Diagnosing Chaos: My Trip Through the Healthcare System

We were riding deep in the North Carolina mountains on a no-name ribbon of asphalt tracing a contour in cool shadow. There are two cardinal rules when taking turns on a motorcycle. The first: Do Not Go In Too Hot. The second: Look Where You Want the Bike to Go, NOT Straight Ahead. You riders out there know the consequence of violating rule two. The bike straightens up and forgets all about making it through the curve.

I bent rule one and shattered rule two. I crossed the road onto gravel and went down – hard – on my right shoulder and side. The pain was bad, bearable, and unusual. Fair warning that all was not well within. The bike was hurting too, but the frame wasn't bent; the important controls were intact, and it started. Such loyalty I did not deserve.

With no level one trauma center in the 'hood, my faithful and graciously non-judgmental buddies decided we should head back to Raleigh. I dry swallowed 2 oxycodones from my first aid kit, used my left hand to lift my strangely uncooperative right arm to the throttle, and u-turned toward the interstate slab and its 250-mile straight shot home.

My wife, exuding an exquisite blend of concern and reproach, drove me to the emergency room. That is where this story begins. It is a story of my now eight-week relationship with the healthcare system and an interesting test case for the existence of Chaos as described by Thomas H. Lee, M.D., a Harvard professor and CEO of Partners Community Healthcare.

In a recent interview with Harvard Business Review, Lee contends that chaos is brought on by the overwhelming amount of information and technological innovation flooding into a disconnected community of providers and physicians. Like Lucy and Ethel on the chocolate candy production line, providers and physicians are unable to assess and selectively assimilate legitimate innovation into improved standards of treatment. Lee believes that the resulting confusion – chaos – leads to poor communication, overuse of tests, low levels of standardization, inefficiency and high cost.

Lee says that the way to attack chaos is twofold, a dual revolution of sorts. The first revolution is a cultural one, where autonomy is replaced by collaboration and seamless communication. The second he likens to the industrial revolution, where the assessment of new technologies is centralized and graded on the basis of diagnostic accuracy and therefore improved outcomes.

It was still early on a Saturday evening and the ER wasn't crowded. I was triaged by an LPN then put in an exam room, my home for the next three hours. After a "what-did-you-do / where-does-it-hurt" debrief by an RN, I went to have x-rays taken. A PA came in 30 minutes later to tell me that the images showed no broken bones. This did not jibe with my level of discomfort, but I thanked her for the good news.

The RN brought in an arm sling and started to Velcro me up. We were still adjusting when the PA returned, looking a bit sheepish. By then my images had been reviewed by a radiologist on the main campus five miles away. (I assume this is SOP, despite the earlier ill-timed bruised muscle diagnosis.) Turns out I did have broken bones: three ribs and one snapped scapula. All broken parts were aligned. Good news. But the undisputed pain leader, my shoulder, remained a mystery. To me, anyway.

With the discovery of broken bones, my ER status surged. One of the ER physicians came by to probe me for internal abdominal injuries. Finding none, he urged me to see an orthopedist on Monday and let me go home.

I'll move quickly through the ensuing eight weeks:

Week One – First visit to orthopedist. Patient stops by ER on the way and hand delivers disc of x-ray images. Patient complains of shoulder pain. Doctor (a saint) believes him and orders MRI.

Week Two – MRI sheds light on shoulder mystery and proves patient is not a cry baby. A fifth fracture is found in the acromium (a bone patient wishes he had never heard of). Better fitting sling prescribed.

Week Three – Another set of x-rays taken at doctor's office. All bone parts appear to be aligned and healing process is beginning. Patient hums Beatles 'Come Together' on way out.

Week Six – Patient complains of continuing pain in shoulder. Another set of x-rays taken. Acromium healing, but doctor very concerned when x-rays show the scapula fracture is now misaligned. Doctor orders CAT-scan.

Week Seven – CAT Scan shows that scapula fracture is, in fact, misaligned but healing is advanced, indicating misalignment took place at time of trauma.

Week Eight – Patient experiences marked decrease in pain level during week. No longer constantly curses acromium. Wears sling sporadically, primarily to elicit sympathy…marginally successful.

Ongoing – Next doctor visit in 2 weeks. Patient's muscle atrophy triggering nightmares with themes of emasculation. Counting down the days for green light to gym.

So, in bringing "I Should Be Dead By Now" to a close, is my experience a case study in support of Dr. Lee's Chaos theory? Each of you can draw your own conclusions. Mine are still a work in process, as my visits continue and my diagnosis/prognosis is still a bit uncertain. I do know that the aggregate cost will be very high, perhaps reaching five figures. The ER visit alone was billed at an astounding $1,800. I have had four series of x-rays, one CAT Scan, and one MRI with another one looming. To date, my diagnosticians have included a PA, two radiologists, and an orthopedist. And worrisome residual symptoms leave me concerned that they haven't completely figured me out yet!

I have to believe that a better culture of collaboration would have resulted in a more accurate, timely, and less expensive diagnosis. Future technological innovations surely will enable injuries like mine to be evaluated in one session. However… since my actual treatment to date has been to wear a sling, will this future technology pass the cost/benefit test? The answer to that question must come from a centralized and respected source, supported by the entire provider community. And if the answer is "yes," new diagnostic protocols must be communicated and implemented system wide.

How do you change the world?

My neighbor's son, a 28-year-old First Lieutenant in the Marines, recently returned from his second tour in Afghanistan. This handsome, unassuming young man, whom I've known since he was a toddler, wears the Bronze Star. Chris was honored for numerous acts of bravery during the 40 firefights his platoon engaged in over a single 30-day span. During one, Chris shielded his wounded sergeant with his own body as he called in close air support.

