Innovation

Well-being Matters

What it means to live a good life to the very end.

A health policy colleague suggested that I read Being Mortal by Atul Gwande MD. It wasn’t what I expected but I always enjoy Dr. Gwande’s books. His stories give us such good insight into some of the biggest challenges in healthcare. 

If you’re not familiar with Dr. Gwande, he is a surgeon, author and now the CEO of Haven Healthcare which is the organization charged with reinventing healthcare for Amazon, JP Morgan and Berkshire Hathaway employees.

Being Mortal is about well-being and what it means to live a good life right up to the very end.

Independence

Last year I stayed at my parents house while they were away. I discovered the HGTV channel and got hooked on all the home renovation shows. It doesn’t take long before you start contemplating a renovation.

I started imagining changes to my parent’s home that would make it more functional for them to continue living independently while making it easier for them to do all the things they love to do. Little did I know then that it is the lens we should all be using when considering our aging parents or loved ones nearing death. 

Happiness vs. Safety

Happiness is a big part of well-being but it often takes a backseat to safety especially in our final years. Most nursing homes and assisted living facilities operate on schedules and protocols to maximize operational efficiencies and profits. For many patients and residents, life becomes annoyingly routine, sterile and devoid of meaning. Nothing about the experience promotes happiness or well-being.

We all live with constraints and those constraints change with events, conditions and time. Fortunately, people’s ideas of what gives their life meaning and how they derive happiness evolves with age but the changes are unique to the person.

That’s why empowering people to live as independently as possible is so important to happiness and overall well-being. Many healthcare organizations realize that now too and are making efforts to incorporate home health programs. It’s the right direction and with the right expertise could make a big difference to their patients.

Discussions

There are a lot of tough discussions to be had in order to help people live a good life to the very end. 

There are the obvious conversations that need to happen between healthcare professionals and patients about prognosis and options as well as within families about how loved ones want to experience the end of their life. The concept of well-being reframed the topic for me so that it felt more positive and easier to discuss. It might help reframe it for you too.

There is a broader discussion that also needs to be had about the lack of affordable housing.

Housing

There is a global housing problem with no clear solution yet. I attended a talk recently given by an urban planning professor and the author of the 5 Rules for Tomorrow’s Cities. It’s written about the global wealth gap and the lack of affordable housing in major cities.

Reportedly, increasing supply has not effectively addressed the issue. No matter how much supply ends on up on the market, it is bought by investors who are chasing a limited number of targets for their capital.

Four decades of flat wages and the 2008 financial crisis has had a profoundly negative impact on the middle class. The next wave of technology and automation will pose additional challenges. The economic table may be harder to tilt than some economists think.

According to the author, the only way to address the housing issue is to take public land [ie. golf courses] off the market and convert it into affordable housing within a self sustaining model. 

There is sure to be resistance to that idea. However, what is clear is that we need new ideas and approaches to solving the issue because it is increasingly clear that wages, housing and healthcare are closely linked.

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.

2020 Rebalancing

Perfect vision: perfect year for rebalancing short term returns and long term strategies.

I’ve been reading the Value of Everything written by economic professor Mariana Mazzucato, Founder of the Institute of Innovation and Public Value. It’s worth reading.

The book will likely challenge or better inform some of your beliefs about capitalism while shedding light on the political landscape and the initiatives prominent tech leaders are undertaking to address equality, privacy and opportunity for all. 

Value Creators

For several decades now, we’ve been lead to believe that the storied innovators and entrepreneurs are the real value creators in society but that is not be entirely true.

Many ideas are incubated at educational institutions with funding from government grants and loans and later brought to life by an entrepreneur with the help of many other people including employees, consultants and attorneys, vendors and others. The role and contribution of everyone else involved often isn’t adequately acknowledged or valued.

Governments take the biggest risk for the years of research needed to discover the most innovative ideas but Venture Capitalists and Asset Managers realize the biggest rewards. Examples are Genentech [years of government funded research], Tesla [government loans] and EHR companies [government stimulus following the 2008 financial crisis]. 

