planning

Why hospitals are like airlines and movie theaters

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I prefer to talk about events before they take place, not after. I don’t know if that makes me a futurist or merely someone not bright enough to understand them as they now are.  I like to have a think about things that don’t seem right.  This helps me understand what I may be missing, or if I may be on to something.

I got one of my “ah-ha” moments while driving to the airport yesterday; something I have done a few hundred times.  I could drive the route in my sleep.  I know of two ways to get there, so I really never thought about needing a third.  My bad.  One of the roads I take was flooded—the rain was so hard it appeared to be raining up.  After being stuck in traffic for twenty minutes,—route number two.  Five minutes later, the drenched man by the side of the road told me the bridge was out.

I found myself out of choices, poor planning on my part.  I came to a fork in the road and took it.  I still had a reasonable amount of time to make my flight.  Then I found myself driving behind a nun who was driving a Rambler.  Really.  We never hit thirty on the speedometer.  I would have missed the flight had it not been delayed.

It occurred to me as I was stopped that I had failed to heed my own advice.  I was guilty of having no plan for what to do if things changed, guilty of having no options because, “I have always done things this way.”

I am speaking this afternoon about innovation and transformation for the large healthcare provider model (hospitals)—could take five minutes, could take an hour—we will have to see how many people brought tomatoes to throw.

The large provider business model is dying.  Play along with me for a minute.  How many different services and procedures are offered by the “average” hospital?   A couple thousand.  Some are performed hundreds of times each day, some on a somewhat regular basis, and some rarely.  Let’s focus on those done rarely.

The funny thing about having the ability to do something is you have to pay for the resources and technology whether you do it once or hundreds of times.  The less you do it, the larger the negative ROI.  Most large providers offer many services with negative ROIs.  How does one alter the business model to compensate for that?  Charge for parking; charge $7 for each Tylenol, outsource less profitable services.

It might be important to recognize that the reason many services—the ones most patients need—are marginally profitable is because those services are helping to fund the unprofitable services.

Sooner or later, hospitals cut loose the low-end services.  Others gobble them up, and make tremendous profits from offering them under a new business model.

I started thinking about other industries that operate under a similar business model.  The two I came up with are movie theaters and the large airlines—both which offer a service.  One of my early clients was the CFO of one of the country’s largest theaters.  They knew their costs down to the penny.  They lose money on every movie they show.  That is why they charge eight dollars for popcorn.  Their model is broken.  Are they changing it?  No.  Others changed it.  Blockbuster did.  Then their model broke.  Now we have NetFlixs.  They are making money without the popcorn.

Continental and United are merging.  Will that make things better?  Will they stop charging for bags?  Will they offer free meals?  More seat room?  Of course not.  Combined, they will lose even more money.  Their model is broken.  Are they changing it?  No.  What are they doing—buying even bigger planes.

You know who owns fifty-five percent of the flying market?  The pesky, disruptive regional carriers.  They make lots of money.  They have a different model, and they know their costs.

Disrupting the business model and changing the way you do something are not the same.  At some point there will be nothing left to change except for what you do.  Building a need for every sub-specialty offered by EPIC is not disruptive, it is dysfunctional.  Offering the same services as every other hospital within your coverage area is not disruptive, it is duplicative.  It simply divides the revenue pie for any given procedure into smaller slices.

Hospitals know their charges, not their costs.  They can’t pull a P&L per patient, or per procedure.  How can one price an Accountable Care model without knowing the costs?  An executive at a large children’s hospital told me they have to markup the costs of little things, like pills, two-hundred and fifty percent.  Unless hospitals are prepared to disrupt their business model, they had better buy a lot more pills.

saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942
paulroemer@healthcareitstrategy.com

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Firing Winston

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I was reporting to the board—or bored—sometimes it is the same.  The mission: figure out what was wrong, and then fix it.

I spent weeks talking to everyone from the executives to the receptionist.  I interviewed patients and physicians.  The doctors were not happy, the patients less so.  Costs were up, charges were down, and quality was down.

