Desperately seeking synergy: the journey to systems integration of women’s health services

Conference Presentation Desperately Seeking Synergy: The Journey to Systems Integration of Women’s Health Services Paula A. Walowitz, MA American Hospital Association Chicago, Illinois

Bonnie Connors Jellen, MHSA Section for Maternal and Child Health American Hospital Association Chicago, Illinois

Presenters:

Kathleen Hanold, RN, MS Women and Infant Services BJC Health System St. Louis, Missouri

George F. Lee, MD Medical Affairs California Pacific Medical Center San Francisco, California

Ann L. Ropp, MS Services for Women and Children St. Luke’s Shawnee Mission Health System Kansas City, Missouri

Vicki A. Lucas, PhD Women’s Services MedStar Health Baltimore, Maryland

Abstract Providing women’s health services can be a profitable enterprise. With 70% of health care purchases being made by women for themselves and their families, focusing on women as health care consumers strengthens the entire system. However, shrinking reimbursement and market pressures are creating an atmosphere of financial instability in health care. Is system integration the answer? The four presenters— each an executive champion for the women’s service line in their systems—agree that integration can potentially reduce costs, improve quality of care, and increase patient and stakeholder satisfaction. Benefits can only be realized, however, if clinicians are engaged as partners early in the process, the organization is prepared to respond quickly to market changes, and competitive forces and culture differences across the system are acknowledged and addressed. “Women’s Services” must also continually demonstrate its value to the system and find creative ways to differentiate itself in the marketplace.

Presented at the Preconference Institute at the National Association for Women’s Health’s 12th Annual Executive Summit, sponsored by the American Hospital Association, Oct. 24, 1999. © 2000 by the Jacobs Institute of Women’s Health Published by Elsevier Science Inc. 1049-3867/00/$20.00 PII S1049-3867(00)00049-9

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o definitive roadmap exists for this journey. Depending on the organization involved—its structures, cultures, vision, values, and people— each journey to systems integration for women’s health can be maddeningly unique. Given the uniqueness of each organization’s experiences as it moves into, or expands, its women’s service line, the preconference institute offered four different examples of how health care systems have tackled the challenges of integration, maximized benefits, minimized obstacles, garnered support, and negotiated the bumps in their particular road.

THE BIG PICTURE Before launching into her own system’s story, the first presenter, Kathy Hanold, RN, MS, vice-president of women and infant services at BJC Health System in St. Louis, began the 4-hour session with a “primer” on systems integration in women’s health. The progress of women’s health services has been unmistakable over the past two decades. In the 1980s, the focus was on inpatient obstetric services. Since then, innovative models have proliferated, Ms. Hanold said, and “everybody—from Wall Street investors to folks on the supply chain, like pharmaceutical divisions, biomedical device firms— everybody is looking to get a piece of the action. Women’s health, looked at collectively, is actually a very profitable enterprise.” This is in sharp contrast, she said, with how hospital women’s health services, especially maternity services, have been generally perceived. At the time of the institute, the Balanced Budget Amendment (BBA) was being actively debated in Congress as the American Hospital Association (AHA) spearheaded efforts to curb the law’s potentially disastrous effects. Although the AHA and its members later succeeded in reducing some of the BBA’s negative impact, health care organizations continue to operate against a backdrop of financial instability, where the only certainty is an ever increasing struggle to tap into ever shrinking resources. Ms. Hanold emphasized the need to respond to this environment by “reinventing the journey along the way” in order to keep integrated women’s services viable.

Synergy and Integration Ms. Hanold defined the “synergy” mentioned in the institute’s title as “a fancy word for cooperation or collaboration,” which can offer the following benefits to organizations with multiple entities that achieve true integration: shared know-how, shared tangible resources, pooled negotiating power, coordinated strategies, vertical integration, and continued business creation.1 Within the resource-starved climate of the 1990s, shaped in part by a need to offset real and expected losses due to managed care and capitation, hospitals accelerated the trend that began in the 1980s toward multihospital systems and developed several integration strategies. The purpose of horizontal integration, which brings together organizations that provide a similar level of care under one management umbrella (e.g., mergers), is to establish a market presence, increase efficiency, and take advantage of economies of scale. Vertical integration brings together organizations that provide different levels of care, such as health maintenance and promotion, ambulatory care, acute care, subacute care, long-term care, and home care. This type of integration also aims to improve efficiency, but it focuses on coordination of care along the continuum and creating “one-stop shopping” for managed care purchasers and payers. 162

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The ingredients needed to achieve system integration, according to Ms. Hanold, include (1) some kind of bonding and alignment across the system, which can mean linking the funds to create fully merged bottom lines or entering into affiliation or joint venture agreements; (2) a compatible corporate structure based on system size, number of markets, the system’s developmental stage, and the state’s legal mandates; (3) integrated strategies for information systems, management practices, patient management, and operations; and (4) a shared vision and values, i.e., a common culture. Governance issues present some of the most challenging aspects of system integration, according to Ms. Hanold. “When you’re trying to bring a women’s health service to market quickly, you’ve got new players coming into your market, you need to make health care decisions, you need to allocate resources—this can all be helped or hindered by how your system is set up. The layers of governance, the number of boards, whether you’re centralized or decentralized—it all impacts your ability to tackle your service line.” Ms. Hanold identified integration initiatives that are more appropriate early on in a system’s development, such as pooling together human resources, centralized purchasing, and medical credentialing. She called these efforts the “low-hanging fruit” in system integration that help an organization cut costs and function more effectively across the system. Achieving clinical integration and establishing a systemwide culture are the most important, she said, but they are also the “most difficult and take the longest to achieve.” Clinical integration, Ms. Hanold explained, requires coordinated mission and goals, performance measurement, market strategy, control and decision making, capital allocation, and physician leadership and practice development. She presented a model of pathways to clinical integration that began with “random acts of clinical improvement” and moved, as a system matures, through maintaining the health of the population, care management, and disease state management, until, as Ms. Hanold described it, “over years and with deep pockets, it becomes a system of care.”

