Insights Series Issue 1: "Five steps every hospital CEO should start taking today"

Siemens Healthineers Insights series Issue 1 Five steps every hospital CEO should start today A white paper on ’Reduce unwarranted variations‘ with Brent James, MD, MPH siemens-healthineers.com/expanding-precision-medicine SIEMENS Healthineers About Siemens Healthineers Insights series Today, every health system struggles with rising costs and varying quality. Diagnoses and treatments are designed for typical patients. Delivery of care is fragmented and focused on volume. The patient experience journey is in its infancy. And healthcare doesn’t leverage the full potential of data. How can we change that? At Siemens Healthineers, our insights make it possible to turn challenges into opportunities. Our purpose is to enable healthcare providers to increase value by expanding precision medicine, transforming care delivery, improving patient experience, and digitalizing healthcare. As your partner for better outcomes in healthcare, we strive to provide a forum for addressing these issues, and to offer insights and new approaches. By joining the conversation with industry thought leaders and change makers, we are sharing forward-thinking ideas and solutions. We are also establishing a platform for leaders in healthcare to connect and exchange with peers. The Insights series offers actionable insights on how to tackle challenges and create solutions that work. Be inspired by best practices and engage with experts at the interface of technology and care. Please visit siemens-healthineers.com/insights-series White paper Five steps every hospital CEO should start today Executive summary Today, hospital executives hold the key to unlocking the value of reducing variation. Hospitals are an indispensable $ part of the communities they serve, so it is imperative that hospital executives continue the hard work of cutting waste 25% of hospital costs are while improving quality. waste from unwarranted variations. Some estimates go up to 65%. To do this, hospital leadership must tackle unwarranted variations. Addressing this issue hasn’t resulted in the It is important to note that reducing variations creates widespread success it promises because it hasn’t typically precision in hospital operations. Achieving this precision is been approached with strong executive leadership. critical for hospital leadership to be able to deliver in- We think it’s time for that to change. Hospital executives creased certainty, predictability, and consistency in clinical around the world have never been under more financial and financial performance. For sustainable and systemic pressure than they are today, and face numerous chal- change – the sort of change that creates measurable lenges including: improvements in outcomes and potentially adds tens of • an ongoing shift to a value-based care model, millions of dollars to a hospital’s bottom line – unwarrant- • margins at a 10-year low, falling below levels seen ed variations must be viewed as a hospital-wide initiative during the last recession (Moody’s, April 2018); and be led by a hospital’s executive management team. • revenue growth hindered by declining reimbursement rates We provide hospital executives a specific roadmap to unlock the enormous potential of reducing unwarranted One of the biggest opportunities to improve outcomes variations. With the proliferation of precision medicine, while significantly – and sustainably – reducing costs is tools and processes now exist for hospital leaders to for hospital executive leadership to address unwarranted address this problem in a thoughtful and successful way. variations in a meaningful, comprehensive way. This paper There are two paths forward: offers a guide for executives looking for an overall under- standing of how to lead sustainable change in reducing Action – Potentially tens of millions of dollars in savings, as unwarranted variations, including: well as improved outcomes and better patient satisfaction • role of the top executive • identifying opportunities for action Complacency – Fall behind competitors that are leading • planning for execution change, sacrifice improved margins, hinder predictability in • measuring results financial forecasting, and increase waste in costs Siemens Healthcare GmbH, 2019 3 “By adopting best-known standards of care and a relentless focus on eliminating unwarranted variations, we’ve been able to consistently improve our clinical outcomes and population health – and do so at some of the lowest healthcare costs in the country.” Charles Sorenson, MD, CEO Emeritus Intermountain Healthcare The challenge common practice environment with their physician peers. This variation produces high error rates, and an inability to The sources of unwarranted variations are learn from shared experiences. Physicians are unlikely to systemic by nature and widespread across change the way they practice medicine unless presented with data that proves another way is better than what they healthcare systems. have learned through their own personal experience. A classic example is the internal medicine service at any Efforts to reduce wasteful spending by hospitals and major academic teaching hospital. Attending physicians health networks are nothing new. Many seasoned hospital change regularly. Each time the attending physician executives have achieved sustainable success in driving changes, the idea of what constitutes ‘best medicine’ out unnecessary expense from labor and