Executive Summary
Implementations of care paths will/may help cut healthcare costs. This report argues that the adoption of the care path approach is necessary to ensure MGH's costs are sustainable, but to ensure success, a phased approach to implementation approach, stakeholder engagement, constant, communication, and use of formal change management models will help.
Summary of the Case
As one of the largest hospitals in the country and a pioneer of open-heart surgery, MGH its ability to rein the costs of one of the most expensive procedures would serve as an important guide for the rest of the industry. Its costs are higher than its competitors while a CABG may alleviate this, its design and implementation is hampered by the lack of an accurate information system. The pressure to cut hospital costs in the 1990s saw the MGH's merger with Brigham & Women's, which was expected to lead to redundancy, reduced bed counts, and service consolidation. This was worsened by the fact that the reimbursement method for MGH CABG resulted in wide variations in the amount received for the services rendered and costs incurred. The mismatch between the costs of care and the reimbursement methods has reduced MGH’s operating profit margins, necessitating urgent changes to ensure sustainability. Other problems include staff resistance, indecision over the implementation approach, and difficulties of behavior change. MGH formed groups to enhance its practices and cut costs across the institution, which, however, came up against a lack of good cost accounting data; and cultural resistance to some cost-saving techniques such as TQM.
The earlier success of a knee replacement care path led to the section of care paths as a viable method of improvement that could cut the length of stay by up to 30%. David Torchiana and Richard Bohmer were planning the implementation of a new care path plan for CABG, which seeks to cut costs and the length of stay, without hurting the quality of care. The care path standardizes treatment procedures, compress the timeline, and minimize variability between surgeons. The success of the CABG care path is critical to MGH's cost reduction plan since other care paths had been planned. Even most importantly, the suitability of CABG’s predictable recovery path to the care path as well as the complexity and costs involved meant that its failure could mean that other care paths were likely to fail as well. After a widely consultative process that drew on multi-departmental teams, CABG standardizes tasks, cuts resources such as blood, saves time (e.g. by introducing charting by exception), cuts staff needs, etc., which reduce the length of stay, the resources required for different treatments/procedures, and ultimately, the overall cost of care.
Major Issues in the Case
High costs
While it is true that MGH receives and deals with difficult cases, which lead to comparably higher costs, the realization that it has the highest costs of all its competitors is worrying. The coronary artery bypass graft surgery (CABG) is a 4- to 8-hour surgical, procedure that cost $2000/hour and surgical intensive care unit (SICU) costs were up to 300% of the costs of regular stay, which when coupled with even more costs before and after the operation comprise a substantial portion of the facilities’ cost structure. While the surgery takes up to eight hours, the SICU and Ellison stays can take up to eight days. It is urgent that the hospital seeks out ways to cut costs without an adverse impact on the quality of care (Wheelwright and Weber 7).
Reimbursement methods
The reimbursement methods by insurance companies are not exactly in keeping with the quality indicators that the hospital may use (Wheelwright and Weber 3).
Employee resistance
While the CABG path development stage did not involve considerable employee concerns, the implementation stage faces possible resistance due to the belief that path could hasten the reduction of MGH bed count or result in layoffs as well as due to unwillingness on the part of the cardiac surgeons to put their patients on the path. Further, there was a slight difficulty with the actual approach that should be used in the implementation of the path.
Implications for quality of care
The potential implications on the quality of care were also a problem, not least because standardization is associated with insensitivity to the individual patient needs. However, the fact that the recovery path for patients was nearly identical for all patients, in spite of the complexity of the medical procedures involved in multiple major areas in the hospital (p. 6). Given the fact that the reimbursements are dependent on the quality of care, a deterioration in the quality of care as a consequence of the CABG care path will not only affect MGH’s income, but perhaps most importantly, the negative indicators such as increased mortality and readmission rates will reduce the demand for the hospital’s services.
Professional autonomy
One of the most difficult concerns was with respect to the choice of the treatment methods that were to be used in the path. The choice between leaving the decisions to the individual medical areas and whether such decisions should be made the team could have implications for both the quality of care, as well as the efficiency gains due from the care path. The flexibility has the consequence of sub-optimal decision-making, particularly when personalized care and attention are important at the level of care involved in CABG. One important aspect of standardization is with respect to the implications for patient education. While any adverse effects on quality is not anticipated, the patients’ perception of the quality of care depended on their understanding of the process, treatment, and expectations, which were in turn shaped by patient education.