Of all the gin joints in all the towns…

The problem was easy to decipher.  I presented my findings.

“What do you recommend?” asked the chair of the audit committee.

I tried to look lost in thought.  “I fired Winston,” I replied.

“Why Winston?”

“Winston was where it all led; quality, cost, satisfaction.  Winston was responsible for the failures.”

Several members of the board nodded, and spoke among themselves.

After several minutes I jumped back into the fray.  “The more I think about it, the more I think Winston may be salvageable—not in the same role but somewhere else in the organization.  The employees really like him.  Besides, it’s the holidays.  Do you really want to be the reason Winston is not able to buy presents for the kids?”

The board held an in camera discussion.  “Agreed.”

I knew they would.  I started with my actual presentation.  “There is no Winston.”  The Winstons scattered around the table looked perplexed.  They were looking for the easy answer to the problems in their organization, they were looking for themselves.

Who are your Winstons?

saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942
paulroemer@healthcareitstrategy.com

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The Kevorkian of the large provider business model

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I call this my premortem of the large provider business model—I guess that makes me its Kevorkian.  The new reform law is Washington’s Anschluss of the healthcare business model—the annexation of the old way of doing business.  With change, as with writing a novel, the most difficult part is to invent the end.  It is only difficult if someone actually gets to that part, the end.  Many large providers remain mired in the first chapter.

The term Ultima Thule refers to any distant place located beyond the “borders of the known world.”  That is where we are when it comes to trying to understand the implications in the realm of the known and unknown external influences on the business model of the large healthcare provider.  I tend to have a stygian mindset about how I think these influences will play out—when Washington sneezes, it is the providers who catch the cold.

Sometimes it is a matter of asking the right questions.  Unfortunately, when one asks questions, somebody always has answers.  The bad thing about answers is they often bring closure to the process of thinking.  In the short-term there may be a modus Vivendi between us—an agreement to agree to disagree, but in the long-term limiting one’s vision to the borders of the known world will prove fatal.

Gone are healthcare’s Elysian moments when leaders thought they could keep doing what they were doing as long as they did it a little better.  At some point, there are no more costs to cut.  Providers will not be able to get any Leaner.  The time has come to square the circle—something proven impossible in 1882 by Ferdinand Lindemann.  Squaring the circle is an attempt to construct a square with the same area of a given circle using Euclidian geometry.

Trying to retrofit today’s healthcare model to meet tomorrow’s business requirements seems to me to be a similar argument.  It can’t be done; you can’t get there from here.  That it cannot be done won’t stop people from trying.  The impossibility cannot be proven.  The proof will be apparent only when hospitals start to fail.  Only then will it be possible to “walk back the cat” to diagnostically deconstruct what failed hospitals should have done.

A purpose of intelligence is the ability to assess and predict.  The application of thinking and intelligence is the ability to assign relative importance to predictions.  Here’s my assessment and prediction.

To successfully change the large provider model one must disrupt it, not simply adjust it.  It has nothing to do with asking, “How can we do this better?” disruption requires that we ask, “Do we need to do this?”

For example, last week I met with the former CFO of a group of east-coast hospitals.  Each hospital had an orthopedic department.  The group also owned an orthopedic clinic.  The clinic was ranked among the top twenty orthopedic centers in the US.  None of the hospitals’ orthopedic departments was ranked in the top one hundred.  The CFO recommended the hospitals close their orthopedic departments and service those patients at the clinic.  This would improve quality and eliminate duplicative costs.  Great idea.  Unfortunately the board liked their hospitals to be able to offer all things to all people—quality and cost be damned.

Pittsburgh has more MRI machines than Canada.  Why?

saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942
paulroemer@healthcareitstrategy.com

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And now for something completely different

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My new favorite toy is Prezi.com.  This prezi link is for a speech I am giving Tuesday at ICSI on what hospitals should do to increase their revenues.  For those expecting bullet points, this is the wrong place to look.

