In last week’s post, I tried to reconstruct the thinking of the Atrius Health management team in early 2008. At that time we were writing a new strategic plan to respond to the uncertain future of healthcare. Over the previous decade publications like To Err is Human and Crossing the Quality Chasm: A New Health System for the Twenty First Century had sharpened our thinking about the vulnerability of quality and the fragility of the efforts to improve performance while we were trying to cope with powerful external forces that threatened our survival. It occurs to me now that there is some benefit in reviewing the “backstory” upon which our thinking evolved. I think the story is instructive at this time when once again so much seems uncertain. Consider it a “cautionary tale,” not a horror story.
I have slightly restated the list that I used in last week’s post, and I think this version is a more accurate recreation of our thinking In 2008. These principles and ideas were woven into a strategic plan for improving our performance on the six domains of quality in pursuit of Triple Aim. We were confident that if we improved performance on each of the six domains of quality we would be more successful in the pursuit of the ideals of our mission and simultaneously be more financially secure.
- Universal coverage will someday be a reality in America, and we are not prepared for it. We do not have a sustainable system of finance, or a care model that addresses downward pressure on performance from the combination of the financial realities of relatively lower rates of reimbursements, and the pressure on care delivery from increasing workforce shortages.
- The only solution that seems plausible is a redesign of the care model toward methods of better leveraging the professional skills that are available and eliminating waste.
- Fee for service payment is an impediment to progress.
- Eliminating waste and promoting operational efficiency, and working with like minded business partners in our “supply chain” will yield more resources for innovation.
- Workforce shortages, difficulties with developing workflows, and incorporating computers into the care model, as well as a dependence on fee for service revenue constitute a perfect storm for professional burnout.
- We must recognize that we are failing in our responsibility to make our efforts patient centric and redouble efforts to put them at the the center of all we do.
We would be a failure if we forgot that healthcare should be:
- Patient centered
As we collected our thoughts and began to write our plan, we were heavily influenced by the painful memory of the collateral damage that was sustained by our practice when our major source of patients, Harvard Pilgrim Health Care, went into receivership in the late nineties. To refresh your memory, the short explanation for that disturbing circumstance was that an aggressive management forgot about prudent actuarial practices. They attempted to sell coverage to businesses to increase market share for less than it cost us to deliver the care. I felt particularly bad because I had been on the board of Harvard Pilgrim and had recently been on its finance committee as the ship began to sink.
It had taken me several years to convince the board chair that a physician should be on the finance committee. My motivation was that I was concerned that you could not consistently sell a dollar’s worth of healthcare for 90 cents and succeed. Once on the committee I must have been pretty obnoxious because it did not take long for me to be asked off the committee as I continued to express my concern to the “business types” on the committee that the insurance company was headed somewhere we did not want to go. Other physicians and managers in the practice shared my apprehension, and fortunately our practice succeed in “separating” in early 1998 as a new 501c3 physician led practice, Harvard Vanguard Medical Associates. I had been the Chairman of the Physicians Council in the old formation and was the Chair of the Board of Trustees in the newly formed independent practice. At the time I had the mental image of our practice being like survivors in a small lifeboat desperately rowing as hard as they could to escape the vortex of the sinking ship from which they had just departed.
We did not get pulled under because the ship stayed barely afloat while we got away, hired a good CEO, Charlie Baker, now the governor of Massachusetts, and then passed him on to Harvard Pilgrim to be their CEO as a last ditch effort to avoid receivership. Baker did not have enough time to avoid the receivership, but through a remarkable exercise of managerial skill and political savvy he did enable Harvard Pilgrim to survive receivership and regain a new, and successful life that endures. In the end, both organizations survived and learned lessons that have enabled them to remain as assets to the community.
We remained very vulnerable after the separation, since over 95% of our patients came from Harvard Pilgrim. When employers and patients left Harvard Pilgrim for other insurers, they left us also because even though we were technically different organizations, we were essentially exclusive to Harvard Pilgrim patients. We had not yet established contracts with other insurers. Our patients who fled Harvard Pilgrim were in effect fleeing us also.
Recovering from losing many more than 100,000 patients takes a while, and excellent management. We were fortunate to hire a new CEO, Ken Paulus, who was able to articulate our value to our hospitals and to the insurers to whom many of our patients had switched. Paulus convinced our business partners to help us with grants, loans, and favorable contracts. Even with help our recovery was a challenge. I remember the years between 2000-2004 like a long, cold winter during which we “burned our furniture” for survival. Such an experience is a great motivator for the resolve necessary to say, “Never again.” Spring did come. Contracts began to yield year over year increases in revenue of 8-10%. We offered the opportunity to the other groups that were similarly struggling because they had also been exclusive, or semi-exclusive to Harvard Pilgrim to share with us the expense of IT, and other business functions, including contracting, and the result was Atrius Health.
