I. To what extent is Providence using evidence-based management? Do you think that this is a good way to run a hospital? Explain your rationale.
2. To what extent are the managerial practices being used at Providence consistent with principles associated with management science and operations management techniques? Discuss.
3. Use Figure 2.3 to analyze the extent to which Providence is using a systems viewpoint.
4. How are the managerial techniques being used at Providence consistent with both a contingency and quality-management viewpoint? Explain your rationale.
5. How can the effective managerial techniques being used at Providence be exported to other hospitals? Discuss
Walk into most hospitals, and you'll see patients scattered about the halls on gurneys or wheelchairs. They're waiting to be moved from intensive care to a standard ward, or to an X-ray room, or to physical therapy. Each journey adds to the patient's discomfort and increases the risk of infections and other complications. Tally up a single patient's migrations over 24 hours, and they may consume as much as half a day of staff time. Walk into Providence Regional Center, in Everett, Washington, and you will see a hospital trying something different: It brings the equipment to the patient. In 2003, Providence opened one of the few "single stay" wards in the nation. After heart surgery, cardiac patients remain in one room throughout their recovery; only the gear and staff are in motion . As the patient's condition stabilizes, the beeping machines of intensive care are removed and physical therapy equipment is added. Testing gear is wheeled to the patient, not the other way around. Patient satisfaction with the "single stay" ward has soared, and the average length of hospital stay has dropped by a day or more. This is just one of many changes-some radical, many quite small-that have enabled Providence Regional to join a special subset of American hospitals: those that do not lose money on Medicare patients.
The crazy world of hospital economics does not offer a lot of incentives to change. Both Medicare and private insurers reimburse on a piecework basis-known as fee-for-service-that encourages hospitals to treat more, prescribe more, and test more. Economists refer to this arrangement as a "value-blind" payment system, since no premium is paid for quality. Consequently, hospitals have no financial motivation to invest in productivity-enhancing computer technology, management experts, or efficiency research-and by and large, they don't. Providence took a different path after picketing by workers nine years ago shattered morale. A new administration decided to attack the internal staff divisions and foster collaboration among doctors, nurses, and administrators. Everyone is encouraged to contribute ideas on driving down costs and improving patient outcomes. "I'm eligible for retirement, and under the prior leadership I would have left," says pediatric nurse Kathy Elder, a 34-year veteran of Providence. "They were very hierarchical, very closed. There was a lack of trust all around."
The current CEO, 48-year-old David T. Brooks, a fast-talking Detroit native, took over two years ago. He says the administration is open to suggestions from any and all staffers. "We have scorecards for everything around here, which measures both quality and efficiency. If all we had were great clinical outcomes but costs kept rising, that just wouldn't be good enough."
The staff embraced the challenge to innovate. The nursing team came up with an idea of checking on patients every two hours without waiting for a call button, to see if they need help walking to the bathroom or moving about in their rooms. Ten percent of fatal falls by the elderly in the United States occur in hospitals. This one change at Providence reduced falls by 25%, according to chief nursing officer Kim Williams. "We believe we'll see more improvement over the next six months."
Providence's saving efforts don't stop at the hospital doors. It offers financial training courses to the 800 independent doctors affiliated with the hospital in an effort to get them thinking about cost efficiencies. That's no easy task, however, since savings don't necessarily flow into their pockets. Cutting back on unnecessary services may be better for the bill payer, but it lowers the income of doctors and hospitals.
Providence also seeks to soften contentious encounters among doctors and patients by doing penance for errors. The hospital set up an independent panel to investigate medical mistakes, disclose its findings to the patient, and voluntarily offer a financial award if warranted. As a result, Providence has only two malpractice suits pending, compared with an average of 12 to 14 at other hospitals of similar size.
When Providence can't find standard medical practices, it innovates. That was the case with blood transfusions. Cardiac and orthopedic surgeons realized a few years ago that there was no widely accepted data on the optimal amount of blood to give patients during surgery, despite the $240 cost per bag. Dr. Brevig (director of cardiac surgery at Providence) started looking around and found several studies that correlated greater transfusion volumes with longer patient stays and higher infection rates. He was particularly surprised that transfusion rates varied greatly from hospital to hospital, regardless of the patient's status. "The variations were related to the culture of the hospital, not the decisions of the doctor," he says. Brevig set out to create a low-transfusion culture at Providence. He got surgeons to slow down because speedy operations cause more blood loss. Settings were changed on heart bypass machines to save blood, and the hospital hired a blood conservation coordinator. In a study of 2,531 operations at Providence, Brevig reported that the incidence of transfusions were reduced to just 18% in 2007, from 43% in 2003, while the average patient stay was reduced by half a day.
The changes have saved Providence an estimated $4.5 million.
Brevig has been proselytizing for his plasma practices at medical meetings, but to little avail. Only some 200 U.S. hospitals have a blood conservation program. Since patients are billed the cost of the plasma, doctors aren't motivated to change their habits.