ACHIEVING CHANGE IN
HEALTH CARE
Kenneth W. Kizer, M.D., M.P.H.
Intermountain Health Care ATP
Salt Lake City, UT
March 26, 2013
TOPICS TO BE COVERED

PRESENT AN OVERVIEW OF THE TRANSFORMATION OF THE
VA HEALTHCARE SYSTEM AS A CASE STUDY IN
ORGANIZATIONAL CHANGE

DISCUSS SOME OF THE CHALLENGES OF INTEGRATING
CARE ACROSS THE CONTINUUM OF CARE AND SOME
OBSERVATIONS FROM THE

VA EXPERIENCE
PRESENT SOME EXPERIENTIAL OBSERVATIONS ABOUT
CHANGE MANAGEMENT IN HEALTHCARE, FOCUSING ON THE
REASONS WHY SO MANY CHANGE EFFORTS FAIL
2
WHAT IS THE INSTITUTE FOR
POPULATION HEALTH IMPROVEMENT?
Institute for Population Health Improvement

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Established as an independent operating unit in the UC Davis
Health System in mid-2011; has since developed a diverse
portfolio of funded activities >$70M
Population health – the intersection of public health and the
clinical sciences
New value-based health care payment models require that
population health management be a core competency for health
care systems
Serves as a resource within UCD/UCDHS for health care reform,
health policy and clinical quality improvement
Assists government health-related agencies design, implement
and administer programs
Seeks to


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Improve the effectiveness and efficiency of clinical care
Build health care leadership and management capacity
Leverage data sources to develop clinical intelligence
Promotes understanding of the multiple determinants of health
and appreciation of health being a function of the totality of
one’s circumstances
SELECTED IPHI ACTIVITIES
 Provide technical assistance in quality improvement and other support
to the state Department of Health Care Services for Medi-Cal
(California’s $60B/yr Medicaid program)
 Medi-Cal Quality Improvement Program
 Evaluate the Delivery System Reform Incentive Payments (DSRIP) Program
 Design the CA-specific Evaluation of the California Medicare-Medicaid Dual Eligible
Demonstration Program
 Manage operations of the California Cancer Registry
 Manage the California Health eQuality (CHeQ) Program - California’s
Health Information Exchange Development Program
 Provide technical assistance and support for multiple statewide
chronic disease prevention and surveillance programs
 Conduct a statewide assessment of surgical adverse events
 Conducting various population health research programs
 Use of the OncotypeDx Genetic Assay in Medi-Cal Beneficiaries with Breast Cancer
 Evaluation of Opiate Overdose Prevention Policies (in collaboration with CHPR)
 Investigate the feasibility of developing Community Paramedicine
 Partnering with California Health & Human Services Agency on a
CMMI-funded Payment Reform Model for the California
HEALTH CARE
TRANSFORMATION:
The VA Case Study
Kenneth W. Kizer, M.D., M.P.H.
Intermountain Health Care ATP
Salt Lake City, UT
March 26, 2013
6
DURING 1995-1999, THE U.S. DEPARTMENT OF
VETERANS AFFAIRS (VA) HEALTH CARE SYSTEM
WAS RE-ENGINEERED, LEADING TO GREATLY
IMPROVED QUALITY OF CARE, SERVICE
SATISFACTION AND EFFICIENCY.
THIS PRESENTATION WILL PRESENT AN OVERVIEW
OF HOW THIS LARGE PUBLICLY FINANCED HEALTH
CARE SYSTEM WAS REFORMED AND SOME OF THE
LESSONS LEARNED.
7
Why Talk About the VA?

The transformation of the VA health care system is
often cited as the largest and most successful
healthcare “turnaround” in US history
8
Why Talk About the VA?
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
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The VA health care system has a large “footprint”
in American health care
It is more similar to the private sector than it is
different and its transformation is instructive
about achieving change in health care generally
Parts of the VA’s change process have been
formally studied and provide evidence about
likely outcomes of various change strategies
It illustrates how dramatic change can occur in
unlikely settings
9
SPECIFIC PRESENTATION OBJECTIVES

