Can Health Care Leadership Discover the Path to Positive Evolution?

There was a rather startling report that recently aired on Rock Center with Brian Williams.  The report exposed the practice of hospitals attempting to collect co-pays at the bedside of emergency room patients.  The story focused on Fairview Health, a Minnesota-based hospital and clinic chain that is now facing legal action from the Attorney General of Minnesota.  Hospitals in the U.S. absorb $40 billion in unrecovered revenue for services rendered each year, so this is not an inconsequential issue that effects all of us.  But is coercing a patient that may be experiencing a myocardial infarction for their credit card the way to go about enhancing revenue?

I wrote a blog a while back that explored the peculiar relationship between health care providers and their customers.  That’s right, customers.  Patients are customers, yet there seems to be a disconnect between what is the natural state of relationships between customers and suppliers from every other industry except health care.  In normal economic exchanges, the customer has the advantage and the supplier will work diligently to maximize the experience, value and benefit they deliver to their customer.  In health care, the relationship is skewed.  The customer is physically and emotionally vulnerable and in need of help and the clinician is the expert that dictates the framework of the relationship.  Be sure to follow doctor’s orders!  The power is reversed in the relationship of economic exchange.

Because of this cultural artifact, health care evolved under an entirely different set of relational circumstances that have brought it to the place it is in today.  The industry operated under a set of drivers that are unique unto itself.  Every other industry has evolved under what we would consider normal, competitive pressures and customer demands.  This forced efficiencies to be uncovered and leveraged to the benefit of the buyer.  No such force ever emerged in health care.

In the report, it was revealed that Fairview had hired a management consulting firm called Accretive Health to help them manage what Accretive calls “end-to-end revenue cycle services to improve your bottom line”. It also revealed the training documents and scripts Accretive provides their hospital clients for the bedside collection of co-pays prior to the delivery of services.  Techniques that are allegedly so coercive and psychologically abusive to the hospitals’ patients legal actions are emerging in response.  Now, there’s bad practice in every industry, but Accretive booked over $250 million in revenue in the first quarter of this year, up 50% over prior year.  What this is telling me is there are enough health care executives buying into this approach that this company was tracking to book a billion dollars in revenue in 2012.  I sincerely appreciate the fiduciary responsibility executives have to their shareholders, but is this the answer to creating long-term relationships that will benefit the hospital, community and customers of health care services?

I portend that, on a whole and greatly due to the peculiarities of the provider/customer relationship, health care really doesn’t understand the underlying drivers of their business model in the 21st century.  Have you seen the automated billboards in your community that update the waiting time in a particular hospital’s emergency room?  Really?  Many even post the current waiting times on their websites.  Now I ask you, if you’re in such a condition that you require the services of an emergency room or trauma center are you really going to stop to compare waiting times?  If you look into the peer-reviewed research as to how and why people choose a hospital you’ll discover it is relationship and emotionally driven.  People make their decisions on where they will purchase health care services based upon the advice and experiences of their primary care physician, family members and friends.  Research from the field of Applied Behavioral Economics clearly indicates 70% of economic decision making is emotionally based, with the remaining 30% based in rational thought.  This is not an industry-specific behavior; it is human-specific behavior.

How people feel about a hospital is just as, if not more important than, what they think about that hospital.  This underlying factor is also revealed when you look into the research surrounding why people file malpractice law suits.  People don’t sue because of the mistake, they sue because of how they were treated once the mistake occurred.  Want to solve the malpractice crisis?  Practice a bit more authentic empathy.  Want to drive down the number of adverse events (of which the Department of Health and Human Services recently reported 7 of 8 are going unreported, despite the law), lower costs at discharge, improve patient outcomes, and create sustainable, competitive advantage?  Begin investing in your nurses.  We uncovered two dozen, yes two dozen, peer-reviewed, published research studies that clearly demonstrated the clinical and financial benefits of cultivating emotional intelligence competencies in nurses and the critical impact of maintaining proper nurse-to-patient ratios.  Yet, we still see nurses being laid off, over-worked, burned-out, and leaving the field entirely.  The cost to hospitals of nurse turnover in Florida alone is $1 billion a year.  Costs that could easily be avoided by practicing mindful, transformational, clinical leadership.

The answers to solving our health care challenges require health care leadership to embrace a shift in perspective.  The answers are not casually lying around waiting to be opportunistically picked up along the way.  Many of the answers to these daunting questions lie right in the midst of the hospitals themselves.  In their nurses.  They’re the hospital’s frontline touchpoint with their customers!  Nurse/patient interactions are the single most important driver of competitive advantage for a hospital.  Take care of your nurses and they’ll take care of your customers.  In turn, your customers will take care of you.

© 2012, Terry Murray.

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Filed under Health Care, Leadership Development

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