel.
  4. Security is the customer feeling free from danger, risk or doubt including physical safety, financial security and confidentiality.
  5. Access is approachability and ease of contact. For example, convenient office operation hours and locations.
  6. Communication means both informing customers in a language they are able to understand and also listening to customers. A company may need to adjust its language for the varying needs of its customers. Information might include for example, explanation of the service and its cost, the relationship between services and costs and assurances as to the way any problems are effectively managed.
  7. Knowing the customer means making an effort to understand the customer’s individual needs, providing individualized attention, recognizing the customer when they arrive and so on. This in turn helps in delighting the customers i.e. rising above the expectations of the customer.
  8. Tangibles are the physical evidence of the service, for instance, the appearance of the physical facilities, tools and equipment used to provide the service; the appearance of personnel and communication materials and the presence of other customers in the service facility.
  9. Reliability is the ability to perform the promised service in a dependable and accurate manner. The service is performed correctly on the first occasion, the accounting is correct, records are up to date and schedules are kept.
  10. Responsiveness is to the readiness and willingness of employees to help customers in providing prompt timely services, for example, mailing a transaction slip immediately or setting up appointments quickly.

In the 1990s, however, the complexity of measuring all these dimensions led the authors to refine the model to measure the following attributes:

  1. Reliability
  2. Assurance
  3. Tangibles
  4. Empathy,
  5. Responsiveness

This RATER model is easier to implement, but we’ll show you how to avoid common mistakes most organizations make.

The next series of blog posts will describe each aspect of our healthcare performance model in detail.

Breaking the Cycle of Failure

One of the classics of service literature that has stood the test of time is Breaking the Cycle of Failure in Services by Leonard A. Schlesinger and James L. Heskett.

In it, the authors show us how a vicious cycle can be created in a service organization, leading to predictably poor results:


How does this model apply to the healthcare industry? Simply insert the word “patient” in place of the word “customer” in the diagram above, and see how closely it matches the dysfunctional workplace we often find ourselves trapped in.  Yes, of course there are significant differences within industries, but the conceptual framework is precisely what we need in our industry – see: the cycle of success.

The authors ask a pertinent question that applies to us in healthcare: “Managers by and large are not irrational. How then have so many fallen into the cycle of failure trap?”

Again, they provide an insightful answer. According to the authors, there are at least five factors:

(1) assumptions about the labor pool,

(2) attitudes and biases about technology,

(3) the availability of excuses for company inaction,

(4) pressures for short-term performance, and, most important,

(5) the lack of relevant information about the cost of perpetuating the cycle of failure.

Notice that they by using a systems, causal view of how the patient/customer experience and the employee experience are closely related, we start approaching the view that Michael Porter espouses in What is Value in Healthcare?  This cycle of failure/success approach is a visual that allows the entire organization to see that “value depends on outcomes and is centered around the patient.”  It is the key to building a unifying purpose for all stakeholders involved.

Next, we adapt a classic model for measuring service quality delivery and apply it to the healthcare industry. Stay tuned.

What’s Your Story? Sharing the Healing Power of Stories

On the literary side of the medical storytelling tradition, Dr. Robert Coles’ classic The Call of Stories, and the “diagnostic” novels of Walker Percy show us that stories make all the difference.  For Percy, the loss of the creature is a problem for modern science and medicine.  How do you come to your self as a self and not a statistic?  Through the power of individual stories.

Dr. Rita Charon‘s Narrative and Medicine in the February 26, 2004 edition of the NEJM opened the doors for examining story-telling and story-listening in a more serious vein. In 2011, a study showed that storytelling could be used as an intervention, and produced substantial and significant improvements in blood pressure for patients with baseline uncontrolled hypertension.

The lesson is that physicians must be able to tell their story (How will you measure your life?) not only to their patients, but also to themselves. The physician leader’s story always has one common strand, no matter where in the world they are: it is always a story-in-progress, a story of becoming.  This open-endedness makes the patient a part of the physician’s story, and helps connect the patient and doctor in ways that would not be possible without active storytelling.

