September/October 2004, In This Issue:

  • HPCI and others request larger Iowa hospitals to report to the Leapfrog Group.
  • National Consensus on Patient Safety Measurement - Leapfrog Group provides public reporting vehicle.
  • Metrics for Success: HPCI 2004 - 2005 Priorities.
  • HPCI Member Survey --- Seeking input.
  • Successful LEAN Health Care Kaizen Events (Rapid Process Improvement).
  • LEAN Health Care makes AME 21st Annual Conference.
  • Iowa Department of Public Health releases study:
    "What a Drag It Is --- The Economic Impacts of Rising Health Insurance Premiums".
  • 2004 Iowa Employer Benefits Survey.
  • 22 strategies for creating more "Person-Centered" Health Care.
  • The ABC's of consumer-driven health care.
  • "Redefining Competition in Health Care", Harvard Business Review.

HPCI and others request larger Iowa hospitals to report to the Leapfrog Group.

On behalf of its 40+ Iowa employers, HPCI joined the Iowa Health Buyers Alliance in requesting 26 larger Iowa hospitals to complete the 2004 Leapfrog Group Hospital Survey.

The Business Roundtable (BRT) founded Leapfrog Group's mission is to trigger giant leaps forward in quality, customer service and affordability of health care. Over 1,000 U. S. hospitals are currently reporting to the Leapfrog Group including 100% of the Minnesota hospitals and many hospitals in areas surrounding Iowa.

Jim Crotty with the Iowa State Education Association indicates that our initial step through this request has already been successful. "It has brought public and private employers and customers together focusing on this important area as well as to encourage, inform and otherwise engage health care organizations and professionals in Iowa. We are pleased that numerous hospitals in the greater Iowa region have or are actively considering reporting to Leapfrog. We recognize and truly appreciate their efforts."

Nearly half of the 26 Iowa hospitals have responded to date that they will report or are very actively considering reporting to the Leapfrog Group. Going forward HPCI will work with others to:

  1. Recognize those hospitals who are reporting to Leapfrog and work with those hospitals actively considering reporting;
  2. Meet with and gather quality and patient safety information from those hospitals indicating their willingness to discuss these important matters and to share information;
  3. Continue to provide information and education to our members, Iowa health care providers, other stakeholders and the general public; and
  4. Seek other opportunities for collaboration.

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National Consensus on Patient Safety and Leapfrog Group provides public reporting vehicle.

The National Quality Forum (NQF), a not for profit organization created to develop and implement a national strategy for quality measurement and improvement, has released its Safe Practices for Better Health Care Consensus Report. The report endorsed 30 practices that can have a major impact on the safety of patients in health care settings. Included in the 30 practices are the original three Leapfrog leaps and 27 other safe practices that have now been combined into a new fourth leap (the NQF safe practices leap).

The NQF membership includes all major stakeholders including the American Medical Association, the American Hospital Association, the American Nurses Association, other health professionals, Centers for Medicare and Medicaid Services, consumer groups, labor organizations, business, employer coalitions and health plans.

Leapfrogs initial three leaps targeted urban hospitals. Non-urban hospitals are now invited on a volunteer basis to complete the survey for the NQF safe practices leap. They may also choose to complete the survey for the first three leaps. Results of submitted surveys will be posted on the Leapfrog Group website: www.leapfroggroup.org. Indications are the hospitals leaders are also finding the NQF report very useful as a checklist or audit for improving their organizations safe practices.

There is now a national consensus on patient safety measurement. Noting this, Roger Brooks, Chairman of the Amerus Group, and Board Officer of HPCI states, "we hope that Iowa hospital leaders will now participate in this important effort to report comparable patient safety information to the public." The Leapfrog Group provides the vehicle for public reporting of comparable provider patient safety quality and value ratings through its website: www.leapfroggroup.org.

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Metrics for Success: HPCI 2004-2005 Priorities.

HPCI has identified four priorities for the near term. Metrics for success are being finalized for each of these priorities:

Priority 1: Engage LEAN enterprise in Iowa's health care industry,

Priority 2: Operationalize consumer-focused expectations and measurement model using cost/quality/delivery/safety (QCDS) metrics and other LEAN tools,

Priority 3: Improve accountability, transparency of health information and recognize/reward results, and

Priority 4: Conduct education, research, data collection and analysis on key health issues:

  • "Consumerism" in health care
  • Public reporting of health care provider cost, quality and patient safety
  • "Positive Sum Competition" rather than "Zero Sum Competition"
  • Education and information for consumers/patients, health care providers, and other stakeholders
  • Prevention and chronic care improvement.

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HPCI Member Survey - Seeking Input.

A member survey is underway to gather baseline data, seek input and suggestions on HPCI's work and its role as a resource to members. Please assist by completing this brief one-page survey that will be sent to you separately.

