The Well-Managed Healthcare Organization, Ninth Edition

HAP/AUPHA Editorial Board for Graduate Studies

Carla A. Stebbins, PhD, Chairman

Rochester Institute of Technology

Kevin Broom, PhD

University of Pittsburgh

Erik L. Carlton, DrPH

University of Memphis

Daniel Estrada, PhD

University of Florida

Edmond A. Hooker, MD, DrPH

Xavier University

LTC Alan Jones, PhD, FACHE

US Army

Christopher Louis, PhD

Boston University

Peggy J. Maddox, PhD

George Mason University

Donna Malvey, PhD

University of Central Florida

Brian J. Nickerson, PhD

Icahn School of Medicine at Mount Sinai

Stephen J. O'Connor, PhD, FACHE

University of Alabama at Birmingham

Maia Platt, PhD

University of Detroit Mercy

Debra Scammon, PhD

University of Utah

Tina Smith

University of Toronto

James Zoller, PhD

Medical University of South Carolina

NINTH EDITION

THE

WELL-MANAGED

HEALTHCARE ORGANIZATION

KENNETH R. WHITE

JOHN R. GRIFFITH

Health Administration Press, Chicago, Illinois

Association of University Programs in Health Administration, Washington, DC

Your board, staff, or clients may also benefit from this book's insight. For information on quantity discounts, contact the Health Administration Press Marketing Manager at (312) 424-9450.

This publication is intended to provide accurate and authoritative information in regard to the subject matter covered. It is sold, or otherwise provided, with the understanding that the publisher is not engaged in rendering professional services. If professional advice or other expert assistance is required, the services of a competent professional should be sought.

The statements and opinions contained in this book are strictly those of the authors and do not represent the official positions of the American College of Healthcare Executives, the Foundation of the American College of Healthcare Executives, or the Association of University Programs in Health Administration.

Copyright © 2019 by Kenneth R. White and John R. Griffith. Printed in the United States of America. All rights reserved. This book or parts thereof may not be reproduced in any form without written permission of the publisher.

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Library of Congress Cataloging-in-Publication Data

Names: White, Kenneth R. (Kenneth Ray), 1956- author. | Griffith, John R., author.

Title: The well-managed healthcare organization / Kenneth R. White, John R. Griffith.

Description: Ninth edition. | Chicago, Illinois : Health Administration Press; Washington, DC : Association of University Programs in Health

Administration, [2019] | Series: AUPHA/HAP editorial board for graduate studies | Includes bibliographical references and index.

Identifiers: LCCN 2018049544 (print) | LCCN 2018050390 (ebook) | ISBN 9781640550599 (ebook) | ISBN 9781640550605 (xml) | ISBN 9781640550612 (epub) | ISBN 9781640550629 (mobi) | ISBN 9781640550582 (print : alk. paper) Subjects: LCSH: Health services administration.

Classification: LCC RA971 (ebook) | LCC RA971 .G77 2019 (print) | DDC 362.1068--dc23

LC record available at https://lccn.loc.gov/2018049544

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BRIEF CONTENTS

Preface

Section I Introduction and Overview

Chapter 1. Foundations of Well-Managed Healthcare Organizations

Chapter 2. Creating and Sustaining a Transformational Culture

Chapter 3. Building Continuous Improvement

Chapter 4. Establishing Strategic Governance

Section II Clinical Excellence

Chapter 5. Foundations of Clinical Excellence

Chapter 6. The Clinical Staff Organization

Chapter 7. Nursing

Chapter 8. Clinical Support Services

Chapter 9. Population Health

Section III Logistic and Strategic Support

Chapter 10. Knowledge Management

Chapter 11. Human Resources

Chapter 12. Environment of Care

Chapter 13. Financial Management

Chapter 14. Internal Consulting

Chapter 15. Marketing and Strategy

Glossary

Index

About the Authors

DETAILED CONTENTS

Preface

Section I Introduction and Overview

Section II Clinical Excellence

Section III Logistic and Strategic Support

Glossary

Index

About the Authors

PREFACE

The challenge in managing any healthcare organization (HCO) is to integrate individuals into multiple teams to deliver care that is safe, effective, patient centered, timely, efficient, and equitable. The solution to this challenge lies in two core thrusts:

• Maintaining a culture that empowers and supports each person and each team

• Improving work processes with measurement, benchmarks, process analysis, negotiated goals, and rewards

In excellent HCOs, professionals communicate as equals, everyone is treated with respect, and authority is derived from knowledge rather than rank. Measurement is central and improvement is constant. Managers meet team members’ needs and respond directly to patients, those serving patients, or those supporting patient care providers. The record of excellent HCOs shows quite clearly that the approach is successful in all provider settings, including doctors’ offices, general and specialty hospitals, continuing care, long-term care, home care, and hospices. Performance excellence is built on a comprehensive and well-supported theory of management:

1. An HCO is supported by many stakeholders who benefit from its success. In general, stakeholders are patients, community members, employees and volunteers, providers, suppliers, regulators, or others involved in the life of the organization. Stakeholders have competing demands, and a key organizational issue is balancing and optimizing the rewards to each group. The purpose of the HCO is stated in its mission. HCO missions are similar because all HCO stakeholders share the common desire to extend the length and quality of life.