Chris' extraordinary courage reminded me that outcomes are more often determined by the acts of individuals than by the masses. On D-Day the landing on Omaha Beach was very much in doubt – the planned second landing was canceled because the situation onshore was so dire – until a few individuals began moving on their own initiative over the sea wall, through the mine fields, and up the hills. Those individuals became small groups; small groups merged until an entire invading army moved inland.

Indeed, we are often inspired by witnessing the initiative of another, because their simple act reveals a rightness that compels us to follow in step. And, sometimes, with that first step our attitude or sense of self or way of living changes forever.

When I was very young I took a road trip with my parents and two sisters into the Deep South to the historic town of Charleston, S.C. At a gas station stop on the way into town I had my first encounter with raw racism. To this day I remember the wave of fear, revulsion and vague guilt that hit me as I crawled out of the back seat and stared at the "Negro" and "White" labels over the bathroom doors. A "whites only" sign hung on the water fountain in the park across the street. I don't remember that I said or did anything – other than get a drink of water.

On December 1, 1955, in Montgomery, Ala., an African-American woman named Rosa Louise McCauley Parks, a 42-year-old seamstress and secretary of the local chapter of the NAACP, refused the driver's order to surrender her bus seat to a white passenger. Her simple, spontaneous act of civil disobedience sparked the Montgomery Bus Boycott, and eventually another piece of the Jim Crow "separate but equal" perversion ended. Years later Ms. Parks sought to clarify why she broke the law. "People always say that I didn't give up my seat because I was tired, but that isn't true. I was not tired physically, or no more tired than I usually was at the end of a working day. I was not old… No, the only tired I was, was tired of giving in (italics mine)." Not so different from the men who left the shelter of the sea wall and saved America from defeat on Omaha Beach.

Certainly, there is no direct transition to the healthcare supply chain from here. That would dishonor my neighbor Chris as well as those who suffered and died in World War II and America's Civil Rights Movement. But there is a legitimate point of comparison, I think, which is the extraordinary impact of the acts of a few. There are supply chain leaders – a handful spawned a growing consortium – who are rejecting long-accepted industry practices in their determined pursuit of efficiency and savings.

It has been (and probably still is in many organizations) a career-threatening act to propose consolidating control of all non-labor spend under a single leader, or to implement self contracting, or to build a self-distribution infrastructure. But a handful took the risk, and they marked the path up the hill for others. The rightness of these innovations has given impetus to a movement that has progressed well beyond the tipping point. And it is a movement that will transform our industry's best-practice standards.

Exercise and the Power of Behavioral Economics

For years it was "Reach the Summit." Then, at about 40, came "Hold the Line." Now, as I approach another post-50 birthday, I have my hands full with "Slow the Decline." It's getting tougher, folks!

Since my college years I have hit the gym several times a week. And there are always days when it is harder than usual to step on the stair climber or lift the bar bells. That's when a little friendly competition works miracles.

If you exercise with a partner you know that friendly workouts inevitably ratchet up to a contest of relative might and pain threshold, usually without either party even realizing it. When my friend finishes a set of bench presses, I'll casually add 5 pounds on either side before I lift. Likewise, when he sees me in a lather of sweat after 30 agonizing minutes on the treadmill, he'll run for 45.

This spirited game of one upmanship we play in the gym closely parallels the classic pattern of Behavioral Economics, i.e., using tools like simple reminders, social pressure, and rewards to gently nudge us to behave in desired ways.

I most recently read about the pattern in the Harvard Business Review Insight Center report (March 2010) entitled Health Care Innovations. The report highlights the impact that peer pressure played on a large practice in Boston.

A group of doctors were shown data revealing a large variation in how much each of them used certain radiology tests. It "called out" those who used radiology in excess and in turn empowered more moderate users to question these colleagues about their more indulgent diagnostic and treatment protocols. This peer-to-peer interaction led to a 15% decline in radiology use by this physician group.

We know of a similar example from a large, geographically dispersed hospital system where the price and lack of standardized physician preference items were a particular challenge. In an initial effort to rein in spending without resorting to strong arming physicians, the materials managers made a list of preference items for a particular procedure and then, each week, printed out usage and price by physician. They placed these charts above the scrub station for each surgeon to see.

The conclusions were obvious and significant. Physicians saw that, while most were using lower-cost items effectively, there was a subset using high-end (and high dollar) PPIs with no better outcomes. Over the next few weeks these high-end outliers began moving toward their lower-priced peers. And nobody had to say it! It just happened!

An additional benefit: physicians considering using a more expensive equivalent product offered by a competitor knew that that product's price and their name would soon appear above the scrub sink for all to see. A very effective counterbalance to the sales skills of the product company rep!

This subtle form of peer pressure has been around a long time and very few of us are immune to its power. Yet it is non-confrontational and instead leverages our common human nature. I highly recommend it to complement other methods you may use to convince surgeons to standardize. The same Behavioral Economics that drive me to match or exceed the performance of my workout buddy can be a major cost reducer in the OR.

Finding Your Organization’s Secret Agents

In the last month I have attended two important industry events, the IDN Summit and Expo in Orlando and the annual MediClick User Conference in Raleigh. Both invigorated my long-held belief in the value of stepping beyond the walls of our comfort zones on a regular basis to spend time learning from our customers and colleagues.

Stepping out, so to speak, is without a doubt the best way to find out about new ways to solve common problems; and even better, to find out how to solve problems you didn't even know you had.

There is a concept called Positive Deviance, which Dr. Jon Lloyd, surgeon and senior clinical advisor with the Plexus Institute, discussed during a Summit session in Orlando. Positive Deviance teaches us how to identify individuals within our community, discover their uncommon practices that lead to success, and then use these practices to facilitate our own particular solutions and improvements.

