Laying the Foundation for Sustainable Change and Success (Webinar)

By Failing to Prepare, You are Preparing to Fail: Laying the Foundation for Success

[John L. Haughom, MD]

Thank you, Tyler.  It’s absolutely my pleasure to be with you once again.  I just want to comment on that distribution of attendees.  It thrills me.  It’s absolutely perfect.  Essentially, everybody’s represented in that group and it’s wonderful to have you all here.

Well, now we move on to the fun stuff.  In the first webinars of the series, we discussed the current state of healthcare.  Given the amazing progress over the past many decades, there is much we could be proud of with respect to modern healthcare.  However, as we discussed in the last webinar, healthcare also faces many quality, safety, access, complexity, and cost challenges that must be addressed.  The present state is simply not acceptable or sustainable.  It’s time for change.

Now that we are well grounded in the present state of care, it’s time to discuss what clinicians and healthcare organizations need to do to successfully ride the wave of change.  A decade ago, it was hard to see what the future would look like but I do not believe that is true any longer.  Thanks to some leading-edge organizations, I think we can get a pretty good idea of what the future will be, especially over the next 5 to 10-year timeframe.  Over this decade, there will be an increased (01:25) on value production and on effective population management.  Individuals and organizations that want to assure their success will need to do what is necessary to prepare for this new future.

The next few webinars will focus on what it will take to be successful.  Based on years of experience in this game, I can assure you that the good news is that this will be a fun and rewarding experience for those who can see beyond the challenges and envision a new future for healthcare.

The real question is, will we make history or will we become history?  Those of us at healthcare today own the answer to this question.  Creating a system of care that is better for those we serve is a noble endeavor.  We need to leverage the incredible progress of the past century and design a new system that is more effective, more efficient and more capable of creating optimal outcomes for patients and communities.  We need to move beyond the current widespread skepticism, frustration, and fear to an era that will be characterized by hope, excitement and promise.  We have the necessary skills and technology solutions.  The only real question is whether we have the will.

So let’s get started…

Healthcare: The Way It Should Be

As I mentioned in prior webinars, this webinar series is based on a book I’m writing on healthcare transformation, entitled ‘Healthcare:  A Better Way, The New Era of Opportunity’.  As soon this is available, the book will be freely available to anyone who is interested in reading it.  The only benefit I get from this book is the satisfaction that some of you might benefit from reading what I have learned.  Initial webinars focused on part 1 of the book which describes the current state of healthcare.  Now, we will transition to part 2 of the book, which will focus on the concepts, tools and techniques clinicians and healthcare organizations need to understand and implement in order to successfully ride the wave of transformation.  I want to express my appreciation to those of you who sent in questions or comments prior to the presentation.  I will be addressing some of your input during the presentation.

One comment that I would like to address upfront came from Eileen Esposito, a nurse clinical practice leader.  She commented on the need to overcome care provider resistance in order to move forward.  In making her thoughtful comments, Eileen hit scorely on the reason that I decided to write this book.  During my 20 years as an executive, leading system-wide changes in a multi-state health system, I encountered profound resistance from my peer clinicians.  It took me awhile but eventually I figured out that the key to engaging clinicians is educating them.  They need to have a clear understanding of what’s good about what they do, what challenges must be addressed, what the solutions are, and how do they fit in to those solutions.  They also need to see what success will look like if they use the tools and techniques well.  This is exactly the format of the book.

As bright and well educated as clinicians are, you cannot assume they understand these key elements of change.  However, every single time that I have walked good clinicians through this process, the vast majority of them not only get engaged, they tap into their strong desire to be the best in what they do, and we subsequently hit the work to keep up with them.  Over my years as an executive, I constantly hone this message and ultimately engage hundreds of clinicians in this process.  My goal in writing this book is to capture this learning on my part and spread the message to as many people involved in healthcare as I can.

So thank you, Eileen, for sharing your thoughts.

Before we dive in today’s presentation, let me post another poll question.

Poll Question #1

On a scale of 1-5, how would you rate your organization’s awareness that the healthcare transformation movement has begun?

So Tyler, if you could let me know what their response is.

[Tyler Morgan]

Alright.  We’ve got that poll up and running.  We’ll leave this poll up in just for another 10 seconds or so and then we’ll share the results.

Alright.  We’re going to go ahead and close that poll right now.  And the results are we have 51% stated that their organization is at a 5 – very aware, 20% at 4, 22% at 3, 6% at 2, and 0% at 1 – very unaware.

[John L. Haughom, MD]

Wow.  I mean that poll is interesting and exciting.  What it says is that healthcare is steadily waking up to a new reality and that survey, my experience as I travel around the country and talk to healthcare executives and clinicians, the people are becoming aware that the world is changing and has to change.  So thank you.

Okay.  Moving on now to the next slide.

Why do we see this?