I welcome your feedback, especially since their is very little text.  I come from the school of wanting people to listen to what I saw, rather than read my slides–otherwise I don’t need to be there.  Besides, people don’t take notes at the movies, why should they during a talk.

http://prezi.com/ved_jyx95m_d/

saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942
paulroemer@healthcareitstrategy.com

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Contact me: Google Talk/paulroemer Skype/paulroemer Google Wave/paulroemer

Why Google, Apple & Microsoft will win the EMR battle

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In the next few years, brick and mortar, immobile physician-centric EMRs and EHRs—those large EHR systems implemented by healthcare providers residing on large systems will be supplanted by portable patient-centric EMRs residing on a next generation of super smart devices—we call them smart phones today.  The limited functionality of today’s Personal Health Records (PHRs) will be replaced by these portable patient-centric EMRs; EMRs that are cloud-based and accessed through super functional next generation smart devices—the grandchildren of the iPhone and the Droid.  Why do I think that is the case?  Please keep reading.

Five billion people voluntarily purchased cell phones.  Initially, consumers had to be convinced they needed cell phones.  The uptake was slow.  Something changed, compelling us to buy cell phones.  We initially bought cell phones not because we needed phones, but because we wanted convenience—we bought convenience.  What made it convenient?  Portability.

Not much changed for several years—not until Palm created a phone-sized portable device that could do other cool things.  Then Blackberry took it one step further—a device that could handle basic email and phone calls.

Very recently, piggybacking on the success of the iPod, Apple redefined the market for smart devices.  They did not set out to build a phone, or a web browser, or a MP3 player, or an email client, or a SMS device—or a device designed to do all of those specific tasks.  Instead they built a device capable of doing just one thing—securely and wirelessly sending and receiving ones and zeros.  Those ones and zeros became emails, faxes, internet interaction, downloading and playing music, videos, images, calls, text messages, and data.  Apple also paved the way for other firms to have customers download thousands of other ones and zeroes applications.  The iPhone device simply sends, receives, reads and writes ones and zeroes.

Phone calls on the smart device (the iPhone) are but a small subset of the device’s total usage.  This breakthrough is what I think of as the “Transport Phase,” moving ones and zeros from point A to point B, reassembling them, and recreating the same thing on the other end.

In the last two years, we have seen the maturing of the Transport Phase whereby the device is even smarter, faster, has more storage and actually performs tasks.  It appears to infer and learn.  It is capable of gaming and GPS functions.  It performs more tasks than the computer on the Saturn rocket.  Last year Google made its debut with the Droid.  It is open and operating in a cloud.  The smart device’s features and usage are so ubiquitous that the pricing model commoditized.

Today’s devices can operate more than one hundred thousand apps—including hundreds of medical applications.  The vast majority of the healthcare applications are for doctors and clinicians.  Very few healthcare applications are available to customers (patients) and there is no PHR for any of the devices.

This will change, and change in a big way.  The smart device many call a phone can do things nobody envisioned ten years ago.  Those “experts” were wrong.  We have a new set of experts today.  They claim:

  • PHRs offer little value
  • PHRs have been slowly accepted by the mainstream
  • There are no good healthcare apps on smart devices for patients
  • There are no PHR apps on smart devices
  • There is no such thing as an EMR on a smart device

My take?  They are correct on all five claims—today.  What else of note is underway?  The launch of the iPad.  Bad name choice.  I would have called it the iGoogle, but neither firm would go for that.  Why the iGoogle?  Stick with me on this.  Google is in the process of transcribing every written word and digitizing the great works of art—ones and zeroes.

What did Apple do?  Apple did one thing—their new smart device made Google’s library potable.  Portable.  Ones and zeroes, colored text and images can now reside on a one and a half pound tablet one a device with a thickness of one half inch.  Complaints—it’s not a computer, it cannot take pictures, it cannot make calls.  Not yet.

Yesterday calls (ones and zeroes) were made portable, as were text messages, emails, videos, and GPS.  Tomorrow, today will be yesterday.  Look forward a thousand tomorrows.