Positive Deviance is all about "bottom up" problem solving. (I do like the term – it can be construed as an oxymoron in certain contexts or an apt description of the personality of a good friend!) Before I apply Positive Deviance to the healthcare supply chain, let me share one of Dr. Lloyd's examples of how well it can work.

Lloyd, a member of the Positive Deviance Initiative Advisory Board, used the epidemic of childhood malnutrition in 1990s Vietnam to describe the concept in action.

The Vietnamese government asked Jerry Sternin, Asian Director of Save the Children Federation, and his wife Monique, to find a solution to a major national crisis. An astounding 85% of children under the age of five were moderately to severely undernourished.

As experts sometimes do, the Sternins could have studied a subset of "representative" villages, formulated causes of childhood malnutrition and comprised a list of best practices to be implemented by the government nationwide. This, of course, would be the classic top-down approach.

Instead, the Sternins formed a team of individuals from four villages and worked closely with them "on the ground" to understand and solve the crisis from the bottom up.

The team identified families whose children appeared better nourished than the general village populations. Through a series of interviews with these Positive Deviant families, the workers discovered a list of common practices: adding available sources of protein like shrimp or peanuts to the regular diet of rice, feeding the children more than the usual two meals per day, and feeding kids more – not less, as was the custom – during bouts of illness.

Then, instead of printing up a list of best practices, the Sternins helped organize several community dinners where the rice was provided. The price of admission: a protein source. This motivated villagers to get in the habit of gathering protein, an act that enabled them to quickly solve their own nutrition problems.

The Positive Deviance approach worked. Understatement! Malnutrition rates dropped from 85% to 15% in just three months!

Dr. Lloyd's story came to mind two weeks ago when our customers met in Raleigh for the MediClick User Conference. I must tell you I stand in awe of our customers and what was accomplished together in the three days they were with us. The one-on-one coffee break exchanges, the customer-taught classroom sessions, and the peer-to-peer interactions enriched everyone, and they revealed ways we could improve our products and our company. The power of Positive Deviance was bountiful.

Let me share one example, which I was witness to by virtue of buying the beers. A supply chain director at a large teaching hospital that had recently gone live on MediClick for the Supply Chain could not get his requisitioners – usually nurses with pressing clinical duties – to look at existing backorders before placing a requisition for out-of-stock items. The nurse on the 1^st shift sees an item is out of stock and orders it. The nurse on the 2^nd shift, seeing that the item is … yep … still out of stock, walks over to the computer, enters the same requisition again, and hurries back to his clinical duties WITHOUT glancing a couple of columns over on the order guide to see that the item is ALREADY backordered. Net result: they need 5 but end up with 10, creating yet another pocket of expensive inventory bloat.

Over our vintage IPAs the MediClick newbie shared his problem with another MediClick customer. This more seasoned veteran explained how she solved the very same dilemma by using a clever teaching approach to get the folks on the floors in the habit of checking for existing backorders before pushing the "finish" button. She also talked about her high-impact meetings with the departmental managers as she showed them the havoc that inventory bloat was wreaking on their monthly expense reports. Best of all, she exuded an empathy that made the new guy realize he wasn't the first one up this creek, and she gave him the paddle.

I spent three wonderful days with our customers, on the front line if you will, and it only strengthened my conviction that they are the ultimate source of uncommon solutions. I'm not sure that they would cotton to being considered Positive Deviants, but our customers are indeed consummate change agents.

Your Positive Deviants are out there, too, brimming with knowledge. They are patients, and they are also the nurses, techs, engineers, cleaning staff, even physicians from our own organizations or others. Seek them out, sit down for a chat, and be inspired by what you learn that can help you create a better supply chain.

Just as the villagers who were motivated by the improved health of their children, once you start, you won't stop – the successes and flow of ideas are addicting. And upon your next promotion, make sure to shout out a big thanks to your allies and enablers: those lovable Positive Deviants.

Innovations in Healthcare Supply Chain Contracting: Part IV

Nick Toscano – Considering Self Contracting? Some Advice

Nick Toscano has developed a reputation as the go-to guy for IDNs considering non-traditional options for their supply contracts. We saw him last week at the IDN Summit in Orlando where we heard other attendees address him as the "father of the integrated service model."

His consummate modesty makes him slow to embrace such a lofty title, but there's little doubt that Nick has parlayed his 30-year career with health systems in New Jersey to become a respected voice and trusted advisor to hospital executives looking for guidance on supply chain strategy.

As part of our series on innovative supply chain contracting, we asked Nick to share his thoughts on self contracting, the impact of committing volume to suppliers and the importance of clinical integration in the supply chain.

MediClick: Is there a provider profile you use to determine what IDNs would be good candidates for self contracting?

Nick Toscano: One of the main criteria is spend, which should be within the $150-200 million range at a minimum. But you need to determine what approach works best for your organization.

Some systems have implemented a hybrid self-contracting/GPO model. They use the GPO for commodities so they can focus on the physician preference items. There's nothing wrong with that. It's an issue of the level of investment and commitment you want to make. If you can go after 70% of your med-surg spend, that's a great start. It doesn't have to be $150 million.

But contracting is just a piece of clinical integration. It's an element of strategic sourcing, utilization management, patient demand factors and clinical outcomes — all things that drive to the value chain and total cost. You need a team of qualified folks to measure and monitor that because what is perceived as the lowest product costs can frequently drive high overall costs without the clinical oversight. Clinical Integration processes are about documenting the efficacy and overall effectiveness of products to the care delivery process and patient experience.

MediClick: How were you first exposed to the self contracting model?