supplies costs. changes. The antibiotics that were ideal for the first As with most such efforts, the big savings are achieved attending physician are suddenly no longer ideal. Some early on with diminishing returns over time. diagnostic procedures are redone to satisfy the new attending’s practice style. Studies of physicians in non- So what’s next? The concept of unwarranted variations has teaching hospitals show similar massive variation. The been discussed for years, but it remains one of the biggest variation is so large that it calls into question whether opportunities to improve outcomes while reducing waste – patients, even with full access to care, could possibly be creating savings that can be reinvested into the hospital. getting good care. Frequently we see hospitals tackle this issue with discreet initiatives that might yield results, but often not at the level Complexity of medicine of sustainable savings that will incentivize a continued The overflow of new knowledge in medicine, driven focus in other clinical areas. Some estimates show reduc- by voluminous research and discovery, can exceed the ing care variation would create an annual savings opportu- capacity of the human mind to absorb and recall when nity in the range of tens of millions for most hospitals. We needed. On average, there are 75 randomized controlled have identified four key sources of unwarranted variations. trials and 11 systematic reviews per day, overwhelming Addressing all four is fundamental to realizing significant the medical industry and clinicians with new information. savings, as well as improvement in the delivery of care. Research shows that the expert mind can address a maxi- mum of between five and nine factors when making Craft of medicine a clinical decision. Most areas of practice require that Traditionally, most physicians see themselves as experts clinicians address many more than nine factors in who craft unique diagnostic and therapeutic experiences diagnosing and treating patients. for each patient, based on their formal education and the subconscious, subjective evaluation of their own practice Diagnosis variations experience over time. Most often, they use a standard Variations in diagnosis can be attributed to three primary approach for each clinical problem, then adjust it to factors: technology poorly adapted to patients’ individual- individual patient needs. However, physicians don’t often ity, device-operator bias, and limited access to relevant share their ‘standard’ approaches, even when they share a patient results at the time of the diagnosis. Variations in 4 Siemens Healthcare GmbH, 2019 Craft of medicine • Physician experience • Lack of standards/protocols • Physician subjectivity diagnosis are relevant because the incorrect identification of the patient condition creates a very high risk that all subsequent decisions will be inappropriate and potentially harmful for the actual condition that afflicts the patient. Complexity of medicine For example, diagnosis variation can be caused if screening and testing equipment doesn’t account for a patient’s • Overflow of new knowledge individual weight, heart rhythm, or movement; or there is • Limitations of the human mind a manual operator error such as imprecise measurement • Lack of high-quality evidence of organs/lesions; and finally, the lack of integration and monitoring of data from different equipment creates a lack of access to patient data reported by those different devices. Diagnosis variations Reduced transparency Transparency in a clinical setting means that the right • Technology not adapted to patients • Operator/user bias information is present at the right time to make the most- • Limited access to relevant patient informed diagnosis or treatment decisions. The primary diagnostic data focus of effective transparency is the interaction between clinicians. The key question is this: How does a particular measure directly support a specific clinical decision? This requires data aligned along specific processes of care. It stands in sharp contrast to most clinical ‘quality’ measures Reduced transparency currently mandated for oversight purposes, often by external agencies. • Limited access to pathways and peers' information • Poor digitalization on site • Restricted access to information Siemens Healthcare GmbH, 2019 5 The solution CEOs have a key, unique role to play in achieving the high value of reducing unwarranted variations. We recommend this five-step approach: Most of the literature available today on this subject is intended for clinicians. Although clinicians clearly play an important role, that shouldn’t diminish the critical role of healthcare provider executives. The solution for a sustain- able reduction of variations involves a systemic change and must include active support and participation from the CEO. The specific solution is not going to be one-size-fits all, nor is 100 percent compliance an obtainable goal, but the positive impact to the hospital is significant and Five-step roadmap how hospital achievable if certain steps are covered. Our customizable executives successfully address five-step roadmap – to be led by a hospital executive – will create sustainable change in their organizations. unwarranted variations 1 2 3 4 5 25% of costs 25% cost savings, are wasted on combined with unwarranted improved outcomes variations Create Identify areas Generate Build Lead, don’t awareness with greatest mechanism transparency dictate impact to change performance 6 