“Once burned twice wary” probably best explained my mindset between 2004 through 2007 as I was continuing as the Chair of Harvard Vanguard, and starting in 2006, was also the Chair of Atrius Health. I hate to admit that I spent more time with the Finance Committee than with the Quality Committee, but I knew from painful experience that quality and all aspects of operations were most vulnerable to failing finance. The “nice thing” about feeling as if you are about to fail is that it sharpens your senses, and it is easier to define you options. Perhaps it is a dramatic stretch, but thinking got clearer and the job before us easier to define when our auditors announced to us in early 2000 that we were “not a going concern.” We were down to our last few days of cash, and making payroll in the near future was not guaranteed. The downside of such a near death experience is that it makes you hyper vigilant in future situations that seem similar in their uncertain to what you have seen before. That was where we were once again between 2006 and 2008.
I look back on the passage of Chapter 58 (Romneycare) in 2006, the act of the Massachusetts legislature that created virtual universal coverage with mixed feelings. It did make coverage possible for everyone through a complicated set of relationships that included a mandate, but it did not make healthcare an entitlement. It was definitely the prototype for the ACA. Not only was Romneycare a mandate rather than the expression of healthcare as an entitlement as I wished, but I was also concerned that the finance was not sustainable without a more focused effort to control the year over year increases in healthcare spending that we were experiencing in Massachusetts. Fixing the finance was always “step two.” That problem has never been solved. Medicaid spending in Massachusetts is now 40% of every tax dollar. Thinking prospectively about the impact of sudden universal coverage in 2006 revealed the likelihood of future uncertainty.
Perhaps that is enough stage setting to bring us to this moment. I do not know if a dramatic challenge is in the cards for your organization, but I can’t escape the feeling that trying times lie before most healthcare organizations. The picture with this post is of the emergency entrance at my local hospital. I have not yet gone through its portals, but I know that beyond those doors is more than medical uncertainty. This last year, for financial reasons, the long term care unit was closed. The hospital is affiliated with the Dartmouth Hitchcock Medical Center. There have been reports in the local newspapers over the last two years as Dartmouth has been working through its finances. All across America there are other systems where the story is the same. Important local resources are now challenged, or soon will be facing issues that threaten their mission and the quality of care that they can offer to the communities that depend on them.
I do not know if, or how, the announcement made recently by Amazon, Berkshire Hathaway, and Morgan Stanley will impact healthcare, but the uncertainty rocked several publically traded healthcare stocks on the day it was announced. What is more certain is that the fact that Amazon, Berkshire Hathaway, and Morgan Stanley feel the need to do something is an indicator that some kind of change may be imminent and is probably warranted.
I still watch what happens on healthcare boards, and I am filled with apprehension when I see balance sheets that look a little better, not because of improvements in operations, but because of the impact of investments and philanthropy. I remember what happened to our cushion when the market fell in 2008-9. Was the record breaking drop of over 1000 points this week the beginning of a correction that will quickly change the financial outlook of local providers of care? Is this the beginning of a 20% “correction?” Most people don’t really understand what Sister Irene Kraus was implying when she famously said “no margin, no mission.” Her point was about improving operations to the point that we could live off of the current revenue of our practice, and not depend on unrealistic increases in reimbursement rates, philanthropy, or investment returns for our survival.
As I look at healthcare now, I still see silos. I see many physicians who imagine personal success doing procedures in systems that are hostage to their ability to generate revenue. I see other physicians who scramble all day long to provide care for underserved populations with suboptimal resources in difficult environments. As everyone pursues their own best interest rather than the mission of their collective efforts and the best interest of their patients and communities, we suffer the potential of future failures, large and small.
I am beginning to get some of those itchy concerns I had back in the late nineties. The good news is that we know a lot more about the opportunities we have to make a difference. We still have waste to mine for “new resources.” We have examples of health systems that have proven the benefits of Lean and the discipline of continuous improvement science in the pursuit of quality, safety, and equity in the context of the Triple Aim. I fear that the most common attitude in boardrooms and management meetings is “let’s wait and see what happens” rather than, “its time to get busy, things are going to change fast!”