Last week, I told you about the past nine years of Jim Anderson's 13-year tenure as CEO of Cincinnati Children's Hospital, which is coming to an end as the calendar rolls into 2010. During that time, he's made his fair share of mistakes, but perhaps his greatest success was initially seen as a mistake by many in the hospital. If not an outright mistake, most of the caregivers initially decided his initiative to do better on infection control and quality care was well-intentioned, but would cut his own financial throat.
That's because of the perverse incentives in healthcare that have received a lot of attention lately—chief among them that if complications ensue when a patient gets to the hospital, leading to a longer stay, the hospital does better financially. Before you besiege me with notes about how those perverse incentives don't exist anymore, both you and I know that much work still needs to be done on this front. Hopefully healthcare reform will take care of some of them, but last time I checked, most of healthcare, in terms of dollars, was still fee-for service. That doesn't mean that hospitals actively seek to injure or otherwise extend patient stays in order to do better financially, just that they don't have a lot of incentive to improve.
Set that debate aside for a moment, because as many of you have doubtless seen for yourself, here's where the sales job got difficult for Anderson.
"In early 2000, we were exposed to the idea of family-centered care," he says. "We got the notion that healthcare is dysfunctional and the opportunity to focus on processes to provide better value was a critical underdeveloped area filled with enormous opportunity."
Silly fool. What did this big-time lawyer and industrial company president (who was appointed from the hospital's board) know about how healthcare worked?
"I was unburdened by that knowledge and it was clear there was a dramatic difference in attitude and approach to quality. That was perplexing and intriguing to me, but I didn't know what to do with it."
He started, rightly, with the caregivers, selling them the idea that relying on evidence-based protocols and family-centered care was the right thing to do, regardless of the business implications. Problem was, many of them didn't trust his motives at first. Neither did his CFO. But he had an influential physician champion on his side and that helped get the ball rolling.
"Jim and the physician came in to show me how a significant portion of treatment we delivered was outside the evidence-based guidelines," says CFO Scott Hamlin. "I asked them if they realized I bill for such things. I thought we would be out of business."
Early on, Anderson and Hamlin joked about the initiative being a "faith-based investment," because some of the things in which Cincinnati Children's invested reduced revenue—but only temporarily.
"We found that those (now-empty) beds filled up with more complex cases and enabled us to build tertiary and quaternary care, allowed us to develop specialists, and expanded the geographic pull of the institution so now we're clearly a global enterprise," Anderson says.
Yes, it's a children's hospital, a vastly different business than running an adult hospital. But Anderson's initiatives at Children's have their origins in businesses outside healthcare, which is really different. Most importantly, these activities are implemented for better outcomes, he says.
"If you lose track of that, and get tempted into selling the cost reduction aspect, you lose the traction that is essential with front-line caregivers."