HFMA VIEWS

Jeni Williams
Senior Editor, HFMA

Healthcare organizations must focus greater attention on making patient care a more memorable experience for their customers if they are to be successful in today’s changing marketplace, author Jim Gilmore told ANI participants Tuesday morning.

Even a procedure such as a colonoscopy provides the opportunity to stage an experience for patients that engages them in an inherently personal way, from registration through admission to the time of discharge.

“Today, more consumers are paying for the experience, not just the good or service itself,” Gilmore told ANI participants. For example, at Fresno Surgical Hospital in Fresno, Calif., which the hospital’s web site describes as “a hospitality-inspired, healing environment unlike anything experienced in a traditional hospital,” the experience is so good, “Patients call on the anniversary of their surgery to see if they can spend the night,” Gilmore says.

Gilmore, co-author of the book The Experience Economy: Work Is Theatre and Every Business Is a Stage, addressed the fundamental shift occurring in today’s marketplace to an “experience economy” during his keynote presentation Tuesday, “The Experience Economy: Maximizing the Value of Health Care.”

Gilmore is cofounder of the Aurora, Ohio-based Strategic Horizons LLP, a thinking studio dedicated to helping organizations create new ways of adding value to their economic offerings.

During Tuesday’s presentation, he described the nature of the emerging experience economy, drawing on examples from Starbucks to McDonalds to Heinz ketchup bottles.

Consider the amount of square footage that Starbucks devotes to making its beverages--the space behind the counter--to the amount of space dedicated to enabling the customer to fully enjoy the coffee experience. “It defies any traditional thinking about retail to devote this much square footage not to services, but to experiences,” Gilmore says. But customers are willing to pay for the experience--which is why Starbucks is able to charge $4 for a cup of coffee, he says.

He displayed images of the new labels on bottles of Heinz ketchup, each one tailored with a clever saying: “Instructions: Put on Food,” “Not Green,” and “14 Billion French Fries Can’t Be Wrong.” He remembers the first time his wife bought bottles of Heinz ketchup with the catchy phrases. “When is the last time your wife called you into the kitchen to admire a ketchup purchase?” he asked the crowd. Today, the company invites customers to come up with their own phrases and allows consumers to purchase custom-made ketchup bottles for special events, such as weddings and birthday parties.

The same principles incorporated by these companies can also be applied by healthcare organizations to make patient care a better experience for their customers, Gilmore says. He outlined principles for staging compelling experiences in a memorable and meaningful way.

Principle No. 1: “Ing” the thing. “Focus on the using of the goods and services, because the using is the experience,” he says. Take a piece of paper and draw a line down the middle. On one side of the line, write down all of the “ing” words you can think of, such as “eating,” “sleeping,” and “imaging.” On the other side, create new “ing” words that could apply to your organization. “Ask yourself: What existing “ing” word is not being thought of as a patient experience? And what new “ing” words could you incorporate in your hospital?” Gilmore says. For example, by looking at the word “ultrasounding,” one company offers expectant parents the opportunity to purchase 4-D ultrasound images of their infant in utero--and parents are willing to pay out of their own pockets for this experience.

Principle No. 2: Theme the experience. Although people tend to equate theming with an amusement park (think Disney World), this is only one genre of theming, Gilmore says. He encourages hospital administrators to create an experience that is built around a theme. “Look at the average hospital waiting room. It’s horrible,” he says.  “I think the dominant operating theme for most hospital waiting rooms is a funeral home.” By “theming” the waiting room according to the needs of patients and their families, healthcare organizations can enhance the experience for their customers. He told of one dentist who has created a jungle theme in his waiting room, to the delight of his youngest patients. “This modest investment in the themed environment has a direct financial effect on his practice,” Gilmore says.

Principle No. 3: Work is theater. The environment is just the stage. When the founder of “Geek Squad,” a popular computer repair service, was creating his business, he looked at the traditional examples of service in this mundane industry and decided to break the mold. Instead of repairmen dressed in polo shirts--the stereotypical IT uniform--his service repairmen are dressed as “special agents,” with white, short-sleeve shirts and black ties. Instead of minivans, they drive Volkswagens with the words “Geek Squad” emblazoned on the side. When a Geek Squad professional is called to an assignment, he arrives by saying, “Special Agent 273 here for your computer. Step aside, Ma’am.”

