Doing what’s right.Building the healthcare delivery

system of tomorrow ... today

Mark P. Herzog, FACHE, President & CEOHoly Family Memorial • Manitowoc, WI

Spring 2013

PrefaceThis paper tells the story of how a community-focused, faith-

based Wisconsin health network is addressing the enormous

demands of change to our country’s healthcare system and

focusing on a healthier population. In the midst of great industry

overhaul, Holy Family Memorial proactively laid the groundwork

for a profound organizational transformation.

Today it is not only meeting the goals of reform, but has succeed-

ed in adopting improvements and innovation processes on par

with some of the largest healthcare systems in the country. More

importantly, Holy Family Memorial is improving lives and the

well-being of the community it serves while remaining steadfast

to its mission and core values.

In serving Manitowoc County’s 80,000 residents, HFM has already accomplished some of the “big leaps forward” for 21st century care that are emerging in the most advanced healthcare orga-nizations in the country. Among them, achiev-ing the Health Information and Management Systems Society (HIMSS) Stage 6 level for electron-ic medical record adoption and 100% Computer-ized Physician Order Entry, a recognition plac-ing HFM among the top 10% most innovative IT adaptors in the United States.1 These disruptive technologies and innovations have delivered better safety, quality and value.

In addition, HFM has a relationship with physicians engaging them as true partners in the care delivery process at all levels including board, leadership and the bedside. To reflect the needs of an increasingly older community, we established physician offices in long-term care facilities, among the first in the nation to take this innovative step. Our model of shared accountability and partnership with many of the

The Patient Protection and Affordable Care Act (ACA) en-acted in March 2010 signaled a profound shift in the coun-try’s healthcare system. While offering insurance coverage to millions more in our county, the law also seeks to lower costs, increase quality, and improve accountability. It moves care delivery from a pay-for-service (First Curve) structure to a pay-for-results structure (Second Curve). For hospitals and physicians, navigating this seismic shift between the curves poses formidable challenges with the ideal path for most hospitals still quite unclear and the scope of the challenge poorly defined.

However, for Holy Family Memorial (HFM), the drive to redesign the system to do better comes from its core beliefs and values and was already well underway long before the reform movement was formalized as legislation.

Over the past decade, HFM has intentionally molded itself into one model for a successful healthcare network of the future (Figure 1, page 2 and Figure 4, page 5). With a drive to-ward improvement and innovation, our organization began implementing programs in 2001 to improve our ability to improve the health of individuals and populations—strate-gies that would ensure efficiency and accountability, reduce inpatient care, lower hospital readmission rates, strengthen physician alignment, and harness emerging technology for improved patient care and safety.

An early adopter of clinical information tools and care management tools, HFM has worked diligently to drive down costs related to over-using expensive resources while maintaining high-quality service through our “Right Care” core beliefs which we developed over this time period. In many ways these beliefs presage the essence of national healthcare reform.

Executive Summary

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community’s employers to reduce healthcare costs while improving care has been important in the economic vitality of these companies. Our commitment has been and will be to do what is right to serve this community and its employ-ers even though this has meant dramatic changes to who we are as an organization and how we are configured.

Our proactive leadership was recognized in 2011 when HFM’s expertise was incorporated into the American Hospi-tal Association white paper, “Hospitals and Care Systems of the Future.” One of only 30 organizations across the coun-try interviewed for the paper, HFM served as a model for proactively shifting care from “first curve” inpatient focus to the “second curve” outpatient, value-oriented, population health model and our focus on culture shaping. Our Reform Roadmap is also featured on the AHA’s Great Boards website (www.greatboards.org) and we are proud to say it serves as an industry resource for other outstanding health systems.

HFM’s path to transformation and to the “second curve” of healthcare delivery is being pursued with a clear strategy, as well as with benchmarks and industry models we adapted to suit our culture and mission.

After a 10-year journey, the results speak volumes.

