Health Markets Guru

Why Patient Experiences Are So Challenging to Measure

More and more hospital executives are looking at the HCAHPS scores imposed on them by the federal government to measure patient experiences at their clinical sites. Soon they will be trending this data to spotlight how effective they continue to be when measuring transactional performance of nursing and physician staff, such as how quickly they responded to calls, how professional they behaved and how thorough they were in explaining a new treatment plan.

As a customer anthropologist, it is my job to take a more effective measure of the experience of the patient when going through the fairly traumatic event of hospitalization. I find it remarkable that hospital executives aren't complementing the HCAHPS tool with a more thorough investigation to discover the elements that comprise a hospital stay. Most hospitals would benefit by exploring the many ways people prepare for, are taken to, are admitted in, put up with, and eventually, exit from the hospital experience.

These people would probably not, for the most part, choose to go to any hospital. We really should be asking "What makes for the whole personal story of someone's hospital experience?" And "How can our hospitals leverage what they learn?"

This will more appropriately take us down a path to discover how to:

• Improve the experience overall
• Ensure comfort and ease of healing
• Remove ineffective wastes, while keeping and bringing new personal touches that mean something to patients and their families
• Find new ways to serve patients, and
• Extend our understanding of the patient experience to include both the before and after portions of care following the hospital visit

In addition to asking a much more comprehensive battery of questions to people already tired from their experience, hospital executives are probably also wary of discovering the truth behind these experiences and the lack of accountability in people they employ to bring about better outcomes in these otherwise relatively unattended areas of experience. For example, most hospital execs are surprised that patients include the hospital as at least partially responsible when billing and insurance claim efforts are seemingly sabotaged by the people we pay to help patients when they need it most. More startling is the lack of understanding at the top levels of decision-making, that hospital people can effectuate simple yet powerful help to give relief to patients overcome by these challenges.

HCAHPS was designed to give the government the ability to rate performance on metrics that would be universal no matter where a person recieved hospital care. It is now time for hospital executives to look more closely at their unique components of care and the administrative aspects of their role in patient experiences, and fess up to better opportunities to bring improved health and higher satisfaction to their patients.

-------Michael

Hospitals' Best Bet: Service Line Development Targeting Best Margins

Hospitals today are facing enormous pressures to perform financially. Most are diligently pursuing the revenue cycle, ensuring that DRGs yield the highest payout and that third-party payments are maximized. Most systems are mired in cost-cutting. Others are looking at service lines to determine how to serve their patients and physicians optimally. Still others are focused on branding, customer experiences, and competition.

And there are huge numbers of hospitals and health systems doing nothing different from the status quo, largely because they feel stuck with their circumstances, they are not certain what they can do, or they feel disempowered by a higher authority. The proverbial deer-in-the-headlights syndrome.

Of all the things hospitals can do to improve financial performance, the most significant actions are those that yield new revenues, both from new service lines and from newly developed service lines. As Ken Blanchard wrote through his character Carlos Grover, "...it's producing revenue, not squeezing expenses that separates the moneymakers from the also-rans. You can't cost-cut your way to prosperity." And isn't that what the business of healthcare should realize? If we are to responsibly champion this business of helping people become healthy and own their health, we must also champion a business model in which our performance yields prosperity, so that we can continue our mission unabated. This, to me, is an authentic definition of sustainable healthcare delivery.

There are many strategies to grow top line performance through effective service line development. Some strategies are acquisitive, some organic, others rententive. Most bring strategic collaboration and leadership into keen focus. Nearly all segment the market and concentrate on superior delivery. In upcoming pieces, I will interview experts who are doing this every day at their hospitals and health systems throughout the country.

--------Michael Harris

Customer Experiences ARE Your Brand, part 1

Healthcare decision-makers like to use data to support all kinds of decisions. The kinds of data are as numerous as the sources are prolific. These leaders measure processes, financials, clinical outcomes, myriad growth determinants, propensity for treatment options, physician performance, disease-population correlation, etc.

Yet one of the most critical measures of healthcare success at any hospital, physician practice or health system is patient experiences. When people tell their stories about interfacing with a health provider, we listen, internalize and turn it into a supporting or contrasting measure for how well the provider is fulfilling their mission. Recognizing patient experience – actually customer experience – as key to provider success, is the most important part of a new consciousness brooding in the healthcare environment today.

