Monday, December 31, 2012

Profit, Non-Profit

 Here's a quote from the Washington Post article,  "5 Myths about charitable giving" on 30 Dec: "Nonprofits are not profitable.  In 2010, US charities reported more than $2.7 trillion in assets.  . . . (in 2007) a large Midwest charity hospital chain reported reserves of $7.4 billion, more than twice the cash on hand at Walt Disney Co."  If you're not laughing yet, read the entire article. 

His basic premise is correct, non-profits do indeed make profits, so it's hard to poke fun at this slip.  But anyone who took accounting 101 knows the difference between profits (the difference between income and expenses) and assets (stuff you own or take to the bank).  The distinction between for-profit and not-for-profit healthcare institutions has long been a source of confusion.  It should not be.  On the one hand, there is no difference.  All companies make a profit, or they cease to exist.  You can spend assets to pay expenses for awhile, but ultimately, you must make a profit to persist.  I once worked for a company that was jointly owned by a for-profit medical group and a not-for-profit hospital.  We kept three sets of books:  One for reporting our business to the IRS each year.  One for reporting to our for-profit owner, and a final one for reporting to our not-for-profit owner.  Note that it was the same business--same income, same expenses, same profits.  Each of the owners treated the profits differently on their tax return.  So that's the rub, how you report profits to the IRS.

It also makes a difference in how you run the company.  Here's a list of goals and strategies for a not-for-profit healthcare organization:
1. Emphasize giving.   Message every patient about all the good work you do and make it easy for them to contribute to your endowment.
2. Call yourself a "Children's" hospital, rather than a "Women and Children's hospital, because Children's hospitals attract more donors.
3. Lobby CMS and Congress for higher reimbursements.
4. Appoint wealthy locals to your board, and hold charity events to raise money. .
5. Cultivate relations with the press to obtain favorable coverage of heartthrob cases.

By contrast, here's what the for-profit competitor might do:
1. Control costs by bargaining aggressively with suppliers.
2. Engage employees in eliminating waste in healthcare processes.  Award cash bonuses.
3. Cultivate surgeons who bring high profit margin cases.  Make it easy for them to work here.
4. Aggressively manage the processes of care to eliminate waste and unnecessary steps.

One more thing:  there is a difference between a charity and a not-for-profit, tho some institutions are both.  In principle, a charity receives income exclusively from donors and spends money on some worthy cause.  Generally, they do not send bills or provide services for a price.  The Girl Scouts of America is a charity.  They do sell cookies, but they don't send bills to those who receive their services.  Georgetown University Hospital is a not-for-profit.  They do send bills to those who receive their services.  The Shriner's hospital  is the closest thing to charity in the healthcare world.  Their web site is all about donating, and their mission is to provide care without regard for the "ability of a patient or family to pay." 

As one might expect, for-profit healthcare institutions tend to be more efficient.  Nothing like reporting to a board on where the money went to focus your attention on the cost of providing care. 

Oh, yes.  The answer to the question from last time is one.  Marriott owns one hotel, the Key Bridge Marriott in Washington.  It was the first hotel Marriott built.  All the others are franchises.  Marriott has a quality team that regularly visits each hotel with a checklist.  If there are deficiencies, you are given an appropriate time to make corrections.  If progress is not forthcoming, they take the sign off the door, and you are no longer a Marriott hotel.

Saturday, December 29, 2012

Great Food

Just finished reading a review of Chef Geoff's restaurant chain in the August issue of Washingtonian Magazine.  OK, I'm a little behind in my reading, but this caught my eye as demonstrating successful use of basic quality tools and techniques, including some principles from ISO 9001. 
Owner, Geoff Tracy opened a restaurant in DC and managed everything himself.  This was successful, so he opened another, and another, and another.  He soon realized, however, that he could no longer manage everything himself and that without effective management, things didn't always go well.  Enter brother Chris, a numbers guy.  Together, they established 800 standards that are measured at each restaurant.  (Wine by the glass dated to ensure freshness, dishwasher at correct temp, email to new employees before first day of work, etc.).  All this is part of a perhaps obsessive attention to detail that rolls up to weekly, monthly, and annual reports on each restaurant.  Tracey is quoted as saying, "Consistency is a lot harder than it looks.  It might just be the hardest thing of all to achieve."  There are 70 training courses for employees, with cash rewards for those doing well on the tests. 

All of this will sound familiar to quality professionals, but it's unusual in the restaurant business.  Marriott hotels has a similar but shorter list of quality metrics.  (Trivia question of the day:  How many hotels does Marriott own?  Answer next time.) 

Chef Geoff has a mission statement: "Great Food, Libation, and Merriment."  His 800 metrics describe in excruciating detail what that means for every employee.  Note that there is nothing about gourmet dining or cheap eats.  Just a promise of great food/wine, and that you'll have a good time eating there.  And they do that every time at every restaurant.  Geoff is also quoted as saying, "I don't think measuring is what differentiates us.  . . . we share that information with our managers in a way that is actionable."  Sounds like my kind of place.  They even have outside auditors, tho they're not registered to ISO.  At least not yet.