Primarily through HFM’s focus on Right Care, the rate of growth in hospital charges in Manitowoc County over the past decade have remained 34% below neighboring Outag-amie County and 97% below Brown County (Figure 11, page

8).2 Major disease mortality rates in Manitowoc are down 16% from 2002 – 2010,3 and the local care delivery system ranks in the top 20% in Wisconsin.4 The dramatic shift away from inpatient care has been accomplished with exceptional quality and safety and only a moderate growth in outpatient volumes, yet our operating margins have generally been 3-5% range, an appropriate level for long-term sustainability of the organization (Figure 9, page 8). We are particularly proud of this performance given the significance of our commitment to a large physician group practice as part of our model and operating results.

These and many other health outcomes from HFM’s decade-long journey reflect important lessons. The biggest: there’s nothing incremental about addressing healthcare reform and achieving its goals. To truly impact the health outcomes of a community and improve population health requires a profound organizational transformation-one well underway at HFM-and weaving a web of community-based resources to focus on population health. It necessitates a focus on culture, comprehensive change, and bold strategies that will dramatically improve systems and processes. It demands collaboration and requires the courage to sustain a long-term focus through the inevitable immediate challenges, the push of the status quo, and the always changing direction of the political and policy winds.

To be sure, while there’s more than one route to the future of healthcare, this is the roadmap we’ve followed.

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StrategyStructure

Business plans &facilities

Systems &processes

Quality/outcomes/safety

InnovationIncubation

Performanceimprovement/VIP

Culture &achievement

Openinnovation,�exibility

Adaptation

Reform readiness

Organizationalrepositioning

Proactivetransformation

Evolution of Holy Family Memorial

2001 2004 2008 TODAY

Figure 1

Quality. The term gets tossed about a great deal in health-care these days. At every turn, there are a range of metrics, all attempting to quantify quality in its various forms, along with numerous industry and independent organizations seeking to monetize the ability to measure it as the ‘magic bullet’ for consumer driven care. In 2010, the federal govern-ment introduced its own set of new metrics for determin-ing quality with accompanying changes to reimbursement through its value-based purchasing initiative.

Healthcare reform seeks to change how healthcare is paid for in order to improve outcomes and quality. It seeks to shift the country’s healthcare systems from traditional volume-based care (First Curve) to value-based care (Second Curve) (Figure 2).

Here in Wisconsin, its high quality, efficiency, and value have already positioned the state’s healthcare as a competitive advantage for businesses to stay, grow, and relocate here.5 Such quality was recently reaffirmed in 2012 when the federal government’s Agency for Healthcare Research and Quality issued a report ranking all 50 states on 171 health measures. Wisconsin ranked second in the nation in overall healthcare quality.

HFM has played a notable role among smaller organiza-tions in leading the state’s quality movement and in helping to shape efforts toward a future vision of patient-focused, value-driven care.

HFM’s primary goal is to offer services and programs that help the community as a whole achieve better health. We do this with strategies that redesign care to deliver an exceptional patient experience by way of an ideal culture (see “About Holy Family Memorial” on page 10). Our model is based on the core beliefs of providing the right care, in the right setting to achieve the right outcomes—in other words, “moving care to the right.”

To do that successfully and faithfully, HFM leadership recog-nized that value-based care could not be possible without first creating wide organizational and deep cultural change. Beyond just embracing change, however, we put ourselves on a path to what Harvard Business School’s Clayton Chris-tensen calls, “proactive disruption,” that is internally chal-lenging our own assumptions about why we do what we do and continually striving to innovate for better value and service. This aspect of our journey began in 2009 through our Strategic Program/Unit Review process.

HFM is transforming to meet the challenges and opportunities of the future on our own terms, under the watchful guidance of our mission and values and our focus on inspired caregiving.

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Leading with Quality

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First-Curve to Second Curve MarketsHow will hospitals successfully navigate the shift from first-curve to second-curve economics?

