A New Norm for Hospital Operations

Since the passage of the Patient Protection and Affordable Care Act (PPACA), I have had the opportunity to engage a wide variety of colleagues, policymakers, and noted health care thinkers about the effects of health care reform on hospitals.  With the hindsight of over 30 years managing hospital operations, I have developed the strong belief that if hospitals are to improve significantly the systemic delivery of care we must commit to making bigger changes than may seem reasonable.  Moreover, hospital administrators entering the field will do well to consider changes of this scale as the “new norm” that will likely govern the industry for the next several decades.

Proposed reforms, like Medical Homes, Accountable Care Organizations and bundled payments, have consumed much of the focus since passage of PPACA, yet they will not be enough to achieve the national goal of high quality, low cost care.  Many progressive organizations have been successfully utilizing variations of this payment methodology and these delivery systems for extended periods of time, but there is little evidence that national adoption of these delivery systems alone will produce the results the country needs.  To have a substantial impact on slowing the growth of care delivery costs we must make a giant leap forward in everything from design of facilities to the processes that govern care delivery to how we utilize information technology.

With more than 5,000 hospitals operating in the country, the thought of altering the fundamental operating design of hospitals may seem to be unreasonable.  However, if we are to design a health system for the 21st century then let’s begin from the ground up.  The industries that produce the best quality products most efficiently today do not use production facilities designed and built 30-50 years ago.  They have recognized the need to streamline facilities so that products move through the operational cycle more quickly; sub processes efficiently contribute to the overall system aim; and information technology delivers a snapshot of any component of the business on demand and in real-time.

Can our most modern hospitals do that? Overwhelmingly the answer is no.  Those who say that we are diagnosing and treating people, not creating widgets, miss the essential truth that if we decrease the waste and inefficiency in hospitals, we can free doctors and clinicians from unnecessary tasks and give them more time to spend with patients. By embodying proven efficiency practices already established in other commercial sectors, within the clinical processes currently employed in hospitals, we can establish a foundation for total hospital efficiency that will significantly benefit patients and lowers costs.

For existing hospitals, reducing the logistical challenges that limit patient flow and create waste will reduce average lengths of stay, increase net revenues, increase capacity (making patient beds available more quickly) and establish a foundation for improved quality.  As in every other industry that has overhauled the design of new facilities, providers will experience increases in efficiency that become further bolstered by increases in quality.

Building on my assertion that we must go beyond what seems reasonable to achieve major change in hospital based care delivery it is my belief that the HITECH Act’s focus on electronic health record (EHR) implementation is too limited.  While digitizing health records, test results, and computerizing order entry will increase the availability and transfer of health information; it will do little to increase the efficiency of the overall care delivery operation.  Decision support protocols may help identify the most appropriate care regimen, but to maximize the potential of EHRs, the underlying systems that govern care delivery must be optimized and supported through technology.

Human driven systems tend to degrade over time and efforts to eliminate work-around or inefficient processes in health care will be unsuccessful unless supported by technology that ensures process efficiencies are maintained.  Advances in logistics software have the ability to choreograph all patient movements, order execution, and patient handoffs across entire hospitals so that total hospital efficiency is achieved.  Additionally, these information systems provide administrators with a real time, system wide view of a hospital’s operations.  By viewing patient flow, staffing needs, and process and cycle time data, leadership can make determinations on the most efficient resource allocation.

Adopting electronic health systems in a chaotic environment will not improve care; instead, it will create unnecessary stress and confusion among already overburdened caregivers.  By first orchestrating all clinical and non-clinical patient movements in a manner that streamlines patient flow, logistics, and departmental handoffs from admission to discharge, hospitals will be able to achieve immediate, measurable and sustainable gains in system-wide productivity and patient care.  EHRs will support these advances but will not produce the system performance needed.1

To meet these challenges of health reform, hospital executives must be prepared to move beyond the dictates of PPACA and HITECH and reconsider the foundations of hospital based care.  From design to operational methodologies to the use of information technology, we must be prepared to go beyond what the hospital industry has always considered reasonable and appropriate.  We must embrace and adapt the success of other industries if we are to create a new norm that delivers high quality, low cost care.

1 “Hospital Computing and the Costs and Quality of Care: A National Study”, Himmelstein – Wright – Woolhandler, American Journal of Medicine, 2009

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6 replies »

  1. I totally agree with the author’s views on health acre reforms. I hope someone’s listening. If everything falls right in place then life will be lot easy. While I was reading other blogs and news, I came across something very interesting. Apollo Hospitals signs MoU with University College of London. You can read more on http://bit.ly/mjj8aF

  2. Oscar,

    I believe one of the main issues is that improvement programs tend to be generally focused on departmental improvements rather than system wide amelioration. Additionally, most PI efforts lack a technology or software to ensure the efficiencies do not degrade over time.

  3. I think this post addresses an important issue in regards to efficiency and I would have thought that will Don Berwick’s background at IHI there would have been a greater emphasis on efficiency to lower costs from CMS. Especially when you consider that he could sell it to Republicans as a market based solution that could save tens of billions without new government spending.

    Also, a commitment to lowering costs through efficiency would make it easier for the government to sell lower reimbursement rates for hospitals.

    Hospital leaders need to spend more time working on improving the efficiency programs and the results they are getting from them.

  4. Interesting commentary… Logistical efficiency can be pursued without any alteration to the payment systems now in place. Not that ameliorating those wouldn’t also add great value.

    Government has a poor track record of revolutionizing things… at least for the 30 years I have been in healthcare. It is up to the leaders of healthcare organizations to make the quantum leap. It is do-able.

    HealthLeaders did an article with the same CEO from the Modern Healthcare article and a hospital in the Seattle area who are also moving beyond the traditional Lean and 6 Sigma projects to focus on total hospital efficiency.

  5. In response to Jonathan and to the author. There is a good piece in this week’s Modern Healthcare, in the C-Suite column by the CEO of a hospital that redesigned his processes, which had a $48 million dollar impact. It is hard, but it can be done. There have also been a few articles on Health Affairs over the last six months about hospitals having great success with efficiency efforts. Once CEOs and their Boards see what kind of savings that can be achieved, I think everybody will start to re-design the processes that guide patient flow.

    It seems like there is such savings in hospital efficiency that it should be the area where more attention should be focused. The government is planning to spend so much money through the Center for Innovation, when all they have to do is increase efficiency and save billions of dollars.

  6. Great piece and I fully agree. A few further observations:

    The sorts of changes you talk about will be precipitated once payment systems change. Given human nature, It will be hard to get out front of those payment changes and reengineer hospital infrastructure and processes now, but of course that is what leadership is for. Just make sure the CEO and the board are behind it!

    You mention efficiency a lot, but not reliability, though they are related. It’s important to focus on improving reliability explicitly because that will connect directly to improvements in quality (six sigma, and all that).