JIM ELLIS, BS, MS, MBA, BB, MBB

MANAGING PARTNER – MME CONSULTING, LLC (RETIRED – CIBA CORNING & ORTHO CLINICAL DIAGNOSTICS)

& THOMAS P JOSEPH

PRESIDENT - VISIUN, INC. Executive War College

May 3, 2017 New Orleans 1

“Using a New Source of National Lab Benchmark Data to Help Your Lab Cut Costs, Boost Productivity, and Develop More Value that Contributes to Better Patient Care—and Earns More Reimbursement”

Agenda

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• Lab Market Conditions Today

• Early Adopters

• The Lab Value Pyramid

• The Value of CTQ’s (Key Lab Performance Metrics)

• How to be Successful & Where to go for Help

• Q & A

Learning Objectives • A key learning objective for each attendee is to know that there is

a methodical, success-proven roadmap (the LVP principles) to transition your lab from data (volume) to value.

• In addition each attendee will also know that there are proven case studies from “early adopters” (the Santa Fe project, et al.) who have followed LVP type principles to achieve successful transitions from data (volume) to value.

• In addition each attendee will also know that there is now available an historic lab database available through Visiun, LLC, that when combined with the principles of the LVP can lead to increased productivity, lower costs, more value and increased reimbursement dollars.

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Status Quo or Value?

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The Challenge you Face: A few “pioneers” & “early adopters” have made the transition from “Volume (data) to Value” and have taken up to as long as 5 years or more to get there but have been reaping the “fruits” of their successful transition. Those labs that decide to remain status quo and not transition are vulnerable to being out-sourced, consolidated, bought-out or closed down.

What will be your decision?

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SPOTLIGHT From Volume to Value: Panel discussion in Houston Join Houston healthcare leaders for a breakfast and panel discussion as they provide insights on new strategies in population health management, the need for usable data and the importance of provider collaboration. The event is Sept. 13 in Houston

Monday, August 8, 2016

RECENT HEADLINES

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SPOTLIGHT

CAP TODAY – February 2017 “LabCorp to purchase Mount Sinai’s outreach laboratories”

RECENT HEADLINES

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Relative $ Value of Lab’s “Products” as a Lab Transitions from Volume (data) to Value

Level 1: DATA $1

Level 2: INFORMATION $1000

Level 4: WISDOM

Multi $1M’s

Level 3: KNOWLEDGE $1M

97% of Healthcare $’s

3% of Healthcare $’s

Glass Ceiling

How do you define Value?

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An historical, working definition of Value from the Lean World is, “What the Customer is willing to pay for.”

BUT

Who is the Customer for the lab moving from Volume (data) to Value? Are they different – 97% vs. 3%?

Who are the Value gurus in the world today?

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• Jim Womack • David Mann • John Toussaint • Paul O’Neill • Charlie Protzman • Kosrow Shotorbani • Richard Zarbo

• Mark Graban • Paul Aker • Joe Kasabula • Jack Welch • Sanjay Ahire • Robert Michel • Rales Brothers

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TriCore Reference Laboratories CEO Khosrow Shotorbani, MT(ASCP), put the matter succinctly to a group of laboratory leaders and other health care experts who met in Santa Fe, NM, this spring to tackle the conundrum of how to move from volume to value. “The question is,” Shotorbani said, “how do we survive in the future? If there is no margin, there is no mission.”

July 22, 2016

RECENT HEADLINES

Laboratory 2.0: Changing the conversation

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SPOTLIGHT March 16, 2017 Every medical laboratory ready to begin the move away from fee-for-service payment and towards value-based reimbursement needs to start offering lab tests that support the practice of precision medicine

RECENT HEADLINES – “DARK DAILY”

Pioneers & Early Adopters

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Monday, August 8, 2016 THIS MORNING'S TOP HEALTHCARE NEWS Hospital execs earn bigger bonuses as value-based care takes hold Modern Healthcare's 36th annual Executive Compensation Survey finds that as executives' compensation continues to soar, more is coming from performance-based payment models that aren't just linked to individual efforts and outcomes, but also the efforts of their organizations. READ MORE

RECENT HEADLINES

• Visionary – willing to play in the 97%. • Leader – ability to create & lead a

successful, rapid change management team.

• Utilizes a structured process, like DMAIC, to initiate change.

• Knows what Success looks like, how to measure it, when to expect it and the gap between now and Success.

• Knows how to promote Success into future Successes.

