How 2nd Curve Practice Will Bend the Health Care Cost Curve

The Tenth National QUALITY COLLOQUIUM on the Campus of Harvard University

Cambridge, MAAugust 17, 2011

Martin D. Merry, MD, CMAdjunct Clinical Associate Professor of Health Management and Policy

University of New HampshireFaculty, Center for Healthcare Governance, American Hospital

Association

Partner, 2nd Curve Healthcare Systems

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Does This Resonate?“At this point, we can’t afford any illusions (re: health care): the system won’t fix itself, and there’s no piece of legislation that will have all the answers, either. The task will require dedicated and talented people in government agencies and in communities who recognize that the country’s future depends on their sidestepping the ideological battles, encouraging local change, and following the results. But if we’re willing to accept an arduous, messy, and continuous process we can come to grips with a problem even of this immensity. We’ve done it before.”

- Atul Gawande, MD. “Testing, Testing,” The New Yorker, 12/14/09

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Is Health Care Now Experiencing a “Perfect Storm” of Forces for Change?

1. Ongoing crisis over quality/patient safety2. Uncontrolled cost escalation, with US

international competitiveness at stake, employers at a breaking point, and patients bearing more costs, driving them from the insurance market as it exists today

3. “Health Care Reform’s” commitment to finally address the historical issue of inequality of access to care.

4. Relentless movement toward transparency, combined with maturation of P4P concepts and practices

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1st

2nd

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Our 1st 2nd Curve Journey

1st Curve: Where did it come from, and how is it failing?What is 2nd curve health care?How Does 2nd Curve Practice “Bend the Cost Curve”?Leadership

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“The most important event in the history of American and Canadian medical education”

(And the birth of health care’s “1st Curve”)

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"... for the first time in human history, a random patient with a random disease consulting a doctor chosen at random stands a better than 50/50 chance of benefitting from the encounter."

1912 : The 'Great Divide'

Harvard Professor L. Henderson

(Harris, Richard. A Sacred Trust. New York, NY: New American Library, 1966)

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Time

Circa 1910

2 Historical Curves of Health Care Innovation(derived from Kuhn, Toffler, Morrison, Merry)

(Bifurcation curve: 2011)

First Curve/ 4 sigma

(Craft-Age Culture)

(Craft+Information- Age Culture )

-

Future Performance (Second Curve/

6+ Sigma)

“Crossing the Chasm”

Perf

orm

ance

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1st Curve Health Care’s Performance Problem

1st Curve Health Care (Craft Culture)90% OK 100,00095% OK 50,00099% OK 10,000

Sigma Defects per million1 690,000

2 308,0003 66,8004 6,2105 2306 3.4

What does this really mean?"If you were admitted to hospital tomorrow in any country... your chances of being subjected to an error in your care would be something like 1 in 10. Your chances of dying due to an error in health care would be 1 in 300," Liam Donaldson, the WHO's newly appointed envoy for patient safety, told a news briefing.This compared with a risk of dying in an air crash of about 1 in 10 million passengers, according to Donaldson, formerly England's chief medical officer."It shows that health care generally worldwide still has a long way to go," he said.

- Reuters, 7/21/201110

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The INEVITABLE consequence managing highly complex health care with a 2-4 sigma

quality infrastructure

Medical errors as 5th- 8th leading cause of

death in US

44,000 – 98,000 deaths annually

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And . . .The “Stealth” Cost Culprit“Cost of Poor

Quality”?*$390 Billion, Annually

* What IOM labels as “overuse, underuse, misuse

and waste”

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Our 1st 2nd Curve Journey

1st Curve: Where did it come from, and how is it failing?What is 2nd curve health care?

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The 21st

Century’s Flexner Report?

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The Vision: 10 Rules of Performance in a Redesigned/2nd Curve Health Care System

1. Care is based on continuous healing relationships.2. Care is customized based on patient needs and

values.3. The patient is the source of control.4. Knowledge is shared, and information flows freely.5. Decision making is evidence based.6. Safety is a system property.7. Transparency is necessary.8. Needs are anticipated.9. Waste is continuously decreased.10.Cooperation among clinicians is a priority.

- Institute of Medicine, Health Professions Education, 2003

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Columns 2 & 3 = 2nd Curve

Regulation Hammurabi

Legal system

State Boards

JCAHO

“Inspection”

Fed/State regs

ORYX, EMTALA, HIPAA, Etc.

JC, CMS “core

measures”

Medical Science

Hippocrates

Nightingale, 4 doctors

Flexner, Codman, ACS/Hospital

Standardization

M&M conferences

Donabedian,structure process, outcome

Outcomes, Disease

management

Evidence based care, Hospitalists

Management Science

Industrial Revolution

Taylor: “Scientific

Management”

Shewhart

Deming, Juran, Total Quality

Complexity theory

Six Sigma, Lean, Action Learning, Adaptive Design, Resilience

Columns 2+3 = 2nd Curve

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The Innovations

Quality Science/Lean 6 Sigma Human Factors Transformational change: Action Learning, Adaptive Design, Appreciative Inquiry, Resilience Leadership/Culture change

Health Care’s Concurrent Industrial, Information, Consumer and Culture Revolutions

. . . And Their Real Implication?