That’s why economists and political leaders are now thinking about how to “tilt the economic table” so that governments participate in the upside [ie: convertible debt] or directly benefit [ie: pricing regulation] so that all tax payers realize the rewards.

Role of Government

There is an underlying belief that public employees are incompetent or lazy but that’s not always the case. In some instances, public employees have reportedly been four times [4x] as productive as employees of outsourced vendors backed by Private Equity [PE] investors.

A new study reports Canada’s cost of administering their national healthcare system is only 17% vs. 34% in the US for the existing public and private system. US costs will continue to outpace Canada’s cost as a result of the privatization of the Medicare and Medicaid programs.

Consequently, some economists and political leaders are questioning the right role for government in innovation and service. Change would be difficult now because it could negatively impact publicly traded companies and the financial industry. Plus it would require change to the national accounting standards and GDP.

We’re seeing the fear of this type of change play out in the “Medicare for All” debate. With that said, Hedge Fund managers are reportedly bullish on eHealth Inc. which leads me to believe that Medicare for all will not become a reality in near future.

Productivity

Many corporate leaders have been playing with the numbers rather than doing the hard yards. In other words, they haven’t been making the needed investments in employees, capital projects or research because the return on those investments take years to realize and may not result in a high enough return for investors.

Most Asset Managers are traders not investors. Their timeline for realizing a return has gotten shorter and shorter and shorter so that with electronic trading their timeline is measured in seconds not years. The excessive focus on short term results has rippled through Corporate America and put too much focus on value extraction rather than value creation. The focus on value extraction is at the heart of the inequality issues.

There is a concerted effort underway by corporate leaders to shift their focus to long term initiatives such as investing in the skills, health and welfare of employees. Economists and political leaders are looking at financial penalties to deter short term trading and other behaviors that erode value over the long term.

Healthcare Industry

As I read financial reports on the healthcare industry, it’s clear healthcare leaders are also struggling to balance short term expectations against long term investments. Many are still prioritizing investments that improve revenue over other needed investments that don’t have a proven ROI.

It’s a horse and cart quandary. But as an industry we needed to do the hard yards [ie. Screenings for social determinants of health] and clean up our act. For 10 consecutive years, healthcare fraud has accounted for 90% of the recoveries by the Department of Justice.

Governments don’t have an unlimited budget for healthcare which is why when volume goes up, pay usually goes down. My guess is that most would like to work less, get paid more and not have to worry about the fallout of questionable billing strategy.

Infinite Mindset

Why leaders need to shift focus to their Just Cause in 2020.

I am departing for Australia this week but wanted to leave you with some thoughts to help you plan for 2020.

Collectively we can have the biggest impact on the health of Americans by shifting our mindset and implementing policies that support all stakeholders – not just shareholders. 

Infinite Mindset

I’ve been reading a new book called the Infinite Mindset that frames the ideas that I’ve shared in earlier articles and posts about ethics, values and trust in relation to capitalism.

Infinite Mindset emphasizes the need for leaders to focus on their Just Cause [aka: vision] and to adopt the policies that promote the trust needed to support collaboration and innovation. 

The most courageous brands that you can think of attract and retain talent because they have a compelling vision for the future. Courageous brands pay employees well, offer meaningful work and training needed for continuous development and promote trust so that employees have the tenacity needed to overcome challenges.

You don’t need Apple’s profit margins to be a courageous brand. Paying your employees a living wage, reduces the cost and negative impact of turnover and enables your company to move forward. The ability to continuously improve and move forward [toward the vision] is how leading edge companies win the long game.

Ethical Fading

I’ve been using the expression “misguided understanding of capitalism” to describe the short sighted business practices that I’ve encountered over the years. Interestingly, there is term for it – Ethical Fading.

A few years ago, I was asked to interview for a CEO position of a company purchased by a Venture Capitalist [VC]. The company was running a strategy the was legal but ethically questionable. I was already familiar with the company and thought that I got the call because they needed my help in transforming the business. I couldn’t have been more wrong. 

The VC was doubling down on the strategy so that they could milk it to the very end. That’s referred to as a Finite Mindset. The meeting didn’t go well because I challenged the ethics of it all. It was so jarring that I debrief needed to debrief with another VC to get his thoughts on the strategy. He agreed with me.

