Bipartisan Congressional Health Policy Conference

January 13, 2006Miami, FL

Maureen Bisognano

Executive Vice President & COO

Institute for Healthcare Improvement

IHI’s Assumptions

• Better care does not always mean higher cost care.• Providers will face steadily increasing pressure to take cost (i.e.,

reduce waste) out of the system while maintaining or increasing the quality of care. This is evidenced by the following:– Health care inflation costs continue to outstrip increases in GDP;– The increasing availability, reliability, and use of information on provider

quality;– The current trend whereby payors reward providers who offer both low

cost and high quality care by directing patient volume to these providers (e.g., tiered networks) and by offering financial incentives (e.g., CMS/Premier Pay-for-Performance initiative; multiple initiatives by Massachusetts payors); and

– The appearance of disruptive entrants (e.g., Minute Clinic) offering care that meets specific patient needs at radically lower cost than traditional providers.

• To achieve the goal of better care for all, it is imperative that delivery costs fall, which in turn reduces costs to patients (while providers preserve an acceptable margin).

Approach to Waste Reduction

• According to Noriaki Kano (a Japanese thinker on process-design and quality improvement), improving the quality of a product or service can be considered using three categories. Each represents a different type of quality improvement lever:

– Lever 1: Eliminate the quality problems that arise because the customers’ expectations are not met.

– Lever 2: Reduce cost significantly while maintaining or improving quality.

– Lever 3: Expand customers’ expectations by providing products and services perceived as unusually high in value.

Kano 1 Kano 2 Kano 3

Clinical Quality Problems

Verify the surgical site with the patient to prevent wrong-site surgery

Open only those instruments that are used during the procedure

Use robotic or minimally invasive surgery

Supply Chain Relocate the staff pharmacist to the unit floor to ensure proper medication dosing

Implement a distribution system to ensure that pharmaceuticals nearing their expiration date are used first

Implement bar coding technology on pharmaceuticals to track their use

Mismatched Services

Have patients self-administer pain medication to ensure proper pain control

Ensure patient admission to the proper care area (palliative care vs. ICU care)

Create a new wing for palliative care services

Exploring the Differences between Improvement Projects Focused on Kano 1, Kano 2, and Kano 3 Approaches

Primary Drivers Secondary Drivers Projects

Dark Green Dollars

Reducing Operating Budget by 1-3% a year

Clinical Quality Problems

Staffing

Flow

Supply Chain

Mismatched Services

Mass Purchasing

Pharmaceuticals

Wasted Materials

Standardize purchasing

Base utilization on best practices

Purchase wholesale instead of retail

Switch from brand-name to generic

Prescribe based on industry norm

Turnover/Recruitment

Premium Pay

Work Days Lost Due to Injury/Illness

Achieve optimum performance levels

Use a flexible staffing model

Reduce agency usage

Implement an acuity identification system

Use appropriate patient lifting techniques

Malpractice claims

Coordination of Care

Adverse Events and Complications

Reduce settlements by changing process when sentinel event occurs

Prevent infections (SSI, CLI, VAP)

Prevent Decubitus Ulcers

Prevent readmissions

Waste in Admin Services

End-of-Life Care

Unnecessary Procedures/ Hospitalizations

Stop denial rework

Stop services not adding value (ex. unnecessary landscaping)

Improve chronic disease management

Stop performing outpatient services as inpatient services

Match Capacity:Demand

Hospital Throughput

Ancillary Throughput

Redesign care management

Redesign ER processes

Redesign OR processes

Kano Aim #2

Aim: Reduce Operating expense budget by 1% per year, year after year

•Start with the dark green dollars and design portfolio

- - -

Kano Aims #1 & #3

Aim: Raise the bar on…Clinical Care - - -

Service & Systems - - -

Work Environment - - -

Business Case Management Systems

Reinvestment strategy

Clinical Care

Service & Systems

Great Work Environment

IT / HR Bottom Line

A Balanced Strategy of Initiatives

An Assertion

• Society needs and would value a health system that is optimized on three dimensions: health of a defined population; experience of an individual over time especially during an “episode” of care; and per capita costs. Unfortunately, as structured today, most health care entities such as hospitals, physician practices, and long term care facilities operate under business models that exclude at least one of the three dimensions.

New Challenges: The Triple Aim

Health

Cost per capita

Experience of care

1. The health of a defined population; 2. The experience of care by the people in that population; and 3. The cost per capita of providing care for this population.