PRESENT AN OVERVIEW OF THE VA HEALTH CARE
SYSTEM

DESCRIBE WHAT WAS WRONG WITH THE SYSTEM IN 1994

DISCUSS THE CHANGE STRATEGIES

REVIEW KEY RESULTS OF THE REFORMS

HIGHLIGHT SOME OF THE LESSONS LEARNED
10
THE VETERANS HEALTH
CARE SYSTEM
11
The Veterans Health Care System
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Managed by the Veterans Health Administration (VHA),
a sub-cabinet agency in the U.S. Department of
Veterans Affairs (VA)
Established in the early 1900s as a “safety net” for
disabled and poor veterans of the armed forces
Now the largest health care system in the U.S., although
unusual in American health care in that services are
both paid for and provided by the federal government
The system is centrally administered, fully integrated
and more “holistic” than American health care generally
The only health care system in the U.S. with hospitals or
other facilities in every state and major metropolitan
area of the country, as well as in Puerto Rico, the Virgin
Islands, Guam, American Samoa and the Philippines
12
The Veterans Health Care System
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The VA Health Care System patient population is older,
sicker, poorer and less well educated than patients in
private health care systems, and it has a higher
prevalence of complex medical problems and psychiatric
conditions
Is extensively involved in health professional training and
research
Is both a health care provider and payer
In 2011, had 8.3 million enrollees, a budget of $47 billion,
>225,000 employees and operated about 1400 facilities
13
The Veterans Health Care System
1.
Provides medical care for eligible veterans
a.
b.
c.
2.
22.2 M living veterans in 2011
37% enrolled in VA Health Care System
Veterans’ family members are not eligible for services
Trains health care professionals
a.
b.
c.
Conducts training for 47 types of health professionals (e.g.,
physicians. nurses, pharmacists, optometrists, podiatrists)
Funds approximately 10% of U.S. Graduate Medical Education
positions (>10,000 positions)
85% of VA hospitals are teaching hospitals
3.
Conduct research ($575M intramural funding in 2011;
about $1.9 billion/yr total research funding)
4.
Assists in response to federal emergencies
5.
Largest direct provider of services for homeless
persons in the US
14
VHA Assets in 1999
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172 hospitals
>600 ambulatory care clinics
131 nursing homes, 40 residential care facilities
94 state veterans homes
73 primary care at home programs
206 counseling centers
>1200 sharing agreements (eg universities)
Contract and fee-basis care
75 laundries
29 fire departments
Veterans Canteen Service (retail stores)
1740 historic sites
15
PROBLEMS WITH THE
VETERANS HEALTH CARE
SYSTEM IN THE EARLY 1990s
16
Problems with VA Health Care in 1994
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Care was highly fragmented; hospital-centric;
specialist-based; episodic and reactionary

Care was often difficult to access – e.g., long
waiting times, long distances to hospitals for some
patients
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Irregular and unpredictable quality
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Rapidly rising costs
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Highly bureaucratic; centralized and hierarchical
management; extreme micro-management; little
accountability
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Organizational culture was punitive and riskaverse; little innovation
17
Problems with VA Health Care in 1994

Leadership frequently changed and was not
always selected on the basis of demonstrated
health care competency
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Governance issues and capital investment
decisions were highly politicized; governing
board often displayed little knowledge of health
care and held varying views about the role of the
system; political agendas/priorities sometimes
conflicted with organizational needs

Patients not satisfied; staff demoralized
18
19
Where do you start?
Reform began with a new vision of how
the system would operate.
The Veterans Health
Care System will
provide a seamless
continuum of
consistent and
predictable high
quality, patientcentered care that is
of superior value.
21
The Vision for Change
The Veterans Healthcare System
will provide a seamless continuum
of consistent and predictable high
quality, patient-centered care that is
of superior value.
22
The New Vision was Based on the
Concepts of Value and Accountability
1.
The system must demonstrate good health care
value that is equal to or better than the private
sector
2.
Superior quality will be predictable and
consistent throughout the system
3.
System-wide and local performance goals and
expectations will be clearly identified
4.
Performance will be measured and continuously
improved
5.
Decision making will be at the lowest appropriate
level in the organization
23
How is Health Care Value Defined?
V = A+TQ + FS + SS
C
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V = Value
C = Cost/price
A = Access or Accessibility
TQ = Technical quality
FS = Functional status
SS = Service satisfaction
24
Once you have the vision
what do you do?
The Strategic Plan - A Roadmap for Change
I.
II.
III.
IV.
5 Mission Goals
32 Guiding Principles
38 Objectives
156 Actions
26
Achieving change in health care must
be grounded on an understanding of
the concepts of complexity or chaos
theory because health care operates
as a complex adaptive system.
27
Key Characteristics of Complex
Adaptive Systems
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They are nonlinear, dynamic and do not
inherently reach fixed equilibrium points.
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Composed of independent (autonomous) agents
which have disparate needs and desires,
resulting in behaviors that often conflict.

