Introduction to High-Quality Hospital Management
[00:00:00] Stacey Richter: [EP492: The Solutions Show:] “How to Run a High Quality Hospital at 143% of Medicare.” Today I speak with Dr. Sam Flanders and Shane Cerone.
[00:00:26] Stacey Richter: Here's something that one of my guests today, Shane Cerone says coming up here pretty quick. Shane Cerone and Dr. Sam Flanders are my return guests.
Management Models for Health Systems
[00:00:34] Stacey Richter: Shane says, “we created a management model for our health system that was focused on surviving at 150% of Medicare. Normally, there's a lot of layers of inefficiency in healthcare and in our health systems. Some of them can absolutely be reduced without any significant impact to quality.”
So while this show today focuses on solutions for health systems, it's inside information also that is really relevant to plan sponsors as well as others.
Calls to Action for Plan Sponsors
[00:01:03] Stacey Richter: So here we go. You'll like this. It's actionable.
Recap of Previous Discussions
[00:01:34] Stacey Richter: Two weeks ago, just reviewing real quick here, Shane Cerone and Dr. Sam Flanders from Kada Health talked with me about the problems that any given solution needs to solve for at any given health system [EP490].
So this solution show is or really should be really timely because there really should be urgency now amongst health systems to solve inefficiency problems and solve them fast.
Two reasons for the need to speed. (a) The myths that enable some of these problems to proliferate are being dismantled these myths and more people realize that they're well and truly myths. Listen to that show from two weeks ago where we get into these myths in detail.
But also, (b) Reason for Speed is per the show last week with Elizabeth Mitchell from PBGH, the Purchaser Business Group on Health.
Transparency in Healthcare Costs
[00:02:24] Stacey Richter: Elizabeth Mitchell talks about what the newly complete PBGH Transparency Demonstration Project accomplished. And it's a done deal folks. None of this is theoretical.
Elizabeth Mitchell says, what this project does, this transparency demonstration project does, first of all. It tells plan sponsors how much a health service costs. Second of all, it tells the plan sponsor how much the range for that service is.
So are they paying a fair price or not? If a member goes to one facility and it's literally five times more than the facility across the street with the same quality, that is really important information for a plan sponsor trying to effectively manage their plan, reduce costs, and improve access to high quality providers.
And you know what else now becomes possible? Plan sponsors creating their own high value networks becomes possible. Plan sponsors creating their own centers of excellence networks becomes possible. Plan sponsors who steer and tier away from low quality but really high priced health systems becomes possible. And it won't matter how many billboards that health system puts on the highway.
Empowering Health Systems to Improve
[00:03:32] Stacey Richter: The value of the service is transparent, and I'm saying all this with the intent of protecting from financial harm patients, plan sponsors, but I'm also saying this again on behalf of those individuals who work at health systems who are trying to grab a foothold to do the right thing.
And further, my intent here is to actually help hospitals because there are health systems out there who have margins that are bigger than Amazon's. Their charity care at the same time comes in at 2 or 3% of their revenues, which is abysmal. And it's very weird and sad when senior leaders cry poor, when they underpay clinicians and then raise prices that are harmful to the very community that they claim to serve. Maybe some of these insights will help anybody so inclined to fix that.
And look, I get that now is a crappy time given Medicaid and what's up with the ACA markets. But honestly, never let a good crisis go to waste. So maybe this is actually the perfect time to embark on some of the solutions discussed today.
If I wanna open the, let's get real drawer though. If you want to know why many health systems will not actually do any of this that we're talking about today, listen to the shows with Dr. Suhas Gondi, the show with Vivian Ho, and also the one with Dr. Scott Conard for more insight into what some CEOs and boards may or may not be up to. And in short, their goals may be less about serving their communities at this point and more about other things. The show coming up with Dr. Mick Connors also touches on this.
Now let's talk solutions. Some of what gets discussed today. Definitely reminded me of that show with Dr. Beau Raymond and the one with Eric Gallagher from Ochsner.
The conversation today also reminded me of something Jerry Durham wrote where he was talking about how everybody talks about the importance of creating trust between doctor and patient. But so few discuss that this is really hard to do with the infrastructure or even other people around said clinical care team are not acting in ways that are worthy of trust.
And that might happen any variety of ways when the front desk disrespects a patient or doesn't listen. It might happen when the bill comes.
