NexGen Advisors Point of View: Healthcare
By Carla Zilka 7/29/09
My doctor recently notified me that she will not be accepting my insurance carrier, due to the burdensome policies, processes and procedures it requires of doctors. My doctor is completely automated, with a website for making appointments, getting test results, etc. It seems to have become too labor intensive and expensive for her to accept its customers. The same thing occurred with my sister, who was being treated for Lyme Disease, and had to switch doctors midstream, because her doctor said her insurance was too cumbersome and difficult to deal with. Yet, even with inefficient processes, both doctors and healthcare companies continue to be profitable. Imagine how much less insurance could cost if insurers were efficient and easy to do business with. But, efficiency can be expensive, usually requiring investment in technology and process improvements, which would eat into profits.
For someone like me, who has been performing business process improvement for 20 years at some of the largest companies in the world and managed corporate benefits at a Fortune 5 company, the thought that insurers and the government are not focusing first on improved efficiency to lower health care costs, is problematic. Issues related to efficiency have always been the main drivers for customer dissatisfaction and increased internal costs at the Fortune 5 company and nothing has changed. We must first fix the internal systemic issues within the current healthcare system, before making drastic changes and adding programs for a new system. The administration is basically throwing more problems on top of an already broken process. The best approach the government could take is to build a multigenerational plan that includes identification of root cause issues within the current system using tools that will point to areas that must be fixed first to ensure that no downstream issues occur. Once the process and system requirements have been identified and fixed, then the government can begin to integrate new policies and required system changes.
The government appears to be tackling the issue of healthcare without the necessary preparation, which is a reckless move. I have heard “what” they plan on changing, but not “how” - the most crucial piece. As with most things, preparation is 80%, execution is 20%. Preparing for the new policies to take effect will be the most important part of this plan, and getting the systems and processes “prepared” to manage the changes is key. To do this, the healthcare changes and processes that will be impacted must be broken down into manageable parts. From there, root cause issues can be identified through detailed analyses, allowing issues to be fixed correctly the first time around. When you don’t fix root causes, the same problem occurs over and over, because the real problem is an upstream defect hiding in a defective downstream.
Some changes may appear small and easy to implement. However, something that seems easy, like forcing insurers to cover hospital stays, prescriptions and maternity care, is not as simple as changing a few rules in the system. Changes to the entire healthcare lifecycle are necessary for patients to use the benefits and for claims to be paid correctly.
Implementing a change like universal coverage is a daunting task. For something like universal coverage to work, the same processes and systems used in a country such as the Netherlands would need to be implemented. In the Netherlands, there is one system that all providers (doctors, hospitals, etc) and insurers use, with standardized, generic codes for treatment and price. This type of healthcare system works because everyone is covered under the same benefits, and there is one point of entry into the process through a primary care provider (PCP). A patient cannot go to the hospital except for extreme emergencies. Most PCP’s have the training to perform outpatient procedures, so the need to go to the emergency room is limited. The entire lifecycle of a patient from doctor identification to claims payment works because a well-thought out process was developed first. In this model, systems were secondary and were programmed to support the process - not the other way around.
The US doesn’t have the same luxury as the Netherlands when it comes to healthcare processes and systems because Medicare, Medicaid and insurers already have systems in existence. The complexity of changing all these systems based on new policies without the time to lay out a plan of attack for potential implementation issues that could arise will result in havoc, most-likely causing significant system errors that will impact end customers. It is impossible to identify just how much time patients, doctors and insurers would waste, let alone the significant amount of money that will need to be invested to fix all the issues that will arise.
To demonstrate the complexity of these issues, significant policy changes would be required to implement an expanded Medicare program to cover the poorest individuals and families, subsidies to help people forced to buy private plans that they can’t afford, out-of-pocket caps and preventative care programs. The implementation of these changes would entail significant system enhancements to current systems, or even possibly a new system altogether, not to mention the integration needed with all the other programs that exist under the proposed healthcare bill umbrella. Along with policy changes, you must change processes and procedures. They would have to be changed and documented, and employees would require training related to the new systems, policies and procedures. I wonder if anyone in Obama’s administration has the project plan and understands the cost this will incur? I bet not.
Finally, metrics would need to be implemented to ensure the processes and systems are running efficiently and effectively. A project of this size at a public company would take 8-12 months alone just to identify the root cause issues in the current systems and to identify opportunities for improvement. The actual improvements themselves could take years, and required process and technical experts to help with the analysis and implementation. Yet, our government is rushing to get all issues identified and fixed in just a few months, and from where I can see, without help from outside experts, there will be significant time and money wasted. And the paying “customer” will feel the brunt of it all.
Additionally, there is the discussion of who will manage and oversee this new healthcare system. What is the most efficient organization to control costs? When we think about outsourcing, we think about public and private companies moving non-core activities to suppliers that perform those functions at a lower cost. Representative Richard Neal complained that President Obama and Congress were “outsourcing congressional responsibility” for the oversight of the new health care system. Most business people would say outsourcing is great, assuming it is outsourced to a private company that does this type of work as their core business activities and has best practices and systems in place to make it the most efficient it can be. However, the proposal on the table calls for another government organization to manage a large and complicated process, and the outcome will be dismal. This requires expertise, thought leadership and a strong leader to drive the program and to achieve successful results. Without these three items, it will take tens of years and billions of taxpayer dollars.