Figure 2

HFM’s transformation toward becoming the healthcare sys-tem of the future began in 2001 when HFM leadership took a long, hard look at our strategies and structure. The HFM executive team, board, and physician leadership engaged in strategic questioning and self-scrutiny, questioning why we’re needed by this community, exploring assumptions about the future of healthcare and the marketplace, and examining our strengths, weaknesses and capabilities. The ultimate goal: to redesign the delivery system around adapt-ability and innovation, and to improve population health.

HFM used the analysis and the resulting conclusions to create a strong foundation and a new, proactive vision for the future. This vision is reflected in our Reform Roadmap (Figure 3). Among our most critical objectives:

• Align and integrate physicians with the hospital and other parts of the care system.

• Invest in information technology (IT) and automation to drive efficiencies, support quality and ensure safety.

• Improve efficiencies, standardize processes, and eliminate waste (Lean & Six Sigma).

• Engage staff and physicians to cultivate a culture of leadership.

• Pursue across-the-board innovation.

Various initiatives toward these ends began to take root in 2004 as HFM worked to develop a cutting-edge infrastruc-ture by focusing on systems and processes. Some of the key highlights include:

• Going lean. HFM researched improvement processes, including the ThedaCare improvement system, be-fore adopting lean management principles across our systems and processes. Lean disciplines have been deeply integrated into how work is done at HFM and supplemented by Six Sigma improvement processes. HFM’s leadership in this process was featured at the 2011 American Society for Quality World Conference in Pittsburgh.

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A Roadmap to Reform…Before there was Reform

“I skate to where the puck is going to be, not where it has been.” —Wayne Gretzky

Figure 3

MOVING CULTURE TO THE RIGHT

• Adopting emerging technology. HFM has long believed in the power of Information Technology to improve clinical and quality outcomes, reduce medi-cal errors, and help standardize care by facilitating evidence-based medicine. To demonstrate this, our organization made significant IT investments coupled with the innovative step of placing responsibility for IT under the responsibility of our chief medical officer in 2004. Evidence of the wisdom of this choice to focus on enhancing quality and ensuring safety was the adoption of computerized physician order entry (CPOE), eliminat-ing reliance on notoriously poor physician handwrit-ing to understand patient orders, which has been the standard at HFM for almost 9 years now. Less than 2% of the nation’s hospitals can make that claim!

• Innovation: Introducing tools for incubating and test-ing new ideas. HFM’s Strategic Program/Unit Review (SPUR) process is a structured innovation discipline new to the healthcare field that ensures ongoing relevance

of our services. HFM made a keynote presentation at the 2013 CoDev International Conference on Open In-novation in California with over 15 countries represent-ed and multiple Fortune 500 companies in attendance.

• Adopting value improvement practices (VIP): VIP began reshaping operations and performance. Using formalized procedures, HFM improved costs, efficien-cies, and alignment. Exceptional performance has made this process integral into the way HFM’s leaders, staff and increasingly physicians complete daily work.

• Investing in physician relationships. Energies were spent to clinically integrate physicians, collaborate with them on improvement ideas and implementations, and establish a multidisciplinary system with greater outpatient care services and greater care management across the continuum. Our efforts in this regard were featured at the 2011 Forum for HealthCare Strategists Executive Summit and the 2013 ACHE Congress on Administration.

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HospitalMission

Focus Recognition

2001: 90-bed

hospital

2012: Focus on

wellness & prevention

2012: Nationally recognized for safety,

innovation and thought

leadership

2012: 35-bed

hospital

SeniorLeaders

2001: 10 senior leaders

2012: 5 senior leaders

Physicians& NP/PA

2012: 90 employed

providers

2001: 35 employed

providers

2001: Focus on the sick

population

2001: Locally

recognized

2001 - 2012 HFM Care System Transformation

Our Strategic Focus:• Redesigning Care: Be a recognized role model for redesigning the healthcare delivery model to achieve

excellent quality, cost and population health outcomes.