A physician with a story is a physician with a sense of purpose, connected to the stories of the individual patients, and the overarching narrative of the institution.

Stephen Denning (the storyteller who used to work at the World Bank) tell us that stories are exchanged in interactions, sometimes in a matter of seconds:

The ability to think narratively—that is, narrative intelligence—reflects a recognition that the narrative aspects of the world matter because human goals matter, and narratives encapsulate human goals. The pattern of words that we use matters: are they abstract, cold, impartial, objective, inert, seemingly remote from human goals? Or do they have all the richness and texture and objectives of human existence, making them likely to engage an audience? And the sequence of patterns matters: one order generates excitement; the opposite generates hostility. And the stories that these patterns of words elicit in the listeners’ minds matter. And the responses, witting or unwitting, in the form of a nod, a smile, or a frown from the listeners matter. And what the leader does about those responses matters, whether the responses are encouraging or discouraging. And the interaction among narratives matters, an interaction that is taking place in seconds: a single word, or phrase, or sequence, at the right time—or out of place—makes all the difference.

Here’s how storytelling makes a difference in day-to-day activities:

  1. storytelling can inspire a passion for service
  2. storytelling is a means to share in the patient’s journey
  3. storytelling is a catalysts for engagement between all stakeholders
  4. storytelling inspires individual performance
  5. storytelling creates shared values in teams
  6. storytelling inspire a common purpose at every level – individual, organizational, and ecosystem

In our Physician Leadership Institute, we coach physicians as part of our leadership model on leading self,  to reconnecting with human being versus human doing. This includes:

- Coaching physicians on thinking and articulating their personal purpose and vision and values using our proprietary Personal Strategy Map™
- Using the power of visulaization, we coach physicians to identify the images that describe their lives, their history and their future. Physicians tend to have tremendous energy around their families.
- Coaching physicians to tell their stories of who they are and what they are becoming and how to share these personal stories with their teams and patients.

What’s your story?

Institutional Story Telling: What’s Your Narrative?

As the healthcare paradigm shifts from volume to value, many leaders are missing a key ingredient in their transformation toolkit: the power of story telling.

While we know that business story-telling makes a difference, the question is how does storytelling apply to healthcare institutions? And, as you read Malcolm Gladwell’s latest, it’s useful to understand the difference between stories and narratives.

John Hagel makes two distinctions:

First, stories are self-contained – they have a beginning, a middle and an end. Narratives on the other hand are open-ended – the outcome is unresolved, yet to be determined.  Second, stories are about me, the story-teller, or other people; they are not about you.  In contrast, the resolution of narratives depends on the choice you make and the actions you take – you will determine the outcome.

To understand why your organization must have both, here’s Hagel again:

Everyone is captivated by the emotional power and engagement of stories and it’s true, they have enormous power.  But to understand the much greater power of narrative, I point out that throughout history, millions of people have given their lives for narratives.  Every successful social movement in history has been driven at its core by a narrative that drove people to do amazing things, whether it’s the Christian narrative, the American narrative or the Marxist narrative.

Sun Tzu, in the Art of War, called it the Tao. The Tao causes people to follow their leader, to live and die without fear in the service of their leader.

The transformation at your organization has to become a movement that unites all your stakeholders – from the board room to the mail room. It must be authentic and genuine.  It cannot be an exercise in public relations or marketing.

I understand that some of you reading this may be critical: Does your organizational narrative really matter? Can it make a competitive difference?

Hagel gives us two examples where narratives have made all the difference: Apple (think different) and Nike (just do it). In both cases, the narrative is about us and what we need to do; it’s not about the companies themselves!

Narratives are not just “nice to have.”  They are increasingly the foundation that will drive business success because they tell your customers why you are relevant. why they need you and not some other competitor.  The best narrative is told not on paper, but through the customer experience. And Hagel makes another important point: stories and narratives not only can and should co-exist, but they in fact amplify and reinforce each other in powerful ways.

In our work at the Physician Leadership Institute, we help institutions build an authentic organizational narrative, one stands on the accomplishments of the past, but creates a vision for the future, a future which asks its customers to join in and participate.

