Laying the Foundation for Sustainable Change and Success

1. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics © 2014 Health Catalyst www.healthcatalyst.comProprietary and ConfidentialFollow Us on Twitter #TimeforAnalytics John L. Haughom, MD April 2014 By Failing to Prepare, You Are Preparing to Fail: Laying the Foundation for Success

2. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics Healthcare: The Way It Should Be Part One – Forces Driving Transformation • Chapter One – Forces Defining and Shaping the Current State of U.S. Healthcare • Chapter Two – Present and Future Challenges Facing U.S. Healthcare Part Two – Laying the Foundation for Improvement and Sustainable Change • What will it take to successfully ride the transformational wave? Part Three – Looking into the Future • What will it take to successfully ride the transformational wave? 2

5. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics A ‘Field of Dreams’ Mentality… 5 “Build it, and they will come.” Geography is destiny: “Who you see is what you get.” Health care system vs. Supplier-induced demand

6. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics Evolution of Methods to Manage Organizational Complexity • As organizations have become more complex, humans have adapted by evolving methods that help them deal with increasing complexity 6

7. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics Guilds • Prior to 1800, commerce was dominated by guilds • An association of artisans, merchants or others with common expertise who control the practice of their craft by limiting membership with training requirements and governmentally granted power 7

8. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics Scientific Management • Developed by Frederick Taylor, ~1911 • Defined mass production methods – assembly line, time and motion studies • Based on the idea of processes • One one side: well-educated engineers who designed the processes • On the other side: uneducated workers who did as they were told – cogs in the machine • Taylorism is still in common use 8 Frederick Taylor “In the past, the man has been first. In the future, the system will be first.”

9. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics Lean Production • Scientific management fails in the face of increasing complexity • Lean production… • Standardized processes with… …“smart cogs” that… …adapt to individual needs • That is, “mass customization” • Efficient processes that can deal with complexity • Healthcare organizations remain heavily invested in Taylor’s views of organizational management, and lag behind in more modern methods of managing complexity. 9 Walther Shewhart W. Edwards Deming

10. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics We will win and you will lose… “We will win and you will lose. You cannot do anything about it because your failure is an internal disease. Your companies are based on Taylor’s principles. Worse, your heads are Taylorized, too. You firmly believe that sound management means executives on one side and workers on the other. On one side, men who think and on the other side men who can only work. For you, management is the art of smoothly transferring the executives’ ideas to the workers’ hands. We have passed the Taylor stage. We are aware that business has become terribly complex. Survival is uncertain in an environment filled with risk, the unexpected and competition. Therefore, a company must have the commitment of the minds of its employees to survive. For us, management is the entire work force’s intellectual commitment at the service of the company without self-imposed functional or class barriers. We have measured – better than you – the new technological and economic challenges. We know that the intelligence of a few technocrats – even very bright ones – has become totally inadequate to face these challenges. Only the intellects of all employees can permit a company to live with the ups and downs and the requirements of its new environment. Yes, we will win and you will lose. For you are not able to rid your minds of the obsolete Taylorisms that we never had.” Konosuke Matsushita, founder of Matsushita Electronic Industrial Co. (ultimately Panasonic) 10

11. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics The Evolution of Process Management System of Production Deming and others “Craftsmanship” Guild System Airline Industry Healthcare Industry Scientific Management Frederick Taylor

14. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics Tesla: Mass Customization at Work 14 • A highly integrated, highly reliable technology-enabled work environment • 160 of the world’s most advanced robots perform standard, highly repetitive tasks with tremendous reliability • 3000 skilled workers use their intellects to manage complexity and adapt to customer needs

15. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics It is happening in medicine, too… 15 da Vinci Xi Aethon Tug iRobot RP-VITA Healthcare Robotics Nurse Assistant Espon Veebot “microbots”

16. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics Lean Production Standardized care processes managed by… …“smart cogs” that… …can adapt to individual needs to maximize value for patients In Lean terms, “mass customization”… …efficient processes that can deal with complexity yet allow front-line workers to adapt when the customer requires it… 16

17. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics Applying Modern Improvement Methods to Healthcare 17 A Sound Improvement Strategy Lean Methods Sustainable Value for Patients and Competitive Advantage Institute of Medicine Innovation Series white paper. Going Lean in Health Care. Cambridge, MA: Institute for Healthcare Improvement; 2005. Good Data

18. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics “Managed care” means “managing processes of care” ... …not managing physicians and nurses. (clinicians are the ones who manage the process of care) Brent James, MD, 101…

20. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics The Healing Professions are Changing… From craft-based practice • Individual clinicians working alone… …using handcrafted customized solutions for each patient… …based on a core ethical commitment to the patient and… …vast personal knowledge gained from training and experience To profession-based practice • Groups of peers, treating similar patients in a shared setting… …plan standard coordinated care delivery processes (e.g., using evidence-based standard protocols)… …which individual clinicians adapt to specific patient needs (e.g., mass customization) Growing experience is demonstrating • This type of care is less expensive, less complex, and yields better patient outcomes 20

21. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics Shared Professional Accountability I will not tell you how to practice medicine… • I will argue the science, but if I cannot convince clinicians “on the data,” I will not expect them to change how they manage patients I will try to create an environment of shared professional accountability… • Where groups of clinicians who manage similar patients in similar settings, discuss best patient care practices with recourse to the medical literature, expert opinion and credible data showing their own performance and outcomes over time In essence, we are converting care environments to ongoing learning laboratories (a redefinition of peer review) 21

26. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics In Summary… • Over the past century, organization’s have implemented increasingly sophisticated methods to deal with complexity with impressive results • These highly successful quality improvement and Lean methods are beginning to impact healthcare • Given the increasing focus on value, these techniques will be at the core of any healthcare organization’s ability to weather the coming changes • Managing the process of care requires an effective strategy to engage clinicians, healthcare’s “smart cogs” • Physicians will need to migrate from a craft-based style of practice to a profession-based practice focused on shared professional accountability • Organization’s will have to implement a sound improvement (value) strategy with the necessary analytical, deployment and knowledge components 26

27. © 2014 Health Catalyst www.healthcatalyst.com Follow Us on Twitter #TimeforAnalytics Thank You Upcoming Educational Opportunities The Importance of Data Governance Date: First Week of May Presenter: Dale Sanders Senior Vice President, Health Catalyst Register at http://healthcatalyst.com/ Healthcare Analytics Summit Join top healthcare professionals for a high-powered analytics summit using analytics to drive an engaging experience with renowned leaders who are on the cutting edge of healthcare using data-driven methods to improve care and reduce costs. Date: September 24th-25th Location: Salt Lake City, Utah Save the Date: http://www.healthcatalyst.com/news/healthcare-analytics-summit-2014 For Information Contact: John.Haughom@healthcatalyst.com