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Emerging Success Patterns of those that have Transitioned:

Laboratory Value Pyramid (LVP)

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a Strategic Pathway to transition/change from Volume (data) to Value driven by the principles of change management

History/Adoption of LVP:

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• “The Dark Report”; a 5-part series 9/14, 11/14, 2/15, 3/15 & 5,15. • Lab Quality Confab; 2014, 2015, 2016. • Executive War College; 2015, 2016, 2017. • AACC; “Online Certificate Program 2016 & 2017” under Lab Management/Lab

Operational Management/Rapid Change Management. • CLMA; “2016 Body of Knowledge Webinar Series”, June 14, 2016. • MedicalLab Management Magazine; “Laboratory Value Pyramid” sidebar,

March, 2016, Vol. 5, No. 2, M. Hiltunen & J. Hermansen. • “The Lean Practitioner’s Field Book”; by C. Protzman, et al, CRC Press, 2016,

concept discussed in Appendix G by J. Ellis. • Lab Quality Confab 2016; “Pursuing Best-in-Class with Limited Resources:

How a Team at ARUP Uses the Value Pyramid to Achieve an Enterprise-Wide Lean Transformation.”

• AACC/Roche; “LabLeaders 2017 Webinar Series, March 1, 2017 – 10 Essentials of Rapid, Successful Change Management for the Laboratory”

Peeling back the “secrets” of what makes the LVP work

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“the devil is in the details!”

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Relationships of Critical Components to Successfully transition/change from

Volume (data) to Value

CTQ’s (Critical to Quality Parameters, the glue to all levels)

Change Management (the 4 Components)

(Structured Process, Set of Tools, Leading the People, Achieve a Desired Outcome)

Volume to

Value

Lab Value Pyramid (the 4 levels of the strategic pathway)

LVP driven by the principles of rapid, successful Change Management

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Change management is the application of a structured process and set of tools for leading the people side of change to achieve a desired outcome. When change management is done well, people feel engaged in the change process and work collectively towards a common objective, realizing benefits and delivering results. (PROSCI)

Operational Definition for Change Management:

LVP driven by the principles of rapid, successful Change Management

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The proven, structured process chosen is DMAIC with it’s traditional tool set. A competent team needs to be lead through DMAIC to a desired outcome:

Define – What is Success? When does it need to be finished? How do I measure Success (CTQ’s)? This takes time! Do it right or FAIL!

Measure – Gather data on Current State.

Analyze – Understand, through data analysis, what factors impact your Current State and its output.

Improve – Design an improved Future State. Predict outcomes of the Future State (measurable). Run a Pilot, analyze results, implement improved Future State, compare quantifiable improvements of new Future to old Current.

Control – Develop and implement standard operating procedures to “Sustain the Gain” of the new process. Conduct performance audits. Identify next opportunity for improvement.

“the devil is in the details!”

CTQ’s are the glue between LVP levels

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“the devil is in the details!”

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When you become proficient at LVP level 2, what does it look like?

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Further Refinement of Previous Slide

Next Level of Resolution from

Previous Slide of 18 Must Have CTQ’s

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How will I know when I am proficient at each level?

Road Map & Check List of Completing Each Level of LVP

Let’s walk through an Example for a CTQ at Level 1 of the LVP:

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“the devil is in the details!”

The only differences between Levels 1 & 4 of the LVP are the CTQ’s you choose (3% or 97%)!

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Monday, August 8, 2016

Most organizations are going to focus on quality metrics that show them performing below peers or industry norms. Payers, including Medicare, influence the need to improve. “There's certainly discussion among our clients and compensation committees about which ones have more impact than others,” Garrison said. But the metrics that make up value-based payments are often the ones included in the compensation of executives.

RECENT HEADLINES

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How do I get started? Is there a level of the LVP below 1? Is there someone who can help me get started?

WHERE DO I GO FROM HERE?

THOMAS P JOSEPH PRESIDENT - VISIUN, INC.

MBA. MT (ASCP)

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VISIUN, INC.

Prior to founding of analytics company, extensive work in laboratory focused consulting, finance, lean, metrics/benchmarking

Analytics/Business Intelligence company founded in 2010.

Now the leading laboratory analytics company.

With hundreds of labs

Deploy in as little as three weeks

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Turnaround Times Outreach Quality Peer Comparisons Productivity, Workflow Quality Control Test Utilization Financial Blood Product Utilization Anatomic Path

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CASE 1: THE VALUE OF DAILY CTQ METRICS

The Dashboard provides us continuous visibility into day to day issues” according to Dr. L.V. Rao, Senior Director of Clinical Lab operations and Director of Core Laboratories and Immunology.

