Service line ins and outs making the strategy work 2009 ache congress on healthcare leadership
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Service Line Ins and Outs – Making the Strategy Work 2009 ACHE Congress on Healthcare Leadership. Bill Vanaskie - COO, Maricopa Integrated Health System, Phoenix, AZ Cecily Lohmar - Principal, New Heights Group, Huntersville, NC. Session Objectives.

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Service line ins and outs making the strategy work 2009 ache congress on healthcare leadership

Service Line Ins and Outs – Making the Strategy Work2009 ACHE Congress on Healthcare Leadership

Bill Vanaskie - COO, Maricopa Integrated Health System, Phoenix, AZ

Cecily Lohmar - Principal, New Heights Group, Huntersville, NC

American College of Healthcare Executives


Session objectives

Session Objectives

Understand the challenges in implementing service line management in healthcare and its implications on the organization

Learn how to determine the most appropriate approach to service line management for your organization

Identify strategies for addressing the key barriers to successful implementation of service lines

American College of Healthcare Executives


The challenges

The Challenges

Fully understanding the strategy and implications

Focusing on the right structures and services

Engaging physicians

Integrating service lines with traditional structures and functions

Source: 2008 survey of strategy executives sponsored by New Heights Group/ Healthcare Forum for Strategy

American College of Healthcare Executives


Understanding the service line strategy

Understanding the Service Line Strategy

American College of Healthcare Executives


The fundamentals

The Fundamentals

An organizational model borrowed from other industries (think P&G, Saturn)

More closely aligns operating units with the customer base (patients)

Traditional hospital model aligns with staff and physicians

Has been adapted for use in healthcare

In its adaptation, basic intent has been forgotten:

To design, organize, and manage a distinct area of the enterprise to create a product of greater value

American College of Healthcare Executives


Service line ins and outs making the strategy work 2009 ache congress on healthcare leadership

Corporate Development

Foundation

President and Chief

Executive Officer

Strategic

Planning

Office of General

Counsel

Chief Operating Officer

Nursing

Professional

Services

Support

Services

Quality and

Medical Affairs

Finance

Program

Planning

and

Execution

Human

Resources

Chief

Information

Officer

Cardiac/

Surgical

Radiology

Clinical

Effectiveness

Treasury

Program

Administration

Organization

Development

Information

Systems

Materials

Management

Women’s

Health

Labs

Food

Services

Hospital

Effectiveness

Internal

Audit

Marketing

and

Communications

HR Planning

and

Communications

Medicine

Oncology

Medical

Records

and Archives

Environmental

Services

MD Staff Office

and

Research

Financial

Planning

and

Analysis

Physician

Support

and Outreach

Personnel

Administration

Ortho and

Neuro

Patient Escort

and Security

Pharmacy

Case

Management

Services

Planning and

Market

Research

Property

Management

Financial

Operations

and

Admitting

  • Therapeutic

  • Services:

  • Rehabilitation

  • Respiratory

  • Therapy

Facilities and

Engineering

Psychiatric

Services

Biomedical

Engineering

The traditional healthcare silos established to support the staff, not the patients

In House

Agency

Emergency

Services

Nursing

Development

Ambulatory

Care

Services

American College of Healthcare Executives


Service line ins and outs making the strategy work 2009 ache congress on healthcare leadership

President and CEO

VP of Corporate Development

VP of Systems and Finance

VP of Managed Care

VP of Medical Affairs

Executive VP and COO

Director of Cardiology Services

VP of Human Resources

Director of Oncology Services

VP of Facilities Development

VP of Support Services

Director of Behavioral Health Services

VP of Patient Care Services

Director of Women/ Children Services

Service lines bring a different mix of staff together to support patients

Director of Long Term Care

American College of Healthcare Executives


When is a service line strategy for you

When is a Service Line Strategy For You?

American College of Healthcare Executives


What is your objective

What is Your Objective?

Greater focus on “mission critical” services - those services of most importance to organizational success (core service lines)

Strategic ‘watchdog’ to monitor and respond to market changes

Enhanced operational efficiency

Greater alignment with physicians

More appropriate allocation of organizational resources – human and capital

Expedited decision making; enable organization to assess vulnerable areas and adjust rapidly to changes in submarkets

Keep up with the other guy

American College of Healthcare Executives


What constitutes a service line

What Constitutes a Service Line?