Siemens Healthcare GmbH, 2019 “We were able to demonstrate that optimal clinical and cost outcomes are inseparably linked – but not in the way most Americans thought.” Charles Sorenson, MD, CEO Emeritus Intermountain Healthcare 1 Understand Learning and create awareness Methods for identifying areas to address can include, among others, key process analysis and gap analysis. Hospital CEOs and their leadership teams need to fully An organization is a system of processes interacting understand the concept of unwarranted variations and together. However, the processes that make up the its impact on hospitals. This goes beyond the impact to organization do not have equal impact, value, or weight. specific areas of the hospital such as radiology or cath One way to pick priorities is to fully understand your labs – although it should include such areas. Armed with hospital as a system of processes, then prioritize those concrete knowledge of how unwarranted variations are processes for variation management interventions. impacting the hospital, the CEO (or other C-level executive) This “key process analysis” is an analytic method that needs to lead the effort to address variations, and build a identifies an organization’s most important and impactful coalition of executives, physicians, and nurses to drive processes that becomes a list of priorities for process sustainable change. design, management, and improvement. Learning • From a patient perspective, key processes are associ- Consider starting a clinical quality improvement training ated with health problems or conditions such as labor program. Have key clinical and administrative leaders and delivery, treatment of a heart attack, artificial hip attend, and require a successful clinical project as part joint surgery, etc. of the course. This is a primary way to generate deep • Other important clinical processes that are not understanding of variations and possible solutions, both condition-specific are in areas like pharmacy, labora- intellectually and functionally. The projects make variations tory testing, or nursing services. These clinical services “real” in the minds of those who attend. Projects should be often roughly correspond to existing hospital selected based on the strategic needs of the organization. departments. • Administrative processes provide another set of essential services for care delivery operations. 2 Identify areas with greatest impact For an organization that is relatively nascent in a quality in your organization transformation, a second approach often works – one that involves finding respected clinicians who are deeply To build momentum for the effort, there must be some engaged around a particular clinical service. Based on their quick wins with measurable impact. Start with one area experience, these individuals can often identify gaps in or two maximum – that will create a demonstrable return care – differences between current clinical performance – on investment while building expertise and competency and possible clinical performance. A leadership team can for future efforts. then extract estimates of those gaps and use them to choose high-priority targets. This has the added advantage of building around a natural physician ‘champion’ to lead clinical change. Siemens Healthcare GmbH, 2019 7 3 Generate mechanisms to change performance, 4 Build measure and share impact transparency We recommend that once the specific process to reduce The right information must be transparent across the variations is identified, the executive sponsor can guide hospital, that is, the right information is provided to the the operational team-leader to look for similar experiences decision-maker at the time decisions are made about minor in other hospitals. Assess the area of care selected by and major treatment choices for a particular patient. identifying case studies, researching existing literature, and Missing information may make the difference in prescrib- reaching out to an informal network of leaders. Ask your ing care that improves the well-being of a patient or does peers and look for what worked for other hospitals and for the opposite. what has not – failure can be a great source for learning. For each program, we recommend looking at the sources Learning of variations mentioned above (page 5). Though the Avoid unwarranted variations by integrating and monitor- relevance of the different sources varies by organization, ing technology. This requires an appropriate IT support this approach provides a structure in which to consider platform. natural sources of the variations in medicine. One relevant aspect that is not usually covered properly by hospital executives is the following: How to ensure your organiza- tion profits from the benefits of the program? 5 Expand efforts through leadership and vision Hospital CEOs must create a hospital-wide management system that goes beyond project-based reporting. It is To manage systemic change in a hospital requires leader- critical to tie the initial identification of the benefits to the ship and vision from the very top of the organization. Such hospital, and how the savings positively impact the bottom change requires inspiration and motivation rather than line of the organization. This needs to be done before the directives and mandates. Getting early buy-in from various execution is in place and fully designed. Hospital CEOs are influencers within the hospital is crucial. But without uniquely positioned to do this with the support of finance passion and support from the CEO, the ability to unlock and strategy colleagues. This step must be managed the potential of reducing unwarranted variations will never directly by the organizations’ financial experts, and not be fully realized. be led by the clinical experts. Learning Be proactive in seeking out information. There are many case studies and much research on the topic, so there is often no need to reinvent the wheel. 