The timeline often reveals the mindset. Activist Investor Starboard Value just took a position in CVS to “unlock shareholder value”. The first question is will they make CVS sell tobacco products again to recover the $2 Billion in annual sales or will they support the company’s Just Cause?

Ethical fading happens when investors and leaders are able to normalize questionable conduct because it’s not illegal. Some experts believe it’s a function of excessive pressure rather than a lapse of individual values and ethics.

Normalizing unethical practices:

Unfortunately when the law is unclear, many leaders implement practices that serve their own interests regardless of the broader impact. That’s when questionable business practices get normalized.

There are three [3] ways unethical practices get normalized:

  1. Leaders disassociate from it. They use language to mask the harmful impact.
  2. Leaders blame the system for their transgressions rather than getting out in front of the issues and working to fix the system. A recent example is the Mylan EpiPen Scandal. They inflated EpiPen prices and then blamed the system for a lack of pricing regulation.
  3. Leaders blame the consumer for not understanding the risks of their products and services. 

Just Cause

Leaders who take responsibility for the broader impact of their business practices consider the ethics of their decisions. They don’t try to hide behind the law, use confusing language or blame the customer.

Leading edge companies are in business for the long term and care more about fulfilling their Just Cause than short term financial gains. That’s the Infinite Mindset.

2020

There is a good article written about prominent economist, Mariana Mazzucato, about fixing capitalism. The article also frames the 2020 Presidential Election issues well.

On a personal note, RUSH is turning 20 next year. I’ll also be taking time to revisit my Just Cause while away. So you likely won’t see another post from me until next year. I look forward to connecting with you then.

Tell me more

Simply saying “tell me more” can transform a conflict into a fresh start.

When speaking with someone you disagree with, the most courageous thing you could do is simply say “tell me more”.

I’ve been thinking about communication skills lately. No matter how suave of a communicator you are there is always room for improvement. With so many polarizing issues making it harder to authentically connect with others, the need for good communication skills is more important than ever.

Conflict

Whether in a workplace or personal relationship, the problem typically starts with conflict over a difference in opinion which gets exasperated by money, power and/or feelings. 

To “keep the peace” people often mind their tongue while in earshot of those with whom they disagree. Anyone who has tried it knows, the whole strategy falls apart in a bad way with a misspoken word, a look or a leak by your confidant.

“A person’s success in life can usually be measured by the number of uncomfortable conversations he or she is willing to have.”

– Tim Ferriss

Use it

There is a better way to manage conflict – use it. Conflict transformation is about active listening which simply means staying present and listening in the same way you want to be heard. If something spoken strikes a nerve with you, say “tell me more” rather than tuning out so that you can plan your response.

Staying present during conflict requires some curiosity to understand how the other person is formulating their ideas and perspectives. Judging is part of the process but rather than judging as right or wrong, listen for the common ground and the insights that may shed light on your own fears and biases. 

Finding common ground and developing a deeper understanding of the other person’s perspectives will help you find new ways to connect and move forward.

Move Forward

No one benefits from staying stuck in the past or holding onto past hurts. Everyone wants to be understood, respected and ideally, accepted for who they are and what they bring to the relationship.

I discovered the book Braving the Wilderness while looking for resources on empathy and highly recommend adding it to your reading list. The stories from the book will help you put some of these concepts into practice.

If you don’t get a chance to read it before the holidays, the questions below provide a good framework for moving your relationships that need a little TLC forward.

1/ Where are we now?

2/ What are we trying to accomplish for the future?

3/ What do we want our relationship to be?

4/ What do we need to create that future?

5/ What do we want for our relationship? 

Reportedly, shifting your focus to the future is the key for creating something new and fresh.

Happy Holidays!

American Thanksgiving for me marks the start of the holiday season. So with that, I wish you peace and happiness this holiday season – and Happy Thanksgiving!

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.

[Re]Building Trust

Why healthcare companies should be re[building] trust now.

Trust is more important than many leaders realize. I’ve been thinking about it in light of the 2019 allegations of wrongdoing in healthcare report and corresponding settlements being chalked up to the cost of doing business. 