“The founder of Geek Squad understands that work is theater. He is staging computer repair services,” Gilmore says. “He understands that the uniform is the costume, and he hires repairmen who are willing to “act” the part.” Today, there are more than 13,000 Geek Squad special agents, and the company is now part of Best Buy.

For hospital employees, theater might involve assessing a patient’s emotional and spiritual needs and responding to those needs. “I encourage you to encourage your employees to act,” he told ANI participants.

Principle No. 4: Help your patients experience less sacrifice when they come to your facility for care. Customer sacrifice is the difference between what a customer settles for and what he would really like. “Ask yourself, ‘What one dimension of sacrifice, if eliminated, would create the greatest value for our patients and most reduce our costs?’” Gilmore says.

Principle No. 5: Turn the experience into a transformation. Think about how you can stage a more memorable experience for patients on a disease state-by-disease state basis, he says. “We ought to be spending more money on experiences in health care,” Gilmore says. Doing so will ultimately drive down the costs of health care, he says.

Jeni Williams
Senior Editor, HFMA

Great leaders don’t just motivate their employees--they inspire their followers to action, Gen. Colin Powell, USA (Ret.), told HFMA members during Monday’s opening session of HFMA's 2007 Annual National Institute in San Diego.

“Leadership is about followership,” he told HFMA members. The best leaders build the trust of their followers through their integrity and their own commitment to the mission of the organization, Powell says, and when they are successful, their followers “are inspired to achieve the great purpose laid before them.”

Great leaders also put their followers in the best possible position to achieve the goals of the organization.

“Your goal is to empower your followers to accomplish great things,” Powell said. “You will accomplish great things as a leader if your followers accomplish great things.”

During his keynote presentation “Leadership: Taking Charge,” Powell offered several tips to HFMA members for inspiring their employees to achieve the goals of their organizations.

Powell has been a powerful leader for most of his life. Considered one of the most admired men in America, Powell has commanded military troops, chaired the Joint Chiefs of Staff, and served as Secretary of State. Throughout his presentation at ANI, he drew on examples garnered from experience as both a leader on the world stage and an eyewitness to leadership in action in providing insight on what it takes to be a great leader.

There are five characteristics that great leaders have in common, he says. In addition to inspiring their employees, great leaders also share these traits:

Great leaders invest the time and the resources necessary to properly train their employees. They combine the best possible equipment with the best possible training, and they are careful to hire the right people for their organizations. “Troops know whether you believe in the mission at hand by how well you have prepared them for battle,” Powell says.

They reward their followers for their hard work and commitment. Consider thanking not only your followers for the time and talents they’ve invested in your organization, but also their spouses. “Show more kindness,” Powell advises. Write handwritten notes of thanks whenever possible. Powell related the story of one leader who discovered his handwritten note of thanks to a follower was later framed in the follower’s office.

They know when it’s time to prune a follower from the organization. If a follower isn’t pulling his weight, his presence will negatively affect other followers--and will ultimately have a detrimental effect on the organization’s performance. “The best leaders make a difference by facing the reality of the problem and getting rid of those who aren’t getting the job done,” he says. Great leaders have “feelers” in all levels of the organization to determine where problems exist--and they act upon this information.

Great leaders build trust among their followers by giving their followers a moral example to follow. “Leadership is about execution as much as vision and planning,” Powell says. The followers of great leaders respect their leaders’ decisions--and they follow them. “You have to know that when you make a decision, your followers are going to follow it,” he says.

Additionally, great leaders used modern tools that help them compete with their competitors. They are open to using new tools processes not only to get information faster, but to improve they way they do business. “It’s a digital world,” says Powell, who admits he’s an “information nut,” “and anybody who can’t play gets left behind.”