So right, having the right culture is the one ring to rule them all. Followed by being actually good at strategy and then deploying said strategy effectively, not just making spaghetti diagrams on some whiteboard and the end.
The Toyota Model for Continuous Improvement
[00:05:56] Stacey Richter: Doing this effectively means having a management model focused on every level of the organization being tasked to solve the problems they see as like part of their job, to spot and solve problems.
Achievements at Beaumont Hospital
[00:06:06] Stacey Richter: As I have said multiple times already, my guests today are Shane Cerone and Dr. Sam Flanders. These two were leadership colleagues at Beaumont Hospital Royal Oak, where Shane served as president of the flagship 1000 bed teaching hospital, and Dr. Flanders oversaw all quality and patient safety programs as chief quality and safety officer for the entire system.
Under their leadership, Beaumont Hospital was number one nationally recognized in nine medical specialties. Got awards for seven consecutive years as one of the top hospitals in the country for care quality and patient safety.
And also they charged 143% of Medicare. 143% of Medicare and high quality.
This podcast is sponsored by Aventria Health Group, but I do need to mention that Kada Health, which is the organization that both Shane Cerone and Dr. Sam Flanders work for, so generously offered some financial support to Relentless Health Value.
So I will also say that this show is partially sponsored by Kada Health, and I couldn't appreciate it more.
And here's my conversation with Dr. Sam Flanders and Shane Cerone from Kada Health.
Conversation With Dr. Sam Flanders and Shane Cerone
[00:07:18] Stacey Richter: Dr. Sam Flanders, welcome to Relentless Health Value.
[00:07:21] Dr Sam Flanders: Thank you very much, Stacey. Great to be here.
[00:07:22] Stacey Richter: Shane Cerone, welcome to Relentless Health Value.
[00:07:24] Shane Cerone: Thank you. It's our pleasure to be here.
Challenges and Solutions in Health Systems
[00:07:26] Stacey Richter: We talked about the three myths of health systems and the hornet's nest of problems these three myths intuitively and un-intuitively, create. Before we dive into the solutions here, because this is the solution, show, anything that you wanna add or say about the problems that many health systems struggle with, just as a tee up for how to solve them.
[00:07:50] Dr Sam Flanders: There are hundreds or even thousands of problems in health systems everywhere, even really good health systems that need to be dealt with, and there's no way you can do that from a central location. You can't have a central quality team or a department or a czar or anyone that can be aware of all of those sorts of things.
Implementing the Toyota Model
[00:08:08] Dr Sam Flanders: If you look at how Toyota structures theirs, their model is conceptually very simple. Every employee needs to do their job and do their job and perform it well every day, but also be thinking and making changes constantly to try to improve the way their job is done. And that's the model that can get out into the front lines, into all of the different recesses that are out there that are impossible to manage essentially, because there's too much complexity.
The people that are doing the work know how to improve it. If you'll let them, if you'll encourage them, if you'll coach them. And letting that happen makes an enormous difference and really gets you to continuous improvement. You've talked a lot about the flywheel model in this podcast. I've heard it numerous times, and it's the same sort of thing.
It's a giant flywheel, and if you get everyone in the organization pushing on it, the flywheel begins to turn faster and faster. If you only try to do it centrally, you can't even get the first turn of the flywheel to go.
[00:09:02] Stacey Richter: Oftentimes on this podcast, we talk about kind of the death spiral direction of the flywheel where quality goes down or at a minimum remains neutral, I guess, best case, but prices go way up.
[[In particular, episode 483 with Jonathan Baran about the healthcare flywheel, part 1 and part 2.]]
What you're talking about is the virtuous spin. So turning that flywheel around, how do you make it go the opposite way? I am on the edge of my seat to hear how, how we do this.
[00:09:32] Shane Cerone: I'm gonna throw out a few things for you.
First of all, you know, when Sam and I worked together at Beaumont all those years ago, I'd tell you, I think Dr. Flanders is literally probably one of the most effective chief quality and safety officers I could ever imagine working with.
Part of what he did that was so special though, is we really created a management model and operating system that was focused on surviving at 150% of Medicare.
And so to your question, Stacey, there's a lot of layers of inefficiency in healthcare and in our health systems. Some of them can absolutely be reduced without any significant impact. And so that's a whole podcast into itself. But the real achievement came from creating a culture that was really focused on, I would say two things.