Let’s start with a question.  Why do we often see advertisements like the one on this slide?  When a friend or a family member experiences an illness or injury, have you found yourself asking questions about the physicians or hospitals who are managing the care of you or your loved ones?  Who is your doctor?  Who referred you?  Have you checked his or her credentials?  How long has she been practicing?  What hospital are you using?  You probably have asked these questions and others like them.  I know I have.  Family members and friends routinely call me when they need medical help and ask me who should I see, what hospital should I go to.  Articles about the best doctors or the best hospitals are common.  Why is that true?

And not this?

On the other hand, we almost never see advertisements like the one on this slide.  Why don’t we ask similar questions about airline pilots?  In general, people feel confident boarding the plane, regardless of who their pilot is.  Why is that and why isn’t the same true in picking or visiting the doctor or hospital?

People ask these questions because they believe there are big differences between doctors and hospitals and they’re right.  As discussed in our last webinar, Dr. Jack Wennberg, the leading researcher on variation in healthcare, found that geography strongly affects what treatment a patient receives.  In fact, the treatment depends as much on a physician’s location as it does on the disease state and its severity.

The healthcare industry suffers from widespread variation and from a lack of standardization.  Healthcare will need to adapt the high degree of standardization and move toward a true system of production as the airline and many other industries have done in order to deal with the quality, safety, and cost challenges facing the industry.  If they do not, we will be forever asking questions about quality, safety, or reliability when we become ill or injured or moved from a healthcare provider to health provider.  These questions are driven by the existence of variation.  Variation and care delivery and utilization often indicates opportunities to reduce costs and improve the value of care a patient receives.

A ‘Field of Dreams’ Mentality…

Some of you may remember that Kevin Costner movie ‘Field of Dreams’.  The main character in the movie had a strong conviction that if he built a baseball field in an Iowa cornfield, players from the (10:03) area would show up to use it.  As he said, “Build it and they will come.”  We share a similar supplier-induced demand in healthcare.  It’s a ‘Field of Dreams’ mentality – Build it and they will come.  Buy equipment, and then make sure to use it.  Add a wing to a hospital and fill the beds.  Add specialists and fill their procedure blocks.  And if a patient is terminal, approach it like Star Trek’s Captain Kirk who famously shouted, “Do something (10:33).  She’s dying.”  Better yet, do everything.  If there’s chance something might work, try it. 

All of these practices contributed to high variation, over-utilization and a skyrocketing cost in healthcare.  It’s not hard to see that a true system of care would be better than one driven by supplier-induced demand.

Evolution of Methods to Manage Organizational Complexity

Humans have been managing work for centuries.  Initially, approaches to managing work were fairly simple.  However, with the passage of time and associated growth and demands for efficient high volume production of goods and services, managing organizations, production, and work became increasingly complex.  With this trend came a parallel growth in the sophistication of organizational structures and approaches to management.

Let’s explore this evolution in managing organizational complexity.


Prior to 1800, commerce was dominated by guilds.  A guild is essentially an association of artisans, merchants or others with common expertise who control the practice of their craft by limiting membership through a combination of training requirements and governmentally granted power to determine who can and who cannot be a member of the guild.  With the advent of capitalism and free trade in the early 19th century, guilds began a long and slow decline in their influence.  However, guilds continued to persist in different forms around the world.  For example, professional organizations continued to replicate the guild structure and the guild mentality.  Professions such as architecture, engineering, law and medicine continued to mandate various training requirements in the lengths of apprenticeship before an individual can gain professional certification to practice in the field.  Medical guilds include medical boards and medical associations.  Licensure to practice medicine in most states requires very specific training, passing tests, and many years of low-paid apprenticeship under fairly strenuous working conditions.  I know.  I went through it.  This approach is not the similar to guilds that existed prior to the 19th century.  The persistence of guilds in healthcare is not necessarily a bad thing, but it is important to recognize that more modern practices for managing complexity have evolved since guilds were developed.

Scientific Management

With the industrialization and modernization of trade and industry in the mid-19th century, guilds faded in influence and beginning of modern organizations occurred with the rise of the factory system, starting first in the textile industry where automation and mass production became the cornerstone of productivity.  With the advent of these modern organizations, there was a need to define what management was and to determine how best to operationalize it.

The first modern management theory to achieve lasting impact and success was scientific management, an approach largely defined and popularized by Frederick Taylor.  Taylor began his work at age 18 as an apprentice to a pattern-maker and machinist.  He later joined a steel company as a laborer, ultimately arising to a chief engineer over an 8-year period.  During this time, Taylor performed detailed experiments on worker productivity and tested what he called the ‘task system’ which eventually evolved into his approach to scientific management.  Taylor sought to determine the best way of performing each individual work operation, the time it required using time and motion studies, the materials needed, and the optimal work sequence.  In taking this approach, he helped formulate the concept of standardized mass production.  While advocating that managers and workers should cooperate, he also tried to establish a clear division of labor between well-educated management and less educated employees.  Taylor believed that managers were not only superior intellectually to the average employee, but that managers had a duty to organize and supervise the work activities of frontline employees.  Essentially, Taylor saw workers as naturally lazy cogs in the machine.  Taylor proposed that simplifying and optimizing jobs would yield greater productivity.  Taylor also believed that workers were motivated by money.  So he promoted the idea of a fair base pay for a fair day’s work.  Taylor accurately predicted the importance of the system as opposed to the individual worker.  As Taylor boldly stated, “In the past, the man has been first.  In the future, the system will be first.”

