Assignment: ThedaCare Improvement System

Assignment: ThedaCare Improvement System ORDER NOW FOR CUSTOMIZED AND ORIGINAL ESSAY PAPERS ON Assignment: ThedaCare Improvement System There are two cases dealing with hospital mergers. One is very successful, one is less so. What is the difference? What did management do in each situation that made the outcomes so different? What can you learn about how to manage such a challenge in your career? Be creative, be analytical. Assignment: ThedaCare Improvement System case_paper_2_case_1.pdf case_paper_2_case_2.pdf For the exclusive use of J. Macrina, 2018. 9-708-424 REV: JANUARY 27, 2010 MICHAEL E. PORTER SACHIN H. JAIN ThedaCare: System Strategy In January 2007, Dr. John Toussaint, CEO of ThedaCare—a health care system with four hospitals based in Appleton, Wisconsin—reflected on his annual board meeting and physician retreat. Although Toussaint had won support for ThedaCare’s strategy based on improving quality of care, there was resistance to the ThedaCare Improvement System (TIS) and other initiatives to improve cost and quality transparency. While Toussaint believed that health plans would demand increasing value over time, had ThedaCare moved too far, too fast? ThedaCare’s board was strongly supportive, but the relationship between ThedaCare and its physicians was challenging. Toussaint had to navigate an increasingly competitive health care marketplace while bringing along all of the key constituencies. ThedaCare and the Fox Valley ThedaCare’s mission was to “improve the health of [its] communities.” With 2006 revenues of $480 million and over 5,300 employees, ThedaCare was the largest employer in Northeast Wisconsin (see Exhibit 1 for financials). ThedaCare accounted for more than 17,000 inpatient admissions and nearly 200,000 outpatient visits in 2006 (see Exhibit 2). Its board consisted of 15 members; 40% were physicians employed by or affiliated with ThedaCare, and 60% were local business leaders. ThedaCare had won several awards and honors including Solucient’s “100 Top Hospitals”™ in America, National Research Corporation’s “Consumers Choice Hospitals” designation for the Appleton/Oshkosh market, and the American Hospital Association’s “100 Most Wired” designation. ThedaCare’s primary service area was the Fox Valley region of Northeast Wisconsin consisting of 500,000 residents, evenly divided between rural and urban settings (see Exhibit 3). Located 100 miles north of Milwaukee and 100 miles northeast of Madison, the cities of Appleton and Neenah were among the major retail, commercial, and artistic centers for the region. In 2007, the ethnic and racial composition of the Fox Valley was relatively homogenous, with residents who were mostly of Caucasian origin. In recent years there had been an influx of refugees from Laos and Cambodia as well as increasing numbers of Hispanics and African Americans. For decades, the major industry in the region had been paper products and related fields. Other industries included wood products, iron work, foundries, and light manufacturing. With changing global manufacturing patterns, some of the traditional industries had been shrinking and the ________________________________________________________________________________________________________________ Professor Michael E. Porter and Senior Researcher Sachin H. Jain prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2007, 2009, 2010 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School. Assignment: ThedaCare Improvement System This document is authorized for use only by Joseph Macrina in Healthcare Management Fall 2018.1 taught by WILLIAM TODD, Georgia Institute of Technology from Aug 2018 to Dec 2018. For the exclusive use of J. Macrina, 2018. 708-424 ThedaCare: System Strategy economy was gradually shifting from manufacturing toward services. In the rural parts of the region, the principal business was dairy farming, which was evolving from small privately-owned farms to larger corporate entities. ThedaCare’s Delivery System Hospitals The ThedaCare system included four hospitals: Theda Clark Medical Center, Appleton Medical Center, New London Family Medical Center, and Riverside Medical Center (see Exhibits 4 and 5). Appleton Medical Center was a teaching affiliate for the University of Wisconsin’s family practice residency program, but no other parts of ThedaCare maintained an academic affiliation. The Theda Clark system traced its history to the early 1900s when a young Neenah woman, Theda Clark Peters, a daughter of the founder of local paper giant Kimberly-Clark Corporation, died at home after childbirth. Theda Clark Medical Center was founded in her name. Appleton Medical Center opened its doors in 1958 after a 12-year fundraising effort by Appleton citizens, businesses, and charitable organizations that sought a nonsectarian, nonprofit hospital. With 156 and 166 staffed beds, respectively, Theda Clark and Appleton Medical Center were two of the largest acute care facilities in the area. The