And that is a culture where you're every day, all staff. I don't care if you have a hundred people, a thousand people, 10,000 people, 50,000, it doesn't matter, are focused on helping make it easier for doctors, nurses, and caregivers to deliver care. And Sam's referenced, you know, the use of the Toyota model, in our view, which is really engaging at the frontline and empowering the frontline to make improvements so that, again, systems are made more efficient and it's easier to see patients and it's easier to spend time with them, and it's easier to give care.
[[00:10:54] Stacey Richter: Does this remind you of what Dan Greenleaf was talking about in the part 1 and part 2 episodes with him when he talks about waking up every day, thinking about reducing friction for patients and clinicians both.]]
[00:11:09] Shane Cerone: And that really gets to productivity. Productivity is what allows an organization to drive down the cost of care and ultimately lower its prices.
The second major focus culturally that we had equally important to that was let's make it easier for patients to access the care system and move through it.
And I think anyone who's been through the care system knows that it can be a very challenging and difficult process, but you need an organization where not just the leadership, but the staff are focused on those two things in addition to all the other work that needs to be done to run a high quality, efficient organization.
Unfortunately, as health systems get bigger in centralized decision making, they actually have a negative impact in achieving those two goals more often than not. It gets really hard.
[00:12:00] Stacey Richter: Yeah. I just wanna break in and summarize a couple of things and then ask you a few questions about what you just said.
So what I'm understanding a word you both have said as well as Mark Cuban on that podcast. This idea of simplicity. The whole keep it simple, stupid, right? Because you said there's two things that you said there that a health system should be focused on making it easier for clinicians or others to deliver care.
And then making it easier for patients to get care.
[00:12:27] Shane Cerone: Yes.
[00:12:27] Stacey Richter: You say it and, and yes, it sounds very reasonable, but to your point, how often we get involved in all kinds of other stuff that doesn't if you even connect a whole lot of dots add up to one of those two things. So really staying focused on what are we even doing here? The whole quality access, affordability. Going back to that kind of trifecta.
Then as we think about how to actually accomplish that, there's a couple of things that have come up. Dr. Sam Flanders, you had mentioned it's really difficult to do this in a centralized way, three states away.
That is something that Dr. Beau Raymond, was on the podcast from Ochsner talking about as well, that even within their service area, they recognize that and do a lot to empower local markets. It could be two communities that are two zip codes next to each other and have strikingly different challenges and therefore strikingly different solutions.
So giving that power to the local market I think was really important something that you mentioned. A word that both of you used is this Toyota Model.
Now, I do wanna ask you a question because the Lean Model has gotten a very, very bad reputation, and I don't know whether deservedly so or not, because it's been used as a euphemism for going in and cutting staff.
Can you unravel that a little bit? Like it's the Toyota Model, the Lean Model, and does both of this equal cutting staff?
[00:13:51] Dr Sam Flanders: Absolutely not, and great question. The Toyota Model is really not the Lean Model. That isn't what Toyota does and we're not fans of the Lean Model. The Lean Model is about just taking tools and applying them to a situation.
The Toyota Model is about teaching people to be great problem solvers and basically unleashing them to let them do their job and support them from top leadership. So that that can happen. So that improvements can happen every single day, and that's a whole lot different. Toyota has a principle that no one will ever lose their job as a result of improvements.
They use improvements as a way to grow without adding costs, and that's really how the model should be used and never is a way to cut staff, or to just chop expenses.
[00:14:36] Stacey Richter: Another word for the Toyota Model, I just thought of this, it's Kaizen, right? Like that's the way that some people describe this as well.
[00:14:43] Dr Sam Flanders: Yes, Kaizen is Japanese word for change towards the better or continuous improvement. And Kaizen means that you're doing small improvements all the time everywhere, which is adding up to things that allows you to achieve your organizational goals.
Many times the big goals that organizations set can't occur because of dozens and dozens of small problems at the front lines that prevent that from happening. And Kaizen is a way at chipping away at a lot of those small problems. And when you do that continuously and relentlessly, you have a model that's unstoppable and that just gets better all the time and allows you to achieve your big goals.
[00:15:21] Stacey Richter: So basically what the Toyota Model is, it's like a lot of Kaizen thinking.
[00:15:25] Dr Sam Flanders: It is.
[00:15:26] Shane Cerone: I just wanna add on Stacey, that what Sam and I and the work that we've done together, first of all, we learned a lot together and I wanna acknowledge that, you know, from a couple people, Charlie Voss and Cindy Voss, who we've worked with for years because of their expertise using the Toyota Model.