Taylor’s principles were widely adapted and they were massively successful.  His influence could be seen today in factories, in schools, offices, and in hospitals – that is in essentially any production environment.  The scientific management approach to production essentially supplanted the last vestiges of its craft style production and guilds.  Using Taylor’s methods, organizations were able to significantly reduce the effort required to produce goods and services.  This led to a huge shift in how organizations conducted their business.  Any company that could not successfully implement Taylor’s method simply went out of business.  Taylor’s theories also led to some major social transformations.  For example, they contributed significantly to the emergence of the American middle class.

One of the key challenges facing healthcare organizations today is that we rely too heavily on Taylor’s ideas for managing organizational complexity rather than on new more modern methods.

Lean Production

Beginning in about the 1960’s, as the work environment became more complex and demands for efficiency and quality grew exponentially, scientific management began to falter as the optimal way to oversee the production of goods and services.  Taylorism promotes the idea that there is one right way to do something.  In the face of growing complexity, this view simply became increasingly unattainable.  Fortunately, new theories and management systems, more able to handle complexity, were ready to take the place of Taylorism, particularly those proposed by W. Edwards Deming.

Deming was a professor of statistics at NYU’s Graduate School of Business.  In 1927, he was introduced to the work of Walther Shewhart of Bell Laboratories.  Shewhart had developed the concept of the statistical process control of processes and the statistical process control chart.  Inspired by Shewhart’s ideas, Deming began to apply statistical methods to industrial production in management.  Shewhart’s ideas of common and special causes of variation led directly to Deming developing his new theories on management.  Deming recognized that his ideas could be applied not only to manufacturing processes but also to how organizations are led and managed.  During World War II, Deming taught his methods to workers engaged in work for time production and helped contribute to the United States’ achieving unprecedented levels of production during the war.  Although statistical methods were widely and successfully applied during World War II, they faded into disuse in the United States once the war ended.

In 1947, Deming was asked by the United States Army to help plan for the 1951 Japanese census.  While in Japan, his expertise in quality control was recognized and led to him be asked to teach the statistical process control and quality improvement methods in Japan as a part of the Japanese reconstruction effort.

Deming’s message was straightforward, “Improving quality would reduce expenses while increasing productivity in market share.”  Deming successfully helped the Japanese his statistical process control methods to all sorts of organizations.  Over the subsequent two decades, many Japanese manufacturers applied his techniques widely and experienced unprecedented levels of productivity and quality.

We will win and you will lose…

The combination of high quality yet low cost goods created massive worldwide demand for Japanese products.  Some of you may remember how far the Japanese were hit in modern industrial techniques and quality improvement in the 1970’s and 1980’s.  I know I do.  It was a worrisome time.  Many wondered if American companies would ever catch up.  Some either predicted that Japanese were establishing a new world (20:46).  The Japanese lead was so impressive that they were supremely confident in their future as reflected in this quote.

Konosuke Matsushita, the highly successful founder of Matsushita Electronics, now Panasonic, said this during the visit to the United States in 1989:

“We will win and you will lose.  You cannot do anything about it because your failure is an internal disease.  Your companies are based on Taylor’s principles.  Worse, your heads are Taylorized, too.  You firmly believe that sound management means executives on one side and workers on the other.  On one side, men who think and on the other side men who can only work.  For you, management is the art of smoothly transferring the executives’ ideas to the workers’ hands.

We have passed the Taylor stage.  We are aware that business has become terribly complex.  Survival is uncertain in an environment filled with risk, the unexpected and competition.  Therefore, a company must have the commitment of the minds of its employees to survive.  For us, management is the entire work force’s intellectual commitment at the service of the company without self-imposed functional or class barriers.

We have measured – better than you – the new technological and economic challenges.  We know that the intelligence of a few technocrats – even very bright ones – has become totally inadequate to face these challenges.  Only the intellects of all employees can permit a company to live with the ups and downs and the requirements of its new environment.  Yes, we will win and you will lose.  For you are not able to rid your minds of the obsolete Taylorisms that we never had.”

Well, Mr. Matsushita’s prediction ended up being wrong.  In the 1960’s, facing their own issues related to complexity couple with fierce competitive threats from Japan, US Organizations finally meet again to widely adapt Deming’s methods.  Although they were far behind, it turned out that American History was far more adaptable than Mr. Matsushita predicted in this quote.  Eventually, American companies duplicated the high quality, low cost outcomes achieved by Japanese manufacturers, and in many cases, exceeded it.  Many US Healthcare organizations are still steep in Taylorism as we mentioned in the last slide.  The question is whether they will awaken to a new reality for managing complexity and follow the lead of non-healthcare companies that have shown the way for us.