Powell, author of the best-selling autobiography My American Journey, served in the U.S. Army for 35 years, rising to the rank of four-star general and serving as chairman of the Joint Chiefs of Staff (1989-1993). In this role, Powell oversaw the resolutions of 28 crises, including Operation Desert Storm and the Persian Gulf War. He was a key aide to the Secretary of Defense and National Security Adviser to President Reagan. He later served as Secretary of State under President George W. Bush, the first African American to hold this title.

Powell is the recipient of numerous U.S. and foreign military awards and decorations. His civilian awards include two Presidential Medals of Freedom, the President’s Citizens Medal, the Congressional Gold Medal, the Secretary of State Distinguished Service Medal, and the Secretary of Energy Distinguished Service Medal. He is also the founding chairman of America’s Promise--The Alliance for Youth, a national crusade to improve the lives of our nation’s youth. 

During Monday’s keynote address, Powell discussed his involvement with “Revolution Health Group,” a new company designed to transform how people approach their health and wellness. Powell is a member of Revolution Health’s board of directors. The cornerstone of Revolution Health is its web site, www.revolutionhealth.com, a free service that provides information on a variety of health topics, allows consumers to compare insurance products, puts consumers in touch with insurance brokers, and offers tips on maintaining health and wellness. “It’s a place where patients can get the transparency they need to make informed healthcare choices,” Powell says. Ultimately, the site plans to serve as a place where consumers can store their healthcare information. “We’re in touch with Dick (Clarke, HFMA President and CEO) to see what potential areas of collaboration might exist,” he says.
At the end of his presentation, HFMA members had the opportunity to ask Powell a few questions. One member thanked Powell, who received a standing ovation before and after his presentation, for his service to our country. Another asked Powell for his thoughts on the future of health care in the United States and the options for care that are available in the public and private sector. “That’s a question I should be asking you,” Powell responded. He believes the biggest challenge facing the American healthcare system is how to make our overall cost structure for healthcare services more affordable.

“You’ve got your work cut out for you,” he told the audience of healthcare finance professionals.

Scott MacStravic, PhD

With most hospitals and other HCOs barely able to keep enough staff to meet quality standards, and often having to rely on involuntary overtime even to do that, the challenge of attracting, motivating, and retaining employees has never been greater. The concept of “talent management,” i.e. identifying, attracting, managing, motivating and retaining truly talented individuals, in contrast to merely adequate staff, may seem far beyond what job market and revenue realities permit.

But HCOs that can succeed in boosting the talent levels, as well as sheer numbers of staff they have compared to what they need, will enjoy significant advantages in their market. First, their more talented staff will, by definition, deliver a higher level of quality, customer service, word-of-mouth “advertising” impact, efficiency, etc. and thereby improve the HCO’s performance. As pay-for-performance (P4P) systems grow, and with them the proportion of the HCO’s revenue that depends on better performance, the direct revenue impact of having higher talent levels will increase, as well as the indirect. 

HCOs have the same choices in evaluating and compensating talent as they do with respect to evaluating the quality of care they deliver – based on any mix of “structure, process, outcome and value” metrics. [A. Donabedian The Definition of Quality and Approaches to Its Assessment Ann Arbor, MI, Health Administration Press 1980] While HCOs have long relied mainly on structure and process measures in their own management, and marketing for that matter, it makes sense in today’s market, to move more to outcome and value.

Of course, the extent to which these measures will work better depends on the extent to which the HCO’s revenue and operating margin can be linked to them, in contrast to structure and process measures. If P4P systems lean more toward structure measures, such as whether the HCO has CPOE and EMR systems in place, board-certified physicians and enough RNs, for example, then these measures become more important. If such systems lean toward measures of adherence to EBM standards, HEDIS gauges of doing the right thing, etc., then process measures become more important.
Increasingly, however, the measures that are being collected for P4P systems, and reported in “scorecards” made public for guiding payers’ and consumers’ selection of providers, are leaning toward outcomes, such as mortality and complication rates and patient satisfaction levels. And there is definitely a move toward value measures, as well, such as cost savings achieved through case, care, and disease management.