2. Mission achievement is monitored using evidence-based, objective measures of performance. Benchmarks—the best known performance—are used to identify goals for improvement. Continuous improvement—the formal, diligent review of opportunities for improvement (OFIs) and rigorous, team-oriented pursuit of the best outcomes—is a given. To achieve the goals, managers and leaders stay informed about the best practices of other HCOs.

3. The resulting improvement benefits all stakeholders (whether they are patients, families, community citizens, care providers or other workers, or volunteers) and encourages them to view the HCO as their preferred affiliation.

These elements are reinforced throughout this book. The ninth edition of The Well-Managed Healthcare Organization tracks evidence-based practices that lead to high performance built on these principles. It is based on documented excellence by Baldrige Award winners, Lean users, and peer-reviewed publications. Numerous HCOs have contributed to the best practices described in the text.

The now well-documented path to excellence balances measured performance and continuous improvement with systematic listening and responsiveness to the needs of patients, care providers, and other individuals. The authors believe it fairly describes the standard of practice for all organized healthcare delivery. Healthcare organizations following the path can reach and document excellence in quality, patient satisfaction, individual engagement, and sound financial performance.

Chapter Descriptions

Chapter 1: Foundations of Well-Managed Healthcare Organizations

• Emphasizes the team structure of modern care

• Defines excellence in care and population health missions, with performance measures and strategic implications for each

• Explains the stakeholder model for HCOs, stressing the role of managers in optimizing overall stakeholder needs

• Describes the US healthcare marketplace

• Outlines the organizational model that excellent HCOs share—a culture of empowerment and servant leadership and a commitment to evidence, measured performance, and continuous improvement

• Identifies the managerial role in developing consensus, building consistent teamwork, and implementing continuous improvement

Chapter 2: Creating and Sustaining a Transformational Culture

• Emphasizes the transformational culture used by excellent HCOs to attract and retain broad stakeholder support

• Develops individual empowerment as a central theme of excellence—what it means, how it works, why it works, and how management facilitates it through servant leadership and a supportive culture

• Emphasizes rewards as a dominant force for high performance

• Specifies the auditing and enforcement activities protecting the organization from internal disruption

• Describes management's leadership role in sustaining the culture: addressing individual concerns, modeling, explaining, and rewarding

Chapter 3: Building Continuous Improvement

• Focuses on how excellent management uses quantitative data to guide the organization, ranging from clinical teams to the governing board

• Explains team-level and strategic-level multidimensional scorecards used to identify, negotiate, monitor, and achieve improvement goals

• Shows how excellent HCOs forecast measures, use benchmarks to identify opportunities, and use team-oriented continuous improvement to redesign processes

• Stresses negotiation of realistic improvement goals for every team

• Describes a communication structure linking each worker with important colleagues and the governing board

• Emphasizes process improvement, training, measured goals, negotiated agreement, and rewards replacing the command-and-control style of management

• Provides examples of how management implements this system to produce excellent care, high patient and worker satisfaction, and financial success

Chapter 4: Establishing Strategic Governance

• Identifies the governing board role as optimizing stakeholder service by working intimately with senior management

• Emphasizes setting mission, vision, and values, as well as implementing them through an annual cycle evaluating strategic needs and opportunities, reviewing management's quantified forecasts and plan, monitoring balanced scorecard performance, and expecting complete implementation

• Describes the board role in approving clinical staff, monitoring quality of care, and identifying and evaluating strategic alternatives

• Emphasizes board self-improvement—membership recruitment, selection, learning, and self-evaluation

• Highlights the management role in fact finding, training, and negotiating with other community agencies

• Addresses legal issues protecting tax exemption

Chapter 5: Foundations of Clinical Excellence

• Emphasizes correct and complete patient diagnoses while supporting a team-oriented integrated plan of care tailored to individual patient needs

• Describes how training and electronic access implement the plans through diagnosis-specific clinical guidelines and protocols for completing specific clinical tasks

• Explains case management for complex patients and supporting a population health mission by expanding chronic and preventive care

• Describes scorecards for clinical teams that are consistent with risk-sharing payment systems

• Outlines a managerial style devoted to building care provider skills and satisfaction through empowerment and systematic listening, a culture of teamwork and respect, and benchmarking to build excellence across multiple teams of care

Chapter 6: The Clinical Staff Organization

• Identifies the managerial role in building and maintaining the clinical staff, establishing performance and cultural expectations, managing guidelines and protocols, and rewarding high reliability

• Explains how excellent HCOs recruit and retain effective clinicians, support professional skill development, and maintain effective credentialing and peer review

• Outlines the multiple forms of clinician contracts, emphasizing the trend toward employment in multispecialty groups or the HCO

• Reviews strategies to prevent burnout and support clinicians’ personal needs

• Outlines the contributions and the limits of the physician role on the governing board

Chapter 7: Nursing

• Describes nursing contributions to patient care and how excellent HCOs support these contributions, continually educating, recognizing and rewarding, and retaining nurses at multiple practice levels so that no shortages occur

• Identifies the nursing contribution to the plan of care and the nursing role in ensuring prompt, thorough completion of the plan

• Stresses the nurse's role in patient education and in overcoming cultural, literacy, and linguistic barriers