Implementation approach
With respect to the implementation approach, the choice between the method adopted by the orthopedic surgeon’s group in knee replacement surgery would allow for the gathering of helpful data would subsequently inform the intensification of the care path program, by convincing more practitioners of its benefits (Wheelwright and Weber 5).
Analysis
The healthcare costs in the US continue to increase (Wheelwright and Weber 3), to the detriment of many people to access quality care, even life-saving treatments such as CABG. While hospitals face a fairly rigid cost structure, determined on one hand by the high costs of equipment and pharmaceutical supplies and high wage bills on the other, the need to reduce wastage across the individual hospitals’ value chains can never be gainsaid. The reimbursement methods present the biggest challenge to MGH, but the intentions of insurers and the government to keep a lead on healthcare costs in the country. However, while it appears quality is a consideration, the current payment methods, particularly the DRG method offers little incentive for high-end hospitals such as MGH to commit resources and human capital in the attainment of absolute quality.
The free-for-service payment method has been largely phased out, and instead, diagnosis-related groupings (DRG) that offer fixed payments for particular medical diagnosis. The adoption of the DRG method in up to 80% of MRGs CABG patients means that that the lengthy hospital stays, and particularly more SICU stays, means that the hospital does not get the value for its services. The global fee approach paid doctors/hospitals a standard fee per patient, with hospitals and doctors reaching their own arrangements on how to share the fees. This method not only creates possible difficulties, particularly when several doctors treat the same patient, but also means that high quality and expensive equipment used by prestigious hospitals such as MGH are under-compensated. Lastly, the capitation method provides fixed payments for groups of patients. This encourages hospitals to keep costs lower to attract certain patient groups, a battle that MGH was not winning with respect to its CABG.
While this forces competition in the industry, a lack of awareness of the costs has implications for the bottom line. A look at the MGH’s income statement also reveals that the operating expenses in 1994 and nearly equal to the operating revenues. The small operating profit margin may indeed result from the mismatch between the payment methods and the services or performance indicators that MGH employs. The implementation of CABG may help to bring the internal performance indicators in line with the indicators used by insurers and the government. The alignment will ensure the costs are better matched by the payments, and thus, the hospital's operating margin may widen Wheelwright and Weber 12).
Torchiana argues, rather rightly that the possibility of service reductions having an adverse effect on the CABG outcomes was unacceptable. There are several indicators that must be considered in the evaluation of the use of treatments such as physical therapy, and in the case of CABG, the mortality rate, as well as the rates of readmission, are important indicators that need to be tracked (Wheelwright and Weber 8). Currently, the two indicators are considerably low, but this could change because of increased respiratory problems due to reduced physical therapy. Given the fact that an additional day in the SICU costs more than the gain resulting from the paring down of physical therapy, such a possibility will lead to the re-examination of the reduction (Wheelwright and Weber 7).
The lack of adequate and/or practical information on some aspects of care is a major problem at the design and implementation stage, as well as the results of the program. Part of this problem is solved by the collection of substantial information about the patient at the outset, which should inform decision-making as well as the adaptation of the path to making it perfect in the future. Hospitals in the US do not have good cost accounting systems enough to identify the sources of high costs with the precision necessary to design a data-based care path. The general information available is inadequate in designing an improvement program. This situation is worsened even further by the fact that hospitals tend to assess outcomes on a case-by-case basis such that assessing the outcomes for a large number of patients is impractical. Effectively, it is difficult for the design and implementation team to make precise decisions that facilitate the development of an efficiency-creating care path.
Further, the implementation of the care path required a change in processes, practices and behaviors across departments, including communication and coordination among varied medical disciplines used to working independently. For instance, some patients received more treatment that was needed because, historically, physical therapy had been ordered for all cardiac patients as against on a need-basis, which in turn made it difficult to simply change an established practice. A further example of how hard-set professional practices cannot be easily changed is the unwillingness to reduce the blood units prepared before an operation, even when most of the units were not usually used (Wheelwright and Weber 10). As such, most of the changes suggested under the care path could take time and convincing before they set in, and this also means that it will similarly take time before the fill efficiency gains can be realized.
One important aspect of standardization is with respect to the implications for patient education. While any adverse effects on quality are not anticipated, the patients' perception of the quality of care depended on their understanding of the process, treatment, and expectations, which were in turn shaped by patient education (Wheelwright and Weber 9). The possibility of reduced patient education will have the consequence of creating mistrust and mixed expectations on the part of the patient, which in turn affects their mental strength and ability to take care of themselves. Particularly, this has effects on the preparedness for discharge in the estimation of the patient, which in turn, has implications for the length of stay (Wheelwright and Weber 9).
