As hospitals and health systems work to adapt to a new payment environment grounded in value, strategic agility is becoming more important than ever. Here is a look at how three hospitals and health systems are going about it.
Agile organizations are likely to be decentralized and nonhierarchical. They tend to empower operating units and individuals. They are good at motivating the entire workforce. Above all, they are organized to act expeditiously, based on rapid decision making.
What does agile decision making look like in a healthcare organization? That depends on the specific organizational culture at work.
For almost seven years, Bellin Health in Green Bay, Wis., encompassing a 178-bed community hospital and a primary care practice, has kept to a disciplined decision-making process called the performance plan, which operates in a 120-day cycle.
Focusing energies. Each Thursday, the organization’s C-suite, vice presidents, and directors (about 20 senior people) meet together for three hours to direct and track initiatives focused around one of four primary strategies:
- Growth and prosperity
- Patient/family/customer-centered care experience
- Engaged staff/partners
- Improved health of the population
A document called an “energy grid” lists all Bellin departments and what each is responsible for in each initiative (see the exhibit below). Every 120 days, 150 to 200 members of Bellin’s leadership and middle management get together to go through the 20 or so current initiatives on the energy grid: What is the status? What activities are taking place? Where are the initiatives headed?
So far so good. But something is changing, says Bellin CFO Jim Dietsche. Things are speeding up, impinging on their rhythmic 120-day process.
Speeding up decision making. “Our marketplace is shifting dramatically in response to competitive, regulatory, and political forces. Our normal weekly leadership meetings still review and report on project status but now, in addition, there may be external developments that we need to make decisions about and start moving on right away.”
A good example of an opportunity that arose quickly and was fast-tracked was an invitation to become a Medicare Pioneer Accountable Care Organization along with ThedaCare, another independent organization in the area. The two organizations had worked together in the past, but this would mean forming a new, clinically integrated entity—called Bellin ThedaCare Healthcare Providers—and sharing savings and risks for the first time.
It would also mean making quick strategic decisions at the highest level. The Center for Medicare & Medicaid Innovation approached the hospitals in April 2012; the application to participate was due in August. In between, both ThedaCare and Bellin had to approve the initiative and win support from their physicians.
Decision making was accelerated, says Dietsche, through a strategic planning group of physicians and system administrators from both systems. Once again, the normal, step-wise process of gathering, analyzing, and presenting data would not be adequate. “Instead, we were flowing through and analyzing the data together at the same time to make an informed decision on the fly, as it were. We brought in an outside consultant to assist in the financial analysis, and we worked together to communicate the recommendation to independent physicians and, ultimately, to our respective governing boards.”
Defining owners. Another aspect of decision making that is changing at Bellin is that each project now has an executive sponsor with sharply defined responsibilities. In the past, says Dietsche, there might be several leaders working on one project, which led to a lot of finger-pointing when something wasn’t going well. The organization is still very group-oriented, but now someone owns both the highs and lows of each initiative and is held accountable at all points.
“So when rapid decision making is required to get a project back on track, typically people rally around that individual.”
The thing is, there are only so many individuals and so many resources available to support them. Instead of having perhaps one major item on their agendas, executives now may have four or five such projects that could significantly affect Bellin’s future, Dietsche says. While some initiatives extend over several cycles, the hospital works hard to avoid project creep or scope creep.
“The speed and volume of events today clearly challenges your human resources. It’s important to be sure we’re not moving so fast that we miss something or make an error. Because, even if we use consultants or advisors, we still have to sit down at the end of the day and make the decisions ourselves.”
Empowerment by Committee
In June 2012, Shawn Steffen, revenue cycle director of Mercy Medical Center, Cedar Rapids, Iowa, identified sluggish accounts receivable in both hospice and home health as a drag on the organization’s attempt to optimize cash flow. In many hospitals, the CFO would be the driver of a solution and, indeed, this might have happened at Mercy five years ago, or even two years ago. But the Lean process improvement training that Steffen has received prepared him to address the situation without CFO involvement.