• Exceptional Experience: Create patient and customer experiences so exceptional as to drive market

share to HFM.

• Ideal Culture: Have the most innovative, engaged and high-achieving culture.

Figure 4

I am proud to work for HFM.

I would recommend HFM’s care and service to friends & family.

I feel a part of HFM and am excited about its future.

HFM’s leadership team welcomes my ideas and suggestions for process improvement.

71.1%

76.3%

48.4%

42%

87.2%

86.7%

73.1%

64.6%

The Culture Di�erence: HFM Employees

23%

14%

51%

54%

Employee Pride % strongly % strongly % Survey agree 2008 agree 2011 Change

70% survey participation rate - All categories show signi�cant growth!

Figure 6

Figure 7

To help further create an adaptable and engaged workforce and strengthen physician alignment, 2008-2009 saw the implementation of a concentrated culture-shaping effort. To establish a baseline for change, HFM conducted an all-employee culture assessment in 2009.

Not surprisingly, the initial results defined our organization in 2009 as conventional, dependent and approval-oriented (typical of a community hospital or indeed any school set-ting), but not the ideal culture for succeeding in the Second Curve of healthcare. A more ideal culture instead was one employees defined as being humanistic, encouraging, self-actualizing, and achievement-focused.

To move our culture towards this ideal we needed to first focus on leadership behaviors, competencies, and develop-ment. Crucial would be our ability to sharpen leadership processes to focus more on strategy and achievement. It was also important to broaden engagement and integrate physi-cian leadership. To this end, HFM introduced a Leadership Institute consisting of a series of learning modules focused on our new, desired approach to inspiring and leading.

We also created new personal accountability reviews (per-formance reviews) based on updated leadership competen-cies we thought were most valuable to our future. Equally noteworthy was our development of an insightful and ro-

bust leadership assess-ment (Figure 5). It ex-amined leaders’ ability and willingness to lead, as well as their cour-age to lead and their congruity with the current culture while transforming to the ideal. It also weighted their advancement potential and gave us

direction on where to invest in leadership development and leadership efficiencies.

Together the new personal accountability reviews (the “rear-view mirror” First Curve perspective) and new leadership assessments (the Second Curve “headlights” perspective) gave us an entirely new representation of our team and the support needed to make important leadership changes. For instance, some leaders who performed well in daily opera-tions in the past weren’t necessarily a good fit to help HFM move to the second curve in the future.

Rounding out our culture-shaping endeavors were employ-ee surveys taken in 2008 then again in 2011. The changes in attitude, pride, and behaviors were impressive, and all categories of cultural elements surveyed showed significant growth over the period (Figure 6 & Figure 7).

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Leadership Team Assessment“Headlights”

30% WeightingABLE TO: Competent to leadWILING TO: Desire to lead

50% WeightingCOURAGE TO: Internal fortitude to leadCULTURE SHAPING CONGRUITY: Ability to �t in current culture and transform to ideal culture

20% WeightingPROMOTABILITY: Advancement potential

Figure 5

I have con�dence, trust in HFM leadership.

I am proud to be part of HFM.

I would recommend HFM to family & friends.

I feel part of and am excited for HFM’s future.

40%

n/a

n/a

n/a

87%

90%

81%

88%

The Culture Di�erence: HFM Physicians

115%

Physician Pride % strongly % strongly % Survey agree 2008 agree 2011 Change

47% survey participation rate

7

Our employee and physician surveys provide strong evi-dence of the success of our culture-shaping efforts. But what about our other initiatives such as changing our infrastructure, developing stronger physician integration, collaborating for health and “moving care to the right”? Was the overall roadmap we developed for ourselves reliable, constructive, and effective? Was it getting us closer to our population health destination? Are we on the right road?