Nick: I was with a large multi-hospital system in Atlantic City and was recruited to be COO of the New Jersey Hospital Association (NJHA) cooperative, the largest regional group purchasing system in the country at that time.

NJHA was different because it used a committed volume contracting process. Participating organizations had to commit their volume to RFPs and contracts up front. We had to qualify products, especially clinical products, so we started the value analysis and clinical integration process. We were one of the first organizations to do that.

We had teams of folks, including clinicians, who supported the process and pre-qualified products. We were able to commit an 80% of utilization rate to suppliers. We enjoyed participation and high compliance levels that were unheard of in the industry at that time. Other GPOs simply awarded multiple source contracts and didn't have the compliance levels that we did because they weren't committed volume organizations. They were trying to create critical mass and leverage their spend based on certain commodities to get a better price. At that time, they didn't have an integrated clinical process or clinicians who supported the effort.

MediClick: NJHA was ahead of its time in how it collaborated with clinicians. How did you accomplish that?

Nick: Our supply chain officers as well as our board – which was made up of CEOs of New Jersey hospitals – recognized that in order to build a sustainable model we needed to engage clinicians in the process. We needed them to understand that we're not necessarily looking for just a low price product; we're looking for a product that they would utilize – one that offers value in patient care.

We also had a significant burning platform in NJHA. At that time New Jersey was the first state and pilot program for the Medicare DRG system. So needless to say, our CEOs were very motivated to get their cost structures in line with the new revenue stream.

In the past, clinicians had been made to feel that purchasing wanted to buy the lowest price product without consulting them or evaluating the quality. So we went through an extensive change management process to understand each other's roles and respect each other's needs while collaborating around the patient.

It took time to get clinicians to participate, especially the physicians. We had a group of nurses that were engaged but few physicians. But over time it grew.

MediClick: During your career, when did you break away from the normal mode of operations and start seeing self-contracting as a viable business model?

Nick: I went back to the provider side to work for one of the largest multi-hospital systems in the state, West Jersey Health System. Because they collaborated with NJHA, they were used to the committed volume process. As innovators, they wanted to expand it and get their arms around spend by integrating with their medical staff.

WJHS eventually merged with Memorial Health Alliance to form Virtua Health, an organization that had a more integrated supply chain and allowed us to leverage our spend across the network.

Because this new organization would bring about significant market share, the federal government required us to complete a Community Benefit Report to ensure the new organization would offer community benefits. We committed a large portion of our report to reducing overall supply chain and healthcare costs in the region.

We knew that our traditional business model wouldn't get us there, but it was a challenge to buck the industry trend and set up our self-contracting model. So we decided to work with manufacturers who saw us as early adopters. We got two of them to help us develop our integrated contracting approach. When the industry players saw two large manufacturers collaborating with us, they started paying attention to the model, understanding it, working within it and driving results.

We started self contracting and focusing on physician preference, more committed volume and more standardization. Then because we could offer market-share improvement, we were able to leverage our direct relationships with suppliers to support good utilization management. You become the customer to the supplier, whereas through the GPO you're just another hospital name on the contract.

MediClick: You learned at NJHA that to get committed volume and save costs you had to have clinician buy in. How did you build trust among clinicians at Virtua?

Nick: Our clinicians felt the national contracts rarely considered their real, local needs. They needed a voice to influence decisions. So at Virtua, we focused on the local needs of the physicians. It wasn't simply about reducing prices. It was about supporting patient care in a high-performing healthcare system.

Since we knew that anyone working with patients was busy, we committed to the clinicians that we were going to put the right people in the right place to give them a voice. We developed a supply chain clinical team, full-time clinicians with great clinical experience and a commitment to work with physicians.

Virtua became one of the first health systems to have full-time clinicians within the supply chain.

This accelerated our cause more than anything. Our infrastructure enabled us to monitor utilization and contract compliance. When we went off contract, it was for a clinical reason. That didn't happen often so we were able to stick to our 80% commitments.

I am proud to tell you that today Virtua Health remains an industry leading supply chain/shared services practice.

MediClick: What kind of advice do you have for anyone thinking about self contracting?

Nick: First, it's imperative to have the support and commitment from your senior leadership. And it's not just the CEO or CFO who need to support you, it's the other stakeholders who need to understand and support what you're trying to accomplish because they will drive success.

Then you must build the business case. Build the plan. Build the justification. Articulate the investment and the ROI in ways that will show financial and performance-level returns.

Your infrastructure must allow you to monitor your progress. You need to be able to see the spend analytics, measure compliance and track success.

Shape the vision so stakeholders understand how this model will build your relationship with physicians. Get the right people on the bus with you – qualified clinicians who have a commitment and a passion for this. Communicating this is extremely important. Don't make assumptions that people know the good work that your team is doing.

Innovations in Healthcare Supply Chain Contracting, Part I

Hallmarks of Innovative Contracting

The final throes of the healthcare reform legislative drama wasn't pretty; frankly, I wasn't sure if I was witnessing landmark policy change or unbridled political blood-sport. It was easy to get caught up in the seamy soap opera theatrics and lose sight of the implications the new legislation has for our nation, our system of providing care, and the life work of people like you and me. I confess to being unsure still about what it means for the healthcare supply chain. I have, however, run across an excellent resource put out by the Kaiser Family Foundation (http://healthreform.kff.org/) that's helping make some sense of it all. I encourage you to check it out. It's long on the info and very short on the bias.

Was I "for" or "against?" Well, within the limits of my understanding I guess you should put me down as a "for." Not because the legislation fixes health care – or our national debt – but because it starts the process. And a start is better than nothing. Yes, I am dismayed that there is an unhealthy skew toward the benefit/entitlement side of the ledger, but I also believe that increased focus on cost reduction and efficiency will follow. Because it must. The directive to do more with less (and to do it better) has only intensified. The supply chain executive has a huge role to play. If ever there was a time for innovation, for thinking outside the box, for responsible disruption, it is now! Which is why I am pleased to introduce our next series on the Take Control blog: Innovation in Healthcare Supply Chain Contracting.

