Reducing Hidden Costs and Improving Effectiveness in a Rural Medical Center: CEO s story of his SEAM journey

Transcription

1 Reducing Hidden Costs and Improving Effectiveness in a Rural Medical Center: CEO s story of his SEAM journey Rural Health Care Leadership Conference February 7, :30 & 9:00 am Dave Dobosenski, John Conbere, & Alla Heorhiadi SEAM, Inc. 1

2 Founded in team members Service Area = 1,000 sq. miles 38,000 unique patients 200,000 annual ambulatory encounters Multi-specialty Group Practice 62 employed providers 6 community locations SEAM, Inc

3 Organizational Goals in 2015 Superior clinical outcomes Exceptional patient experiences Best place to work and practice medicine Market leader Financially thriving External Federal, State, and Regional challenges for rural health care Limiting Factors Internal Lack of agreement on strategic vision Culture of blame > We vs. They Lack of resources and bench strength Lack of cooperation between medical group, administration, and staff. SEAM, Inc. 3

4 The Context of American Rural Health Care Older patients, with lower income, more disabled, and uninsured. Reimbursement is lower. Declining patient volumes due to younger patients migrating to urban centers. Difficult to recruit Primary Care physicians. Aggressive strategy to acquire smaller health care organizations. Rural hospital closures continue. SEAM, Inc. 4

5 Increase efficiency The environment pushes healthcare organizations to simultaneously reduce costs and increase organizational effectiveness Cost reduction Environmental factors Health care organizations cannot continue to operate in old ways and be effective. Something has to change! SEAM, Inc. 5

6 How to find a change approach that could help to: a) alleviate the organizational problems, b) achieve the organizational goals, and c) sustain itself over time? CEO The CEO began to search for answers SEAM, Inc. 6

7 How to know what problems an organization should address first? Four-Leaf Clover Approach to Change DYSFUNCTIONS Look for problems (dysfunctions) that generate the highest hidden costs Design the improvement processes aimed to reduce these costs STRUCTURES HIDDEN COSTS BEHAVIORS Not measured by SEAM, Inc. traditional accounting 7

8 Why are the costs called hidden? Hidden costs are not measured by standard accounting The amount of hidden costs per employee per year vary between $20,000 to $70,000 depending on the industry Every organization has hidden costs! SEAM, Inc. 8

9 What is Socio-Economic? Socio and Economic are two sides of a coin Many organizations separate economic performance from the human side of work ( socio ) Economic performance is driven by socio performance (engagement) While employee engagement is a buzz word, the level of engagement nation-wide is low While most organizations think they attend to the human side of work, they do not integrate socio and economic. This is the problem! SEAM, Inc. 9

10 What causes organizational problems? Leaves - Dysfunctions Poisonous berries - Hidden costs Roots - Root causes Lack of steering Lack of synchronization Lack of negotiation Lack of cleaning up Poor information systems SEAM, Inc. Twigs - Alleged causes Branches - More generic underlying causes To eradicate the problems, deal with roots 10

11 Root Causes Explained Lack of steering failure to align people and resources towards achieving organizational strategic goals Lack of synchronization all the of parts of an organization do not work in harmony Lack of negotiation top-down autocratic management fails to engage employees Lack of cleaning up when changes are made, old rules and previous processes are left in place Poor information systems workers at all levels do not have the necessary information to do their work properly SEAM, Inc. 11

12 Why don t many organizational changes last long-term? 3 vectors of the SEAM Trihedron (1) The improvement process Only one vector of change Managers lack needed skills to sustain the changes Lack of systems thinking a superficial change in one part creates a ripple effect in other parts Change is not supported through strategic and political decisions (3) Coaching leaders on implementation of changes (2) Teaching SEAM Management tools All three are needed SEAM, Inc. 12

13 How to involve the whole organization? Data Collection Leadership group Months Mirror Effect Expert Opinion P r o j e c t s Silo 1 Data Collection Mirror Effect Expert Opinion P r o j e c t s Cascade change through silos over time Silo 2 Data Collection Mirror Effect Expert Opinion P r o j e c t s SEAM, Inc. 13 Silo 3

14 How to reduce resistance to change? Involve everyone in change Eliminate blame of people Keep the focus on changing the system, not behaviors Improve employees perception of leaders A common employee perception of leaders SEAM, Inc. 14

15 How to begin the change process? Organizational change begins with leaders changing Modeling the desired change by leaders sends a strong message that it is safe for the rest of the organization to engage in change Leaders should model change SEAM, Inc. 15

16 I chose SEAM because CEO Rigorous approach with deliberate pace with a 40 year proof record (evidence-based) Involves the whole system Engages front line employees, increasing their ownership of the change process Addresses dysfunctions and discovers Hidden Costs Both an unfreezing and a healing effect Compatibility with other approaches (e.g. Studer Group, Lean) Change of culture happens naturally SEAM, Inc. 16