The Evolution of Process Management

In summary, what we have witnessed over the past 100 years as organizations adapted to growing complexity is the evolution of process management.  Organizations have moved from guilds to scientific management to a true system of production.  In the healthcare industry, we still have a craftsmanship mentality to process management.  Even the way physicians are trained reflects more of a craftsmanship approach because it relies heavily on whom they shadowed during their residency, resulting in inconsistently in expertise among doctors.  And most hospitals are still organized in a top down fashion that is highly characteristic of Taylorism.

In contrast, other industries, including airline industry, have moved toward a system of production in order to deal with complexity and reliably produce value at competitive prices.  It’s important to recognize that healthcare will be no different.  We will eventually need to go down the same road.

Advances in Aviation

The airline industry is often used as the quaint essential example of process standardization to promote safety.  This is for a good reason.  The airline industry uses very standardized routine procedures and safety checks and sophisticated communication protocols, they’re designed to deal with complexity.  Pilots go through a highly rigorous systematic training including years of flight stimulations.  Because processes are highly standardized, each pilot receives the same information during training and while in the air.  Pilots are also supported by some of the most advanced technology in communication systems in the world.  Contrasting the 1917 cockpit with a modern day Boeing 787 Dreamliner cockpit, as illustrated in this slide, so it’s just how far technology has advanced in aviation.  Every clinician would benefit from this level of advanced technology-enabled support as they deliver care.

Process Management Works…

Over the last three decades, the aviation industry has learned the importance of technology, team work and standard safety and communication protocols which have had a dramatic impact on safety performance in aviation.  Aviation is near six sigma, a few defects per million, and has been there for several years.  This graph shows up through 2012 and demonstrates a remarkably low incidence of accidents over the last three decades.

Healthcare patient safety advocates have appropriately turned to the aviation industry to adapt their team work concepts to clinical care.  Few areas in healthcare are anywhere close to aviation safety requirements.  Although anesthesia has done a remarkable job that has reflected in plunging mortality rates as demonstrated in the graph on the right of the slide.  Much of anesthesias were in the fifth sigma.  The rest of healthcare needs to catch up.

Tesla: Mass Customization at Work

The effort to deal with ever greater levels of organizational complexity continues to march on.  I’m sure many of you are familiar with Tesla.  Tesla is the most successful American auto-manufacturing startup in 90 years and it is the most remarkable example of mass customization I have ever personality witnessed.

In 2010, Tesla had set out to build the most advanced auto factor in the world.  The goal was to try to constantly improve manufacturing efficiency and quality by using automation to the fullest possible extent.  Robots are very good at performing highly standardized repetitive tasks.  They can do these highly repetitive tasks better and more reliably than humans.  On the other hand, humans are better when creativity and intelligence are required.

The work in the Tesla factory is divided accordingly, with 160 advanced robots performing the standard repetitive tasks and humans applying their intellect where it’s needed.  The factory is a highly integrated environment, merging humans and advanced technology in a highly efficient manner.  If you ever want to see it in action, there are several videos on the internet that show it.  Likely components are assembled by a swarm of red robots in an intricate valet that is mesmerizing to observe but their bodies shift off for robotic prepping and robotic pinning before joining the assembly line under the power of more autonomous robots.  The gleaming shell is ushered through the line as Tesla’s 3000 workers work alongside their robotic counterparts to install the battery, motor, interior, and miles of cabling and components that help create the award-winning electric sports sedan.  We are watching the future of manufacturing unfold before our eyes with the Tesla example.  (29:10) to most Americans, many American companies are using very similar methods and steadily pulling manufacturing back into the United States in the process.  This raises an important question.  Will healthcare organizations go down the same road?  In fact, healthcare will not be immune to these forces.

It is happening in medicine, too…

If you don’t think robotics has a future in healthcare, think again.  There are dozens of robots under development to address many different functions in healthcare.  A few examples are shown in this slide.

In the upper left hand corner, you will see the Da Vinc Xi, the latest version of a highly sophisticated robot designed to assist surgeons in very complex surgeries.  To its right, you will see the Aethon Tug, a robotic system designed to help hospitals move supplies, such as medications, linens, food from one space to another.  In the upper right hand corner is iRobot’s Remote Presence Assistant designed to augment a physician’s ability to reach more patients remotely.  In the lower left hand corner, you see Healthcare Robotics Nurse Assistant, which can assist nurses with patient (30:20), meds, and vitals.  In the middle on the bottom of the slide is Epson’s Veebot, a robot capable of drawing blood better than a human.  In the lower right hand of the slide is an example of “microbots”, miniature mobile robots that can arrange in size from a few millimeters down to nanometers in size and the particular microbot illustrated in this slide is designed to guide hemotherapeutic agents through blood vessels to cancer cells, thereby increasing the efficacy and reducing the size effects of the hemotherapeutic agents.  Like other industries, robotics will revolutionize healthcare by managing high repetitive standardized tasks, leading humans to focus on situations where their intelligence and creativity are necessary.  This represents the same integration of technology process improvement and innovation that we saw being used by Tesla in the prior slide.