Designing a new structure. In spring 2012, a new cross-disciplinary committee structure was put in place at Mercy, designed to align performance improvement efforts with the hospital’s five strategic pillars:
- Organizational excellence
- Cultural excellence
- Transfer technology
- Improving clinical outcomes
- Strengthening collaboration
Each of these strategic pillars has a steering committee assigned to it. These steering committees oversee a number of councils that handle specific areas. For instance, the Organizational Excellence Steering Committee oversees five councils on compliance, accreditation, environment of care, IT, and maximizing resources (see the exhibit below). Each of these councils, in turn, has a number of committees that focus on specific topics.
Accordingly, the accounts receivable initiative was assigned to the Revenue Cycle Committee (which rolls up to the Maximize Resources Council, which is under the Organizational Excellence Steering Committee).
“For many matters,” says Karna Colberg-Swenson, Mercy’s director of continuous improvement, “we’ve pushed approval down so the committee has the ability to say ‘Yes, go research that’ or ‘Go do that event.’ Executives still make decisions—but they can delegate and rely on staff to make more of them.”
Teaching everyone PDCA. Colberg-Swenson sat down with employees on the Revenue Cycle Committee to conduct a root-cause analysis, using Lean tools to map the accounts receivable process, identify performance metrics, and determine roles and responsibilities. They found that 90 percent of the problem could be traced back to the admissions and intake process as clinicians are entering patient data, assigning service levels, and initiating treatment.
“It was an eye-opener,” says Colberg-Swenson. “Bills were not flying through because they too often had wrong information: in-home service instead of long-term care facility service, intermittent instead of continuous care, Medicaid instead of Medicare. Nurses and billers had not fully realized their effect on each other and on the success of the process as a whole.”
Mercy coaches employees, as the experts in their own jobs, to be able to understand and improve front-line processes. The health system has trained employees in the Plan-Do-Check-Act (PDCA) improvement cycle and empowered them to serve on an equal footing with supervisors, managers, and executives on each committee. This is an effective way, says Colberg-Swenson, to ensure that there isn’t a disconnect between leadership and what’s actually happening on the ground with patients.
In the case of the poorly performing accounts receivable, clinician and biller teams co-developed and implemented the process improvements, which included a regular joint review of patient status changes and a change in the sequence of accounts receivable steps. In six weeks, accounts receivable for home care and hospice improved by 57 percent, pouring millions of dollars back into Mercy’s cash flow.
Encouraging participation. In addition to making decision making more participatory, Mercy Medical Center’s new committee structure gives it the discipline, predictability—and often speed—that was missing when the traditional chain of command governed such matters exclusively. The whole organization knows how the structure works: what committees deal with what areas and which councils they roll up to. Perhaps most important, staff and employees know where and when decisions will take place.
“I know what committee to bring my ideas to,” says Colberg-Swenson. “I know when it meets, I know who’s leading it, and I know when I will have a decision or who is reviewing the performance metrics. If it’s a matter of some depth and breadth, perhaps affecting multiple departments, I know the decision will roll up to the steering committee. There again, I know when the steering committee meets, I know when I’m on its agenda, and I know when I’ll get a thumbs-up or thumbs-down.
The committee structure is intended to create an environment of trust and accountability. “But it is a change for executives as well as for front-line employees not accustomed to sharing decision-making authority,” says Colberg-Swenson. “So we needed to orient people at every level to working together in groups this way to solve their problems where they occur.”
In the Northwest, PeaceHealth has a long legacy of being a consensus-driven organization, says Carol Aaron, senior vice president, culture and people. “One of our core values is collaboration, and we are always trying to make sure that we have maximum input and involvement in key decisions. Having said that, we recognized that, with the rapid rate of change in health care these days, we would need to make decisions in a more nimble way than in the past.”