Component agents are intelligent; they learn and
adapt, resulting in self-organization and new
behaviors.

There is no single point of control; no one is
truly “in charge”.
28
Achieving Change in Complex
Adaptive Systems

Change cannot be specified and controlled the
way it can be in simpler, more linear systems
such as manufacturing.

Achieving desired change requires making
selective changes in a few critical change
levers.
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Change strategies and tactics should be
overlapping and mutually reinforcing.
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Unintended consequences are unavoidable;
these should be anticipated and vigilance
designed into the system.
29
Reform of VHA Was Based on an
Integrated Change Strategy
1.
Increase accountability
2.
Integrate and coordinate care
3.
Improve and standardize superior quality
4.
Modernize information management
5.
Align finances with desired outcomes
30
Strategic Objective 1
Increase accountability
31
What does it mean to be
accountable?
32
Accountability vs Compliance
33
Some Principles of Accountability
1.
You can only be accountable for what you have
control of
2.
Accountability for results requires empowerment
to get the results
3.
Accountability is dynamic and must adapt to
changing circumstances
4.
Accountability requires fair, appropriate and
meaningful consequences
5.
Organizational accountability belongs to every
employee
What are the tactics for creating
organizational and individual
accountability in health care?
35
Strategic Objective 1: Increase Accountability
Tactics Used to Increase Accountability
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Created a new accountable management
structure based on the concept of integrated
delivery networks
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Implemented a new performance management
system
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Decentralized decision making and held
managers accountable for performance
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Worked to ensure consistency in messaging
and communications
36
CREATING AN ACCOUNTABLE
MANAGEMENT STRUCTURE –
VETERANS INTEGRATED
SERVICE NETWORKS
“The reorganization plan
presented in this
document should be
viewed as the first step in
transforming the
Veterans Health
Administration (VHA) to a
more efficient and
patient-centered health
care system.”
The New VA Health Care System
Management Structure
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Established 22 Veterans Integrated Service
Networks (VISNs)
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Each network had a defined patient population and
geographic service area and was able to provide a continuum
of primary to tertiary care
Based on long-standing patient referral patterns and other
criteria
 Placed “a premium on improved patient services,
rigorous cost management, process improvement,
outcomes and ‘best value’ care.”
 Expected network leaders to “utilize data-driven
methods to manage total performance” in ways
that deliver care in a patient-centered manner and
that improves the overall health and functionality
of the population
38
In the VISNs, the hospital was envisioned
to be an important but less central
component of “larger, more coordinated
community-based network of care” in
which emphasis is placed “on the
integration of ambulatory care and acute
and extended inpatient services so as to
provide a coordinated continuum of care.”*
*Vision for Change, 1995
39
Veterans Integrated Service Networks (VISNs)
Typical VISN Assets
 7-10 hospitals
 25-30 clinics
 5-7 long term care
facilities
 10-15 counseling
centers
 1-2 residential care
facilities
40
THE VISNS CHANGED THE BASIC OPERATING UNIT OF
THE VA HEALTH CARE SYSTEM FROM INDIVIDUAL
HOSPITALS TO NETWORKS OF FACILITIES THAT
INTEGRATED THEIR SERVICES TO SERVE A DEFINED
POPULATION IN A SPECIFIED GEOGRAPHIC AREA.
NOT ALL VISNS HAD THE SAME ASSETS SO INTERNETWORK AGREEMENTS AND COLLABORATIONS WERE
NECESSARY, AS WELL AS AGREEMENTS WITH PRIVATE
HEALTH CARE PROVIDERS.
41
Performance Management System
Align vision and mission with quantifiable
strategic goals
 Link strategic goals to performance
measures
 Track performance
 Hold managers accountable for achieving
results through performance contracts
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Additional Steps Taken to Increase
Accountability
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Decentralized decision-making

