Week 6: Hospital for Special Surgery/Seva Foundation

Week 6: Hospital for Special Surgery/Seva Foundation

” Hospital for Special Surgery/Seva Foundation”
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  • Coursework > Week 6: Hospital for Special Surgery/Seva Foundation > Video: HSS/SEVA
  • Coursework > Week 6: Hospital for Special Surgery/Seva Foundation > Video: HSS/SEVA 2
  • Coursework > Week 6: Hospital for Special Surgery/Seva Foundation > Video: HSS/SEVA 3
  • Coursework > Week 6: Hospital for Special Surgery/Seva Foundation > Video: HSS/SEVA 4
  • Coursework > Week 6: Philips-Visicu > Video: Philips-Visicu
  • Coursework > Week 6: Philips-Visicu > Video: Philips-Visicu 2
  • Coursework > Week 6: Philips-Visicu > Video: Philips-Visicu 3
  • Coursework > Week 6: Philips-Visicu > Video: Philips-Visicu 4
  • Coursework > Week 6: Philips-Visicu > Video: Philips-Visicu 6
  • Coursework > Week 6: Philips-Visicu > Video: Philips-Visicu 7

Coursework > Week 6: Hospital for Special Surgery/Seva Foundation > Video: HSS/SEVA

  • It is a health delivery organization, very famous, it’s called the Hospital for Special Surgery.
  • Most of their work involves orthopedic surgery on the shoulders, on knees, on the hips, on other parts of the body where bones are jointed.
  • The Hospital for Special Surgery has developed protocols for how they do the surgery.
  • You might think, big deal they’ve developed protocols, but they are working with independent surgeons who are not employed by the hospital.
  • Surgeons have a lot of points of view about how they perform surgery.
  • Carve a turkey? Ever watch somebody else carve a turkey? You know how many different theories there are about how to best carve a turkey? So now imagine if you’re a surgeon and you were implanting an artificial hip or shoulder or some other joint in the body, an elbow, a knee.
  • So the Hospital for Special Surgery somehow has worked with these famously independent, strong-minded people.
  • So they’ve taken these people who don’t even work for the hospital, and somehow they’ve convinced them and worked with them to develop protocols that they’ll all follow.
  • Following these protocols is very important, because it enables more uniform delivery of health care, fewer mistakes, more practice in learning how to do the same thing over and over again.
  • So first of all, the nurses and the physical therapists they work in teams there.
  • This is the person who helps you get out of bed after your surgery to start the very painful and difficult process of learning how to use your new joint, your new shoulder, your new hip, your new knee, your new wrist, your new ankle again.
  • So the nurses have categories, and they know that they can advance within this great institution, the Hospital for Special Surgery.
  • So in most hospitals, surgery is over there, and radiology is over here, and physical therapy is over there.
  • In the Hospital for Special Surgery everything is on every floor.
  • Wouldn’t you want to do that? If you’re working someplace that does something really well, wouldn’t you want to bring that skill, that discipline, that culture to other places? And because the Hospital for Special Surgery is so articulate about what they do, in other words, they don’t just wave their hands and say, we’ve got teamwork and we’ve got culture.
  • Who the heck wants to stay in a hospital for 11 days? First of all, you don’t want to be there.
  • When they went to the UK and they started a new Hospital for Special Surgery there, they greatly reduced the length of stay.
  • When they reduced the length of stay and they practiced their fabulous protocols, costs went down and quality went up.
  • So the infection rate, that’s a really worrisome thing about a hospital is you can get an infection.
  • Hundreds of thousands of people get infected in hospitals.
  • In the case of the Hospital for Special Surgery, there are no shares to give away.
  • So one of the choices is they could consult to other hospitals and help them be as good as the Hospital for Special Surgery, is or they could start a hospital management business.
  • This is a franchising business like Cathy where they say for certain fees we’re going to help you manage your hospital.
  • Hospital management you have a recurring fee for helping to manage the hospital.
  • Or they could start a chain of orthopedic hospitals.
  • I don’t know if you remember in the Battle of the Bulge, we looked at a chain of bariatric surgery centers.
  • Why not have a chain of Hospital for Special Surgery? I think there’d be a lot of places all over the world that would love to have a hospital that is of the quality and of the cost structure as HSS. Another thing they could do is they could do ad hoc consulting, somebody comes along says would you work with me, you like the story, and you do it.
  • It is when a hospital comes along and says we will jointly share in the profits and losses if you work with me.
  • The Hospital for Special Surgery could do a joint venture with SAVA.
  • Surgery could eliminate or correct their blindness, corneal surgery for example.
  • So SAVA started a program with 100 hospitals all across the world, Africa, South America, Asia, Europe, everywhere.
  • It trained these hospitals in how to do eye surgery.
  • So for $9 million a year it achieved these amazing results with 100 hospitals.
  • They did it with very well articulated steps about how to get a general hospital to adapt protocols that will help them do eye surgery very successfully.
  • I urge you to look at that tape and learn about how they do what they do at such remarkably low expenditures.
  • So the Hospital for Special Surgery among its

