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Harvard Business School Case Study – Intermountain Essays

Healthcare Case Study Gina L. Turley Northwestern University In the Harvard Business School case study of Intermountain Health Care (IHC), we learned about the efforts made by IHC to adopt a new strategy for managing health care delivery that is focused on improving care quality while simultaneously saving money. Beginning in 1986 as a series of experiments tying cost outcomes to traditional clinical trials, IHC’s approach to delivering care became known as “Clinical Integration” which “referred to both an organizational structure and a set of tools” (Bohmer, 2002).
The organizational structure required a departure from the traditional administrative management model to one that “involved administrative and medical staff working together to implement a system of gathering, storing, and making accessible detailed medical data on each patient”. Once gathered, IHC analyzed that “data across all patients to create decision support tools (protocols) that helped medical providers determine the best medical interventions for each patient and also increase efficiencies” (Bohmer, 2002).
Between 1986 and 1996, IHC made two attempts to establish a self-governance model for its physicians, both of which proved unsuccessful. However, through an iterative, continuous process-improvement program highly focused on medical personnel education, IHC was eventually able to establish “quality (defined as process management with measured outcomes) as IHC’s core business approach and to extend full management accountability to IHC’s clinical functions” (Bohmer, 2002). In 1986, IHC, led by Dr.
Brent James, successfully tested Dr. W. Edwards Deming’s theory that “high quality would lead to lower cost” by developing an activity-based cost accounting system that created cost profiles of different strategies for managing particular clinical conditions (Bohmer, 2002). Equipped with these cost profiles, IHC senior management “felt they could realize Deming’s maxim by allowing their physician population to self-manage” and formed The Great Basin Physician Corporation for community physicians within IHC (Bohmer, 2002).
While the idea of “self-governance and protocols for care ‘helped pull the physicians together’”, it never really materialized and “sort of died quietly on its own” (Bohmer, 2002). It did, however, set the stage for a quality movement within the organization and in 1991, IHC conducted a series of workshops where James more deeply introduced the concept of protocols to control care delivery and encouraged discussion how IHC might implement them.
Though no formal conclusions were reached, those meeting proved crucial as the “shared vision that [they] came away with from that series of meetings has informed [their] decision making ever since” (Bohmer, 2002). In 1993 IHC again attempted to establish physician self-management, this time “by hiring physician leaders and providing them with management tools. ” (Bohmer, 2002). Despite ample financing and training, the program once again proved unsuccessful. In both cases (1986 and 1993), this was primarily due to two issues.
The first was that they provided the physician leaders the wrong data, namely, “financial data organized for facilities management, but without the associated clinical detail” (Bohmer, 2002). Per James, “the key to engaging physicians in clinical management is aligning data collection to work processes” (Bohmer, 2002). In the old model, managers thought “in terms of cost-per-facility” but “physicians think in terms of tests and treatments required for a specific condition” (Bohmer, 2002). You manage what you measure…Doctors manage patients, not money” (Bohmer, 2002). Therefore, if you want to change clinical behavior, you have to provide physicians with the relevant clinical data. The second reason for the failures was that they lacked “an overarching guidance structure” (Bohmer, 2002). Essentially, without direct medical personnel management and accountability, a strategy for protocol development, a method for implementation and a clinical feedback loop, the diffusion of responsibility makes success nearly impossible.
Building upon the knowledge gained in its previous attempts, over the next several years, IHC went about creating the infrastructure necessary to support such a model. IHC reorganized its management teams to include “a clinical administrative structure to be the clinical counterpart of the administrative structure at each level of the organization” (Bohmer, 2002). Guidance Councils (consisting of a physician leader and nurse manager) were formed for each clinical program and were responsible for coordinating program goals, management strategies and data collection across the system.
Within the Guidance Councils were interdisciplinary Development Teams who identified “the key work processes and medical conditions for which protocols should be developed”, then created, implemented and refined said protocols (Bohmer, 2002). This was made possible by engaging practicing physicians (who were wisely reimbursed for their time) in the process, which gave them both the direct experience of the systems they created (be it paper or computer) and a provided feedback loop within the clinical community.
Furthermore, IHC created a culture around process improvement, organizing “everything around value-added (front line) work processes” while offering “extensive training in clinical process improvement” as well as operational process improvement (Clark, 2010). At the beginning of this case study, it was presented that there was some initial resistance to the Clinical Integration concept due to the commonly held view in the clinical community that “each patient [is] unique and could not be treated in an assembly line manner” (Bohmer, 2002).
While many have argued that evidence-based medicine is “cookbook medicine” or medicine that strictly adheres to practice guidelines rather than clinical judgment, I disagree. IHC simply developed a model that provides a structure for clinicians to standardize their care, while still allowing for their experience and knowledge of the patient to drive their decisions. This can be seen in IHC’s development of its EMR, which integrates clinical decision support protocols designed by the Development Teams into the data entry process.
While the system provides evidence-based guidance, it still affords a measure of physician autonomy by allowing the doctor to provide an override reason (which is often used to refine the protocol). This direct entry of data allows for increased efficiency and more complete documentation (which has the added benefit of increased billing). Once proven successful, this strategy would eventually lead to a “tipping point” of physicians espousing the benefits of the model, a necessity for system wide adoption.
Furthermore, as they smoothed out the data collection methods and could produce measurable outcomes, it became possible to align both medical and administrative personnel’s financial incentives to match the organizational goals. Considering this case study is 11 years old, it is natural to question if this model proved to be successful in the end. The unfortunate truth is that while the protocols did show a marked improvement in both clinical outcome and reduction of costs, they also had the unintended consequence of reducing reimbursements to its physicians and hospitals (Clark, 2010).
For example, IHC instituted a CPAP protocol for neonates with respiratory distress syndrome. “The use of nasal CPAP with oxygen and surfactant (preventing alveolar collapse) at the birth hospital allowed the region to reduce transport to NICU [tertiary hospital] from 78 to 18 percent in the first year following implementation” (Clark, 2010). “Revenue to the birth hospital (American Fork) is increased, but it is decreased at the tertiary hospital (Utah Valley). Further, transport costs are reduced, but staffing is not changed. This results in a net loss to the healthcare delivery system” of over $300,000 for one year (Clark, 2010).
An example such as the above “emphasizes the perversity in the reimbursement system that does not necessarily align financial incentives with improvements in quality and efficiency” (Clark, 2010). Despite this, I would absolutely consider IHC’s model to be not only successful but to position them well for the upcoming changes in the healthcare landscape. “Generally, the fulcrum for market competitiveness is tilting from revenue generation and increasing utilization to favor the most efficient and lowest-cost providers with the best clinical outcomes.
Industry experts and policy wonks acknowledge that in the coming years, healthcare reform will introduce the biggest utilization change of all—internal utilization management via bundled payment and capitation. If commercial insurers adopt accountable care organization strategies, we are likely to see an emergence (or, in some cases, a reemergence) of provider-led value enhancement” (Clark, 2010). At that time, I expect IHC will be most richly rewarded for its innovative and patient-centered thinking. Reference Bohmer, R. , Edmondson, A. Feldman, L. (2002). Intermountain Health Care. Harvard Business Review. Retrieved from http://hbr. org/product/intermountain-health-care/an/603066-PDF-ENG Clark, D. , Savitz, L. , Pingree, S. (2010). Cost Cutting in Health Systems Without Compromising Quality Care. Frontiers of Health Service Management. Retrieved from http://web. ebscohost. com. turing. library. northwestern. edu/ehost/detail? sid=70bf874f-1c96-4c40-a2d5-330dd2a9339a%40sessionmgr115&vid=1&hid=117&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=60616963

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