In practice, no consistent definition applied.

Delivery settings (rehabilitation) – do stroke patients go through similar continuum as sports patients?

Demographic populations (women’s) – are needs of young women at all similar to those of older women

Revenue centers (surgery) – is the continuum of care even similar for trauma as it is for pediatric ENT?

A patient population that travels through the same continuum of care; typically defined by group of diagnoses (cardiovascular)

Beginning to see subgroups of service lines develop (thoracic, vascular)

American College of Healthcare Executives


Selecting the service line model that s right for you not them

Selecting the Service Line Model That’s Right for You, Not Them

American College of Healthcare Executives


Service line models the continuum

Service Line Models - The Continuum

Service line organization

Service line management

Service line leadership

Service line marketing

High

Consumer

industry models

Implementation Challenge

Hybrids

adapted for healthcare

Low

Low

High

Ability to Create/Add Value

American College of Healthcare Executives


Service line marketing

Service Line Marketing

  • Focus: marketing only

  • No authority/ accountability across functional areas or departments

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Jones hospital

Jones Hospital

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Critical success factors service line marketing

Critical Success Factors – Service Line Marketing

Do

Validate that your product is worth marketing

Prove you can deliver on any promises

Try to get at least one physician behind your efforts

See a longer vision – is this the endgame or a means to a different end?

Seek to understand your service line market before your campaign

Don’t

“Dump” this in marketing’s lap; leadership must still own service and strategy

Market without measurable performance objectives – volume, payer mix, etc.

American College of Healthcare Executives


Service line leadership

Service Line Leadership

  • Service line leaders are champions and thought leaders

  • Matrix relationships across organization

  • Support by planning, marketing, finance, recruitment, other staff functions

CEO

Service Lines

Service Line Support

Nursing

Planning/Marketing

Finance

Ancillaries

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Carnegie hospital

Carnegie Hospital

American College of Healthcare Executives


Service line management

Service Line Management

  • Service line managers have accountability over operational departments affecting their service line

  • Service line managers both operational and strategic leaders

  • Typically report directly to COO or CEO

  • Senior leadership active support critical

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St somewhere health system

St. Somewhere Health System

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Cardiovascular service line management

Cardiovascular Service Line Management

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Service line organization

Service Line Organization

Complete organizational redesign

Functional departments become support to service lines; no independent identities

Multiple campuses run by site administrator who ensures service line needs are met on site

Senior leadership take on dual roles – site administrator and service line leader

American College of Healthcare Executives


Service line ins and outs making the strategy work 2009 ache congress on healthcare leadership

Health System

Leader

Cardiology

Pediatric

Oncology

OB / GYN

Ambulatory

Behavioral Health

PROS

CONS

  • Service line teams are important in obtaining institutional support from key players

  • Avoids ambiguity over authority and accountability

  • Technical specialists with knowledge in one area are brought together

  • Scarce or expensive resources can be best utilized

  • Aligns service specific patient care requirements across the continuum

  • Information systems overhaul needed to support change

  • Service line managers’ lack of authority over physicians and functional departments limits ability to increase revenues and control costs

  • Relies on integrated systems to manage the flow of information

  • Changes medical staff structure

  • Matrix structure often confusing

  • Outpatient services can be difficult to fit in to service lines and system structure

  • Culture change VERY difficult

American College of Healthcare Executives


All saints medical center

All Saints Medical Center

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Focusing on the right things portfolio analysis

Focusing on the Right Things: Portfolio Analysis

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Components of a portfolio analysis

Components of a Portfolio Analysis

Hard components:

Market assessment

Financial assessment

Soft components:

Operational

Quality

Softer still

Physician leadership

Physician interest

The foundation

Used in rating services and determining actions and priorities

American College of Healthcare Executives


Market assessment

Market Assessment

Percent of total volume indicates organization’s reliance on service

Compare case mix index against comparable facilities – are we seeing the same patient types?

Comparing ALOS against regional/national norms provides some indication of operating and quality performance

American College of Healthcare Executives


Market assessment1

Market Assessment

Market size measured by use rates to control for population size; compare against regional and national rates to see if discrepancies exist. Review trends.

Reviewing regional draw shows how far beyond service area service draws from; relevant for some orgs only.

