Virginia Mason A Study in Transformation Robert S. Mecklenburg, MD AAPMR October 2, 2015

Virginia Mason Medical Center Seattle-based integrated system 450 employed physicians 800,000 outpatient visits; 17,000 hospital visits Graduate medical education Research Center Virginia Mason Institute

The First Board Meeting

Two Circles and a Choice Proactive or Reactive? Influence Concern 1. So in 2000, as part of a failing health care delivery system, Virginia Mason faced a choice: to be proactive or to be reactive. 2. We had immense concerns beyond our control. Many of these persist and have become more worrisome over the last decade.

Circle of Influence for Providers Remove Waste From Health Care Delivery Produce appropriate, quality health care Eliminate needless variation Eliminate waits and delays Reduce cost of producing health care Instead of reacting to the issues in our circle of concern, we chose to be proactive in areas where we could make a difference. 2. Each of these items were under our control, were relevant to our interests and to those we serve, and could be addressed at a rapid pace. [note: this is Intel’s mantra: “control-relevance-pace.”]

A Decade of Change at VM Physician compact and reorganization to ensure accountability 2. Strategic plan to define ourselves and our decision rules 3. Reliable systems to reduce variation in care 4. Marketplace Collaboratives to redesign care with customers

Physician Compact Mutual Accountability Organization’s Responsibilities Foster Excellence Recruit and retain superior physicians and staff Support career development and professional satisfaction Acknowledge contributions to patient care and the organization Create opportunities to participate in or support research  Listen and Communicate Share information regarding strategic intent, organizational priorities and business decisions Offer opportunities for constructive dialogue Provide regular, written evaluation and feedback Educate Support and facilitate teaching, GME and CME Provide information and tools necessary to improve practice  Reward Provide clear compensation with internal and market consistency, aligned with organizational goals Create an environment that supports teams and individuals Lead Manage and lead organization with integrity and accountability  Physician’s Responsibilities Focus on Patients Practice state of the art, quality medicine Encourage patient involvement in care and treatment decisions Achieve and maintain optimal patient access Insist on seamless service Collaborate on Care Delivery Include staff, physicians, and management on team Treat all members with respect Demonstrate the highest levels of ethical and professional conduct Behave in a manner consistent with group goals Participate in or support teaching Listen and Communicate Communicate clinical information in clear, timely manner Request information, resources needed to provide care consistent with Virginia Mason goals Provide and accept feedback  Take Ownership Implement Virginia Mason-accepted clinical standards of care Participate in and support group decisions Focus on the economic aspects of our practice Change Embrace innovation and continuous improvement Participate in necessary organizational change

Strategic Plan Who we are. What we do. Our Strategic Plan reflects who we are and provides decision rules for our entire organization as we move forward to transform health care.

Path Toward a Management System That Works

New Attitudes and New Tools To Achieve Zero Defects VM Board Member at Hitachi The second critical initiative was identifying a management method that would allow us to deliver zero-defect quality. 2. We first looked at well-regarded US medical centers. We found that none came close to the standards of performance we felt was necessary. Ultimately, a connection to Boeing and their adoption of the Toyota Production System led us to Japan. As we entered Japanese factories for the first time in 2002 we began to learn how to use a number of new tools that had been developed in the world of manufacturing. We also began developing the attitude that would allow us to deliver on the promise we were making with our strategic plan.

The Sensei and the Waiting Room

Reliable Systems Eliminating Wasted Time and Content Standardize Processes Build in Pace Only what is needed when and where needed Build in Quality Evidence-based, patient centered care LESS WASTE LOWER COST BETTER - FASTER - MORE AFFORDABLE Cost of care Cost of absences Cost of variation

Reliable Systems “Best Doctors” Not Sufficient Reliable System Installed 1. This slide illustrates how providing reliable systems for providers improves quality and lowers cost 2. On the left hand side of this image, we can see that intelligent, motivated providers have a high defect rate in writing medication orders at Virginia Mason Hospital. 3. On the right hand side of the image, we have installed a reliable system: a computerized order writing system that did not allow erroneous, duplicative, illegible or confusing orders. 3. Defects fell to nearly zero and the personnel and time needed to correct errors also fell to nearly zero. 4. Eliminating the waste of defects reduced the cost of producing care substantially for VM: better orders, completed more quickly, lowers cost.

The Medical Assistant’s Question

Reliable Systems Flu Shots Another application of systems reliability was applied to immunization of all VM staff for influenza. This suggestion was made by an entry level medical assistant and was promptly adopted by the Board as a fitness for duty requirement, the first medical center in the US to do so. Our compliance rate has stood at 100% for years. The very few employees that are not immunized are required to wear a mask while at work during flu season. This quality measure also reduces our cost of producing health care by protecting our employees and their families form needless absenteeism. We are much less likely to transmit influenza to our patients, again avoiding an unnecessary cost of care. Better quality means lower cost.