Consistent messaging
Strategic Objective 2
Integrate and Coordinate Care
What are the tactics for
coordinating and integrating
healthcare?
45
Strategic Objective 2: Integrate and Coordinate Care
Some Tactics Used for Coordinating Care
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Implemented universal primary care
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Instituted comprehensive “care management”
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Established community-based clinics to improve
access
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Convinced the Congress to change the laws to
allow provision of comprehensive care
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Instituted network-based “service lines”

Merged nearby hospitals under common
management
46
Strategic Objective 3
Improve and Standardize
Superior Quality of Care
What are the tactics for improving
quality and standardizing superior
quality care?
48
Strategic Objective 3: Improving Quality of Care
Some Tactics for Improving Quality

Implemented clinical performance measurement
and public reporting of results
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Instituted patient service standards
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Implemented a National Formulary for drugs
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Continued implementation of the National Surgical
Quality Improvement Program
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Undertook targeted clinical improvement initiatives
(cancer, pain management, palliative care, others)
based on a “collaborative” model
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Established quality awards and recognitions
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Promoted a new organizational culture based on
continuous quality improvement
49
Strategic Objective 4
Modernize Information
Management
What are the tactics for
improving information
management?
51
Strategic Objective 4: Modernize Information Management
Some Tactics Used for Modernizing
Information Management

Implemented a system-wide electronic health
record (CPRS/VistA)
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Standardized IT systems and data bases
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Instituted a “semi-smart” patient identification
and registration card
52
Strategic Objective 5
Align Finances with Desired
Outcomes
What are the tactics for aligning
finances with desired outcomes?
54
Strategic Objective 5: Align Finances with Desired Outcomes
Some Tactics Used for Aligning Finances
1.
Designed and implemented a new capitationbased “global payment” resource allocation
system
2.
Diversified the funding base – increased private
insurance billings
3.
Reduced operating costs; eliminated waste
4.
Expanded VA’s authority to partner and contract
with private providers
5.
Focused on health promotion and disease
prevention
55
Veterans Equitable Resource Allocation
“Global Payment” System (VERA)

Allocated funds (“payment”) to the VISNs according to
the number of patients they cared for (averaged over the
prior 3 years), adjusted for patient acuity and certain
other factors

Tiered payment according to type of care (1998)

Basic Care – 96% patients, 62% funds (annual $2,857,
PMPM $238)
 Complex Care - 4% patient, 38% funds, (annual $36,955,
PMPM $3080)
 VERA changed the funding model from being hospitalbased to network-based (i.e., population-based) and
created incentives for providing services that were
more effective and more efficient
56
SOME RESULTS OF THE CHANGES
AFTER 5 YEARS
57
Selected Results, 1995-1999
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Treating 24% more patients per year (>700,000)
Reduced staffing by 12% (25,867 less full time
employees), but relatively more caregivers
Implemented universal primary care
Closed 55% of the acute care hospital beds (28,986)
Improved access – opened 302 new community
clinics; reduced waiting times
National Formulary – improved evidence-based drug
utilization and reduced purchase price of
pharmaceuticals by $650 million/yr by 1999
Reduced ‘Bed Days of Care per 1000 patients’ by
68%
Reduced in-patient admissions by 350,000 per year
58
VA Healthcare Transformation
Selected Results, 1995-1999
1,040,000
38.0
37,000,000
1,010,000
37.0
980,000
36.0
950,000
35.0
920,000
34.0
890,000
33.0
860,000
32.0
830,000
31.0
800,000
30.0
770,000
29.0
740,000
28.0
710,000
680,000
27.0
25,545,988
26.0
650,000
622,000
620,000
25.0
1993
1994
1995
1996
1997
1998
1999
59
Selected Results, 1995-1999

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Implemented a system-wide electronic health
record
Instituted a universal “semi-smart” patient
identification and registration card
Reduced waste and bureaucracy

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2,793 forms (72%) eliminated
Merged 52 hospitals into 25 local multi-campus facilities
GAO reported annual operating costs were reduced
by >$1Billion/year between 1996 and 1998
Decreased per patient annual expenditures by
25.1% in constant dollars
60
Selected Results, 1995-1999

Improved patient service satisfaction

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In 1999, 80 percent of VA users were more satisfied
than two years earlier
Every year since 1999, VA’s patient service
satisfaction ratings have been higher than for private
sector hospitals and clinics on the ACSI
Marked improvements in quality and safety
Not all quality problems have been fixed
61
VA Transformation
Quality Indicators: VA vs Medicare