Is It Working? Ms. Hanold discussed arguments on both sides. Those who believe that integration is not working assert that it is based on a flawed model that identifies patients as the “raw material” rather than the various stakeholder groups and the payment mechanisms that are a key driver of the model. Integration may actually be making us less effective and more costly, she said, as indicated in a study from the Virginia Commonwealth Group that found that patient care cost $140 more per discharge in integrated delivery networks than in freestanding, unaligned entities. Critics also point to the complexity of vertical integration and the culture struggles needed to achieve a shared vision and values across a system. Proponents of integration say that it takes time to develop these new models; the process offers the opportunity to focus on best practices, eliminate waste, reduce cost, and deliver high-cost specialty services in a more effective distribution network; and that “the best is yet to come.” Ms. Hanold quoted from an article in Healthcare Executive2 that integrated delivery system (IDS) hospitals tend to have more “throughput,” i.e., more admissions per staffed bed, but non-IDS hospitals have more outpatient visits. Reasons for these differences are unclear. Average occupancy is higher in IDS hospitals, but length of stay is not significantly affected because integrated health systems tend to attract much sicker patients. Although integration was originally touted as a way to decrease costs, all health care prices have increased, especially in private, for-profit hospitals. The future of integration is uncertain, according to Ms. Hanold. “It

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behooves all of us in women’s health care, because we’re part of this large wave, to really understand how we operate in our market and how we add value,” she said. “Especially when you have margins that are eroding or next to nothing.”

BJC HEALTH SYSTEM BJC is one of the largest integrated delivery networks in the country, with revenues approaching $2 billion, and is the largest employer in the St. Louis area. A fully integrated model, the nonprofit health system spans five regions and two states, and includes 14 hospitals, 100 ambulatory sites, 4,500 beds, two health plans, and an owned physician medical group.

System Management and Governance BJC’s federation model merges bottom lines across the system, but allows for individual decision-making authority that rests in the board of each entity. The system board handles issues around debt, asset transfers, system executive selection, capital allocation, mergers, consolidation, and managed care contracting. The institutional boards appoint their own directors, prepare their own operating and capital budgets, do their own endorsements and fundraising, and are responsible for utilization review, quality improvement, and medical staff appointment and review. At the time of the session, BJC had been without a system chief executive officer for 17 months, which Ms. Hanold said had slowed decision making and created additional difficulty for women’s services. “The institutional boards continue their primary focus on the individual institution and its market,” she explained. “As such, there’s no consensus among the institutional boards about the role and functionality of an integrated service line.”

State of the Market St. Louis is currently a chaotic market, Ms. Hanold said, with about a third of its hospitals losing money. It is considered the most overbedded community in the country. She calls the 30% penetration rate “managed care lite” and bemoans the low revenues—about 40 cents on the dollar overall. Despite the Certificate of Need (CON) process in the state, for-profit niche players continue to enter the market. One of these for-profit entities has recently partnered with several physicians and one of the four health systems in the area to build the first women’s hospital, which she says is “shaking up the market and creating tension.” On the plus side, the move has attracted attention to women’s services, including from the BJC board.

Service Line Sixty percent of BJC’s business, or about $600 million in revenues, comes from women’s and infants’ services. Of that amount, $110 million is for obstetrics/ gynecology (ob/gyn) or special care nursery services and includes 12,500 births. Ms. Hanold is the executive for women’s and infants’ programming across the system and is in a staff position. At the corporate level, she reports to the chief medical officer. She has no line accountability but maintains several matrixed relationships, meaning she has “influence and accountability through shared values and vision,” including with each of the hospital presidents, and women’s and infants’ leaders across all sites. She is directly accountable for 164

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$110 million worth of business, largely defined as ob/gyn and nursery services, and her performance is also evaluated based on incremental growth and other women’s services, such as heart, breast, and bone health, which continue to grow. Ms. Hanold’s key functions are to oversee and run business planning for the service line, oversee quality and clinical integration, and reduce operating losses. The women’s and infants’ service line is the largest in the health system, and it carries a significant operating loss. The service line cannot currently demonstrate a return on investment to expand with additional market capital and build incremental market share. To address this issue, Ms. Hanold has explored options for innovative partnerships and other ways to bring capital to the table.