In the next post, we’ll discuss the role of the individual physician. What’s your story? What’s your narrative?

A Model for Hospital-Physician Alignment: The Role of Physician Leaders

Do your physicians walk into a meeting blaming everyone else about the issues they’re having, or they come in with a statement like this: “We own this issue, so let’s work together to find a solution” ?

The blame game is a symptom of the lack of alignment between the physician and the organization.

Effective leadership, on the other hand, results in a sense of collective responsibility.

Peter Drucker stressed the importance of self report and feedback analysis where expected results are matched to actual results and the reason for shortfall becomes a collaborative process. Highly motivated leaders never complain when things don’t go their way. Instead they re-channel their energies to engage in identification of the solutions.They show a passion for work that goes beyond their own personal gains. Goals are pursued with energy and persistence.  Their commitment inspires others to do the same.

There is an assumption in the diagram above that all the disparate practices in a hospital can somehow be aligned using a technique known as clinical integration – a set of initiatives designed to improve patient care, developed and managed by physicians, and supported by a performance management infrastructure.

But the opposite is actually true. This is a very challenging task, unique to each institution. Today, healthcare organizations can no longer afford to send physicians to generalized leadership development workshops, and hope for substantial outcomes. Lasting success requires leadership development that is well-targeted, high quality, delivered and embedded on-site, and customized to the unique needs of physicians and the organization. The goal is to transform physician leadership at all levels and build the next generation of physicians to successfully lead healthcare transformation.

Let’s review how we might design a Model for Hospital-Physician Alignment. Here are some Key Design Principles:

The Alignment Model must be built on shared values and purpose
Without a common purpose, no alignment model will succeed. What is critical is that the process for creating the shared values must to some extent be collaborative and integrative. It is the heart of the transformation, and cannot be rushed.

The Alignment Model must work at three levels
There are three levels of alignment that must be dealt with simultaneously:

Individual Alignment: This is an individual level alignment focused on helping the individual with their leadership strategy and development areas, usually identified using a 360-degree assessment. The physician works on their own individual development plan and on a biweekly frequency works on tangible actions to change their leadership behaviors.

Project Alignment: At any given time, the number of change initiatives in a health system is overwhelming. Project alignment is focused on helping participants solve assigned problems and guiding them through project, team dynamic, and stakeholders buy-in. That should happens once or twice a month as a group. Project alignment drives accountability to deliver on the project commitments as well as teaches problem solving, project management and collaboration as a team.

Team Alignment: This is group coaching focused on helping the teams with their leadership gaps identified in the 360 and other assessments. Learning is key, and teams build on their individual alignment objectives to create a shared experience as teams. Topics covered cover a wide range of leadership and team issues such as communication, collaboration, conflict, etc.

The Alignment Model must be based upon the Hospital’s Service/Practice Portfolio
The Alignment Model is based upon the actual services being delivered. To measure patient experience, performance, quality, and costs, the model must be organized around the products or services that are provided to the customers, and then one can calculate the cost per unit to deliver the service, and the unit price to charge the customer for the service. This area is going to be a critical part of your competitiveness for the future.

The Alignment Model should be started and focused around an immediate major initiative or issue
It’s incredible to me how many redundant analyses institutions embark on that involves the same or similar data being collected and processed with great expense, and then thrown away at the end of the project. The best way to start is to build alignment via action projects which have a major impact on the flow of work.

The Alignment Model must be data-driven
The model cannot be static. It must dynamically capture perfomance data at a point in time and compare trends, changes, and improvements toward targets.

The Alignment Model must maintain financial integrity
If the changes introduced by an Alignment Model can’t be reconciled with real financial data, it will not be useful or taken seriously. There will be a glaring disconnect between talk and action.

The Alignment Model must be led by Physician Leaders
Physician leaders who have been certified as Change Agents are trained to understand the tools and tactics required to drive organizational change. They are certified in much the same way as a Six-Sigma team for change management. If the alignment model is not building physician engagement and enthusiasm, then it is not authentic, and is wasting precious resources. Unfortunately, most institutions tend to see physician leadership as a title.