When HCOs are paid on the basis of explicit measures of structure, process, outcomes, or value, it makes sense for them to measure their talent in precisely the same terms as it is being paid. And once measured, it makes sense for them to pay their talent based on the same measures. This can enable achieving the universally touted alignment of incentives between the organization and its workforce.
But it will require throwing out one of the more popular devices currently used in evaluating and paying talent – the “normal distribution”.

In virtually all of the HCOs where I was employed during my thirty-year career in healthcare, the “bell curve” was used in judging and compensating employees. The organizations’ overall distribution of performance ratings, as well as compensation levels, was expected, and therefore forced to fit a distribution where “excellent” was reserved for a small minority of staff, usually around five percent or less, with “good” permitted for perhaps another ten or fifteen percent, “average” expected for fifty percent or more, “fair” for ten or fifteen, and “poor” for five.

This distribution was used to examine the ratings actually rendered by managers, and any who were thought to be “over-rating” their employees were advised to revise their evaluations. Raises were limited to cost-of-living or perhaps one percent above that for all but the top ten or twenty percent of performers. And thanks to the symmetry of the normal distribution, raises for those forced into the fair and poor categories were less than cost-of-living levels to make sure total compensation was “budget neutral”.

I recall the problems I had when I was corporate VP of Strategy and Marketing, and rated all four of my key professionals and managers in the good to excellent range, with bonuses for all four. I argued that all were truly significantly better than average, and that since our division had produced a significant revenue and margin addition for the system, all should be eligible for such a bonus. While I won the battle that year, I lost the war, and all four were removed from the bonus system the next year. 

The only people on my staff who were exempt from this normal distribution tyranny were the physician relations representatives. They were compensated through bonuses directly tied to the number of additional admissions, and amount of revenue and margin delivered thereby, from physicians they were visiting and “developing” into better customers. And the formula for calculating their annual bonus ensured that their total compensation was dramatically affected by this bonus, compared to their salary. This ensured that all who were good to excellent performers got good to excellent compensation for it. It also ensured that they would remain among the organization’s talent.

While there is some justification for enforcing a normal distribution on managers’ ratings of their staff, it makes no sense once a value performance measurement and management system is in place. As soon as the value delivered by employees can be measured, this value should determine how much they are paid, not an artificial statistical distribution. And the conscious, public aim of the HCO should be to produce a staff with as high a proportion of “talent” rather than “placeholders” as possible, which will only happen if all talent is evaluated and compensated accordingly.

Both the level of compensation and the proportion of total compensation that is based on performance have been identified as major factors in attracting, motivating, and retaining talent. [[W. Lynch, et al. “Brief 1: Human Capital Motivation and Productivity” Health as Human Capital Foundation May 2007 (www.hhcfoundation.org/hhcf/pdf/Brief1.pdf)] The more effectively these are used, the more the HCO’s workforce should become “biased” in the direction of high performers, ideally reaching the Lake Wobegon ideal of everyone being above average.

One classic example of this effect occurred in the first year that one firm switched from a normally distributed hourly wage compensation system to one based on objectively measured productivity. The major direct result was a 44% improvement in productivity at the cost of only a 10% increase in compensation. But perhaps an even better result was the reduction in turnover by 21% among those rated as high-performers, while turnover among those rated average or low performers increased by over 10%. [E. Lazar “Performance Pay and Productivity” American Economic Review 190:5 Dec 2000 1346-1361]

It is a simple mathematical task to calculate how the mix of “talent” in the overall workforce will change away from the normal under such circumstances. As turnover decreases among high-performers and increases among average and low performers, the average performance levels will improve significantly. As the organization improves over time in identifying potential talent in its new hires, by learning what distinguishes high performers and can be used in applicant screening, this move toward an “abnormal” distribution in terms of talent levels will increase.

It should be the challenge of C-level executives, certainly the CEO and COOs, to deliberately seek and strive for such an abnormal distribution. One of the best ways to do so will be to ensure that the organization’s P4P system permits it, since otherwise, forcing a normal distribution in payment will end up forcing a normal distribution in performance. And a normal distribution in performance will automatically force a normal level of payment to the HCO, which may not be enough to enable it to succeed, or even survive in future. 