Strategies and Successes Ms. Hanold identified critical success factors for women’s and infants’ services that include facility capacity for growth, which she says will require looking beyond maternity and ob/gyn; a differentiated way of competing in the marketplace; attractiveness to physician groups; ability to manage costs and deploy resources across the system; and attractiveness to external customers, such as managed care groups, employers, and community leaders. Although, this past year, 80% of her time has been focused on “tweaking” operating performance, Ms. Hanold has been able to begin planning strategies to address some of these issues. For example, she was able to measure downstream revenue this year. She demonstrated, by using ob/gyns as primary gatekeepers, that ob/gyn physicians generate an additional $140 million in revenue to the health system, which means—for fully aligned physician practices—about $6 million in hospital revenues for each ob/gyn physician. This amount includes all the mammograms, bone density testing, and incremental revenue that goes into the neonatal intensive care unit (NICU), and “the fact that anywhere from 10% to 20% of the top subspecialists in women’s health get their volume from where? Ob/Gyns. That’s a pretty good chunk of change.” Ms. Hanold measures this downstream revenue to help reposition the value of women’s health in her system, but she says that “not everybody believes it. That’s my continuing challenge—to state that compelling case.” Ms. Hanold has led the service line to brand itself through new programs. One way to differentiate and brand their women’s health product in the marketplace has been through their Spirit of Women partnership that has allowed them to reach out to the segment of our market population that is growing at a rate of 12% over 5 years—women in midlife and senior women. Mostly, the service line’s focus is on expanding into breast, bone, and heart services, though they are also “concentrating on both the front and back end of the life span continuum”—adolescents through the school and seniors through the national Oasis program. To improve cost management, the service line has begun distributing monthly dashboard indicators that help identify how well they are managing direct expenses. The indicators include productivity measures, FTE (full-time equivalent) levels, direct labor expenses, and supply expenses, especially for maternity services. Ms. Hanold said that her goal is to reduce operating expenses by 5%, and she uses these dashboard indicators to gauge how close the service line is to its targeted budget cycle. One effort designed to enhance attractiveness has been the development and implementation of a scorecard, which measures eight indicators—four are clinical, and include well woman care, and the other four are financial and

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service indicators. Some of their other initiatives include working with women in their business and employer community to identify unmet needs, exploring the possibility of a claims-based health improvement program with employers in the area, and partnering with the local NBC television affiliate to develop a breast health outreach program. Other successes include good results in market branding for the service line, excellent market share growth, and improvements in managed care contracting.

Goals and Challenges Some of Ms. Hanold’s goals for the women’s and infants’ service line in 1999 included reducing direct operating expenses by 5% from 1998, improving obstetric patient satisfaction as well as satisfaction scores for both ob/gyn physicians and service line employees, and continuing the expansion of women’s health. The service line’s biggest challenges include aligning clinical practice management in terms of improvement goals, financial performance, and managing the local market demand. Ms. Hanold also mentioned the following considerations for the future of women’s health:

• “Consumers are the change agents. No matter what service platform you provide, you have to deliver value.”

• “You’ve got to move quickly, which means you’ve got to have agility and business discipline, which also means we have to find some way to short-circuit the decision-making process in large integrated delivery networks.” • “Women have health care needs across the life span, and we’re seeing more and more companies beginning to focus on that . . . . Our own market research has shown that we have unmet needs in every one of our age cohorts; 9 in 10 are changing insurance once in 5 years; there is a desire to change physicians (1 in 5 women feel their doctor doesn’t have the current, gender-based information required to provide health care services).” • “We also know we can’t do everything. We’ll have to forge innovative partnerships.”

SUTTER HEALTH SYSTEM Sutter Health encompasses 5,000 physicians, 26 acute care hospitals, four long-term care centers, eight cancer centers, eight medical research institutes, and 35,000 employees in northern California, southern Oregon, and Hawaii. George F. Lee, M.D., senior vice-president of medical affairs for the California Pacific Medical Center (CPMC) in San Francisco, emphasized true integration throughout his presentation. “The failure of mergers is the failure to merge,” he stressed. “In the rapid effort for people to expand their market share, they’ve acquired or merged with other institutions but really have not merged the functions, therefore not realizing the value and the economic savings. If you don’t merge completely, you actually add costs to the operation.”

System Management and Governance Dr. Lee described the system’s governance as involving the eastern, western, and central regions. The system board has a system leadership council, a clinical leadership council, and a system management team to help oversee the three regions, each of which has service areas. Each service area has an independent CEO and one to four hospitals. Every local affiliate in Sutter has its own local board and its own local management. Shared functions across the system include information technol166

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ogy, legal services, and procurement, which produce some system and local savings. “That in itself is probably not enough to have a system,” Dr. Lee explained, “but we have been able to develop more market share, and more importantly for each one of these hospitals, there is access to capital through the system that they would not have otherwise.”

State of the Market Managed care dominates health care in California, up and down the West Coast, and other urban areas throughout the country, Dr. Lee said, and 90% of his facility’s nongovernmental patients are enrolled in managed care. “Most of our losses,” he added, “are in capitated managed care, and most of our profits are outside of managed care.” In 1987, California Pacific Medical Center received about $140 per member per month for reimbursement. Today, it receives $90. Like other health care organizations in the marketplace, CPMC is finding ways to decrease its reliance on capitation. For example, CPMC is projected to lose $19 million in Medicare senior risk in 1999. As a result, Dr. Lee said, “we’re exiting senior risk.” Prior to 1991, there were 13 hospitals in San Francisco; today there are 7. Almost all of the surviving hospitals, according to Dr. Lee, have obstetrics services, while none of the closed hospitals did. Obstetrics is therefore, he said, a significant market differentiator in the San Francisco market. Ultimately, the highly competitive market forced out any hospital that did not offer a full-service model for women’s health.

