6

Enabling Change

The operations were humming, and the financial trajectory was positive. Leadership and key employee recruiting had recovered well from Geisinger’s demerger malaise. And the strategic discussion was coalescing nicely around how optimal healthcare could be delivered and paid for, which was uniquely testable in our structure, sociology, and market context.

But how could strategic commitment to continuous innovation be enabled throughout Geisinger at the front lines of caregiving to ensure broad success? Simple, repetitive communication of the strategic goal was key, but not enough. Neither was the obvious Geisinger advantage of a systemwide, standardized electronic health record (EHR).

We created an infrastructure to serve as a bridge between aspiration and continuous innovation, one that was pragmatic, instructive, and efficient and would eliminate the need for reinvention every time we scaled and generalized ProvenCare. This infrastructure has evolved over the years as we took Geisinger value reengineering into new markets within our own expanding health system as well as into new non-Geisinger markets.

DRIVING DESIGN PRINCIPLES

In almost every aspect of the Geisinger story of the past 16 years, our focus on desired patient outcomes was the driving force. Without the energizing professional pride of purpose, improving patient outcomes would not have happened. Our priority was to target the hearts first, then the minds, and finally the wallets of the entire Geisinger family. Without all three, and without sequential focus on the first two motivators, the compensation plan alone would not be an effective lever.

In addition, we believed that top leadership should not interpose itself between clinicians and their patients, but rather should motivate, coalesce, cheerlead, and empower caregivers themselves to establish improvement targets and best practice defaults. Leadership’s job was to enable, not to showboat.

Leadership’s enabling started by choosing areas most likely to create recognizable quality improvement quickly. Our choices ranged from programs with documented good outcomes and good clinical care leadership in place to programs with relatively bad outcomes and no reasonable clinical leadership in place. Despite the latter appearing to be the obvious improvement candidates, we always chose to go from good to great, assuming that with internal and external affirmation, we could more easily recruit better leaders into the clinical problem areas.

Clinical leadership was always key. No one was going to change anything at Geisinger without a respected clinician at the head of the transformation effort. Even at the CEO level, clinical credibility enabled questioning why and how things were done and exploring how they could be changed without losing the troops in either hospital-associated treatment areas or the ambulatory setting.

We also realized that most successful, busy clinicians were not competent financial or operational experts. So we included in our design principles a dyad or triad approach to clinical service-line and discipline-based leadership roles, with the clinical leader, operational leader, and/or financial leader working together. We did not wish to dilute a great clinician’s credibility and productivity by asking him or her to obtain additional operational or financial training. However, we did require that our clinical leaders agree to equal input from coleaders with specific financial and/or operational expertise. While this may sound straightforward, we often found that a clinical leader simply could not or would not acknowledge the necessary added expertise, nor celebrate the visible coleadership of the other members of the dyad or triad. In these cases, we replaced the clinical leader. We were also willing to replace the nonclinical partners if they viewed themselves simply as suppliers of data rather than key members of the accountable leadership duo or trio.

Another major design principle became obvious early on as we simultaneously grew our geographic reach and market share and began to transact the innovation strategy. At issue was what we came to call the dominance of the day-to-day operational crisis. In both for-profit and nonprofit settings, increasing growth, complexity, and stringency of the payer and provider markets created so many legitimate operational and even existential challenges that leaders became completely reactive to the momentary crisis or the particular stimulus at the time. The confluence of these factors became a catalyst for leaders to shift their focus away from strategy to almost exclusively operational emergencies.

Advances in communication technology compounded the problem, as thought was supplanted by action, thoughtful action was replaced by motion, and discussion was replaced by transaction. Human interactions were interrupted by the telephone; the telephone was replaced by e-mail, then text messaging and tweeting. Writing with punctuation disappeared, and thinking was diluted by multitasking. Thinking and discussion with others was replaced by chaotic social media. It was imperative to slow this decline into chaotic activity, which we did through intentional structural design.

ELEMENTS OF OUR STRUCTURAL DESIGN

Most important was leadership recruitment, in our case an executive vice president for strategy and strategic program development. Interestingly, at the time none of our benchmarking data contained any such job category. This individual focused exclusively on helping to establish, maintain, update, and transact the strategic plan and became the most important colleague of the CEO and the chief medical officer (CMO). The position maintained the CEO’s critical process map, ensuring that the journey reached its desired endpoint.

