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Healthcare Performance ImprovementApril 2009 wahcnews.comThe Process Improvement ImperativeBy Bonnie Jasman Cech, MHSAPresidentCech Systems, Inc.in leadership. This shift in focusis neither easy nor quick, but thelong term benefits are well-worththe investment. Using lean principles as a foundation, healthcareorganizations can do somethingthat matters right now: implementimprovement in their core business processes and move towardsa more efficient overall deliverysystem.Specify value from the patient’sperspectiveNowhere in our society is processimprovement needed more thanin health care. Growing at an annual rate over 6%, health carecosts are outpacing inflation andwages. The media is focusing alot of attention on inadequate access, service delays, error ratesand less-than optimal outcomes,but significant labor shortages andcare-giver burnout (including physicians) also threaten quality. Atthe same time, baby boomers growolder, the elderly live longer, andthe prevalence of chronic diseaseincreases; the industry faces significant increases in demand butlimited resources to manage it.While there is no panacea for allthat ails the healthcare system,physician groups and hospitalscan achieve dramatic improvements in efficiency, quality, andsatisfaction by embracing systemlevel process improvement. Successful implementation requires achange in methods -- and a changeLean process improvement can bedescribed as the least wasteful wayto provide value to your patients.The critical starting point then is tounderstand value, not as we havetraditionally defined and measuredit in healthcare organizations (e.g.,revenue centers, asset optimization, technologies), but as specified from the patient’s (customer’s)perspective.they begin to clearly focus on aservice line, and ways to increasethe value of that service for the patient.Streamline primary patientpathways end-to-endAs we shift our thinking fromfunctions or departments to service lines, it enables us to definethe primary value streams withinthe core business. Through theprocess of mapping the valuestreams, we can begin to see clearly the individual steps of the process from beginning to end. Witha clear view of each step, we areready to streamline the process –to eliminate the hidden waste andimprove the flow of value to thepatient.The key to streamlining your corebusiness processes is to involveand engage the people providingthe service - the physicians andfront-line staff. Armed with theproper tools, techniques and training, they become your improvement experts to identify, quantify,and eliminate waste in their processes.How do you find out what patientsvalue? Ask them. Conduct focusgroups or interviews with patientsand ask targeted questions aimedat understanding the underlying(emotional) attributes they ascribeto the value of your services. If Core business process improveyour budget doesn’t allow for a ment - specifying value from theformal interview process, start patient’s perspective and streamwith the patient feedback informa- lining patient pathways - is antion you already obtain through enlightening experience. Notpatient satisfaction surveys, pa- only is there clear benefit to thetient complaint reports and patient patient (e.g., better access, fewersuggestion systems. Categorize service delays, quicker responseand quantify the information to be- to requests, higher quality), butgin understanding value. It’s only the organization benefits as well.when healthcare organizations Physicians and staff experiencefundamentallyrethink value fromVisit wahcnews.comfor current career opportunitiesthe perspective of the patient that Please see Improvement, P10-6-

Count onour healthcarelaw solutions.Your healthcare business operates in a complex environment. Miller Nash’steam of healthcare attorneys has the specialized knowledge and depth ofexperience to help successfully navigate the constantly changing issues andchallenges you face.Please contact: Bob Walerius bob.walerius@millernash.comSpecializing in: Regulatory Compliance Board Governance Physician Credentialing Fair Hearings Labor and Employment Joint Ventures Physician Recruitment & Contracting Real Estate206.622.8484

