Transformation

Regulation vs. Ethics

Can the healthcare industry self regulate?

I had a discussion recently with a CEO to fortune 1000 companies about the need for proper regulation. At the start of the conversation, he asked what I meant by regulation. So to ensure that we’re all on the same page for this discussion, let’s start with the definition of regulation.

Definition: A regulation is a rule or directive made and maintained by an authority.

Regulations are tricky to get right because they need to be protective but not restrictive – and somehow, they need to be efficiently and effectively enforced to work well. It takes a lot of work to strike the right balance. That may be why some politicians and business leaders would like to do away with all regulation and let the markets self regulate. 

AdvaMed


The AdvaMed Association for medical technology is taking on a self regulation initiative for 2020. They are developing a new code of ethics that is values based to better engage everyone in and involved with the organization in compliance. To do so, they have been reportedly working with all of their stakeholders including teaching hospitals, hospitals, clinicians, device and diagnostic companies to develop the new code.

At this point, they have identified six [6] key values for the new code of ethics:

1/ Innovation
2/ Education
3/ Integrity
4/ Respect
5/ Responsibility
6/ Transparency

It’s not clear yet how they plan to operationalize the values. What we know is that member companies will need to have policies and programs in place signed by the CEO demonstrating compliance in order to be awarded the AdvaMed seal of approval.

There is a carrot for member company participation. The seal will help business partners and customers identify organizations who are in compliance. That may also give companies selling solutions an edge in competitive bid opportunities.

There is no stick for non-compliance. AdvaMed will not initiate investigations or bring any action for non-compliance. 

The question that remains unanswered is whether ethics can protect consumers from corporate wrong doing and greed better than regulations?

However, the industry should welcome the attempt to self regulate even if it’s an added regulatory measure. With all the advances in medicine that are raising new ethical questions and concerns for the healthcare industry, ethics need to be ingrained in the culture for companies to earn the trust of partners, customers and patients around the world.

Relativity applies to physics not ethics.
~ Albert Einstein

Startup Comp

What is the value of your time and risk tolerance?

A member of the Female Founders Network shared her story of working for a successful startup that recently became a public company. She was an early employee but was never offered shares or options and questioned whether or not it was fair.

With the amount of pay inequity in the market, it would be easy to chalk it up to another example of gender inequality. Without knowing the numbers, I have to generously assume it has more to do with risk and reward.

Startups are high risk. It’s easy to look back at a successful startup and wish you were paid in equity. But how would you feel forgoing cash and benefits for a stock vesting plan if the company failed after 4 years? My guess is that the experience gained would not feel like adequate reward for most. That’s the risk – reward relationship of startup.

My advice to the Female Founder Network and you is to know the value of your time and your risk tolerance. Everyone deserves to be fully compensated for the value of their time. The method of compensation needs to reflects your risk tolerance. Methods include:

1/ cash + benefits
2/ stock + options
3/ blended

Time is one of your most precious resources that can only be valued by you. The method of compensation should be negotiated.

From a leadership perspective, we need to think about the person not just the position when offering stock and options. Doing so will help address pay inequity.

Stand Up?

Should you take a stand on important issues?

It’s something many leaders are rubbling with right now.  Eric Topol MD wrote an article for the New Yorker recently about the potential for a new doctors’ organization that would enable physicians to take a stand on important issues affecting the health and wellbeing of Americans. Issues such as vaccines, drug pricing, climate change, stem cell clinics and false health claims spread by celebrities involved in lifestyle medicine businesses. 

In the article, he noted several female physician leaders who took on the NRA and claimed the lack of adequate gun control regulations not only as their lane but as their highway. What gave them the courage to stand up to the NRA?

Dr. Topol hypothesized that their courage was attributable to dealing with long-standing gender inequities in medicine. Possibly but it likely has more to do with their values and their frustration with the lack of change. 

Organizing to take a stand on important issues is commendable but also challenging. The values and interests of the group need to align for the group to have a powerful voice.

Whether physicians organize or not, they should be encouraged to bring their whole self to work as employees in leading edge companies do and to speak out on issues affecting the health and wellbeing of Americans. Otherwise, how can doctors be held accountable for the cost of healthcare if they can’t speak out on the biggest drivers of cost?

Daring leaders who live into their values are never silent about hard things.~ Brené Brown

Valeant

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

Valeant reportedly 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.

The company took extraordinary measures to bilk insurance companies for payment. 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 company’s stock eventually tanked.

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

Change in 2020 is likely because even though the pricing strategy is not illegal, many leaders feel that it is morally wrong.

Good Data

Only 30% of the analytic results in healthcare organizations are accurate. 

It was one of the facts that we learned on the Health Catalyst webinar this morning and based on my own experience seems about right.

