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. 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]."
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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. So, here we go. You'll like this. It's actionable.
Two weeks ago, just reviewing real quick here, Shane Cerone and Dr. Sam Flanders from Kada Health talked with me (EP490) about the problems that any given solution needs to solve for at any given health system. 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 are well and truly myths. Listen to that show from two weeks ago where we get into these myths in detail.
But also (b) is per the show last week with Elizabeth Mitchell from PBGH, the Purchaser Business Group on Health. 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.
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 Suhas Gondi, MD, MBA (EP404); the show with Vivian Ho, PhD (EP466); and also the one with Scott Conard, MD (EP462) 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 Mick Connors, MD, also touches on this.
Now let's talk solutions. Some of what gets discussed today definitely reminded me of that show with Beau Raymond, MD (EP455) and the one with Eric Gallagher (EP405) 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. 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.
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 #1 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.
Also mentioned in this episode are Kada Health; Elizabeth Mitchell; Purchaser Business Group on Health (PBGH); Suhas Gondi, MD, MBA; Vivian Ho, PhD; Scott Conard, MD; Mick Connors, MD; Beau Raymond, MD; Eric Gallagher; Jerry Durham; Jonathan Baran; Dan Greenleaf; Mark Cuban; Charlie Voss; Cindy Voss; John Lee, MD; Benjamin Schwartz, MD, MBA; Kathy Pawlicki; Dan O'Neill; Zack Cooper; Cora Opsahl; National Alliance of Healthcare Purchaser Coalitions; John Rodis, MD, MBA; and Tom Nash.
For a list of healthcare industry acronyms and terms that may be unfamiliar to you, click here.
You can learn more at Kada Health and follow Dr. Flanders and Shane on LinkedIn.
Sam Flanders, MD, FAAP, is a seasoned healthcare executive and physician with a distinguished career in quality, safety, and performance improvement leadership. He most recently served as executive vice president for quality, safety, and population health at St. Luke's Hospital in St. Louis, Missouri.
Prior to joining St. Luke's, Dr. Flanders held the position of senior vice president and chief quality and safety officer at Beaumont Health (now Corewell Health) in Michigan. Prior to Beaumont, he served in a similar role at Indiana University Health (formerly known as Clarian Health Partners).
Dr. Flanders earned his medical degree from the University of Illinois College of Medicine and has an undergraduate degree in computer science from University of Michigan. He is board-certified in pediatrics. For over 30 years, he has served as a volunteer physician at summer camps for children with diabetes, helping to educate and support young campers to better control their disease.
Shane Cerone is the CEO of Kada Health, LLC, a consulting, management, and leadership practice that supports employers in reducing the cost of exceptional healthcare and advises hospitals, health systems, outpatient centers, and physician groups on practices that improve care quality and efficiency.
Prior to establishing Kada Health, Shane spent more than 20 years leading high-performing hospitals and physician group practices in both community and academic health systems. He has served as the president/chief executive for Beaumont Hospital (Royal Oak), Mercy Iowa City, Virginia Commonwealth University Hospitals, and St. Luke's Hospital & Health Network in St. Louis.
During his tenure as its president, Beaumont Hospital (Royal Oak) was recognized as one of the nation's highest-performing hospitals and health systems, consistently ranked as a national leader for clinical excellence (US News & World Report), care quality and safety (University HealthSystem Consortium), and affordability (the RAND Corporation).
Shane earned a bachelor of arts degree in biology from Nebraska Wesleyan University and a master of arts degree in hospital and health administration from the University of Iowa, where he serves as adjunct assistant professor.
07:08 What are the many problems that health systems deal with?
08:44 EP483 (Part 1 and Part 2) with Jonathan Baran.
09:43 What was the real achievement in building this hospital system?
10:25 EP489 (Part 1 and Part 2) with Dan Greenleaf.
10:42 Why productivity and patient access are the top two things to focus on.
11:36 EP488 with Mark Cuban and Cora Opsahl.
12:32 EP455 with Beau Raymond, MD.
12:58 The lean model versus the Toyota model.
16:06 EP438 with John Lee, MD.
16:40 EP481 with Benjamin Schwartz, MD, MBA.
17:44 Why small changes accumulated create greater change than big changes.
21:01 How an efficiency mindset can increase improvement faster.
27:42 Why administrators should not be negotiators.
28:11 EP491 with Elizabeth Mitchell.
29:06 What are the steps to this multifaceted process?
30:17 EP286 with John Rodis, MD, MBA.
30:48 Study by Suhas Gondi, MD, MBA, on hospital boards.
33:03 Why it's important to focus on the pricing issue first.
33:49 What Kada Health is all about.
Recent past interviews:
Click a guest's name for their latest RHV episode!
Elizabeth Mitchell (EP491), Shane Cerone and Dr Sam Flanders (Part 1), Dan Greenleaf (Part 2), Dan Greenleaf (Part 1), Mark Cuban and Cora Opsahl, Kevin Lyons (Part 2), Kevin Lyons (Part 1), Dr Stan Schwartz (EP486), Dr Cristin Dickerson, Elizabeth Mitchell (Take Two: EP436)