But a lot of my colleagues in the industry, when you talk about Toyota and continuous improvement, they tend to fall back into a conference room where they do spaghetti diagrams and draw charts and put Excel spreadsheets together. It's really important to me that we just emphasize, that the approach to making improvements, making it easier for caregivers to see patients and care for them, making it easier for patients to receive care is a cultural aspect.
But the tools that Sam and the teams have used with the Toyota Model is all at the frontline. There's nothing in a conference room. It's working with frontline staff on the frontline, seeing problems, trying changes, hardwiring, the changes that make the most sense.
And it's a dramatically different approach than I've seen almost anywhere else. And yet I think it was essential in our success in performing at high levels with really low commercial rates.
[00:16:33] Stacey Richter: And I also could see that if you are a clinician, and I'm thinking back to the show with Dr. John Lee, who's an emergency room doctor, and we had a whole show about trying to overcome the cognitive dissonance at the front line where he's working in the belly of the beast.
He's trying as hard as he can, and this echoes the experience of a lot of clinicians. I am just thinking that a clinician would be eager to be in this model because one of the hardest things in the world is to be working at a place where you can see with your own two eyes what the issue is.
You know, 10 feet from the bedside, the issue is readily apparent, 10,000 feet from the bedside as Dr. Ben Schwartz often says, you don't understand this inconsequential little piece of noodle spaghetti on, on some whiteboard is creating chaos.
[00:17:19] Shane Cerone: Right. I heard that podcast and I, Dr. Lee highlighted all the things that we know exist in every health system in the country in terms of the desire to make improvements and to do them at a local level where people see the problems.
The approach that Sam and his teams have used is the tool and is only effective if the CEO and the senior leadership team adopt it, endorsed it and support it. And not often do those three things align. But that's what's required to get to this highest level of performance.
[00:17:50] Stacey Richter: Can you give a very specific example?
So Shane, earlier you said that there's a whole lot of examples here. That could be a whole other episode, but could you just drill into maybe one of them?
Examples of Effective Changes
[00:18:03] Shane Cerone: I'll offer one or two, and I'll see if Sam can offer a couple as well. The problem is, is that when I share my examples, most people respond with like, well, okay, that sounds nice, but doesn't seem big enough.
What I've learned from Sam and the Voss' and others over the years, is that it's the accumulation of these small changes made in a rapid manner. We get way more done than sitting around in a conference room thinking there's some silver bullet that no one has discovered before, which really just doesn't exist.
I remember years ago, one of our great colleagues, Kathy Pawlicki, ran the pharmacy services with us. She's with ASHP now, and I remember we'd created this environment and this culture where we said, look, our priority is increasing caregiver time with patients. It gets to that, make it easier for caregivers to see patients.
We measured time at the bedside as a way to try and understand the impact. And of course we emphasized, not exclusively, but we emphasized nursing time at the bedside.
And I remember Kathy came to me one day and said, now this is not a small change, it's a big one. She said, Hey, I, you know, I just probably maybe should have mentioned this before we did it, but I wanted to let you know we've completely redesigned our pharmaceutical care model.
And, and I said, okay. You know, like, what did you do Kathy? And she said, well, we're really sending our pharmacists out to the floors now because we know they can work with the nurses at the bedside and the doctors and the patients. And when they work in this new system, it will help nurses and it will give them more time with patients at the bedside.
And so, you know, a change like that, it can have a dramatic effect. But not every change, not every one of these small changes do we bother to measure because it's not worth measuring it. We just implement it and move on.
Sam, I know you've got a couple of examples.
[00:19:42] Dr Sam Flanders: I can give an example of a Kaizen that we did one time in a hospital where we were reaching the limits of the capability of one of the busy CAT scan machines in the hospital.
We had several, they were very close to need to order another machine. We had a small team of a couple of x-ray techs and basically we just watched the flow. Through the CAT scanner. What we realized within the first hour or so was that there were big empty blocks of time when there was no patient in the CAT scanner.
Because you had to get the patient and put them on the table and do the scan and then do some processing afterwards. And the x-ray techs were doing all of this and there were all these big gaps. We said, well, if we could fill those gaps with more patients, we could really see more throughput through this machine. Maybe not have to buy another one.
