What health care can be an expanded role for financial leaders: glimmers of changes to healthcare governance, policy, and financing are on the horizon. How can you be a driver of change?

Healthcare Financial Management, June, 2005 by Paul H. O'Neill

* How do we know if they are able to learn from others--across the building and community and nation--instantaneously?

At a broader level, financial staff and their bosses need to take on the structure of hospital finance and payment. There is no other industry that keeps two sets of books as a matter of convention. Last year, Pennsylvania hospitals were paid 30 cents for every dollar billed--the exact level they expected. In my experience, asking a large segment of your employees to carry out a function every day that is a cynical fiction has a corrosive effect on an organization. If this is false, employees wonder, what else is? It also further obscures the ability of managers to effectively link inputs with outputs in their decision making.

Hospital CFOs should also be the internal champions of moving toward well-designed pay-for-performance payment systems. At too many hospitals and health systems, I hear rhetoric supporting a link between payment and quality of service, but then learn that the same leadership has negotiated fiercely with payers to take pay-for-performance off the table and arrive at a global annual expected budget based on increased ease rates.

And I do not understand how healthcare financial officers can tolerate formal processes for mitigating the risk of lawsuits that are profoundly counterproductive. The current system of secretive peer review inhibits rapid learning from mistakes and symbolizes the dysfunctional structures and approaches to things gone wrong in health care.

It's helpful to me to think of problems like this in terms of first principles. The first principle of health care for me is that patients should get the best possible quality of care, and it should be absolutely safe. That means that when things go wrong, the "things" need to be exposed and learned from, immediately, so that they won't be repeated.

It turns out that despite physicians' and hospitals' fears of lawsuits, openness about errors is what patients want most. A growing body of research and experience at places such as the U.S. Naval Medical Center and Kaiser Permanente show that when something goes wrong, patients and their families want to feel like they've been leveled with, receive a full apology, and be assured that actions have been taken to prevent the same problem from happening to someone else. They are less likely to sue if they get those things than if they don't.

Financial Leaders as Champions of Change

The financial community might champion two policy changes to advance these concepts. First is the implementation of a "blame-free" error learning system that can help healthcare workers learn from errors almost instantly across the country (enabling legislation is stalled in Congress). Second is the creation of a genuine economic incentive under medical liability laws for caregivers to use the system. If mistakes are reported to the learning system and the patient within 24 hours of discovery, and prevention measures are installed within a week, payments to the patient could be limited to their economic damages with some basic adjustments for fairness.