ABCs of TJR--physician involvement helps build a profitable program.

An aging but active U.S. population has created a demand for total joint replacement (TJR) procedures that is already high--and likely to remain so. Analysis suggests the orthopedic market can be expected to grow as much as 10 percent from 2003 through 2006.

However, TJR reimbursement rates are not keeping pace, leading to an unpleasant squeeze on organizations that perform these procedures.

* The Medicare hospital reimbursement for DRG 209 is actually 3.9 percent less than in 1994, although the cost of implants has risen 73 percent in the same period.

* Competition from outpatient surgical facilities and free-standing orthopedic hospitals/clinics further pinches organizations that, despite their best efforts, may be losing money on their orthopedic product line.

And yet, in these difficult circumstances, some health care organizations--the better performers--are thriving. Emphasizing quality and successful patient outcomes, while effectively managing the cost of each procedure, these better performing hospitals and health systems are succeeding by developing strong relationships with their orthopedic physicians to ensure success.

Better performers yield new ideas

By examining and emulating the better performers, it's possible for other administrative teams to learn and then adopt their strategies to achieve similar good results. To that end, starting in 2003, a study sought to understand and document what really works in TJR, by scrupulously examining successful programs today.

To get a national picture, 10 better performing facilities were chosen and reviewed for their clinical and business practices in TJR surgery. Teams of experienced clinicians conducted extensive analysis and detailed surveys, as well as lengthy on-site examinations at each of the participating organizations.

The study involved a few assumptions:

* Some clinical and management processes will regularly and consistently produce better program outcomes.

* No orthopedic product configurations or patterns of use for implants are routinely associated with the lowest cost or best clinical outcomes. Clinical solutions (implants and soft goods) are generic rather than specific to patient outcomes.

* The best clinical and least expensive outcomes are associated with each local hospital team's attention to detailed process analysis and improvement, with a focus on total service line performance improvement, both in cost per case and quality outcome.

These assumptions were validated by our observations and analysis. This national study of TJR programs in better performing hospitals found no pattern of correlation between the clinical outcome and the vendor of choice in a particular program. That is, all commonly used orthopedic appliances appear to perform adequately in the hands of qualified practitioners, with an experienced team in a well-run program.

And this critical indicator: If your organization is spending more than 35 percent of the reimbursement cost on the implant device alone, you're likely to be in trouble. And if you're spending 40 percent or more, you're in the red.

The data indicate that reducing the cost of the implants to about 35 percent of the total cost was the only way to hold the line on costs overall. Here's how the remaining 65 percent of the variable cost distribution breaks out in better performing hospitals:

OR/anesthesia   16%
Pharmacy         5%
Room/board      18%
PT/OT/Rehab      4%
Lab/Radiology    3%
Other supplies  15%
Other            2%
Blood Bank       2%
                65%

But how can an organization resist when physicians demand ever more expensive implants? That would appear to be a job for management.

Engaging physicians

Management is the art of relationships, of getting things done through and with other people.

By engaging their medical staffs, bonding their physicians to the outcomes, entangling them in the TJR program, attaching them to its goals and embedding them in an appealing business model, better performers minimize clinical practice variations and reduce unsupported implant variations.

By focusing on and making explicit their interdependence with their physicians, the better performers reduced or stabilized TJR costs while enhancing their practices, minimizing process variation, and improving patient outcomes and safety.

Based on the study, here are the key methods used by better performer management teams to achieve strong relationships with their TJR physicians:

Make a compelling case for change/improvement through collaboration

The place to begin is never, "You've got to help us save money." That's a quick dead end to the kind of dialogue that must be established. Rather, base your case on their (your dominant TJR surgeons') needs--and you know what those are because you've listened to their complaints for years.

They want to improve their practice by having specific advantages such as block times, or dedicated nursing teams or outreach marketing or patient education. Let them know they can have their needs met if they will make a conscious decision to dialogue with you about the clinical and business realities.

When their needs are met, they'll be happier and so will you. Of course, you can't let the monumental marketing campaigns mounted by huge medical device corporations daunt you. Better performers prove that you can counter the effects of massive clinical and consumer advertising, aggressive sales reps, and even cash incentives paid to physicians if you can make a compelling case for collaborative change.

Create a performance improvement challenge

Physicians in general are competitive people, especially those with surgical practices. They want to compare themselves with what others are doing--other programs and other physicians--to get and keep a competitive edge.

Hospital/system management is positioned to provide that competitive challenge through benchmarking and other comparisons of business and clinical processes (and even discreet, blinded physician profiling).

For physicians to buy in to it, the data must be rock-solid; often that means relying on a proven national database. Give them excellent reasons to improve and make it as hassle-free as possible, and they'll take the challenge.

Define clear objectives for change and measurement of results

Whatever is to be improved--lower DVT or infection rates, or reduced average length of stay, or improved complication or mortality rates, or lower blood usage, or establishment of a new contracting strategy for supply purchases--set out clearly the current situation, define new goals and set target dates and times for measurement of the changes.