Service Line “National marketing has demonstrated that 70% of health care purchases are made by women, mostly in the reproductive years,” Dr. Lee said, emphasizing the immense purchasing power held by women in this age bracket. “Women buy services for their children, for themselves, frequently for their husbands, and very frequently for their aging parents.” Women’s and children’s services make up 20% of his hospital’s total volume and revenue stream. Sutter Health in northern California, through a series of mergers and acquisitions, now has a market of 39,000 deliveries a year. CPMC alone provides more than 50% of San Francisco’s deliveries and 90% of the city’s private care deliveries. Clinicians include obstetricians, midwives, perinatologists, and neonatologists. In addition to general ob/gyn, areas of service include prenatal genetics, gynecologic oncology, infertility and in vitro fertilization, lactation support, and prenatal education. Dr. Lee emphasized that a women’s service line need not operate as a loss leader. He admitted that, for his 25 years as ob/gyn department chair, “it was always an uphill battle to get economic resources for women’s health.” As he expanded his services, however, into a mammographic program, perinatology, and pediatrics, things began to change. “When I sat at the table at budget time or the clinical executive committee of the medical staff, and I commanded 20% of the volume of the institution, my voice in that institution went up dramatically,” he explained. “I didn’t have to ask the CEO. The CEO began to ask me about what needs were going to be there for the coming year.”

Strategies and Successes Dr. Lee led the creation of a women’s services program for Sutter that combines clinical trials, standardization of marketing and functionality throughout the system, and the ability to develop statistical outcomes that have immediate meaningfulness. It began with an operations plan for the western

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region that was developed by a multidisciplinary group headed by Dr. Lee and composed of nurse directors and managers, physician department chairs from each of the institutions, neonatologists, perinatologists, and other key leaders. The group dealt with operational issues, such as staffing ratios, budget preparation, and an analysis of a 48-hour maternity length of stay, which became an immediate success. Prior to 1997, managed care required a 24-hour length of stay for maternity, which was overturned through state legislative action. The group put together an operational plan for the shift to 48 hours that analyzed the economic impact, the resource impact, and what each manager needed to do to accommodate the change. This success and others over the next two years led to Sutter Health asking the group to expand into the entire system. One of his first coordination efforts across the system was standardization of the perinatal record. “Those of you who are involved in management of an obstetrics unit know what it’s like to have every physician bring in his or her own OB record and then to have the nurse managers and the nurse clinicians have to abstract from those records the pertinent information,” Dr. Lee told the attendees. He explained how the concept initially met with great opposition from hospital managers and clinicians, but, he said, “if you are going to act like a system, what could be more basic in women’s services than a standard OB record? If we can’t accomplish this one thing, we have no future as a system.” By engaging the early participation of nurse managers in all the OB units, as well as physicians who are department chairs, the system is now moving forward rapidly, Dr. Lee said, toward a single perinatal record across all 26 hospitals. Another effort that he said is fundamental to achieving integration benefits for the system is the development of a common clinical database. Using a common language across the system allows comparison of outcomes between facilities, physicians, and nurses, and sets the stage for the implementation of a uniform report card. “Site of Care,” the database that Sutter Health is supporting, takes in data such as the fetal heart rate and abnormalities, the medical record, birth certificate information, and patient registration information. From this input, the software can generate discharge summaries, delivery notes, birth certificates, standard log books, departmental statistics, report cards on all aspects of physician and nursing behavior, newborn screening and neonatal reports, referrals to home health, benchmarking and quality improvement reports, ICD-9 and CPT coding, and HEDIS reports. The time savings in terms of producing and distributing the reports, according to Dr. Lee, offset the cost of the system. Dr. Lee and his staff noticed that implementing the database in one hospital achieved a moderate decrease in cesarean section rates. To enhance this improvement in 1994, they took the additional step of providing clinical results to physicians in a public manner, replacing the previous practice of providing “blinded” data so physicians could see only their own statistics. By doing nothing more than providing personal information in an open forum, they reduced the cesarean section rate from 26% to 17% in 18 months. Dr. Lee called it “a remarkable example of what data can do when you use it properly.”

Goals and Challenges These and other early successes have been expanded across the system. When Sutter decided to establish six clinical initiatives for the entire system, they put two in women’s health. Breastfeeding was selected as the major initiative, as a result of its high volume and solid support from providers, health plans, and the community. Another effort tackles early onset of beta group streptococcal infections. One of the system’s hospitals has designed a protocol that has 168

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dropped deaths from beta strep infection in the nursery to zero in the past 2 years. This protocol is now being introduced throughout the system. The greatest overall challenge, according to Dr. Lee, is clinical integration, which “brings together the critical mass of a system and applies the strengths of that critical mass.” Succeeding at clinical integration requires that special consideration be given travel times from divergent areas (some of his hospitals are 300 miles apart); early involvement of all stakeholders; the need for more consensus building to get buy-in as a result of divided reporting responsibilities; and acknowledging competitive forces within the system and cultural differences across the service line.

SAINT LUKE’S SHAWNEE MISSION HEALTH SYSTEM Saint Luke’s Shawnee Mission Health System is a billion-dollar, seven-hospital system. Four hospitals— one tertiary and three community—are in the Kansas City metropolitan area, and the other three hospitals are rural facilities in Kansas and Missouri. Saint Luke’s Hospital of Kansas City is a tertiary care hospital and a major teaching hospital affiliated with the University of Missouri–Kansas City. The system has more than 1,000 beds, nearly 1,000 physicians, more than 7,000 employees, and more than 7,000 births annually, with that number growing each year.