• Describes how excellent HCOs avoid being short-staffed by forecasting their need for nurses, working to recruit people to nursing careers, and retaining committed nurses

• Outlines scheduling systems to meet patient needs while reducing overtime and eliminating float personnel

• Describes community and non-HCO nursing contributions

Chapter 8: Clinical Support Services

• Identifies clinical support services (CSSs) roles in care, guideline and protocol development, and consultation to care providers

• Outlines scheduling systems, design and use of protocols, and methods of resolving inter-CSS conflict

• Explains how HCOs establish their array of CSSs and arrange support for CSSs not offered

• Outlines contracting with independent CSS providers

• Identifies multidimensional measures for unit scorecards, goal negotiation, and integration of CSSs into performance improvement

• Describes a tested process for generating and competitively reviewing capital requests

• Identifies six critical questions in CSS excellence and demonstrates how high-performing HCOs approach and resolve these questions

Chapter 9: Population Health

• Identifies population health as an expansion of the mission of excellence

• Explains forecasting of population health needs

• Outlines and illustrates a strategy emphasizing continued clinical excellence, expanded primary care, and collaboration with multiple community agencies to support population wellness

• Emphasizes the patient-centered medical home model for primary care

• Stresses collaborative goal setting, measurement of success, and continuous improvement for community-wide effort

• Describes management of the financial implications for an HCO and its caregivers

Chapter 10: Knowledge Management

• Describes knowledge management (KM) as an essential resource, emphasizing convenient, universal, and routine use of a data warehouse, including web access, videos, text, and quantitative data

• Describes best practices for supporting electronic health records and removing barriers to reduce user frustration

• Emphasizes KM support of statistical analysis and documentation

• Explains training and support of users

• Endorses a multidisciplinary committee to control terminology and statistical definitions

• Outlines protection of data and KM operations

Chapter 11: Human Resources

• Emphasizes retention and improvement of individual associates, including ten days’ training per associate per year, ongoing evaluation of associates’ learning, and systematic improvement of individual performance

• Identifies the human resources (HR) department's role in maintaining a safe, comfortable work environment, building cultural competence, and reducing implicit bias

• Describes traditional HR functions such as position control and wage, incentive, and benefits management (including collective bargaining)

• Provides measures for the improvement of the workforce as a competitive asset and for an HR balanced scorecard

Chapter 12: Environment of Care

• Explains how excellent HCOs plan, operate, and improve all aspects of the physical environment, including supplies, safety, and convenient services for associates and guests

• Shows how space allocation and planning decisions are made

• Details systems for reaching benchmark performance in safety, security, and degree of environmental damage

• Provides measures for facility operation and improvement

• Discusses how controversial space issues are resolved, outside contractors are effectively integrated, and environmental service changes are incorporated into performance improvement

Chapter 13: Financial Management

• Emphasizes accounting and finance as sources of data and funds

• Describes accounting's role in the planning cycle, supporting multidimensional goal negotiation that replaces the traditional budget

• Describes long-range financial planning, pricing and revenue contract negotiation, revenue cycle management, multicorporate accounting, and financial evaluation of both long-term investments and replacement capital

• Describes protection of assets against common threats

Chapter 14: Internal Consulting

• Describes how management supports the planning cycle by conducting an environmental assessment; forecasting demand; and identifying benchmarks, statistical issues, and regulation

• Shows how management supports performance improvement, develops criteria for modeling processes, manages outside consultants, and tests proposed improvements

• Describes a rigorous, competitive process for evaluating routine capital requests in terms of scorecard improvements

• Reviews how capital investments are managed and implemented to achieve scorecard improvements

• Discusses how internal consulting sustains organization-wide continuous improvement, ensures quality work by outside consultants, and benchmarks its own size and effectiveness

Chapter 15: Marketing and Strategy

• Develops marketing around the four Ps (product, placement, pricing, promotion) and shows why the order is essential

• Identifies the importance of marketing to caregivers and of marketing health as opposed to care

• Identifies collaboration with other organizations as an important marketing function

• Approaches strategy through wide-ranging and thorough listening, rigorous forecasting, and systematic review of multiple alternatives

• Argues for deliberate risk taking, supported by thorough analysis; identifies many successful examples but notes that too many HCOs fail to implement their basic commitments to seeking measured excellence through empowered workers and continuous improvement

New to This Edition

The ninth edition describes the new standard of practice for HCO of all kinds. Every chapter does the following:

• Provides five practice application questions, offering beginner and current managers the opportunity to learn responses to common issues and designed to promote active learning in the flipped classroom

• In the final chapter sections, Managerial Leadership, addresses flashpoints and critical areas where responsive leadership makes a difference

Chapter 1: Foundations of Well-Managed Healthcare Organizations

• Supports financial success under risk-based payment

• Describes value-based insurance design and the important role of patient-centered involvement and satisfaction, as well as quality outcomes and their impact on reimbursement

• Shows reasons and implications for moving to a population health mission

• Updates Healthy People 2030 for a healthcare organization focus to eliminate health disparities, achieve health equity, and attain health literacy to improve the health and well-being of all

• Expands descriptions of post-acute care delivery models, including long-term care, home care, palliative care, hospice care, and end-of-life care