Commitment to our Core Beliefs, Mission and Values provided us the confidence to stay the course throughout several bumps in the road, including financial pressures in 2006 due to difficult turnover in the physician network and turbulence in the insurance marketplace, and then again in 2009 as we and our nation began navigating the second great recession.

But perhaps our biggest confidence booster arrived in early 2009 when co-presenting a national program with KaufmanHall & Associates, a prestigious national consulting firm with integrated management solutions for healthcare. In the program, KaufmanHall Partner Mark Grube offered a reform readiness assess-ment to help guide healthcare leaders in making a successful transition to value-based care.

In the assessment, KaufmanHall identi-fied a framework of seven competencies (Figure 8) that provided an excellent refer-

ence point to gauge our progress against. The information confirmed conclusively we were on the right road. When compared with some of the most prepared organizations in the country, HFM stood near the best in the country in several key benchmarks, including physician integration and information systems. This affirmation was an important stopping point on our journey, one that provided encour-agement, inspiration and courage for the next steps.

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Are We There Yet?

Figure 8 - Blue stars represent HFM.

With this in mind, HFM is redesigning its delivery model for safety, efficiency and lower cost to the patient, employers and our government. Our system transformation over the decade has been dramatic, as shown in Figure 4 on page 5.

More than just how our system now looks and operates in its transformed state is the real and positive impact HFM is hav-ing on our community. Led by an intense focus on the right care in the right setting to achieve the right outcomes, we are well positioned to help meaningfully move the needle on population health.

Through our efforts, HFM has reduced the need for hospital stays, greatly transitioning healthcare from costly inpa-tient utilization to more outpatient and clinic visits. While reducing the need for hospitalization by over 40%, HFM has increased clinic visits 38% since 2001. In fact, when the inpatient versus outpatient volumes in our service area are mapped, it is evident HFM is indeed shifting care onto the second curve (Figure 9).

The Robert Wood Johnson Foundation and the University of Wisconsin Population Health Institute have documented a 52% improvement from 2009 to 2012 in Manitowoc Coun-

ty’s overall Clinical Care, moving the county from 31st to 15th out of the state’s 72 counties.6 As the County’s leading healthcare provider HFM takes great pride in this perfor-mance (Figure 10). To demonstrate why ALL health factors must work together, clinical performance improvement alone was NOT enough to increase Manitowoc County’s overall ranking.

In addition to improving population health and enhancing quality care, value and cost savings for HFM and our com-munity are also being realized. For example, HFM’s focus on Right Care has kept the rise of hospital charges in our service area to a rate about half that experienced just to the north in the Green Bay area (Figure 11).

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Where the Rubber Meets the Road

200%

100%

150%

Manitowoc

Fox Valley

Green Bay

Hospital Utilization and ExpensesHospital Utilization and Expenses

Population adjusted regional growth in hospital charges 2001 to 2012:

Transformation’s Impact on Hospital Utilization and Expenses

UW Population Health Model

Holy Family MemorialShift of care ... onto second curve

Figure 9

Figure 11

Figure 10

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Given the above, if all inpatient and outpatient hospital care in our community from 2001-2011 had been provided solely by HFM, the increase in total unadjusted gross charges dur-ing the last 10 years would have been $28 million less than it actually was (Figure 12).

Most evidence points to a successful transformation, one in which quality and safety are the priorities, and value is the outcome. HFM is positively affecting utilization, dropping inpatient levels and keeping a lid on hospital charges, all while enhancing the consistency of the patient experience. That our outstanding physicians can do this while serving the oldest patients in the region is even more significant (Figure 13). The publicly available data speak for themselves!

HFM is taking its population health commitment even further, beyond traditional and regional partnerships to the national stage. Heart attacks are among the top issues facing both men and women in our community. In this regard, HFM is bringing best practices advocated by organizations like the American Heart Association to help improve the country’s standards for door-to-balloon time, the precious

time needed for angioplasty patients to receive lifesaving treatment to the forefront! HFM provides our community with the gold standard in cardiovascular care, eliminating reason to transport out of the area, a move that can jeopar-dize the health of heart muscles and delays time-sensitive care.