8 Siemens Healthcare GmbH, 2019 Confronting the causes of variations Conclusion The role of the CEO is inevitable and critical. An executive blueprint designed specifically for this role guides the required leadership actions for reducing unwarranted variations. This offers the potential to hospitals and health networks alike to unveil the full benefits of cost reduction and positive outcomes around the world. Companies in other industries, especially those that are publicly traded, have long been incentivized to reduce waste and improve processes. Savings are reinvested into the company or otherwise passed on to the shareholders. Well-run companies rely on data and defined processes to evaluate and improve operational performance, reduce human error, and better predict financial performance. The same rigor, driven by robust data analytics, must be more universally applied to hospitals and health networks. Until then, the healthcare system will not reach its full potential while finally bending the elusive cost curve. Suggested follow up on siemens-healthineers.com/ news/expanding-precision-medicine • Harvard Business Review: “Expanding Precision Medicine – The Path to Higher-Value Care” • The Economist: “Reducing Unwarranted Variation: Increasing the Value of Care” • The Economist: “Standardisation in healthcare – What is the impact of standardisation on hospital efficiency, cost-savings and patient outcomes?” Siemens Healthcare GmbH, 2019 9 Insights series, issue 1 About the authors Luis Lasalvia, MD, MIB Vice President, Global Medical Officer Siemens Healthineers Luis Lasalvia drives and generates unique executive insights for deliver- ing high-value medicine, partnering with top thought leaders in the world. His know-how lies in multiple functions across healthcare (phar- maceutical, medical devices, clinical practice, leadership/consultancy and startups). He has also led numerous successful partnerships and teams around the globe, including more than 30 complex programs with various healthcare organizations. Luis Lasalvia has authored numerous peer reviewed papers and publications, submitted a number of patents in the US and Europe, and has been speaker at about 500 events and conferences around the world. He's a Medical Doctor from the Republic University in Montevideo, holds a Master in International Business from Pompeu Fabra University in Barcelona, and conducted postgraduate studies at The Wharton School of Business, New York University, and Harvard Business School. Brent James, MD, MPH Brent James, MD, MPH is world renowned for his influence on and work to improve the quality of patient care while Reto Merges reducing the cost of treatment. He is a member of the Global Head of Expanding Precision Medicine United States-based National Academy of Medicine. He Siemens Healthineers holds faculty appointments at the Stanford University With more than 10 years’ leadership experience in healthcare market- School of Medicine, the University of Utah Eccles School ing, he has a strong track record in building effective teams for clinical of Business, the T.H. Chan Harvard School of Public Health, and innovation marketing. In addition, Reto Merges has four years of and the University of Utah School of Medicine. While work experience in China, ramping up efforts for research collabora- tions in China and Korea. He holds an engineering degree in electrical leading Intermountain Healthcare’s Advanced Training engineering and information technology from the Karlsruhe Institute Program in Clinical Practice Improvement (the ATP), he of Technology, Germany, and has studied at the Nanjing Normal trained over 5,000 senior physicians, nursing and adminis- University, China. His scientific background is in the field of medical trative executives, drawn from around the world, in clinical imaging where he has authored many publications, while submitting management methods producing reduced care delivery multiple patents. costs through better clinical outcomes. Brent James also organized more than 50 sister training programs running in ten different countries. 10 Siemens Healthcare GmbH, 2019 At Siemens Healthineers, our purpose is to enable health- care providers to increase value by empowering them on their journey towards expanding precision medicine, transforming care delivery, and improving patient experi- ence, all enabled by digitalizing healthcare. An estimated five million patients globally everyday benefit from our innovative technologies and services in the areas of diagnostic and therapeutic imaging, laboratory diagnostics and molecular medicine, as well as digital health and enterprise services. We are a leading medical technology company with over 170 years of experience and 18,000 patents globally. With more than 48,000 dedicated colleagues in over 70 countries, we will continue to innovate and shape the future of healthcare. Siemens Healthineers Headquarters Siemens Healthcare GmbH Henkestr. 127 91052 Erlangen, Germany Phone: +49 9131 84-0 siemens-healthineers.com Published by Siemens Healthcare GmbH, 2019