Healthcare LawWashington Healthcare News April 2009 wahcnews.comIs Concierge Care Right for You?By Leslie M. MeseroleHealthcare Attorney and PartnerMiller Nash LLPPrimary care physicians are declining in number, largely becauseof heavy patient loads, poor reimbursement levels, and insufficienttime for properly evaluating patients. One option for physicianswishing to continue practicingin primary care is to reform theirpractices into what is known as"concierge care." The underlying philosophy of concierge careis that of a “membership practice”in which patients pay an annualfee in exchange for enhanced physician services, such as same dayappointments, longer appointmenttimes, 24-hour telephone access tophysicians and coordinated referrals to specialists. Physicians maylimit the number of patients in thepractice, self-regulate the timespent with each patient, and determine the membership fee amountcharged independent of payor reimbursement rates.Utopia in primary care? Soundslike the ideal practice, right? Notso fast! Concierge care's growtharound the country has promptedscrutiny under the watchful eyesof Medicare, the Office of Inspector General (the "OIG"), and various state government agencies, including the Washington Office ofthe Insurance Commissioner (the"OIC"), resulting in new guidance,rules, and state law.Medicare and the OIG. In March2002, Medicare published guidance on concierge care in general,stating that concierge care membership fees collected from Medicare beneficiaries may constituteprohibited charges if those chargesare for services already covered byMedicare. In addition, the OIG issued an Alert in March of 2004,stating that “when participatingproviders request any other payment for covered services fromMedicare patients they are liablefor substantial penalties and exclusion from Medicare and other federal healthcare programs.” In other words, participating physicianswho charge Medicare enrollees forservices already covered by Medicare, other than the applicable deductible and coinsurance amounts,are violating the physician’s assignment agreement, in whichthe physician agrees to accept theMedicare fee schedule amount forall covered services provided toMedicare beneficiaries. Non-participating providers must also observe this guidance, because eventhough non-participating providers do not accept the Medicare feeschedule amount as payment in fullfor covered services, they are stilllimited as to the amount they maycharge Medicare beneficiaries.They really mean it! In 2003 and2007, the OIG entered into settle-8-ment agreements with physiciansoperating concierge practices onthe basis that the physicians hadovercharged beneficiaries in violation of the physicians’ assignmentagreements. The OIG asserted thatthe physicians had charged Medicare beneficiaries a membershipfee for services already coveredand reimbursable by Medicare.The settlement agreements, however, did not specify which services were covered. The result: acompliance challenge and a desirefor more clear-cut guidance.Opting out is an alternative. Tosteer clear of these overpaymentissues, physicians may opt out ofMedicare altogether by agreeingto not submit for two years claimsfor reimbursement of any servicesprovided to Medicare beneficiaries. By opting out, physiciansare not limited in what they maycharge concierge care patients forservices, whether or not the services are covered by Medicare.What’s all this talk about insurance? In 2007, the WashingtonOIC published an opinion in support of proposed concierge carelegislation stating that providerswho practice concierge care assume risk by accepting prepayment for an unknown amount ortype of services, and are thereforeconsidered health care service contractors subject to OIC regulation.However, the OIC went on to saythat given the limited amount ofrisk and potential harm to consumers, the full scope of regulation isnot practical or warranted. In theend, the Washington legislaturePlease see Concierge, P11

Because.It’s Rocket Science(or at least it feels that way.)Selecting a health plan for your small businessshouldn’t take a PhD in physics. Introducing “Solutions”new small group coverage from KPS Health Plansthat makes taking care of your employees easier thanlaunching a Saturn V rocket from your garage.4 Easy-to-follow plan designs4 Competitive rates4 Preventive care emphasis4 100% coverage after office visit copay4 On the job coverage for owners and officers4 All plans include pharmacy coverageAnd, with KPS’s network of providers, including morethan 47,000 in Washington state alone, you know youwill be covered wherever life takes you. Contact yourbroker or KPS directly for more information.Blast Off!There’swww.kpshealthplans.com 360 478-6786 800 628-3753

Improvement, from P6increased satisfaction with theirwork, while at the same time increasing throughput, productivity,and overall profitability.Identify organizational changeneeded to sustain improvementThe activities outlined previously require new methods (such astechniques for specifying value,mapping value streams, definingand eliminating waste). The thirdactivity, identifying the changesneeded to sustain improvement, requires new leadership. It involvesrethinking organizational behaviorand development, plus management systems and structures. Itinvolves rethinking the traditionalroles of department managers, forexample, and introducing the concept of value stream managers. Itinvolves the design of new systems to manage the improvementprocess itself, to monitor the valueWe hate lawsuits. We loathe litigationWe help doctors head off claims at thepass. We track new treatments andanalyze medical advances. We are theeyes in the back of your head. Wemake CME easy, free, and online. Wedo extra homework. We protect goodmedicine. We are your guardian angels.We are The Doctors Company.The Doctors Company is devoted to helping doctors avoid potentiallawsuits. For us, this starts with patient safety. In fact, we have thelargest Department of Patient Safety/Risk Management of anymedical malpractice insurer. And, local physician advisory boardsacross the country. Why do we go this far? Because sometimes thebest way to look out for the doctor is to start with the patient. To learnmore about our medical professional liability program, call our Seattleoffice at (877) 673-2101 or visit us at www.thedoctors.com.A2614 WAHealthcardNews.indd 1-10-3/2/09 4:24:27 PMstreams, and to ensure that theimprovement efforts are linkedto the over arching strategy anddirection of the organization. Itinvolves rethinking the flow ofinformation throughout the organization, and how this knowledgeflows to the people closest to thework - the physicians, clinicalstaff, schedulers and receptionists performing the core businessprocesses. In other words, it requires the organization to developthe capacity to keep the primarypatient pathways clear and ensure improvement results are sustained.SummaryWhile the healthcare industryfaces its share of challenges, corebusiness process improvementprovides an exciting opportunityfor healthcare organizations toenhance their competitive position and ongoing ability to thrive.Just as important, continuingdedication to finding better waysto produce value-added servicesis what our industry needs nowmore than ever.Bonnie Jasman Cech, MHSA isthe President of Cech Systems,Inc. where she has developedan innovative systems approachto applying lean principles.Through CxInSight, Cech Systems, Inc. helps medical organizations implement resultsdriven process improvements,supportive management systems(tools and metrics), and effective training programs to sustainthe improvement results. Bonniecan be reached at 206 524-7710or bcech@cechsystems.com. Tolearn more about Cech Systemsor CxInSight, visit the web siteat www.cechsystems.com.