Consolidating decision making. Toward that end, the eight-hospital system is in the process of adopting a more centralized, consultative decision-making model that stresses accountability and clarity of roles:
- Specialized systemwide teams, which integrate representatives from throughout the health system around specific projects and program functions, make many decisions that previously were left to individual hospitals.
- Two examples are the transition of support services to a shared services model and the establishment of centers of expertise tasked with improving quality and reducing cost through standardization, centralization, and service (e.g., centers of expertise for talent, rewards, and organizational effectiveness in the human resources department).
- Decision authority and accountability are pushed to the most appropriate level, more often downward than upward.
- The decision owner(s), typically one individual or a clinical dyad, is responsible for getting the right level of stakeholder participation and input prior to finalizing decisions, allowing for more clarity and speed.
In the past, says Aaron, PeaceHealth’s different work teams would have operated in silos—for example, one on preparation for ICD-10, another for computerized provider order entry, and still another for the implementation of an EHR in the ambulatory setting in 2013. “Instead, we are building an office of change with portfolio oversight for transformational and large-scale system initiatives, replacing multiple large clinical initiatives at both the system and hospital levels. This new, centralized management model emphasizes integration of people, finance, and technology resources.”
This integration of functional leadership reflects the reorganization of PeaceHealth itself into three community-based networks of care, each accountable for coordinating care across multiple communities, as well as the system’s shift in focus from acute care towards community partnerships (see the exhibit below).
Loss of control. One of the biggest challenges of this structural change, says Aaron, is coming to grips with the loss of control felt by leaders of hospitals and services—including Aaron’s own. For example, in an effort to hold down costs and strengthen the system’s culture of wellness, PeaceHealth needed to change its employee health benefits.
“In the past, each hospital had a traditional human resources department that would assess local needs and budgets and act accordingly. It could easily have taken years for each CEO and human resources vice president to weigh in and help design a plan. Now we were able to put together a centralized benefits team within the Center of Expertise for Rewards (which encompasses health, wellness, and compensation practices) to assess best practices within and outside of PeaceHealth, identify ways to leverage those practices, design and finalize a benefits plan, and go through the approval process—in an unprecedented six months.”
This shift in approach was scary at first, and the health system is still in the learning phase. There is a trust element, says Aaron: “People wonder, ‘If I let this go, will somebody pick it up—and what happens if they don’t?
Now that they have had some success, Aaron says, “the systemwide teams are starting to take a lot of pride in the value they’re giving back to the organization—in ways the individuals never could have done when each site was working alone. And they appreciate the opportunity to grow, develop new skill sets, and take advantage of lots of new learning and development avenues.”
Different Approaches to the Same End
It may seem counterintuitive that enhanced collaboration—bringing more people into the process and requiring them to come to consensus—can contribute to more timely and more effective decision making. But Mercy Medical Center has shown that it does, as long as there is a sure-footed process and a sturdy structure underpinning efforts to meet clearly stated goals.
At Bellin, on the other hand, speeding up decision making has required a loosening of a highly structured process. Leaders are acting on several fronts simultaneously rather than sequentially, and making room for issues that can appear on the horizon with the suddenness of squalls.
And PeaceHealth is finding that centralizing organizational structures and decision making processes is bringing new clarity, accountability, and speed to major initiatives.
In all three cases, hospitals and health systems are demonstrating the benefits of agility in seizing opportunities to improve their financial and competitive positions within their communities.
Lauren Phillips is president, Phillips Medical Writers, Ltd. (firstname.lastname@example.org). Interviewed for this article (in order of appearance): Jim Dietsche, CFO, Bellin Health, Green Bay, Wis. (email@example.com). Karna Colberg-Swenson, director of continuous improvement for Mercy Medical Center in Cedar Rapids, Ia. (firstname.lastname@example.org). Carol Aaron, senior vice president for culture and people, PeaceHealth, Seattle (email@example.com).
Publication Date: Friday, March 01, 2013