• Explains the importance of recruiting and retaining a diverse and inclusive workforce

• Describes and emphasizes team-based care in twenty-first-century HCOs and the importance of meeting the needs of clinical care teams and addressing the prevention of burnout

• Emphasizes manager and leader visibility and the importance of leadership rounding in a transformational culture

• Includes nonphysician providers by using a more inclusive term—licensed independent practitioner (LIP)—for a better description of physicians’ and nonphysicians’ scopes of practice and their ability to provide and bill for services independently

Chapter 2: Creating and Sustaining a Transformational Culture

• Describes the increased usage of Lean methods to sustain continued improvements in quality and outcomes

• Expands the focus on transformational culture

• Focuses more on management's leadership role in sustaining the culture

• Adds additional content on communication and messaging and provides suggested responses—explanations and justifications—for common situations

• Provides more examples of measures commonly used for tracking in a transformational culture

Chapter 3: Building Continuous Improvement

• Details the proven systems that support excellent care and high patient satisfaction and that reduce care provider turnover to less than 10 percent per year

• Strengthens emphasis on identifying and implementing processes that will move patient care to excellence and that will support ongoing, long-term market success (measured by growth in patient and associate loyalty and satisfactory financial performance)

• Describes how to base care delivery on best practices and evidence-based information

• Stresses negotiation of realistic improvement goals for every team

Chapter 4: Establishing Strategic Governance

• Expands the definition of the governing board's legal and regulatory requirements, including IRS regulations and the avoidance of private inurement

• Expands the focus of governance and strategy—not only on clinical care excellence but also on meeting community health needs

• Describes the qualities and commitments of a good board member

Chapter 5: Foundations of Clinical Excellence

• Emphasizes a greater focus on population health and comprehensive ambulatory care delivery

• Focuses on care team organization in clinical service lines, interprofessional care planning, and rounding

• Expands on the importance of team communication, care handoffs, conflict resolution, and ways to enhance continuity of care

• Outlines how case management has become more important in navigating care for complex patients with chronic conditions

• Bolsters content on the role of managers in providing interprofessional education to improve knowledge, skills, and teamwork

• Expands the definition of functional protocols to include standard work

• Updates resources for the development of clinical guidelines

• Updates information about access to guidelines, protocols, patient data, and the interfaces between the electronic health record and resource databases

• Describes the reporting system required by the Patient Safety and Quality Improvement Act of 2005

• Updates patient safety goals and regulatory and consumer accountability

• Conveys a greater focus on patient satisfaction and associate engagement as it relates to quality, which, in turn, improves financial performance

Chapter 6: The Clinical Staff Organization

• Expands the section titled Elements of Privilege to include specialization criteria and American Board of Medical Specialties Maintenance of Certification requirements

• Outlines criteria beyond specialization that must be considered in appointing and reappointing LIPs to maintain excellence in clinical care

• Adds new information about the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which created the Quality Payment Program and streamlines multiple quality programs under the Merit-based Incentive Payments System (MIPS)

• Adds best practices for dealing with LIP burnout with nine recommended organizational strategies

Chapter 7: Nursing

• Updates educational pathways and trends in specialization

• Describes the growing numbers and roles of advanced practice nurses

• Identifies managerial leadership strategies for sustaining the nursing supply, reducing turnover, and providing an environment that promotes interprofessional teamwork

• Recommends increased focus on continuing education for clinical skills and teamwork

• Adds recommendations for burnout and more professional autonomous control over nursing practice

Chapter 8: Clinical Support Services

• Updates citations and resources

Chapter 9: Population Health

• Describes potential for radical change with population health

• Outlines effective measures for population health

• Suggests explicit advance care planning and end-of-life teaching strategies; recommends more robust programs to educate communities about advance directives

• Discusses the impact of population health on acute care services

• Clarifies quantification of population health needs

• Recommends ways to expand and integrate primary care

Chapter 10: Knowledge Management

• Updates electronic health record requirements for meaningful use

• Describes meaningful use as a requirement of MIPS, a part of MACRA

• Describes best practices for the implementation of meaningful use

• Recommends guidelines for the appointment of a knowledge management committee and an effective deliberation process

• Suggests ways to expand use of the electronic health record and clinical data

• Details the experiences of Memorial Hermann, Intermountain, and Sharp HealthCare

Chapter 11: Human Resources

• Highlights examples of best practices from Henry Ford Health System

• Underscores organizational consistency and its relationship to associates’ perceptions of fairness

• Emphasizes the need for a focus on diversity and inclusion in the workforce and for policies and training that affirm fairness, equity, and nondiscrimination

• Encourages training for cultural humility and implicit and explicit bias

Chapter 12: Environment of Care

• Explains the United States Department of Homeland Security's National Incident Management System, which facilitates coordination between all responders to emergencies and disasters

Chapter 13: Financial Management

• Updates citations and resources

• Streamlines and integrates financial functions

• Emphasizes greater transparency in financial reporting

• Describes oversight authority for accounting standards for HCOs controlled by local and state governments

Chapter 14: Internal Consulting

• Emphasizes a greater support for balanced scorecards and negotiated goal setting

• Focuses on the increased support to internal stakeholders evaluating capital investments and service expansion

• Outlines management of external consultants

• Supports the effectiveness of process improvement teams

• Recommends sizing strategies and evaluation of effectiveness of internal consulting

Chapter 15: Marketing and Strategy

• Increases the emphasis on a comprehensive, data-based approach to marketing and strategy

• Updates citations and resources for strategic planning

Using The Well-Managed Healthcare Organization

We believe that this book gives current and future managers a foundation for engaging in meaningful dialogue with team members who contribute directly or indirectly to the HCO's mission, to evaluate their contribution and activity outcomes, and to help teams identify their OFIs and translate them to actual improvement.