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Successful LEAN Health Care Kaizen Events (Rapid Process Improvement).

Three Kaizen events were conducted this summer. Three Iowa hospital teams were engaged for a week learning LEAN techniques to remove unnecessary steps and costs in various procedures. They were: 1) the University of Iowa Hospitals and Clinics, 2) St. Lukes Hospital in Cedar Rapids, and 3) Unity Hospital in Muscatine. The technique, based upon Toyota's lean production system, optimizes time, human resources, assets and productivity to improve quality of products and services.

All three hospitals reported positive results.

Importantly, leaders of the three hospitals along with leaders of the Iowa Hospital Association are becoming enthusiastic. The following is a quote from an article by Kurt Norris in the Iowa Hospital Association Newsletter:

"The results of this collaborative effort were nothing short of eye-popping."

"Perhaps the most subtle notion encountered last week was not the learning of a faster process improvement technique. Rather, it was that people empowered to study their work environment can affect change that positively impacts how work is performed and more importantly how a hospital is perceived by its various publics and patients."

"Another subtle notion encountered is that Iowa is uniquely capable of forging collaborative efforts between seemingly desperate partners of health care and manufacturing."

"Continued collaboration with these stakeholders is key and exposure to these perspectives is something on which IHA is uniquely capable of engaging its membership."

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Lean Health Care Makes 21st Annual Conference of the Association for Manufacturing Excellence.

Two presentations on LEAN health care will be made during the 21st annual conference of the Association of Manufacturing Excellence (AME). The conference will be held on October 18-22 at the Northern Kentucky Convention Center, Covington, Kentucky. One will feature the Iowa work, "Lean Health Care? It Works!" presented by HPCI. The other will be presented by Lean Health Care West and will feature successful efforts underway in Montana, Utah and other locations.

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Iowa Department of Public Health Releases Report What a Drag it is---The Economic Impacts of Rising Health Insurance Premiums.

The Iowa Department of Public Health recently released this What a Drag study. Highlights:

  • The burden of health insurance costs for Iowa businesses appears not to discriminate on the basis of location or size of the company. Businesses statewide of all sizes, in rural and metropolitan counties alike, report having problems managing the bottom line of paying the increasing burden of health insurance.
  • The major theme in the study findings is the conflict between businesses absorbing rising costs or passing costs onto employees. While most businesses have opted for the former more often than the later, both reactions to rising costs threaten the businesses' viability.
  • Key findings: 1) businesses expect health insurance rates to go up every year, 2) for businesses, lower company profits threaten their viability, 3) most employers are starting to pass on higher costs to employees, 4) employers are working to educate employees as they share the cost, 5) businesses are actively looking into alternative ways to offer health insurance, i.e., health savings accounts (HSA).
  • The main goal of the study was to test how open business decision-makers might be to different approaches to health insurance. The researchers found the majority support most ideas tested. See table below.

Reaction to Selected Changes
in Health Insurance Delivery

not sure

Money individuals spend
to buy their own health insurance
would not be taxed, as it is now

84 8 8

Offer health insurance now

88 8 4

Do not offer health insurance

85 7 8

Instead of buying health insurance,
employers would pay a fixed
tax-deductible amount per month
into an employee-directed medical
savings account for use only
on health care expenses

56 33 11

Offer health insurance now

65 25 10

Do not offer health insurance

52 39 9

The state would require all
Iowans to have, at minimum,
a policy for catastrophic coverage
for themselves and their families,
which would cost no more than
$100 per month

52 38 10

Offer health insurance now

60 36 4

Do not offer health insurance

49 41 10

The state would set the standards
for only three types of policies
insurers could sell - a basic policy,
an expanded policy, or a premium policy
- making shopping for insurance easier

54 33 13

Offer health insurance now

55 36 9

Do not offer health insurance

54 33 13

The government would help low-
income individuals buy catastrophic
insurance and pay medical expenses.
This would replace the current
Medicaid program.

48 33 19

Offer health insurance now

53 29 18

Do not offer health insurance

47 36 17

Study conclusion: Pressures from dramatic increases in health insurance have created a climate open to change among the business community. The adage that the only things that make institutions change is calamity and catastrophe is borne out in the survey data and enlightened by the interviews. Many businesses feel that point has already arrived. In response, many businesses, especially large companies, are already dramatically reconfiguring their health plans with HSA's, on-site medical professionals, and incentives to employees to help keep costs down. In the short term, these innovations may help reduce cost. The long-range impact remains to be seen.

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2004 Iowa Employer Benefits Survey.