The impact of wrongdoing whether it’s excessive charges, abusive billing practices and the mistreatment of patients and their data is likely having a much bigger impact than most healthcare executives realize. 

Healthcare Consumers

Healthcare companies undermined the trust Americans have in the system at a time when we are asking for more and need more data and engagement from patients and healthcare consumers. Granted there are other factors that have contributed to the mistrust felt more broadly but healthcare companies will need to rebuild that trust in order to transition into value based care models.

Employees

Employees of these companies are likely impacted too. The wrongdoing is not accidental but rather a function of the business practices that likely don’t align with the company’s stated values

How do employees reconcile what they believe versus what they do? They can’t reconcile it. The wrongdoing is likely contributing to the anxiety felt by the employees working within those companies. The impact of the stress and anxiety will only get worse until there is better alignment in the values and the work performed.

Profits

Did you know that companies with high levels of trust outperform their competitors by as much as three [3] times? Healthcare companies have relied too heavily on having a captive consumer. When people are sick, they surrender to the process to get better and deal with the fallout after the fact. 

That’s not going to work going forward. New approaches to medicine and healthcare services require participation from all consumers – not just patients. How is your company going to convince consumers to trust your organization and the process when there is no immediate need?

Trust

What is trust? The one common theme that I have found to describe trust is that trust happens when you’re willing to accept the risk of vulnerability or in other words, the risk of being harmed in some way. The perceived risk has to be lower than the probability of being harmed.

How do you convince someone to take the risk on your organization or you? Trust is earned by repeating actions that conveys trust. 

The book Trillion Dollar Coach, written about Bill Campbell’s work with leading Silicon Valley companies and executives, identifies five [5] key elements of trust:

  1. Keep your word: The commitment and/or fulfillment of one’s promises. Be accountable for mistakes, apologize and make amends when things go wrong.
  2. Loyalty: A strong feeling of support or allegiance. Establish clear boundaries and when you’re unclear about what’s okay and not okay, ask rather than ask for forgiveness after the fact.
  3. Integrity: The quality of being honest and having strong moral principles. Have the courage to practice your values and do what is right versus what is easy, fast and fun.
  4. Ability: The possession of the means or skill to do something. Avoid overpromising and underdelivering.
  5. Discretion: The quality of behaving or speaking in such a way as to avoid causing offense or revealing private information.

Trust can’t be won with one large gesture. It has to be built over time with actions that are consistent with the key elements of trust. Just remember – trust can be undermined faster than it is earned.

Be generous

Best advice from Dare to Lead for developing trust within an organization is for everyone to extend the most generous interpretation possible to the intentions, words, and actions of others.

Even if you believe that you are trustworthy, most only trust a handful of people. Chances are your assumptions about a situation, interaction or person are wrong. Default to truth but when in doubt, look for the data and trust the facts.

Healthcare is Hard

It shouldn’t be so difficult….

I’m hearing this statement a lot this week and my guess is that you might be thinking the same thing too.

Let me start by giving you some context from my week.

Leadership

I was invited to interview for a spot an in upcoming national leadership summit and in preparation, was given sample interview questions. One of the questions: “how have you overcome challenges such as discrimination?” 

The reality is that I haven’t overcome discrimination [age and gender] in Corporate America but rather learned to survive it. The stats help tell the story. However, I was concerned about my answer because overcoming and surviving are two very different experiences. 

When I consulted my coach about it, her response was “it shouldn’t be so hard”. Being a subject of discrimination is hard, taking about it is hard and for some, listening to others talk about discrimination is hard. For many, it raises feelings of fear, blame and shame.

Some leaders are reportedly calling out the behavior. I’m not sure exactly what that entails but I do know that clarifying intentions during planning helps people think about their objectives and potential biases.

I’ve also started sharing some of my stories with colleagues. It’s helped to lower their defenses and made the issues easier to discuss. Sharing our challenges gives others perspective and helps leaders take the right corrective actions.

We can’t change what we don’t understand.

Physician Referrals

In the spring, I participated in a film for a public health event. The physician creating the film asked me about the role physicians should play in promoting health to their patients. He wanted to know whether they needed to be health and fitness gurus or what?