All managers should strive to learn continuously. A manager who does so will grasp the totality and interdependence of the HCO. Excellence demands comprehensiveness, because failure in one activity contributes to failure in another. For example, an HCO cannot have clinical excellence without corporate excellence and logistic excellence. All managers and leaders must also understand the application of this book's crosscutting themes—the role of the mission, evidence-based decisions, measured performance, continuous improvement, and rewards. Importantly, all managers should be able to explain these issues to others, including customers, newly promoted supervisors, and new employees.

After chapter 1, each chapter begins with a list of critical actions. Informed by the high-performance practices of Baldrige Award–winning HCOs and other high-caliber HCOs, each chapter identifies and lays out the purpose of functions that lead to high performance. Then, guidelines are provided for optimal performance and engagement by staff, affiliated physicians, and other LIPs. Measures for progress are spelled out. Managerial Leadership sections address commonly encountered issues—flash points—and how they can best be managed. Each chapter concludes with five practice applications. These sections describe realistic situations that require management action and are well-suited for group or class discussion.

Experienced managers and clinicians transitioning to management can use this book as a checklist and a guide to best managerial practice. Beginning students might best master this book with a deliberate approach to each chapter, such as the following:

1. Study Critical Actions sections, making an effort to relate the issues to your previous experience.

2. Review the details of the Functions section to understand how each function contributes to the whole and how the functions are best implemented.

3. Explore the various people—their qualifications, credentials, scope of work—who are represented in the People section.

4. Study the exhibit that shows performance measures and review the Measures section to understand what drives the goal-setting and continuous improvement process.

5. Check the Managerial Leadership section for insights that relate the HCO's purpose to a conglomeration of activities that all need to be managed well in order to achieve and sustain high performance.

6. Review Practice Applications for suggestions on how managers convey the right knowledge to the right people—that is, how knowledge is summarized in formal policies and procedures, in training programs, and in day-to-day interactions.

Acknowledgments

As the editions of The Well-Managed Healthcare Organization mount, keeping track of all who have contributed to this text by their examples becomes difficult. The applications of the HCO recipients of the Malcolm Baldrige National Quality Award are the only comprehensive, audited documentation of the transformational and evidence-based approach. Our visits to Catholic Health Initiatives, Henry Ford Health System, Intermountain Healthcare, Legacy Health, Mary Washington Healthcare, MedStar Health, Cone Health, Sentara Healthcare, and University of Virginia Health System have helped us understand how excellent processes are designed and implemented. Many high-performing HCOs have published detailed descriptions of their work, often relying on Lean practices that parallel the Baldrige approach. We are indebted to all.

Over time, both of us have worked with specific organizations, including Summa Health System in Akron, Ohio; Allegiance Corporation (a physician–hospital organization) in Ann Arbor, Michigan; Mercy Health Center in Oklahoma City, Oklahoma; Mercy International Health Services in Farmington Hills, Michigan; and Bon Secours Health System in Marriottsville, Maryland. We are grateful to these HCOs. We are also grateful for the assistance of our colleagues at the University of Michigan, Virginia Commonwealth University, and the University of Virginia.

We are especially grateful to Nicholas Mendyka, chief financial officer with the University of Virginia Medical Center, for his contribution to chapter 13.

Kenneth R. White, PhD, APRN-BC, FACHE, FAAN

University of Virginia

Charlottesville, Virginia

John R. Griffith, MBA, LFACHE

University of Michigan

Ann Arbor, Michigan

Instructor Resources

This book's Instructor Resources include a test bank with application-oriented multiple choice questions (new to this edition), presentation PowerPoint slides (new to this edition), PowerPoint slides of all the book's exhibits, instructor notes for the book's Practice Applications sections, and additional applications questions.

For the most up-to-date information about this book and its Instructor Resources, go to ache.org/HAP and search for the book's order code (2381).

This book's Instructor Resources are available to instructors who adopt this book for use in their course. For access information, please email hapbooks@ache.org.

SECTION

CHAPTER

CRITICAL ACTIONS¹

1. Emphasize mission, vision, and values:

• Be prepared to state your healthcare organization's mission, vision, and values (MVV).

• Know how to explain how MVV were developed by a stakeholder consensus.

• Be prepared to answer questions such as Why are MVV important?, Do people really believe that?, What if I see things that do not reflect the MVV?, and How do we use the MVV in decision-making?

2. Recruit and support a diverse and inclusive workforce:

• Establish recruitment programs that encourage underrepresented groups to attain technical and professional skills.

• Ensure that evaluations and promotions are free of bias.

• Uphold respect as an organizational value, so that every associate is comfortable in the workplace.

