The Four Disciplines of Executing Transformation Strategies in Healthcare

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1 Copyright 2016 Loft9. All Rights Reserved. 1 Loft9Consulting.com LOFT9 BUSINESS INSIGHTS The Four Disciplines of Executing Transformation Strategies in Healthcare

2 Copyright 2016 Loft9. All Rights Reserved. 2 Loft9Consulting.com Having a Solid Transformation Strategy is Not Enough. Important changes in care delivery, health policy, and payment have shifted the landscape of the health care system in the United States. For healthcare organizations to survive, thrive, and continue to meet evolving patient needs, every one of them must successfully transform. The department of Health and Human Services defines Healthcare Transformation as: The US health system consisting of public health, health care, insurance, and other sectors undergoing critical clinical, financial, operational, and service delivery changes. These changes include improving the efficiency and effectiveness of health organizations and services, as well as increasing connections and collaborations among public health, health care, and other sectors. 1 Seventy percent (70%) of transformation programs/initiatives fail. Seventy percent (70%) of transformation programs/initiatives fail 2. The top reasons for failure are due to a combination of the following common barriers: 1) Lack of data and information; 2) Employees resistance to change; 3) Lack of structure for staff to achieve change; 4) Lack of the right resources; 5) Lack of communication and accountability. The Accountable Care Act (or ACA) has galvanized the healthcare industry to go through comprehensive transformation that reshapes almost every aspect of the industry. The ACA drives the healthcare industry s shift from a volume-based delivery system to a value-based one. But this transformation has not been consistently successful across the board, proven by thirteen out of thirty-two pioneering Accountable Care Organizations (ACOs) dropping out of the Medicare Shared Savings Program. 3 More recently, MACRA and the CMS implementation of the Merit-based Incentive Payment System (or MIPS) is another upcoming dramatic transformation challenge that healthcare organizations and their providers must effectively take on with pending deadlines approaching in the coming months and years. With so much at stake, what can be done to increase the rate of transformation success? Healthcare organizations must have a comprehensive execution plan for organizational and clinical transformation which must include: business and data analysis, process improvement, project management, and change management. These four disciplines reduce the risk of transformation failure, while setting the foundation for sustainable outcomes.

3 Copyright 2016 Loft9. All Rights Reserved. 3 Loft9Consulting.com #1 Business Analysis/Data Analytics The Four Disciplines. Healthcare organizations often know that they need to change course but don t know where to go and when to start. Business Analysis/Data Analytics focuses on identifying the critical few questions that need to be answered, finding the right data or information that can answer those questions and organizing the data to be useful and accessible to the end user or decision makers. Business Analysis/Data Analytics aids in mitigating the risk of transformation failure by providing managers and directors the essential quantitative information they need to change their behavior towards facilitating transformation. Companies with poor business analysis capability will have three times as many projects fail as they do succeed 4. Companies with poor business analysis capability will have three times as many projects failure as they do succeed. An example of how this transformational discipline is applied is with Medicare Access and CHIP Reauthorization Act, or MACRA, readiness and optimization. More specifically, the implementation of the Quality Payment Program - Merit Based Incentive Program (MIPS) and Alternative Payment Model (APM). MIPS and APM will replace the old sustainable growthrate formula for determining physician pay. There is a long list of decisions, milestones, and tasks that an organization must accomplish to be ready to start reporting data to CMS. This is easier said than done considering that data in the healthcare environment is notoriously complex. But it must be done and done well as the organizations future physician compensation and reimbursement will be based on how well it is set up. A Business Analysis/Data Analytics expert can help determine the optimal approach to MIPS and APM reporting for that organization as well as lead the effort to verify the organizations electronic health record (HER) readiness. They can help navigate through the strict requirements needed for a system to qualify as an alternative payment model. More importantly, a Business Analysis/Data Analytics resource can help streamline reporting for any organization. Reliable data coupled with efficient and effective reporting methods inform decision making. This in turn positions the medical group or ACO to maximize the benefits of MIPS. 1 Health System Transformation and Improvement Resources for Health Departments, 2014, Department of Health and Human Services, 2 McKinsey Quarterly Transformation Executive Survey, 2008; next Generation PMO KIP Team 3 When Health Care Transformation Fails, 2015; Stuart Pollack 4 The Impact of Business Requirements on the Success of Technology Projects, 2013, Keith Ellis

