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Effective Leadership Promotes Perioperative Success
GUEST EDITORIAL Effective Leadership Promotes Perioperative Success ERIC ZOOK PhD
E
ven before sequestration cuts and the introduction of value-based reimbursement holdbacks in 2013, hospitals were financially challenged. Between 1986 and 2011, the industry failed to break even on direct patient care.1 As value-based purchasing regulations contribute to the evolution of reimbursement rules, US hospitals can expect a revenue reduction of 20% to 24% in the next 10 years,2 and as many as 1,000 will seek a merger by 2020.3 As the source of 50% to 70% of hospital revenue in the United States,4 the OR is critical to financial success. However, OR profitability will require success in controlling high costs and high error rates.5 In effect, health care reformdincluding the Affordable Care Act and value-based purchasing programsdhas defined a new bottom line where “OR revenue now depends on reducing surgical complications and readmissions, eliminating surgical errors, and controlling perioperative costs.”6
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n
n
n
A CRITICAL AGENDA Success requires significant improvement across all aspects of current perioperative performance. Immediate priorities6 include the following:
n
n
n
Achieve high Surgical Care Improvement Project (SCIP) scores. High SCIP marks are key to earning hospital value-based purchasing (VBP) program incentives and avoiding penalties.
Two percent of diagnostic-related group payments are at risk in 2017. Minimize health careeassociated conditions. Medicare no longer reimburses for health careeassociated conditions, such as foreign objects retained after surgery and Stage III/IV pressure ulcers. Beginning in 2015, hospitals with bottom-quartile performance will incur a 1% pay reduction. Reduce postoperative complications. As a measure of surgical quality, VBP will include OR complications (eg, pulmonary embolism, sepsis) in 2015. Higher readmission rates associated with complications will negatively affect shared savings. Limit same-day cancellations. High cancellation rates are a measure of poor preoperative planning and result in wasted supplies, labor, and OR time. Reduce length of stay. Long surgical lengths of stay put pressure on profitability under bundled payment and shared savings models. Minimize readmissions. Readmissions directly reduce shared savings, and Medicare may penalize readmissions for select procedures starting in 2015. Maximize OR time. Operating room time in tertiary care hospitals is valued at $60 per minute (ie, $5,400 for a 90-minute block), and poor use of time translates directly into lost revenue. http://dx.doi.org/10.1016/j.aorn.2014.05.011
4 j AORN Journal July 2014 Vol 100 No 1
Ó AORN, Inc, 2014
GUEST EDITORIAL n
Reduce supply costs. Seventy percent of OR costs are nonlabor, with particular problems related to supply waste, high inventories, and high spending on joint implants.
A CALL TO LEAD The opportunity for perioperative leaders to play an outsize role in their institutions has never been greater, but the challenges have arguably never been as great as well. Success requires clear and visionary leadership. Perioperative executives require strong transformational competencies to fundamentally rework operations and strategy. They must be able to build and leverage a strong leadership team to engage staff members, secure support from physicians and administrators, and execute the full range of priorities. Transformational and Transactional Leadership Today’s perioperative services leaders must have transformational as well as transactional competencies.7 In transactional relationships, the leader provides resources and support (eg, salary, benefits) in exchange for specific outcomes and employee behaviors. The emphasis is on work standards, assignments, task orientation, and task completion, with a focus on maintaining the status quo or executing a well-defined strategy. Transformational leaders focus on team building, motivation, and collaboration with employees to accomplish change in a dynamic, shifting environment. Transformational leaders use ideals, inspiration, charisma, intellectual stimulation, and individual consideration to influence the behaviors and attitudes of others. Transformational leaders create more adaptable, innovative teams that can thrive in the midst of change. The transactional emphasis on structured assignments, task orientation, and goal achievement is critical to the execution of existing work processes as well as in the successful implementation of new solutions. However, an overemphasis on
www.aornjournal.org
these strengths undermines an organization’s ability to thrive under uncertainty, the very circumstances for which transformational leadership is so well suited. Research on transformational leaders shows that they are more capable of producing exactly the results required under the Affordable Care Act,8 which are n
fewer patient complications and adverse events and n greater patient satisfaction. These critical patient outcomes are achieved in no small part by transformational leaders’ ability to create the conditions for success: n