Management attention to the few key surgeons should focus on mutually understood clinical, patient service, and cost objectives that have clear and accurate measurements and systems of data collection to allow for continuous monitoring and analysis.

Find, support and provide meaningful incentives, especially non-monetary incentives

There are really three primary motivators for the TJR surgeons: their professional success, including their income, their daily hassles and the quality of patient care they can deliver. They see their needs as simple: they want to work efficiently and effectively in your operating room and then go to their office or home or the golf course.

If you can reduce the hassles that frustrate them and slow down their efficiency, and if you can maintain or enhance the quality of their patients' care, you will be making it easier for them to earn their fees.

To know what your physicians want, a designated interface can be maintained through a service-line head or through the less formal linkage created by casual conversation in the halls.

Better performers do it both ways, always keeping their antennae up and active to stay alert to the needs of their physicians. And then, importantly, they deliver--explicitly solving physician problems in return for the expectation that the physicians will help them manage the program more successfully.

Set an example

Do everything possible first to help the program. Remember, this is not about the physicians making you look successful, but about working with them to give them what they need for their patients, within a reasoned, evidence-based context that is supportive of the program's overall vitality.

This can produce unexpected improvements for other constituencies as well, positively affecting staff morale and nursing engagement. If you have human obstructions, deal with them. If they can't find benefit in the program, they may have to go somewhere else for the greater good. Be ready to make those changes in the organization and let your physicians know why you're acting. Your example will be powerful.

Carefully address quality concerns and other resistance

However the better performers collect their data, they know that the data require credible interpretation and explanation so that the physicians accept it as a direct reflection of reality.

The first conversation you will have will be on improving measurements for quality patient outcomes. Listen well and you'll be halfway to resolving their doubts. But it's also true that data alone are not magic bullets, and there may be some recalcitrant physicians who flatly reject any data that are provided to them. They don't feel obliged to get along with you or want to help you.

You may not be able to reach them, but the success (and improved income) of their peers may turn the trick. Better performers don't give up on these folks, but they don't spend all their time and energy courting them, either. Instead, they work extensively with the physicians who want to work with the program overall and who help create a real, mutual payoff in the relationship.

Optimize physician involvement, making effective use of informal leaders

You'll want to identify those who "get it" quickly and expand their influence as champions for the cause. Here's a bit of heresy: You don't need to treat all of your physicians the same. Your high performers and heavy admitters have earned more of your attention, so give it to them.

And forget about requiring your physicians to attend the ritualized, long, drawn-out meetings where everyone gets cranky and restless. Instead, make your meetings brief, informal, repetitive and set in the most convenient location for the physicians--in the hallways near the OR or the lounges--to optimize their time.

Give them information they can use and don't waste their time. They'll appreciate the consideration. Remember the drug detailing reps who live for 20 seconds with the physicians, every once in a while, but they make that 20 seconds work very well for them? You can learn from their example.

Your early adopters/champions will become extremely good ambassadors, naturally spreading information among their colleagues. An article in the April 16, 2003 Journal of the American Medical Association by Donald M. Berwick, "Disseminating Innovations in Health Care," is must reading on this topic.

Not a drill

The national TJR study revealed the similarities among better performers that constitute much of their underlying structures. But they're not locked into some kind of precision drill; rather, they are naturally responsive to their own locales and cultures and histories.

While looking for the common threads that signify better performers, differences were important. Their paths to success do not constitute a single, paved highway; better performers differ from one another in many important ways:

* They use implants from a range of vendors.

* Their contracting strategies vary from ceiling pricing, capped pricing, limited vendors, to bid process, etc.

* They demonstrate a wide range in their total cost per case.

* Most have community outreach, but some do not.

* Most, but not all, have patient education programs.

However, none paid cash incentives to physicians to achieve change, and none of those better performers employed their surgeons.

The most important single aspect to emerge in reviewing successful TJR programs was the emphasis placed by better performers on engaging their physicians in the program through explicit and effective "give-to-get" strategies.

Management action that improved working conditions while impacting patient outcomes and the efficiency of the physicians was key. In exchange, the administration received participation in problem-solving and standardization of both clinical and business practices, including managing implant variation and the introduction of new technology.