System Management and Governance Ann L. Ropp, RN, MS, vice-president of Women’s and Children’s Services (WCS) at Saint Luke’s Shawnee Mission Health System, described the mission and vision of the organization as a “wellness mission built around community service and our core business of delivering patient care.” The defining characteristics of the system include a quality focus, customer satisfaction, market leadership; physician partnerships (“It’s not a lip service thing,” she said. “We involve physicians at the outset.”); managed care efficiency; and fiscal stability. The system stays on a “unified track,” Ms. Ropp added, through the use of the “Excellence Collection,” a manual with organization charts and market assessments for all of the entities and businesses. Six strategic business groups operate within the organization: (1) hospitals; (2) physician services and clinics, including a medical group of more than 100 physicians; (3) a health insurance company of more than 300,000 members that offers preferred provider organization (PPO), health maintenance organization (HMO), and Missouri Medicaid products; (4) “whole person care” that addresses community health in the context of mind, body, and spirit; (5) corporate services, including management services for a large array of medical office buildings; and (6) the service or product lines referred to as the Centers of Excellence (COEs). The organization also includes home health and a durable medical equipment company. The four Centers of Excellence include (1) women’s and children’s services, comprising a regional tertiary perinatal program, the Center for Women’s Health, pediatric services, and the Mid-America Cleft and Cranial Facial Program, which is one of only about 10 such programs in the country; (2) cardiovascular services, which includes the internationally recognized Mid America Heart Institute; (3) rapidly expanding oncology services, including an integrated breast care center; and (4) behavioral health services. Governance is highly centralized at a corporate level. The corporate governing board is composed of members of the hospital boards. During a massive reorganization in September the corporate leadership group was reduced in number and reorganized so that most of the corporate leaders have

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added responsibilities throughout the health system. For example, the corporate CEO and executive vice-president have also become CEOs for two of the metropolitan hospitals. Reorganization included layoffs of approximately 300 individuals and elimination of many positions at the corporate, middle management, and support staff level. Since the delivery of health care services is the system’s core business, Ms. Ropp said, “We made a promise to ourselves and the community not to go to the bedside, so caregivers were preserved.” Integration has also been reaffirmed for information services, strategic planning, marketing, and material management.

State of the Market Kansas City, according to Ms. Ropp, is a “branch office town.” As a result, 92% of employers in the area have fewer than 50 employees, which also means that many do not offer health insurance and maternity benefits for their employees. In spite of coalition efforts to address compensation for maternal child care, many people have no insurance or way to pay for these services. With a population of 1.5 million, she said, Kansas City is a growing, diverse, multinational “town of working poor.” Kansas City is growing rapidly in its use of managed care plans. Many corporations offer limited choices of health plan services to their employees. According to Ms. Ropp, it is believed that as health care premiums continue to increase, employers will direct their workers toward HMO plans to try to keep health care affordable for the companies. The marketplace is said to be approaching HMO penetration similar to that of the Minneapolis marketplace, she said, once touted as the home of HMOs and managed care.

Service Line Ms. Ropp has divided women’s and children’s services into three submarkets: perinatal services for childbearing families and newborns, pediatrics for children to age 18, and services for women age 15 to 65. Perinatal services are well organized in all system hospitals and include the full continuum of reproductive services from an in vitro fertilization program through high-risk neonatal services, including a regional referral maternal–fetal center. The decision was made to limit an emphasis on integration of obstetrical physician practices because they are located in the same communities as the metropolitan hospitals and have local community cultures. However, there is a single maternal–fetal/neonatal care service, which is centralized at the tertiary hospital. Economically, tertiary perinatal services demand a catchment area of at least 10,000 births annually. With about 7,000 yearly births in its community, the system limits itself to one NICU plus supporting specialty care nurseries (formerly referred to as Level II and Level I nurseries) at the community hospitals. Pediatrics, the second submarket, is a million-dollar business for the system despite the presence of a popular and highly respected children’s hospital in the community. The third submarket of WCS is the women’s market. Women’s care focuses on age and gender-related health status conditions that are specific to women, other than the childbearing programs and services. Examples of the services include the Women’s Cardiac Center, hormone replacement therapy and osteoporosis programs, breast health and mammography, and pelvic health programs, which include urinary incontinence diagnostic and treatment programs. Women’s services accounted for over 65,000 encounters and more than 35% of the system’s gross revenues in 1998. 170

