AI 2011 Leading Change National HFMA Chair

Leading Change HFMA Metropolitan New York Chapter Joseph A. Levi 52nd Annual Institute Debora Kuchka-Craig, FHFMA HFMA National Chair and Corporate Vice President, Managed Care MedStar Health, Columbia, MD March 10, 2011

The Crisis May Seem to Be Over . . . The recession─at least technically ─ has ended...

…this month marks the one-year anniversary of the Affordable Care Act

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. . .But the Long-Term Issues Remain Exponential Growth in Healthcare Expenditures

Need for Better Access to Insurance Coverage

REFORM DRIVERS Substantial Opportunities to Improve Quality of Care and Patient Outcomes

No Correlation Between Expenditures and Quality

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Kotter’s Eight-Step Model for Leading Change Create Urgency

Create Short Term Wins

Build on Change

Form a Powerful Coalition

Remove Obstacles

Anchor Change in Corporate Culture

Create a Vision for Change

Communicate the Vision

Source: John Kotter, “Leading Change,” 1996 4

Step 1

Create a Sense of Urgency As We Navigate a New Phase of the Crisis Emergency Phase Leaders sought to stabilize the situation and buy time

Adaptive Phase Leaders must tackle the underlying causes of the crisis and build the capacity to thrive in a new reality

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Step Up: Healthcare Finance Must Take the Lead “Somebody has to do something, and it’s going to be— and it has to be—you.” Former Senator and Senate Majority Leader

Bill Frist, MD Speaking at HFMA’s ANI: The Healthcare Finance Conference, June 2010

Source: hfm magazine. August 2010. 6

Step 2

Form a Powerful Coalition Other Administrative Departments Finance

Patients & Community Members

Physicians “Leadership has nothing to do with titles; it has everything to do with, “Do you inspire other people? Nurses Do they want to follow you? Do they want to be with you?” & Other -Tom Atchison, author of Followership: A Practical Guide to Aligning Leaders and Followers

Payers

Clinicians

Other Entities Within Your Health System 7

Community banks and residents bought 38% of the $45M in bonds that a rural Nebraska critical access hospital used to fund construction of a replacement facility.

REDESIGNING PRIMARY CARE

A California healthcare system created core revenue cycle teams with representatives from 10 departments across all system hospitals. Improvement: $9.4 M

FUNDING A CAPITAL PROJECT

TRANSFORMING REVENUE CYCLE

Healthcare Coalition Success Stories A payer funded an initiative to make a Minnesota healthcare system’s primary care clinics more efficient and patient-centered. Physicians, nurses and other clinicians provided the ideas.

For more information, read HFMA’s Leadership e-Bulletin, available at www.hfma.org/leadership. “Transforming Revenue Cycle” (Providence Health & Services CA region): Oct. 2010 issue. “Funding a Capital Project” (Beatrice Community Hospital/NE) : Dec. 2010 issue. “Redesigning Primary Care” (Fairview Health Services.MN): Nov. 2010 issue.

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Step 3

Create a Vision for Change 9

“The people who really succeed in this field have a vision. They have a high degree of motivation, and they are out to make things better—to do good and to change the world on whatever scale they can. They work hard, they have an end in mind, and they will acquire whatever skills and training and knowledge they need to get there. ” Mary Stefl, professor and chair of the department of healthcare administration, Trinity University, San Antonio, Texas, and a consultant for the Healthcare Leadership Alliance Competency Model 10

Step 4

Communicate the Vision

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Virtua focuses around the united goal of providing an outstanding patient experience. All improvement projects relate to one of the five points of the star.

IDENTIFYING WHAT TO CHANGE

Virginia Mason leaders use this pyramid graphic to continually communicate and sum up the health system’s vision and strategic plan.

UNIFYING GOALS

REINFORCING STRATEGIC PLAN

Communicating the Vision Success Stories At Kettering, team members can easily see how close they are to achieving annual goals based on where the darts fall on the bulls-eye graphic.