Over the next few weeks we will feature interviews with supply chain leaders of several IDNs that have chosen to approach contracting in their own ways, disrupting the status quo in the process and attracting the attention of others with their positive financial results.

Several common themes have emerged in our interviews, themes that we are coming to recognize as hallmarks of the best supply chain leaders. Here are some of them:

They pay attention to the wants and needs of the clinicians but understand when to stand their ground.

They know that the supply chain is an integral part of providing quality patient care, and their stature and authority is commensurate with that role. They work hard to understand what clinicians need to do their jobs and how they think. In an atmosphere of mutual respect, the effective supply chain leader is the recognized point of convergence for patient care and fiscal efficiency. Though seldom needed, the effective supply chain leader retains the power of "no."

They have a willingness to partner with key suppliers, achieving optimal pricing and delivering on committed levels of volume and market share.

These innovators recognize the value of empathy and transparency as a prerequisite for win-win business relationships. Each of the people we interviewed talked about the need to make (and keep) a compliance commitment to supplier partners. In return they expect the best possible price, often achieved by frank discussions of manufacturer profit margins and procedure reimbursements.

They have earned and maintain the support of their executive teams.

Each of the supply chain leaders we interviewed brought up this point several times. Without executive support, they said, it's nearly impossible to introduce any meaningful innovation to the contracting process. They each worked hard to earn the support of their organization's C-suite, and they each have become quite skilled at communicating results in a way that helps maintain that support.

They invest in the infrastructure needed to manage contracts effectively.

Supply chain innovators know it is impossible to manage change without the right supporting infrastructure in place. To run an effective contracting organization – one that brings significant reductions in overall supply costs – they invest in the right people and put them in the right positions, and they enable maximum focus on achieving meaningful, measurable results by equipping their staff with the best technology tools.

 

Enjoy these interviews in the coming weeks. As always, I would love to hear your own thoughts on ways to foster greater innovation and responsible disruption in the world of healthcare supply chain contracting.

Something as simple as a checklist …

When US Airways Flight 1549 lost both engines after striking a flock of Canadian geese, crash landed in New York's Hudson River and all 155 passengers and crew survived, America hailed Captain Chesley B. Sullenberger III as a hero. Humble Captain Sully – as he came to be known – insisted that the successful crash landing, the Miracle on the Hudson, was a team effort by the entire crew.

As Harvard surgeon, journalist, and bestselling author Atul Gawande points out in his book The Checklist Manifesto, the captain's modest claims may be grounded in truth. But in addition to the heroic efforts of the cabin and passenger crews, another unlikely hero seems to have emerged. The checklist.

In his latest work, Gawande – who made tsunami-size waves last year with his New Yorker Magazine article on healthcare spending in McAllen, Texas (an amazing expose that I strongly suggest you read) – shows how adding a simple checklist to a standard process can save you from calamity by helping you make sound judgments and reduce the likelihood of errors. I admit that I am no list maker, never have been. But the results cited by Gawande are so powerful and unexpected that I am rethinking my approach!

Just like his piece about McAllen, Texas, Gawande's checklist idea raises eyebrows, and not just mine. As seasoned professionals with deep experience and understanding of our specialty, we can lay legitimate claim to our multitasking and performance-under-stress skill sets.

But Gawande's research proves that a simple checklist can benefit the most seasoned professionals. He recounts how a checklist has saved lives, even within his own operating room. In fact, in eight test hospitals around the world, a ninety-second checklist before surgery reduced deaths and complications by more than one-third!

Interestingly, the research shows that much of the success isn't so much the checklists themselves, but rather the teamwork that the checklists help to instill in the individuals working together on a particular task. Before I bring this teamwork idea to the supply chain, let me continue to illustrate this point with the checklists used on Sullenberger's flight.

Sullenberger and First Officer Jeffrey Skiles had never flown together before the January 15, 2009 trip. Upon starting the engines at the gate, the two ran methodically through their checklists, which included introducing themselves to each other and to the rest of the cabin crew. Then, also as dictated by the checklist, they discussed the plan for the flight, any concerns, and how to handle potential trouble.

In taking these list-mandated steps, Gawande writes, Sulley and Skiles transformed themselves from strangers into an effective team. When trouble struck 90 seconds after takeoff, each team member knew his role.

We know something about roles in the medical setting, don't we? Thousands of professionals go to work each day to concentrate on making the appropriate diagnoses, ordering the right products, prescribing and administering the right medications, and performing successful procedures. We focus so intently on our particular specialty that it can be easy to lose sight of the intricate interdependence of our roles in achieving the end game: the delivery of quality patient care.

The value analysis process provides a good case study in microcosm for this interdependence. The committed collaboration of supply chain professionals, clinicians, physicians, and financial analysts toward a common goal can produce dramatic breakthroughs in standardization and cost reduction. Many of us have seen this. We've also seen similar VA efforts end in failure.

So how does a checklist, which many of us consider as a way to get the "dumb stuff out of the way," help individuals expand their preoccupation with core competency and enable them to function as a cohesive unit? In many team situations, Gawande suggests that the first element be that of introductions: name, title, role. That's what the crew of Flight 1549 did.

Introductions are not perfunctory. Psychological studies have uncovered something profoundly simple: when individual members of a group don't know one another's names, they don't work together nearly as well as when they take the time for introductions. When you know someone else's name, you automatically establish a human connection, and the quality of your communication with that person increases significantly.

