PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
THE CHANGING LANDSCAPE
OF HEALTH CARE
Leadership College Module II, January 24, 2015
1/24/2015
Leadership Model - NCMSF
Module IV: Evaluating Information &
Connecting Our Service
•Building from previous modules, this module
reinforces learning about change and
leadership, leading change as opposed to being
a bystander to the change.
•White Coat Wednesday: Leadership College
Advocacy Day
Module III: Holding to Account,
Leading with Care, Engaging the Team,
Influencing for Results & Developing
Capability
• Introduction to leadership concepts and
positive leadership
• Ind. Profile and teams:
•Communication:
•Employee
•Patient
•Feedback
•Conflict resolution
•Building trust and lasting relationships
Final meeting: The Leadership Journey
• Project report-back
• Evaluation
• Graduation
Module I: Inspiring Shared Purpose
The beginning: The Journey Ahead and
Understanding Self
Introduction to the program and overview:
•Purpose and learning objectives.
•Insights Discovery workshop:
•Developing self – self-awareness and
reflection.
Module II: Inspiring Shared
Purpose & Sharing the Vision
Culture and Change: Understanding the
competing streams of culture and how
culture affects change
• Financial history of healthcare
•Strategy: Mapping out the how and
what aligned with the vision
•Terminology and key concepts
Learning Objectives
• Describe legislative structure and interpret most pressing
and current issues in the broader context of health care
• Analyze current context of health care and formulate
opportunities and challenges at the overall level as well as
the individual level
• Explain key issues of culture and describe the competing
streams of culture and how culture affects change
• Understand and apply basic concepts of finance in daily
work
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Agenda
•The Landscape of Health Care
• Mapping out the scene
•Advocacy
• Health Policy
• Legislative Issues
•Change & Culture
•Finance 101
• Basic Concepts
• Terminology
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
COLOR CHECK – What color energies do you
bring today?
Methods
Q - How can you bring more
method and structure to the
team?
Q - How can you better value
the method and structure other
team members bring?
Shared processes
Trust
Q – How can you use your gifts to
create a trusting and supportive team
atmosphere?
Q – How can you better value what
others do to create trust?
Shared relationship
Achievement
Q – How can you use your gifts to
bring a goal focus to the team?
Q- How can you better value the
goals focus other team members
bring to the team?
Shared
Success
Shared goals
Environment
Q – How can you make your team a
creative, energised and inspirational
place to work?
Q – How can you better value what
others do to make the team an
inspiration?
Shared vision
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Porter’s Model of Five Competitive
Forces
•Tool used for
competition
analysis in business
strategy
formulation.
•Provides
understanding of
the rules of
competition.
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Exercise
Use Porter’s Five Forces to “paint a
picture”:
 Work in assigned groups
 Use the model to map out current
state of healthcare
 Time: 15 min.
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Group discussion
•Future state of
healthcare: Where
are we heading?
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
LUNCH BREAK
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Introduction to
Balanced Score
Card
CUSTOMER
“To achieve our vision, how
should we appear to the
customer?”
FINANCIAL
“To succeed financially, how
should we appear to our
shareholders?”
VISION &
STRATEGY
INTERNAL BUSINESS
PROCESSES
“To satisfy our shareholders
and customer, what
business processes should
we excel at?”
LEARNING & GROWTH
“To achieve our vision, how
will we sustain our ability to
change and improve?”
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
BSC and the Tree Analogy
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Generic BSC vs. Adapted BSC:
Generic
Adapted
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
1/24/2015
Example:
• Strategic plan for NY State
Office of Mental Health
• Major release of the Plan
every 5 years
• Clear plan of why, what and
how for each individual in the
organizations
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Concept of Culture
• Artifacts and creations:
• Social and physical
environment
• Values:
• What the organization
ought to be
• Basic underlying
assumptions:
• Patterns of believing
or acting that is taken
for granted
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Acculturation and expectations
• The culture of medicine has its own
norms, rules and expectations:
• Competition
• Authority as a physician
• Independent
• The reality of the future context calls
for the opposite:
• Team work
• Collaboration
• Altruistic individual
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Organizational structures
Decisions are made at the top, the hierarchical structure of
command and control prevails. People work in ‘silo’
functions where asking permission is often more important
than meeting the customers’ needs.
Decision-making and leadership are the responsibility of
those who first connect with the clients and who are doing
work that adds value to the customer.
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
1/24/2015
Culture, leadership and
change
• What kind of culture would
enable the organization to
successfully move towards
the vision?
• What, if any, change is
required?
• At what level
• Stakeholders
• Why?
1/24/2015
Stop and reflect
• Individual reflection
• What are some of the challenges you experience in your current
organizational culture?
OR
• What are some of the strengths in the organizational culture that sets your
workplace apart?
• How do your strengths help you to meet the challenges/ promote the
positive aspects of the organizational culture?
• How do your weaknesses hinder your success in this organizational culture?
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Change and
Emotional
Response
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Change process
• “Change is hard in
many fields, and
medicine’s altruistic
core values actually
reinforce
practitioners’
resistance to
disturbing the status
quo”
(Lee, 2010)
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Signs of reaction
PRIMARY REASONS FOR RESISTANCE
TO CHANGE
• Lack of awareness about and
involvement in the change
• Loss of control or negative
impact on the job
• Increased work-load and lack of
time
• Culture of change resistance
and past failures
KEY BEHAVIORAL INDICATORS
• Apathy, lack of involvement
• Passive aggressive behavior
• Lack of motivation
• Extended or multiple absences
• Inadvertently delivering
negative messages
• A general feeling of being
overwhelmed
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
1/24/2015
Triggers for stress for each color energy
Lack of information
or understanding
Lack of structure
and logic
Poor quality work
Wasted time
Distractions
Irrelevant
chatter/purposeless
discussion
Sudden changes without
warning
Lack of consideration for
others
Interruptions
Time pressures/fast pace
Three jobs needed all at
once
Unfair or impersonal
treatment
Lack of focus
Indecisiveness in the
group
Lack of leadership
Being out of control
Lack of immediacy
Slow pace
Restrictions on flexibility
Lack of influence
Lack of involvement
Being forgotten or
overlooked
Personal rejection
Over-seriousness/lack of
fun
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
1/24/2015
Finance - Step 1
• Develop an understanding of financial
statements and apply that knowledge in
the process of financial analysis.