3. Guide coordinated action of interprofessional care teams and support teams. Describe excellence and identify worker actions that deserve encouragement.

4. Relate to stakeholders. Know which dimensions of excellence each stakeholder group focuses on and how HCO leadership should listen to its concerns.

5. Build a transformational culture:

• Seek best practices rather than fixing problems.

• Define what constitutes a constructive response to associates’ and stakeholders’ concerns.

• Practice rounding by managers and senior leaders can improve the performance of associates.

6. Use measured performance, seeking benchmarks and continuously improving.

Know the following terms and be able to explain clearly to any stakeholder how they contribute to excellence: scorecard, goal, current performance, benchmark, 90-day plan, opportunity for improvement (OFI), process improvement team (PIT).

Purpose: Mission of Healthcare Organizations

Patient care is a central purpose of any healthcare organization (HCO). Excellent care to each and every patient is often stated as the HCO's mission. HCOs provide care in a variety of inpatient and outpatient settings, using their organizational strength to meet patient needs. Many started as acute care hospitals and then grew as care sites broadened and specialized.

Many HCOs now expand their mission to "sustaining population health, a substantially broader mission seeking the World Health Organization (WHO) goal: a state of complete physical and social well-being and not merely the absence of disease or infirmity.² For HCOs, not merely" is the operative phrase. Population health includes

• excellence in care to individual patients, including preventive care;

• fulfillment of needs that go beyond healthcare—the housing, food, and social support that are essential to sustaining health and managing chronic disease; and

• meeting the needs of people who are not patients to help them stay well and avoid becoming patients.⁴

The US Department of Health and Human Services specifies national goals and objectives for population health in the Healthy People program. The goals for 2030 are the following:

• Attain healthy, purposeful lives and well-being.

• Attain health literacy, achieve health equity, eliminate disparities, and improve the health and well-being of all populations.

• Create social and physical environments that promote attaining full potential for health and well-being for all.

• Promote healthy development, healthy behaviors, and well-being across all life stages.

• Engage with stakeholders and key constituents across multiple sectors to take action and design policies that improve the health and well-being of all populations.⁵

Healthy, purposeful lives is deliberately ambitious. HCOs that adopt a population health–focused mission create collaborative systems that encompass public health, safety, education, housing, and urban planning organizations to move their communities toward the WHO goals. The HCO is only one participant. Its patient care contribution is central, but healthcare disparities may be created by variations in income, race, ethnicity, and geographical dwelling place. Persons with lower incomes have greater challenges to their health and fewer resources to respond to those challenges. Housing, safety, and food supplies are often inadequate. People of color are often victims of less desirable health outcomes than white counterparts.

HCOs must address disparities and develop goals that are consistent with Healthy People 2030. Fortunately, leadership concepts that create excellence in care are also successful in the population health mission.⁶ The transformational culture and continuous improvement themes that create the best possible patient care also support the interagency collaboration that drives population health. Chapter 9 describes HCO actions that can form the foundation for this expanded mission.

Defining Excellence

Excellence in Patient Care

Excellence occurs when every patient care act is the right thing, only the right thing, and delivered as soon as the patient needs it, creating the best possible outcome for every patient. The challenge is formidable. Most serious patient health events—a birth, a heart attack, or ongoing diabetes care, for example—require hundreds of specific acts. An error in diagnosis can cascade into a series of problems that sometimes leads to fatality. An error by an early team can create problems for downstream teams. A strategic failure or a logistic failure—a staff or supply shortage, for example—can force a care team to improvise or delay care.

Excellence is a multidimensional concept. It is achieved by measuring, analyzing, and improving performance on each dimension of exhibit 1.1 and by striving for benchmark, the best-known performance. Benchmark is a realistic comparison—a value that a similar organization has achieved. It is often a moving target, as better processes are designed and implemented, but it marks the achievable frontier.

Excellence in Population Health

Excellence in population health is also measured and benchmarked, but the measures are of population, not patients. Population health is measured by the incidence and prevalence of disease, disability, or premature loss of life.

The definitions of incidence and prevalence illustrate the need for collaboration to achieve the population health mission. Although any HCO can calculate its exhibit 1.1 measures, the population-based incidence and prevalence measures must be approached as a community-wide project.

Sources for The Well-Managed Healthcare Organization

The Well-Managed Healthcare Organization describes excellence in proven processes used by HCOs with top-tier outcomes. It focuses on the patient care mission (recognizing that excellence in patient care is an essential foundation) and on the HCO's unique contribution to the broader mission of population health. It describes tested processes that have achieved superior results with real patients. Much of the text is based on reports of HCOs that have received the Malcolm Baldrige National Quality Award.⁹ Award recipients have carefully documented their culture, processes, and results. Their documentation has been independently audited. Their results are typically in the highest quartile and often in the highest decile. Collectively, they provide a full range of care, from preventive to palliative, to a broad spectrum of US communities. The processes they use constitute the Baldrige model, an integrated set of best practices and work processes that produce benchmark results.¹¹ While there are many excellent HCOs that do not explicitly follow the Baldrige model, there are no comparable documented, audited descriptions of HCO excellence.