lower rates of nurse burnout and turnover, n higher staff satisfaction, and n higher physician satisfaction. Developing a True Leadership Team No leaderdhowever experienced or skilled, however exceptional his or her transformational abilitiesdcan match the current challenges alone. Perioperative executives today must be able to focus a majority of their time on strategic, systemlevel issues. This can only be accomplished with a strong leadership team to help maintain and improve clinical operations on a day-to-day basis. Success requires a leadership team that can generate collective insight, share a common vision, and successfully implement required changes. This requires a consistent commitment by each leader to mentor and develop the leadership skills of their direct reports, creating a cascade of continual improvement and effectiveness. In the words of Noel Tichy, former head of GE’s Leadership Center, “Winning companies win because they have good leaders who nurture the development of other leaders at all levels of the organization.”9 Every leader, from team leads and up, must have clearly defined roles and be able to execute them at the highest level. Indeed, leading today’s perioperative services environment is like performing
AORN Journal j 5
July 2014 Vol 100
complex invasive surgery; it requires equal levels of precision, teamwork, competency, and commitment to outcomes. AORN SUPPORT FOR LEADERSHIP DEVELOPMENT Recognizing the need for executive leadership development, AORN launched the Nurse Executive Leadership Series in 2012. In 2013, AORN created the Center for Nursing Leadership (CNL) to develop a systematic leadership development framework that allows nurse leaders at all levels to build a robust skill set matched to their role requirements. A significant first step in this mission was creating the OR Executive Summit as a parallel event to the AORN Surgical Conference & Expo 2014, held in Chicago, Illinois, March 30 to April 2. This event will be expanded at the 2015 conference in Denver, Colorado, to include a Leadership Academy for midlevel and new managers. Over the remainder of 2014, the CNL team plans to n
complete a first offering for midlevel and new leaders on financial management; n conduct a leadership survey to detail the current state and specific needs for perioperative leadership development; n develop a taxonomy of perioperative leadership competencies; and n seek content partnerships with other associations that have expertise in leadership training to develop knowledge and skills of perioperative leaders at all levels. To support the efforts of the CNL and to promote overall perioperative leadership development, the AORN Journal also will provide more regular leadership-specific content. The new “Perioperative Leadership” column will explore key leadership concepts, challenges, and competencies. The debut column in this issue by Plonien and Williams focuses on risk management related to vendor presence in the OR.10 This issue also features three articles on leadership. In the first article, Taylor11 provides a practical 6 j AORN Journal
GUEST EDITORIAL
No 1
overview of perioperative leadership, building out the themes presented in the preceding text and a framework for developing critical competencies. In the second article, Wesolowski et al12 describe their development and implementation of a program to improve patient outcomes through use of a clinical nurse leader. Finally, Mercurio et al13 present a patient safety initiative that increased surgical consent accuracy through enhanced communication. As a whole, these initiatives and insights advance our understanding of leadership issues critical to success under value-based care. Just as importantly, they serve as a stimulus to continued research and application. CONCLUSION The road forward will not be easy, and success is far from guaranteed. The deepening revenue squeeze and industry consolidation will generate significant disruption well through the decade. Whether generated by or forced on us, change will be continuous and unsettling. There is no clear end point in the near future where relative stability will return. Great challenge, however, is also great opportunity. The present is an opportunity to lead with excellence, to define a forward path, to develop an inclusive vision and process to deliver needed outcomes, and to shape the destiny not just of departments but of institutions and communities. It is a time that asks for and gives rise to the very best. As ever, AORN is honored to stand with and support perioperative leaders, now and throughout the journey before us.
References 1. Carlson J. Booster shot. Modern Healthcare. August 2, 2010. 2. Betbeze P. Resisting the consolidation frenzy. HealthLeaders Media. http://www.healthleadersmedia.com/ page-1/MAG-298965/Resisting-the-Consolidation-Frenzy. Published December 13, 2013. Accessed May 21, 2014. 3. Adolph G, Ahlquist GD, Sharma A, Spencer B. The Coming Surge in Health Provider M&A: How Historical Forces and Healthcare Reform Will Combine to Drive Activity. New York, NY: Booz & Co; 2012.
GUEST EDITORIAL
4. 5.