Where should your organization begin engaging their clinicians in the leadership of the organization and the initiatives? Who should they invest in to help lead? Our answer is that leadership is not a title, rather, leadership must be everywhere in the organization. Each one of us needs to lead from where we are. Leadership is not a program, or a book, or a retreat. Leadership is a thoughtful and systematic process, a journey, even part of the culture’s DNA.

Typically, organizations tend to invest in clinicians that are already in leadership roles by sending them to various leadership conferences. But these clinicians typically account for less than 20% of the clinicians that could make a difference in the healthcare transformation. The focus should be to invest and recruit the 80% of the clinicians that are in the trenches. We call them the “silent majority”: the clinicians who are working hard every day in their clinics and/or leading a service line. It is these clinicians that will be critical in leading the new models of healthcare delivery. They, the silent majority, must become the change agents that lead the transformation of healthcare.

What are some other elements critical to building an enduring model for alignment?  Stay tuned.

From Physician to Leader: The Physician Leadership Journey

The transformation from individual leader to organizational leader is what physician leadership is all about.

Often, physicians will say, “I am already a leader, why do I need leadership training?”

Here are two “classic” videos of Dr. Kollmorgen‘s from The Iowa Clinic – his thoughts before and after engaging in the Physician Leadership Institute >>


and AFTER:

In their article – When Physicians Lead (McKinsey Quarterly, February 2009) – James Mountford and Caroline Webbin define a physician leader as one able to “communicate a powerful, clinically based vision and have deep, broad skills in both leadership and administration. These skills are both “hard,” such as strategic thinking and planning, and “soft,” such as negotiation and influence.”

According to Mountford and Webbin:

A growing body of research supports the assertion that effective clinical leadership lifts the performance of health care organizations. A recent study by McKinsey and the London School of Economics, for example, found that hospitals with the greatest clinician participation in management scored about 50 percent higher on important drivers of performance than hospitals with low levels of clinical leadership did. In the United States and elsewhere, academic studies report that high-performing medical groups typically emphasize clinical quality, build deep relationships between clinicians and nonclinicians, and are quick to learn new ways of working. A recent study by the UK National Health Service (NHS) found that in 11 cases of attempted improvement in services, organizations with stronger clinical leadership were more successful, while another UK study found that CEOs in the highest-performing organizations engaged clinicians in dialogue and in joint problem-solving efforts.

At the Physician Leadership Institute, we have quantified the benefits of physician leadership measured by each of our clients. These measures are customized based on the requirements defined by the teams we work with. In all cases, the results have made a significant cultural and business impact on both the participants and their organizations.

The Physician Leadership Transformation journey is a continuous process of improvement:

We believe the key to success for any organization includes the following process:

Working with our leadership assessment tools, we help you assess your challenges – both organizational and personal – establish measurable goals, evaluate existing gaps, and identify priorities and opportunities.

We establish a baseline for key leadership performance indicators for your organization and build an evidence-based leadership performance system.

Using the results from our evidence-based leaderhip assessment, we work with you to customize a development structure and programs for your organization. The leadership topics selected will be based on the findings of the assessment. The curriculum will use our tested delivery approach which includes a customized selection of solutions designed around the specific challenges facing your organization.

Our onsite solutions enables your entire organization to embark on the Physician Leadership Transformation Journey. Leadership metrics are based on outcomes. Your organization tracks progress and results over time.

As the impact of our physician leadership program starts being felt in the workplace, we help you create an “evidence-based” monitoring system with key leadership metrics based on outcomes. These are the measurements you need to track progress and results over time. We also help you identify the next steps – the areas of strategic impact your organization needs to tackle next. As part of the cycle of continuous improvement, this is a critical component of physician leadership.

Learn more at The Physician Leadership Institute >>

What is Value in Healthcare?

In his now classic article in The New England Journal of Medicine Michael Porter points out that in healthcare, the “stakeholders have myriad, often conflicting goals, including access to services, profitability, high quality, cost containment, safety, convenience, patient-centeredness, and satisfaction. Lack of clarity about goals has led to divergent approaches, gaming of the system, and slow progress in performance improvement.”