Robert Fromberg
Editor-in-Chief, HFMA

“They realized the need for a story, complete with enemies and villains.” Bob Woodward, The Agenda.

In 1992, the Clinton administration struggled to communicate its complex first budget plan to a wary Congress and public. Hillary Clinton, according to Bob Woodward, proposed a time-tested approach from the communications professionals’ playbook: tell “a simple story, with characters, with an objective, with a beginning, middle, and end.” According to Woodward, the Clintons believed that story also needed villains.

Another storyteller who uses the heroes-and-villains approach for complex issues is Michael Moore. As I write this column, Moore’s latest movie, SiCKO, has not been released; however, based on the trailer and advance accounts, the hero may not be clear, but the villain is: insurance companies. And no one will be surprised if hospitals are cast in a supporting-villain role for anything and everything from long emergency-room waits to illogical pricing.

From Superman to Star Wars, the heroes-and-villains formulation is successful at rallying an audience. That’s great in a comic book, an adventure novel, or a blockbuster movie. And in an unfortunate way, it works well in politics, simplifying complex issues and motivating voters to support certain candidates and initiatives and defeat others. The unfortunate parts are the oversimplification and emphasis on the negative.

Healthcare executives need to tell complex stories. They need consumers to understand hospital pricing and quality, and to take advantage of community benefits designed to improve health. They need to renegotiate contracts with managed care organizations. They need government to understand the effect of the payment system and to improve that system.

However, the heroes-and-villains approach is terrible for these stories. It may be efficient to demonize managed care organizations or pharmaceutical companies or the federal government. But that ultimately gets us only to a stalemate. There is no point in defeating these groups when the only positive change will come from involving them in solutions.

There is, however, a compelling story line that is suitable for health care. (No, not the fall of the tragic hero.) I once attended a talk by Martha Nelson , the editor of People magazine. She said the issues of People that sell the best have on their covers “ordinary” people who had done extraordinary things.

I call this a purpose-and-passion story. A purpose-and-passion story could highlight people who have overcome obesity or alcoholism, practitioners who identified a mysterious condition, staff who found ways to help people with financial challenges to fund their health care. A purpose-and-passion story even could be told about your hospital’s efforts to create a rational pricing system.

A good purpose-and-passion story doesn’t need a villain. There is a beginning, middle, and end. There is rising action. There is an inspiring conclusion. And the motivating force is all directed toward accomplishing something worthwhile. Now that’s a story line for health care.

Scott MacStravic, PhD

I read an article yesterday that caused me to ask the above question of hospitals in general. It described how Florida Power & Light (FPL), a major employer in that state, began an employee wellness program called “FPL-WELL” in 1991, beginning modestly with some health promotion initiatives, adding an exercise facility, then opening its first onsite medical clinic in 2000.  The first clinic proved so successful that it opened a second in 2003 and a third in 2005.

The first center was initiated with the help of a local hospital, which operated it for its first few years, but could not keep up with challenges in resources, technology and staffing. As a result, FPL contracted with Whole Health Management (WHM) in Cleveland, Ohio, a specialized supplier of occupational and corporate health services. When FPL planned the second clinic’s opening, it approached “four or five” local hospitals about running that clinic, but: “They weren’t able to make the connection about how it related to their core business.” according to Andy Scabelli, FPL’s manager of employee health and well-being. A proposal to use medical residents and interns to staff the clinic also fell on deaf ears at the area’s medical school.