In their new book, Healthcare Tsunami, Wayne Glowac and Dean Halverson make the strong case that the new wave of consumerism in healthcare will change the industry forever:

“As consumers begin to spend more dollars on healthcare, they will vote, as they do in other ndustries, with their wallets. Consumers will have newfound power when they understand the value of that vote and use it to change the industry. This will change everything from the way care is delivered to the information available on procedures and their cost. Consumerism will generate greater transparency in an industry that has a high degree of confusion under present conditions.”

And, it seems, that in barely a year since the book had been penned, much of that transparency is coming to the fore of healthcare provider environments. Companies like Health Grades have engineered interactive web sites that allow people to rate providers on the quality of care, the outcomes, and even bedside manner. Other organizations have found ways to turn families’ frustrations about lack of transparency and disclosure into new gold mines. Care Pages offers patients and their families the opportunity to form communities of people in similar situations, so as to share war stories and speak about their health issues.

Many health systems and hospitals have been collecting patient survey data for years, and yet, this is a fairly antiquated and inflexible method of discovery. Research professionals serving the healthcare world universally acknowledge that survey data is limited in measuring and capturing the true power of customer experiences. Even more limiting, the data they collect is old and significantly past the emotional memory of the event.

But if experiences translate into consumerism that changes our way of doing business, how do we positively affect customer experience? And how do we know if these efforts lead to success? The answers lie in how people make choices.

------------Michael

Why a Strategic Vision Is So Important for Hospital Success

Frank and his team had narrowed their choice down to three firms vying for the development of a new service line: our firm, and two other veteran players who didn't focus on having a strategic vision to guide their successes.

These were intelligent decision-makers, listening to final presentations about why each firm was the right choice for this business. They knew how to evaluate. They had a history of great decision-making. And as far as we could tell from people on the inside, the principals of each candidate firm were equally liked and well regarded, including us.

Later we heard that one of the teams brought goodies into the room. Cakes, cookies, sodas, and candy. We heard the other team brought their entire office into the board room, crowding the decision-makers with bodies that added little but extra heat and reduced oxygen.

When our time came, we focused all our confidence on the single most important determinant of success in building a new -- or redeveloping an existing -- blockbuster service line: the collaborative process of helping our clients arrive at a Strategic Vision. And it was just the two of us.

It was not a surprise to us that members of the Board sat in on these presentations. Hospital investment historically reached into the several millions when all was tabulated, and board members took their fiduciary responsibility very seriously. But it was the board chair, and not the CEO, who leveled the critical question to us: Why would a strategic vision make the difference between those who try and fail and those who wildly succeed? Our reply was as powerful as it was simple: The Strategic Vision sets the unified agenda for the expectation for, and definition of, ultimate success.

I'll repeat that: The Strategic Vision sets the unified agenda for the expectation for, and the definition of, ultimate success.

A strategic vision is a process that allows all key staff to participate in airing possibilities for success with regard to the customer environment, the competitive environment, the regulatory environment, the referral and reputation environment, the financial environment, and the physical environment. It seeks to discover successes and failures that correspond to this kind of service launch, as a basis of comparison for what will work and what will not.

The strategic vision begs the question how the launch will integrate with all other components in the hospital, not just functional but also cultural, and asks whether it can become integrated into the overall strategic plan for the company. The process helps all contributors winnow the possibilities to the one to three that are likely candidates for success. It articulates what that success looks like, and manages the expectations so that everyone on the team -- both at this moment and down the line when attrition and new hires have changed the team -- have the same, precise understanding of the final expected outcome, allowing the consultants and those who execute (we are both) to do what they do best: build a bridge from point A to point B.

We've witnessed hospitals have all the best resources in the world and fall on their well-branded faces because the team was not unified in its expectation for and definition of ultimate success. And we've seen organizations with very limited resources unsure how they'd compete realize amazing success because everyone was on the same team, both figuratively and literally. This kind of unity happens when a dream is shared, and people know they have a part in making that dream come alive.

A vision is a powerful tool that unites people for a common cause. It is at the heart of what it means to be American. It compels people to give their all, to sacrifice for ultimate glory, and to remember why they chose this line of work in the first place. And when a dream is infused with strategic intent and tactical fulfillment, nothing gets in the way of a predetermined successful outcome.

-----Michael

I Just Enjoyed a Wonderful Interview

I had a wonderful experience this week being interviewed by Health Leaders' Gienna Shaw. As passionate as I am about our work, it's always intriguing to hear about what's going on in other parts of the healthcare marketplace, and Gienna surely encounters this on a regular basis. Health Leaders is the recognized authority in reporting experiences from senior leaders in the global healthcare market, and every day I find compelling stories, trends, analysis and opportunities on Health Leaders' web site. It's a remarkable way to listen to the ongoing conversation about changes in healthcare, and I was honored to share our work with Gienna.

