Who's Running the Show?

Disruptive Strategies: a business imperative

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When you think about it, companies begin to die the day they are born.  Some last longer than others, and some are reborn after they die–think GM.  Others may be caught in a death by stagnation spiral.  Microsoft may be a good example–has their lack of innovation caught up to them, or is Windows 37.9 considered innovative?

Disruption.  If you do not like the word, here are a few others that work just as well–disassemble, dismantle, unhinge, and disengage. Disruption is only a first step.  Once you disrupt you then must rebuild. Knowing what to rebuild is the critical success factor.

My new favorite business toy is Prezi.com.  This Prezi link is for a speech I gave last year at ICSI on why disruption is not only good for hospitals, but may in fact be a survival imperative.

For those who like to read bullet points, this presentation may not be for you.  I welcome your feedback on the tool and the ideas, especially since I wrote very little text.  I approach presenting ideas by trying to get the audience to listen to what is said rather than simply reading slides–otherwise I my being there would be superfluous.  Besides, people don’t take notes at the movies, why should they during a talk.

http://prezi.com/ved_jyx95m_d/

What my daughter taught me about healthcare IT

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The other night as I’m sitting on a hard bleacher watching my seven-year-olds baseball practice I noticed the mom sitting next to me looking a little forlorn. Being naturally inquisitive, I asked if everything was okay.

“I lost his glove,” she replied.

Noticing a glove on her son’s hand, she saw my look of confusion. “Not his. My husband’s. I had it with me last Thursday, and I left it here.”

“I don’t suppose this was a new glove. Judging by the look on your face I’d say this was his favorite glove, and was probably handed down from his father. Autographed by Mantle and Maris in 1961.  Fifty years old, supple, broken in, fold flat as a sheet of paper.”

“Fifty-five years,” she corrected as she lowered her eyes.

“It’s rained the last three days,” I told her, which caused her to grimace even more. Having nothing better to do, I flayed her emotions. “I bet that glove meant the world to him. He probably planned on giving it to your son in a few years. The glove probably reminds him of the big events in his life, every scar, each stain on the leather, points to something important. You know, if it was outside for a few days, the field mice will have chewed on the leather.”

She brushed away a tear, and headed to the lost and found.

“Any luck?” I asked when she returned.  She shook her head in despair. “In some countries, if a wife does something life that, the husband can sever the relationship, literally,” I said as I made a slashing motion with my hand. She made the briefest of smiles. At least she knew I was pulling her lariat. Reeling her in, I continued.

“You’re not thinking of spending the night at home, are you? If you are, you should at least call someone and let them know of your plans. He’ll heal over time,” I told her. “But he won’t forget it. Twenty years from now the two of you will be watching something on TV, and something will remind him of the glove YOU lost.”

Fast forward to last Wednesday night. My daughter and I are getting out of the car so I can coach her and her softball team in the playoff game.

“Is your glove in the trunk?” I asked. This is after I spent several minutes grilling her at home about whether she had everything she needed for her game.

“I hope so,” she said shamelessly as I popped the trunk for her. “You hope so?” I repeated with an edge in my voice.

“It’s not here Daddy,” she said as she searched the trunk.

I left her with her friends and drove home to look for it. Ten minutes. Nothing. For some reason, I looked in the trunk. There it was. Death by 1,000 cuts.

Does it all come down to baseball gloves?  “I hope so.”  What kind of a response is that?

Will these EHR expenditures improve our operations? I hope so.

Can you confirm for me that Patient Experience Management won’t fall any further? I hope so.

Are we ready for the reform changes coming to the business model?  I hope so.

Will we meet Meaningful Use? I hope so.

Do you think we should continue to employ you? I hope so.

Are Customers Running the Asylum?

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Below is a response I wrote to a blog on customer experience management. I would love to hear what you think. http://www.ceforprofit.com/2010/08/defining-customer-experience-implications-and-all/comment-page-1/#comment-3111

One thing businesses have been slow to realize is they have lost control of the customer conversation, and as such, at least from the customer’s perspective, have forfeited their right to control the customer experience.

Traditional customer relationship management (CRM) has always been a Push.  A manages B.  Organizations manage customers.  Sort of reminds me of cowboys trying to manage a herd of cattle into the cow-pen for slaughter.  Organizations have only been marginally successful at “managing” their customers.

Customer Experience Management (CEM), CRM’s big brother, is at least a thought in the right direction.  However, most firms still do not “get it.”  The ungotten “it” is that customers have taken over the sandbox and they are not going to give it back.  Customers are now managing vendors, and the vendors have yet to figure that out.

Most firms can print a report titled “My customers” or “Our customers.”  The single most important error with these reports is the use of the pronouns ‘my’ and ‘our’.  Firms no longer own customers.  More accurately, customers now hold the power.  Customers now have “My vendor” reports; vendors they have researched and hand-culled.

If a firm wants to check out how well they are managing the customer experience all they have to do is to Google themselves, or search for themselves on YouTube.  See what people are saying about them.  Not much of it is favorable, but much of it is viral.  Videos, blogs, Tweets, and chat rooms.

Manage that?  Too little too late.  Customers are issuing virtual RFPs.  Whether customers want a large screen television or a hip replacement, they go to the web.  They find out your pricing, how well you service your customers.  They make informed decisions.  Most organizations have a long way to go just to get back into the battle to make it a fair fight.  The first step is for them to learn how they are being managed by their customers and then to learn what to do about it.

