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THE ROLE OF THE CHIEF MEDICAL OFFICER has changed significantly in recent years. Traditionally, CMOs acted as high-level liaisons between the administration and the medical staff. But with the advent of value-based care, CMOs increasingly are taking responsibility for the entire range of issues that affect quality, patient outcomes, costs and financial performance. As the de facto "chief value officer" in many hospitals, CMOs now lead care coordination efforts, oversee population health initiatives and help develop cost-efficient delivery systems. (1)

However, there is one area of the hospital where many CMOs are uncertain how to manage value--the operating room. The surgical services environment presents many challenges in terms of divergent stakeholders, conflicting priorities, complex processes and technologies and, not infrequently, difficult personalities. CMOs without a surgical background --and even some who have one--can be reluctant to wade too deeply into OR operations and politics.

What can they do to overcome these challenges? CMOs who want to transition the OR to value-based care must focus their efforts where the marginal benefit of their work is greatest. Based on the experience of hundreds of top-performing surgery departments, CMOs and other physician leaders can achieve dramatic change in perioperative services by focusing on six key actions.


Most hospital surgery departments have a structural problem: lack of multidisciplinary team engagement in making decisions and setting direction. While surgical services depend on the efforts of physicians, registered nurses and ancillary providers, daily OR management is typically under the leadership of nurse managers alone.

Nurses are critical to the success of a hospital OR, and many nurse managers stand out for visionary perioperative leadership. However, nurses by themselves cannot enact change on the scale needed in many surgery departments. For example, buy-in from all stakeholders is critical to improving surgical safety. Nursing leaders frequently advocate for surgical timeouts, checklists and other safety practices. But if surgeons resist compliance, the OR nursing manager has little power to force a change.

A multidisciplinary department should be run by a multidisciplinary leadership group. Some leading hospitals have established collaborative OR governance by creating a surgical services executive committee that effectively serves as an operational "board of directors" for the OR. The ideal committee is composed of surgeons, anesthesiologists, OR nursing leaders and hospital administrators, including either the CEO or the COO. Surgeon members should represent key specialties, with a mix of well-established senior surgeons and younger surgeons who offer new thinking and energy.

All physician members should be active clinicians who have a strong professional stake in the success of the OR--no ex officio seats for department chairs. Physicians should make up the majority of members, and the committee should be co-chaired by a surgeon and an anesthesiologist. In addition, the group must be a committee of the hospital, not a committee of the medical staff or a subcommittee of surgery department leadership. Hospital administrative sponsorship is key to avoiding medical staff politics and focusing the committee squarely on the OR's total clinical, operational and financial success.

Establishing an executive committee is critical for hospitals that want to prepare their ORs for value-based payment, because a well-designed committee brings together all of the individuals needed to create effective change.

For example, consider the challenge of bundled payment programs such as the Comprehensive Care for Joint Replacement model. To succeed under this program, OR stakeholders must work together to coordinate and optimize clinical protocols, surgeon-driven costs, acute rehabilitation services and many other dimensions of joint arthroplasty. Without a structured multidisciplinary leadership group, orchestrating these components is an uphill battle. But with an executive committee, physicians, nursing managers and hospital administrators can work together to optimize every element.


Operational inefficiency in the OR leads to low use and high costs, so it often is a focus of high-level efforts to improve surgery department performance. These efforts typically focus on individual failings (real or imagined) as opposed to system design and management flaws. Nurses are blamed for inefficiency and ineffectiveness. Surgeons are faulted for case delays and overruns. Only rarely do hospital leaders identify one of the main causes of OR inefficiency--poor schedule design.

In most hospitals, OR time is allocated in blocks, but most ORs have poor control over how block time is structured and managed. First, blocks often are assigned collectively to surgical specialties or surgeon groups, and surgeons have no individual accountability for use. Second, blocks typically are too short (often only four hours), which increases transition-related waste. Third, block rules are weak and poorly enforced; surgeons can cancel procedures at the last minute without repercussions.

