Posts Tagged ‘pay for performance’

$500 Billion From Where?

October 26th, 2010

In a recent conversation with a long time healthcare CEO, he made the following observation:

“There are about 2,750 pages to Obamacare.  I have no idea what the implications are of the first 2,700 pages, but I do know that at least 50 pages allude to the fact that $500B will be cut from hospital reimbursements in order to support the new legislation, and it’s also clear that these monies will be cut based upon quality.  Pay-for-performance will be the new catch phrase of the reimbursement world, and our peers are not ready for this stark reality.”

How does one move from a non-transparent system to one that allows anyone to log onto healthcare websites and search every detail relating to the success rates, scores, and capabilities of any given institution?  One very obvious “missing element” in hospital-related problems is the lack of dedication to getting to the “root cause” of most issues.  We are great at work arounds, but rarely take the time, energy, and have the cultural commitment to dig deeply enough to literally stop the root cause of the problem.  Is that why there are a reported 98,000 people killed by our facilities, and about an equal number injured each year?


Several organizations have attempted to take on these issues, but few have gone beyond scratching the surface of the real problems.  As bundled payments become the norm, a commitment to getting the highest available reimbursement for procedures will take on a new meaning.  Imagine a great doctor in an under-performing medical center where his or her work is not rewarded equally to a peer in a stronger hospital, because that bundled reimbursement was lowered due to institutional medical imperfections. Charles Kenney in  The Best Practice, and Steven Spear in The High-Velocity Edge have both addressed some of the nuances of this new culture, this new world order, but for hospital administrators, physicians, and staff to “get their arms around it,”  there will need to be transformational shifts in the fundamental culture of the organization.

Leadership will be forced to accept personal responsibility for virtually everything that occurs in an organization.  Employees will need to be empowered to embrace shared values, and key targets such as patient and employee safety will need to be identified so that goals can be set that stop nothing short of a level of complete PERFECTION.

The healthcare establishment will also need to embrace transparency within their organizations, and that information must be shared with everyone.  Most importantly, it must include the human element.  What is the human impact of each and every error or mistake?  This point alone will represent a major cultural shift in the way we do business.

Truman's phrase "The Buck Stops Here" - F. Nicholas Jacobs, FACHE

Employees, physicians, and administrators will need to actually be taught to see risk, and be provided with data upon which actions may be taken.  Most importantly, however, problem solving must be encouraged and supported at every level of the organization.

How is this all possible?  I was recently on a speaking tour to several hospitals, and the bottom line at these facilities was that their leadership was “new age.”  They had worked diligently to decrease the hierarchy and to reduce and reorganize the roles of those in operations in order to support the fastest possible improvements.

The tsunami is coming, however slowly it may appear to be; it is approaching our healthcare shores, and quality – no, perfection, is the only means left for achieving success or, in many cases, is the only way to survive.  We must discipline ourselves to see problems and not simply try to work around them.  We must establish a problem solving culture.  We must set our goals and empower all of the players to do what is needed to solve these problems once and forever.  Harry Truman’s phrase, “The Buck Stops Here,” should become every CEO’s mantra, and the journey will finally begin, the journey to solve the myriad repeating problems in our current system.

Nick Jacobs, FACHE - HealingHospitals.com

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Posted in Healthcare, Hospitals, medical errors

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Carrots or Sticks?

January 30th, 2010

When you do the math, you can rather quickly determine that, as the aging process continues with the Boomer generation, federal funding for health care and Social Security will become more and more scarce. At the same time, we have all read the sobering national statistics regarding unnecessary deaths from hospital missteps. The CMS (Center for Medicare and Medicaid Services) previously introduced a form of pay for performance, or –more accurately– no pay for performance, which has already caused a great deal of change in the American Healthcare System.

As is widely known by now, CMS has decided to literally stop paying for the treatment costs of preventable medical complications.  This actually may seem like an intelligent idea. This approach is referred to by some as visibility for good care, and there is no doubt that it will represent the beginning of a stampede from the third-party insurance payers to follow the CMS “Big Dog.”  In fact, several companies have already announced that they will not be reimbursing hospitals for similar errors, as well.  The truth of the matter, however, is that this step does not even begin to address the problem.

The problem is not about penalizing hospitals, it’s about creating an incentive system that is not disease and sickness based.  Until the pyramid is flipped, we will not see the necessary changes to halt this financial slide to economic oblivion.

Sanjay Saint, MD, MPH

About 9% of U.S. hospitals presently use daily reminders to help physicians remember which patients have urinary catheters in place.  According to the University of Michigan’s Sanjay Saint, a professor of internal medicine, about 74% of hospitals don’t keep tabs on how long the catheters are in place.  But the real issue is that about 98% of hospitals and physicians don’t completely address issues of wellness and prevention that can allow us to remain well until we die because there is little or no incentive to do so.

Logic would dictate that because financial reimbursements will be connected to these hospital-created mistakes, infections or injuries, someone will surely pay more attention to the current misses.  But what if the entire system was based on keeping people healthy?  What if all of our focus was on exercise, appropriate food consumption, and stress management?

Unfortunately – or fortunately, depending upon your perspective – the United States has become the most proficient country in the world when it comes to capitalism, and much of capitalism is based on manipulating people to get them to consume what will bring the financial success and rewards to the corporations.  If you doubt this, just go to Eastern Europe to see what is happening in an environment with unregulated tobacco advertising.  The circle has started all over again.

In the old carrot-and-stick arrangement, there will be plenty of hits.  Wouldn’t it have been interesting, though, to reward hospitals where mistakes are almost nonexistent so that the less successful medical centers might line up to learn from them, or to reward docs and hospitals for helping to keep people healthy all the time. Carrots work, too, and with much less grief.

Carrots and (Celery) Sticks

What’s the old line?  “We’re going to beat the troops until morale improves.”

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Posted in Boomers, medical errors, Wellness

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