RELATED ARTICLE: ABCs of TJR

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DVT Rates

Top Performers     0.4%
Top Quartile       0.5%
50th Percentile    0.9%
75th percentile    1.0%
Bottom Percentile  1.1%

30 day Readmission Rate

Top Performers     3.6%
Top Quartile       3.7%
50th Percentile    5.0%
75th Percentile    5.3%
Bottom Percentile  7.3%

Discharge to Home or Home Health Rate

Top Performers     64%
Top Quartile       61%
50th Percentile    52%
75th Percentile    46%
Bottom Percentile  35%

Complication Rates

Top Performers      4.8%
Top Quartile        5.8%
50th Percentile     6.8%
75th percentile     8.3%
Bottom Percentile  10.2%

Wage and Severity Adjusted Cost

Top Performers      $9,672
Top Quartile        $9,964
50th Percentile    $11,522
75th Percentile    $11,990
Bottom Percentile  $13,743

Severity Adjusted ALOS

Top Performers     4.1
Top Quartile       4.3
50th Percentile    4.4
75th Percentile    4.5
Bottom Percentile  5.2

Wage and Severity Adjusted Variable Cost

Top Performers     $5,533
Top Quartile       $5,769
50th Percentile    $6,924
75th percentile    $6,902
Bottom Percentile  $8,072

RELATED ARTICLE: Methodology for TJR Review Project

The national study of TJR better performers consisted of an evaluation of programs through outcomes data analysis and field observations. The outcomes analysis was performed using a subset of subscriber hospitals in Premier, Inc.'s clinical and cost comparative database. All hospitals that provided data to the database during four quarters of 2001 were considered and then sorted for ranking segmentation.

Only those hospitals performing more than 100 TJR procedures during that period that also apply procedure-based accounting systems were included in the project sample pool. This resulted in a first-cut sample size of 165 hospitals.

Statisticians from Premier's informatics division used a multi-variable algorithm on the first-cut sample, scored balanced outcomes of care and cost for DRG-209 (TJR), and rank-ordered the sample into top decile performers, weighting cost and quality equally. (Clinical indicator criteria used in this process mirror the criteria used by The Center for Medicare and Medicaid Services (CMS) and the Joint Commission on Accreditation of Healthcare Organizations.)

The first-cut sample was examined to ensure that the data provided were error-free and statistically valid, resulting in the removal of several hospitals from the sample. The top 10 remaining hospitals in this second cut were invited to participated in the TJR better performer project.

Detailed pre-survey questionnaires were used to gather clinical and financial data prior to on-site visits by a team clinicians. The data were used to capture the patients' complete acute-care experience, mapping the process flow of a TJR patient from the physician's office through his/her hospitalization and discharge. Data was also collected on TJR medical devices currently used by the hospital to map how the implants enter the materials management flow, how they are priced and charged for, and the percentage of reimbursement received by case, physician and implant classification.

Data gathered were confirmed by direct observations and discussions by a multidisciplinary team whose members gathered data and narrative information through in-depth interviews with administrators, high-volume orthopedic surgeons, clinical and financial staff members during site visits with each hospital.

On-site survey tools--composed of questionnaires for each clinical and financial area--were developed to allow team members able to take direct observations while providing consistent and thorough comparisons among the 10 hospitals.

Through the pre-survey questionnaires and field visits, recurring patterns and processes correlated with better clinical and cost outcomes were identified. Reports were prepared for each participating hospital with a confidential comparison of the hospital's orthopedic prosthetic device product and supply management approaches to those of other superior performers and Premier's national comparative database.

RELATED ARTICLE: Who are the physician champions?

Remember, your physicians think of the hospital as their workshop; it may be easier to align your management objectives with theirs if you keep this construct in mind.

In this scenario, the vice president of medical affairs or chief medical officer or other physician executive is not the primary change agent--the physician champions play that role with their colleagues. However, management has an essential supportive part to play, and may also assist in grooming younger physicians for leadership.

This champion role is not a job with a title or a box on the organization chart or any direct remuneration, either. And don't assume that your highest-volume physicians are necessarily your champions; they may be too busy operating to have time for or interest in leading.

Here are some recognition "markers" of physician champions:

* Has a reputation as a change agent

* Mentors or coaches others

* Takes prudent risks to get things done

* Has sound judgment under stress

* Has earned a leadership role, not merely elected or appointed

* Has successfully implemented new clinical processes

* Is future-oriented and takes ethical positions

* Has good collegial relationships with nurses and other clinical professionals

* Focuses on outcomes and is data-driven

* Can reconcile differing viewpoints

* Has high energy and is resourceful

* Looks on setbacks as opportunities

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By Michael B. Guthrie, MD, MBA, Girard F. Senn, RN, MS, CNAA and Pamela M. Froneberger, RN, BSN

Michael B. Guthrie, MD, MBA, was previously a senior executive with Premier, Inc. and is now executive in residence, University of Colorado School of Business, program in health administration. Guthrie is a Fellow of the American College of Physician Executives and a past president of ACPE. He can be reached at [e-mail]

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Pamela M. Froneberger, RN, BSN, is director of physician relations and physician preference product applications for Premier, Inc., and is a Fellow of the American Society for Healthcare Materials Management. She can be reached at [e-mail]

Girard F. Senn, RN, MS, CNAA, is managing principal, clinical supply utilization, in Premier, Inc.'s supply chain performance iImprovement division. He can be reached at [e-mail]