Lead Production

The two keys to Deming’s success were producing what customers wanted and this recognition that successful efforts toward continuous improvement could be built only on the knowledge of frontline workers who later became known as “smart cogs”.  In order to manage complexity and product value in the modern era, management needs to put quality improvement into the hands of frontline workers, the smart cogs, and then provide them the support necessary to achieve success.  Deming’s approach to quality improvement was process-focused and data-driven.  He recognized that if you couldn’t measure it, you couldn’t (32:04) it, and Deming’s words, in God we trust, all others must bring data.

Deming’s improvement methods were further enhanced with a widespread adaption of Lean Production, starting in the 1980’s.  Lean Production, or Lean for short, is the production practice that considers the expenditure of resources for any goal other than the creation of value for customers to be wasteful and a target for elimination.  In short, Lean is centered on preserving value with less work.  Similar to Deming’s methods, Lean recognizes the need to empower frontline workers.  The goal of Lean is to use standardized processes to eliminate wastes but also allow frontline workers, the so-called “smart cogs”, to adapt to individual cost per needs as necessary.  It utilizes efficient processes that could deal with complexity, yet it also supports mass customization.

A classic examples though, a world leader in Lean methods, a customer can go to the Dell website and order a personal computer with very detailed individual specifications and the computer will be efficiently built to exactly those specifications.  In fact, Dell’s process is so efficient it often takes long to shift a Dell PC to a customer than it does to manufacture it.

Tesla’s success is another example of Lean work.  There are many more examples.  This is Lean Production, it allows frontline workers to drive out wastes using optimized workflows and standardized processes while also providing room to adapt to individual customers’ needs.  Although they have not been widely adapted in healthcare, the improvement methods promoted by Deming and others are highly applicable in the complex healthcare delivery environment.  The evidence is overwhelming that we need to address widespread variation by using standard evidence-based processes and healthcare’s frontline workers are some of smartest ”smart cogs” of any industry in the world.  The idea of using so-called mass customization, standardized processes to eliminate inappropriate variation in waste while allowing clinicians, healthcare smart cogs, to adapt to individual patient needs when necessary, is highly applicable to what we do in healthcare.

Applying Modern Improvement Methods to Healthcare

When Lean principles are applied rigorously throughout an organization, they have been demonstrated to have a dramatic effect on quality through productivity, waste reduction, cost, and competitiveness.  In other industries, it’s not uncommon for improvements to range up to 90%.  A growing list of leading-edge healthcare organizations are demonstrating that these improvement techniques can be effective in improving the quality of care, in reducing harm, in improving patient satisfaction, in reducing wastes, and in lowering costs.

Under the visionary of leadership of Dr. Brent James, of Dr. David Burton, as well as others, Utah-based Intermountain Healthcare has demonstrated two decades of remarkable success in implementing improvement principles promoted by Deming to achieve superior outcomes in quality, safety, waste reduction, and cost.  Many of Intermountain’s achievements in the area of quality improvement and their application of information technology and analytics to support data-driven improvement are truly phenomenal and deserve widespread emulation.

Similar results are being achieved by other leading-edge healthcare organization.  For example, the Virginia-based hospital and clinic in Seattle began implementing Lean principles in 2002.  Since the introduction of Lean, they have demonstrated they can save capital, use staff more efficiently, reduce inventories, improve productivity, save space, and improve care quality.  Improvements have resulted in tens of millions of dollars in savings.

Listeners interested in delving deeper into Lean are encouraged to read the IHI whitepaper entitled ‘Going Lean in Healthcare’.  The reference is listed at the bottom of the slide.

Prior to this presentation, Beverly Masky asked me to how to convince leaders of health system about the importance of developing an improvement strategy.  Actually, I’ve done quite a bit of this type of conversion work, attempting to help members at C Suites of both small and large healthcare organizations see the need for improvement strategies.  Like clinicians, healthcare executives all the time just need to be made aware about the present challenges, what the solutions are, and now they fit into those solutions.  Well it can be hard to distract them from their very challenging and difficult jobs.  Based on experience, I know it is possible to do it.  Ultimately, these executives need to understand that either they get this message and implement an improvement strategy or plan on being acquired by an organization that has successfully done it.  This type of industry consolidation in fact has already begun.

Eventually, all healthcare organizations, regardless of payer models, will need to emulate the efforts of these improvement pioneers if they want to survive the future transformation of healthcare.  Healthcare organizations need to implement the right strategy focused on process management and outcome improvement using good data and Lean methods with the ultimate goal of optimizing value (37:47) patients.  Any organizations that can do that will realize a distinct competitive advantage in the years ahead.

Poll Question

On a scale of 1-5, is your organization prepared to embrace quality improvement and Lean methods?

It’s time for another poll question.  On a scale of 1-5, is your organization prepared to embrace quality improvement and Lean methods?

I will turn it over to you, Tyler.