6.
7.
8.
9.
http://www.strategyand.pwc.com/media/file/Strategyand -Coming-Surge-Health-Provider-MA.pdf. Accessed May 21, 2014. Cantlupe J. Anesthesiology focus for operating room efficiency. HealthLeaders Media. December 2012. Gamble M. 6 cornerstones of operating room efficiency: best practices for each. Becker’s Hospital Review. http://www .beckershospitalreview.com/or-efficiencies/6-cornerstones -of-operating-room-efficiency-best-practices-for-each.html. Published January 18, 2013. Accessed May 21, 2014. Peters JA, Young D, White J, Mahal-van Brenk C. Managing OR revenue under new payment models. HFMA. http://www.hfma.org/Content.aspx?id¼16305. Published April 2013. Accessed May 21, 2014. McGuire E, Kennerly SM. Nurse managers as transformational and transactional leaders. Nurs Econ. 2006; 24(4):179-185. Drenkard K, ed. MagnetÒ: The Next Generation: Nurses Making the Difference. Silver Spring, MD: American Nurses Association; 2010. Tichy NM. The Leadership Engine: How Winning Companies Build Leaders at Every Level. New York, NY: HarperCollins Publishers, Inc; 2002.
www.aornjournal.org
10. Plonien C, Williams M. Vendor presence in the OR [Perioperative Leadership]. AORN J. 2014;100(1):81-86. 11. Taylor DL III. Perioperative leadership: managing change with insights, priorities, and tools. AORN J. 2014; 100(1):8-29. 12. Wesolowski MS, Casey GL, Berry SJ, Gannon J. The clinical nurse leader in the perioperative setting: a preceptor experience. AORN J. 2014;100(1):30-41. 13. Mercurio P, Ellis AS, Schoettker PJ, Stone R, Lenk MA, Ryckman FC. Using improvement science methods to increase accuracy of surgical consents. AORN J. 2014; 100(1):42-53.
Eric Zook, PhD, was the manager of the AORN Center for Nursing Leadership, Denver, CO, at the time this article was written. Dr Zook has no declared affiliation that could be perceived as posing a potential conflict of interest in the publication of this article.
AORN Journal j 7
E
ven before sequestration cuts and the introduction of value-based reimbursement holdbacks in 2013, hospitals were financially challenged. Between 1986 and 2011, the industry failed to break even on direct patient care.1 As value-based purchasing regulations contribute to the evolution of reimbursement rules, US hospitals can expect a revenue reduction of 20% to 24% in the next 10 years,2 and as many as 1,000 will seek a merger by 2020.3 As the source of 50% to 70% of hospital revenue in the United States,4 the OR is critical to financial success. However, OR profitability will require success in controlling high costs and high error rates.5 In effect, health care reformdincluding the Affordable Care Act and value-based purchasing programsdhas defined a new bottom line where “OR revenue now depends on reducing surgical complications and readmissions, eliminating surgical errors, and controlling perioperative costs.”6
n
n
n
n
A CRITICAL AGENDA Success requires significant improvement across all aspects of current perioperative performance. Immediate priorities6 include the following:
n
n
n
Achieve high Surgical Care Improvement Project (SCIP) scores. High SCIP marks are key to earning hospital value-based purchasing (VBP) program incentives and avoiding penalties.
Two percent of diagnostic-related group payments are at risk in 2017. Minimize health careeassociated conditions. Medicare no longer reimburses for health careeassociated conditions, such as foreign objects retained after surgery and Stage III/IV pressure ulcers. Beginning in 2015, hospitals with bottom-quartile performance will incur a 1% pay reduction. Reduce postoperative complications. As a measure of surgical quality, VBP will include OR complications (eg, pulmonary embolism, sepsis) in 2015. Higher readmission rates associated with complications will negatively affect shared savings. Limit same-day cancellations. High cancellation rates are a measure of poor preoperative planning and result in wasted supplies, labor, and OR time. Reduce length of stay. Long surgical lengths of stay put pressure on profitability under bundled payment and shared savings models. Minimize readmissions. Readmissions directly reduce shared savings, and Medicare may penalize readmissions for select procedures starting in 2015. Maximize OR time. Operating room time in tertiary care hospitals is valued at $60 per minute (ie, $5,400 for a 90-minute block), and poor use of time translates directly into lost revenue. http://dx.doi.org/10.1016/j.aorn.2014.05.011
4 j AORN Journal July 2014 Vol 100 No 1
Ó AORN, Inc, 2014
GUEST EDITORIAL n
Reduce supply costs. Seventy percent of OR costs are nonlabor, with particular problems related to supply waste, high inventories, and high spending on joint implants.