In a team setting, this goes a long way in coming together to carry out a common mission. Gawande has noted in his own practice that, when given a chance to introduce themselves and voice any concerns at the beginning of a case, the participants in a surgical procedure are more likely to note problems and offer solutions, and in real time. Much as a co-pilot is responsible – per the checklist – for verbally confirming changes in course, speed, and altitude made by the pilot, a checklist puts pointing out surgical errors squarely in the line of duty.

Consider the benefits of the checklist to value analysis teams: it establishes the category of product being evaluated – commodity or PPI – and what the requisite data is for each. It ensures that the whole team clearly understands the decision criteria. It establishes a time line. It identifies follow-up activities to measure time to conversion. And so on.

"Man is fallible," Gawande writes, "but maybe men are less so." Good stuff.

It was good stuff for Flight 1549, too. First Officer Skiles tried to restart both engines, as airline protocol (yes another checklist) dictated. But if Sully and Skiles didn't perform the pre-flight checklist in which they introduced themselves and became a team, then perhaps both men would have reacted by attempting to re-start the engines at the same time. No one would have been solely focused on gliding the plane safely into the Hudson.

Give a checklist a try, and please let me know how it works!

Campfires and Supply Chain Innovation

When I was a boy, our family did a lot of camping. Tent camping – the real thing. I loved it, not realizing it was the only type of vacation we could afford. My dad was a lowly resident at Duke, and money was carefully titrated. Our weekly dinner menu seldom changed: meatloaf Mondays, creamed chip beef Tuesdays, tuna casserole Wednesdays, and the dreaded fried liver Thursdays. No amount of ketchup could ever squelch my Thursday gag reflex. (To my mother's credit the "special nights" of fried chicken and spaghetti were rapturous.) Camping was different though. Anything cooked over an open fire in the great outdoors tastes good. Even beanie weenies in an iron skillet.

I loved camping. It taught me good lessons about being happy with simple things and about self-reliance. Take the ritual of starting the family campfire. It was a rite of passage ceded solemnly to me by my father when I turned 12. The pressure to perform was immense – success signified manhood, failure unleashed the merciless ridicule of my 2 younger sisters. The ritual began with the painstaking selection of kindling and the studied arranging of rocks for the fire pit. Then, at a moment when the air was still, I would ease a thumb-struck wooden match into the nest of dry leaves, nurture the frail glow breath by breath, twig by twig and stick by stick … until the flames finally danced hot. Only then would I step back and bestow on my family the gift of fire.

The memory of campfires came back to me last week at MediClick's first Strategic Partners Forum, an extraordinary gathering of innovators who are leading by example a mission to transform the healthcare supply chain. I watched as the group, initially tentative and polite, progressed into a candid and spirited exchange, demonstrating keen insight into the problems of the healthcare industry and accepting a shared recognition of their status as role models for change.

It is my experience that profound change often begins as a single spark, but it is fueled to critical mass by the unique power of peer-to-peer interaction. By collaboration.

This is true in many of history's most acclaimed developments. Rosa Parks' refusal to give up her bus seat is my own favorite. In healthcare, Scottish biologist Alexander Fleming's 1928 accidental discovery of the penicillin fungus was actually pretty inauspicious, until others revisited and expanded upon his work some time later. Ultimately, the deciphering of penicillin's chemical composition and refinement of its therapeutic action led to the age of antibiotics and launched an entire pharmaceutical industry. Experimentation, implementation, refinement, replication – all are fostered and accelerated by collaboration.

This is what I saw happening at the Strategic Partner Forum. Some of the members have implemented self-contracting and self-distribution models. Others are currently focused on bringing their market share clout to bear on preference items while relying on national GPO contracts for commodities. All are determined to improve their ability to prioritize opportunities, optimize pricing, measure savings, measure vendor performance, and calculate fees. All are interested in the impact of GS1 and government reforms. All have the courage and the vision and the commitment to lead the way.

MediClick may have supplied the spark, but the Leadership Forum quickly took on a character and durability of its own. I am confident that this forum – this Forum of Innovators – will become the recognized industry focal point for taking back control of the healthcare supply chain. Stay tuned for more.

Chuck Mauro at UNC Hospitals in Chapel Hill, NC: Redefining the Reputation of Materials Management

Chuck Mauro first joined the hospital business as warehousing supervisor in a hospital in New Brunswick, NJ, moving from industry to the healthcare field primarily because he felt there was something noble about working for a hospital.

He kept that noble feeling as he worked his way through supply chain roles in three different hospitals in New Jersey and Massachusetts before taking the director of materials management position at UNC Hospitals in Chapel Hill, NC, in 1999.

Having been without leadership for two years, much of the service the materials management department provided to the hospital developed a reputation for being unreliable and inconsistent. Additionally, for clinical staff, materials managers were seen as single-minded cost cutters who plowed through their initiatives without regard to clinicians or patients. There was a clear need for changing the hospital's mindset on the supply chain and developing more effective service delivery programs.

We sat down with Chuck to learn how he dealt with these issues at UNCH, what were some strategies employed to help develop a more clinically integrated supply chain, and how the relationship between physicians and materials managers improved.

MediClick: How are you working with the UNCH patient care providers to achieve your supply chain goals?

Chuck Mauro: It's very much a partnership between the clinicians and supply chain. It wasn't always so. That was quite frankly due, at least in part, to mistakes made on our side. People in my position would just try to plow ahead thinking we could save a couple of bucks without necessarily considering the clinical end.