Part of the issue is the old adage “Garbage In/Garbage Out” and the other part is lack of consistency in defining and pulling the data elements.

The new Health Catalyst population stratification module standardizing the datasets makes it easy enough for business people and maybe even some clinical people to pull their own data. It’s a huge plus especially for healthcare organizations conducting research.

Garbage in/Garbage out needs to be addressed with better user interface design, refined data capture requirements and compliance with medical record documentation. There is just no way around it.

Everyone needs quality data to make sounds decisions whether clinical or business. When the data is bad, we end up wasting resources solving problems that don’t exist and overlooking the real issues.

Focus on Why

Do you know why your company exists?

If you answer is something like to provide high quality medical services or to provide a specific type of solution to the healthcare industry, you’re telling me about your company’s what – not the why. 

The why is the reason the company was founded and continues to exists. The why embodies the company’s beliefs about those that it serves and reflects the values that guide how the company operates. 

One Medical

I reviewed an investor report on One Medical recently that had this really wordy description of why the company exists. It made me wonder whether the company is loosing touch with their why [a common problem as companies grow] or if the why was just lost in translation.

However, most people are familiar with the company so it seemed like a good example to explain the differences between why – what – how and the value of focusing on why.

Early success:

1/ Why: The founder, Tom Lee MD believed waiting 29 days [the average wait time in the US] to see a primary care physician was unacceptable. So the company’s core belief is timely service is most important to their customers and members.

2/ What: One Medical found customers willing to pay a premium for on demand access to care. Employers and those without an established relationship with a primary care physician were willing to pay the premium. 

3/ How: The company solved the wait problem by incorporating nurse practitioners and technology into their service so that most if not all of their members are seen within 24-48 hours of scheduling an appointment. They also increased the length of the appointment to minimize the risk of wait times on the date of service.

Growth + Profitability:

The why has defined the company and is the reason existing customers and members value the company. As the company enters new markets and partnerships, the management needs to consider:

1/ Do other populations value timely access to care as much and are they willing to pay a premium for it? 

2/ Are they able to modify the how without sacrificing the why to achieve long term growth and profitability?

It will be interesting to see how the next chapter turns out.

Living your Values

If you’re thinking which values are you referring to – personal or company values? I’m actually referring to both because there should alignment in your personal and professional life.

If you need to google your company values or call human resources, chances are your company’s values have not been operationalized. Only 10% of companies have a short list of memorable values that they’ve associated with behaviors to reinforce their values.

Salesforce has done a good job of honing the values list to four [4] values and associating behaviors with each value. It’s how they are able to walk their talk in everything they do despite being a very large company.

Whittling down the values list from 100+ takes some time and careful thought. Most companies have a list of 10-15 values but within that shortlist there are usually 2-4 that encompass the company’s core beliefs. 

Operationalizing values is a process of linking values to behaviors so that people understand what’s an acceptable behavior as well as what’s not an acceptable behavior. Providing three [3] examples of each type of behavior is usually enough.

Once the values are operationalized, the company culture will develop to support and enforce those values.

If you’re questioning whether or not it’s worth your time, think about how much easier it will be for everyone in your organization to:

1/ Hire the right people 

2/ Manage customer relationships 

3/ Work collaboratively with people throughout the organization

4/ Make good decisions for the company

Defining and operationalizing your values is not something you want to put off until you’re the size of Salesforce. There are a lot of steps in the journey to realize that level of success. That’s why I think of it as one of those “the sooner the better” activities.

“Daring leaders who live into their values are never silent about hard things.” ~ Brené Brown

Our Values

I’ve been working on refining the values for Rush360 too.

Innovation is the heart of what we do. There are 4 steps in our process [Learn, Engage, Design and Transform].

So I started with the steps and thought about the values we need to have in order to do those things well and support the people on our team.

These are the four values that resonated the most with what we do and why:

1/ Courage: It takes a lot of courage to step into a new environment and to get up to speed quickly especially when people see you as a change agent.

2/ Open: It takes an open mindset to be constantly working with new people, new process, new system and in new environments.

3/ Creativity: We get the benefit of having a fresh perspective on the problem but it takes a lot of creative energy to work with all the stakeholders and to design a solution that works for them now and in the future.

4/ Innovation: It takes someone who loves to innovate because the stakes are high and the risk of failure is real. Failure on any scale is disappointing and tough on the ego.

That leads me to balance. I think everything in life – from our bodies to our businesses – needs balance. In Dare to Lead, Brene talks about daring leaders having a strong back and a soft front. It seemed like a good framework to test the balance of our values… it takes a strong back [courage and love for innovation] and a soft front [open and creative mindset].