Who should be able to answer these business questions?

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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.

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.  There seems to be an inability to answer basic business questions relating to how the business of healthcare is run.

On the care side there is a need for the independence and the je ne sais quoi nature of care. However, 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 the ineffectiveness of running a hospital like a business has to do with costs, some with waste–wasted time, wasted opportunity, some with inefficiency, and some with poor planning. If one hospital can do procedure X for thirty percent less than another, 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 most 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.  To those lauding how many Six-Sigma professionals they have employed, what have they done for you?  Are you better off than those hospitals who only have Five-Sigma specialists?  Would you be better served if you cranked it up a notch or two to Seven or Eight-Sigma gurus?

Then there are the cost cutting advocates. Cost cutting alone is a dead end strategy.  Every manager 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.

Hospital Executives: Can you answer these questions?

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Been there, done that, got the T-shirt.  Every hospital executive who thinks they have their arms around EHR and healthcare reform, take one step forward……whoa, where are you going Sparky?

The questions below resulted from a round-table discussion I recently had  with six healthcare executives about EHR and healthcare reform. The topic we discussed was what questions should C-Level executives be prepared to answer and what questions should boards be asking. What do you think? Are their others you’d add?

Are we taking adequate advantage of stimulus funding to improve our readiness?

How is health care reform going to impact our business and when?

Are we doing enough to be ready to succeed in an environment where we get paid for outcomes rather than inputs?

Are we ready to comply with Federal policies for Electronic Health Record reporting and sharing?

Are we achieving our own business improvement standards? Do we have the right standards?

Are we ready to use web 2.0 technologies to improve clinical outcomes for our clients?

The Patient as Customer

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The headline for a recently published McKinsey survey stated “Ninety percent of hospital CEOs ranked Patient Experience Management (PEM) as their first or second priority over the next three years.

Buried deep within the article was a throw away statement that little will be done regarding PEM because nobody knows who owns the patient.

Any journalism student worth their salt would tell you the real headline for the survey should read something like “Ninety percent of hospital CEOs and COOs do not know who owns the patient at their hospital.”

From a business perspective, in the conversation about patients and PEM one thing is always overlooked.  These people, the patients, also have a business avatar.  They are also customers.  PEM from a business perspective focuses on all the non-clinical aspects of the patients as a customer.

There are dozens of non-clinical processes that affect each customer (patient)—admissions, discharge, billing, scheduling, disputes, claims…

Many of these processes are ineffective and inefficient.  Many are redundant and duplicative.  Many add more cost than value.

If you want to improve the patient experience, look first at these.  You will be surprised by how much better your organization will be perceived.

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” hospital business model (how the hospital is run) was created over time, by followers. I may be wrong, but the most innovative alteration I have seen to the hospital business model in the last decade has been the addition of mini Starbucks, and the revamping of their lobbies to make hospitals look more like hotels.  The future will be created by someone who believes the strategy of how hospitals run 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 services 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.

Healthcare IT: A premonition

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As I walked through the offices of one of my clients last week I kept passing errant lines of code that had fallen to the floor throughout the hospital.  Each time I passed one I retrieved it and dropped it in a folder.  Eating lunch in the cafeteria, I laid the lines of code in front of me on the café table—HIE, EHR, Meaningful Use, HIPAA, and one bit of code on Accountable Care Organizations—not sure how that one got in there; probably written by a healthcare futurist with a pet unicorn.

I was reminded of the time a purchased an unassembled gas grill—why pay an extra hundred dollars to have someone connect Part A to Part B?  As I learned, the reason to pay the hundred dollars is so that at the end of the process you are not left with parts K and Q and no idea where they go.  The grill started just fine.  Apparently, parts K and Q had a lot do with turning off the grill—the lid melted seven years ago, and the grill has served as our home’s eternal flame ever since.

I dare say there are many organizations whose systems are missing important lines of code.  Maybe that is why more than half of the large providers will soon discover their EHR functions more like a multi-million dollar scanner than an EHR.

A major problem for healthcare information technology (HIT) is the disruption it has brought upon itself.  If we are honest about HIT, it was not working all that well before we started disrupting it.  EHR was not a natural fit on the prior architecture.  To make EHR fit required that bits of the old be cut away and new applications had to be hammered and welded into place.  Many chasing Meaningful Use have to take short cuts to meet it.  Getting something to fit is not the same as getting something to function.

Once the EHR is in place, out come the hammers to get EHR to meet Meaningful Use.  The code and interfaces are chiseled away, and functionality is sacrificed.  Now leaders are trying to figure out what must be sacrificed to get ACOs hammered into place.

The old architecture was never architected to support an EHR or an ACO.  That means that many, many hospitals are a few months or one or two years away from having to rethink their EHR strategy.  The short cuts and dropped lines of code will have degraded the EHR’s performance to such an extent that it will have to be replaced.

The next trend in HIT will not be ACOs.  Instead it will be large teams of outside consultants swarming like locusts to provide disaster recovery on hundred million dollar EHRs.

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.  Neither are the associated revenues.

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; one that will have no application to 99% of patients in their service area.

What if instead of continuing to expand the reach for the stars model ad nauseam, the hospital flipped the model on its side and catered to the ninety-nine percent?  What if the business model centered on serving mainstream customers?  But then who or what would handle the other one 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.