Heathcare

Purpose + Impact

Three principles for leading with purpose and positively impacting the world.

I’ve been reading some of the report outs from the JPM Healthcare conference this week. As expected with a financially oriented conference, there was a lot of discussion about growth, profit and returns and the need for innovation and process improvement over value extraction.

On that note, I started reading Be Fearless by Jean Case last week and feel that it’s worth your time to read. Jean shares the five [5] principles for leading from a place of purpose and positively impacting the world.

The three [3] principles that resonated with me the most are:

Start where you are

I met with the CEO of health tech startup a few weeks ago and explained how I start engagements. It helped her put words to her own experience and the gap in expectation versus reality that often exists. 

There is nothing new or special about my approach. It’s something auditors routinely do and what Steve Blank recommends to innovators and entrepreneurs. Look at the data and then get out of your building [or office] to see what’s really going on. There is often a gap in what you expect and reality.

Getting a good grasp of where you’re starting from is the first step for leading any initiative. The data might be incomplete or inaccurate but chances are you have more than what you need to get started.

Lots of small steps

There are literally a million little steps that have to be taken to realize a big vision but progress gets people excited to take the next step. In the early stages, the next step is all that really matter as long as it aligns with the organization’s purpose and your vision.

Initiatives often take longer than expected. Enthusiasm waxes and wains, mistakes happen and money runs short. To keep people engaged through the rough patches, leaders need to be constantly reminding people of where they are going. Think about how many times Elon Musk tells us that he’ll be taking us to Mars.

“You can’t have progress, growth, and innovation without people who desire what’s best for the company, even if they make a few mistakes every now and then.” ~ Jacob Morgan

Having the right investors on board can also help. Several of the companies profiled in Be Fearless have impact investors which is not an investor category that I’ve heard startups talk about but that could be a good option – especially for healthcare.

Reframe failure

This is probably the best reframe of failure that I’ve ever heard…”you haven’t failed until you give up.” 

Most leaders and organizations don’t give up on their purpose. They give up on a strategy or an initiative that isn’t achieving the desired result. Learn, pivot or scrap the entire model and try again. Starting over can be a bit painful [emotionally and financially] but it’s not the end unless you give up.

Join me on the mat

On a personal note, I will be teaching Community Pilates Mat classes starting in February, 2020. I’ve been practicing Pilates for more than 20 years and started Pilates Teacher training last year.

Funny Story: Last year I ordered a new mat from Amazon and received a box of 10. At the time, I didn’t know if it was an early AI initiative or simply a mistake. Either way, the gift of mats from Amazon is being paid forward via the community classes. I’m sure Jeff Bezos would be pleased to know the outcome.

About Pilates: Pilates was developed by Joseph Pilates to address some of his own health issues. He accredited his program for keeping fellow detainees healthy at an internment camp [1918-1919] and for rehabbing wounded soldiers. In 1926 he established a studio in New York in the same building as the New York Ballet and started working with dancers. Many athletes and others from all walks of life now use Pilates to rehab injuries and maintain their health.

Yes to Pilates: If you want to be added to my list for community mat classes please send me a reply.

Building Courage

Courage by definition is the willingness to do something that frightens oneself. 

In a business context it usually requires people to do the right thing rather than acting in their own financial interest. Doing the right thing is frightening for those with a lot to loose.

Ethics and compliance with regulations is comparably a low bar for businesses but still a challenging hurtle for companies focused on maximizing returns to shareholders.

Tenet Health

Tenet is a good example of a leading edge company focused on maximizing shareholder returns that has experienced compliance issues.

The company has made early investments in technologies that help them reduce operating costs, streamline revenue cycle processes and accurately report revenue related numbers.

The problem is that some operators put the financial focus ahead of the company’s purpose of providing high quality care to the patients in the communities that they serve. In some instances, patients paid a very high price. 

If you need details, google Tenet’s issues in Redding, California. Nurses at the facility eventually “blew the whistle” but given the company’s focus on financial operations, others likely new something was wrong but they didn’t have the courage to question the physician or Administrators involved.