What exactly are the electronic medical records flying around in ERHs costing hundreds of millions of dollars?  Ones and zeroes.  Nothing more.  Oh, did I mention these institutionalized EMRs are immobile.  The plan calls for them to be portable—a billion here and a billion there.  Maybe it comes down to what kind of portability you think Americans will adopt.

I think two things are in store for healthcare.  In the near-term, stationary hospital-centric EMRs and EHRs will begin to be replaced with portable patient-centric EMRs residing on super smart devices owned by individuals.  Point two; the limited functionality of today’s immobile Personal Health Records (PHRs) will be replaced by portable patient-centric EMRs, EMRs that are cloud-based and accessed through super functional next generation smart devices.  These devices will be the offspring of the iPhone, the Droid, and the iPad.  EMR functionality will be available, along with the existing functionality on these super smart devices.  Customers will not need to buy a separate device to make their EMRs portable.  They will simply gain access to that functionality when they purchase the next generation phone-camera-notebook-tablet-MP3-EMR.

Just because PHRs can’t do much today doesn’t mean PHRs won’t evolve to become tomorrow’s EMRs and EHRs.  PHRs will be replaced by EMRs in the same way mere voice applications have been supplemented by multitudes of additional powerful applications.

What business drivers will make this happen?  Apple, Google, and Microsoft are huge corporations, corporations with which almost everyone currently does business.  They are not healthcare companies.  They do not operate like the government.  They know how to build and market very high-tech, glitzy devices packed with the functionality their customers demand.  Customers line up outside of stores for days to be the first to have one.  Hospitals and physicians are not doing that to install EHRs.

Why do PHRs exist?  They exist as a way for these companies to establish a foothold in healthcare, to have their customers begin to associate their healthcare records with the likes of Apple and Google.  They know there is very little money to be made with PHRs.  The revenues will come to them as the functionality evolves the PHR into the EMR.

Measured in today’s dollars, the average US resident will spend about $650,000 on healthcare during their life, or about $8,000 a year.  Eight thousand a year doesn’t seem like much until you extrapolate it.  Eight thousand a year times three hundred and fifty million people comes out to an annual healthcare expenditure of about three trillion dollars.

Let’s compare that $8,000 a year figure to what we spend in other areas.  The average annual phone bill is around $700.  The average cable bill is $1,000; electric—$1,200.

What if these companies developed a way to build a secure, HIPAA compliant, portable EMR application that could be accessed using the next generation of the super smart device we get in line to purchase?  In addition to everything else it can do, the device will have secure access to clouds to access, update, and transport electronic medical records—combining the future functionality of the tablet and open architecture of smart devices like the Droid.

What if firms like Apple and Google made these next-gen super smart devices available for free?  This approach is almost identical to the current model of highly discounting smart phones to lock customers into service agreements.  Why would Apple and Google give away the super smart device?   The reason to give it away only makes sense if the real business opportunity is so large that the money they would have earned from the device is a drop in the bucket compared to the downstream revenues.

What if firms like Apple, Google, and Microsoft devise a way to earn a transaction fee of one percent for each dollar of healthcare services that either comes in through their device or goes out over it?  That is how phone usage is billed.  Companies bill for ones and zeroes sent and received.  They do not care what information those ones and zeroes contain.

The model of providing devices to consumers for free is no different than giving away toothbrushes to sell toothpaste.  The bulk of the revenues come not from the device; but from what consumers do with the device.  A one percent transaction fee applied to the three trillion dollar healthcare market is a thirty billion dollar business.  That’s a pretty good chunk of change for coming up with another service facilitated by moving around ones and zeroes.

Let’s suppose for a minute that as consumers adopt this model that these same corporations, using cloud computing, succeed in building an interoperable healthcare network, the same network the federal government plans to spend billions to develop.  The companies do not need to build it, it exists today—the internet—and it exists wirelessly.  The government just announced the development of a supercharged internet.