hospitals featured emergency rooms, general inpatient wards, general surgery, obstetrics, urology, and orthopedics, but each hospital had several distinctive service lines. Appleton Medical Center was the sole location for cardiac surgery and radiation oncology services. Theda Clark was the sole location for neurology and neurosurgery, trauma, bariatrics, and inpatient rehabilitation. Theda Clark was also the sole location for inpatient pediatric services, specialty pediatrics care, and neonatology care, which were operated by Children’s Hospital of Wisconsin through a separately owned and managed hospital within the hospital, “Children’s Hospital of Wisconsin-Fox Valley.” The New London Family Medical Center was a 25-bed critical access1 community hospital providing general acute care to New London and nearby rural communities in Outagamie and Waupaca counties. The hospital, which had been in operation since 1928 and affiliated with ThedaCare since 2000, offered general medical care including inpatient/outpatient surgery, orthopedic services, a 24-hour emergency department, rehabilitation services, a birth center, and transitional care. In 2006, the New London center closed its intensive care unit (ICU) and directed these patients to other ThedaCare sites. Riverside Medical Center, founded in 1954, was another critical access hospital providing a fully staffed, 24-hour emergency department and inpatient care along with ambulatory care services, cardiac care and cardiac rehab services, diagnostic imaging services, and services for obstetrics, occupational health, orthopedics, surgery, urgent care, and laboratory services. Riverside had joined the ThedaCare system in 2006.Assignment: ThedaCare Improvement System In 2007, Riverside was beginning to implement quality-improvement initiatives aimed at waste and error reduction. ThedaCare maintained a partnership with Milwaukee-based Froedtert Hospital, to which it directed patients for bone marrow transplantation. ThedaCare had pursued a more expansive oncology relationship with Froedtert, but progress had been stalled by oncologists affiliated with ThedaCare. In 2005, ThedaCare and Froedtert had implemented a joint system for electronic ICU monitoring, which allowed both organizations to provide 24-hour remote video-based intensivist coverage for their respective ICUs. 1 “Critical access” is a designation used by rural hospitals that allows cost-based reimbursement instead of diagnosis-related group (DRG)-based reimbursement. 2 This document is authorized for use only by Joseph Macrina in Healthcare Management Fall 2018.1 taught by WILLIAM TODD, Georgia Institute of Technology from Aug 2018 to Dec 2018. For the exclusive use of J. Macrina, 2018. ThedaCare: System Strategy 708-424 ThedaCare had also pursued a relationship with Green Bay-based Bellin Health System for cardiac surgery, in which ThedaCare had above-average mortality rates, while Bellin’s heart surgeons had achieved some of the best cardiac surgery outcomes in the state. Bellin’s surgeons had begun operating at ThedaCare in 2001, but ceased providing services in 2003 when local cardiologists stopped referring patients to them because of personality differences. ThedaCare subsequently recruited new affiliated surgeons who improved ThedaCare’s performance on cardiac surgery mortality. ThedaCare Physicians ThedaCare Physicians was a wholly owned primary care practice spread across 20 sites (see Exhibit 6 for organizational charts) that employed over 180 providers. ThedaCare had acquired primary care physician practices throughout the Fox Valley beginning in the early 1990s. Most physicians in the group were board-certified in internal medicine, family practice, or pediatrics. Other physicians were internists who worked as hospital medicine specialists (hospitalists) at Theda Clark and Appleton Medical Center. Most specialists were outside physicians. ThedaCare had traditionally employed a few specialists in fields and regions where it was difficult to find affiliate physicians, and had hired its first specialists in orthopedic surgery in 2005. Each ThedaCare Physicians site included nurse practitioners and physician assistants. Primary care physicians were compensated based on their own individual revenues (70%), practice site revenues (25%), and performance on quality metrics (5%). Full-time equivalent (FTE) compensation ranged from $136,427 to $344,351 (median = $200,034). ThedaCare hospitalists, nurse practitioners, and physician assistants were paid on a salary basis, although ThedaCare was considering ways to add a productivity component to their compensation. In addition to ThedaCare Physicians, 400 independent primary care doctors and specialists had received admitting privileges at ThedaCare hospitals. Some of these physicians had privileges at rival hospitals as well. Admitting privileges involved no compensation but allowed an independent physician to claim affiliation with the hospital, admit patients, and use facilities to