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At the time of the preconference institute, WCS had been a designated product line or formal COE for only 15 months. The WCS product line has a “small but mighty” steering committee, Ms. Ropp said. In order to evaluate and make decisions rapidly, committee membership is limited to the system vice-president for WCS, the WCS medical director, the system CEO liaison, WCS nursing directors from the metropolitan hospitals, and the system vice-president for marketing. Others are invited to attend as the agenda dictates. Ms. Ropp currently reports to the CEO liaison but has matrix relationships to all system CEOs, and access to the system CEO and the executive vice-president as situations require. The system leadership is relatively comfortable with a matrix structure. There is considerable trust among the leadership to promote and accomplish the objectives of the system and to work together to ensure financial stability, recognizing that “when one part wins, the system wins.” Prominently featured among the measures of success for the service line are quality, high customer service indices, and strong financial performance. According to Ms. Ropp, it is very important “philosophically and personally” to the CEO of the system “that we demonstrate to the community that we are a quality organization. Over the past three years, we have received 17 regional and national awards. Twenty-five percent of those have been in women’s and children’s services, so we’re very proud of that. With all these groups recognizing what we’re doing, it gives us a little more bargaining power at the table with insurance companies.” The service line boasts a 26% market share, which Ms. Ropp says is “not too shoddy in a community of this size where we are the second largest health system.” Financial performance, however, she calls “a stretch,” partly due to the low reimbursement levels from Missouri’s Medicaid program for obstetrical services—approximately $900 a day. So far, they have been able to maintain a positive margin, but Ms. Ropp is not certain that can continue. However, she is unwilling to make cuts in her “very tenured nursing staff,” who participate in a shared governance model that has been in place for 9 years and gives the nurses substantial decision-making authority about their practice. “I don’t want to sacrifice any one of those nurses and that experience level they have,” she insists. “I would rather find another way to deal with the finances.” Ms. Ropp admits to having some improvements to make in payer relationships, but she has found a way to communicate to the changing leadership of the system physician– hospital organization, which handles contracting, that obstetrics is not inexpensive to operate. She estimates the value of a day in a labor, delivery, recovery, postpartum (LDRP) room as follows: “The birthing bed costs $10,000 to $12,000, the fetal monitor about $11,000, the infant care warmer another $10,000 to $12,000. Add some good obstetrical nurses, who are invaluable. Put all this together, and you could have bought a new Porsche.” Often, she added, financial people and contract negotiators do not fully comprehend LDRPs or birthing beds, but “they understand the relative value of a Porsche.” “I didn’t think I ever wanted to have a job selling, but I feel like that is exactly what I do now,” Ms. Ropp told the institute attendees. Especially given the recent reorganization, she said, not all of the CEOs have had the time to recognize the relationship of the new WCS Center of Excellence to their own hospitals. They are understandably focused on their own institutions. “They have a business to run that has multiple demands, and a facility to worry about, and service demands,” she explained. “So they are not excited when I tell them that I am worried about leakage of referrals from their building and services to competitors, and that I want to help keep referral patients in the system if they can’t be served in their community hospitals.”

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A big part of her role, she said, is selling the service line concept to all entity leadership and “helping them understand that this is a priority and that I’m not selling out of self-interest, or that WCS is so wonderful (even though it is!), or simply ‘women and children first.’ This is good business for the system. If the focus on women as consumers and health care decision makers is lost, the future of the system is threatened. Women’s services is about building long-term health care relationships with the community hospitals and the system. Without the emphasis on women as health care consumers, in 5 or 10 years, the women’s business goes away, those friends and family that the women influence are lost, and then the system goes away.”

Strategies and Successes An early success was rolling out an enterprise solution to fetal monitoring technology, archiving, and records retention. Ms. Ropp was able to work with system WCS nursing directors and with support from information services leadership, to develop a consensus to purchase the Watch Child System, an obstetrical fetal monitoring, archiving, and data management system. The implementation of a single solution produced a million-dollar savings for the system. They are also planning to develop a system-wide obstetrical database similar to the one in place at the tertiary center. This database was begun over 15 years ago. There are at least 100 data points for every obstetrical patient delivered on the service. A system database will provide information for quality monitoring, performance improvement activities, research, scholarly publication, and contract negotiations. Saint Luke’s Hospital staff has succeeded in lowering the cesarean section rate at the tertiary center to 18%. When the rate is adjusted to factor out the 400 –500 high-risk maternal transfer patients who deliver low-birth-weight and very low-birth-weight babies each year, the rate drops to 13%–14%. Another early success was getting nurses from different hospitals to work together on various efforts, including a system perinatal education program, a grief support and counseling program, lactation services, and the Center for Women’s Health, which Ms. Ropp hopes to disseminate throughout the system. They have also tried to standardize material management and capital equipment acquisition, which has made vendors more amenable to offering substantial discounts.

Goals and Challenges Some of the high cost per case in obstetrics, Ms. Ropp believes, goes beyond low reimbursement. She sees a need to integrate more tightly and to continue to tackle the finances of the teaching service. An ongoing challenge for finances is the commitment to accept every patient, regardless of payer source, who presents to the service. In the year 2000, she hopes to develop comprehensive, system-wide financial reporting, “so I will get one document instead of several documents” that have to be combined to determine the profitability of the service line. Another challenging goal is the creation of some boundaries for the women’s service line. “Women’s and children’s services,” she said, “can take in everything from womb to tomb.” They have decided that gynecologic oncology is a better fit with the oncology product line, “though we often remind them that WCS is their major referral source.” Ms. Ropp said she plans to do “some targeted marketing using women as the care decision maker, and that allows us to bring in oncology and cardiovascular services, but focuses on the 172

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woman as the decision maker. So we feel we get more bang for our marketing buck.” Obviously, the system reorganization has created its own challenges for Ms. Ropp, as well as the rest of the system leadership. She related that in September 1999, system rightsizing was dramatic. Major leadership changes occurred for the third time in as many years. “I had another change in my reporting relationship. However, since most of my work occurs in a matrix reporting structure, there was very little loss of momentum in continuing to position women’s and children’s services in our reorganized health system.” She emphasized the need for health care leaders to develop flexibility, become comfortable with ambiguity, stay focused on objectives, develop aligned incentives for performance, and cultivate what she called “the new administrative skill”—resilience, or “bouncing back with vigor and energy.”

MEDSTAR HEALTH MedStar is the largest integrated delivery network in the mid-Atlantic region with gross revenue of $2 billion and the second-largest employer in Baltimore. It is composed of five hospitals in Baltimore (formerly Helix Health) and two hospitals in Washington, DC (formerly Medlantic). MedStar is a fully integrated model with 7 hospitals, 70 ambulatory sites, 10 home health agencies, one health plan, an owned physician group of more than 200 providers, and a network of more than 1,500 providers across a four-state region. Vicki A. Lucas, Ph.D., vice-president of women’s services at MedStar Health, liberally sprinkled her presentation with examples of, and comparisons between, her experiences in the past year and a half at MedStar and her experiences in a similar position at Houston-based Memorial Hermann Healthcare System, an 11-hospital system. Stories from both systems are included.