So when I joined UNC, I saw the need to demonstrate to clinicians the value in procuring and utilizing products more cost effectively. One of the first big things we did was to convert our contract for infusion pumps. We were with a particular manufacturer for 20 years, and nursing was very comfortable with the product. When we looked at the market we felt that there was significant opportunity to upgrade our technology and reduce our overall spend for this product group. We therefore went out to bid, and we ended up going with another manufacturer. I'm really glad to say that that award has proven to be very valuable to the hospital both financially and clinically over the past nine years or so.

But the equipment conversion was not without a number of difficulties. The nursing staff was very comfortable with the existing product. Many nurses found fault with the new equipment and resisted the conversion. One approach we took with them was "I want you to work with me on this, and I need you to play a key role in helping me move through and improve this process." Some of them wouldn't help me. But enough did.

No product conversion, regardless of the perceived superiority of the new product, will be successful without clinical staff buy-in. With the help of clinicians and administrators, we demonstrated that saving isn't necessarily painful, and something new and different isn't always worse than what you've got.

MediClick: How is it that you might take a savings initiative on a Physician Preference Item (PPI) from start to finish and how would you engage the physicians along the way?

Chuck: We start off by comparing what we're paying for a PPI product group against what other hospitals are paying in general and getting round figures that are not hospital specific. This gives us an idea of fair market price based on our volume, which isn't always the lowest price we see nationally. This research tells us if our pricing is good or if it needs to be 5 to 8 percent better. We then set a CAP price for each of the various component parts of that product group. In other words, that CAP price is the most we'll pay for each product in that group.

We don't release the CAP pricing to the manufacturers until we have buy-in from the physicians. We want the docs involved to understand the process we're employing and that we are not restricting their ability to select a specific manufacturer, as long as that manufacturer agrees to abide by the CAP.

We then send the manufacturers the CAP letter, which when executed by them, becomes our contract. For the most part, this process plays itself out without too much difficulty and is effective in driving down our costs. We did have one situation with total joints where we sent the CAP letter to four manufacturers and three of the four we sent it to refused to accept the CAP price. The fourth, which didn't have business here, agreed to it.

Our chief of orthopedics, who supported our plan, was not about to compromise. He told his staff that they'd be trained on the fourth manufacturer if their existing manufacturer didn't agree to the CAP. It was because of his belief and dedication to the process that the three holdouts did finally sign off on the CAP contract.

I always enjoy telling the story about one of the manufacturers who was particularly adamant that UNCH would never get the CAP price we were asking for. When we told them "Without your signature, your product will be removed from the shelf by midnight on Friday," they agreed to sign. Once he did so, I recall him saying to me "I hope that there are no hard feelings." I said "Well I never have hard feelings, but I have to tell you I'm a little surprised. You told me that there is no way we'd ever get this pricing." He just chuckled and he said "Well, you're UNC we can't afford to lose you." To me, that clearly demonstrates that good and amazing things can happen when clinicians and materials managers work together.

He didn't think we were in a strong enough position to enforce the CAP. But when he found out that the head of orthopedics was unrelenting in his support for the program, the landscape changed for him.

MediClick: What's the tenor of the relationship between the materials department and the clinicians and physicians today?

Chuck: When I first started in this business it wasn't unusual for a doctor or a nurse to insist that they needed to use one and only one specific product. Over the years that mentality has changed because clinicians now understand that if we can select a product that is clinically acceptable from a field of competitors then we can contribute to a healthy bottom line. As an old boss of mine used to say, "no margin, no mission." If we can't reduce expenses on an on-going basis, then that will adversely affect their ability to care for their patients. There's much more of a "let's work together attitude" now.

The key to any effective partnership is understanding that problems will occur and believing that you will be able to work through and resolve them. Once our internal customers saw that we held ourselves accountable for the level of service we were providing and that we were committed to process improvements, a greater willingness to work with us on cost reduction projects surfaced. Just as there is no such thing as the perfect contract, there is no such thing as a mistake-free service. Another boss I once had – and I've been fortunate to have had many truly excellent supervisors who acted as teachers and mentors to me – said, if you don't make any mistakes, you're not doing any work. We therefore always strive to remain transparent in our activities and foster a spirit of openness and cooperation between us, the financial end of health care, and the people who treat and care for the patient.

Another change that makes the job easier today than it was 15 or 20 years ago is the creation of the clinical materials analyst position – a position within materials management staffed by a registered nurse who acts as a liaison between the business side and the clinical population. She speaks their language. She knows about patient care, but she's also an advocate for good business practice.

Before this position, I had to beg a nurse manager to give me a few minutes of her time; what I wanted was usually very low on her list because she had tons of other things to do. Now the clinical materials analyst is able to work directly with the staff and really move on things like product trials and contract conversions.

MediClick: What are your challenges for UNCH in 2010?

Chuck: It gets a little tougher every year to find savings and to make money; we spend more on indigent care every year. We're up to about $300 million a year just on uncompensated care. That figure is likely to keep growing too. All of the revenue and expense trends are unfavorable to us.

So if we're going to remain a viable institution with a healthy bottom line we have to be more creative, we have to work harder, we have to really push the envelope in order to remain healthy.

That's why when I saw C&A [MediClick for Contracts & Analysis], I knew I was really going need it because, although I'm doing ok now, I'm not always going to be able to rely on the tools that I have now to take me where I need to go. I need to get out of my Volkswagen and get into a starship, and I think C&A is that starship for us.

With the help of C&A, we as the buyers finally have our hands on tools and information that are as sophisticated as the sellers. I've always felt that the vendors have had a leg up on us because they were able to spit out information much more easily than we ever could. That information helped them with their negotiating strategy because they knew information that we didn't.