This makes Health Information Exchanges (HIEs) and the National Health Information Network (N-HIN) obsolete before they are even built.  As a result of having built the network, and having equipped customers with these EMR capable devices—next generation super smart devices—these firms then own the entire EMR food chain.  Might these firms then be able to garner some kind of usage rights to clean medical data, data that has been scrubbed so as to make it anonymous, data which they can sell to payors, providers, the government, and pharma?  It’s all about the healthcare data, or at least it will be.

The business opportunity is data usage, transporting ones and zeroes.  Data usage is what Apple and Google sell—the portable devices are simply a means to an end.  According to gigaom.com, Apple’s revenues just from its App Store exceeded $2.4 billion in 2009—pretty good money for a start up, a start up that uses a super smart device.

Microsoft doesn’t sell computers.  It sells ideas.  Microsoft is an enabler.  It sells the ability to allow people to do more and more things.  The idea about which I write is no different from Microsoft’s, Apple’s and Google’s current business models.  The smart devices, sell data, data transport, and data usage—ones and zeros.

The difficulty healthcare providers have with today’s approach to EMRs and EHRs is they are focused on now, on today.  They are costly, immobile, hurting productivity, and are driven from the top down—the government.

What if this idea comes to pass, or even something close to it?  What does that mean for physicians?  More than anything else it means physicians will face patients who will take more responsibility for their health, patients whose medical records are stored on the same smart device as their Rolling Stones records.  Physicians will be able to beam the patient’s EMR to their own EMR capable super smart device.  The demand for EMRs will shift from building immobile EHRs that may meet today’s business requirements—to a patient driven demand for portable EMR devices that will meet tomorrow’s requirements, devices which in addition to containing EMRs will meet there other smart device requirements.  It is those other requirements which will drive consumption, the EMR functionality will be a bonus.

I think in five years terms like Meaningful Use, Certification, HIEs, and incentives will be outdated.  The C-suite should be looking at what lies ahead, not at what will be outdated by the time a monolith EHR-NHIN has been implemented.

What do you think?

saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

paulroemer@healthcareitstrategy.com

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Hospital Business Strategy–One size fits none

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One size fits none, or is it one.  The patient rarely buys what the hospital is selling.  The hospital sells a hip replacement—the patient is buying the ability to play golf for ten more years.

Clayton Christensen conducted a study which showed that seventy percent of today’s patients would have been in the ICU thirty years ago, and seventy percent of the patients in today’s ICUs would have died thirty years ago.  The question the study seemed to leave unaddressed is who is now caring for those patients who were not in the ICU and who didn’t die.  Wanna’ bet most have been outsourced to non-hospital care givers?

There was a successful business model in that group of patients when they were treated at the hospital thirty years ago.  There is an even larger business model today for that same set of patients; only it is no longer owned by the hospital.

Hospitals have more high-end capability—and cost—than the average patient will utilize—sort of an 80/20 rule on steroids.  Each successive clinical breakthrough enables the hospital to solve a problem for a mere handful of patients that will have no application to the bulk of patients.

What if instead of continuing to expand the current model ad nauseum, the hospital flipped the model on its side and catered to the eighty percent?  What if the business model centered on serving mainstream customers?  But then who or what would handle the other twenty percent of the cases?  An autonomous business unit could be established to serve those cases, or they could be outsourced to a group which did.

saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942
paulroemer@healthcareitstrategy.com

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The large provider business model–The Sky is Falling

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This link takes you to my newest post on Anthony Guerra’s HeathsystemCIO.com site.  I welcome your thoughts.

http://healthsystemcio.com/2010/04/27/the-large-provider-business-model-the-sky-is-falling/

My best – Paul

saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942
paulroemer@healthcareitstrategy.com

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Contact me: Google Talk/paulroemer Skype/paulroemer Google Wave/paulroemer

Why is the large provider business model obsolescing?

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Margaret Thatcher said, “Anyone who finds themselves on public transport after the age of 26 must consider themselves a failure.” There’s probably some sort of corollary for anyone twice that age that spends part of every day writing to imaginary people on the web.

