JJ Parsons Presbyterian Healthcare Services Vice President, Business Development & Contracting

1. Total Quality Management in Health Care Marketing How the Market’s Demand for Quality is Changing! JJ Parsons Presbyterian Healthcare Services Vice President, Business Development & Contracting jparsons@phs.org (505) 923-8512

2. Americans are more likely to want a new direction in health care even compared to the situation in Iraq! Source: Public Opinion Strategies (2007)

3. Healthcare Needs a Quality Focus • “The current healthcare system is economically unsustainable and negatively impacting our nation's ability to compete globally.” Craig Barrett, Intel Chairman, 2006. • The Institute Of Medicine estimates that44,000-98,000 deaths occur annually in American Hospitals due to medical errors.

4. Market Implications: • National and local healthcare reform and legislation • Market transparency of quality outcomes • Changes in Reimbursement • Increase focus by regulators • Increased competition by healthcare travel companies • Healthcare corporations focused on balanced scorecards

5. Don’t Try this at Home “Why are they always pushing quality on us?”

6. 1. National & Local Healthcare Reform & Legislation • Massachusetts • 2006 - First state to require health insurance and provide universal coverage • California • Governor introduced $12B universal coverage plan, but failed in Legislature in 2008 • New Mexico • Governor Richardson seeking healthcare coverage expansion but outlook in Legislature is uncertain

7. Insurance: National Scene • Rising healthcare costs • Evolving consumer role & interests • Importance of technology • Increasing government involvement • Increasing focus on quality & customers • Consolidation

9. Insurance: New Mexico Market - Overall • Increasing role of government including legislative bill and restrictions on profit levels of health plans • Higher percentage of individuals covered under government programs; lower reimbursement for these programs increase rate for Commercial market

10. Source: US Census Bureau & Center for Health Workforce Studies

11. 2. Market transparency of quality outcomes Who are the audiences for health performance information? Consumers…use this information at various points of interaction with the health system, from the time they choose a health plan to the point of selecting a health care provider for a specific service. Employers/Purchasers…want information to use in selecting from among various health plans, including the cost and outcomes of providers and quality standards.

12. Transparency (continued) Health Plans…want to evaluate the price and quality of all physicians, hospitals, and other providers. May also want to benchmark their performance on service and quality measures to their competitors. Providers…Hospitals, physicians, and other health care providers would benefit from more transparent price and quality information as a feedback loop for improved performance efficient or effective referrals. Policymakers…Federal/state officials for oversight and monitoring of provider and health plan performance.

14. Quality in Healthcare: Performance Scores (continued)

15. Response: Demand for Increased Transparency • Cost (IRS Form 990) • Collection practices • Community benefit • Tax-exempt status • Quality • IHI: “5 Million Lives Campaign” • Leapfrog: 27 Safe Practices • Never Events • Regulatory

16. 3. Changes in Reimbursement: CMS Halts Payments for Never Events • CMS – “The right care, for every patient, every time.” • October, 2007: 1st step toward preventing Medicare from paying hospitals for costs of treating a patient who acquires specific conditions during hospitalization. • “Never Event” Examples: • Objects left in surgery • Catheter-associate urinary tract infections • Decubitus ulcers

17. 4. Increased focus by regulators: Transparency of Patient Satisfaction Data Hospital Consumer Assessment of Healthcare Providers and Systems As stated by CMS and AHRQ: • “HCAHPS is a tool to be used for public reporting of major areas of hospital performance to support consumer choice” • “HCAHPS is not a stand-alone quality improvement tool” HCAHPS presents the symptoms—additional measurement is needed to make a diagnosis and improve.

18. Transparency of Patient Satisfaction Data • Consumers will have access to the data • Consumers will relate more easily to HCAHPS than to clinical data • Some will use HCAHPS data to choose hospitals • Will have volume, revenue, and reputation implications • HCAHPS will be in the public eye • Media coverage • Promotion by hospitals themselves • Reported for consumers on Hospital Compare Web site (www.hospitalcompare.hhs.gov) • Typical public report data are shown as frequencies • Hospital performance frequencies • National and state average performance frequencies

19. Transparency of Patient Satisfaction Data Public reporting will include the following six domains (March 2008): • Communication with Doctors • Communication with Nurses • Responsiveness of Hospital Staff • Pain Control • Communication about Medicines • Discharge Information The following four questions will also be reported: • Cleanliness of Hospital Environment • Quietness of Hospital Environment • Overall Rating of Hospital • Recommend Hospital

20. Don’t Speak in “Quality-ese” “It’s a vice-president thing, Berger.You wouldn’t understand.”

21. 5. Increased competition by healthcare travel companies Medical Tourism Plans Blossoming Around the country • Why? • Reduced costs • Ex: Open Heart Surgery in US: $100,000 Wockhardt, India: $7,500 • Way in which patient Treated • Care outside medical services includes: gourmet meals; laundry services; quality of room; hotel suite like room • Access to physician call phones - Opportunity to see new part of the world: “vacation” - Access to procedures not yet approved by FDA Source: ForbesLife

