Healthcare issues continue to dominate Washington’s attention. No matter which party is in power and how they view issues like the solvency of Medicare and Medicaid, insurance mandates or the government’s role in providing healthcare, the debates rage on. But these debates have surprisingly little impact on some of the central issues of healthcare quality and cost, which are shaped much more by what happens in the private sector than by what laws are on the books.
From my perspective, the prescription is straightforward: If you want to make American healthcare stronger, focus on the health of our healthcare businesses. Get the private sector into better shape, and the choices facing the public sector look a lot simpler.
The central reality of American healthcare is that the institutions that deliver it—from one-person medical practices to major urban hospitals—are businesses. We have nearly 6,000 hospitals, 670,000 physicians, 2.9 million nurses, 56,000 pharmacies and 1,200 life and health insurance companies. Every one of them faces the same kinds of fiscal, operational and competitive concerns as any other business. And like other businesses, they serve their customers—all of us—best when they themselves are thriving.
Look at the difference healthy businesses make. Seattle Children’s Hospital implemented technology and improved operational practices to cut costs per patient by 3.7 percent, saving $23 million while improving patient satisfaction scores in the process. Aetna applied evidence-based medicine data in their partnership with US Oncology and saw a 35 percent reduction in costs with improved patient outcomes. A study at a hospital in New York showed that reducing the number of steps nurses take during a shift can cut hours by 40 percent and save $1.14 million annually. Amplify these small improvements across thousands of providers, hospitals and other healthcare organizations, and we will accrue impressive gains.
These thriving businesses have a lot in common with successful companies in other spheres of the economy. They use resources effectively and efficiently both to improve their bottom line and to strengthen their ability to provide quality products and services. Disciplined leadership and visionary planning turn intractable problems into exciting opportunities. Simply put, they are in good “business health.”
Unfortunately, too many organizations in healthcare are in poor health and showing discouraging vital signs. Like chronically ill patients, these businesses function at less than optimal performance. Their conditions may have many causes—inadequate technology, poorly designed work flow, a stifling culture, a lack of leadership, a history of bad incentives—but the institutional illnesses that result are increased costs and diminished quality of care. Many of the challenges provoking such drama in the political sphere are really symptoms of this deeper sickness.
So what can be done? There’s no silver bullet that will solve the problem quickly and easily. But thriving businesses like those I’ve mentioned have shown us the path to better health. Just as we’ve learned that only 16 extra minutes of exercise a day separates children with normal body weight from those who are obese, experience shows that healthcare organizations can make a major impact by instituting what seem like minor changes, such as adjusting work processes to reduce paperwork and remove redundant or wasteful steps.
It’s no secret that the healthcare sector lags the rest of the economy dramatically when it comes to IT adoption – where else do you still see so many handwritten forms and bulging files of paper? The good news is that every hard-to-read prescription and crosshatched scheduling book represents an opportunity to improve both patient care and the bottom line.
Smart medical practices have figured out processes for managing schedules that make it easier for patients to see a doctor when they need to, while reducing missed appointments and other hidden costs. Well-run hospitals use sophisticated pharmacy management systems to prevent medical errors that cause patient suffering and dramatic cost increases. Forward-looking leaders across the healthcare system are exploring collaborations to eliminate duplicative testing and to improve the quality of care.
These are business challenges, and they require business solutions. Leaders in most industries understand that audacious goals may be exciting, but operational excellence drives success. Our industry has plenty of examples of what it takes to thrive; the success stories range from the largest most technologically sophisticated health systems in the world to small primary care practices. From enormous new players like Wal-Mart or Target to independent pharmacies that have been family-owned for generations, companies are working in innovative ways and breaching traditional barriers to provide quality healthcare. They provide better care to their patients, which allow them to reap financial rewards and invest in continuous business and clinical improvements. It’s a virtuous cycle that leads to better health for all. Following their example provides our best opportunity for the kind of reform that no one will want to repeal.