The Nightmare

Mary McClinton “Hands that make dreams come true”

The Customer

Affordability: Three Challenges 1. Failed process for delivering quality 3. Failed process for purchasing quality 2. Failed process for paying for quality 1. Our work with employers began in 2004 when they approached us with their health plan because health care had become unaffordable. 2. As we spent time with the large, self-funded employers in our market, we came to realize that achieving affordable health care requires addressing three challenges. Solving for one or even two of these will cause us to fall short of achieving optimal quality and value. 3. It begins with the problem of a failed process for producing quality. US providers produce some of the best health care in the world, but this is largely an individual effort and individual variation introduces a substantial proportion of non-value added care and even care that is harmful. Until providers produce high quality care in a reliable fashion, health care cost will be higher than necessary. Producing quality is the accountability of providers. 4. Health plans pay for high quality care but they also pay for low quality care that is almost always more expensive. As long as health plans pay for quantity of care rather than quality, providers will produce a very large quality of care of variable quality and health care will remain unaffordable. Paying for quality and only for quality is the accountability of health plans. 5. Employers and individual purchasers purchase high quality care but also buy an immense quantity of health care that adds no value care. To the extent they are purchasing care that does not add value, they are wasting health care dollars of their own or employers. Lack of a clear concept of quality health care means that neither employers or individuals can consistently purchase wisely. 6. Addressing affordability in health care requires correcting all three. And that is why we created Marketplace Collaboratives in 2005. Affordability requires correcting all three.

A Marketplace Collaborative 1. Employer uses purchasing power to define products and quality specifications. 4. Employer purchases product. 3. Health plan pays for delivery of quality specs. 2. Provider produces product to quality specs. Here’s how a Collaborative works: The employer sits at the head of the table. The employer pays the salary of both providers and health plans and is in a good position to use purchasing power to define both the priority medical conditions and the quality specifications needed to maintain a healthy workforce. The provider produces the “product”: high quality care for the medical condition specified by the employer. The health plan uses the money of the employer to pay the provider based on performance against quality indicators important to the employer. The employer is then able to make a purchasing decision This type of transaction proceeds millions of times a day in our business community. It is the foundation of our economy. It does not occur in health care. The lack of a market for quality allows high prices and inconsistent quality to exist. And employers pick up the tab.

Employer Defines Products Doing the Right Thing: High Cost Conditions Screening and prevention Back pain Joint pain Headache Upper respiratory infection Breast symptoms Diabetes Depression/anxiety Asthma 10. Abdominal pain 11. Chest pain 12. Bladder infection 13. Dyspepsia 14. Hypertension 15. Hypercholesterolemia Total joint surgery Spine surgery Coronary artery bypass graft The first question addressed by the Collaborative was to develop a list of priorities based on aggregate direct and indirect costs to the community. We aggregated charge codes from claims data and estimated productivity loss to develop this list of top health care spending for employers. This became the agenda of the Collaborative. Peter Drucker would call this “doing the right thing”.

Employer Defines Quality Specs Doing Things Right 1. Better Evidence-based care: what works 100% patient satisfaction 2. Faster Same-day access Rapid return to function 3. More Affordable Affordable price for employer and provider The second important question we asked employers was to state their definition of quality. As providers we measured over 100 process indicators and reported these results to over 20 outside organizations. Most of these indicators had no meaning to purchasers. 2. Employers were quick to state these five as market-relevant quality indicators. 3. This is the most important point of this presentation . Each of the five can be measured and monetized Together, they form the basis for production, payment and purchasing of health care. 4. Particularly important is same-day access and rapid return to function. These indicators reflect work loss. These “indirect” costs of care are much greater than the cost of doctor visits, tests and procedures. 5. Affordable price must sustain both employer and provider. This is not the lowest price. It is the best price. Since there is so much waste in the health care systems, employers should have lower costs and providers higher margins. 6. Employers procure thousands of goods and services from suppliers according to quality specifications. They do not purchase medical care from physician suppliers on the basis of quality. These five product specs are the foundation for improving quality, affordability and access.

Will it Work? 1. PM&R underwater financially 2. 12 professionals leave section 3. Major changes across medical center 4. New Section Head Using the right providers and applying the processes we adapted from Toyota, health care costs plummet. This image shows that all stakeholders do better. The example is Virginia Mason’s Spine Clinic. For health plans, those that provide health care insurance for small companies spend less of their own money. If large employers are self-insured, the full savings return to the employer.

There is no security on this earth; there is only opportunity There is no security on this earth; there is only opportunity. -MacArthur