When I write I like to pick a side and stand by it instead of standing in the middle of the road where you can get run over by the traffic from both sides. Likewise, I don’t look for consensus around an idea. Consensus is the process of everyone abandoning their beliefs and principles and meeting in the middle. When was it decided that meeting in the middle is beneficial? So, achieving consensus about a problem is nothing more than that state of lukewarm affection one feels when one neither believes in nor objects to a proposition.

Having this approach to solving business problems tends to yield a high number of critics. I don’t mind critics; those are the same people who after seeing me walk across a swimming pool would say that my walking only proves that I can’t swim. I rather enjoy it when someone offers a decidedly personal attack on something I wrote if only because it means they can’t find a legitimate business principle on which to base their argument. I love the debate, and I don’t expect anyone to agree with me just because I say it is so.

In trying to promote a different way of looking at the large provider business model, I’ve learned that it’s not possible to lead from within the crowd. The “as-is” was created by history, by followers. The future will be created by someone who believes it can be done better. I believe firmly in the notion that improving the business model by building off the current one is like trying to cure a cold with leeches.

The approach that has been used to grow the business for the last fifty years is that the hospital is responsible for everything. And yet, who is responsible for the hospital? Who is accountable for the fact that the business model is obsolescing itself?  We have loads of new stuff—expensive stuff.  No other industry can tout new and improved better than healthcare.  However, in those industries new and improved means faster, smaller, cheaper–it means adding services to reach significantly more customers, not fewer.

Each new and improved procedure with its more costly overhead has application to a smaller percentage of the health population, thereby allocating that overhead across fewer patients.  In turn, that makes the low-margin services unprofitable.  Those services will be cut lose, picked up by new entrants with lower overhead.  Those entrants will make a good business out of services discarded by hospitals.  The cycle will repeat, as it has for decades.  The profitable new entrants will move up-market.

Is it a question of scale versus scope, or scale and scope?  What happens if instead of continuing to repeat the cycle, large healthcare providers were to invert it?  What makes them more relevant, adding the capability to perform a procedure used once a month or one used once an hour?  Which is more important to the future model, inpatient care or outpatient care?  I suggest that “in” or “out” will become irrelevant.

Those phone booths in the photo used to be the way to make public calls, now you can’t even find a booth.  Maybe some day someone will take a photo of a group of hospitals stacked next to each other in a vacant lot.

saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942
paulroemer@healthcareitstrategy.com

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How many Sigmas does it take to change a hospital?

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I wrote this in response to some comments I received on my piece in HospitalImpact.org.

I do not advocate assembly line medicine, especially at a hospital. I go out of my way to stay out of the healthcare business, the clinical side of healthcare, an area in which I have no background other than having been a patient.

If the hip replacement analogy was a poor choice–my bad. The point of the piece was not the hip replacement, rather the seemingly inability to answer basic business questions relating to how the business of healthcare is run.

I think there is a need for the independence and the je ne sais quoi nature of care. I just happen to think that the business of healthcare and the healthcare business can coexist in a more business-like manner. There are hospitals which get it right, and those which get it much less right.

Some of it has to do with costs, some with waste–wasted time, wasted opportunity, some with ineffectiveness, and some with planning. If one hospital can do X for thirty percent less than another, I think it is worth exploring what accounts for the delta. If another hospital can perform twenty percent more procedures with the same level of resources, that is worth investigating. There is no point keeping metrics unless one is willing to improve them.

I am not big on efficiency. In many cases, efficiency implies speed. It is possible to perform poor processes at a speed which will make your head spin. Lots of hospitals are toying with Lean. Lean works best with a valid set of processes. Without a valid set of processes–best processes–there are not enough Sigmas to justify the expense.

Then there are the cost cutting advocates. Cost cutting is a dead end strategy.  Every manager worth their salt can cut costs–less than one in a hundred can increase revenues. What do you do when there are no more costs to cut? Are you more effective, or net-net did you simply replace the brewed coffee with Folgers? Want to cut costs? Lock the doors. But that does not solve anything.