A CALL TO LEAD The opportunity for perioperative leaders to play an outsize role in their institutions has never been greater, but the challenges have arguably never been as great as well. Success requires clear and visionary leadership. Perioperative executives require strong transformational competencies to fundamentally rework operations and strategy. They must be able to build and leverage a strong leadership team to engage staff members, secure support from physicians and administrators, and execute the full range of priorities. Transformational and Transactional Leadership Today’s perioperative services leaders must have transformational as well as transactional competencies.7 In transactional relationships, the leader provides resources and support (eg, salary, benefits) in exchange for specific outcomes and employee behaviors. The emphasis is on work standards, assignments, task orientation, and task completion, with a focus on maintaining the status quo or executing a well-defined strategy. Transformational leaders focus on team building, motivation, and collaboration with employees to accomplish change in a dynamic, shifting environment. Transformational leaders use ideals, inspiration, charisma, intellectual stimulation, and individual consideration to influence the behaviors and attitudes of others. Transformational leaders create more adaptable, innovative teams that can thrive in the midst of change. The transactional emphasis on structured assignments, task orientation, and goal achievement is critical to the execution of existing work processes as well as in the successful implementation of new solutions. However, an overemphasis on
www.aornjournal.org
these strengths undermines an organization’s ability to thrive under uncertainty, the very circumstances for which transformational leadership is so well suited. Research on transformational leaders shows that they are more capable of producing exactly the results required under the Affordable Care Act,8 which are n
fewer patient complications and adverse events and n greater patient satisfaction. These critical patient outcomes are achieved in no small part by transformational leaders’ ability to create the conditions for success: n
lower rates of nurse burnout and turnover, n higher staff satisfaction, and n higher physician satisfaction. Developing a True Leadership Team No leaderdhowever experienced or skilled, however exceptional his or her transformational abilitiesdcan match the current challenges alone. Perioperative executives today must be able to focus a majority of their time on strategic, systemlevel issues. This can only be accomplished with a strong leadership team to help maintain and improve clinical operations on a day-to-day basis. Success requires a leadership team that can generate collective insight, share a common vision, and successfully implement required changes. This requires a consistent commitment by each leader to mentor and develop the leadership skills of their direct reports, creating a cascade of continual improvement and effectiveness. In the words of Noel Tichy, former head of GE’s Leadership Center, “Winning companies win because they have good leaders who nurture the development of other leaders at all levels of the organization.”9 Every leader, from team leads and up, must have clearly defined roles and be able to execute them at the highest level. Indeed, leading today’s perioperative services environment is like performing
AORN Journal j 5
July 2014 Vol 100
complex invasive surgery; it requires equal levels of precision, teamwork, competency, and commitment to outcomes. AORN SUPPORT FOR LEADERSHIP DEVELOPMENT Recognizing the need for executive leadership development, AORN launched the Nurse Executive Leadership Series in 2012. In 2013, AORN created the Center for Nursing Leadership (CNL) to develop a systematic leadership development framework that allows nurse leaders at all levels to build a robust skill set matched to their role requirements. A significant first step in this mission was creating the OR Executive Summit as a parallel event to the AORN Surgical Conference & Expo 2014, held in Chicago, Illinois, March 30 to April 2. This event will be expanded at the 2015 conference in Denver, Colorado, to include a Leadership Academy for midlevel and new managers. Over the remainder of 2014, the CNL team plans to n