Team Structure of Twenty-First-Century Care

Modern healthcare is complex, expensive, and enormously successful. It has added decades to countless lives, as well as the health to use those decades productively. Its success, complexity, and cost arise from the diversity of scientific advances in treatment and the need to tailor treatment to individuals with varying needs. Healthcare delivery is almost always a team activity. Cases in which individual care providers change the course of disease are real but rare. Excellent HCOs have committed to diversity, equity, and inclusiveness in their workforce. They select individuals based exclusively on the skills they bring, independent of ethnicity, gender identity, sexual orientation, religious affiliation, or other identifying features with the goal of associates that represent the communities being served.

Clinical Teams—Interprofessional Care and Clinical Support

Interprofessional (also called interdisciplinary) care teams, shown in the top triangle of exhibit 1.2, deliver virtually all twenty-first-century healthcare. As shown in the upper left box, they provide highly specialized technical responses to diverse patient needs. They include physicians, nurses, other allied health professionals, and nonprofessional caregivers. A sequence of several interprofessional teams is often necessary as a patient's needs evolve. It is not unusual for a lifesaving event—cardiopulmonary resuscitation, cancer cure, or treatment of an endangered pregnancy, for example—to require several teams with different skill sets and several dozen different care providers.

The care teams in the top triangle have three major duties:

1. They assess and diagnose, a crucial first step and an ongoing process. Diagnosis labels symptoms and complaints as illness, indicating possible disease and its prognosis. Effective and efficient therapy—including reassurance, watchful waiting, and supporting patient self-efficacy—depends to a large extent on an accurate interpretation of (early) symptoms and the outcome of the diagnostic process.¹²

2. They provide and coordinate treatment, integrating drugs, surgery, rehabilitation, and other activities into a plan of care that involves the patient in key decisions and maximizes the patient's safety, recovery, and comfort.

3. They monitor the patient's response and adjust treatment interventions as indicated.

Excellence of care teams is measured by their performance on the factors shown in exhibit 1.1.

Care teams are almost always small and interdisciplinary, including a licensed independent practitioner (LIP), a nurse, and other professional and supportive care providers as needed. Teams are organized to treat similar patient needs. Primary care—the patient's first contact—includes teams for general internal medicine, family medicine, obstetrics and gynecology, mental health, and emergency care. Clinical specialty teams provide surgery, intensive care, and other specific therapeutic interventions. Other teams address rehabilitation, management of continuing disability, and palliative care.

HCOs approve privileges for LIPs based on their credentials, specifying their role within the scope of their license and assigned clinical responsibilities.

Clinical Support Teams

Frontline care-providing teams are supported by other clinical teams providing specialized professional services, such as laboratories, pharmacies, anesthesia, imaging, surgery, rehabilitation therapies, and home health. Treatment plans developed by the primary care team call for specific requests and services for specific patients. The team's excellence is also measured by the six exhibit 1.1 dimensions, and the support services they provide often use powerful and potentially dangerous technology. The terms safe and effective are not trivial where small errors can be fatal. Rigorous protocols and extensive training, often professional certification, are the key drivers of clinical support excellence.

Logistic and Strategic Teams

Both interprofessional care and clinical support teams are supported by logistics teams providing information, training, supplies, facilities, food, and financing. These teams contribute to excellence by furnishing patients, guests, and clinical teams with critical resources. The dimensions discussed in exhibit 1.1 measure excellence for logistics teams, broadening patient centered to customer centered. Safety remains important; HCOs are open to numerous threats, from dangerous substances to catastrophic events. Timely, efficient, and equitable care depends on these systems.

Strategic teams are responsible for achieving long-term excellence, for maintaining the teamwork structure, and for sustaining the HCO's relations to its stakeholders (individuals or groups who have a direct interest in the organization's success and whose needs shape its mission and strategies), customers, payers, and the community at large. These activities are the central functions of leadership. They are measured by the exhibit 1.1 measures and by additional dimensions, such as the extent of HCO services, unmet needs in the HCO's marketplace, and the long-term sustainability of performance.

A population health mission requires a fifth level that goes beyond the HCO itself. As noted earlier, population health is measured by incidence and prevalence of disease, disability, and premature death.

Real HCOs have used a wide variety of relationships to assemble the exhibit 1.2 teams. Historically, not-for-profit community HCOs served most of the nation, contracting with LIPs as credentialed affiliates who operated their own small corporations rather than being employed. Volunteers, usually including governing board members, have served without compensation and continue to be an important resource.

Current Trends

The current trend, however, has been toward centralization and employment. Most care is now provided by large HCOs with a full array of exhibit 1.2 services. LIPs are now mostly employed, rather than independent contractors. For example, Kaiser Permanente, the largest nongovernmental HCO in the United States, uses a formal employment structure for almost all of its needs.

Clinical support teams are now employed or organized as corporations contracting with the HCO. Many logistic and some strategic needs are met by contracts with corporations providing specialized services to many HCO customers. It is still true that many thousands of small care teams operate as independent corporations, focused on specific patient needs such as psychological counseling, dialysis, and long-term care. They refer patients to larger HCOs to meet any needs outside their expertise.