If none of these questions can be answered today, what happens in five years? New entrants will have gobbled up many profitable services and will be able to do so because they do not have “Big Box” overhead. Reform will have forced another business model on large providers. Payors and pharma will continue to battle for their share of each healthcare dollar.

I think hospitals can grab an even larger portion of that dollar, but I do not think they can do it without changing how they approach the business of healthcare.

saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942
paulroemer@healthcareitstrategy.com

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Who should be able to answer these business questions?

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I wrote this piece for Hospital Impact, published April 22, 2010.  (Not the title I would have chosen.)

http://www.hospitalimpact.org/index.php/2010/04/22/planting_the_seed_why_assembly_line_medi?blog=1&c=1&page=1&more=1&title=planting_the_seed_why_assembly_line_medi&tb=1&pb=1&disp=posts

Now that spring is in full bloom, I’ve been doing a little gardening. My dogs are the anti-gardeners. No sooner do I turn my back after planting something, there they are, happily digging away and ceremoniously digging it up. I don’t know if that’s because they don’t like the particular plant, or just happen to disagree with where I planted it.

Today I discovered the youngest dog uprooted a plant and replaced it with a Reece’s Peanut Butter Cup. Perhaps she wanted to grow a candy tree.

One thing that always confuses me about gardening is this: When I plant a one-gallon shrub, I dig a two-gallon hole. I place the gallon shrub in the two-gallon hole and proceed to fill the remaining one gallon hole with the two gallons of dirt lying next to it. Without fail, there is never enough dirt to fill the hole. Perhaps you can tell me what I am doing wrong.

Here is another area of confusion for me: When you walk or are wheeled into a hospital, neither you nor anyone else knows the answer to anything.

That is astonishing. Nobody can tell you:

* With whom you will interact.
* How long you will stay.
* What will happen to you.
* How it will happen to you.
* When it will happen to you.
* Who will be doing the happening.
* Exactly when it will happen.
* Whether it will need to happen again.
* What it will cost.
* What you will be charged.
* What will be covered.
* How much you will owe.

I am stupefied. How can anyone run a business like this? My daughter knows what her lemonade stand costs per cup. Wendy’s knows the cost of a bag of fries and a large Frosty. Porsche knows the cost of a Cabriolet, the cost of the shift knob, when the wheels will arrive at the factory, when they will be placed on the car, who will build it, who will inspect it, and who will sell it. They can tell you exactly who will touch the car, when they will touch it, and what those people will do to it.

The only thing anyone at a hospital may be able to tell you is whether HBO is billed separately. If I wanted to fly into space with the Russians, I would know the answer to each of those questions. The cost, for example: $50 million.

Why can’t a hospital do this? Because it doesn’t know the answers. It is not because anyone is keeping this information a secret–it’s because they really don’t know. The truly strange thing is that they seem to be okay with not knowing.

Recently, I reconnected with a good friend whom I haven’t seen in years. He is the vice president of finance for a large hospital. He used to be an accountant–a very detailed and precise profession, unless you’re one of the guys who used to do Enron’s books. (The only thing I remember about accounting is that debits are by the window and credits are by the door–if I’m in the wrong room, I’m at a total loss.) This business must drive him nuts!

And so I’ve been wondering; would hospitals be more profitable if:

* They had a P&L by patient?
* They had a P&L per procedure?
* The steps for the same procedure, say a hip replacement, were identical each time?
* They had answers to any of the questions you read above?

Of course they would!

Some areas of healthcare already discovered this tautology–Lasik, endoscopy, the Minute Clinic. Assembly-line medicine. Some people say those words with an expression on their face as though they’d just found a hair in their pasta. The office of my Lasik surgeon looked more impressive than the lobby of my Hyde Park hotel. It may leave a bad taste in the mouth of some, but for others, they are laughing all the way to the bank.

saint Paul M. Roemer
Chief Imaginist, Healthcare IT Strategy

1475 Luna Drive, Downingtown, PA 19335
+1 (484) 885-6942
paulroemer@healthcareitstrategy.com

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