A second part of our intentional structural design was to force overall institutional attention to strategic accomplishment and to mitigate the operational dyads or triads being too focused on operational issues when allocating their limited time and energy, even with 20 percent of total compensation based on achievement of strategic goals.

We took inspiration from three models of innovation in other industries during some extraordinarily progressive transformational eras: the Institute for Advanced Study, associated with Princeton during the era when computational data analysis was combined with nuclear physics; Bell Telephone Laboratories and the old AT&T when communication, physics, and mathematics were producing the first high-tech revolution; and the Skunk Works at Lockheed Martin Corporation that combined breakthrough science and engineering to develop magnificent new products.

To foster continuous innovation, we committed space and resources that permitted people to think about new ways of doing things and new scalable enabling ideas and products without the continuous distraction of running an operating unit in our hospital, provider group, or insurance company. We called this Geisinger Innovations and recruited the second-most-critical colleague in our top leadership team, our chief of innovation, who reported to the strategy EVP. At the outset, the chief of innovation position also had no basis in benchmark data.

During the next five years, Geisinger Innovations built up key staffing that helped design, transact, and update the Geisinger continuous innovation process and expand our healthcare value reengineering into the ProvenCare Acute and ProvenCare Chronic portfolios. The group included key nurse leaders on both the provider and payer sides of Geisinger. We also recruited and expanded the physician assistant leadership crucial in ensuring that real-time data was collected and initially fed back manually to clinicians through parallel non-EHR systems. The group also included IT experts seconded from other parts of our system to design best practice templates to be embedded into our EHR. Finally, Geisinger Innovations enabled interaction with key health economists whose input was critical to analyzing and eventually publishing the patient outcome benefits, as well as the cost consequences, of our value reengineering efforts.

This innovation structure justified a separate budgeting process for the start-up costs, which had two distinct advantages. First, we could define the costs. Second, we didn’t have to make individual return on investment arguments at the operating-unit level to prioritize resources that would be in competition with more immediate and operationally pressing clinical operating needs. The innovation budget was determined by the CEO and the EVP for strategy, managed by the chief of innovation, and justified to the Geisinger board of directors by the CEO, who could tout innovation as the main enabler of the strategic plan’s top priority.

OPERATIONALIZING THE INNOVATION FUNCTION

Here’s how our innovation process worked. The CEO and/or the strategy EVP began a discussion with the leadership duo or trio in a clinical service line or discipline, for example, cardiovascular, which was a single combined surgical and medical service line at Geisinger. The objective was to obtain baseline data regarding indications for a particular procedure and to inventory the occurrence of unjustified variation in each aspect of routine practice for an episode of care. The leaders of the caregiving disciplines or interdisciplinary service lines simply needed to lead the effort to inventory the baseline data and then to help socialize whatever became the default best practice. All of the data accumulation, best practice template building, transaction detailing, and updating of the rapidly changing knowledge base was done by Geisinger Innovations. Our innovations function was the key driver of increased efficiency and decreased cost in our overall transformation effort.

The clinical leadership narrative, the goal-setting tasks, and the transaction of key innovations were critical and difficult. For instance, almost all of the CEO’s initial ProvenCare Acute proposals were modified significantly from their original high-impact concepts to become more practical, but still substantive and attention-capturing. Similarly, almost all of the initial clinical leadership commitments to default best practice and standardized outcome metrics were modified. Initial bottom-up proposals were identified either as sandbagged or as unlikely to make a real difference in increased quality or decreased cost, or at least not easily perceived by the outside world as making a real difference.

There were basic lessons that, at least in retrospect, seem intuitive. The first was the difficulty of managing a growing budget with the yet-to-be-realized economic return. Second, as the results of ProvenCare accrued and affirmation increased both within the system and externally, many of our best medical and surgical acute care nurses, acute care physician assistants, and insurance company care managers began to prefer the professional trajectory of innovations compared to their core caregiving commitment. Managing this inflow without stripping our clinical leadership was a balancing act.

In addition, every successful non-P&L budget could easily justify infinite growth after several years of expanding our ProvenCare portfolio. So we quickly grew to see the need for a more generalizable and less costly approach to systematic clinical value reengineering, and Geisinger Transformation, a sister non-P&L group, was established. Its mission, first under the Geisinger Accelerated Performance Program and later under the acronym PRIDE, for Proven Innovation Drive for Excellence, was to increase efficiency across our system and extract 15 to 20 percent of our cost structure over three years. This was a scaling effort related to, but not quite the same as, the innovation group’s original mission, and initially the head of Geisinger Transformation reported to our chief of innovation.