[Tyler Morgan]

Alright.  We’ve got that poll up and we’ll leave this poll up for just a few seconds.  I would like to remind you while you’re filling up this poll that you can interact with us, you can type your questions and comments into the questions pane on your control panel.  We’re going to go ahead and close this poll now and let’s share the results.

Alright.  We’re showing 12% rated their organization at 5 – very prepared, 31% at 4, 35% at 3, 14% at 2, and 18% rated their organization at a 1 – not prepared.

[John L. Haughom, MD]

Again, those findings are very interesting and I think what we’re seeing here is that the bell-shaped curve which a few years ago would have been much closer to the lower end of the scale is definitely starting to shift towards the awareness that they have to be better prepared.

Okay.  Thank you for your responses.

Brent James, MD, 101…

The success of these methods in clinical care delivery is not surprising to any experienced clinician who also understands modern improvement strategies and techniques.  After all, all the improvement in healthcare, as in any other industry, is simply the result of applying the science of process management.  Although complex, healthcare delivery is basically a system made up of thousands of interlinked processes.  Each process is a series of interlinked steps often but not necessarily sequential that are designed to produce specific valuable outcomes for patients.  At the outset, it’s important to understand what managing care really needs.  It does not mean managing physicians and nurses.  They are the ones who best understand the process of care and therefore the ones who need to manage process of care.  Process management implies that one starts with the right knowledge of processes, knowledge of systems, knowledge of human psychology, good data, and an underlying understanding of variation.  It further suggests that one builds a rational system to manage processes and support ongoing learning.  Based on my experience, I know that once you provide good clinicians the education, data tools and support they need, they are eminently capable of managing and optimizing the process of care.

Dr. Anne Macintosh had me a question this weekend about how to engage physicians in realistic, on-the-ground solutions.  The beauty of the quality improvement approach we are talking about here is that you are asking these frontline clinicians what they believe is important.  As I will discuss in the next webinar, these clinicians need to be guided by good data but ultimately it is the practicing clinicians that use the data to decide what process improvements will provide the greatest benefit for the patients they are caring for.  It is in my good fortune to be in rooms many many times where good clinicians do this work and I can tell you a certainty that the light bulb is switched on, the energy is palpable, and as long as they are guided by good data, the solutions they come up with are virtually always realistic.  These physicians, nurses and others in healthcare are driven to be the best they can be, and they have no problem picking up the mail of improvement once they understand what needs to be done and have the tools they need to the job.

Deming 101…

Your quality improvement is going to work in healthcare.  If we are going to realize value, it means we have to engage clinicians.  To use Deming’s term, clinicians are healthcare’s so-called ‘smart cogs’.  Clinicians are the frontline workers who understand and own the processes of care.  Value in healthcare will be achieved only by engaging clinicians, the frontline workers of healthcare delivery, and supporting their ability to optimize workflow, standardize processes and reduce waste while also being able to recently adapt to individual patient needs.  Given this reality, it’s important to recognize that the quality improvement will be very empowering for clinicians.  It is something they should embrace and not resist.  The core business of any healthcare organization is delivering care and clinicians are essential to care improvement.  Thus, any healthcare organization that wants to succeed in the future will have to have a strategy to educate and engage and empower clinicians in the improvement process.  Such a strategy is critical to success.

The Healing Professions are Changing…

On a workforce perspective, healthcare is very fortunate.  Few industries have a workforce that is as talented, well-educated, and committed to serving the customers as healthcare.  We are in the industry filled with professionals who take pride in what they do.  When we fall short as generally the result of a system that is broken and does not provide the environment and support individuals require to produce consistent value for patients, whether one is involved in clinical care or operations, the vast majority of healthcare workers get up every day with the desire to be the best they can be for the patients they serve.  The goal of management is to provide clinicians and operational leaders the training, tools, techniques, data, environment, and other forms of support they need to be successful in the quest for value.

Having said that, going down this road will also require that clinicians give up on the craft-based approach to medicine. The traditional craft-based approach to medicine has consisted of an individual, physician putting the healthcare needs of an individual patient before any other (43:56) goal and drawing on his or her clinical knowledge to develop a unique diagnostic and treatment regimen that is highly customized for that individual patient.  In the modern era, healthcare has simply become too complex and too costly to rely on this craft-based approach to deliver the right care to the right patient at the right time everytime while also assuring that the overall population benefits.

Clinicians will have to adapt a profession-based style of practice where groups of peers, treating several patients in shared settings develop standard coordinated care delivery processes using standard evidence-based protocols, which individual clinicians can adapt to specific patient needs.  This is mass customization in healthcare.  This is healthcare’s version of what other industries are doing to achieve value for their customers.  Growing experience is showing that this approach is less expensive, less complex and yields better patient outcomes.

Shared Professional Accountability

This profession-based style of practice will require a new sense of shared professional accountability.  I will not tell you how to practice medicine.  I will argue the science, but if I cannot convince clinicians based on “good data”, I will not expect them to change how they manage patients.  However, I will try to create an environment of shared professional accountability, where groups of clinicians who manage similar patients in similar settings, discuss best patient practices with recourse to the medical literature, expert opinion, and credible data showing their own performance and outcomes over time.  In essence, we are converting care environments to ongoing learning laboratories.  With engaged clinicians, with the right skills and good data, we can turn every care environment into a learning environment.