complete a first offering for midlevel and new leaders on financial management; n conduct a leadership survey to detail the current state and specific needs for perioperative leadership development; n develop a taxonomy of perioperative leadership competencies; and n seek content partnerships with other associations that have expertise in leadership training to develop knowledge and skills of perioperative leaders at all levels. To support the efforts of the CNL and to promote overall perioperative leadership development, the AORN Journal also will provide more regular leadership-specific content. The new “Perioperative Leadership” column will explore key leadership concepts, challenges, and competencies. The debut column in this issue by Plonien and Williams focuses on risk management related to vendor presence in the OR.10 This issue also features three articles on leadership. In the first article, Taylor11 provides a practical 6 j AORN Journal
GUEST EDITORIAL
No 1
overview of perioperative leadership, building out the themes presented in the preceding text and a framework for developing critical competencies. In the second article, Wesolowski et al12 describe their development and implementation of a program to improve patient outcomes through use of a clinical nurse leader. Finally, Mercurio et al13 present a patient safety initiative that increased surgical consent accuracy through enhanced communication. As a whole, these initiatives and insights advance our understanding of leadership issues critical to success under value-based care. Just as importantly, they serve as a stimulus to continued research and application. CONCLUSION The road forward will not be easy, and success is far from guaranteed. The deepening revenue squeeze and industry consolidation will generate significant disruption well through the decade. Whether generated by or forced on us, change will be continuous and unsettling. There is no clear end point in the near future where relative stability will return. Great challenge, however, is also great opportunity. The present is an opportunity to lead with excellence, to define a forward path, to develop an inclusive vision and process to deliver needed outcomes, and to shape the destiny not just of departments but of institutions and communities. It is a time that asks for and gives rise to the very best. As ever, AORN is honored to stand with and support perioperative leaders, now and throughout the journey before us.
References 1. Carlson J. Booster shot. Modern Healthcare. August 2, 2010. 2. Betbeze P. Resisting the consolidation frenzy. HealthLeaders Media. http://www.healthleadersmedia.com/ page-1/MAG-298965/Resisting-the-Consolidation-Frenzy. Published December 13, 2013. Accessed May 21, 2014. 3. Adolph G, Ahlquist GD, Sharma A, Spencer B. The Coming Surge in Health Provider M&A: How Historical Forces and Healthcare Reform Will Combine to Drive Activity. New York, NY: Booz & Co; 2012.
GUEST EDITORIAL
4. 5.
6.
7.
8.
9.
http://www.strategyand.pwc.com/media/file/Strategyand -Coming-Surge-Health-Provider-MA.pdf. Accessed May 21, 2014. Cantlupe J. Anesthesiology focus for operating room efficiency. HealthLeaders Media. December 2012. Gamble M. 6 cornerstones of operating room efficiency: best practices for each. Becker’s Hospital Review. http://www .beckershospitalreview.com/or-efficiencies/6-cornerstones -of-operating-room-efficiency-best-practices-for-each.html. Published January 18, 2013. Accessed May 21, 2014. Peters JA, Young D, White J, Mahal-van Brenk C. Managing OR revenue under new payment models. HFMA. http://www.hfma.org/Content.aspx?id¼16305. Published April 2013. Accessed May 21, 2014. McGuire E, Kennerly SM. Nurse managers as transformational and transactional leaders. Nurs Econ. 2006; 24(4):179-185. Drenkard K, ed. MagnetÒ: The Next Generation: Nurses Making the Difference. Silver Spring, MD: American Nurses Association; 2010. Tichy NM. The Leadership Engine: How Winning Companies Build Leaders at Every Level. New York, NY: HarperCollins Publishers, Inc; 2002.
www.aornjournal.org
10. Plonien C, Williams M. Vendor presence in the OR [Perioperative Leadership]. AORN J. 2014;100(1):81-86. 11. Taylor DL III. Perioperative leadership: managing change with insights, priorities, and tools. AORN J. 2014; 100(1):8-29. 12. Wesolowski MS, Casey GL, Berry SJ, Gannon J. The clinical nurse leader in the perioperative setting: a preceptor experience. AORN J. 2014;100(1):30-41. 13. Mercurio P, Ellis AS, Schoettker PJ, Stone R, Lenk MA, Ryckman FC. Using improvement science methods to increase accuracy of surgical consents. AORN J. 2014; 100(1):42-53.
Eric Zook, PhD, was the manager of the AORN Center for Nursing Leadership, Denver, CO, at the time this article was written. Dr Zook has no declared affiliation that could be perceived as posing a potential conflict of interest in the publication of this article.
AORN Journal j 7