The overall result is significant waste in available procedure time, often leading to use of 50 percent or less. This always has been an issue for hospital ORs, but it is especially problematic under capped reimbursement. For example, if a hospital participates in the Bundled Payments for Care Improvement program for surgical spinal fusion, its payment per procedure is capped while operating costs for a day of OR time remain constant. In this environment, ORs managing only three fusions per room a day (rather than four) will struggle to maintain a positive operating margin.

The solution? Comprehensive block system reform led by the surgical services executive committee. First, establish minimum eight-hour blocks to enable efficient block management. Second, the committee should establish and enforce rules that encourage surgeon accountability. Surgeons should be required to maintain at least 75 percent use or risk losing their assigned block. This helps establish a sense of surgeon "ownership" of valuable block time that leads to careful stewardship. The committee also should build flexibility into the daily schedule by designating about 20 percent of all OR time as "open" rooms. This ensures access for nonblocked surgeons and urgent and emergent cases.

Other committee-driven changes can reduce wasted time by improving schedule accuracy. For example, standardizing scheduling forms and establishing a reliable case-time methodology (such as averaging case times for a surgeon's last 10 similar procedures) will ensure the schedule is as accurate as possible. Collectively, these changes can increase overall OR use to 85 percent or higher, helping ORs achieve critical cost efficiency.

As many CMOs can attest, block schedule reform can be a major source of contention among physicians. Many committees successfully run fair and transparent schedules, but they can be undercut when surgeons make "back-room deals" with hospital administrators. This is why hospital leaders must fully empower the committee to manage the OR schedule and back its decisions.


Non-multidisciplinary leadership, such as a nursing-only paradigm, also leads to challenges in daily operations. A nursing manager alone is, for example, unable to make the decisions necessary to ensure smooth day-to-day operations in perioperative services. The solution, again, is multidisciplinary leadership.

The most efficient surgery departments are run by a management duo consisting of a physician--ideally, the anesthesia medical director--and the OR nursing director. They work together to make real-time decisions about the complex operational issues that affect both nurses and physicians. They assign staffing resources, optimize anesthesia use, resolve schedule problems and generally put out "fires" that flare up in a busy OR.

One important tool in multidisciplinary management is the daily huddle--a daily 20-minute meeting attended by the anesthesia medical director, the preadmission nurse manager, the scheduling clinical coordinator, a materials management representative and other key individuals. Participants use this brief session to examine the schedule for the coming days. They verify medical clearance for next-day patients, finalize case time and room assignments, and optimize staffing and equipment decisions. The goal is to identify and resolve all clinical and operational problems that could lead to delays, cancellations, extended case times and other inefficiencies.

Operational inefficiency adds overhead costs that erode potential margin. A physician-nurse management team can create the efficiencies that keep department costs down, helping the OR achieve a key goal of value-based payment.


Often, the root cause of a poor surgical outcome is poor preparation. Patients go into surgery with unrecognized and uncontrolled risk factors, leading to high complication rates and extended ICU and inpatient stays. Top ORs reduce quality problems by establishing front-end processes for identifying and mitigating surgical risk.

Guided by the surgical services executive committee, clinical leaders should work together to devise standard protocols for preoperative testing, including:

* A preoperative testing matrix that specifies required presurgical tests based on procedure invasiveness and patient comorbidities.

* A standardized test result matrix that spells out normal and abnormal test values, clarifying which patients need further presurgical intervention and risk mitigation.

* Standard preoperative protocols for managing patient comorbidities and medications before the day of surgery.

Ideally, presurgical processes would be embedded within a preadmission testing clinic. Establish an algorithm-driven screening process to determine which patients do and do not require a PAT visit. Use the PAT clinic to drive patient education and optimize patients preoperatively.

In leading ORs, strong presurgical processes help ensure patients enter the OR with the best possible chance of a good outcome. For example, at Advocate Lutheran General Hospital near Chicago, Illinois, the OR staff uses well-defined protocols to manage surgery patients with diabetes mellitus. (2) Diabetic patients with blood glucose readings above defined thresholds are sent to their primary-care physicians or diabetes specialists for preoperative medical management.