So what's this have to do with healthcare?  Healthcare as an industry needs this approach.  Here's what it might look like:
1. A clear mission statement, linked to identifiable customers and their needs.
2. Weekly metrics to the CEO from key processes, with actionable items for improvement.
3. Consistency in service everywhere.  How about 70 in-house training programs, with cash awards for effective learning by employees.
4. Call buttons answered within three minutes.  If this restaurant can serve a cocktail within three minutes of the order, surely we can answer the call button in that time, every time. 

In short, healthcare needs to define some standards, measure performance against those, and develop action plans for noted deficiencies.  Note that it's not enough to say that "we'll meet this goal 90% of the time."  The quality professional will ask what happened the other 10% and what are you doing about it.  Take a page from Lexus automobiles, "The relentless pursuit of perfection."

In defense of the healthcare industry today, there are too many metrics that are imposed externally and have little to do with the quality of care.  Even for some that are relevant, the task of measuring compliance is more expensive than providing the service.  (Think, giving an aspirin within 30 minutes of an ER visit for chest pain.)

Some hospitals are adopting ISO 9001 as a management system, and there are consulting companies to help them with that effort.  Still, dramatic change will require something that doesn't exist today--price competition for healthcare services.  There is just so much business in "eating out" in the DC area.  Chef Geoff is pursuing a subset of those diners and aggressively assessing the quality of his efforts with the aim of constant improvement.  He will do well.  Now, what about healthcare?

Monday, December 24, 2012

A Raise?

December is Salary Survey month for Quality Progress--your chance to see how you're doing relative to the industry at large.  And if the results are not to your liking, I guess you could always ask for a raise.  (That sound you hear is my muffled laughter.)  In an environment where most people are grateful just to have a job, where Federal workers (me) have't had a raise in three years, go on, make your case.  Just to set the record straight, the ban on raises for Federal workers doesn't apply to political appointees or to those at the high end of the pay scale (SES workers), only to rank and file workers at GS-15 and below.

 Paul Borawski offers some tips on asking for a raise, but this is not going to be easy. Remember, duration of employment doesn't sell.  Just bringing that up may remind me (your boss) that I could hire a new employee for less than I'm paying you.

Quality managers don't come with statistics, like baseball players, so I can't look at batting averages or stolen bases, etc.  Do certifications count?  Only if they're specified in your position description, and then they're a condition of employment, not a reason for a raise.  However, the knowledge gained from studying for the exam may serve you well in solving problems for your employer and thereby demonstrating your expertise/value.  There is a difference between knowing about quality tools and techniques and applying them to everyday problems. 

How much money have you saved the company in the past year?  Yes, you can count time saved, but I'd like to see some hard cash also.  In healthcare, I'd look at standard metrics, like central line infections or response time to call buttons. How about readmission  rates?  That's a big one now and destined to get bigger as hospitals are held responsible for those costs.  Furthermore, that's an area that should be amenable to the quality tools you know so well.  Show me that you have contributed to improvements in these areas.

Tired of hearing employees tell him how good they are, one manager put the following sign above his door: "You're not really good until someone else tells you you're good."  That speaks to the value of auditing, but also to objective evaluations--metrics.

My favorite metric in the healthcare world is time.  How long does it take?  How long for the whole process, and how long for each step?  Time is easy to measure, easily understood, and Excel does time arithmetic.  Time, of course, is money, but the translation isn't always easy.  If you saved employee time, what is that employee doing with the extra time? 

Time can also be a customer satisfaction issue.  I doubt many patients would ask to sit longer in your waiting room.  If you employ LEAN principles, you will be pulling the patient thru your process just in time, rather than pushing him to the next waiting area.   How about surgeons?  If you agree that patients don't like to wait, ask surgeons if they like waiting for the OR to change between cases.

Back to your raise:  Show me all the sections you have worked with to improve their times.  Put a $$ value on it.  Do more surgeons want to work in your OR's because things happen faster there? Have you gained market share because you run a LEAN machine?

Improvement requires change, but all change isn't improvement.  There is an effort now to encourage physician offices to use electronic records, but when our clinic adopted an electronic record, we had to hire another physician to make up for the extra time the new system required of providers.  One thing has always bothered me about this concept:  if electronic records are such a good idea, why do we have to pay offices to adopt them?   It may be impossible to make a business case for electronic records in a physician office.  Many systems are VERY expensive, and to get paid, you have to show you are using the system for some use that a Washington bureaucrat thinks is "meaningful."  Electronic prescriptions are wonderful, but I'm not sure about the rest.  When our office offered an optional electronic prescription module, there was over 99% acceptance within a month.  We don't have prescription pads anymore.  When we introduced an electronic record, productivity plummeted and several threatened to resign.  So be careful of becoming an advocate for electronic records.  They may have a negative effect on your financial resume.

Still, there is a lot to do.  Five years ago, there were two main problems with the US healthcare system:  access and cost.  The access problem was mostly solved with the Affordable Care Act.  The remaining issue, cost, provides a huge opportunity for quality managers.  Show me what you can do, and we'll talk about a raise next year.