“These reports give us an opportunity to manage effectively and to be able to track performance by providing continuous feedback to both administrative as well as physician leadership.”

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CASE 1: THE VALUE OF DAILY CTQ METRICS

Decrease in outliers after dashboard implementation – without process changes

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CASE 2: INTERNAL PEER COMPARISONS

Performance improvements system wide (ED BMPs) Decrease in outliers: 72% (median) to 93% Decrease in receive to verify TATs: 7 minutes (median) to 15 minutes Decrease in 95% completion (receive to verify TAT): 11 min (median) to 25 min Peer comparison ranking improved from 57th percentile to 94th percentile

Alastair "Ali" Dunnett, Senior Director, Laboratory Services, Seton HealthCare We loved using Performance Insight, it has worked well, it is doing exactly what we

need it to do. I wanted people to focus on the turnaround times and make some improvement and they really have. It’s been great.

It has helped them get some insight they could not get in any other way. I’m proud of the work they have done. They couldn’t have done it without

Performance Insight though. Caused such a big buzz. A lot of energy around this because they have the right

tools. Several techs came to me and said “I want in”. People are drawn to it, rather than running away from it.

Performance Insight continues to impress us.

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CASE 2: IMPROVING CTQ METRICS

Alastair "Ali" Dunnett, Senior Director, Laboratory Services, Seton HealthCare

Re: ED Testing:

ED Medical Staff: I gave up waiting for the lab to improve. Buy the POC methods for the ER. Tired of waiting for them [the lab] to hit 30 minute [TATs].

Ali: We didn’t have a choice. Along comes Performance Insight, we hit 30 minutes, we demonstrate we can hit 30 minutes again and again. They are saying, we don’t need POC.

Resulting savings are $250k per year from one institution alone.

Improvements at Seton: Median: 52% reduction 90 pct completion: 34% reduction Improved peer ranking from 57th

to 94th percentile

PRECISION MEDICINE PARTNERSHIP

Improving Patient Outcomes • Standard of care for Acute Myeloid Leukemia (AML) has not changed in 40 years

• Research shows 9% of AML patients are candidates for new, targeted therapies

• Diaceutics’ real-world data shows only 3% of patients are evaluated for this marker

• Novartis drug PKC412 (midostaurin) has received FDT Breakthrough Therapy designation

• Overall survival of AML patients that are FLT3 mutation-positive increased from 25.6 months using conventional therapies to 74.7 months (a 190% increase)

• Value add-> educate clinicians on optimum guidelines and outcomes

Agreement signed with Diaceutics

Helping pharmaceutical companies integrate diagnostic testing into their treatment pathways to advance the practice of personalized/precision medicine

CTQ Metrics – Inputs 2017 Dark-Visiun Metrics

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Paid working hours per test:

Productivity (Performed Billable Tests) Technnical Staff (Paid Hours) Total Staff (Paid Hours)

Tests per Hr Hrs per Test Tests per FTE Tests per Hr Hrs per Test Tests per FTE

26.55 0.204 55,232 19.05 0.371 39,624 16.63 0.135 34,113 10.30 0.210 21,372 14.10 0.109 29,271 8.18 0.177 17,022 11.60 0.086 24,122 7.00 0.143 14,555 9.15 0.071 19,034 5.64 0.122 11,721 7.38 0.060 15,358 4.76 0.097 9,893 4.91 0.038 10,212 2.70 0.052 5,610

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DATABASE OVERVIEW

Visiun clients have access to industry’s largest peer comparison turnaround time database Current 300 lab database covers all clinical path procedures

(35 billion performance measurements)

Academic medical centers, teaching, community hospitals

Children's hospitals

Lean labs

Specialty labs (ED, Oncology, clinic)

Users can network with best practice labs Best practices may be result of Lean methods, technology or

both.