System Management and Governance The Houston system is based on a very centralized model, Dr. Lucas explained. Its CEO is a former National Football League (NFL) referee, she said, and “he runs the system the same way.” The system is governed by one corporate board. When a new hospital is acquired, it gets a place on that board. MedStar hospitals maintain their own local hospital boards in addition to the system board. The Memorial system tends to be more conservative culturally, while “MedStar is very aggressive. They like to shake up the market and play close to the edge.” Because Memorial is so centralized in its processes, like purchasing and finance, as well as decision making, integration is a given. MedStar is much more decentralized and integrates only if the integration clearly adds value.

State of the Market Both systems’ markets have achieved a high degree of managed care penetration. But they differ greatly, mostly as a result of Maryland’s tight regulations on how much can be charged for health care. In Houston, there was “all-out competition,” which Dr. Lucas said allowed the system to carve out some package pricing and exclusive contracting, and supported market consolidation, which has not yet occurred in Baltimore. Also, excess is evident. “The Baltimore market has too much of everything,” she said. “We have about 2,000 too many beds, more artificial reproductive technology than I’ve ever seen in my life, and in vitro fertilization programs on almost every corner.” Dr. Lucas explained that the regulated environment in Maryland—the last

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regulated state in the country for health care costs— has prevented market consolidation and permits the survival of “inefficient hospitals and large consumption machines like Johns Hopkins Hospital.” The number of births in Baltimore is declining by 7% annually, which makes obstetrics a very competitive market. She contends that Baltimore has “three to four” more obstetrics programs than the market can support. “The market is stable to an extreme,” she said. “Very few people move to Baltimore and very few people leave.” Houston, on the other hand, was a very mobile market, which benefits the women’s services business. Although Baltimore is heavily penetrated with managed care, “the regulatory environment disincentivizes payers from ‘steering’ volume,” Dr. Lucas said, “whereas in Houston many payers limited their network and would contract exclusively.”

Service Line Of MedStar’s $2 billion gross revenue, about 24% is attributable to ob/gyn alone, not including referral business or downstream revenue. Women are responsible for 60% of all encounters, and 70% of the top DRGs are related to women’s services. Dr. Lucas has a staff position for MedStar, as opposed to Memorial, where she was staff throughout the system but had line responsibility for one 600-bed tertiary care facility that did about 5,000 annual deliveries. Before she arrived in Baltimore, Helix Health initiated a 2-year planning process to plan the women’s program that involved multiple stakeholders. Participants included a practitioner work group, a delivery system work group, a marketing work group, an obstetrics group formation committee, and a product development work group, all of whom reported into the women’s services executive planning committee. Dr. Lucas was then recruited to refine and implement the program. Upon her arrival in Baltimore, she faced many of the same challenges she had encountered when she first came to Houston. There had been major market share losses (approximately 33%), women’s services in Baltimore had lost market share for 8 straight years, and, as mentioned previously, the number of women of childbearing age was declining by 7% annually. Employees were demoralized, disempowered, and angry. “I knew I had to influence reputation and community interest quickly, and I needed to do it in large numbers,” Dr. Lucas said. She initiated several efforts, described in more detail in the following section that focuses on strategies and successes, which turned around the service line so they gained market share and significantly improved customer satisfaction, consumer preference, and employee use of obstetrics services. Service line employees now include a coordinator for women’s services and obstetrics, a marketing coordinator, one person acting as coordinator for both breast services and doula (labor support) services, an executive assistant, and Dr. Lucas. Current functions of the service line include practice development; product development; managed care contracting; marketing plan development; public relations; employee relations; government relations; product evaluation; financial analysis; business plan development; process improvement; a systemwide obstetrics risk management plan; product, supplies, and equipment standardization; a system-wide obstetrics quality improvement plan; market analysis; customer satisfaction; acting as an internal consultant on women’s services throughout the system; staff education; and certain direct services, such as labor and postpartum doulas, childbirth education, lactation consultation, the women’s services telephone line, community service, and the Spirit of Women seminars. 174

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The service line budget includes about $1.3 million in product development and $600,000 in practice development. Compared with the other service lines in the system, women’s services is considered large, so it constantly has to prove its value. In 1998, the service line brought in $4.6 million in incremental revenue and incurred about $3.9 million in incremental expenses, including its corporate overhead that is allocated out to the organizational units. As a result, it still turned a profit of about $500,000 and yielded a 13% return on investment for the first year.

Strategies and Successes One of Dr. Lucas’s first acts in the Baltimore system was to hire four women’s services representatives, whom she calls her “direct sales force.” Their job is to understand the community and its needs, and if “hanging out in nail salons” brings in patients, then “so be it,” she said. In 1999, they have sales targets and are responsible for showing a direct correlation with 5% of the target volume in the hospital to which they are connected. She stressed differentiating women’s services from its competitors in an aggressive, competitive, and declining market. “We had to be best, better, or different in order to gain consumer preference,” she said. They standardized women’s services products and processes across the system, including free labor doulas, retail postpartum doulas, and personal services coordinators for the women’s services telephone line.