For more information, read HFMA’s Leadership, available at www.hfma.org/leadership. Virtua case study : Spring/Summer 2010 issue. Virginia Mason and Kettering case studies : Fall/Winter 2009 issue.

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Step 5

Remove Obstacles

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LEVEL 3

LEVEL 2

LEVEL 1

Leaders Will Confront Obstacles on Three Levels INDIVIDUAL & INTERPERSONAL    

Resistance to change Risk aversion Need to develop new skills Need to relate differently to team members ORGANIZATIONAL

 Incentive structure that does not reward risk-taking & change  Lack of organizational nimbleness  Limited resources for supporting change HEALTHCARE DELIVERY SYSTEM  Divisive political differences  Complex web of regulations  Misaligned provider incentives

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“. . . a leader needs to know and understand his or her people. You cannot lead without knowing the needs of your people—what drives them, what makes them do what they do. Once you understand some of the psychology of that, then you can give them opportunities to succeed based on their own psychology of success.” Kerry Gillespie, FHFMA, vice president, operations, Community Health System, Inc., Brentwood, TN, and a member of HFMA’s Tennessee Chapter

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Step 6

Create Short-Term Wins “A journey of a thousand miles begins with a single step.” - Lao-tzu, Ancient Chinese philosopher

“Don’t be afraid to start small.” - Marty Manning, Advocate Physician Partners

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Short-Term Wins Help Bridge the Gap to Long-Term Solutions Healthcare Delivery System Issue

 In 2008, the U.S. spent $14 billion treating 115 million people who visit the ED for a non-urgent condition

How it  Payers no longer want to pay ED prices for Manifests at the non-emergency care Hospital Level

Short-Term Win

 New Mexico’s Presbyterian Hospital launched a patient navigator program that deferred 60 unnecessary ED visits within a month after its launch. The program is expected to save $10M - $15M over five years For more about Presbyterian Hospital’s navigator program, see the Oct. 2010 Leadership e-bulletin, available at www.hfma.org/leadership

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Step 7

Build on Short-Term Wins

“Leadership is invaluable to surviving Step 7. Instead of declaring victory and moving on, transformational leaders will launch more and more projects to drive change deeper into the organization.” -John Kotter

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Building on Short-Term Wins Success Stories Floyd Memorial Hospital One-year initiative to reduce supply chain costs by $1.1M

Catholic Health East Small pilot program to prevent readmissions

Two-year savings of more than $4M

Number of participating physicians nearly tripled in two years

 Increased collaboration  Enhanced quality of care  Reduced waste hospitalwide

 Avoided payment denials from direct readmissions  Increased physician satisfaction

For more information, see “The Value Equation” in the Nov. 2010 hfm, available at www.hfma.org/hfm..

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Step 8

Anchor the Changes in Corporate Culture

“Company cultures are like country cultures. Never try to change one. Try, instead, to work with what you’ve got.” -Peter Drucker

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SHARP HEALTHCARE

 Sharp aligns all strategic initiatives under six pillars of excellence  Leaders and staff come together at an annual All-Staff Assembly to recommit themselves to their mission  Sharp produces an annual TV documentary that shares real-life experiences with the community

ADVOCATE HEALTH CARE

Corporate Culture Success Stories  Advocate’s balanced scorecard centers around health outcomes  40 percent of managers’ merit compensation increases are based on health outcomes  Their publicly available Value Report documents quality and cost achievements

Read an interview with Advocate’s Lee Sacks, MD, in the Dec. 2010 hfm, available at www.hfma.org/hfm.

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Build on Finance Professionals’ Change Leadership Strengths “CFOs are often better leaders than they think they are. They are good at setting goals, measuring results, and looking at variances.” -Quint Studer, CEO & Founder, Studer Group

“The CFO is really in a role to help the various stakeholders understand how the pieces fit together.” -Noblis Health Innovation Senior Principal, Paul Breslin

“When asked what role finance officers can play in transforming our healthcare system, David Walker said to remember what the ‘P’ in CPA stands for.” -HFMA Board member Edward Giniat, quoting the former U.S. Controller General & CEO of the Peter G. Peterson Foundation

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