In addition, all diabetic patients older than 50 are referred for blood urea nitrogen, creatinine and EKG testing. Any abnormal results (as defined by the department matrix) lead to specialist consultations for individual risk-control strategies. The protocol also includes detailed instructions for insulin dosing and timing on the day before surgery.

Under this protocol, Lutheran General has reduced its postoperative hyperglycemia rate to under 10 percent and its total perioperative hypoglycemia rate to about 25 percent. Controlling perioperative blood glucose is an important factor for reducing surgical-site infections, line-associated infections and other complications. Cutting these complications can, in turn, help a hospital perform better under the Hospital Value-Based Purchasing and the Healthcare-Acquired Condition Reduction programs, which penalize a range of perioperative complications.


Many OR quality problems trace back to inappropriate variation in care. In some instances, physicians and nurses might be unaware of evidence-based practices. In others, disorganization and miscommunication prevent the OR team from adhering to established procedures. To combat these problems, surgical leaders increasingly develop care pathways that hardwire evidence-based practices into patient care.

For example, a multidisciplinary team of surgeons, anesthesia providers and nurses at Johns Hopkins Hospital recently implemented a clinical pathway for patients undergoing colorectal surgery. (3) The pathway encompasses the entire continuum of care for this population, from preoperative evaluation through postoperative follow-up. It includes patient education, anesthesia protocols, OR management protocols and recovery milestones. This bundle of interventions reduced length of stay by two days and cut the SSI rate by more than 60 percent. It also led to a reduction in variable direct costs.

Care pathways also appear to reduce unplanned readmissions, one of the core goals of value-based care. For instance, clinicians at Case Medical Center in Cleveland developed and implemented an enhanced recovery-after-surgery pathway for open ventral hernia repair. Compared to a pre-implementation cohort, the pathway reduced 90-day readmissions from 16 percent to 4 percent. (4)

In addition, the perioperative surgical home model--a similar but broader concept that implies a more-comprehensive approach to care coordination (5)--might also help cut readmission rates. One for total joint replacement established at the University of California at Irvine achieved a 30-day readmission rate of 0.7 percent, (6) well below published national readmission rates for knee and hip arthroplasty. (7)

Showing collaborative, physician-led governance.


* Majority of members are active surgeons from representative

* Includes representation from anesthesia, nursing and hospital

* Uses data and gathers consensus to optimize the OR operationally,
strategically and financially.


Create pre-operative testing standards.
Establish clinical management protocols.
Develop evidence-based care pathways.


Reform block schedule to optimize use.
Lead efforts to control high-cost implants/supplies.
Develop efficiencies across the continuum of care.

The most comprehensive care pathways encompass alternative courses of care for appropriate patients. For instance, a care pathway for joint replacement might divert obese patients to a consultation for bariatric surgery. The goal is to optimize the overall patient outcome, not just the result of a specific surgical procedure.

Increasingly, health care reform is forcing OR leaders to extend care pathways beyond the hospital. New population-based payment models encompass both hospital care and post-acute care. Forward-looking ORs understand this means they need to help skilled nursing facilities and home rehabilitation providers control post-discharge spending. This is an organizational challenge, and it is only slightly easier for hospital systems that own post-acute providers.

CMOs can help address this challenge in several ways. First, work with representatives from both the surgical staff and local subacute providers to incorporate nursing facilities and home health into existing surgical care pathways. This can help reduce many quality and operational issues that increase patient costs. This includes working with stakeholders to strengthen surgery patient handoffs to post-acute care. This will help prevent many of the problems created by miscommunication following discharge. Second, work with nursing facility partners to raise the standard of care in the subacute setting. For example, create processes to monitor patients in these facilities daily to help avoid unnecessary days of care.


In the same way the committee must play a key role in managing surgeon access to the block schedule, the committee also must take control of department spending--specifically, spending driven by surgeon preference.

Surgical implants and other high-end supplies and equipment generate significant costs for hospitals, and hospital leaders often find it difficult to address OR cost issues. Many surgeons have strong preferences about everything from joint implants to sutures, but controlling direct costs is critical to succeeding under bundled payment and other value-based payment models. Some ORs have found surgeon cost dashboards can help.