How do we find a common purpose? According to Porter: Achieving high value for patients must become the overarching goal of health care delivery, with value defined as the health outcomes achieved per dollar spent.

Because value depends on outcomes and is centered around the patient, Porter’s formula is a unifying purpose for all stakeholders involved. But Porter goes further. Outcome measurement and costs should be measured separately – he emphasizes, because we actually know very little about cost from the perspective of examining the value delivered for patients.  The problem according to Porter:

Understanding of cost in health care delivery suffers from two major problems. The first is a cost-aggregation problem. Today, health care organizations measure and accumulate costs for departments, physician specialties, discrete service areas, and line items (e.g. supplies or drugs). As with outcome measurement, this practice reflects the way that care delivery is currently organized and billed for. Today each unit or department is typically seen as a separate revenue or cost center. Proper cost measurement is challenging because of the fragmentation of entities involved in care. Entities such as rehabilitation units and counseling units are all but ignored in cost analyses. Costs borne in outpatient settings, particularly within primary care practices are often not counted. Past efforts at cost reduction reflect the way costs are accumulated. The focus has been on incremental steps and quick fixes. Payers have haggled over reimbursement rates, which are not the true underlying costs.

Also, consider:

Past efforts at cost reduction reflect the way costs are accumulated. The focus has been on incremental steps and quick fixes. Payers have haggled over reimbursement rates, which are not the true underlying costs. There are efforts to raise the efficiency of individual interventions rather than examine whether there is the right group of interventions. Considering drugs as a separate cost, for example, only obscures the overall value of care and can lead to misplaced efforts to reduce pharmaceutical spending, rather than more holistic approaches to improving efficiency over the full cycle of care. The net result has been marginal savings at best, and sometimes even higher costs.

There are no simple solutions. Porter tells us that the full reimbursement for a total joint replacement in Germany or Sweden is approximately $8,500, including all physicians’ and technical fees and excluding only outpatient rehabilitation. The comparable figure for the United States is on the order of $30,000 or more.  Why?  Because most physicians and provider organizations are not aware of the total cost of caring for a particular patient or group of patients over the full cycle of care.

Now, for the first time, the Centers of Medicaid and Medicare Services (CMS) have released comprehensive data on the costs of the 100 most common inpatient procedures performed in 3000 hospitals and medical centers across all 50 states.

At the Physician Leadership Institute, we went through the data on joint replacement surgeries without medical complications and co-morbidities, i.e, reasonably healthy patients who undergo knee or hip surgery for degenerative joint changes. The baby boomer generation entering their 6th decade is the quintessential demographic for such surgeries with an assurance of a good quality of life thereafter. No small wonder orthopedic surgery is the top earning specialty in hospitals and medical centers.  However, costs fluctuate wildly between states, intra state, and even within hospitals located within a stone’s throw from each other in the same city. In a southern state like Alabama the average covered charges of such joint replacements works out to $52,613. In California, three time zones away, the average charge was almost twice as much, at an average of $90,000. Within Alabama, for example, Stringfellow Memorial Hospital at Anniston was the most expensive charging $141,035, while 106 miles to the northwest, Parkway Medical Ctr. in Decatur would set a patient back the least at $21,006. In Birmingham, the most populated state city, the six hospitals listed varied in price from $31,093 at St. Vincent’s East to $89,408 at Trinity Medical Ctr. The difference was more than $60,000 within a few miles, or to put in a different perspective, the cost of three such surgeries in Decatur.

That phenomenon is repeated in California with an eye popping $223,373 bill for a hip replacement at Monterey Park Hospital, Monterey but within the same county, Kaiser Foundation Hospital at Downey charging $32,358, or the difference of nine such procedures in Decatur, AL.

What about the vaunted University of California medical system? Surely, their costs would be reasonable. At an average of over $95,000, they were anything but. Curiously, such costs remained impervious to socioeconomic conditions as the average cost of joint replacement cost an average of $87,000 in cash strapped Bakersfield-Modesto-Fresno, one of the country’s poorest metros where almost one in four live below the poverty line.