perform surgeries and procedures. Physician fees and facilities charges were billed separately. Assignment: ThedaCare Improvement System Fifty percent of the affiliated physicians leased office space on hospital campuses from ThedaCare hospitals; the other half had offices in buildings in close proximity. Affiliated independent specialists typically received referrals from ThedaCare Physicians practices as well as from other independent physicians. Independent specialists often operated as solo practitioners or as members of groups of physicians with the same specialty that shared office staff, billing departments, and clinical policies. Many operated on ThedaCare’s information technology platform that was installed and supported by ThedaCare for an up-front hardware payment and a monthly fee per physician. Despite the absence of a formal relationship, ThedaCare collaborated closely with its affiliated specialist physicians in setting practices and protocols. In 2007, ThedaCare was considering ways to strengthen these relationships. Ingenuity First Ingenuity First was a stand-alone unit that served the on-site primary care needs of employers including occupational health services; on-site doctors, nurses, and counselors; and employee assistance and health and wellness programs. Ingenuity First sought to help selfinsured employers reduce health care expenditures. Physicians employed by Ingenuity First were not part of ThedaCare Physicians. In 2007, Ingenuity First was beginning to adopt ThedaCare’s electronic medical record system. ThedaCare Behavioral Health ThedaCare owned and operated seven facilities in its service area that provided a full range of behavioral and mental health services including inpatient and outpatient psychiatry, psychology, behavioral medicine, group therapy, alcohol and drug abuse counseling, and individual and family counseling. Some sites were co-located with ThedaCare 3 This document is authorized for use only by Joseph Macrina in Healthcare Management Fall 2018.1 taught by WILLIAM TODD, Georgia Institute of Technology from Aug 2018 to Dec 2018. For the exclusive use of J. Macrina, 2018. 708-424 ThedaCare: System Strategy Physicians, which was the largest source of referrals to ThedaCare Behavioral Health. ThedaCare Behavioral Health also operated the inpatient psychiatry unit at Theda Clark. ThedaCare Behavioral Health operated on the ThedaCare electronic medical record system. ThedaCare Laboratories ThedaCare Laboratories, a full-service clinical laboratory with sites at both Appleton Medical Center and Theda Clark, was formed in 1988 when the laboratories of the two hospitals were consolidated. ThedaCare Laboratories provided services to a number of customers which included ThedaCare hospitals and physicians’ offices as well as other hospitals, employers, and agencies throughout the state. Senior Care ThedaCare first entered the senior care business in the 1980s, as part of a national movement of hospitals acquiring senior care facilities. In 2007, ThedaCare operated a full range of senior living facilities but did not brand these with ThedaCare name. Residents chose from various kinds of residential apartment living with optional support services in homelike atmospheres. Choices included independent residential living (Heritage), assisted living (Heritage Woods), shortterm rehabilitation services, or full-service, long-term skilled nursing care (Peabody Manner). Residents could choose a higher level of care if their needs changed and almost always used ThedaCare hospitals and physicians when they became ill. Assignment: ThedaCare Improvement System ThedaCare at Home ThedaCare operated a full-service home care agency and home medical equipment company that served more than 19,000 individuals annually in the Fox Valley and surrounding counties. Its goal was to help people of all ages regain their independence after illness or injury and maintain their quality of life. Some of the services it provided included skilled nursing, hospice, pediatric services, infusion therapy, home medical equipment, mastectomy support, and respiratory services. In 2006, ThedaCare at Home began to record each patient visit on the patient’s electronic medical record. Gold Cross Ambulance Service In 1991, ThedaCare and the Affinity Health System jointly purchased the Gold Cross Ambulance Service to preserve service availability for its patients. Gold Cross was the major ambulance service serving Appleton Medical Center, Theda Clark Medical Center, and St. Elizabeth’s Hospital. The Oshkosh Fire Department offered a competing ambulance service. Information Technology Platform ThedaCare had first begun investing in electronic medical records in 1997, with the full-scale rollout of EPIC, a commercially available electronic medical record system, at ThedaCare Physicians in 1999. The Web-based software initially featured outpatient medical records and a data repository for lab reports, radiology reports, and imaging. The system was also made