Frontline of Addiction

Everyone is feeling the pain of the homeless issue and the drain of addiction related issues.

A colleague emailed me today with his latest story of arriving to work early and stepping in human feces on his way into the office. Emergency workers were also on the scene dealing with some other health hazards and attending to what he referred to as the walking dead. Needless to say, the drama affected his mental state all day.

The healthcare systems are also being taxed. I was on a call a few weeks ago listening to the gains realized by a Canadian hospital system after redesigning key processes. When I asked if they were able to reallocate those resources to reduce their waitlists, they replied no because they are experiencing an increase in ER visits.

Addiction is a specific mental illness. We need to get the experts on the frontlines of this issue and remove the access barriers or we’re not going to stem the tide.

Hospitals aren’t set up for rehab. So what if we restructured rehab facilities for emergency overdose services and observation? They have the expertise and resources to really help people suffering with addiction.

It might not be the right solution but it’s a starting point. We need to challenge our approach to the problem because what we’re doing now is clearly not working.

IDNs are the Now

A colleague has been asking me about the biggest challenge for integrated delivery systems now.

He was specifically asking about Kaiser and in the interest of full disclosure, they are not one of my clients.

Kaiser is a staff model HMO which gives the company a unique competitive advantage. Other integrated delivery networks are trying to replicate the model but without the structural efficiencies most won’t achieve the same economics.

The economics are a big part of the challenge for all integrated delivery networks including Kaiser. Healthcare in the US is simply too expensive.

I found my notebook from a design thinking course that I took at Stanford. One of the cases discussed was the high infant mortality rate in India. Most hospitals in India have incubators but they’re rarely used. Why? Most babies at least then where born in the community not hospitals. The incubators didn’t meet the need.

To some degree, integrated delivery networks seem like the incubators in India. They are state of the art but they’re not meeting the needs of the community. The US needs something more accessible and affordable.

That’s why I think IDNs are the now but not necessarily the future of healthcare.

Words Matter

How you make people feel is more important than what you do. Why?

It’s a lesson from the book Undo It by Dean Ornish, MD on enhancing one of the four key elements of life – Love. However, it is equally important to remember in the workplace.

I met with a colleague this week and he commented on “the waste” in the US healthcare system. His only point of reference was one statistic: healthcare as a % of GDP.

One statistic does not tell the whole story and for me, it struck a nerve. The healthcare system operated as it was designed and unfortunately, limited technology and misaligned incentives didn’t enable it to operate optimally. That’s changing – although slowly.

Innovation in healthcare is hard in part because the culture doesn’t support it. In Dare to Lead, Brené Brown explains the connection between vulnerability and innovation. You can’t have one without the other because failure is inevitable.

How we think about failure and what we say to those who are brave enough to try and fail matters.

Experience vs. Service

The Hudson Bay Company [HBC] is a really good case study for modernizing healthcare. Why?

The retail customer is becoming the healthcare consumer. In an era where the retail customer is becoming more knowledgable and empowered with choice, HBC is struggling and stores will likely close.

After attempting one transaction with HBC, I told a healthcare colleague that the company is in for a rude awakening as Amazon expands operations throughout Canada. 

1/ Lack of Customer Focus: They’ve tried to be things that they are not [ie. competing in the luxury market] and failed. They clearly don’t have a strong grasp of their customer and what their customer expects of them.

2/ Product over Experience: HBC is still focused on what to sell rather than curating the experience for their customer. Companies thriving in the modern era of retail are doing so by focusing on the entire customer experience rather than simply curating product. 

3/ Ease of doing business: Retail consumers expect the payment system to work for all their transactions whether online or in person. The more friction there is with the purchase process the more likely the customer will go elsewhere.

Healthcare service companies are also in for a rude awakening if they don’t get these three things right.

Financing Healthcare

My pick of healthcare systems would be none. Why?

All the choices are dated. Rather than looking at a model in it’s entirety, we need to look deeper to what aspects are working and why.

What we know is that healthcare financing affects timely access and all systems no matter how they are currently financed have access issues whether it’s waitlists, the cost of care or patient’s who prioritize savings over timely care.

We also know that untimely care typically results in more expensive care. So the question should be not which system is best but rather do we shift the financing to emphasize more timely care that keeps people healthy.

The questions that everyone should be asking now are:

1/ Which companies should be at risk for keeping people healthy?

2/ Which companies should be at risk for delivering high quality care?

3/ What role should the government play to make healthcare affordable?

As an industry, we can’t answer those questions. We need to know:

1/ Who do people trust as a partner for their journey through life?

2/ How much involvement are they willing to tolerate before the solution becomes too invasive and creepy?

3/ How can we build trust?