So that's exactly what we did. We simulated it ourselves by transporting patients and created a way, as soon as one patient's wheels were out of the room, the next patient was able to come in. It almost doubled the number of patients that could be scanned without making the techs work any harder than what they were working before.
What the hospital could do is just have a transporter dedicated to that area. Much less expensive, because CAT scan machines are a million dollars of investment, and get better patient care right away without having to buy new equipment. So that's one example.
[00:20:56] Stacey Richter: Yeah. And when you say stuff like that, it really reminds me of, there was a paper that was recently written that showed private equity when they come in to a health system, can make substantial operating efficiency gains.
When you say what you just said, it occurs to me, it's a simple, I don't wanna say simple, but it's an obvious improvement to make. And kind of the point here because obviously again, you can wind up efficiencying your way into really bad patient care and really high prices. So it also kind of goes back to the spirit of the endeavor.
But what I'm really hearing you say is that if you have a leadership commitment and an efficiency mindset, quality can be improved while costs and labor can be reduced in a way that makes everybody happy. This kind of goes back to something that Dan O'Neil said most recently. Zack Cooper has said this also.
Just find ten 1% solutions and you'll get to improvement faster if you get good at incrementally fixing those very, very small inefficiencies throughout these sprawling bureaucracies with all their little fiefdoms and their little power centers. That that is really the silver bullet, if you will.
[00:22:06] Shane Cerone: Yeah, and it's, it's more than 10. It, it's really, you know, it's like the inches we need are all around us kind of philosophy that if everyone in the organization is working out with clarity around these goals and using the Toyota principles, and if they're empowered to make appropriate changes locally when they can, a lot of the changes occur without the leadership team knowing about them or authorizing them, and as it should be.
But it does not happen in a lot of organizations that way that are overly centralized in their leadership and their decision making structure. You have to take a completely different leadership philosophy to survive at 150% of Medicare and it is doable.
[00:22:41] Stacey Richter: But I do wanna ask you something. You said something earlier, which I know I don't know that we've fully addressed, which is hospitals, as organizations, tend to spend every dollar that they are given.
What do you mean by they spend every, every dollar that they're given. And I wanna add another wrinkle to this, which is hospitals a lot of times get a lot of big donations. Does this cap out at a certain level of spend? And then does that spend go down when you get a big donation?
How does all this work?
[00:23:05] Shane Cerone: Hasn't capped out yet. We're 50% above the nearest country in the world. I mean, it caps out when employers say, I've had enough and I mean that, and we can come back. I think we should talk about that today too, a little bit and what they need to do.
You know, when you're the CEO of a health system or a hospital, there's countless things you can spend money on, and most of them are not bad things, but it doesn't mean you have to do it either. It's, you know, there's always new clinical programs to enhance. There's always new equipment to purchase. It's not like any of those things are bad things to spend money on.
You're, I mean, you're spending them on things that affect the care that people receive, but that's in the absence of competition on price. CEOs aren't bad people. I mean, they're fantastic people. We've got great leaders in this country. But they live in a market where they're rewarded for negotiating the best, the highest possible price because they have a fiduciary role to their organization.
They're never gonna admit what I'm talking about, because they have a responsibility to maximize the resources available for their organization, and they're board every CEO, I don't care if you're running a car company, a grocery store chain or a hospital. Your job is to optimize resources. What constrains you is market pricing pressure, which it, we started with, it doesn't exist today.
[00:24:22] Stacey Richter: Well, you know, one of the things that you're reminding me of, and then Dr. Flanders, I asked for, you'd weigh in here. One of the things I'm reminded of is Parkinson's law, which is that however many resources you have or however much time you have, the task will fill it. It is human nature for these things to happen.
[00:24:39] Dr Sam Flanders: Well, I think one of the antidotes for Parkinson's law is what you said about looking for the small things, the 1% instead of the big 10% type things. But I just add to that, if you get the frontline people to do that and to find it for you, and it's their ideas that they get to implement, you know that they'll be safe for patients though because they'll do them with the right heart. They'll do the right things for the employees. They'll help to build morale and discretionary effort, which is an enormously important tool that really gets engendered in a model like this. And then that will help you to combat that entropy that you get otherwise, where things just get bigger and bigger.
But to get it started and to give health systems a real reason to want to do it, competing on price could be a really important tool. And Shane could talk a little bit about our idea for what could employers do to get that started in their marketplace.
[00:25:31] Shane Cerone: I wanna circle back to, if I can, a few things you said earlier, Stacey, that I wanna highlight again.