Significant to marked improvement in all
indicators in VA
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VA’s performance superior to Medicare
FFS on all indicators 1997-1999 and on 12
of 13 in 2000
Jha, et al. NEJM 2003: 348: 2218-2227
VA Transformation
Hospitalization Rates
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9 high risk cohorts followed: CRF, CHF,
COPD, DM, IHD, Pneumonia, Psych (x3)
Bed day rates fell by 50%
Urgent care visits fell by 35%
Medical clinic visits increased
moderately
1 year survival rates stayed the same or
improved
Ashton, et al. NEJM 2003; 348: 1637-1638
VA Transformation
Diabetes Management: VA v MCOs
VA compared with commercial MCOs on 7
process, 3 outcome and 4 care satisfaction
measures
 VA scored better on all process PMs
 HTN-control equally poor in both
 LDL Cholesterol and HbA1c better in VA
 Satisfaction similar in both

Kerr, et al. Ann Intern Med 2004; 141: 272-281
VA Transformation
Cross-sectional Comparison of Quality:
VA v Commercial Insurance
12 local VA health systems compared to
12 communities, 1997-2000, using RAND’s
Quality Assessment Tools system (348
quality indicators , 26 conditions)
 Overall quality – VA 67% vs Comm 51%
 Chronic disease – VA 72% vs Comm 59%
 Preventive care – VA 64% vs Comm 44%
 Acute care – VA 53% vs Comm 55%

Asch, et al. Ann Intern Med 2004; 141: 938-945
VA Transformation
Vaccinations and Pneumonia Admissions
Influenza vaccination rose from 27% (1995)
to 70% (2003)
 Pneumococcal vaccination rose from 28%
(1995) to 85% (2003)
 Variation in rate due to geography, clinical
indication and type of facility nearly
eliminated
 Hospitalization due to CAP fell by 50% in VA
(compared to a 15% increase in Medicare)

Jha, et al., AJPH 2007 (December)
Comparison of VA and US Private
Sector Health Care Quality*
 9 studies comparing VA and non-VA care in general
showed greater adherence to accepted processes
of care – or better health outcomes – in VA
 5 studies of mortality following a heart attack or
other coronary event found similar survival rates in
VA and non-VA settings
 3 studies of care after a heart attack found greater
rates of evidence-based drug therapy in VA
 1 study found lower use of clinically appropriate
angiography in VA
 3 studies of diabetes care found VA to have better
adherence to guidelines and outcomes
 3 studies found higher rates of vaccination against
flu and pneumonia for the elderly in VA
*Medical Care, Jan 2011
67
68
SOME LESSONS LEARNED
69
Some Lessons Learned
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Public hospitals can provide high quality and
efficient care equal or superior to private hospitals
Rapid and major improvement is possible in large,
politically sensitive and financially stressed public
health care systems
Higher quality of care, better patient service and
reduced cost can all be achieved at the same time
Presenting a clear vision of what the reforms are
expected to achieve is critically important
The vision must be implemented with pragmatic
and integrated strategies that have clear goals and
which routinely measure performance to track
progress toward achieving the goals
70
Some Lessons Learned

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Publicly reporting performance results using
standardized metrics can drive major change
Automated information management tools (e.g.,
electronic health records) are essential for
improving health care quality and performance
An integrated system of health care can be
achieved using both vertical or virtual integration
Frontline clinicians must be continuously involved
in the planning and implementation of health care
reform if it is to be successful
Focusing on organizational performance and
processes is more productive than focusing on
poor-performing individuals
71
Some Lessons Learned




Training and education are essential components of
the change process so personnel know how to
function in new ways
Decentralizing responsibility and authority must be
coupled with an understanding of “mission-critical”
activities and accountability
Health care organizations function as complex
adaptive systems, which operate according to the
rules of complexity theory, so health care reform
leaders must understand chaos and complexity
theory
Health care system finances or payment methods
must be aligned with the desired reform outcomes
72
Funding the VA Health Care System
Reforms



Essentially no funds were appropriated for the
reforms
Reforms were funded by achieving savings and
redirecting those funds to other uses
5 year VA Health Care System budget increases



Before the reforms (1990-1994) – 37%*
During the reforms (1995-1999) – 10%*,**
After the reforms (2000-2004) – 45%*,***
*average annual medical care inflation about 6%
**number of users increased 24%
***number of users increased 73%
73