More proof that the Michael Porter-type solution is living in the future before it gets here. Another study, this one from HSC shows that Virginia Mason has improved its processes, is saving money for its customers, and is paying the financial penalty.
Michael Millenson showed the same issues were going on in Demanding Medical Excellence 10 years ago, and effectively not much has changed. Doing the right thing will send providers into bankruptcy and most intermediaries and most end customers just don’t care. Here’s the full story in Health Affairs
It’s the incentives, stupid.
UPDATE: Jamie Robinson interviews Gary Kaplan, Virginia Mason’s CEO. No video, though, Brian!
> I just read “The Goal” recently for the first time
> and it was a truly eye-opening book, even if it was
> written 20 years ago.
It is a classic. Some students of Goldratt’s Theory of Constraints have directly applied his principles to hospital management in We All Fall Down.
As long as bribery is the operating fundamental you will not get competent government.
No. You put all your eggs in one basket, the basket spills, you’re ******. Real-world 101.
And, of course, the Clintons were the most honest politicians in the the world (e.g., Whitewater, beef futures, Travelgate, Monica, pardons, $50,000,000.00 in speaking fees, ad inf.)
Thanks for the video, Brian. I finally got a chance to watch it. It looks like they know exactly what they’re doing and what kinds of risks they’re taking.
I just read “The Goal” recently for the first time and it was a truly eye-opening book, even if it was written 20 years ago. One of the things that book makes crystal clear is that sometimes flawed measurements lead you to think that better approaches are actually performing worse. I wonder if that’s going on here as well, as Tom alluded to and I forgot when I made my initial comment. Hopefully the LEAN model can continue to deliver improvements in other hospitals as well.
“Is this not an indictment of government-controlled health care — including single-payer? All resources in one bucket — just one more Katrina-in-the-making? Of course.”
As long as you expect new administrations to appoint their own party hacks and ideologes into positions they have no clue about, and you support career and kickback rewards for contributors and supporters, then all you will get is incompetence. To change government is more than changing the faces. As long as bribery is the operating fundamental you will not get competent government.
> isn’t it in the interest of self-preservation
> for the health plans in Seattle and elsewhere
> to find a way to reward, rather than punish,
> this innovation?
Let’s not “reward” or “punish”; let’s drive adoption.
Keeping in mind that the bottom line for VM is top-line revenue – the cost of capacity – variable costs, we should not focus too much on VM’s bottom line. VM will worry about it in the short term, but over time this is manageable. More later.
Applying Toyota’s model, what the payers could do is an Activity Based Cost estimate of VM’s process, and use that as target reimbursement for everyone. Then switch from FFS reimbursement to case rates.
Each year, the reimbursement offered will be reduced (say) 10% of the difference between the FFS costs experienced and the target. The other groups will either match VM’s performance, or go broke. VM benefits by enjoying higher margins than its competitors during the adjustment period.
Over time, VM can use its newly-freed resources (physical and human) to pursue other projects. Or VM can manage their excess capacity (and associated costs) out of their system.
Everyone benefits by driving adoption of VM’s methods. Even VM benefits for awhile, but it does not last forever. As in any other business.
YES — DO ‘THE KATRINA’
Of course. What Prof. Porter said in his book about integrating improvements with today’s government-driven realities should be ignored. Down with “value for patients.”
Is this not an indictment of government-controlled health care — including single-payer? All resources in one bucket — just one more Katrina-in-the-making? Of course.
FYI: Prof. Porter is for universal health care — where everyone capable of paying for health insurance MUST buy health insurance.
Mr. Moore — when your slacker buddies find out they will be REQUIRED to buy health insurance like car insurance — will they call you a “moron?” Of course.
Funny. I’ve actually been kicking around the idea of bringing LEAN (which is the “Toyota philosophy” mentioned in the press release) principles to a hospital setting to see what they could do. I guess what they do is make you go bankrupt. There was that New York Times article a year ago or so about the clinic in NYC which was doing a better job of managing their diabetes patients and going broke in the process. The U.S. health care system makes me sad.
Isn’t it great to see how free market innovation is going to solve the healthcare cost crunch. When people realize that a single pay governement run system that considers health expenditures a cost to society and not a profit for providers, then we might see a real reduction in costs and better efficiencies. This system is making too much money on waste to change.