One is that employers are taking advice from brokers and benefit advisors and insurance companies who make money when money is spent and when prices increase. You can't take advice from people who are making money off the, you know, that's, you shouldn't rely exclusively on the advice of people who are selling you the products and services.
[00:25:56] Stacey Richter: Which isn't everybody. I just wanna be really clear. Not everybody, but if there is someone who's making money, when more money is spent, like, that's when problems arise.
[00:26:03] Shane Cerone: It's not everyone, but there's too much of it, I think in our industry right now. I would say that, you know, just for employers who are listening, Sam and I know that care can be delivered far below 200% of Medicare and that it can be exceptional care.
In fact, it can be among the best care in the country. We need a different marketplace to get there though, because of all the things that we've highlighted that can happen, they won't unless the marketplace changes.
The Role of Employers in Healthcare Pricing
[00:26:26] Shane Cerone: And I would just remind employers that in this country we have what's called an employer sponsored health insurance model.
Employers need to take charge. No one's gonna change it, but the employers themselves, not the health systems, not the insurance companies. Not anybody, the brokers or the benefit advisors. Employers will have to take the reins and take control.
To Sam's point, we believe this can be done and we believe you can create competition and bring it back into the marketplace, and that we will see dramatic improvements in healthcare value in this country by doing it.
But it's all based around employers working within metropolitan markets largely together to create price competition. They have to reject a third party negotiating prices and setting them through a two party negotiation model, which is how our whole system is based today.
And instead say, no, we're going to go to a model where providers will compete on price, they've gotta submit their pricing to us directly, and then we will work with insurance companies, health plans, TPAs to administer those fee schedules.
I also believe, as we said earlier, that to do that employers have to insist on radical simplification of pricing, which is largely a percent of Medicare model, I think is the only way to really get there. And of course there's nuances and things and details, but they're not insurmountable.
And I would submit that a year from now, employers working together within any single market could probably achieve 15, 20, 25% reductions in prices just in a first year pass. And that the long-term opportunity is much, much greater than that once the structure of the market is modified and implemented.
[00:28:06] Stacey Richter: You said something fascinating and makes so much sense and that is that, you know, we, we use this term administrative services only, but actually even if we're using administrative services only or a third party administrator, those two statements have the word "administrator" in it, not negotiator of the contract.
So I think what you're suggesting is employers use collective action, which Cora Opsahl has said 90 times on on this podcast as have others, gang up, you negotiate pricing. You negotiate pricing yourself, and then use your administrators to administrate the contract, which you know, again, Elizabeth Mitchell [EP491] talked about as well.
Like, you know, there is legit administration that is certainly involved here. So use the administrator to administrate only.
[00:28:50] Shane Cerone: Pay the claims. Don't let Visa negotiate the price of the milk. Doesn't make any sense. You negotiate the prices and let the card just process the transaction. I think we've gotta get back to that.
We believe it can be done. We believe it can be done within markets in a relatively short period of time. We will be talking about this at the National Alliance Annual Forum on November 11th, where we're gonna present a model that we think works that employers can use in their markets to achieve this end for next year's discussions.
[00:29:18] Dr Sam Flanders: And just to clarify one point, it doesn't involve narrow networks or excluding any providers, but the employers have to create incentives for their team members to utilize the lower cost providers and then just let market forces go where they will.
[00:29:33] Shane Cerone: We think you can have it all Stacey. We think that what we envision is a multi-tiered process or multiphase process.
The very first step is for employers to take the reins and set prices to make people like me as when I'm sitting as a CEO in a hospital or health system, send me a request for proposal and challenge my team to say, give us your quality data. Give us your prices a percent of Medicare.
Tell us how good you can be because as a CEO of a provider organization, I issue RFPs all the time. I've never responded to one. And that has to change. If you change that one aspect. Things will come into play and no tier one is not just the low price, low quality. In fact, you're gonna find markets, as Sam and I have personally experienced, where low priced hospitals and health systems may be the highest quality providers.
But at the end of the day, the employer group should choose the milieu from the milieu of criteria, who's tier one and who's tier two, and just creating that competition and that incentive for organizations to work toward, here's where I am today, but I'm gonna be better next year. We'll drive massive change in our industry and move us from conversation to action in my view.
[00:30:41] Stacey Richter: You have probably a lot of hospital CEOs that would love that, or at least the good ones.
[00:30:45] Shane Cerone: I would.