Cases like Redding create trust issues with payers, partners, employees and healthcare consumers. The company pays a hefty price for years even when corrective actions are taken.

The question that remains to be answered, is it worth it?

CVS

Did you know that CVS stopped selling tobacco products in all of the company’s pharmacies in 2014? Despite the loss of $2 Billion in annual sales, executives decided it was the right thing to do. 

The company couldn’t be an authentic partner to healthcare providers when they were selling a product known to create significant health issues. They put their mission ahead of their financial gain.

Reportedly, the company didn’t suffer because they were able to replace the revenue stream with new and enhanced services that better aligned with their core mission. Apparently, people in communities with a CVS have changed their tobacco consumption habits as a result – not their purchasing habits.

Other pharmacy companies have continued selling tobacco and claiming they are complying with all laws and regulations. Those companies continue to profit from the sale of tobacco and people continue to smoke.

Is compliance enough when we already know the negative impact to the consumer?

Values

Your answers will reflect your belief and values. For companies, the answers need to reflect how they operate in order to operate authentically and to attract the employees, partners and others that align with their beliefs and values.

Healthier Hospitals

A framework for Healthcare Finance 2.0 already exists.

Similar to leading edge retailers, hospital systems participating in the Healthier Hospital Initiative are working to make their organizations healthier and more environmentally friendly. 

I discovered the initiative while researching organizational values of leading healthcare organizations and noticed the reference on the old values page for Tenet Health. Unfortunately, the page is no longer available.

Tenet Health

Tenet’s new values are reflected by the acronym CARE which may make them easier for people to remember. However, what truly makes values memorable is whether they are reinforced every day by the way people work and conduct themselves on the job and in the community.

Change of Values

I started my healthcare career with Tenet Health and the values reflected now are fairly consistent with how the company operated back then with one important exception.

Innovation is no longer on the values list and there is no reference to the Healthier Hospital Initiative in the description. For me and likely many Tenet employees, that change is a big deal.

Innovation

With the number of innovation titles used now within the healthcare industry, you might think innovation has become more of a platitude than a meaningful organizational value. However, the Tenet that I knew was a leader in information technology. It’s how the company was able to develop Broadlane and Conifer and to provide services to other healthcare systems. 

Now it’s something that I have to question because there has also been a change in management. Do they have the internal courage to make the early investments in technology or not?

Healthier Hospital Initiative

The Healthier Hospital Initiative is what hospital systems need to challenge current financial models. When I posed related questions in my Healthcare Finance 2.0 post, some industry leaders dismissed the idea as something hospital providers couldn’t afford to do.

The reaction is to be expected during the innovation process. However, it’s also why we need leading edge organizations that can make those early investments to show other systems that it’s possible and to support others in the transition to greener, healthier organizations.

Risk Is Rewarded

Companies that take risks attract the people with the courage and drive needed to lead meaningful change. The value structure needs to support the courageous few for the organization to realize the benefits of innovation.

Culture

According to the book the Trillion Dollar Coach, good cultures need a healthy blend of ethics, values and trust. 

Tenet should have focused on trust because the company already has a strong framework for ethics and values. Plus trust is essential for moving healthcare organizations forward into value based care arrangements, retaining good employees and maximizing profits.

Courage

I’m reading a new book on developing the organizational courage needed to facilitate innovation and change. I’ll have more thoughts on that for you next week.

Fraud + Abuse

There have been some eye popping headlines lately about the use of kickbacks to induce physicians and others to refer patients. Apparently, the FBI has just scratched the surface.

Kickbacks are career ending for healthcare professionals and cause significant issues for the company and investors involved. As someone who has experienced the organizational fallout, it’s a lesson that you don’t easily forget.

I worked for an organization under the first OIG settlement for use of kickbacks and other practices deemed abusive. What I learned is that people cross the line when they are under pressure to meet financial targets. 

