December 2003, In This Issue:

Lean Health Care? It works!

The Iowa effort through HPCI to drive LEAN enterprise in Iowa's healthcare industry was highlighted in a lead article in the November issue of Industry Week magazine and industryweek.com. The article reads "A medical researcher approves that a TPS approach slashes costs and a group of Iowa manufacturers in making it happen." The article is available through HPCI or can be downloaded here.

Quotes from the article:

  • "The insult to the injury of rising costs is that most of the money is wasted."
  • Simple, simple stuff makes really dramatic changes."


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Driving LEAN in Iowa's Health Care Industry: Overall Approach and Update.

The Approach:

Approach the issue very much like any other LEAN or Sigma challenge - start at the customer and work the complete process:

  • Problem analysis. Understand the problem before you jump to the conclusions including quality and cost implications of each process step.
  • Constituent needs. By carefully understanding the problem, we will be much better prepared to articulate the `burning platform' as well as potential opportunities for each of the constituents along the way.
  • Buy-in for results. The better everyone understand the process, what is in and out of scope as well as the potential for returns for each of the constituents, the higher the potential for everyone to buy in to the outcome.

Efforts underway thru HPCI:

  1. Working the Complete Process.
    • Step 1. Develop health system high level process map of the current state between employers, health plans, health care providers and patients.
    • Step 2. Identify some initial heartburn areas (problems), gather data and other information to describe and understand these issues.
    • Step 3. Identify desired future state.
    • Step 4. Gap analysis.
    • Step 5. Develop activities list - do now vs. visionary list.
  2. Identify Early Adopters in Health Industry.
  3. Support Iowa Demonstration Projects.
    • Networking among sites and supportive organizations.
    • Encourage new demonstration sites.
  4. Conduct Education and Communications
    • Glossary of terms.
    • Communicate success stories.
    • Hold education sessions/seminars.
    • Providers want opportunities to share time with manufacturers and LEAN practitioners.
    • LEAN 101 training.
  5. Buy-in of Top Leaders


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Health Care LEAN is #1

Industryweek.com Quick Poll

Current question: Which one of the following would most benefit from the application of lean practices?

Current Totals as of November, 2003:

Health Care = 59%
Education = 6%
Judiciary System = 11%
Federal Regulatory Agencies = 24%


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Information and Education is Key

Earlier this year HPCI convened a planning session involving all the various Iowa stakeholders. A key priority that came out of this session is as follows: "Develop and initiate a plan so that all Iowa stakeholders have a better understanding and can speak a common language around healthcare. Education and information for consumers/patients, healthcare provider and professionals and other stakeholders is key."

Ideas and resources are being sought to advance this priority. Your ideas and suggestions are encouraged.


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LeapfrogGroup Cost Savings

The LeapfrogGroup founded by the Business Roundtable (BRT) works to initiate cutting-edge improvements in the safety of healthcare for Americans. It is a voluntary program aimed at mobilizing employer purchasing power to alert America's health industry that big leaps in patient safety and customer value will be recognized and rewarded.

Three initial leaps were identified by the LeapfrogGroup. Information has been developed on what these leaps are worth. Annual gains projected if fully implemented in U.S. urban hospitals:

  • Reduction of 522,000 serious medical errors (about 6,200 in Iowa).
  • Reduction of 98,000 preventable deaths (about 1,000 in Iowa).
  • Reduction of 58,300 preventable disabilities (about 700 in Iowa).
  • $9.7 billion in estimated net savings (about $116 million in Iowa or $38.00 per person per year or $85 per employee per year - based on average contract of 2.2 persons)

The three leaps are:

  1. Computerized physician order entry (CPOE) in hospitals.
  2. Intensive care unit day time staffing with CCM trained physician live or via tele-monitoring, or risk adjusted outcomes comparison.
  3. Evidence based hospital referral (EHR) or risk adjusted outcomes comparison for seven complex treatments (Coronary Artery Bypass, Coronary Angioplasty, Abdominal Aortic Aneurysm, Carotid Esophageal Cancer Surgery and High Risk Deliveries and Neonatal ICU's).

For more information, visit the LeapfrogGroup website at: www.leapfroggroup.org


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One Thousand to One

More than 1,000 hospitals in the U.S. are currently reporting their patient safety information to the LeapfrogGroup. Only one Iowa hospital is doing so (Mercy Hospital in Iowa City).

HPCI is assisting and otherwise encouraging Iowa employers, other private and public purchasers and consumer/labor organizations to join the LeapfrogGroup. Collaboration with Iowa health provider groups and organizations is also being pursued. For more information, contact HPCI.


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Iowa Hospital Association Task Force on Quality Initiatives, Final Report.

The task force was a collaborative effort with the Iowa Medical Society. Task forces members included hospital CEO's, nursing executives, physicians and other hospital staff involved in patient safety quality of care activities.

The task force recommended that Iowa hospitals voluntarily participate in the American Hospital Association Quality Initiative as well as Quality in Patient Initiatives of the Agency for Healthcare Research and Quality. They also recommend that the Iowa Hospital Association and Iowa Medical Society Boards should adopt and implement a provider sponsored and directed collaborative effort to enhance patient centered safety and quality of care in Iowa.

While not directly supporting the LeapfrogGroup or other purchaser and consumer initiatives, the task force recognized that there are other national and Iowa initiatives and vehicles underway in quality and patient safety. They concluded that Iowa hospitals, health systems and providers can participate in these efforts at their option.