22. National Excellence Three Things Growth & Mission Staff Focus Customer Loyalty Clinical Outcomes Financial Outcomes • Commercial Sales • Throughput • Facilities/SM • Advanced Access • Customers First • Customer Loyalty • Bundle • Advocate • Hire Right • Rounding • TYN • 30/90 • Medical Safety • Clinical Bundles • Comprehensive • Diabetes Care • MCR • Management • Expense Control • PFS • Customer Count • Time to 3rd next • available • PHP Satisfaction • PDS Satisfaction • PMG Satisfaction • Turnover • Employee • Satisfaction • Mortality • Harm Rate • Diabetes AIC • Operating Margin • Day’s Cash 6. Healthcare corporations focused on balanced scorecards

23. Baldrige Criteria Framework: A Systems Perspective Leadership Triad Results Triad

24. MBNQA Applicants by Stage

25. Strategy: National Excellence Goals: 3 Things 1. Malcolm Baldrige Award 2. Top 10% in Patient Safety 3. “AA” Rating PresEssentials : Clinical Outcomes Financial Outcomes Customer Loyalty Staff Focus Growth and Mission Results: PHS Board Measures 2007 Vital Few Create process and information infrastructure changes to: Objectives: – Improve outcomes of the Patient Care Process (access, throughput, satisfaction, safety) – Reduce cost per member and cost per unit of service 2007 Theme: Every Patient, Every Member, Every Time Hire Right Bundle – Behavioral Interviewing – Pre-Interview Assessment – Peer Interviewing Customer Loyalty Bundle – Key Words at Key Times (AIDET) – Rounding on Customers – Pre, Post and Welcome Calls – Service Recovery (Advocate) Must Haves: How We Work EmployeeRetention Bundle – Rounding – Thank You Notes – 30/90 Day Meetings

26. To benefit patients and members, Presbyterian is dedicated tonational excellenceby the achievement of 3 Things: • Malcolm Baldrige Quality Award- continuously improve processes to produce nationally excellent clinical, service and business results. • Top 10% in Patient Safety - create the safest possible environment for those who place their trust in us. • “AA” Rating - control expenses while growing our business to sustain positive financial performance and to fund excellence.

27. PHS Baldrige Journey Timeline Training Define customers and requirements Key core process identification Organizational Profile Self Assessment Four areas of focus Achieve MBNQA Consensus Stage NMQA Zia Award Recipient 40 QNM Examiners One MBNQA Examiner MBNQA Site Visit Two MBNQA examiners: One senior 26 QNM Examiners 2007 2006 2002 2003 2004 2005 Focused on Key Learnings 49 QNM Examiners 1 MBNQA Examiner Plan from self-assessment Zia application completion QNM Roadrunner Recipient 49 QNM Examiners MBNQA Site Visit 25 QNM Examiners One MBNQA Examiner

28. Looking Ahead (The journey is challenging but we are better prepared) Presbyterian Annual Rhythm 2nd Quarter People 1st Quarter Celebration/Kickoff • Staff reviews • Leadership evaluations • People summit • Annual Theme • Vital Few Objectives March MPR April MPR, QPR, ELF, LDI, QEF February MPR May MPR January MPR, QPR, ELF, LDI, QEF June MPR Start SHAPING THE FUTURE CYCLE 2009 - 2011 PERFORMANCE MANAGEMENT & IMPROVEMENT CYCLE 2007 PERFORMANCE MANAGEMENT & IMPROVEMENT CYCLE • Performance Reviews: • Monthly Leadership (MPR) • Quarterly Leadership (QPR, LDI, ELF) • Quarterly All Employees (QEF) Stop MPR, QPR, ELF, LDI, QEF July MPR December MPR August 3rd Quarter Strategy MPR, QPR, ELF, QEF October MPR November 4th Quarter Preparation MPR, LDI September • Project Prioritization • Strategic Plan • Tactical Plan • Capital Plan • IT Plan • Budget assumptions • Budget • Work Plan • Measures • Incentives • Theme LDI : Leadership Development Institute QPR: Quarterly Performance Review MPR : Monthly Performance Review QEF: Quarterly Employee Forums ELF : Extended Leader Forum Process link Revision: 1/11/2008

29. PHP PDS Operating Units Customer Acquisition and Retention Process/Council Each Employee connects to PHS’ Purpose through the management structure Employees and other Stakeholders engaged at each process step Presbyterian Healthcare Services EST and EOT PHS Work System Annual Rhythm Process Patient Care Process/Council Support Customer Service Process/Council Selection & Engagement Process/Council Customer Financial Experience/Council

31. Good

32. Presbyterian’s Commitment to Quality • Earned two consecutive site visits from National Malcolm Baldrige Quality program. Earned QNM’s Zia in 2004. • Health Plan one of 14 in nation with three“excellent” accreditations for managed care. • Medical Group setting the benchmark for care of patients with diabetes. • Investing millions in patient safety, reduced hospital medication errors by 80 percent.

33. Perspective on the Future • Healthcare will continue to be front page news • It will be painful for those not prepared • All stakeholder's of the healthcare arena will demand data to make decisions • The value equation = quality over cost • Will under go many cycles of change • Every service will be faster • Those who don’t accelerate on the technology journey will not be around • Very soon there will be no payment for mistakes • Consumer will own their own healthcare data