This is profession and professionally a very exciting possibility.  It is also a redefinition of crucial peer review which is more focused on what clinicians do wrong, which (46:07) folks on how we can continuously improve care for the patients we serve.

A Framework for Organizing

Given the complexity of healthcare, provider organizations were benefiting enormously from doing a system or taking a systematic approach to this improvement.  As they approach this challenge, it is useful to have a framework to organize one’s thinking.  The method that we have found useful is to organize the approach into three systems that collectively create the ability for organizations to effectively and efficiently deliver high quality and safe care at a reasonable cost.  These three systems provide a solid foundation for any organizations to improvement strategy.  These three systems are illustrated in this slide – an analytic system, a deployment system and a content system.

Achieving scalable and sustainable outcomes requires effectively implementing these three systems in conjunction with each other.  By taking these steps, care providers can lay an effective foundation for the future.  Let’s (47:09) a look at each of the systems.

Analytic System Components

The first system, the analytic system, illustrated on this slide is where an organization standardizes the way it measures things.  To strengthen and improve analytic systems, organizations need to accomplish three goals.  They first need to unlock the data and make it accessible to improvement teams.  This requires implementing a well-designed analytic infrastructure.  We will discuss these analytical tools and others in more detail in the next webinar.  Using these types of foundational applications and an effective visualization engine, healthcare organizations (47:48) to successfully automate the distribution of information so that it is readily available to clinicians involved in improvement to identify important patterns in the data.

Deployment System Components

The second system, the deployment system, illustrated on this slide involves standardizing organizational work.  To improve the deployment system, an organization needs to start by organizing (48:12) teams that take ownership of the quality, cost and patient satisfaction associated with care delivery.  Your organization also needs to organize team structures, provide training and rules, allow teams to design their own solutions and make sure improvements are implemented consistently.  Encouraging clinicians to design new ways of doing things creates a sense of ownership in the solution they come up with.

An organization also needs to implement an agile or iterative method which fosters continuous improvement.  It has to be agile because care improvement teams can never be totally certain where circumstances will take them.  Organizations need to integrate Lean processes with measurement systems so they can have immediate automated feedback on performance in addition to (49:05).  We will discuss elements of an effective deployment system in a couple webinars from now.

Content System Components

The third system, the content system, involves standardizing medical knowledge work, as illustrated on this slide.  Even when a study comes out and identifies best practice, it can take as long as 17 to 20 years for clinicians to fully integrate the new knowledge into everybody practice.  By standardizing knowledge assets, such as order sets, intervention criteria, value stream maps and patient safety protocols, an organization can improve the speed at which that medical knowledge is integrated in everybody clinical practice.  An organization needs to speed up the integration of evidence into everyday practice of care delivery and standardize delivery of care by using shared baselines and standard protocols.  By leveraging all of the components of the analytic deployment and content system, an organization can truly ignite change and behavior throughout the entire care delivery system.  And by igniting change through analytic deployment and content systems, healthcare delivery organizations can achieve scalable, sustainable, optimized outcomes.  In future webinars, I will discuss each of these three systems in some detail.

Poll Questions

Does your organization have a well designed strategy to capture the hearts and minds of its front-line workers, the so-called “smart cogs”?

Okay.  It’s time for our final two poll questions.  So the first one is does your organization have a well designed strategy to capture the hearts and minds of its front-line workers, the so-called “smart cogs”?


[Tyler Morgan]

Okay.  We’ve got that poll open.  It looks like also we’re getting a lot of great questions there.  I would like to remind you that you can submit your questions in the control panel.  We’ll be sure to address all those that we’re able to.  I’d also have to say that if we are not able to address your question during the webinar, we will follow up with you, your questions and your comments, afterwards.  Let me go ahead and close that poll now.  And let’s share the results.

It looks like 6% responded for their organization 5 – definitely, we’ve got 12% at 4, 36% at 3′ 30% at 2, and 16% at their organization 1 or not at all.

[John L. Haughom, MD]

Again, very interesting findings and it does reflect what I’ve seen as I’ve visited organizations around the country.  I think this is the number one way that healthcare is failing to implement modern methods for managing complexity.  They have not yet figured out how to engage the “smart cogs”, the frontline workers, the clinicians who deliver care everyday and I’m hoping that my book will help with that and that’s why I’m making it available but it’s the important thing to do.  You can’t make progress without it.

Poll Question

Has your organization developed a logical framework to prepare for a future focused on value production and effective population management?

Next question is has your organization developed a logical framework to prepare for a future focused on value production and effective population management?

[Tyler Morgan]

Alright.  We’ve got that poll open.  We’ll just leave that open for a few seconds to give you a chance to answer that.

Alright.  We’re going to go ahead and we’ll close that poll in just a couple of seconds.