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2003 Iowa Employer Benefit Study - A Summary.

David P. Lind & Associates, LC recently published his findings from the 2003 Iowa employer benefits study. The average health insurance rate increase reported in 2003 overall was 18.2%. It ranged from 22% for small firms to 17.2% for larger firms.

  • The in network deductible for a family increased 71% during the last four years to $1,022. (Note this is based upon PPO for all Iowa industries.)
  • The deductible for a single increased 69% to $474 during the same four year period.
  • Monthly PPO premium - $724 for family plan (increase of 47% over four years) and $279 for single (increase of 43% over four years).
  • Monthly employee contribution - $249 for family (42% increase over four years) and $51 for single (31% increase over four years).
  • Iowa employer overview of the U.S. healthcare system: 8% = U.S. healthcare system works pretty well, only minor changes needed; 77% = there are some good things, but fundamental changes are needed; 8% = system needs to be completely overhauled; 7% = don't know/not sure.

Employer response to increase rates:

% of Iowa Employers Response (what they did do)
68% Employees and Company shared in paying additional cost
30% Reduced benefits to minimize or eliminate the increase
15% Organization absorbed entire increase
14% Changed insurance company
7% Reduced/eliminated pay raises or bonuses
4% Pass all increase on to the employee
3% Hired fewer new employees
2% Postponed Capital improvements
0.4% No longer provide health insurance coverage
11% Other

Possible employer response to future increase in health insurance rates:

% of Iowa Employers Response (what they did do)
74% Employees & Company share in additional cost
43% Reduce benefits
34% Change insurance companies
16% Don't know
13% Pass all increased costs on to employees
6% Have organization absorb increased costs
3% Release employees
2% Drop health insurance coverage


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Building New Hospital Facilities in Central Iowa? Background Facts.

In recent months, Iowa Methodist Medical Center and Mercy Medical Center of Des Moines announced plans to build new hospital and clinic facilities at a cost of $270+ million dollars. More recently, Iowa Methodist Medical Center officially applied for State permission to build a new $82 million dollar hospital in West Des Moines. Their application is likely to be reviewed by the State regulators some time after the first of the year.

There are certainly some benefits to be derived if one or all of these proposal hospital facilities are built. But what is the cost-benefit and cost-effectiveness? Will health insurance costs increase due to these new facilities and additional supply induced utilization? Will these hospitals have necessary funds remaining to invest in patient safety and other needs?

Given these developments and questions, HPCI is gathering background information in order to share relevant facts with State regulators and others. An update on the Certification of Need Program is also being considered. See the following section.


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Iowa's Certificate of Need Program - Serving the Public Interest.

The Iowa Certificate of Need (CON) Program enacted in 1977, is a regulatory review process that requires application to the Department of Public Health for, and receipt of, a certificate of need prior to the offering or development of a new or changed institutional health service. Projects proposed by providers are reviewed by the department staff and the State Health Facilities Council, a five member, governor appointed body. It is the Council's mandate to assure that growth and changes in the health care system occur in an orderly, cost effective manner and that the system is adequate and efficient.

Over the years, there have been numerous questions and challenges as to whether the CON program truly serves the public interest. Most Iowa stakeholders are not very knowledgeable or engaged. Those being regulated by the program (hospitals and long term care facilities) continue to actively support the program.

The CON program has changed over time. Two items seem to be especially noteworthy:

  1. Although required by the law, data to be compiled by the Department of Public Health, as described under 135.78, only limited information is reported. No information on facility charges or current rate schedules is reported or otherwise available.

    "The Department shall compile all relevant financial and utilization data in order to have available the statistical information necessary to properly monitor hospital and health care facility charges and costs. Such data shall include necessary operating expenses, appropriate expenses incurred for rendering services to patients who cannot or will not pay, all properly incurred interest charges and reasonable depreciation expenses based on expected useful life of the property and equipment involved. The Department shall also obtain from each hospital and health care facility a current rate schedule as well as any subsequent amendments or modification of that schedule as may be required."
  2. The law was modified in recent years by adding many exclusions to the review and oversight by the state. Perhaps the most important of these is the inclusion: "the replacement or modernization of any institution or health facility if their replacement or modernization does not add new health services or additional bed capacity for existing health services, notwithstanding any provision in this division to the contrary." State regulators believe that tens of millions of dollars have already been spent to "modernize" or "replace" facilities over the past several years with no review or state oversight. In fact, the state has no ability to monitor or keep track of what's occurring in this regard.

    Some believe this results in the state operating a "franchising" system for existing hospitals and long term care facilities which is essentially has created a barrier to competitors offering options and innovation. On the other hand, others believe this is not the case. What is the right approach going forward that best serves the public interest? How will this play-out with forecasted disruptive innovation in health care which almost certainly will have a huge impact on the current health industry. More on this in the next issue of HPCI News.


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Joining HPCI

HPCI works for quality, affordable healthcare in Iowa. Individual employers, other purchasers and consumers use many strategies for addressing healthcare costs and quality on their own. HPCI adds value by helping focus attention and mobilize actions that are best done on a collective or coalition basis involving numerous employers and other purchasers across local Iowa markets. HPCI collaborates with health care professionals and other Iowa stakeholders. For membership information, please send a request to health@hpci.org. Join HPCI today!

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