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2nd Curve Health Care InnovationEvidence-based medicine Clinical protocolsService Line ManagementHospitalists, IntensivistsRapid cycle PDCA Lean Six Sigma IT:EHR, CPOE, TelehealthClinical Microsystem DesignTeam-based careNew models of Physician/ Hospital partnerships Community health innovation (ACOs, Medical Home) Leadership/Transformational change: Action Learning, Adaptive Design, Appreciative Inquiry, Resilience, etc.

Health Care’s beginning ascent of its 2nd Curve: Re-designing care systems around those served – while restoring the “joy of practice” to caregivers

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1st Curve 2nd CurveEvolved around medical and hospital practicesDisease focus, one patient at a timeHierarchical, physician controlledPerformance problems assumed as people-caused“Culture of blame”Fragmentation of care givers and health care functions, “hand-off” gaps commonMedical records paper, frag-mented, “owned” by caregiverComplexity frequent errors, harm to patientQuality is compliance-oriented, 2-4 sigma commonReactive to “sentinel events”

Designed around patient/ community, population needHealth, prevention focus, patient plus populationTeam-based systems outperform hierarchyRecognition that performance problems 95% systems-based“Just Culture”Integration of all system elements, care “seamless” for patientsEHR, “smart cards” owned by patients Integration of “quality sciences”minimizes error, harmQuality, value oriented toward 6+ sigma, O preventable harmPro-active, “events” history

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Our 1st 2nd Curve Journey

1st Curve: Where did it come from, and how is it failing?What is 2nd curve health care?How Does 2nd Curve Practice “Bend the Cost Curve”?

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The “Deming Cascade:” Simultaneous Quality , Cost , Value (W. Edwards

Deming)

Improve Quality

Decrease Cost

Enhance Value

Increase Market

More Jobs

( Process Improvement)

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Creating 2nd Curve Cultures

2nd Curve Vision

Change Processes

Change Structures

Change Work

2nd Curve Culture

“Changing how work is done changes the

culture.”- Jeff Goldsmith, PhD

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Our 1st 2nd Curve Journey

1st Curve: Where did it come from, and how is it failing?What is 2nd curve health care?How Does 2nd Curve “Bend the Cost Curve”Leadership

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Caveat: Process change will not alone accomplish the transformation to 2nd

Curve . . .

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Board of Trustees

• Credentialing• Departmental (Peer)

Review• Surgical Case

Review• Blood UR• Drug Usage Review• Pharmacy and

Therapeutics• Medical Records

Medical Staff Functions(“Silo 1”)

• Nursing• Ancillary• Laboratory• Radiology• Physiotherapy• Risk Management• Finance, Planning• Regulatory Agencies• Etc.

Hospital Functions(“Silo 2”)

Chief Executive Officer

Medical Staff Executive Committee

Our Structural Heritage, 1917-2011 Our structural “fatal flaw”

Management:(industrial culture)

Physicians:(craft culture)

2011: The Structure Hierarchy, Fragmentation, Communication gaps,

Misunderstanding, Power Struggles, etc.

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1st Curve: FRAGMENTATION!!!Patients and families navigate unassisted across different providers and care settings, fostering frustrating and dangerous patient experiences.Poor communication and lack of clear accountability for a patients among multiple providers lead to medical errors.The absence of peer accountability, quality improvement infrastructure, and clinical information systems foster poor overall quality of care.High-cost, intensive medical intervention is rewarded over higher-value primary care, including preventive medicine and the management of chronic illness.

- Adapted from The Commonwealth Fund Commission on a High Performance Health System, 2008

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The “New Leadership:” Creating Context

“Farmers don’t grow crops; they create conditions under which crops can grow.”

- Stephen Covey

Question: In my leadership role, am I creating a “fertile field” for a) vigorous process improvement, and b) reflecting seriously on whether or not present structures enhance or hinder energetic top-down, bottom-up collaboration and change?

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Collaborative Care: ALL are Team Members

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Car

diop

ulm

onar

y C

are

Obstetrics, Gynecology,

Perinatology,Pediatrics,

Neonatology

Management and Coordination of Care

Participation

Leadership Patient/Community

Primary CareInternal Medicine, Medical

Specialties, Family Practice,

Hospitalist, Psychiatry,

Emergency Medicine*

Women & Children

Care

Management

Design

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COMMUNITY MEMORIAL HOSPITAL ,

Hospital

Administration

Hospital Board

Medical Executive Committee

Col

labo

rativ

eP

ract

ice

Credentialing

Performance Improvement

Car

diol

ogy,

Car

diot

hora

cic

Surg

ery,

Pul

mon

olog

y,

Vasc

ular

Musculoskeletal C

are

Orthopedics, Podiatry,

Neurosurgery, PM

&R,

Radiology*

General Surgery, Surgical

Specialties, Anesthesia*

Surgical Care

Radiation Oncology, Medical

Oncology, Pathology*Cancer Care

PerformanceImprovement Teams /

Clinical

Microsystem

sCaregivers

* Specialties provide care in all service lines

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“Command & Control” Pyramid (Taylorism, circa 1900)

Top Management

Obedience

Commands

Hint: Doesn’tWork Anymore

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“Stewardship/Servant Leadership” (Covey, Block, others)

Top Management

Resources/Support

Caregivers/InnovationThose We Serve

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What might I do . . . ?

“Make yourself what you want the world to become.”

- Mohandas Gandhi“To successfully respond to the myriad changes

that shake the world . . . Transformation into a new style of management is required . . .

The first step is the transformation of the individual.”

- W. Edwards Deming