Much of the information in the above described report is confirmed and updated by the new 2004 Iowa Employer Benefits Survey conducted by David P. Lind and Associates. Highlights of the report:

  • Health insurance rates rose an average of 15.7% for all Iowa employers in 2004. For employers of 20-29 people, they rose even higher: 20.9%.
  • If rates continue to rise, 75% of employers said they will ask workers to share in the added expenses. 37% said theyll reduce benefits and 2% said they might quit offering coverage altogether.
  • Monthly premiums charged employers have risen from $493 in 2000 to $811 monthly in 2004 for a family enrolled in a PPO (Preferred Provider Organization). Employees have been asked to pay $276 of the monthly cost in 2004 compared to $175 monthly in 2000.
  • Office co-pays for PPO participants rose from $11.32 in 2000 to $15.55 in 2004.
  • Prescription co-pays and generic drugs rose from $6.58 in 2000 to $10.28 in 2004.
  • The number of employers that offer vision benefits declined from 37% in 2000 to 33% in 2004.

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22 Strategies for Creating More Person-Centered Health Care.

The Foundation for Accountability (FACCT) has released a new report that details 22 strategies for creating a more Person-Centered health care system. FACCT President, David Lansky, PhD., interviewed hundreds of experts in the field and researched dozens of innovative projects in the writing of this important document.

Strategies to achieve Person-Centered system are described as the "levers of system change" and are categorized under: 1) Payment to pay for results; 2) Culture (to change public expectations); and 3) Infrastructure (to build national systems that support evidence-based, collaborative care).

More information can be found on the FACCT website, www.facct.org

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ABCs of Consumer-Driven Health Care.

The acronyms surrounding consumer-driven health care may be confusing. Here are some of the more common ones and what they mean.

FSAs Flexible Spending Accounts: Around longer than the consumer-driven health care concept itself, FSAs are open to an estimated 29 million workers. They can set aside funds tax-free from their paycheck to pay for out-of-pocket medical expenses. Lack of understanding and a provision requiring workers to forfeit any unused funds at year-end are reasons that only 6 million use medical FSAs.

MSAs Medical Savings Accounts: Under a 1996 pilot program, Congress made available MSAs to small businesses and the self-employed. Because of restrictions on their use, tax-deferred contribution levels and participation levels, few insurers offered the products. As a result, only some 70,000 individuals hold an MSA.

HRAs Health Reimbursement Arrangements: Nonportable spending accounts established by employers on behalf of workers so individuals can pay for qualified health care expenses. Employer deposits aren't taxable to employees, but workers can't contribute to HRA plans. Workers are responsible for picking up costs once accounts are exhausted. Once the deductible is met typically in excess of $1,000, the HRA plan becomes a traditional major medical plan. It cannot be used for non-medical expenses.

HSAs Health Savings Accounts: Portable accounts allowing employers and employees to contribute tax-free up to $2,600 per individual or $5,150 per family annually for health care expenses when used in conjunction with catastrophic health insurance. These accounts are more flexible than predecessors and withdrawals for medical expenses are tax-free. While seniors can't contribute, certain pre-retirees can contribute even more toward accounts, and can use the funds once they reach 65 for medical and non-medical purposes.

Excerpted from Hospitals and Health Networks, August, 2004.

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Redefining Competition in Health Care, Harvard Business Review.

The Harvard Business Review recently published "Redefining Competition in Health Care." Written by Michael E. Porter and Elizabeth Olmsted-Teisberg, the full article can be accessed through www.hbr.org

According to the article, the wrong kinds of competition has made a mess of the American health care system. The right kinds of competition can straighten it out.

"In healthy competition, relentless improvements in processes and methods drive down costs. Product and service quality rise steadily. Innovation leads to new and better approaches, which defuse widely and rapidly. Uncompetitive providers are restructured or go out of business. Value- adjusted prices fall, and the market expands. This is the trajectory common in all well functioning industries - computers, mobile communication, banking, and many others."

"Health care could not be more different. Costs are high and rising, despite efforts to reduce them, and these rising costs cannot be explained by improvements in quality."

The report described health care as currently under "zero sum competition." It describes how reform went wrong. The system participants divide value instead of increasing it.

The features of new "positive sum competition" in health care are:

  1. The Right Level of Competition: competition is to prevent, diagnose, and treat specific diseases or combinations of conditions.
  2. The Right Objectives: improve value - quality per expended dollars over time.
  3. The Right Forms of Competition: competition is to create value at the level of diseases or conditions by developing expertise, reducing errors, increasing efficiency, and improving the outcome.
  4. The Right Information: speed the development of information about providers, treatments and alternatives for specific conditions.
  5. The Right Incentives for Payers: Payers help subscribers find the best-value care for specific conditions. They simplify billing and administrative processes and pay bills promptly.
  6. The Right Incentives for Providers: providers succeed by developing areas of excellence and expertise. They measure and enhance quality and efficiency. They eradicate mistakes, they get it right the first time. They meet, exceed and improve standards.
  7. The Right Geographic Market: Competition is at the regional or national level.
  8. The Right Strategies and Structure: Participants define their distinctiveness by offering services and products that create unique value. The system has many focused competitors.

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