Long-term strategic approaches help Charleston Area Medical Center and Texas Health Resources achieve quality and financial success.
As the healthcare industry continues its transition from volume to value, it’s imperative for health systems to develop and implement a long-term strategic approach to build capabilities that position their organizations for financial success. This means big changes in how healthcare executive teams operate. Hurried solutions to fix budget discrepancies, labor excesses, or operational holes may be detrimental to organizations and their overall long-term success. Short-term modifications through budget and labor manipulations will only postpone the required fundamental redesign of how hospitals and health systems operate.
The Charleston Area Medical Center Health System (CAMCHS) in Charleston, W.Va., exemplifies a long-term strategic approach that yields significant return on investment. A 2015 recipient of the Malcolm Baldrige National Quality Award, CAMCHS was honored for establishing practical operational methods for improving financial, quality, and service performance within all four hospitals under the Charleston Area Medical Center (CAMC) umbrella.
Similarly, Texas Health Resources, recognized at the highest level with the Texas Award for Performance Excellence in 2013, has fundamentally changed how leaders set and deploy strategic and operational initiatives across 29 hospital locations with more than 3,800 beds and a total of 350 points of access across north Texas. These systems are two of the most process-literate health systems in the country today, having dramatically redesigned their leadership and operations to prepare for value and improved performance over several years, yielding significant patient outcomes and organizational and financial successes.
Organizations that desire to achieve the same success as CAMC and Texas Health Resources should start now to redesign how they lead and manage their enterprise, systematically building new skills to compete in a value world. To begin the process, healthcare leaders should develop the following four fundamental capabilities that will position their organizations for success.
Build a Robust, Actionable System
CAMC built and continues to advance a robust system of processes involving all key operators to ensure operational leaders can effectively manage cost, quality, and experience of operations against targets.
CFOs, operational, and clinical leaders work together to identify performance measures and targets across multiple dimensions including quality/safety, patient experience, workforce environment, strategy implementation, and financial/market performance. Multidisciplinary design teams systematically select measures that are actionable, can be collected with integrity and benchmarked, and/or are required by regulators. After selection, they ensure alignment with strategic and operational objectives and targets and develop schedules for production, revision, and decision making around performance improvement opportunities. Daily, weekly, monthly, quarterly, and annual reviews include relevant analytic methods to ensure valid conclusions and effective actions taken.
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The focus of action depends upon the size of variances, trends, and risks to the organization. Through this process, operations leaders and staff learn the art and science of applied analytics and managing by fact and how to use both in-process and outcome measures to improve operations performance.
In addition to systematic selection and design of actionable data for operators to manage clinical and support functions, CAMC leaders review their key performance measures annually for alignment with the organizational vision and revise them to address updated strategic objectives and goals. This is accomplished through a cycle of strategy planning, measure selection, goal and action plan deployment, and performance analysis and improvement that includes the following steps taken by senior leaders:
- Review progress toward achievement of four-year, long-term strategic objectives, annual goals, and “big-dot” targets organized around five pillars.
- Assimilate and analyze progress to identify strategic opportunities that impact achievement of the vision to be recognized as the best place to receive care, to work, to practice, and to refer patients in West Virginia.
Across their operations, small and large savings have been achieved, leading the organization to achieve low-cost, low-price status with above average uncompensated care but a strong operating margin that consistently exceeds benchmarks.
For example, CAMC’s use of service-line analytics including comparison of physician cost and utilization of products resulted in $300,000 in annual savings and its use of Lean methodology eliminated batching in the production line for IV pharmacy medication waste, resulting in annual savings of $134,000. This exceeded the target of a 50 percent reduction and has totaled $670,000 in savings to date. Key distribution supplier performance is measured and evaluated with performance metrics and biannual or annual scheduled business reviews.
Build an Effective Leadership System
As a young organization in 2006, Texas Health Resources recognized it needed a new and fundamentally different leadership system to achieve their 10-year strategic focus. Leaders benchmarked more mature companies and focused on building an effective leadership system that would allow them to radically transform from a hospital company to an organization positioned for population health and value-based management. Through several iterations, they established a leadership system of leadership groups, systematic approaches, and new cultural norms across entities and silos, providing groups and individuals clearly defined and transparent decision authority, accountabilities, roles, and responsibilities.