There are two ways to interpret these variations in pricing:

(i) Pricing in healthcare is not market driven where consumer and competition sets price. This is what CMS is trying to influence by releasing the information.

(ii) Pricing of procedures was  “cost plus” i.e. every organization knows exactly what it cost them to provide the service then mark it up for margin, then we could interpret these charge variations as an indication of lack of efficiency. The more expensive you are, means you are not efficient in your procedure thus costing a lot more than others. Historically, organizations charge as much as they can, even though reimbursement was much lower, thus writing off the difference.


Interestingly, no such ambiguity remains when we scored Kaiser Permanente hospitals vs rest of California as the figure above illustrates. A shade over $40,000 and tightly clustered pricing between the least and most expensive ($7000) compared to the vast variation in the rest of the state.  What sets apart Kaiser, a non-profit health organization from the rest of the hospitals and university medical system is the tight co-ordination and integration of primary, secondary, and tertiary levels of services, putting a strong emphasis on prevention, and extensive and detailed electronic medical documentation.  All of which keep costs down while ensuring quality care; Kaiser delivers value, as defined by Porter.

As Hal Wolf, senior vice president and chief operating officer of the Permanente Federation, explains, the organization delegates overall health care to its patients to primary care physicians.

Dr Jill Steinbruegge, MD, is Kaiser’s point person in developing capable physician leadership: “ The need for superior physician-leaders was identified as a critical success factor for the Permanente Medical Groups as well as for Kaiser Permanente (KP) as a whole.

Kaiser’s leadership building focuses on 4 domains: Sharpening the focus, building commitment, driving for results, building capacity.

Kaiser is also aware leadership does not operate in a vacuum; it must permeate through the organization.

Wolf: “Each person—whether delivering primary care, secondary care, pharmacy management, or something else—must ask: what are our goals for this patient?”  Kaiser Permanente uses care pathways where physicians are aligned with the organization’s goals of providing the best possible care to their patients and also incentivized to achieve those goals. Performance data is shared with physicians providing them with the knowledge of their actions getting the desired results. These goals are decided by physicians.

Wolf :“The physicians sit down as a group to pick the targets they want to achieve and the metrics that will be monitored.” Physician leadership meets patient empowerment.

From The Economist to the New York Times, the Kaiser model is viewed as a leader of the future of healthcare in the US.

Where does your organization fit in? In future blog posts, we’ll look at the value equation more closely, as well as models to assess and measure the quality of service delivery.

The High-Performing Health System: What Exactly Should We Benchmark?

As we mentioned in the previous article, the costs of medical procedures are now becoming more transparent. For some institutions, this is a wake-up call. But how do we benchmark organizational performance? Cost cannot be the only criteria – we must measure value.

Consider the AMGA‘s model for a “high-performing health system.”  According to the AMGA, if an organization must demonstrate that it is conducting the following activities:


Efficient Provision of Services
The provider entity successfully manages the per capita cost of health care, and improves the overall patient care experience, and the health of their respective populations.

Organized System of Care
The provider entity includes a multispecialty medical group or other organized system of care and:

Provides a continuum of care, including prevention and ambulatory care, for a population of patients;
Is integrated or has partnerships with other care sites, which may include, but not be limited to, acute care hospitals, long-term acute care hospitals, inpatient rehabilitation facilities, skilled nursing facilities, home health agencies, ambulatory surgery centers, and hospices to provide the appropriate care setting for each patient’s needs;
Includes physicians who are the principal leaders of all clinical programs and medical care and share responsibilities for the non-clinical aspects of governance, administration, and management; and
Assumes accountability for coordination across transitions in care.

Quality Measurement and Improvement Activities

The provider entity conducts quality measurement and improvement activities across sites of care and between patient visits to improve the health and outcomes of populations, including:
Preventive care and chronic disease management for targeted groups of patients;
Ongoing patient outreach programs, such as patient registries, to improve the health of those populations;
Participation in continuous learning, such as collaboratives, and the conduct of benchmarking on utilization rates and patient outcomes with other peer groups;
Use of research and/or other mechanisms, such as applied data analytics, to validate clinical process and outcomes data to determine effectiveness;
External reporting and transparent internal reporting on clinical outcomes, variability, and timely performance improvements; and
The conduct of patient experience surveys which would be made publicly available.