Stakeholders

All organizations, including HCOs, exist because they fulfill a need that individuals working alone cannot meet, and they thrive because they fulfill that need better than competing alternatives. Organizations serve stakeholders. HCO stakeholders are patients, patient families, insurers, workers, suppliers, regulators, and owners, as shown in exhibit 1.3. Most stakeholders can choose to participate with a specific HCO or not. Any HCO's survival depends on attracting sufficient numbers of each kind of stakeholder; otherwise it fails and disappears.

Stakeholders’ desires are inherently conflicting. Patients want immediate service; insurers want low costs; workers and suppliers want high compensation. HCOs and other organizations exist by negotiating solutions to those conflicting desires. Business can be understood as a set of relationships among groups that have a stake in the activities that make up the business. Business is about how customers, suppliers, employees, and managers interact and create value. To understand business is to know how these relationships work.¹⁵

HCOs represent one of the most complex applications of the stakeholder model. Stakeholders in each of the four categories actively express their needs and can vote with their feet—that is, change their affiliation to a different HCO. Leadership's basic obligation is to identify and meet the stakeholders’ important concerns and to negotiate unmet needs as opportunities for improvement (OFIs). The following sections identify the principal concerns of the major groups in each stakeholder category: patients and families, associates, other customer partners, and owners and community groups.

The exhibit 1.1 criteria fulfill most stakeholder needs. HCOs that excel on exhibit 1.1 measures thrive in the stakeholder marketplace. They become great places to get care and great places to give care, easily passing governmental and accreditation requirements. Their finances are strong, and their owners have no cause for concern.

Patients and Families

Patients seek accurate diagnosis and effective treatment but also confidentiality and as much comfort as possible for themselves and their families. Patient-centered care increasingly involves patients and families in providing care that is respectful and responsive to individual patient preferences, needs, and values.¹⁷

Web-based public sources such as HealthGrades (www.healthgrades.com) and WhyNotTheBest (www.whynotthebest.org) are increasingly influential in forming customer opinions, although their validity is often questionable.¹⁸ They rely heavily on published values for exhibit 1.1 measures.

Associates

Associates seek comfortable working conditions and fair compensation. Trustees and a great many others volunteer their time to not-for-profit HCOs; their compensation is the satisfaction they achieve from the work. However, most associates are salaried or earn hourly wages. Their compensation is often an important issue, but it is largely driven by national or regional markets; individual HCOs have little choice but to follow the market. Collective bargaining and unionization is limited in HCOs. The use of rewards (compensation for specific goal achievement) allows excellent HCOs to share the financial gains with associates. Rewards are usually in addition to a competitive wage or salary.

Working conditions may be the more important consideration in attracting and retaining workers. Respect, a value universal in excellent HCOs, has two clear and important meanings: (1) that associates feel their voices are heard and their employers make reasonable efforts to accommodate them, and (2) that associates know they will not be harassed (that is, no other worker, at any level, will make inappropriate sexual or personal comments). As chapter 2 discusses, excellent HCOs systematically solicit associate input, identifying and meeting realistic needs.

Government agencies of various kinds monitor the rights of associate groups. Occupational safety agencies, professional licensure groups, and equal employment opportunity agencies are among those entitled to access to the HCO and its records. The National Labor Relations Board and various state agencies establish rules for relations with unions. HCOs must comply with all those requirements.

Other Customer Partners

Health Insurers and Government Payment Agencies

Health insurers and government payment agencies provide most of the revenue to HCOs, making them essential stakeholders. Two large governmental insurance programs—Medicare and Medicaid—are essential partners for most HCOs. The federal Medicare program deals with HCOs through payment agencies called fiscal intermediaries. Medicaid, a state and federal program that finances care for the poor, is run by the state Medicaid agency or an intermediary.

Payment organizations seek the lowest possible price. Recent changes establishing incentive payments have allowed them to press for improvements in quality and safety as well. The Affordable Care Act (ACA) encouraged new approaches to addressing chronic disease care and HCO accountability for the cost and quality of care. Payers increasingly use value-based insurance design, which rewards HCOs for performance.¹⁹

Buyers

Much health insurance is provided through employment, making employers important stakeholders. Employers pay a large share of health insurance premiums. They must meet the demands of their own stakeholders, so they have encouraged value-based insurance design. They often also serve on HCO governing boards, where they must balance the HCO needs of the community with the needs of their companies’ stakeholders.

Regulatory and Accrediting Agencies

Regulation of HCOs and their associates is provided by a wide variety of groups and agencies, both public and private. For example, all states license HCOs that provide any inpatient care. LIPs and many support specialists are licensed through state-administered examinations and programs that establish national qualifications. Many states have certificate-of-need laws requiring HCOs to seek permission for construction or expansion. Quality improvement organizations are external agencies that review the quality of care and use of insurance benefits for Medicare and other insurers.

HCOs are subject to many consumer protection laws, including the Health Insurance Portability and Accountability Act, which addresses major issues of privacy and security of protected health information. The Emergency Treatment and Labor Act requires all HCOs providing emergency care to accept all patients, regardless of ability to pay, until they are stabilized and can be safely moved. HCOs are subject to antitrust law; large mergers or consolidations are reviewed by the Department of Justice and the Department of Commerce. Not-for-profit HCOs often occupy facilities that, if taxed, would add noticeably to local revenues. The community