It remains to be seen whether the hospital and physicians keep a cooperative environment, particularly since the hospital will not order practitioners to adopt the care path. Like any major changes, resistance is likely, especially if the changes are implemented with little regard for important stakeholders (Wheelwright and Weber 11). Resistance stems from fear, lack of clarity, confusion, pride, non-involvement, poor communication, and other similar problems (Kotter 97). This is particularly emphasized by the fact that the merger between MGH and Brigham & Women’s, which was feared to lead to bed reductions, service consolidation, and layoffs (Wheelwright and Weber 3).
Poor implementation will erode the confidence that would draw fierce opposition to the care path, and since this is the first major attempt at this (Wheelwright and Weber 1), it could create problems for subsequent initiatives. Change management models emphasize the role of consultation and active involvement of all stakeholders in the planning and actual implementation (Kotter 103). While the political approach to the planning stage helps, a similar approach at the implementation stage could cause marked delays in the completion of the care path. Involvement can take as little as constant communication, and representation in decision-making, which can be built into the implementation without major disruptions to the actual implementation deadlines, as well as ensuring greater effectiveness. Other than the resistance from key stakeholders, the potential of disruptiveness at the implementation stage must be careful monitored and handled to prevent it from having negative effects on the quality of care (Kotter 97).
The choice of the actual implementation approach is also a challenge. While savings would be made because there is no need for retraining staff at the slightest tweaks to the path, the fact that the problems being address are slightly different means that considerable modifications may actual be needed (Wheelwright and Weber 11), which may not have the same results as the initial program. On the other hand, the choice of a pilot program would necessitate the problem-specific path that can be tweaked at without causing huge disruptions in the hospital, and its success would have nearly the same effect as the first approach, in convincing practitioners and other stakeholders of the benefits of a critical path. However, a pilot approach will not create similar problems that the implementation currently faces i.e. the lack of information on how scaling up the path would have on MGH and whether the path would be successful in cutting costs (Thompson, Strickland and Gamble 91; Wheelwright and Weber 5).
Recommendations
Use change management models (e.g. Kotter’s eight-step model) to mitigate resistance and ensure successful implementation. These models mainly rely on the creation of a clear vision, and a political approach to the implementation of CABG as well as excellent communication in order to mitigate resistance (Kotter 98). The CABG care path implementation should involve a committee drawn from key departments to ensure collective decision-making and willful changes in professional practices to fit in with the care path. A participatory approach should also make for timely communication across the departments involved, but active efforts to ensure adequate and constant communication among all the stakeholders is critical at all the implementation stages.
The implementation approach used should be based on the knee replacement care path, but should be phased in, as against using a pilot project. A phased implementation will encourage individual practitioners and departments to accept the new approaches e.g. reduced decision-making flexibility and units of blood prepared before surgery without making it seem as if the care path is stifling their professional autonomy. A phased implementation will also help detect and prevent any adverse effects resulting from the adoption of the care path such as the effects of scaling back physical therapy because the results will be evaluated during/after every implementation phase.
Doing nothing is always an option for MGH. The hospital remains marginally profitable, which is perfectly acceptable for a prestigious teaching hospital, whose focus should lie in research and provision of quality medical care. This is particularly so if possible changes necessitated by the CABG care path such as reduced physical therapy, patient charting, and days of hospitalization may result in the deterioration of quality. Since it is impossible to tell with certainty whether the care path will deliver the expected benefit, then it would be reckless to use some patients and practitioners are guinea pigs. Perhaps even most critically, the possibility of change will fuel cynicism that may hurt future attempts are controlling the costs of care (Wheelwright and Weber 9; Kotter 99).
Works Cited
Kotter, John. "Leading Change: Why Transformation Efforts Fail ." Harvard Business Review (2007): 96-115. Print.
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Riegel, Barbara, Tiny Jaarsma and Anna Strömberg. "A middle-range theory of self-care of chronic illness." ANS Adv Nurs Sci 35.3 (2012): 194-204. Web. 14 April 2016.
Thompson, A. Arthur., et al. Crafting and executing strategy: The quest for competitive advantage: Concepts and cases: 2009 custom edition (17th ed.). New York: McGraw-Hill-Irwin, 2010. Print.
Wheelwright, Steven and James Weber. "Massachusetts General Hospital: CABG Surgery (A)." Harvard Business Review (2004). Print.