With the implementation of MediClick for Contracts & Analysis, I often feel like I'm creating a new religion. I'm not normally taken to hyperbole, but I truly believe that the C&A tool opens up a whole new dimension on how we can do our business. It gives us not just information we've never had before, but it adjusts the way that we work and negotiate significantly. It changes our whole buying strategy and the contract landscape to the point where we see things with new eyes now. It's like we have these supercharged glasses and our whole vision has been substantially improved.

For example, prior to implementing C&A, we thought our master files had been pretty clean. Boy did we find out otherwise. C&A showed us that there were all kinds of funky stuff going on in there. In my mind that was all good. Everything we discovered that we thought was not a problem, all of the sudden we're finding that it needs to be fixed. It was extremely valuable to be able to – during the implementation –uncover things that we really didn't even know were going on with our own databases.

Take Control: One Phrase. Two Meanings

If you know much about MediClick, you know that our company's slogan, Take Control, effectively represents what our products do for our customers. For me, on a personal level, Take Control also has another meaning.

Twelve years ago, at the age of 41, a routine physical revealed that I was diabetic. The diagnosis was, and still is, pretty simple: if your fasting blood glucose level is over 140, you're diabetic. In those days any adult (a category that I qualified for solely by virtue of my age) diagnosed with diabetes was automatically categorized as a Type II diabetic. Only later was my diagnosis correctly changed to Type I.

My experience with taking control of diabetes, while personal, does have a strong parallel with our use of the slogan in MediClick's software solutions. The parallel brings up some thought provoking points regarding healthcare supply management.

Before I go there, though, I hope you will indulge me in a brief story of my diabetes odyssey, at least the first leg of the trip. I also have found that many folks aren't very familiar with diabetes, even though it has become an epidemic in the US, and virtually everyone knows someone who has it. So I threw in a little education as well, which I hope you find interesting.

Unlike Type II, Type I diabetes is an auto-immune disease, which means that something, likely a genetic anomaly, mistakenly tells your immune system to kill off insulin-producing beta cells in the pancreas. Insulin, when secreted into the bloodstream, enables the body's cells to absorb glucose – the most basic form of the food we eat. Yes, think of glucose as "cell food." Without cell food your body begins to starve. Not good.

Early symptoms, sometimes realized only in retrospect, include weight loss (duh), energy loss, and frequent urination. Without insulin the glucose stays in your bloodstream until filtered out by the kidneys and sent downstream, so to speak.

Over time, the high levels of glucose in your blood cause the BIG problems, including blindness, kidney failure, and heart disease. When I learned I had diabetes, I felt like a "why me" victim. I didn't go into denial, but I certainly did not face up to my new reality and take control.

Even after tests indicated that my body was producing very little insulin, I tried to control my new illness by taking oral medications and lowering my carbohydrate intake. While this regimen often works for the Type II diabetic, it is completely ineffective for Type I. For Type I diabetes there is one treatment and only one: insulin injections. Even so, I persisted in avoiding or delaying the dreaded shots. I didn't take control.

Ultimately, I realized I needed to make a change. Although initially traumatic, it really only took a week or so of 6-8 finger pricks and 4-5 insulin shots per day to become fairly routine. And I felt better almost immediately, so I was rewarded for taking control. Good old immediate gratification. Today, healthy and happy at 54, I feel very fortunate that I made the decision to confront my disease and control it, rather than being a victim.

Seeing my diabetes saga as a supply chain allegory isn't so farfetched. Hospitals are facing financial crisis, in part due to causes beyond their control and in many cases due to forces unforeseen. It's unfortunate, even unfair; but the crisis has to be faced, analyzed, managed, and conquered.

Forgive the redundancy from previous blogs, but the healthcare supply chain is a hospital's second largest operational expense; the amount of inefficiency (more kindly put as "the opportunity for savings") is massive; attacking these inefficiencies, i.e. taking control, will put millions of dollars to the bottom line. No revenue strategy can have as profound an effect on profitability and do it so quickly.

After resolving to inject insulin, in two weeks my bench press went up 30% and I gained 15 pounds of good weight; I felt great! Not so different from the endorphins you'll enjoy when you help change your organization's bottom line from red to black.

I believe that taking control of your supply chain boils down to two things. The first is to establish and ensure continual pricing accuracy. The second, joined at the hip with the first, is to employ the processes and disciplines necessary to achieve pricing optimization.

Pricing accuracy establishes your organization as the consistent and reliable source of truth: you have the most current contract price as your item file price, and in turn as your purchase order price. Discrepancies are, by definition, errors of the other party.

Pricing optimization means that you have taken full advantage of every asset available to you – your GPO membership, your spend volumes, your market share commitments, your product standardization projects, your commitment to transparency / empathy with your suppliers, etc., to secure the very best pricing on the products you buy.

Simple to say, tough to do. But I strongly believe – and I have seen compelling evidence – that achieving pricing accuracy and pricing optimization is possible. If you determine to take control, if you allocate and, if necessary, supplement your people resources, and if you have the right software tools at your fingertips, you will do it. The good news is that the opportunities to save are virtually inexhaustible. The other good news is that the savings start quickly and will be augmented with each new step.

A colleague and former vice president of operations at a large IDN recently told me about jump starting his accuracy-optimization mission. He chose for his team a specific target for these new processes, biomedical equipment services, which had an annual spend of $8.4 million. To make a fascinating story very short, within 3 months, the new "take control" disciplines resulted in the reduction of overall annual spend by $1.2 million! Needless to say, the team got fired up, and the CFO and CEO were ardent fans. Your first victory doesn't have to be this dramatic to get the same results. And as recounted by my friend, the first victory leads to a succession of others.

Like beginning a lifelong regimen of insulin shots, taking control of your supply chain pricing is not easy. But it is doable. And increasingly, it is necessary.

Final word, don't forget that the rewards are great, not least among them a profound sense of personal achievement.