available to affiliated specialists. In 2002, additional functionality was incorporated into the electronic medical record including features for inpatient medical record keeping, patient registration, scheduling, and management of accounts receivable. The system included a patient-facing interface called “MyThedaCare,” which allowed patients to read their charts online, request refills of medications, e-mail their providers, learn about their specific conditions, and schedule appointments. By 2007, 297 of 400 affiliated physicians were using the ThedaCare electronic medical record and 30,000 primary care patients had “MyThedaCare” accounts. Affiliated physicians not using ThedaCare’s electronic medical record cited the burden of using multiple systems because of the other providers with whom they were affiliated. 4 This document is authorized for use only by Joseph Macrina in Healthcare Management Fall 2018.1 taught by WILLIAM TODD, Georgia Institute of Technology from Aug 2018 to Dec 2018. For the exclusive use of J. Macrina, 2018. ThedaCare: System Strategy 708-424 In 2003, ThedaCare began implementing EPIC’s computerized physician order entry system. It allowed physicians to order medications, diagnostic tests, laboratory studies, and other services electronically instead of through paper-based systems that sometimes resulted in errors. Assignment: ThedaCare Improvement System The system supported improved inpatient record-keeping and quality assurance. Computerized order entry faced resistance from many physicians who were unfamiliar with computers and objected to the additional work required to enter data, due in part to cumbersome interfaces. By 2007, only an estimated 5% of inpatient orders were being entered using the system. In 2007, ThedaCare was planning an upgrade to the EPIC system that would allow physicians to order and monitor home health care services (e.g., a visiting nurse) through the electronic medical record. Efforts were also underway to incorporate guidelines into the system from the Institute for Clinical Systems Improvement to assist clinical decision-making. A new release of the order entry system with a simpler interface was expected to streamline physician ordering. ThedaCare was also hiring ancillary data-entry staff to save physician time. Competitors In 2005, there were 124 community hospitals in Wisconsin, which accounted for $11 billion in combined inpatient and outpatient revenues. Of these, 69 hospitals had fewer than 100 beds; 35 had 100 to 200 beds; and 20 had more than 200 beds. In total, Wisconsin had 12,387 community hospital beds, 608,252 inpatient admissions, 2.6 million inpatient days, and an average length of stay of 4.3 days. ThedaCare had two primary local competitors, Affinity Health and Aurora Health System (see Exhibits 4 and 7). Exhibit 9 compares service lines offered by ThedaCare and these competitors by American Hospital Association service code. Affinity, a Catholic regional health care network, was a partnership of Ministry Health Care, based in Milwaukee, and Wheaton Franciscan Healthcare, based in Wheaton, Illinois. Affinity Health System was ThedaCare’s primary competitor and the Fox Valley’s third-largest employer. The Affinity network included Mercy Medical Center and Mercy Health Foundation in Oshkosh; Franciscan Care & Rehabilitation Center, St. Elizabeth Hospital, and the St. Elizabeth Hospital Community Foundation in Appleton; Affinity Medical Group, a regional network of 23 family medicine and specialty clinics in 13 communities; Calumet Medical Center in Chilton; Affinity Occupational Health; and Affinity Visiting Nurses. St. Elizabeth’s Hospital was located in Appleton, four miles from Appleton Medical Center. Mercy Medical Center was located in Oshkosh, 17 miles from Theda Clark Hospital.2 Like Appleton Medical Center, St. Elizabeth’s was a teaching affiliate of the University of Wisconsin family medicine residency program. Affinity owned and operated the Network Health Plan that had achieved “excellent” accreditation status (the highest possible level) from the National Committee for Quality Assurance (NCQA). It was ranked 41st in terms of customer satisfaction and clinical performance among the 246 rated health plans in the nation.3 Aurora, established in 1984, was a not-for-profit health system that operated throughout Wisconsin. Aurora employed 25,000 people at sites in more than 90 communities throughout eastern Wisconsin, including hospitals, more than 100 clinics, and over 120 community pharmacies. More 2 3 According to the U.S. News & World Report/NCQA Best Health Plans in America listing, 2006. 5 This document is authorized for use only by Joseph Macrina in Healthcare Management Fall 2018.1 taught by WILLIAM TODD, Georgia Institute of Technology from Aug 2018 to Dec 2018. For the exclusive use of J. Macrina, 2018. 708-424 ThedaCare: … Get a 10 % discount on an order above $ 100 Use the following coupon code : NURSING10

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