Alright.  Let’s go ahead and share the results here to everybody.  We’ve got 3% responded to this at a 5 or definitely, 18% at a 4, 25% at a 3, 36% 2, and 17% selected 1 or not at all.

[John L. Haughom, MD]

Very interesting again and I think that it shows that while there’s growing interest in moving towards improvement strategies in organizations and developing the foundation that’s required for success, that illustrated curve also needs to move farther along before we’ll see a lot more progress.

Okay.  Thank you for answering those.

In Summary…

The final slide, I just summarized the points I’ve made in the presentation.  In the interest of time, I’m going to not read this off.  I think I made the points and you are free to read them because this Powerpoint is available to anybody.

Thank You

And so, what I’m going to do is just move on to thank you for your participation today.  This is a joyful work for me and I love doing it and I love interacting with all of you.  We do want to highlight some important events that are coming up there and I’m going to turn it over to Tyler to address those before I answer questions.

[Tyler Morgan]

Well thank you, Dr. Haughom.  I just want to let you know that on the first week of May, it will be May 7th, I believe, we’ll have a webinar coming up that Dale Sanders will present on importance of data governance.  And also particularly we’ll be promoting next week, you’ll see in our communications about our healthcare analytics on this that we will be sponsoring coming September.  We will provide you with a link where you can save the date on that.

And Dr. Haughom, are you ready?  Let’s get right to the question, shall we?

[John L. Haughom, MD]



Tyler Morgan:      Okay.  Our first question – and again, I would like to remind everyone that if we’re not able to get to your question during this time, we will follow up with you afterwards.

So the first question comes from Laura Black.  She asks, “Must healthcare move through Taylor’s methods or can we leapfrog directly to Deming’s method?”

Dr. Haughom:      Oh we absolutely have to leapfrog.  You know, most health delivery hospitals and multi-hospital systems or clinics are actually Taylorized now, although the actual training of clinicians is still back in more of the guild mentality.  But we need to leapfrog and we’re eminently capable of doing it because we have the smartest (55:10) in the world and there is no reason why we shouldn’t be able to do that.  Thank you for the question.

Tyler Morgan:      Alright.  Jerry Murray asks, “What are the biggest challenges in health organizations being guided by good data?”

Dr. Haughom:      The biggest challenges, boy, I could give you a long way to the answer but I would say that the two things that I see is, number one, having the data readily available and accessible.  There’s a lot of organizations implementing electronic health records.  They capture the data but they don’t make it available in an efficient way.  And so, you have to have the data readily and efficiently available.  When you do it, it’s mind-blowing to see how much data there is.

The second thing they need to do is have clinicians engage in wanting to use the data and I can tell you they do, they just may not know it yet.  I’ve been in rooms many many times where I’ve just been blown away by the response when I start showing good clinicians good data and a 30-minute meeting turns into a 90-minute meeting because they can’t stop asking questions.  The first questions leads to 5 more, those 5 to 20 more and that just keeps escalating like that.

And I do want to emphasize what Tyler said, I will take the time to try to answer every question that is posted here.  So don’t get frustrated if I can’t answer it along.


Tyler Morgan:      Okay.  Well we’ve got time for one more question and this question comes from Dale Sanders.  He said, “At present, only 11% of our healthcare dollars in the US are spent on bundled post service payments.  The (56:58) says that we in healthcare are not going to change until that percentage gets to at least 50%.  What do you think, John?”

Dr. Haughom:      Ah…my good friend, Dale, is asking a provocative question.  I think you’re right.  You know, most people, in any industry, are incentive-driven, and right now in healthcare we’re incentivized to do things, to do transactions.  How many procedures can we do or how many patients can we see in the clinic, or how many people can get through the ED, and until that payment changes and we start taking responsibilities for populations, then the health of populations is going to be tough.  And quite frankly, that’s why CMS is working so hard on that.  A lot of people don’t know that the Affordable Care Act set aside $10 billion for a CMS center for innovation.  And the last time I checked, they were looking at 18 different models for payment based on outcomes.  So you can expect over the next 2, 3, 4 or 5 years to see a lot more movement in that direction.  And it’s not just CMS that’s interested in that, all the big private payers are as well.  So as I’ll say in later webinars, the future is about population management and definitely the incentives are going to change and it’s important that people start recognizing that they need to get ready for that.

So thank you for the question, Dale.

Tyler Morgan:      Alright.  We are at the top of the hour and it looks like we’ve got another 15 plus questions that we’ve got.  We’ll make sure we will address all of these questions afterwards.  We would like to thank everybody who joined us.  After this meeting closes, you will have the opportunity to take a short survey.  Please take a few minutes and fill out the survey so we can continue to bring you relevant content.  Shortly after this webinar, you will be receiving an email with links to the recording of this webinar and the presentation slides, as well as a link to chapter 3 of Dr. Haughom’s ebook.

On behalf of Dr. Haughom, as well as the folks at Health Catalyst, thank you for joining us today.  This webinar is now concluded.