We’re proud that our gold standards will help shape best practices benefiting patients across the nation. Today’s ‘gold standard’ for that care is 90 minutes, and HFM routinely is in the 70 minute or less range. If patients are transported out of town a minimum delay of 45 minutes occurs before the care begins. When time is heart muscle, our inspiration and commitment to provide immediate access and quality care for you or a loved one truly stands out.

With inspired caring, HFM is assuring sustainability of the mission began 114 years ago and successfully moving between the curves to make a profound difference in the health and lives of those we are proud to serve – our patients, families and community.

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If HFM were the only choice ... Uncovering savings for Manitowoc County

Serving an Elderly PopulationHospital patients 75+ years of age

Figure 12

Figure 13

HFM serves a greater portion of the elderly population than ANY hospital in the region.

About Mark P. HerzogMark P. Herzog, FACHE, has served as President and CEO of Holy Family Memorial since 2001. Prior to joining HFM, Herzog served as Chief Operating Officer for 10 years at two hospitals in northwest Indiana. His 30 years of experience also includes leadership roles in health systems in Ohio and Pennsylvania. He was awarded an MHSA degree from the University of Michigan and is a Fellow in the American College of Healthcare Executives.

Herzog is active in national and state wide healthcare indus-try associations, speaks nationally on innovation, process improvement, safety and strategy, and serves as guest lec-turer and faculty for several schools including the University of Michigan.

In 2011, he was recognized as a finalist for the American Hospital Association’s Shirley Ann Munroe Leadership Award. The award is sponsored by the AHA’s Section for Small or Rural Hospitals and presented annually to a hospital administrator or chief executive officer who has improved health care delivery in their communities through innovative and progressive efforts.

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About Holy Family MemorialFounded in 1899 by the Franciscan Sisters of Christian Charity, Holy Family Hospital has evolved from humble beginnings into Holy Family Memorial, a comprehensive, integrated healthcare network of innovative services and exceptional professionals dedicated to improving health and serving the lakeshore region that is home to Manitowoc County. HFM is a faith-based health network and a mem-ber of the Franciscan Sisters of Christian Charity Sponsored Ministries.

A community-focused, tightly integrated healthcare delivery system, HFM offers a full range of services including a hospi-tal, an employed 90-practitioner multi-specialty group, a regional orthopedic program, and a comprehensive outpatient cam-pus (healthcare village). Its “Right Care” focus em-phasizes quality, value, wellness and prevention, which includes a wellness center, work/health options, and local business collaborations. HFM has more than 1,500 physicians, employees and volunteers with years of com-mitment, service and innovation. Its physicians and leaders routinely share their expertise generously through presenta-tions on many national stages in nine different States in the last two years alone. The Board, leadership and sponsors of HFM are proud to contribute thought leadership to assist our nation in rising innovation and service to new levels in meeting the many challenges the future holds.

Since 2004, HFM has been named Solucient Top Perfor-mance Improvement Leader, has received a Premier/CareScience Select Practice National Quality Award, and has been recognized four times nationally for its Excel-lence in Patient Safety, with designation in 2009 as a Top 25 Most Wired Small Hospital and a Stage 6 Electronic Medical Record Adopter by the Health Information Management Systems Society, one if its highest honors.

1. HIMSS Analytics. 2. Wisconsin Hospital Association. 3. Wisconsin Department of Health Services. 4. UW Population Health Institute. 5. “Is Healthcare Part of the Facility Location Decision?” Area Development magazine, November 2012. 6. Robert Wood Johnson Foundation and the University of Wisconsin Population Health Institute, County Health Rankings, model 2012.

2300 Western Ave., Manitowoc WI 54220(920) 320-2011 • www.hfmhealth.org

Contact information:mherzog@hfmhealth.org