Care Coordination
The provider entity uses a team-based approach that supports collaboration and communication among the patient, physician, and licensed or certified medical professionals who are working at the top of their field across medical specialties and health care settings to improve the patient’s well-being. This activity shall include:

A single plan of care across health care settings and across health care providers who furnish care to the patient; and
Shared decision making which is a collaboration between the patient and health care provider that empowers the patient in the decision-making process; and provides the patient with objective information concerning: (1) the risk or seriousness of the disease or condition to be prevented or treated; (2) available treatment alternatives; and (3) the costs and benefits of available treatment alternatives.

Use of Information Technology and Evidence-based Medicine
The provider entity meaningfully uses interoperable information technology, scientific evidence, and comparative analytics to:

Aid in clinical decision making and improve patient safety;
Help monitor patients and track preventive services; and
Aid in the prescribing of prescription drugs.

Compensation Practices That Promote the Above-listed Objectives
The provider entity uses compensation structures that provide incentives to physicians and licensed and certified medical professionals to improve the health and outcomes of populations. These compensation practices may include, but not be limited to, incentives that are affiliated with:

Patient experience; or
Quality metrics, such as chronic disease measures and prevention compliance within a physician’s managed population.

The provider entity assumes shared financial and regulatory responsibility and accountability for successfully managing the per capita cost of health care, improving the overall patient experience, and improving the health of their respective populations.

Understanding these AMGA criteria can be used to improve performance, but in our experience at the Physician Leadership Institute, we think the value equation is key.

We have found that most organizations are measuring these four distinct areas in some form or another:

- Cost
- Patient Experience
- Process metrics
- Outcome metrics

Very few are measuring value (see previous blog post) over the total care cycle. To be fair, some of our clients are focused on specific value-drivers, as defined by internal teams. Others are content with a top-down approach. Is there an integrated methodology your organization uses to measure the quality of service delivery? How do you measure value?

Stay tuned.

Lean Leadership: The Future of Healthcare

The Lean principles of the Toyota Production System model are not new. They have been successfully used in manufacturing companies for decades—and are now making dramatic improvements in healthcare institutions as well. And, as I asked in my previous post on Lean Culture, from an organizational perspective -  Is Lean being adapted in healthcare as a tool or as a culture? Is your organization doing lean or becoming lean?

Here are a few more considerations:

- Purpose: What customer problems will the enterprise solve to achieve its own purpose of prospering?

- Process: How will the organization assess each major value stream to make sure each step is valuable, capable, available, adequate, flexible, and that all the steps are linked by flow, pull, and leveling?

- People: How can the organization insure that every important process has someone responsible for continually evaluating that value stream in terms of business purpose and lean process? How can everyone touching the value stream be actively engaged in operating it correctly and continually improving it?

The Lean Enterprise Institute also states that the purpose is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources. A lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide optimal value to the customer through a value creation process that has zero or minimal waste (more about “value in healthcare” our next blog post). To accomplish this, lean thinking changes the focus of management from optimizing separate technologies, assets, and vertical departments to optimizing the flow of products and services through entire value streams that flow horizontally across technologies, assets, and departments to customers. Eliminating waste along entire value streams, instead of at isolated points, creates processes that need less human effort, less space, less capital, and less time to make products and services at far less costs and with much fewer defects, compared with traditional business systems. Companies are able to respond to changing customer desires with high variety, high quality, low cost, and with very fast throughput times. Also, information management becomes much simpler and more accurate.

At the Physician Leadership Institute, we help clients identify and eliminate 9 types of “waste”:

Completion of wrong information; missing Information; multiple processes, inconsistency

Waiting for service, Lack of communication

Movement of staff, forms, customers

Extra Processing
Redundant forms or questions; duplication of efforts. Unnecessary approvals. “Re” Rework, Revise, Repeat, Review

Movement of staff and resources throughout hospital or clinic

Hoarding of supplies; excessive supply ordering

Overbuilding of space; Printing multiple copies and forms.