17 The SEAM journey began CEO Executive group 2016 Jan April Timeline of Change Intervention at Sept Oct 2017 Feb Mar Aug Sept 2018 Radiology; Business Office Clinic 1 Improvement projects are ongoing OR Clinic 2 Up to date: Total Team Members engaged more than 200 1/4 of total HR; Education; Quality Clinic 3 IT; Facilities SEAM, Inc. 17

18 Unit Hidden costs identified Overpaid Wasted time Wasted $ Missed productivity Undeveloped potential Total DI $19,141 $529,585 $3,100 $551,826 B.Office $38,977 $1,900,136 $805,128 $2,744,241 OR $3,840 $235,395 $137,555 $1,648 $378,438 Clinic 1 $284,326 $82,746 $56,351 $61,391 $295,837 $780,651 Clinic 2 $20,840 $328,722 $0 $298,948 $648,510 EmplServ $564,897 $3,045 $567,942 Quality $154,841 $10,563 $165,404 Clinic 3 $2,394 $508,647 $31,971 $507,674 $1,050,686 IT $4,905 $358,378 $363,283 Facil $10,089 $40,622 $17,887 $50,280 $0 $118,878 SEAM, Inc. 18 Total $384,512 $4,703,969 $1,065,600 $919,941 $295,837 $7,369,859

19 B.Office Unit Hidden costs reduction after 1 year Year Overpaid Wasted time Wasted $ 2016 $38,977 $1,900,136 $805,128 $2,744, $21,116 $1,131,292 $773,061 $1,925,469 Savings $17,861 $768,844 $32,067 $818,772 Diagnostic Imaging 2016 $19,141 $529,585 $3,100 $551, $19,141 $424,087 $2,500 $445,728 Savings $0 $105,498 $600 $106,098 SCRMC Total savings $17,861 SEAM, $874,342 Inc. $32,667 $924,870 19

20 One of the biggest value on investment came from recognizing and reducing magical thinking CEO SEAM, Inc. 20

21 Magical Thinking A delusional, and often unconscious, belief that one can do the impossible. Very common in the modern workplace Magical thinking is harmful to employees and destructive of organizational productivity. SEAM, Inc. 21

22 Examples of Magical Thinking Committing to work that is not possible to accomplish in the allotted time. Doing more with less resources, without reducing quality. Not addressing the interruptions that eat away at one s productivity. Promoting employees to supervisory positions without a) providing a proper training and b) removing from them their prior duties Not putting enough time into steering and then wondering why the organization does not meet its strategic goals Can do realistically Should happen magically SEAM, Inc. 22

23 CEO One common problem in healthcare organizations is lack of management and leadership skills in middle level management. This is how we tackled the problem SEAM, Inc. 23

24 (1) The improvement process Using three vectors of change Train SEAM internal consultants (3) Coaching leaders on implementation of changes (2) Teaching SEAM Management tools Create: Nursing Leadership Academy Physician Leadership Academy SEAM, Inc. 24

25 The more we worked with SEAM, the more I saw the need to change organizational culture of blame into the learning culture CEO SEAM, Inc. 25

26 Organizational Culture Artifacts Visible organizational structures and processes Espoused beliefs, values Strategies, goals, philosophies (espoused justifications) Underlying assumptions Taken-for-granted, conscious or unconscious beliefs, perceptions, thoughts, and feelings Most difficult to change SEAM, Inc. 26

27 CEO I witnessed how organizational culture changed through change in employee beliefs & behaviors Change in beliefs Skepticism, distrust, blame Increased curiosity to learn & try things Rebuilt trust in leadership, willingness to take risks Change in behaviors Resistance, passiveness Resolving issues & differences Participation, through negotiation, engagement leading change projects SEAM, Inc. 27

28 Some Examples Old beliefs Nothing will change. This is the way we worked for ages. If I did something wrong, I will be blamed. Thus, I am not going to say anything. Communication is awful here. I do not know what is happening. We are so busy - we do not have time to plan or to meet. SEAM, Inc. New beliefs We can change the way we work. It depends on us. If something went wrong, I need to share this, so we all together can find a way to improve things. I am part of communication loops in the organization. My role is to make sure these loops work. We cannot afford not to meet and redesign things.

29 Value on Investment at Financial Outcomes Reduced hidden costs by 23% Savings of $924,870 Quantitative Outcomes Reduced wasted time Reduced risks Reduced turnover A/R Days Days Cash on Hand Days of Debt Qualitative Outcomes Increased engagement of employees Increased employee competencies; leadership Improved morale & culture Reduced magical thinking Improved patient services & patient experience SEAM, Inc. 29

30 My final thoughts: CEO SEAM is a long-term commitment. There is no quick fix to problems that were festering for ages. Band-Aids will not help here. SEAM healed the workplace. The organization has become more vibrant More work is needed - I am eager to continue my SEAM journey SEAM, Inc. 30