4 Copyright 2016 Loft9. All Rights Reserved. 4 Loft9Consulting.com Identify, verify, and address opportunities to improve. Business Analysis/Data Analytics is essential in helping align and define the necessary data and information required to drive change in the right direction. By investing in Business Analysis/Data Analytics up front, organizations will save time and money throughout their transformation efforts, while landing impactful changes with lasting returns. The next essential step is to identify the right opportunities and key tactical changes that will effectively move the organization towards the defined transformation goals. #2 Process Improvement Healthcare is changing at a rapid pace, and continuous process improvement is essential to staying one step ahead. Organizations that have a commitment to improvement programs will benefit from system-wide efficiency gains, improved patient care, and the lowering of health care costs. This key discipline of transformation success provides a reliable structure from which improvement opportunities are identified, verified, and addressed --- delivering significant wins that bridge current and future states. In the case of MACRA readiness and optimization, comprehensive Process Improvement support can provide value to both MIPS and APM systems implementation as well as optimization once up and running. A Process Improvement resource can help an organization assess and compare their current systems, resources, and processes to the MIPS and APM requirements. From this assessment, they can make recommendations on the most efficient and optimal changes to meet those requirements that benefit the organization and its patients. An ongoing process improvement effort beyond implementation requires tracking metrics and action to improve upon current performance. Without such a system of support from a Process Improvement resource, healthcare providers are at risk of having their compensation reduced. Healthcare organizations must establish a process improvement structure, methodology, and resourcing approach to effectively identify and validate opportunities that will impact the organization. This will mitigate risks and will focus efforts that support hitting performance goals. Now that a reliable data and a process improvement approach is present, how do organizations make sure they are effectively and sufficiently making the actual changes required for their transformation strategy? Project management is the answer.

5 Copyright 2016 Loft9. All Rights Reserved. 5 Loft9Consulting.com #3 Project Management Bring clarity and direction for how and when the desired state is achieved. Projects are commonplace in the healthcare industry, yet utilizing a structure and formal project management processes, tools, and techniques are still a new concept to many organizations. Project management is the transformational discipline that brings clarity and direction for how and when the desired state is achieved. Project selection, prioritization, and execution are key capabilities of project management. This is increasingly important in healthcare organizations, as they look to manage costs while making the necessary changes to improve care and outcomes. Without disciplined Project Management, transformation efforts in healthcare are at significant risk of failing. A study published in the Harvard Business Review found that 2.5% of companies successfully completed 100% of their projects which is not sufficient for any organizational-wide transformation. These companies had a formal PMO with certified project managers 5. As for MACRA preparation, Project Management much like the Process Improvement discipline, will play a role in both MACRA readiness and optimization. CMS has a tight schedule for the implementation of the Quality Payment Program (MIPS and APM) where all milestones and tasks must be in place at certain deadlines, or providers will miss critical opportunities that impact their reimbursement. A qualified Project Management resource(s) can help build and drive a workplan that ensures that all milestones are effectively accomplished. More importantly, a Project Management expert can adjust the plan when issues or blockers threaten the timeline. Once the program is up and going, having an adequately supported Project Management program that works closely with BA/DA, PI, and CM resources can drive the key changes that are required by the performance categories of the Quality Payment Program (the Improvement Activities and Advancing Care Information categories). All this is essential to determining the future financial success of provider organizations moving forward. Project & Change Management working side-by-side deliver the technical changes and adoption together. The best transformation resources bring a skillset that goes far beyond scope, schedule and budget management. Today, being able to blend the science of project management with the art of change management is critical. After all, what good is a project delivered on time and under budget if the benefits of the project are not fully supported by the organization post launch? Change management, the fourth discipline of effective business transformation, will produce lasting and sustainable results. 5 The Cost of Bad Project Management, 2012, Hardy-Vallee