• The free labor doula program, which supplies a nationally certified, locally trained labor

support individual who stays with the couple throughout the entire labor experience, has improved patient satisfaction dramatically and achieved a cesarean section rate of 12%, as compared with the general system rate of 18% and its competitor’s 28% rate. Postpartum doulas are support people who go to the home after the child is born; patients pay for the service, approximately $200 for 12 hours of care. • The women’s services telephone line, located at the MedStar Telehealth Center, provides clinical triage, clinical education, provider referral, class and seminar registration, obstetrics preregistration, answering service for clinics after hours, database development and management, customer satisfaction and clinical call-backs, tracking promotions, and service recovery. The phone is answered by a personal services coordinator, who is “like a personal shopper at Nordstrom’s,” Dr. Lucas laughed. She established the women’s services phone line as a centralized strategy for coordination of women’s services. Critical success factors were identified as employee partnership, community partnership, cost management, volume enhancement, customer satisfaction, facilities expansion, and provider partnership.

When she first started managing the practice development process, Dr. Lucas admitted, “We were stepping on each other’s toes and tongues. Nothing was coordinated. We had MedStar Physician Partners doing one thing, chiefs of ob/gyn doing another thing, and the physician relations people doing something different. It was a mess.” To address the situation, she formed a practice development committee with all the key stakeholders, which established physician productivity targets, physician compensation packages that have parity across the system, practice development plans for each hospital, and strategic plans encompassing all of the changes. Women’s health ran several special events to steer patients into obstetrics services, including maternity fashion shows, “maybe-baby” classes, and Baltimore’s Biggest Baby Shower, which attracted 4,000 women in both 1998 and 1999. Also as part of the drive to develop obstetrics, Dr. Lucas ran an internal campaign that was a referral contest for employees. “We wanted all of our 12,000 employees to feel a part of building obstetrics last year,” she said. Any employee who referred a maternity patient to the system got their name in a drawing for a trip for four to Disney World and other prizes.

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The purpose of the bonus program, according to Dr. Lucas, was to align all women’s services employees across the system with the goals and targets of the service line. The program measured success on four performance standards: volume of births, patient satisfaction, consumer preference, and community service. “To make sure they remembered those four things,” she explained, “my staff went around ’round the clock, weekends, nights, whatever, and said, ‘Tell me your four performance standards.’ If they knew them, they got five bucks.” Each quarter, targets were set for each standard. If the system met the targets and the employee did community service as approved by one of the women’s services representatives, the employee received a check for $350 gross, so they would each “net out” at least $200 a quarter. In 1998, bonuses were paid all four quarters. In 1999, the program and performance standards were changed to be hospital-specific, and bonuses were paid for the first quarter of the year for all hospitals but one, which failed to meet its customer service target. Anyone is eligible who works at least 20 hours a week and devotes at least 80% of their time to women’s services—which includes about 700 employees—with a satisfactory appraisal and no attendance or discipline problems. The bonus program applies only to the Baltimore side due to employee union contract constraints on the Washington side. After losing market share for eight straight years, Dr. Lucas and her staff successfully turned women’s services around. On the Baltimore side, they are 8% above their base year in market share, and they posted a 60% increase in customer satisfaction, a 29% improvement in consumer preference, and a 27% raise in employee satisfaction. When she first arrived, 32% of employees were using the system’s obstetrics services. By April 1999, that had increased to 51% and, at the time of the institute session, had risen to over 60%.

Goals and Challenges Women’s services’ goals for the year 2000 include continuing to grow obstetrics volume, developing women’s services programs, implementing the Spirit of Women seminars and breast services programs, securing new physician practices while retaining the ones they have, reducing obstetrics liability exposure, and developing facility improvement plans. Dr. Lucas identified her main challenges as communication in a large system, demonstrating value to beleaguered hospital presidents who are under tremendous bottom-line pressure, the financial crunch, obstetrics risk liability and the hysteria that follows the hint of a lawsuit, managing physician practices cost-effectively, fighting against a competitor that is perceived as progressive and women-empowering but actually uses a very traditional model, medical staff leadership development, a movement to decentralize that seems to place little value on integration, competing in a regulated market that has not yet consolidated, and the constant need to compete with other service lines for resources. To address the need to demonstrate value, Dr. Lucas taught her staff a “10-second sales pitch.” If someone, such as a hospital executive or anyone in the facility, informally asks how they’re doing, they answer, “Oh, we’re 11% ahead of our volume, things are great.” She said, “Don’t miss that opportunity to sell, sell, sell.” Dr. Lucas compared the role of a women’s services leader to that of an “offensive coordinator in the booth above the football field who is connected to the action with a headset to call the plays,” who is in the unique position of being “the best person in the system to be able to truly see the big picture for the service.” She emphasized the importance of an executive champion and the 176

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need to be “always scanning the horizon for new and better opportunities to ensure the success of the service.”

SUMMARY System integration within the women’s health service line, according to the session’s four presenters, can potentially generate the synergy needed to decrease costs, enhance quality of care, and heighten patient and stakeholder satisfaction, thereby making the service line a profitable asset to the entire system. The ways to realize the benefits of system integration, however, are many and varied. Each organization presents different challenges, but certain requirements seem to be true across the board:

• Clinicians should be brought into the process as early as possible in the role of full partners.

• The system should be flexible enough to respond quickly to changes in both the market and the health care field.

• Competition and cultural dissimilarities should be identified and addressed among the system’s different units and organizations.

• Women’s health services must continually demonstrate its direct and indirect value to the system and find creative ways to differentiate itself in the marketplace.

REFERENCES 1. Goold M, Campbell A. Desperately seeking synergy. Harvard Business Rev 1998;76: 131–143. 2. Nilson JT. Is the IDS glass half empty or half full? Healthcare Exec 1999;14:14 –18.

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