Most people who read this blog know that I write about how to build revenues and profits in hospitals and health systems. They know that I am a student of markets, seeking ways to better understand the intersection of human potential with the finest that the healthcare profession can deliver to realize that potential. Yet, I am humbled by the incredible output -- both qualitatively and quantitatively -- that Health Leaders and its people like Gienna deliver to a hungry market. Thank you, Gienna, for all that you do!

------Michael

Best Way to Grow Bottom Line? Grow Top Line!

If your team is working effectively to keep more of what your organization brings in, it's time to get more "big picture" by applying strategies to grow the amount that comes in.

Hospitals and physician practices alike are seeking ways to grow total healthcare revenue, and are finding that squeezing incremental gains out of what they currently earn has limits. Beyond that which they are already doing, they are also discovering that increasing collections on revenues billed requires more effort that ever to inch any higher. They have come to recognize that this kind of practice management is one of diminishing returns.

How then, they ask, can they increase earnings and collections?

The solution is simple: Find new ways to serve, and grow new revenue streams that have higher collectability and stronger margins.

Physicians who entered the cosmetic industry know this all too well. They moved their core practice into the sphere of vanity, and took advantage of Americans' constant need to improve their images. The prices are high, the margins are stratospheric, and there seems to be a never ending flow of patients who will gladly out-of-pocket to get that better nose, those higher cheekbones, and those growths removed. Except that now, so many physicians have entered this market that opportunities seem to be drying up. Many of the physicians we know in the Southwest are experiencing slowing demand for services in light of a huge influx of physician supply.

So the question remains, What additional revenue streams can be substantiated by out-of-pocket paying consumers who seek more from their healthcare institutions? We've discovered that some systems are building much better mousetraps, by examining the continuum of care that loyal patients expect from where they get care. In an urban setting, we've helped a hospital chain bundle a variety of services that can be accessed at each of the care delivery settings, allowing customers (patients and their physicians) to be cross-sold on multiple services. Simply opening up a dialogue with patients gives you access to new kinds of intelligence, the kinds that can showcase new opportunities to serve and make people happy with their experiences.

We've also found hospitals who are proactive about competitive offerings, bringing new service lines together with lifestyle choices to bridge the outreach gap most hospitals and physician practices seem to encumber. A great example is where a hospital created a weight-loss center for people needing to lose weight, and includes nutritional counseling, personal trainers on-site at the hospital's gym, and even supplemental meal packaging offered by the hospital's kitchen. Physicians champion the approach, and patients go to free seminars teaching how symptoms illustrate the effects of extra weight on the body's ability to perform. Experimenting with this approach, the health leaders here brought on a substantial bariatric center, offering varying degrees of weight loss to their constituent patients, and the entire service line bundle now grosses more than $25 million dollars. Not bad for an experiment.

Our Five Stage Process for Service Line Development can be levered universally for all health providers:

1. Set the Strategic Vision for what the health provider can become.
2. Perform a Candid Assessment, to test the readiness of the organization to grow its capacity to serve.
3. Enter a process of Discovery, learning about new service line opportunities, preselecting physician champions who'd like to make a difference, and most importantly, opening ongoing conversations with each of your constituents: patients, families, the community at-large, physicians, payers, hospital decision-makers, and hospital front-end folks, those who interface with patients on a daily basis.
4. After discovering several opportunities, conduct Pilot Experiments that test the revenue-producing power and market acceptance of a potential service line.
5. Finally, provide seamless integration of the new offering, ensuring that lines of communication are open and precise messages are delivered consistently to all customer types.

In these days where the bottom line is so heavily conditioned by the process of collections, it makes sense to begin exploring the business development side of healthcare, finding, testing and implementing the best new ways to serve people. Not experimenting with how you deliver value by growing your top line, will probably lead to failure.

-----Michael

Top Line Growth: The Key to Your Hospital’s Financial Success

What is the business of hospitals today? Why are they in the business of providing excellent healthcare facilities? Why do payers get away with only paying 30% of every dollar earned? Would receiving 100% of what they earn on every procedure, diagnosis and treatment be mythical? Do hospitals truly earn the amount they charge?

These basic questions have been the foundation for getting into the hospital business, and they are the basis for reevaluating whether to stay in the hospital business today. If you were seeking an investment that would deliver good ROI, would you choose a hospital knowing that they would only likely receive 30% of every dollar earned, and only after fighting tooth and nail for it?