Another basic lesson learned was the continuing pull of operations, particularly as individual senior leaders contemplated what most likely would be helpful in advancing their own careers. Dr. Steele, a resolute contrarian who put the Skunk Works idea into practice at Geisinger, always maintained that the most difficult job was one in which there was no easy definition of schedule, metrics, or outcome; hence the need to recruit the strongest probable leadership into these usually nonoperational, often nonbenchmarkable jobs. For individuals who could tolerate the uncertainty and ambiguity inherent in the new, highly matrixed positions, there always was the siren song of big operational leadership opportunities, either within Geisinger or outside.

A key evolution in our start-up infrastructure was the consolidation of transformation and innovation and the evolution of innovation into three separate units. One is under the direction of a single leader who is both chief medical informatics officer and chief information officer. This seemed logical given that value reengineering continues to be dependent upon either embedding innovation into transactional EHRs or bolting innovation onto functional applications.

A second innovation center is under the direction of our chief scientific officer, who is responsible for our basic science portfolio, health services research, and a remarkable new effort in population genomics, our version of individualized medicine.

The third innovation component is embedded in a center called the Institute for Advanced Application, focused on bedrock bench-to-bedside translational medicine, doable at Geisinger with an immediacy unavailable in almost any other academic medical center.

SCALING OUTSIDE OF GEISINGER

We established three scaling and generalizing engines at Geisinger, all formulated with the understanding that scaling was quite different from innovating. The first test of our ProvenCare portability was simply the growth of our own payer/provider markets into Harrisburg, Scranton, and Wilkes-Barre, Pennsylvania, and most recently into Atlantic City, New Jersey. We knew that what had been successfully tested and grown in the sweet spot of the Geisinger Central Susquehanna, Pennsylvania, market might not be easily translatable into the quite different sociology of those other markets. In northeast Pennsylvania, for instance, even though 50 percent of the payer market was Geisinger Health Plan, almost 90 percent of the clinical care that occurred in the Geisinger hospital in Scranton was provided by non-Geisinger, nonemployed physicians. Our value reengineering was applied when many of the levers and enablers available among our own doctors were not applicable to our nonemployed caregiving partners.

A second engine for scaling and generalizing ProvenCare was our intentional expansion of Geisinger insurance into Delaware, Maine, New Jersey, and West Virginia, with no intention of any Geisinger provider overlapping expansion. In most of these new insurance markets, working with non-Geisinger delivery systems was enabled by partnering the insurance products with our third scaling engine, the xG Health Solutions consulting group, which was created in 2013 as a for-profit spin-off.

The first evidence of scaling success was with one organization in Virginia and another located in rural Illinois and Wisconsin. These partnerships occurred even before we formalized xG as a for-profit Geisinger spin-off and were instructive in both positive and negative ways. Significant results in redesigning hospital-based care, changing the fundamental doctor-hospital leadership relationship, and decreasing hospitalization needs by improving ambulatory care for patients with multiple chronic diseases were accomplished almost as quickly in the non-Geisinger markets with non-Geisinger providers as they had been accomplished at Geisinger.

This proved to be the case for each of our subsequent experiments in exporting ProvenCare. In the joint Geisinger Health Plan and xG ventures in Delaware, Maine, and West Virginia, quality and cost benefits in managing hospital-associated and chronic disease patient populations became obvious after one year. (See Figures 6.1 and 6.2.)

FIGURE 6.1   Significant Reduction in Utilization at Client A

FIGURE 6.2   Significant Reduction in Utilization at Client B

But limits to the sustainability of the reengineering also were evident after several years. First was the effect of leadership change. Regardless of whether a strong leader left when a system was in disarray or handed over an intact system with a strong operational trajectory, our successful joint experiment would wither quickly if good hospital margins were dependent on fee-for-service and if the leader’s successor was not committed strategically to fundamentally transforming how care should be financed. If the hospital-centric CFO saw a volume decrease because the organization was taking better care of patients with multiple chronic diseases, unit prices would rise precipitously. Second, if the dominant payer was in a position to threaten the fee-for-service reimbursement to our provider partner if the Geisinger beta test continued or, even worse, expanded, most system leaders would cave, and we were quickly dismissed. Most important, though, we learned that our costly infrastructure used to initiate and enable our initial innovation engine did not need to be reproduced in our forays into these non-Geisinger markets.