Future opportunities can be found in use rate changes due to ‘normalization’, demographics, technology and other external forces.

American College of Healthcare Executives


Financial indicators

Financial Indicators

Other measures may include payor mix, % government payor

Contribution margin measures financial performance before overhead and indirect expenses.

Organizational reliance measures percent of total net income attributed to that service line.

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Service line summary

Service Line Summary

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Pulling it together

Pulling it Together

Rating scale developed for each indicator evaluated

Services measured against each other

Score provided for each rating

Provides evaluation of both current and future opportunities

Serves as decision making guide, not recommendation itself

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Service line rating surgical

Service Line Rating - Surgical

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Understanding the results

Understanding the Results

Highest scores – these are the ‘mission critical’ services:

The 20% that drive your revenue

They should be getting the disproportionate share of your resources to grow/thrive

This is where you service line emphasis should be

The middle range:

Invest after investment in above, only if you can improve position

Be very selective; maintain skepticism

What is the opportunity to improve operating performance?

What is the opportunity to improve market position? Is this realistic?

The lowest scores:

Can you divest/outsource to minimize your losses but maintain service?

Objective is to keep it viable if truly needed in community, but investment is minimum

American College of Healthcare Executives


Engaging your physicians

Engaging Your Physicians

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Service line ins and outs making the strategy work 2009 ache congress on healthcare leadership

American College of Healthcare Executives


Why is this an issue

Why Is This An Issue?

Why can’t we get physicians engaged?

Once we get them engaged, why do they disengage?

American College of Healthcare Executives


Why physicians disengage

Why Physicians Disengage

Data disillusionment

Process paralysis

Focus on the hospital not physician

# 1 Reason:

Physician sees NO ACTION

If service line leaders aren’t given the ability to

take some action, or if this is not structured into

implementation in some way, you are almost

guaranteed to lose the physicians

American College of Healthcare Executives


Service line ins and outs making the strategy work 2009 ache congress on healthcare leadership

Factors that motivate physicians and hospital managers

9/6/2014

Slide 38


Engagement models

Engagement Models

Service line management teams

Medical directorships

Physician advisory groups

Management services agreements

Clinical institutes

Increasing complexity

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Service line management teams

Service Line Management Teams

Physician/Service Line Leader

Physician/Nurse Clinician/Service Line Leader

Team co- manages the service line.

Size, complexity of organization drives need for duo or trio team.

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Team roles and responsibilities duo

Team Roles and Responsibilities: Duo

Physician/Medical Director

Utilization management

Physician engagement

Physician recruitment/

retention

Evidence based practices

Quality initiatives

Service Line Leader

Marketing

Program development

Financial performance

Service line metrics

Staffing ratios

Patient satisfaction

Very effective model. Requires committed physician with specific job description

American College of Healthcare Executives


Team roles and responsibilities triad

Team Roles and Responsibilities: Triad

Physician/Medical Director

Utilization management

Physician engagement

Physician recruitment/

retention

Evidence based practices

Service Line Leader

Marketing

Program development

Financial performance

Service line metrics

Most effective in larger, more complex organizations, academic centers

  • Nurse/Clinician Director

  • Evidence based practices

  • Quality metrics

  • Staffing ratios/practice patterns

  • Patient satisfaction

American College of Healthcare Executives


Medical directorships

Medical Directorships

Plan before you write!

Organizational strategy

Type of organization and degree of responsibility dictates job description what is the overall organizational plan/strategy

Detail areas of responsibility and specific actions expected

Accountability clearly defined, e.g. cost, quality, throughput etc.

Relationship to other formal structures like Med Staff listed and defined

Reporting relationships both up and down

Compensation must be at Fair Market Value

American College of Healthcare Executives


Advisory groups

Advisory Groups

Physician advisory groups must report to a person with authority to effect change

Hospital role to facilitate meetings, provide necessary information, solicit input

Groups geared around specific tasks

Strategy and program development

Operations and utilization management

Quality improvement and evidence based guidelines

Key to effectiveness of advisory groups is hospital’s willingness to respond to recommendations

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Selecting your advisory group

Selecting Your Advisory Group

One physician group or multiple groups represented?

Referring physicians or service line specialists?

Expectations on loyalty or none?

Quality criteria?

Expectations on confidentiality?

Expectations on competition?