In the end, it is not just about the policy changes that would be put into affect if the health care bill is approved, but it is also imperative to evaluate the processes they are using to identify issues and resolve issues, and the implementation plans on how to fix them. This is not just critical, but paramount to ensure continuity for the millions of Americans who already have insurance and the new customers that will be accessing the system through other programs. I hope Obama’s team knows what they are doing. If not, hire an expert that does….and I don’t mean another politician or financial advisor.
For someone like me, who has been performing business process improvement for 20 years at some of the largest companies in the world and managed corporate benefits at a Fortune 5 company, the thought that insurers and the government are not focusing first on improved efficiency to lower health care costs, is problematic. Issues related to efficiency have always been the main drivers for customer dissatisfaction and increased internal costs at the Fortune 5 company and nothing has changed. We must first fix the internal systemic issues within the current healthcare system, before making drastic changes and adding programs for a new system. The administration is basically throwing more problems on top of an already broken process. The best approach the government could take is to build a multigenerational plan that includes identification of root cause issues within the current system using tools that will point to areas that must be fixed first to ensure that no downstream issues occur. Once the process and system requirements have been identified and fixed, then the government can begin to integrate new policies and required system changes.
The government appears to be tackling the issue of healthcare without the necessary preparation, which is a reckless move. I have heard “what” they plan on changing, but not “how” - the most crucial piece. As with most things, preparation is 80%, execution is 20%. Preparing for the new policies to take effect will be the most important part of this plan, and getting the systems and processes “prepared” to manage the changes is key. To do this, the healthcare changes and processes that will be impacted must be broken down into manageable parts. From there, root cause issues can be identified through detailed analyses, allowing issues to be fixed correctly the first time around. When you don’t fix root causes, the same problem occurs over and over, because the real problem is an upstream defect hiding in a defective downstream.
Some changes may appear small and easy to implement. However, something that seems easy, like forcing insurers to cover hospital stays, prescriptions and maternity care, is not as simple as changing a few rules in the system. Changes to the entire healthcare lifecycle are necessary for patients to use the benefits and for claims to be paid correctly.
Implementing a change like universal coverage is a daunting task. For something like universal coverage to work, the same processes and systems used in a country such as the Netherlands would need to be implemented. In the Netherlands, there is one system that all providers (doctors, hospitals, etc) and insurers use, with standardized, generic codes for treatment and price. This type of healthcare system works because everyone is covered under the same benefits, and there is one point of entry into the process through a primary care provider (PCP). A patient cannot go to the hospital except for extreme emergencies. Most PCP’s have the training to perform outpatient procedures, so the need to go to the emergency room is limited. The entire lifecycle of a patient from doctor identification to claims payment works because a well-thought out process was developed first. In this model, systems were secondary and were programmed to support the process - not the other way around.
The US doesn’t have the same luxury as the Netherlands when it comes to healthcare processes and systems because Medicare, Medicaid and insurers already have systems in existence. The complexity of changing all these systems based on new policies without the time to lay out a plan of attack for potential implementation issues that could arise will result in havoc, most-likely causing significant system errors that will impact end customers. It is impossible to identify just how much time patients, doctors and insurers would waste, let alone the significant amount of money that will need to be invested to fix all the issues that will arise.
To demonstrate the complexity of these issues, significant policy changes would be required to implement an expanded Medicare program to cover the poorest individuals and families, subsidies to help people forced to buy private plans that they can’t afford, out-of-pocket caps and preventative care programs. The implementation of these changes would entail significant system enhancements to current systems, or even possibly a new system altogether, not to mention the integration needed with all the other programs that exist under the proposed healthcare bill umbrella. Along with policy changes, you must change processes and procedures. They would have to be changed and documented, and employees would require training related to the new systems, policies and procedures. I wonder if anyone in Obama’s administration has the project plan and understands the cost this will incur? I bet not.
Finally, metrics would need to be implemented to ensure the processes and systems are running efficiently and effectively. A project of this size at a public company would take 8-12 months alone just to identify the root cause issues in the current systems and to identify opportunities for improvement. The actual improvements themselves could take years, and required process and technical experts to help with the analysis and implementation. Yet, our government is rushing to get all issues identified and fixed in just a few months, and from where I can see, without help from outside experts, there will be significant time and money wasted. And the paying “customer” will feel the brunt of it all.
Additionally, there is the discussion of who will manage and oversee this new healthcare system. What is the most efficient organization to control costs? When we think about outsourcing, we think about public and private companies moving non-core activities to suppliers that perform those functions at a lower cost. Representative Richard Neal complained that President Obama and Congress were “outsourcing congressional responsibility” for the oversight of the new health care system. Most business people would say outsourcing is great, assuming it is outsourced to a private company that does this type of work as their core business activities and has best practices and systems in place to make it the most efficient it can be. However, the proposal on the table calls for another government organization to manage a large and complicated process, and the outcome will be dismal. This requires expertise, thought leadership and a strong leader to drive the program and to achieve successful results. Without these three items, it will take tens of years and billions of taxpayer dollars.
In the end, it is not just about the policy changes that would be put into affect if the health care bill is approved, but it is also imperative to evaluate the processes they are using to identify issues and resolve issues, and the implementation plans on how to fix them. This is not just critical, but paramount to ensure continuity for the millions of Americans who already have insurance and the new customers that will be accessing the system through other programs. I hope Obama’s team knows what they are doing. If not, hire an expert that does….and I don’t mean another politician or financial advisor.
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