Friday, August 22, 2008

Future - Viewing the Hospital of the Future through the Lens of Complexity

View your system through the lens of complexity.

Brenda Zimmerman, Curt Lindberg, and Paul Pizek, Edgeware: Insights from Complexity Science for Healthcare Leaders (VHA, Inc, 1998)

Hospitals will no longer be expected to just diagnose disease, prescribe medications, and perform surgeries. Rather hospitals will be part wellness centers, part hospice, part nursing school, part medical group. In short, patients and their families will want integrated features from across the provider spectrum.

Molly Rowe, “The Hospital of the Future,” Healthleaders Magazine, July 11, 2008

This is my 605th blog, roughly 604 more than medical world needs, for there is surely one remains worth savoring.

Nonetheless, on the other hand, the health care system is so complex, with so many niches, gaps, crevices, crevasses, chasms, hills, valleys, tectonic faults, convexities, concavities, choices, options, perplexities, innovations, opportunities, and problems to be solved and explored, that I persist in my quest to explain what is going on, in this case, with the hospital of the future.

In Innovation-Driven Health Care: 34 Key Concepts for Transformation (Jones and Bartlett, 2007), I devoted four chapters to hospital innovations.

• “From Hospitals to Physician-Integrated Hospitals” – In it I posed two big questions for hospitals and doctors: integration or disintegration? I suggest one possible solution: join together as equity partners in a large 25,000 to 50,000 ambulatory square foot facility known as a “Big Box.”

• “Making Rooms for Boomers” – Here I described the hospital building boom of new patient and eco-friendly hospitals designed for aging babyboomers.

• “New Partners for Building and Financing Big MACCs” – Big MACCs are Multispecialty Ambulatory Care Centers build to accommodate and to cater to affluent suburban and exurban denizens in underserved medical regions.

• “From Independent Specialty Practice to Hospital Employment” – Here I dwelt on the rush of primary care doctors and specialists alike to be employed by hospitals, and the innovative possibilities and perverse incentives of this model, which has become known as the “staff model.”

From the experience of writing these chapters, I concluded; when I am re-incarnated, I do not want to be a future hospital CEO. The job will simply be too damn complex for any ordinary mortal.

The future CEO will have to be a contortionist, with a finger to the wind, an ear to the ground, one eye on the horizon, one eye on the rear view mirror, a nose in the air, and all senses focused on simultaneous competition and cooperation with physicians. As the late Peter F. Drucker commented, “One cannot run a hospital with doctors, and one cannot run one without them.”

Then, too, there’s the fundamental managerial impossibility of being all things to all people and doing all things well. As Regina Herzlinger, Harvard Business School Professor and godmother of the consumer-driven movement, has noted, hospitals cannot manage diverse numbers of sophisticated specialized activities and do them all well.

Hospitals tend to view themselves at the centerpiece of community health – as coordinator and last resort of all things related to health and disease and the only facility open 24/7 to receive all comers. This is certainly true when one thinks of the emergency room.

But options to the hospital are continually opening up, in the form of retail clinics, worksite clinics, urgent care centers, ambulatory clinics staffed by specialists, virtual home care supported by monitoring technologies, and specialist-owned hospitals. .

These options are taking their toll on hospitals, which are seeing slowing growth and drops in the number of admissions. The great migration outside the hospital, towards more consumer-friendly settings outside hospitals, is gathering a head of steam.

At the same time, physicians are flocking to hospitals to be employed. This is understandable in this age of low physician morale, economic difficulties in managing physician small businesses, the harassments of managed care, dropping health plan reimbursements, mounting accounts receivable, rising practice costs, not the least of which are onerous malpractice premiums.

But hospital employment of mass numbers of physicians has perverse incentives as well. Hospitals may take 80% of physician production as overhead. Collecting only 20% of what one produces is not a powerful incentive for physician productivity and may result in physicians taking advantages of the fringe benefits of hospital employment – a short working week, more time off, more vacation. Many primary care physicians are turning to ER and hospitalists work, but the expense of these specialists is fast becoming a significant expense burden for hospitals.

Physician employment is not a potent stimulant for reducing overall costs. To maintain growth and produce a profit margin, hospitals often insist employed physicians channel all referred work, particularly high-ticket items such as CT, MRI, and PET scans and costly cancer care to in-house specialists and facilities. Hospital services are invariably more expensive than those offered on the outside.

Still, after all is said and done, hospitals in most cases remain the largest employer in any given town, and hospitals have access to the capital needed to survive in today’s hotly competitive environment. Well-heeled specialists, however, the main strut of hospitals’ profitability, may prefer to remain independent.

As I said in the beginning, being a hospital CEO in today’s complex environment is tough. As laid out in Edgeware, the CEO job requires flexibility with a good-enough vision of what needs to be done, balancing data and risk, dealing with physician diversity and differences, honoring safety and risk, taking multiple actions at the edges, paying rapt attention to gossip and informal physician relationships, and competing and cooperating with doctors at the same tie. It’s job for the hardy and hard-headed, and for someone with a deep knowledge of the physician

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