Medicare Changes Demand Hospital Makeovers

    The assault on the Medicare program now pointing toward one of the fundamental disconnects between healthcare and the rest of the business world. In the original federally controlled program, hospitals were actually financially rewarded for poor quality. They were frequently paid for the now-called "never events"

Under the new state-controlled versions, quality is no longer simply a moral imperative; now it's a real pocket-book issue for every hospital. Medicare will no longer pay for those "never events," or a lot of other things. Reforming the Medicare system to save money, has gone to the next level, demanding higher quality from service providers.

To thrive in this much harsher economic climate, hospital executives must revisit their hospitals' performance drivers and understand and anticipate how this economic change should be folded into the larger management system.

There are five areas that require close examination.

Strategy: How can the hospital's strategic direction change to make operational quality a competitive advantage in the marketplace? How can services that do not deliver superior quality be walled off or eliminated?

Process: Resist the default diagnosis that your hospital has a process problem. Most hospitals have a process control problem. Take steps to better control your processes. This isn't magic, but it does require knowledge of control systems, something they really don't teach you in medical school.

People: Now, more than ever, hospital employees must be multifaceted. Examine the hiring criteria to ensure that your hospital acquires the quality people who can deliver the quality that will drive success. It isn't trite, good people trump many problems.

Culture: Does your hospital culture tolerate the lack of discipline that leads to poor quality? Do you have a system that drives accountability throughout the organization? Do you put clear, actionable information in the hands of the people who need it? Are the targets clear and relevant to the individual? And is there a mechanism in place that instigates improvement when the organization's performance doesn't meet established standards? Does your culture serve the whole hospital?

Organization: Can the people in your hospital make decisions? A fundamental flaw in management today is the lack of importance placed on decreasing number of people who need to be involved in decision-making. A preventable problem is only preventable if people can act in time to prevent it. If you truly want your people to keep you out of trouble, they need to be able to act on information provided when and where they need it.

Changing the mindset of hospital executives and staff is a tall order, but not insurmountable. There are plenty of tools, techniques, and expertise available to put them over the top.