Volume 4, Issue 4charged more than the membership fee for the primarycare services. Concierge carephysicians may bill insurancecarriers and patients for services provided outside the scopeof the primary care servicesdescribed in the written agreement with the patient. Concierge, from P8approved legislation codified atRCW 48.150, adopting rules forthe operation of concierge carepractices.Washington law. Those physicians who decide that conciergecare is their desired form of practice should carefully consult theWashington statute; failure tocomply constitutes unprofessionalconduct enforceable under RCW18.130.180. These requirementsinclude: Concierge care physicians mayprovide only primary care services, as defined in the statute,in exchange for the membership fee by entering into a written agreement with patientsthat must describe the servicesto be provided and be terminable at will by the patient. Insurance carriers may not bebilled and patients may not be The membership fee must becharged to patients monthlyand may not be increased morefrequently than annually. The concierge care practicemay not accept or declinepatients based on health status, race, religion, disability,education, economic status,or sexual orientation, and themembership fee may not varybased on health status or sex.Focus on the future. Both CMSand the Washington state government are monitoring conciergecare. Washington concierge care-11-practices must submit annual reports to the OIC. In December2012, the OIC will submit a studyto the legislature analyzing whether concierge care improves or reduces access to care, increasesconsumer costs, and provides adequate consumer protection. CMShas implemented an agency wideeffort to monitor Medicare beneficiaries’ access to care, including afocus by the Seattle regional officeon the impact of concierge care onaccess to care. The future promises evolving regulation, whichmandates careful attention to compliance.Leslie M. Meserole is a healthcareattorney and partner at MillerNash LLP. She can be reached atleslie.meserole@millernash.com.Miller Nash LLP is a multispecialty law firm with offices in Seattleand Vancouver Washington, andPortland and Central Oregon.

Healthcare AdministrationWashington Healthcare News April 2009 wahcnews.comAnticipating the Trends: Current Challenges We Face as the State’s LeadingMedical Professional Liability InsurerBy Susan Peskura, CPCU, RPLUAssociate Vice President,Marketing & SalesPhysicians InsuranceA Mutual CompanyNo one says it’s easy being on top.Physicians Insurance A MutualCompany insures more physiciansthan any other insurance carrier inWashington. Having physicianscontinue to entrust their coverageto us requires diligence in understanding health care delivery andcontrolling claim costs with practical and effective risk managementtools and patient safety programs.It also requires a conservative approach to managing our investment portfolio. And to stay on top,the company must provide industry-leading customer service.2009 premiumsIn 2009, thanks to a decline inclaim frequency, our member insureds received a 10% decrease inpremium rates while continuing tobe eligible for our ACCOLADESloss experience credits, which canreduce premium by another 5%up to 20% for members with excellent loss histories. In 2008, thecompany was also able to returndividends to its members totaling 5,000,000.Cautious reserve managementPhysicians Insurance manages itsassets conservatively. While otherfinancial services organizationssuffered weighty blows due toinvestment in derivatives or otherwise risky securities, more than90% of our company’s assets areplaced in a highly rated and welldiversified bond portfolio. Therest is invested in equity mutualfunds and short-term investments.This conventional approach to asset management resulted in positive returns on investments andcontrasted significantly to overallindices, which were down significantly in 2008.Risk management and patientsafety initiativesOur focus in risk management andpatient safety education lies inaugmenting providers’ own practice standards with good patientcommunications skills-buildingprograms, practice safety audits,and patient record-keeping tools.Our new AVERT (AdVerse EventResponse Team) training programincorporates enhanced physician/patient communications skillsbuilding training. It also promotesa patient-focused approach to adverse outcome management. We’realso launching Patient SAFE (Patient Safety Assessment for Ev-12-ery Medical Practice), an auditingmechanism clinics can implementto regularly evaluate their patientsafety practices. Patient SAFEuses ten parameters for assessingquality care, including maintainingdetailed medical records, securinginformed consent, and recording known allergies. These riskmanagement programs, as wellas numerous Continuing MedicalEducation courses we provide forour members, are designed to helpphysicians achieve their professional goal of outstanding patientsafety while also lessening the frequency and severity of claims.Regulatory reporting dutiesChallenges facing both insurersand self-insured organizations aretheir regulatory reporting duties.For many years, payers of medicalprofessional liability claims havereported those payments to the National Practitioner Data Bank andthe Medical Quality AssuranceCommission. Last year, all payersof medical professional liabilityclaims began reporting outcomesto the Washington Insurance Department. This year, the Center forMedicare and Medicaid Services(CMS) is requiring all liabilityinsurers and self-insured organizations that pay liability claimsto register with CMS and reportall their claim payments made toMedicare beneficiaries. Additionally, both insurers and self-insuredorganizations have a responsibility to assure that their physiciansPlease see Trends, P16

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KPS Health Plans: Nimble and Responsive to Changing Health Plan Trends 14 Healthcare Interview: Ken Provencher, CEO of PacificSource Health Plans 18 Healthcare Finance: Private Placement Securities: Another Option for Institutional Investments 20 Healthcare Facilities: Constantine Builders Announces Opening of New Surgical Building 22