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    Misc

    Planting the seed: Why assembly-line medicine could help a hospital's revenue cycle

    April 22nd, 2010

    by Paul Roemer

    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.

    [More:]

    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.

    Paul Roemer is a healthcare strategist and the managing partner of Healthcare IT Strategy, which helps health care providers solve business problems using EHR, workflow improvement, and change management.

    Comments, Pingbacks:

    Comment from: Julia [Visitor]
    I have a problem with this part: "* The steps for the same procedure, say a hip replacement, were identical each time?" PEOPLE are not "identical". HUMAN BEINGS are not mass-produced with the same parts that function in exactly the same way. Cars? Probably so. Non-complex, less invasive medical procedures? Maybe so. Hip replacement? Doubt it.
    Permalink 04/22/10 @ 11:31
    Comment from: Michael [Visitor]
    People are not "identical", but they are close enough that we have a standard system of medicine that people are trained for this in standard ways, with standardized credentials. Human beings are mass produced by other people and the DNA goes forward and we end up mostly with hips that are more similar to other human hips than anything else which gives us a category we can price.
    Permalink 04/22/10 @ 11:49
    Comment from: Barbara Guster [Visitor] · http://Bobcat
    I understand you are very uneasy with the steps and procedures that are the required in healthcare. I think you are requesting an order of operations hiearchy?

    1. registration- to submit all necessary records to the hospital. demographics, insurance policy number, person to contact, living will.

    2. Admissions- to report and be admitted for surgery. The surgical date which your physician and you reached an agreement on.

    3. holding rooom- to prepare you for the surgery and to obtain personal medical information.

    4. Doctors team normally comes in the holding room, one at a time, to discuss concerns.

    Normally, the surgical procedure is not scheduled, until proof for payment is promised.

    This answer may not be concrete enough for you. Therefore, I would suggest, you call, the admissions department and inquire about a medical tour of your chosen hospital.

    I hope I have been able to put your mind at ease.

    Sincerely
    Barbara Guster BPS,PSR
    Weareregularfolks!
    Permalink 04/22/10 @ 12:06
    Comment from: Paul Roemer [Visitor] · http://healthcareitstrategy.com
    Thanks for the clarification Barbara; indeed that is where I was headed.

    I am not advocating 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.

    If the hip replacement analogy was a poor choice—my bad. The point of the piece was not the hip replacement, rather the seemingly inability to answer basic business questions relating to how the business of healthcare is run.

    I think there is a need for the independence and the je ne sais quoi nature of care. I just happen to think that 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 it has to do with costs, some with waste—wasted time, wasted opportunity, some with ineffectiveness, and some with planning. If one hospital can do X for thirty percent less than another, I think 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 many 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.

    Then there are the cost cutting advocates. Every manager worth their salt 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 Folger’s? Want to cut costs? Lock the doors. But that doesn’t 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. 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 don’t think they can do it without changing how they approach the business of healthcare.
    Permalink 04/22/10 @ 13:51
    Comment from: Thomas Dahlborg [Visitor] · http://www.truenorthhealthcenter.org
    The term complex adaptive systems (CAS) was coined at the interdisciplinary Santa Fe Institute (SFI), by John H. Holland, Murray Gell-Mann and others.

    Humans are all complex adaptive systems. We are all individuals whose dis-ease(s) are created and sustained by multitudes of factors, i.e., physical, mental, emotional, spiritual, economic, environmental, genetic, etc.

    As well the approach and solution plan of the root cause issues creating and sustaning the dis-ease will be different for each patient as will the root cause itself.

    Regina Herzingler of Harvard in her book Market Driven Health Care compares the treatment of patients to McDOnald's making French Fries.

    This analogy is also not congruent as humans are complex and different and again with multitudes of variables impacting health status.

    To best inform patients we should be very clear on the various impacting factors on their health, the process we will use to identify the specific root cause issue for the specific patient, the cost of the approach, the value of the approach, and the information, tools, interventions, and solution plans the patient will walk away with and the cost and value of same.

    The answer will be different for each individual and educating folks on this very point well also serve to benefit the patient.
    Permalink 04/24/10 @ 07:43
    Comment from: Audra Woods [Visitor]
    Excellent point about the "not knowing". One example of how to do it right can be found in medical tourism and I can specifically speak to bariatric surgery in Mexico. There are MD's there who can tell you exactly how things will go, when you will be discharged and the cost is up front! I had a wonderful experience there and I work in the medical field. We need to encourage hospitals to utilize the clinical pathways that exist for many procedures and explain them to patients fully with the small print saying that if you have problems a new course will be charted as needed. I work in mental health and we are required to provide EVERY patient with a treatment plan of what we are going to do to help them and they can provide input in that planning process... that is another model that can be brought into family practice as well as surgical procedures that would help patients understand cost as well as quality.


    Permalink 04/29/10 @ 09:11
    Comment from: Carla South [Visitor]
    Why assembly-line medicine could help a hospital's revenue cycle
    Permalink 04/30/10 @ 07:32
    Comment from: sally [Visitor] · http://starcraftreplays.org
    "I am stupefied." lol...so true
    Permalink 05/13/10 @ 01:45
    Comment from: hartes [Visitor]
    Approach is quite competent. I think I should be more stressed and the ralatia with others. Today image is everything. Even in the medical system may change some things with a good image. tractoare de vanzare
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