Underutilizing the talents and knowledge of the leaders and team member. Lack of employee engagement.

Management & Leadership Systems
The wrong system of management invariably increases waste and grows unproductive practices. Decision-making is not delegated to the right level, and accountability is questionable.
Leadership is not institutionalized as a practice.

Operationalizing Lean practices requires Lean Leadership – leadership which inspires change and provides the support – via coaching and other resources. In Healthcare, the organizational change agent is not a consultant or an outsider.  The change agent can be a physician, an administrator, even a staff worker.

Lean leadership comprises of the following:

- Assess and ensure organizational “readiness to change”
- Understand and answer the most important question: “why change?”
- Lead by example
- Engage and influence others
- Operationalize measurement and accountability
- Be flexible and open to change
- Empower and motivate front-line teams
- Coach others through letting go of current ways of doing things and being uncomfortable
- Ensure innovation and experimentation (try-storming not brainstorming)
- Embrace continuous change
- Provide support, praise, and authentic recognition

The future of your organization depends on mastering these skills. At the Physician Leadership Institute, we specialize in: (1) the “hard side” of lean by teaching lean concepts to physicians, (2) applying lean through action projects that bring together physician leaders and hospital administrators to renovate your business model and your business processes, and (3) the “soft side” of lean by teaching physicians and administrators the necessary leadership skills to lead change while engaging others.

Lean Culture: Sustaining Operational Improvements

In today’s cost-cutting climate, work-process improvement is a significant issue across all departments and functions.  The lean organization strives to continuously eliminate waste from its work processes, but what is often overlooked is quality of experience.  In service organizations, the customer must be embedded at the heart of all improvement initiatives. Redesigning services around the patient experience is literally the most fundamental design principle. Intangibles play a significant role in experiential design, and must not be discounted.

In From lean to lasting: making operational improvements stick, the authors demonstrate that we must look beyond just  technical changes, to the ways that organizational structures and processes—and even the mind-sets of employees—could affect our ability to meet the goals we set:

The authors warn us that the biggest challenge impacting sustainable success in Lean is integrating the better-known “hard” operational tools and approaches—such as just-in-time production—with the “soft” side, including the development of leaders who can help teams to continuously identify and make efficiency improvements, link and align the boardroom with the shop floor, and build the technical and interpersonal skills that make efficiency benefits real. Mastering lean’s softer side empowers all employees to commit themselves to new ways of thinking and working. No change is sustainable without this cultural shift. Building a lean culture is just as important as developing a lean work-process.

Lets look at an example – a patient visit to a doctor. If you go visit a doctor at a clinic, the whole visit can be deconstructed into value-added steps, and non-value-added steps. A value-added service is defined as a service a patient is willing to pay for such as seeing the doctor. A non-value-added step, might be something like filling out paper work or waiting in the waiting area.

Red = non-value added; Green = value-added; Yellow = value-enabler

A time-value analysis of this process tells us that over 65% of the patient’s time is spent on non-value added activities. This impacts the patient experience directly.

Ask yourself: how can you eliminate the impact (time, hassle-factors) of your non-value-added activities on the patient experience?

The culture of your organization will determine whether Lean-Design is simply used as a mere tool or as way transform operational performance.

Doing Lean (Lean Tools) Becoming Lean (Lean Culture)
focus on reducing costs improving processes to serve patient better and grow the business
project-focused business strategy
complex measures and score cards simple, brief, visual, customer focused metrics
delegated leadership with black belts and experts Leadership at every level, physician-led, with coaching and constant reinforcement
asking “are we LEAN”? knowing this is never ending journey with continuous improvement
Lean Tools used during events Waste identification and elimination daily and as part of everyone’s job


From an organizational perspective, ask: Is Lean being adapted in healthcare as a tool or as a culture? Are healthcare organizations doing lean or becoming lean?

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