As a result, FPL went again to WHM. Hospitals have a similar “core business” choice when it comes to their own employee health. They can ignore it, or deal with it modestly within the confines of health insurance and Employee Assistance Programs. They could develop and operate their own programs, such as the “Fairview Alive” program offered by the Fairview Health System in Minneapolis. This program has been reported to have saved the system several millions of dollars in workers compensation, absence and turnover costs. [B. Eischen “Impact of Wellness Programs: Fairview Health Services’ Experience” National Forum on Health, Productivity and Absence Management 2003 (www.ibiweb.org/forum-presentations/9)]

Numerous hospitals have developed disease management centers, particularly for diabetes, to reduce the crises, complications and worsening thereof. Hundreds offer executive health programs, fitness centers, and other health-focused initiatives, even though these conflict with their interests in gaining revenue from sickness care. But employee health management, for themselves, or as a revenue-generating “sideline”, is easily the greatest opportunity to both benefit the economy as a whole, and gain profitable revenue.

So why is it not a “core business”? Wheaton Franciscan Healthcare, Milwaukee, Wisconsin, has been partnering with Quad/Graphics, a large, local printing firm, in a joint venture called “QualMed”, which operates eight onsite employee health clinics in the US. It also staffs onsite clinics at two other locations in its market. Because of its close working relationships with local employers, it enjoys a “preferred provider” status that delivers extra patients, or reinforces current patients’ preferences for inpatient and outpatient sickness care.

Both St. Luke’s Health System in Sioux City, Iowa, and the University of South Florida’s USF Health are partnering with U.S. Preventive Medicine® in sponsoring preventive medicine services for consumers and The Prevention Plan for employers.  These programs include health risk assessments and extensive diagnostic testing, along with coaching and medical care, where needed, to improve the health of employees, generate added use of the hospital’s diagnostic and treatment services, and generate added wellness revenue.

The Pratt Diagnostic Center at Tufts-New England Medical Center in Boston offers its own “retainer medical practice” in concert with MDVIP. This practice, like all MDVIP practices, stresses wellness and proactive health interventions, which have been shown to significantly, often dramatically reduce the use of reactive sickness care among their patients. While it is true, and the deliberate intention of proactive wellness services that sickness care need, demand, and expenditures should be driven down as a result, it may be that such services belong in the core business of hospitals, if only to join with all other stakeholders in health care to reduce this increasingly unaffordable burden.

Scott MacStravic, PhD

There has always been at least a logical connection between banks and healthcare organizations (HCOs). As financial services institutions, banks relate to people’s “wealth assets” in much the same was as do HCOs relate to people’s “health assets”. They can restore, protect and improve their customers’ wealth in largely the same ways that HCOs restore, protect and improve their patients’ health. Of course, banks do much more to protect and improve, while HCOs do much more to restore the assets they work with.

But with the emergence of consumer-directed-health plans (CDHPs) and various kinds of health spending accounts (HSAs) that are permanent personal health//wealth accounts, banks are becoming potential partners for HCOs that are willing to do more on the protecting and improving side of their “asset management. The explicit aim of HSAs is to turn consumers into prudent purchasers of health care, and effective managers of their own health. Both of these aims, if achieved to any significant degree, will help and be helped by effective asset management of health and wealth.

As it is now, banks and other financial institutions will serve primarily as repositories, interest-payers, and payment-makers for HSAs, enabling consumer clients to store, earn interest, and manage the deductibles and required payments out of their accounts. But since it will be in both the banks’ and their clients’ best interests to preserve as much of the HSA account as possible, for as long as possible, they may also be willing to partner with HCOs who can deliver similar benefits to the same clients.

Not that I think it a realistic possibility that banks will contribute financially to proactive health management (PHM) efforts by HCOs, aimed at either their own employees, as a cost savings strategy, or at local employers’ employees, as a revenue/profit-generating strategy. I have never experienced anything from banks that would suggest such generosity. But they may well become co-marketers and supporters of HCOs’ efforts.

It would be a simple and virtually costless matter, for example, for banks to stuff their monthly account reports mailings with a flyer about the HCO’s PHM services. Including notices and sending e-mails promoting the general value of PHM to HAS protection would be almost equally easy, with so many bank customers already banking online. The only way to find out what banks would be willing to do is to approach them and see if they also see and appreciate the partnership potential. After all, if their clients seen protecting HSA assets as a valuable benefit, they are more likely to remain bank customers, as well as to become or remain the HCO’s customers.