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Management services agreements

Management Services Agreements

Contractual relationships with a group of physicians

Depending on depth of agreement, may include group management of:

Unit/provider staffing

Quality improvement

Utilization management

Equipment selection

New program development

Payment for services related to performance in quality, cost, program development, patient satisfaction

American College of Healthcare Executives


Example management services agreement

Example: Management Services Agreement

Base Fee $335K

Includes

Orthopedic trauma services, orthopedic spine services, total joint services

Physicians responsible for coordination of services that promotes quality, efficient patient care, utilization review and fostering quality assessment programs

Incentive compensation: over $700K at risk

SCIP quality measures

Patient Satisfaction

Cost Savings

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Clinical institutes

Clinical Institutes

Clinical and business structure designed to integrate hospital and a group of physicians to pursue service line development

Amalgam of above strategies

Creates a separate entity designed to develop service line

Most staff remain under hospital; institute staff mostly ‘virtual’

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Institute model

Institute Model

  • Management

  • Services

  • Agreement

Health System

Institute

Independent Physicians

  • Professional

  • Services

  • Agreement

  • Medical

  • Services

  • Agreements

Dept. of Surgery

Dept. of Medicine

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Institute example

Institute Example

Total Joints

Hospital Business Development

Orthopedic Surgery-Upper Extremities

Sr. VP Business Development

Medical Directors

Orthopedic Surgery-Lower Extremities

Admin Secretary

Institute Advisory Board

Sports Medicine

Institute Director

Neurosurgery- Simple/Complex Spine

Nurse Navigator

Data Analyst

(Research) ½ time

Spine Center

Occupational Health


Engagement models1

Engagement Models

Models are not mutually exclusive

American College of Healthcare Executives


Engagement models2

Engagement Models

Models are not mutually exclusive

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Integrating into existing operations

Integrating Into Existing Operations

Business plans

Management structures (matrix)

Financial plans (budgeting)

Reporting metrics

Evolving service lines

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Does this look familiar

Does This Look Familiar?

Service Line Manager

Department Manager

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The hierarchy of planning

The Hierarchy of Planning

Mission

Why are we here?

What do we want to be?

Vision

What are we going to do?

Strategic Plan

Service Line Plans

How will key service lines support strategy?

OperatingPlans

FinancialPlans

FacilityPlans

How do we get there?


Integrating budgeting some options

Integrating Budgeting – Some Options

Service line managers and department directors jointly develop budgets.

Service line managers submit budget requests to key relevant department directors. The request is “rolled up” into the overall departmental budget at the discretion of department director.

Department managers are charged with articulating how they will address service line needs in their budget. Support for service lines part of performance evaluation.

Service line managers review department budgets against service line priorities and point out their consistency or inconsistency to leadership. Leadership makes the final decision.

CFO as arbiter – Dept manager develops dept budget. Service line leader/manager presents needs to CFO. Final budget decision determined by CFO.

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Service line ins and outs making the strategy work 2009 ache congress on healthcare leadership

Cardiology Scorecard

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Financial reporting clarify contribution vs profitability

Financial ReportingClarify Contribution vs. Profitability

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Service line ins and outs making the strategy work 2009 ache congress on healthcare leadership

Some level of matrix management is inherent in service line management

unless you are restructuring entire organization around service lines

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Matrix management

Matrix Management

Matrix management is a deliberate organizational structure

It IS NOT a loosely defined structure

It IS a blending of project and functional management

It requires a mature leadership team, especially at the top

A matrix structure can not be assumed to work; it must be structured to work

Varies by type of organization – no one matrix fits all organizations

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Matrix challenges by model

Matrix Challenges by Model

Service line marketing

Service line leadership

Service line management

Service line organization

Low

The ‘lower’ the complexity of the service line model, the more reliant on the matrix structure

Implementation Challenge

High

Low

High

Matrix Needs

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Service line ins and outs making the strategy work 2009 ache congress on healthcare leadership

American College of Healthcare Executives


What makes matrix models succeed or how do you do it right

What Makes Matrix Models Succeed?Or, how do you do it right?

Roles and responsibilities are clear throughout

Everyone feels a sense of ownership

Everyone feels a sense of empowerment

All are moving towards a common goal/vision

Check each of these in your current matrix structure – what’s missing?