Investors expect two things from leaders: growth and/or profitability. So I thought it might be helpful to frame the fraud and abuse risks that way too.

Growth:

A focus on growth increases the risk of kickbacks. To minimize the risk, you should have a process in place to:

1/ Identify all your potential referral sources. 

Potential referral sources are physicians, organizations owned by physicians or a family member and others who can influence patients.

2/ Review all the payments made to the potential referral sources to ensure they are supported by a contract. Contracts need to be reviewed for:

  • The nature of the agreement
  • The payment to ensure it reflects fair market value for the services rendered
  • The documentation requirements

3/ Review the documentation for services provided to ensure the services were actually provided in accordance with the contract.

4/ Educate those contracting with a potential referral source on the risks and requirements.

Profitability:

The shading things some people will do for their own gain is almost limitless. 

To minimize risk you need to be constantly looking at the financials, asking questions and validating the answers when something looks off.

With that said, the most vulnerable numbers are the revenue numbers.

1/ Trend and benchmark the charges

2/ Review the number of changes to the charges and the timing of the changes

3/ Review the methodology for contracted write-offs and discounts 

4/ Watch for deviations from the methodology

Potential issues:

1/ Out-of-network strategy 

2/ Over utilization

3/ Additional outlier payments 

4/ Tucking and smoothing to meet financial targets

All of these issues are problematic. The underlying reason and business practices will tell you how problematic.

The Risk is Real

For me, the most memorable cases is that of Richard Scrushy, Founder of HealthSouth and felon. Yes – felon.

Richard and his inner circle intentionally misstated HealthSouth’s revenue numbers by $2 Billion before the problem was uncovered.

The numbers alone make it memorable. However, the problem surfaced just after we launched our online training programs that focused on all the processes needed to accurately report revenue. The case validated our why.

The government is now using data and AI to catch fraudsters. It’s a good time to make sure your I’s dotted and T’s crossed and that you have a process in place to keep them dotted and crossed.

Operating in the Grey

Morally wrong but not illegal. That’s the fine line that many companies walk.

There is a really good documentary called the Drug Short that uses the story of Valeant to explain the problem with drug pricing in the US.

Valeant operated more like a hedge fund than a pharmaceutical company. The model was pretty simple:

1/ Buy companies that have a drug with a monopoly.

2/ Strip out the R+D so that the typical 18% spent on R+D goes to the bottom line.

3/ Raise prices on existing drugs.

The problem is that many of the drugs were life sustaining drugs for people in middle America who couldn’t afford to pay for them. 

So the company took extraordinary measures to bilk insurance companies into paying for the prescriptions. To keep patients quiet about the issue, they provided just enough financial support to them through their advocacy efforts.

Hillary Clinton started tweeting and talking about the issue during her campaign. Investors and board members could have looked into it and taken action, but they didn’t. They were reportedly paid large sums to look the other way. 

The returns on biotech companies now are largely due to price increases. The companies can’t afford to lower their prices and profits.  So nothing has changed.

Food + Health

Have you read or watched the documentary called Food Inc.? It is eye opening.

The US government reportedly subsidizes farmers to produce large amounts of corn below cost. Corn and corn bi-product is found in everything we eat – from meat to sweets.

The problem is that it’s having an effect on your health and wellbeing for a number of reasons:

1/ Your weight: Corn is being fed to chicken, pigs and cows to make them grow faster. The additional weight impairs their organs, their ability to move and in some cases, life expectancy.

2/ Your health: The way growers [aka: farmers] work, they are contaminating the environment with hazardous waste that ends up in the food supply during processing. Unfortunately, the way meat is massed processed, there is no way to trace the contamination back to the source in a timely manner. Hence, wide spread outbreaks of e coli and untimely recalls.

3/ Your job: There was a time when a meat processing job was a good paying American job – not anymore. It’s one of the most dangerous jobs and often performed now by undocumented workers. Some of the undocumented workers lost their corn farms due to US policy.

The Food lobby is strong which is why you don’t hear much about these issues in the news. Overcoming the impact is definitely a challenge for the healthcare industry.