[[00:30:46] Stacey Richter: Reminding everyone about the story from the show with Dr. John Rodis that I mentioned last show with Shane Cerone and Dr. Sam Flanders.
Dr. John Rodas, he was the CEO of a hospital. He improved safety in that hospital wildly, pretty much, and got zero increase in volume to his hospital as a result. That is not something that makes the board of any given hospital happy. Mind you. So there's some lessons here, and that is an actionable insight for employers, more of which are coming up right now.]]
Because like now you can go to the board and say, this is what I wanna do and for these business reasons, because as we know on many hospital boards, Dr. Suhas Gondi did a study on this. There's a lot of finance folks.
So like it, it's a lot more compelling if you say, we have our market that wants this.
[00:31:32] Shane Cerone: You'll find plenty of executives who are bright and intelligent and they're great people, who in this model will say, I as a leader of a community resource, my fiduciary role is to the community too. And I want an environment where we're rewarded and recognized for delivering high value, great care at low prices.
It won't, you won't get a lot of people admit to it upfront under the structure we have. But I know that you'll see people embrace it. And maybe just, I don't wanna forget to say, I think employers, you know, they always are gonna hear from health systems and health plans and brokers and benefit advisors that the stuff we've talked about today is impossible or scary or destructive.
And I would tell employers to have some courage and some faith. It's not true. And, and what I'd say is this, is that, you know, on the days and the times when I sit as the CEO of a health system, it's a privilege. And the privilege is I come into work with doctors, nurses, pharmacists, scientists, engineers, the whole staff. These are some of the most intelligent, hardworking, ethical groups of people you'll ever come across.
And if you think about what a hospital is every day, people walk through the doors to see providers. They have problems. Their problems are always a little different. And what we do is we solve problems. We give 'em the best possible care we can. So my message to employers is these organizations are filled with problem solvers.
If we turn the engine, the, the focus, the ingenuity, the creativity, the work ethic of these organizations to actually improving productivity, efficiency, lowering costs of great care, I’m not sure we know what the limit is. It may be lower than 150% of Medicare, and it may be by quite a bit, but the work will get done if we frame it in the correct way.
Conclusion and Final Thoughts
[00:33:24] Stacey Richter: It was a very compelling roundup there. Dr. Sam Flanders, do you have anything that you want to add to that or anything that I didn't ask.
[00:33:32] Dr Sam Flanders: To kind of sum up our discussion. My feeling is first focus on the pricing issue. There's so many different things that could be done to help improve cost of care, but pricing is low hanging fruit, and we need to focus on that first, and as Shane said very, very well. That will drive a lot of these other things. And of course quality is a big piece of this too. It needs to be a reasonable price with good quality.
And then the second thing is create a model within the organization that drives improvement at the front lines modeled after the the Toyota method where everybody is focused on doing their job well every day, but also how do they do their job better?
Focused on organizational priorities and constant improvement, and I think if we could get those two things going, it would make an enormous difference.
About Kada Health
[00:34:18] Stacey Richter: Who wants to talk about Kada Health and what you're up to there?
[00:34:21] Shane Cerone: I'll say a few words about it. At Kada Health, our mission is to make exceptional healthcare affordable and accessible. Everything we do is built around anything that leads to that goal for our system in this country.
We serve providers, we provide, you know, advisory services and the like and help them implement the programs that we've talked about today to help achieve the results that we've seen organizations achieve.
And now we're turning our attention also to employers to say, you can restructure your markets, you can take the reins back. And we help groups of employers with understanding how to do that while also giving them the assurances of, we're a team of people who've served as executives in the healthcare system for years and years. And to kind of refute some of those common myths that are thrown at them that discourage them from driving change.
[00:35:10] Stacey Richter: And Kada is KADA.
[00:35:11] Shane Cerone: Kada Health? Yes. KADA.
[00:35:14] Stacey Richter: And that's your website, Kada Health?
[00:35:15] Shane Cerone: Kadahealth.com.
[00:35:17] Stacey Richter: Shane Cerone and Dr. Sam Flanders, thank you so much for being on Relentless Health Value today. I learned a lot.
[00:35:23] Dr Sam Flanders: Thank you, Stacey. You are an excellent interviewer.
[00:35:26] Shane Cerone: Thanks, Stacey. We really appreciate it. We enjoyed the conversation.
[00:35:29] Dr Sam Flanders: We did.