• Explore the dynamic factors affecting the
financial management of healthcare
organizations.
• Integrate best practice tips into every day
practice operations.
• Apply key considerations and actionable
steps to financial success in the future.
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Financial Management in Broad Terms
• Generating Income and Measuring Productivity
• Business Planning and Budgeting
• Controlling expenses
• Tax and regulatory compliance
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Common Financial Terminology
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•
•
•
•
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•
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Balance Sheet
Gross Charges (Revenue)
Gross/Net Collections
Deductions from Revenue
Net Patient Service Revenue
Income From Operations
Non Operating Revenue
Net Income
Days of Cash
Price/Payment/Cost
Resource-Based Relative Value Scale (RBRVS)
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Relative Value Units (RVU)
• RVUw
• Physician work involved in performing a clinical service
• Measures provider’s skill and complexity
• RVUpe
• Expenses associated with delivering the service
• Measures amount of resources required, e.g. staff, supplies, equipment
• RVUm
• Malpractice risks
• Measures the risk involved providing service
• RVUt
• Total value
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Where do I look on an income statement?
• Revenue
• Net Patient Service Revenue (NPSR) – Expected collections from patient care
activity
• Other Operating Revenue
• Non‐patient activity such as research revenue, academic revenue, operating
investment income, other
• Expenses
• Salaries and Benefits
• Supplies and Outside Services
• All Other Expenses
• Operating Gain (Loss)
• The amount of income we made, after expenses, from continuing hospital
operations, “The bottom line”
• Excess (Deficit) of Revenues over Expenses (Net Gain (Loss))
• The amount of money earned from all our lines of business, including
non‐operating gains, gifts, non‐operating investment income, etc.. “The
bottom, bottom line”
Income Statement (P&L)
2014
Gross Charges
$386,153
Revenues
2014
Operating Expenses
Staff Salaries
Office A
$194,112
Physicians Salary
Office B
$142,362
Retirement
Office C
$60,307
Other income
$500
Less refunds
($4,580)
Total Revenues
$392,701
Other expenses
Total Operating Expenses
$98,434
$5,667
$37,391
$245,900
Administrative Expenses
Fix Overhead
$48,390
Office Expenses
$32,021
Surgical Supplies
$32,425
Travel Expenses
$15,306
Miscellaneous
$7,969
Taxes and Licenses
$1,769
Total Admin. Expenses
$137,880
Total Expenses
$383,780
Profit /Loss
1/24/2015
$104,408
($8,921)
Where do I look on a balance sheet?
• Current Assets (C/A)
• Resources that are available to the organization within a year
• Cash, Investments, Receivables – generally for patient care services,
other assets
• Current Liabilities (C/L)
• What the entity has to pay within a year
• Debt payments, accounts payable, compensation & benefits,
settlements with 3rd party payers
• Current Ratio (Ratio of C/A to C/L)
• An important indicator to the organization’s ability to meet near term
responsibilities ‐ Less than 2:1 can be a sign of financial stress.
• Long term debt
• The borrowing, generally to build the facility and buy equipment
• Net assets
• The difference between total assets and total liabilities it is one
measure of the financial value of the organization
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
1/24/2015
Balance Sheet (B/S)
Assets
Liabilities
Current Assets
Current Liabilities
Cash
$47,561
401-k plan payable
$10,500
A/R Mutual Stock
$1,914
Payroll taxes payable
$12,768
A/R TPW LLC
$51,108
Current long-term debt
$28,600
Total Current Assets
$100,583
Total Current Liabilities
$51,868
Property and Equipment
Long-Term Liabilities
Furniture and Fixtures
$440,044
Long-Term Note Shareholders
$58,909
Equipment
$540,122
Long-Term Debt
$146,400
Professional Library
$4,969
Total Long-Term Liabilities
$205,309
Computer Software
$66,803
Total Liabilities
$257,177
Less Accumulated Depreciation
Net Property and Equipment
Total Assets
1/24/2015
($980,800)
$71,138
$171,721
Stockholder's Equity
Retained Earnings
($22,499)
Treasury Stock
($62,957)
Total Stockholder's Equity
($85,456)
Total Liabilities and Stockholder's Equity
$171,721
Categories of revenue
• Patient Service Revenue
• Gross Patient Service Revenue (GPSR) vs. Net Patient
Service Revenue (NPSR)
• Calculation of NPSR
• Payment Methodologies
• Membership revenue, capitation
• Other Revenue
• Research Revenue
• Direct and Indirect
• Academic Revenue
• Faculty practice
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
1/24/2015
Discussion
• In your current role, how involved have you been in financial
matters?
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Strategic planning?
Budgeting?
Physician compensation
Pay for value
• Do you feel like you have appropriate knowledge to actively
participate in these functions?
• What more training do you think you would need to have to be more
effective?
• TIME: 20 min.
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE
Thank you!
• Next session May 15- 17 in Chapel Hill
• More information will follow
• Block the dates in your calendar!
PREPARING LEADERS FOR THE
FUTURE OF HEALTH CARE