Physicians are highly trained professionals. Healthcare executives want physicians to be working at the top of their knowledge and skillset [aka: medical license] so that everyone gets the most from their expertise. Diet and exercise are foundational to health but they’re at the bottom in terms of knowledge and skill.

The problem is that in shifting to Value Based Care, physicians need to have a way to mitigate medical risk rather than only treat patients when they’re sick. Hence, the question.

What is the best way to engage physicians in maintaining the health of their patients?

We already have a universal measurement for healthy weight – Body Mass Index [BMI]. It’s something that is routinely calculated and/or captured in Electronic Health Records [EHRs]. A BMI outside the normal range is a clinical indication that something in the patient’s diet is off.

So what are physicians doing with the BMI result? I’ve never asked the question. So I’m wondering if physicians are offering patients a referral to a Dietitian and if not, why not? Dietitians are the experts in nutrition.

To solve some of the chronic health issues, we need to think about why it’s so difficult now and what needs to change to make the process easier for physicians, clinicians and patients. More specifically:

  1. Who is currently doing the work vs. who should be doing the work [considering knowledge and skills]?
  2. Is there a problem with the referral process and if so, how can we make it easier and/or better?
  3. When should digital health solutions be introduced into the discussion with patients?
  4. Who should be choosing the digital health solutions recommended to patients?
  5. Do physicians/clinicians need to monitor the patient’s progress or is the standard data collected at time of service enough? Think about what’s novel vs. necessary.

US Veterans Service

David Shulkin MD, Former Secretary of the US Veterans Affairs, wrote a new book called It Shouldn’t be this Hard to Serve your Country.

In a recent interview, he mentioned that there are back channels working in the Trump Administration to privatize the VA health system. Reportedly, his work didn’t support that effort which is why he is out.

Verily just announced their VA project to help lower the cost and improve the outcomes for total joints.

Healthcare Finance 2.0

Can healthcare companies do well and do good?

We’ve reached a crisis point in healthcare and we can’t financially engineer our way out of it by simply shifting risk and costs. It’s time for healthcare finance 2.0.

We need to start looking at the big components that make up the financial framework. Historically it’s been hard for publicly traded and for profit companies to strike a balance between maximizing shareholder return and serving the broader needs of Americans.

With business leaders calling for a new version of capitalism that balances the needs of all stakeholders, it gives us the opportunity to challenge our old financial frameworks and business practices.

I’ve compiled a few questions and insights to help you think about the changes needed for the industry to move toward value based care.

1/ How much profit could healthcare companies generate by serving all stakeholders?

Under the new rules of capitalism, the healthcare industry should be considering all stakeholders including patients, providers, employees, vendors and payers in their policies and business practices.

Leading retailers such as Nordstrom and Patagonia have achieved sustained financial success by serving all their stakeholders.

They do well by doing good. Both companies invest in technology to better serve customers and work closely with their vendors to reduce their environmental impact.

Plus they give back a portion of their profits to the communities they serve. They realize that without customers that can afford their products, they don’t have a business.

2/ How should healthcare providers be compensated?

Risk sharing arrangements [capitation and bundled payments] are tough models to sell because there are so many variables that can affect a patient’s outcome that are beyond the direct control of physicians.

In Dare to Lead, Brene Brown talks about vulnerability and how many of us are tasked with engineering vulnerability out of systems. The reality is that we can’t engineer all the risk out of healthcare no matter how many apps, sensors and devices we incorporate into the delivery of care. 

Healthcare is still about people and people are fallible. We can’t penalize providers for issues that they can’t influence or control.

Eric Topol MD may be correct in calling for a new organization that gives physicians a collective voice about their pay and public policies that affect the health and wellbeing [aka: medical risk] of Americans.

Rather than just expecting healthcare providers to do more for less pay, we need to engage with them in prioritizing the digital health solutions that will mitigate vulnerabilities now, near and far.

3/ How can we empower healthcare consumers?

The Gates Foundation published an article recently about governments and foundations needing to take targeted action to solving problems rather than making broad sweeping changes. 