Today, the health system’s hospital and ambulatory operations are run by triads of physicians, nurses, and administrative executives across natural geographic market regions. Overall, systemwide operations report to a dyad of clinical and operational leadership—the chief clinical officer and the COO. At every level, matrixed decision authority is defined by roles expressed in the acronym OVIS:
- Owner—the person responsible for the correct and thorough completion of the work
- Vetoer—the person with final decision /veto power on the work
- Influencer—the person who is able to provide information to informally impact the outcome of the work
- Supporter—the person who is involved to support the correct completion of the work
Someone has the bullseye, meaning that person owns and is accountable for certain types of decisions. Some topics, such as clinical integration and workforce engagement, have shared ownership. Everyone knows their responsibilities and the expectation of teamwork. To ensure clarity, Texas Health Resources has a process for communication that integrates messages and expectations to address the “why” around organizational performance, change, and the future. Leaders use performance improvement tools periodically to evaluate, improve, and standardize communications.
Overall, high-performing organizations address how leaders lead by going beyond good job descriptions and organizational charts and specifying the roles of individuals and leadership teams in advancing organizational initiatives and achieving results. Other indicators of high-performing leadership structures include the following factors:
- Evaluation, design, and integration of multi-disciplinary group (e.g., committees, councils) leadership to have well-coordinated decision-making authority and responsibilities
- Development and improvement of processes groups use to conduct their responsibilities, standardizing pre- and post-meeting expectations as well as meeting processes
- Implementation of efficient and effective decision making and action planning at all levels—C-team to front line teams and matrixed multi-disciplinary teams—to ensure the organization achieves its goals and intended outcomes
- Reliance on a mixture of front-line or bottom up mechanisms with top-down, enterprisewide approaches to support delivery of value and optimized services
- Leadership involvement in making decisions and overseeing action plans to manage and improve performance.
To make and oversee strategic decisions effectively, operational performance and progress reviews need to be carefully designed with well-developed and transparent processes. High-performing groups relying on hardwired, efficient decision making and direction setting processes make up effective leadership systems.
Develop a Systematic Approach
Leaders in the midst of significant organizational change need to have clarity around the future of the organization, including planned scope of business, geography, and/or key functional areas, and clarity around differentiating their market advantage compared to other consumer alternatives.
CAMC developed a systematic approach to setting and implementing strategic and operational plans, including processes to modify action plans when market conditions require agility. Its organizational core competency is “improving the health and economics of our community.” It modified action plans and used intelligent risk criteria to make recent changes, including the development of programs for infusion solutions and radiation oncology, integrating Teays Valley Hospital into the CAMC, and switching information technology systems. These strategic decisions resulted in more than $4 million in financial contribution.
When developing plans, leaders need to evaluate operational performance targets, including quality of care, patient safety, patient experience, wait times, and access processes, in addition to traditional budgetary and financial metrics. It is essential that directly involved staff identify tactics to achieve goals that are clear, transparent, and effectively communicated to all involved staff while leadership takes responsibility to remove barriers to change.
Instill Process Literacy at all Levels
Health systems need to standardize how work gets done and eliminate redundancy so that the clinical end product is reliable and state of the art. To do this, many organizations have adopted Lean Six Sigma, rapid process improvement, or other process improvement tools.
To build process literacy organizationwide, the leadership team needs to believe in its action plan and instill this plan as part of the organization’s culture. In high-performing organizations, managers train colleagues in clinical and administrative functions to identify inefficiencies that are wasteful or hazardous to the patient and are vocal about reducing these process failures. Giving everyone in the organization a voice and a common vision is critical to the overall transformation and to sustaining change in the organization. Sustainable change requires organizations to transform and align organizational culture and process.
Texas Health Resources accomplished this by becoming a culture of high reliability and integrating all strategic deployment and performance improvement capabilities under a system integration and innovation office. Through this office, initiatives are coordinated, integrated, and managed, enabling Texas Health Resources to achieve more than $180 million in value realization while improving quality over the past two years (2015 and 2016). Leaders developed a systematic approach called Reliable Care Blueprinting involving more than 350 people of all key disciplines in work teams that oversee standardizing and improving key processes in care delivery. Each team is led by a hospital triad leader, keeping the work close to direct patient care and service while coordinating the initiative through the system integration and innovation office leader who reports directly to the system CEO.
Not only do staff have a voice, but they also own the redesign of their work processes, which is proving to be a critical success factor in the results Texas Health Resources is achieving. This realignment, coupled with elevating and training all staff on high- reliability tools, ensures that the success factors from their early work are hardwired for long-term sustainment.
Passion Pays Off
Healthcare systems understand that the market is demanding change, but leaders often question how to successfully transform in a way that is also sustainable. Quick “triages” of departments and budgets may address discrepancies in the short term, but this type of haste is not efficient or effective in the long-term. A clear, systematic approach that builds capabilities for data-driven leadership and sophisticated, on-going process management are vital for sustainable change. Long-term goals that put patients first are imperative to success. Leaders need to be focused on the culture of the organization and share their passion for sustainable change. In short, leaders need a passionate team, a thoughtful strategy, and an organizational culture ready for transformation to be successful.