CTQ Metrics – Outputs 2017 Dark-Visiun Metrics

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Number of Results:

• A profile of data set used for metrics: (Includes 101 labs)

# Billed Tests # ResultsRatio

Results: Billed Tests

Dept Chem Heme Clinical Path Chem Heme Clinical Path Chem Heme Clinical Path100th Percentile 5,408,205 1,976,475 10,418,195 24,561,580 43,504,350 79,876,965 6.20 28.37 8.86 90th Percentile 4,061,173 1,069,766 7,716,173 12,811,986 16,137,100 33,878,815 5.61 20.43 7.52 75th Percentile 1,811,187 582,723 4,070,517 7,977,075 10,801,445 24,575,815 5.16 15.84 7.04 50th Percentile 837,584 340,910 1,723,895 4,016,528 2,914,708 8,755,255 4.93 12.01 5.89 25th Percentile 362,901 190,362 918,813 1,947,940 2,219,772 5,450,661 4.44 9.13 5.15 10th Percentile 166,201 78,731 347,489 857,203 935,208 2,147,824 4.21 8.56 5.00 0th Percentile 25,550 19,710 60,590 126,290 188,340 433,985 1.31 7.92 3.11

CTQ Metrics – Outputs 2017 Dark-Visiun Metrics

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Percent of Tests Autoverified:

CTQ Metrics - Outputs2017 2017 Dark-Visiun Metrics

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Percent of Tests Achieving a Target TAT (in Lab TAT (Receive to Verify/Result): • ED CBC Target – 20 minutes • ED Troponin Target - 35 minutes

CTQ Metrics - Outputs 2017 Dark-Visiun Metrics

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“You get what you expect and you deserve what you tolerate.” - Mark Graben Laboratories have widely different expectations of what constitutes acceptable performance

Dept ED CBC Target

ED Troponin Target

100th Percentile 10 25 90th Percentile 17 30 75th Percentile 23 31 50th Percentile 30 38 25th Percentile 33 54 10th Percentile 54 60 0th Percentile 60 60

CTQ Metrics - Outputs 2017 Dark-Visiun Metrics

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“You get what you expect and you deserve what you tolerate.” - Mark Graben Labs with the best performance, not surprisingly, have set the highest standards

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THE IMPORTANCE OF DAILY MANAGEMENT

“Quality means doing it right when no one is looking.” Henry Ford

“You can expect what you inspect.” "You can't manage what you can't measure."

W. Edwards Deming

“If you are observing every day you ought to be finding things

you don't like, and rewriting the standard immediately.” Taiichi Ohno

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THE IMPORTANCE OF DAILY MANAGEMENT

“What’s measured, improves.” Peter F. Drucker Management Consultant, Educator and Author

“People do what you inspect, not what you expect.”

Louis V. Gerstner, Jr. Chairman of the Board and CEO of IBM

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From a 2008 Study of Early Adopters of Lean: Early adopters of lean have dramatically improved performance.

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Labs with access to daily metrics have outperformed early adopters. It is difficult to sustain a critical process with weekly or monthly metrics.

CTQ Metrics - Outputs

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Percent of Inpatient Testing Completed by a Target Time of 8am (when received by 7am)

CTQ Metrics - Outputs 2017 Dark-Visiun Metrics

CTQ Metrics - Defects

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Critical Values Called in under 15 minutes

CTQ Metrics - Outputs 2017 Dark-Visiun Metrics

Achieving Levels 3 & 4

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Visiun is helping labs identify unnecessary testing and opportunities to increase revenue

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The 4 Stages* “You” Will Go Through to Successfully Transition from Volume (data)

to Value

Unconscious Incompetence

Unconscious Competence

Conscious Competence

*The Four Stages of Competence, Abraham Maslow, 1940

Conscious Incompetence Most people are here after attending this workshop

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The Challenge You Face: 2 Constraints - Time & lack of SME’s PLUS Your level of competency & your team? BUT You are here – so your level of competence at least is at “Conscious Incompetence” AND You are amongst many SME’s and various levels of competence all the way to the top SO Take advantage of your surroundings!!

Learning Outcomes • After attending the workshop each attendee will understand why it is important

for their lab’s sustainability to initiate a strategic plan to move from data (volume) to value as quickly as they can.

• ...understand the Lab Value Pyramid (LVP) can act as a roadmap for executing their lab’s strategic plan in moving from data (volume) to value.

• ...understand the two biggest constraints in accelerating the lab’s movement towards value creation is time and resident Subject Matter Experts (SME’s).

• ...understand that there now are emerging, documented, published case studies of “early adopters” who have followed LVP type principles to successfully move from data (volume) to value.

• ...understand that there is an historic lab database available through Visiun, LLC, that when combined with the principles of the LVP can lead to increased productivity, lower costs, more value and increased reimbursement dollars.

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Q & A

Emails: jellisaiken@gmail.com & tom.joseph@visiun.com