The dashboards quantify direct costs for common high-cost procedures, such as joint replacement surgery, valve replacement surgery and laparoscopic cholecystectomy. Monthly dashboards show average costs per surgeon, providing Medicare reimbursement as a comparative profitability benchmark. While physician costs are broken out individually, the results are anonymous. Surgeons are assigned identifier numbers only they know.

Dashboard reporting intends to harness surgeons' innate competitiveness in the service of cost control. No surgeon wants to be the department outlier when it comes to cost per procedure. Dashboards allow surgeons to see how they stand among their colleagues, spurring healthy competition to maintain cost efficiency. Dashboard reports also can spark dialogue among surgeons about supply choices, which helps high-cost surgeons learn about and adopt cost-efficient preferences.

In addition, the committee can help control supply costs on the front end by creating a value analysis committee. A well-functioning VAC should include active surgeons plus representatives from materials management, OR nursing and central sterile supply. By evaluating surgical supplies and implants in terms of both clinical benefit and costs, the VAC plays a key role in preparing an OR for value-based care.

As hospital reimbursement migrates from volume-based to value-based payment, CMOs and other physician leaders must play a key role in establishing OR priorities. In terms of both revenue and contribution margin, the OR is a hospital's financial heart. That's why strong OR performance is critical to success under value-based care. For CMOs who have responsibility for optimizing organizational value, the priorities are clear:

* Advocate for changes in the way the OR is governed and managed.

* Champion key operational changes to increase quality and efficiency.

* Increase OR stakeholders' accountability for achieving overall results.

Focusing on these priorities will help an OR improve quality, control costs and improve patient outcomes. That will increase the value of the hospital's surgical care while helping to ensure the organization thrives in the evolving world of value-based payment.

Jeffry A. Peters is chief executive officer of Illinois-based Surgical Directions, a specialty health care consulting firm aimed at driving change in operational, clinical and financial performance.

David Young, MD, is medical director of presurgical testing at Advocate Lutheran General Hospital in Park Ridge, Illinois, and medical director of Surgical Directions.


(1.) Hayes WS, Donatelli D, Fabius R. What concerns CMOs in the move from volume to value? Physician Leadersh J. 2(4):18-22, July-August 2015.

(2.) Young D, Nolan L. Protocols control glycemic levels in diabetic surgical patients. OR Manager. 32(7):20-3, July 2016.

(3.) Wick EC, Galante DJ, Hobson DB, et al. Organizational culture changes result in improvement in patient-centered outcomes: implementation of an integrated recovery pathway for surgical patients. J Am Coll Surg;221(3):669-77, September 2015.

(4.) Majumder A, Fayezizadeh M, Neupane R, et al. Benefits of multimodal enhanced recovery pathway in patients undergoing open ventral hernia repair. J Am Coll Surg. 222(6):1106-15, January 2016.

(5.) Cannesson M, Kain Z. Enhanced recovery after surgery versus perioperative surgical home: is it all in the name? Anesth Analg. 118(5):901-2May 2014.

(6.) Garson L, Schwarzkopf R, Vakharia S, et al. Implementation of a total joint replacement-focused perioperative surgical home: a management case report. Anesth Analg. 118(5):1081-9, May 2014.

(7.) Ramkumar PN, Chu CT, Harris JD, et al. Causes and rates of unplanned readmissions after elective primary total joint arthroplasty: a systematic review and meta-analysis. Am J Orthop. 44(9):397-405, September 2015.

Showing organizational silos and misaligned incentives.


Controls                Little input on     Little input on
staff and schedule      OR processes        OR processes

Dictates OR             Dictate material    Little control over
policies/processes      preferences         work schedule

Little guidance from    No accountability
physicians              for use


* Difficulty coordinating clinical processes
to improve quality and outcomes.

* Difficulty orchestrating operational processes
to increase efficiency and control costs.
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Article Details
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Title Annotation:FIELD REPORT
Author:Peters, Jeffry A.; Young, David
Publication:Physician Leadership Journal
Geographic Code:1USA
Date:Nov 1, 2017

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