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

2. 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

3. The First Board Meeting

4. 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.

5. 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.”]

6. 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

7. 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

8. 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.

9. Path Toward a Management System That Works

10. 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.

11. The Sensei and the Waiting Room

12. 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

13. 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.

14. The Medical Assistant’s Question

15. 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.

16. The Nightmare

17. Mary McClinton “Hands that make dreams come true”

18. The Customer

19. 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.

20. 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.

21. 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”.

22. 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.

23. 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.

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