xG HEALTH SOLUTIONS

As word of our ProvenCare success spread throughout the healthcare industry and the country, many leaders from integrated delivery networks and organizations that wanted to become integrated delivery networks visited Danville to discover firsthand the Geisinger approach to innovation. The number of visit requests became so great that we initiated quarterly innovation conferences where we explained the Geisinger innovation portfolio and its key infrastructure. Attendees were impressed with our structure, culture, innovations, and sustainability; however, they often felt what they learned at Geisinger could not be replicated in their particular organization or geography.¹

We pushed back with those visitors who believed our innovations could not be exported outside of Geisinger. As healthcare in the United States entered a period of unprecedented turmoil and opportunity, particularly with the ACA, many policy makers and integrated provider system leaders came to believe the Geisinger model and innovation accomplishments were well positioned for the move from volume- to value-based reimbursement. To us, the situation provided an attractive business opportunity to assist providers who wanted to operate successfully in a value-based payment environment. We determined we could export the following:

•   Customization of the Geisinger electronic health record

•   Bolt-on or embedded software programs to enhance primary care and subspecialty work flow in clinical decision support

•   Data warehouse updating in near real time from both the electronic health record and claims data

•   Extensive data analytic algorithms to enable change in managing individual patients and populations

•   Evidence and consensus-based care pathways integrated into clinical work flows

•   Multidisciplinary clinical service lines with leadership teams to ensure how care should be given

•   Fundamental change to ensure caregivers all operate at the top of their license

•   Care management partnering between our payer and provider components targeted to patients and issues that yield the greatest benefit (for example, concierge care for the sickest patients)

•   A curriculum and incentive system affirming and promoting continuous care innovation²

Rather than assign responsibility for scaling to our leadership team’s already long list of responsibilities, we decided to recruit new team members devoted specifically to this effort and to position them in a new entity that could control its own resources rather than compete with other parts of Geisinger. And while launching an entity to help other healthcare delivery systems improve their performance was similar to our not-for-profit mission, the goal of creating a meaningful financial return to Geisinger through this endeavor could best be realized through the creation of a for-profit entity, particularly if we partnered with a credible and repeatedly successful private equity co-investor. We also felt it would be easier and require less investment to recruit and maintain the caliber of talent required for a new entrepreneurial venture to be successful if the venture was a for-profit entity in which employees could be incented primarily through equity self-interest.³

While the Geisinger board agreed to invest the required capital, we looked for an outside partner to affirm our business model, bring market-based discipline, add significant subject matter expertise and market networking, and increase the likelihood of success while at the same time reducing Geisinger’s financial risk. Through a process assisted by JP Morgan, which had been Geisinger’s banker for more than 30 years, Oak Investment Partners became co-investor and xG Health Solutions was launched in 2013 as an independent, for-profit company. Although the Geisinger board understood it could not possibly know what intellectual property the health system would produce over the next decade, it also recognized there would be substantial cost related to finding potential commercialization partners and negotiating and renegotiating license agreements if it decided to license each intellectual property separately. We agreed to a perpetual license agreement, allowing xG Health to retain its rights over the long term even if it was acquired by another entity, and with a noncompete provision to ensure that Geisinger would present a single face to the marketplace for selling its innovations outside of its traditional service area. In addition, the license was exclusive for a specified period of time and reciprocal—xG Health Solutions licensed to Geisinger any derivative work and new intellectual property that xG Health acquired or developed. Governance and management structures have ensured a close working relationship between xG Health and Geisinger, and the product portfolio has been sharpened over the past three years. xG Health’s client base has been broadened to include significant distribution channel opportunities by embedding content into high-market-share electronic health records, becoming the design architect of a new cooperative of 40 self-insured companies intent on working together to purchase value-based healthcare for their employees, and continuing to accrue provider clients.⁴

LESSONS LEARNED

•   Assigning responsibility for strategy is key to attaining an important strategic destination.

•   Making space and resources available for innovation as a nonoperating unit is important to start the process.

•   Pairing great clinical leaders with administrative and/or financial coleaders creates an accountable team.

•   The enabling structure varies over time and should become less costly.