Would you be more inclined to invest if you learned that what they bill is sometimes 20 times higher than what it costs? Hospital executives are a shrewd bunch. They know they have to operate profitably in order to ensure they’ll have access to capital for the new equipment, talent and facilities they must build.

Improving their financial position comes in two flavors:

• Keeping as much of what they earn.
• Earning more as a result of improved cash flow and new revenue streams.

Many financial healthcare consultants focus on the first one, helping to infuse processes that eek out as much lemon juice from the current lemons, er, um, ...billed amounts. Collections is a very active business to be in today. At a recent healthcare conference I noted that 70% of all the exhibitors were offering some sort of factoring play. “Give us your receivables over 90 days and we’ll guarantee 30% today!”

It seems far fewer creative consultants are in the development side of revenues. What can hospital decision-makers do to improve their revenue production? How about adding products and services that patients would willingly pay for out-of-pocket? How about new service lines that leverage the hospitals’ current assets such as digital imaging and lab equipment? How about programs that bring in the community to achieve better health while fostering a collaborative and engaging environment that puts patients in a position to choose your hospital the next time they are in immediate need. How about creating a loyal base of physicians and patients that produce ongoing work as per the continuum of care they’ll need for the rest of their lives.

We in the current healthcare management system need to cease reacting to every change thrust upon us by competitive and regulatory market forces swimming around us.  We need to take charge of our destinies by innovating the business of healthcare. We need to ensure a healthy financial and service environment by experimenting with new ways to deliver care, and equally important, the message of well-delivered care. We need to continually ask: Are there other revenue streams we haven’t considered that offer opportunities for the organization to grow?

As it turns out, there are hundreds. As a business consultant to healthcare organizations looking to grow their organic revenue, we have found scores of opportunities to help our clients grow the number of revenue streams and the flow of cash within existing revenue streams. The successes continue to mount because each health organization is a different mix of assets, customers, and competitors. It is the evaluation of each of these that produces the most traction to grow their serving opportunities, and realize them with significance and sustainability.

Examples of these successes include learning how to connect directly with fee-paying consumers, dramatically ramping high-margin revenue producing activity by all physicians, and offering a complete selection of goods that can be purchased through the hospital’s DME product inventories, including, strangely enough, impulse-buy items that speak to patients’ sense of immediate gratification.

Each innovation in revenue production is unique. Each launch must be carefully matched to the current service line mix and to the potential for continuum of care services offered by the institution and its team of medical professionals. We believe in launching pilot programs to test marketability and preferences when assessing a new revenue opportunity. Each pilot is carefully packaged to meet expectations of the market, and to mirror the branding the hospital currently enjoys with its existing customers.

And we learn from each experiment what will work and what won’t. The point is that hospitals must begin to position themselves for new ways to serve and deliver the best of American healthcare, and they must begin today. Staying with the status quo is a recipe for the demise of American healthcare superiority and for the demise of your health organization along with it.

-----Michael

Hospital Execs Know Healthcare Biz Can Be Highly Lucrative If You Accept The Costs

Hospital executives today are consumed with expense control. Evaluating how to get the benefits of the products and services they buy at cheaper prices, better terms, and more favorable negotiations. Since their chief revenue activity is the daily embattlement for small portions they actually can collect from what they bill, they are equally ferocious when it comes to purchasing. This is considered a position of stealth to most industries. When it comes to healthcare, however, I hear a lot of moaning and groaning.

Who, in their right minds, would elect to enter the hospital business today?

I have been astonished that even with strict enforcement of accurate billing, most hospitals average 30-34% in total aggregate collections on what they expect from their revenue streams. While great expense control and productive revenue capture is critical for businesses that operate on slim margins, are we resigned to the fate of overproducing and under-collecting?

Indeed, a closer look at how hospitals establish the price they can charge reveals many instances of what most Americans would consider extreme gouging. My colleagues in hospitals around the country have shared that while prices seem out-of-control, they are established within the guidelines set by Medicare, with follow-the-leader acrimony from private health insurers. And it’s a wonder where those guidelines have come from, since the rates grow costs almost exponentially across the board. One such example became evident in my family.

My father recently had his pacemaker replaced. Cost of the outpatient surgery? $97,000! And this was the newer kind with a built-in defribrulator; this particular operation did not call for removal and replacement of the leads into the aortic chambers. Certainly the physician would need to be compensated, but surprisingly, that charge comes to less than $2000. What then constitutes the other 95K?

Look to the maker of the pacemaker, Medtronic, and look to the amount the hospital is allowed to charge, both as a markup of the device and a healthy facility charge. And yet, the real costs for both the device and the 9 hour use of the facilities – including the recovery areas – amount to less than $25,000.