6 Copyright 2016 Loft9. All Rights Reserved. 6 Loft9Consulting.com #4 Change Management 32% of companies confirmed the need for more adequate change management impact analysis in reducing difficulties with planning and execution of projects and initiatives. Change is a fast-paced constant in healthcare. Healthcare workers must be able to make changes and adjust under the stress of providing care to patients. Despite this, healthcare organizations are quick to point out that they are not adept at managing or effectively landing those changes. Change management is the transformation discipline that assess an organization's people and cultures to determine how changes in business strategies, organizational design, organizational structures, processes, and technology systems will impact the enterprise. A recent study on the impact of change management on project work mentioned that the effectiveness of business transformation projects directly depends on the ability of the project team to give a comprehensible description of change and explain to managers and leaders what needs to be changed in the current business practice to reach the target state. 32% of companies confirmed the need for more adequate change management impact analysis in reducing difficulties with planning and execution of projects and initiatives. Provider awareness and readiness for CMS changes are critical to succeed in MACRA reporting. In the case of MACRA Readiness and Optimization, Change Management is even more critical as MACRA is not only changing the way providers are compensated, but it is also fundamentally changing the way they approach their delivery of care. Provider readiness and awareness of the changes they need to make is a concern across the board. Half of physicians with a high share of Medicare beneficiaries reported no knowledge of MACRA with another 32 percent only recognizing the name. Compared to nine percent of employed physicians, 21 percent of independent practitioners reported being aware of the forthcoming changes to Medicare reimbursement via MACRA s Quality Payment Program. Having a CM expert can help an organization improve provider readiness by developing and implementing a change management strategy while providing resources that help physicians adapt to maximize the system and improve quality of care to their patients.

7 Copyright 2016 Loft9. All Rights Reserved. 7 Loft9Consulting.com Conclusion and Summary The complexity of transformational change in healthcare can easily overwhelm an organization, dissipating energy before the effort gains traction or achieves its objectives. Ineffective efforts exhort the organization to "fix everything at once" with no coordinated execution plan that encompasses the essential tools and resources needed for success. It is far better to adopt an execution strategy that encompasses the essential disciplines (Business and Data Analysis, Process Improvement, Project Management, and Change Management) and devote the required energy to them until measurable progress is achieved. This is easier said than done and most organizations don t have all the resources, time, and expertise. But if your organization takes the time to build an execution plan that encompasses the four essentials, it will be a powerful step towards transformation success.

8 Copyright 2016 Loft9. All Rights Reserved. 8 Loft9Consulting.com About Loft9 Get the complete story This introductory paper is intended to provide a high-level overview of change management elements you may want to consider on projects. This is the first paper in a series that will provide in depth examples of projects we ve delivered on for our clients. If you have an idea for a future paper or a topic you would like to learn more about, please reach out to us using the methods listed below. Loft9 is a management consulting firm that provides business and technical solutions. Clients look to us for the expertise, bandwidth, and focus that delivers impactful, lasting results across a wide range of industries. Expertise our Consulting Services span the entire business lifecycle from envisioning and planning to running and optimizing, bringing industry leading thinking in Project Management, Change Management, Process Improvement, and Business Analysis. Bandwidth our Staffing Services provide a wide range of client-ready resources that seamlessly integrate with our clients teams, providing the right experience at the right time in business operations and information technology. Focus our Managed Services provide our clients with the freedom to focus on their core business activities, while we take on the outsourcing, running, and optimization of non-core functions. At Loft9, we're as focused on the expertise we deliver as on the experience we create. Our clients get fresh thinking, sincere partnerships, and elevated outcomes. Together, Loft9 is able to be there for our clients, at the right time, with the right resource, consistently producing great results. That's the Loft9 experience. We actively collaborate with and leverage the knowledge of other Loft9 Associates for the benefit of clients. Co-Delivery TM is our "secret sauce. Co-Delivery TM helps provide a quicker ramp time and the highest quality in delivery. We pair every Associate on an engagement with someone else from within the firm who has relevant experience in the space. More than just a check-in, Co-Delivery TM leverages experience and knowledge to bring additional resources to bear each and every week for the benefits of our clients and our delivery. Our clients keep coming back to us year after year. When we ask them why, they mention our expertise and the results we deliver, but it always comes back around to the quality of our people. They say that when you're working with Loft9, it's the intangibles, it's the communication, it's the way we collaborate and deliver It's the experience. Contact Seattle: Lake Street South Suite 240, Kirkland, WA Denver: Platte St., Floor 4, Denver, CO info@loft9consulting.com