American College of Healthcare Executives


Evaluating your matrix structure

Evaluating Your Matrix Structure

Do your support staff have a clear understanding of their roles and responsibilities in service line development?

Is this written down in their job description or an add on?

Do clinical staff have a clear understanding of their reporting relationships under the matrix?

Who do they report to and for what?

Does leadership support this fully?

Do functional managers fully understand and support the matrix? Is their relationship with matrix manager spelled out?

Have you thought of everyone?

Senior leadership often left out

Ancillary staff as well as nursing

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Clarify write down full reporting structure

Clarify – Write Down Full Reporting Structure

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Assigning roles and responsibilities

Assigning Roles and Responsibilities

As you define what’s in your service line, the matrix relationships will become clearer.

Services that are clearly ‘in’ will likely be directly managed in a management model, with a matrix back to functional manager

Services that are indirectly ‘in’ the service line may be matrixed to the service line leader/manager and directly managed by functional manager

Support services are typically a matrix relationship with that functional department unless the service line is large enough to warrant a full time person

e.g. neuroscience service line has 2 physician liaisons directly reporting to service line leader and indirectly reporting to Director of Physician Relations

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Examples

Examples

Direct Report

Planning Analyst

Physician Liaison

Matrix Reporting

Cath Lab

Coronary Care Unit

Cardiac Surgery Team

Cardiac Diagnostics

Marketing

Financial Analyst

Direct Report

Planning Analyst

Physician Liaison

Cath Lab

Coronary Care Unit

Cardiac Diagnostics

Matrix Reporting

Cardiac Surgery Team

Marketing

Financial Analyst

Leadership Model

Management Model

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Consider partnership agreements

Consider Partnership Agreements

Cross-divisional partnership agreements can help minimize the disconnects under a matrix structure.

Agreements identify expectations of the matrix relationship and outline basic operating principles for the relationship.

Partnership agreements may address elements such as the following:

Standard operating procedures, needs for flexibility

Required lead times for reports, information, data, etc.

Expected turnaround times/cycle times, response times

Potential irritants and high-priority elements

Means of communicating concerns, dealing with problems and issues

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Parting thoughts

Parting Thoughts…

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If you are thinking of service lines

If you are thinking of service lines….

Define your objective clearly – what are you trying to achieve through the strategy

Do you understand the organizational commitment you are making?

Go through a portfolio analysis to determine what service line(s) make most sense for you

The effort is worth it!

Determine the model that best fits your organization and needs

Outline the organizational structure with all matrix relationships

Educate senior leadership and get buy-in and true commitment to plan

Must “walk the walk” not just “talk the talk”

Identify service line team

Leader/manager – internal or external candidate

Physician champion

Team members

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If you have already ventured into service lines

If you have already ventured into service lines

Is it achieving the objectives you set forth?

Do you have the right model? Is it consistent with your objectives?

Is your team fully on board?

Does your physician champion understand their role?

Are your matrix relationships clear across the organization?

Have you given it enough time and senior leadership support? Has your whole team made the commitment?

Are you ready to evolve to next level? Questions to ask:

Do you need to evolve?

Are people (leadership and line staff) thinking service lines or functional departments?

Do we have a champion in medical staff and senior leadership?

Review checklist

Has your position changed in key areas to support evolving to stronger management structure?

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Service line ins and outs making the strategy work 2009 ache congress on healthcare leadership

Questions?

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Service line ins and outs making the strategy work 2009 ache congress on healthcare leadership

Bill Vanaskie, Maricopa Integrated Health System

[email protected]

602 344-1258

Cecily Lohmar, New Heights Group

[email protected]

www.reach-newheights.com

704 895 3410

American College of Healthcare Executives


Some interesting reading

Some Interesting Reading

Service Line Strategies for US Hospitals, The McKinsey Quarterly, July 2008

Transforming US Hospitals, The McKinsey Quarterly, February 2007

The Secrets to Successful Strategy Execution, Harvard Business Review, June 2008

Designing Product and Business Portfolios, Harvard Business Review, January/February 1981

Promise-Based Management: The Essence of Execution,Harvard Business Review, April 2007

Is It Real? Can We Win? Is It Worth Doing?: Managing Risk and Reward in an Innovation Portfolio, December 2007

How to Make a Team Work, Harvard Business Review, December 1987

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