Define Healthy Profit

One might ask: Shouldn’t hospitals be allowed to make a healthy profit on their product? I say YES, of course they should be allowed to be healthy. [BTW, so should the physician and there is clearly a disconnect here.] And going back to the amount they’ll actually collect, it should be noted that the total collection from Medicare and out-of-pocket from my parents will be just over $77,000. Still, that’s a lot higher than the typical 30-34% collection rate, more like 79%. And it just seems like gouging.

So, why all the complaining? I have a simple, yet powerful explanation for this. The atmosphere of overcharging and underpaying has led to a very hostile relationship between providers and payers in our health system, despite the clear fact that monetarily, there are some big winners out there. We are engaged in daily negativity—Extreme Negativity that encompasses nearly every person working in hospitals today. Not only are we focused too much on the almighty dollar more than the delivery of quality care, but our negatively-charged environment is bleeding the patient of vital healing capacity.

We cannot help but be touched by this detrimental behavior. And it can’t be good for our family lives, our individual contributions to society, and perhaps even our self-pride. Today’s environment of making money by delivering quality medical care is nothing short of toxic.

So now, we may better understand why people are still entering the hospital business today. It’s very lucrative, and for those who know how to manipulate the system, it’s yet another historic opportunity to quell America’s healthcare leadership potential.

I’ll leave you with an important thought:

Its time for a better approach to making money for hospitals.

------Michael

 

A Better Formula to Service Line Management? You bet!

In a late May article with HFMA, a new & improved formula for service line management was offered:

5 Step Process to Achieve bold targets of growth, performance, satisfaction, and quality:

 

1) Recognize the Burning Platform

 

2) Evaluate internal readiness

 

3) Invest in early wins

 

4) Build the management model

 

5) Create the Service Line Mantra

Look at this formula. It's quite compelling. It's basically a directive for senior hospital leadership to begin rethinking how service lines can be better managed to serve the revenue-producing needs of the hospital organization. It relies on a willingness to recognize that the way we do business now is faulty. It demonstrates that in order to truly be successful in healthcare, we need to become ready to experiment. It compels us to shape the business model for how each service line operates, both independently and holistically, within the competitive environment of care for any given region. And it asks for organization-wide embracing through a Service Line Mantra, which is nothing short of a Battle Cry.

How many hospital organizations are approaching service line management this way? How many more are stuck in the continuous determination of portions that can be cut, expenses that can be lessened?

Tom Peters speaks about the need for the healthcare industry to engage in experimentation and consumer engagement. Denis Cortese, head of Mayo Clinic, speaks about healthcare reform in terms of changing the culture to one that mirrors a corporate learning organization. Michael Porter addresses the redefinition of healthcare from a global perspective. With these and countless other thought leaders challenging us to look at how we perform and asking what business we really are in, it's truly become time to change the very role of the service line executive.

------Michael

How to Increase Revenues For Hospitals

Most hospital administration teams have revenue cycle people working on shoring up costs, so that the organization can be profitable. Indeed, the mantra of the revenue cycle junkie is: Keep More Of What We Make! These are great professionals and this is a reasonable approach, but as many Wall Street companies are learning, getting lean has its limits and can sometimes compromise things like quality and service.

It's important to remember that if revenues are fixed in place, keeping more of what we make is limited to what we make and is subject to efforts that produce diminishing returns. Savvy hospital decision teams are now investing more heavily into efforts to grow the top line of their business. By growing new revenue streams and fortifying the revenue streams they already enjoy with stronger cash flows, the hospital has a geometric result stemming from successful Keep More of What We Make strategies.

Some of the hospital organizations we've served are discovering that building new pipelines and increasing customership in older ones are not as insurmountable  as one might guess. We've helped them to reconnect with their consumers -- their patients and families and physicians -- and by genuinely listening to their desires for better healthcare at the hospital setting. We've uncovered serving opportunities that cement their relationships to the hospital and affiliated physicians while building ways to grow substantial revenues. By keeping an open mind, these organizations are growing their brand while growing their finances, and with relative immediacy.

What are your experiences with growing the top line for hospital services? What creative ideas have infused new life into old service lines to beef up cash flow? Which ancillary products and services have bolstered current hospital offerings to create new revenues and customers who benefit from a better continuum of care focused on their lifestyles and health events?

If your hospital decision team isn't working to grow revenues for the organization, along with innovative services and experiences for the customer, your strategies are limiting your financial success and sustainability.

------Michael