Some healthcare organizations are taking steps to give community based vendors priority but as an industry, we can do more.

Leading retailers also invest heavily in their people whereas healthcare organizations often do the minimum required.

Speaking from experience, healthcare organizations are in a better position than vocational programs to offer formal training programs, mentorships, jobs and meaningful career paths.

Investing in people is better than pursing and jailing patients for medical debt when they have no means to pay. Plus improving someone’s financial health often helps improve their physical and mental health too.

Execution Vs. Kickbacks

Why good execution trumps kickbacks

The Trump Administration is considering relaxing the federal fraud and abuse regulations for kickbacks and bribes. Even though I still believe people are generally good, the thought of it is cause for concern. 

Simply speaking – when there is a big pot of money and no clear rules on how it can be used or earned, bad things happen. There are plenty of examples in healthcare as well as in other industries that serve a broader public interest. Just think back to 2008 for a minute.

The question that remains is whether or not there is a valid business reason to relax the federal bribery and kickback regs. The Ambulatory Surgery Center [ASC] industry is probably the most relevant example for this discussion. 

Ambulatory Surgery Centers [ASCs]

In case you’re not familiar with these entities, ASCs are free standing surgical facilities that perform routine surgical cases requiring less than a 23 hour stay. 

ASCs are thought to be an extension of a surgeon’s practice and therefore, frequently owned at least in part by the physicians who work there. Current federal regulations require disclosure so that patients understand the financial relationship. 

In short, ASCs give surgeons a legal way to participate in the full profits [and losses] of providing surgical services to their patients. There is no need for bribery or kickbacks.

Bribery and Kickbacks

Even though technically there is no need, bribery and kickbacks have been used to incentivize physicians to use one or more facilities.

Patients have been bifurcated by payer and treated at the facility that pays the physician the most money. Federal anti-kickback regulations have helped protect the Medicare population from these practices. However, the commercial population is a whole different story because the impact of economic credentialing is less severe than federal debarment.

Economic Credentialing vs. Federal Debarment

Economic credentialing and federal debarment are similar in that they exclude a provider from participation in a specific network. Federal Debarment is more punitive for providers because few providers can afford to operate without servicing patients funded by government programs, and more specifically Medicare.

Commercial payers have had a harder time excluding providers from their networks because they have to remain competitive with other health plans in the market to get the more lucrative contracts with employers.

So relaxing the federal kickback and bribery regulations reduces the risk of federal debarment and increases the potential for schemes that maximize provider reimbursement.

Value Based Care

The argument for relaxing the federal fraud and abuse guidelines is to better facilitate value based care arrangements. The desired outcome of value based arrangements is to increase the quality and reduce the cost of care. 

If we think about the Strategic Execution Framework, how would relaxing federal regulations translate into the structure of the organization?

I’ve put together a sample outline of the structure needed to support a value based care transformation to help you answer the question.

Purpose: We provide patients needing routine surgical services a high quality, cost effective alternative to inpatient services.

Long Term Intention: We will continuously expand the scope of services provided and improve the quality of our care by investing in our people, facility and processes. We will also strive to deliver the outstanding service patients expect and deserve.

Identity: Our employees are service oriented, committed to continuous learning so that they are prepared for what’s next and have the courage needed to help the organization step into the future.

Key Values: Service, Learning, Growth and Courage

Long vs. Short Term Intention

During the height of the Out-of-Network strategy [and kickbacks] in the ASC industry, I asked several physicians how long they thought the scheme would last. Most thought only a few years. 

Some had a short term intention because they were close to retirement. Others lost site of the bigger picture and consequently, paid a big price in the end. 

Relaxing the federal fraud and abuse regulations seems like another short term intention that could run amuck. Kickbacks are not a substitute for good strategic execution.

Strategic Execution

Strategists often leave the Operators in charge of execution. It rarely works. In fact, it only works 10% of the time. 

Strategic Execution requires specialized knowledge and skill to develop the structure and culture needed for long term success.

I’ve been reading the Nordstrom Way lately. Nordstrom success has everything to do with their strategic execution.

I’ll share some more insights from the book in a future Rush Weekly.