Triple Aim

The Canadian healthcare system is undergoing a similar digital transformation as the US.

Even though the healthcare systems are different in how they are financed, the triple aim of the transformation is for the most part the same.

The triple aim:

1/ Enhance the patient experience

2/ Reduce the cost of care

3/ Increase population health

A couple of differences to note:

1/ Patient vs. Consumer experience: The US has been trying to engage patients in consumer type behavior to help lower the cost of care. The jury is out on whether it’s having the intended effect or not. However, the word consumer resonates even less in a Canadian healthcare context even though many also have private insurance and pay some healthcare costs out-of-pocket.

2/ Clinical experience and productivity: The 4th aim in Canada whether official or not, is about making things easier for clinicians in order to utilize their time effectively and to reduce the risk of errors. Given the number of reported issues with EHRs and physician burnout, most US physicians would likely sign on to that aim too.

Regardless of country, it’s hard to manage risk in large scale transformations without stifling innovation. There are differences in how the risk is being mitigated and managed. I will touch on that too.

2020 Reform

Americans have a huge opportunity to get healthcare right in 2020.

The current system is broken. Access is limited by the lack of coverage and/or the cost of healthcare.

Medicare for All would make healthcare more accessible to all American even though access has yet to be defined in terms of who and what.

Getting who and what right is the first opportunity. If the benefits are too rich, the system will become unsustainable. Reportedly, Canada is spending 60% of all tax dollars on healthcare and have reached their maximum budget. They too are trying to address the rising cost with the triple aim.

The Republican concerns are real if other measures are not taken to curb the cost of healthcare.

Expanding access helps reduce the cost/person if people use the system to better manage their health and thereby reduce the need for expensive medical intervention.

For the theory to work:

1/ Self-Care: Americans need to take a more active role in managing their health and wellbeing.

2/ Primary Care: PCPs need to engage as health coaches rather than just as gatekeepers to specialists and pharmaceuticals.

3/ Coverage: Insurers need to cover self-care apps + devices.

The opportunity in 2020 is to present a new system that focuses on health and cares for the sick when needed.

Risk Pools

Risk pools are a powerful tool but they have been incorrectly within the healthcare system.

Risk Pools are a way for insurers to share the medical responsibility and financial risk with healthcare providers for managing a defined patient population. It rarely goes well.

Providers have a few big issues:

1. Insurers have premiums and investment vehicles to absorb risk pool loses. The risk pool is a limited amount of money with no means to increase the available funds. Providers end up rationing care.

2. Managing the risk pool is about predicting future medical events. The technology and methods providers use are getting better but still pretty limited.

3. The conversation between doctors and patients is changing. Patients are more informed of experimental therapies. Telling a patient NO when there is even a remote shot of something working would be tough for someone who is invested in the relationship.

Given that many insurers are becoming provider organization offering health coaching and preventative care, risk pools would be better used between the government and insurers as a way to incentivize them to keep people healthy.

The government is also better positioned to improve access by providing the Stop Loss insurance for patients with genetic issues.

Political Risk

Lower cost is one element of the triple aim. How does your company’s values address the cost of healthcare?

Cost is a big issue for the 2020 election. Some of the government findings about healthcare pricing and billing practices are clearly an issue that could blow back on companies that aren’t proactively addressing cost.

What are patients being promised about the cost of their care? Is your company promising the lowest cost, a market rate or a high cost for a premium service? There is no one right answer but patients need to know what your company is promising. Why?

Stakeholders have the ability to influence government action now more than ever thanks to social media. Social pressure from stakeholders including patients, employees and employers will force the government to regulate the reported problem. We’re seeing it now with proposed regulation for pricing and billing practices.

Leaders of companies should be thinking about:

1. Risk profile as it relates to cost.

2. Prioritizing cost as a risk and integrating it into their values + strategies.

3. Mitigating existing risk.

Companies that don’t will expose themselves to unnecessary political and reputation risk by not making a clear statement about cost.