Coursework > Week 6: Hospital for Special Surgery/Seva Foundation > Video: HSS/SEVA 2

  • We have left as options they could do a regular consulting business, they could do the franchising, they could start a chain of orthopedic hospitals, they could do joint ventures like the one with Sarah Bloom that’s described in the case.
  • What about the consulting, hospital management, chain of hospitals, blah, blah, blah? How did they fare under the financing option? Well, to do a consulting business, you need consultants.
  • Hospital management, in contrast, you still need a group of people who can do the franchising and who can teach the franchisees to do what the Hospital for Special Surgery does.
  • You’ve got more certain revenues, because you’ve got a deal with a hospital, you have a franchise agreement, and you’re going to have not only more certain revenues, but a stream of revenues.
  • Hospital management, as long as the franchise is there, you can keep going.
  • Now you’re going to need billions of dollars to create a chain of hospitals.
  • If they had a chain of Hospital for Special Surgeries, their revenues are more than commensurate for the costs involved.
  • Of course, the problem is, how does the Hospital for Special Surgery, a non-profit organization, raise the billions of dollars that are required to build the chain of the hospitals? So what about doing JVs with hospitals? That’s kind of similar to the hospital management business, but it’s more risk, more reward.
  • Seva started 100 eye hospitals for $9 million a year.
  • So in terms of risk reward, the consulting business seems to me to be dominated by the hospital management business.
  • In the hospital management business, you have a stream of revenues rather than one of kind of revenues.
  • If they were for profit, I think the Hospital for Special Surgery could do so well with their skill set.
  • So where is that money going to come from unless they’re willing to convert to be for profit and get the billions of dollars it would take to build the Hospitals for Special Surgery all over the place.
  • How about the JVs with hospitals? That’s a little more risky than a hospital management business.
  • It’s gone from zero eye hospitals to 100 eye hospitals very fast with very little money.
  • Sadly, we’ve eliminated the chain of hospitals as options.
  • We have left the hospital management business, the JVs with hospitals, and then the JV with Seva.
  • How do the other of the six factors other than financing affect them? I think the structure would be fine with any choice that the Hospital for Special Surgery made except if it chooses to joint venture or do hospital management.
  • The hospitals with whom it does not affiliate may be angry and may retaliate in some way against the hospital with whom they choose to work.
  • How about public policy? Well, public policy understands that you need to build scale in health care delivery through integration of great ideas and great ventures like the Hospital for Special Surgery.
  • So whatever they choose to do, hospital management, JVing with other hospitals, working with Seva, they’re OK with it.
  • So the Hospital for Special Surgery, it is what I call a focused factory.
  • So Hospital for Special Surgery is a focused factory.
  • Can it really work with general hospitals that do everything for everybody? It’s very different to run a hospital that focuses primarily on joined surgeries than to run a hospital that does AIDS and heart disease and heart transplantation.
  • I think it would be difficult for the Hospital for Special Surgery to work with general hospitals, either as a joint venture or as a franchiser.
  • Seva it has shown how it can work with general hospitals and convert them so that they become very good, in their case, with eye disease.
  • How about the customers and these different choices? Customers love focused factories like the Hospital for Special Surgery.
  • If you’re a general hospital and you’re doing hundreds of thousands of different things, accountability is very difficult.
  • Maybe not you, it’s convinced me, that the only route for the Hospital for Special Surgery is to joint venture with Seva or just to say the heck with it.
  • Of course, if it were a for profit firm with access to capital, obviously the thing it should do is build chains of hospitals all across the world.
  • Is Hospital for Special Surgery in conjunction with Seva? Will it have a successful business model? “.

Coursework > Week 6: Hospital for Special Surgery/Seva Foundation > Video: HSS/SEVA 3

  • So what would this thing be, Hospital for Special Surgery with Seva? Well, it’s an integrator, right? It’s going to provide high quality care at lower cost.
  • There aren’t hospitals for special surgery all over the world.
  • Will it be valuable? No. So if the Hospital for Special Surgery partners with Seva, it’s going to do a whole lot of good.
  • Is this whole thing sustainable? You know, is this just a one-note-Johnny, and they do the deal, and then it falls apart? So what about the management? Is there compatibility between the management of HSS, the management of Seva? I don’t know.

Coursework > Week 6: Hospital for Special Surgery/Seva Foundation > Video: HSS/SEVA 4

  • REGINA E. HERZLINGER: So we’ve gone through this case study.
  • So what did the Hospital for Special Surgery do? As of now, they did none of the above.
  • Here’s something else that happened with the Hospital for Special Surgery.
  • Second, being nonprofit is sometimes a terrible constraint.
  • SAVA is nonprofit and it’s an extraordinarily mission-driven organization, like the Hospital for Special Surgery.
  • Third lesson, don’t assume that people are angels, even the very sophisticated board of the Hospital of Special Surgery composed of major New York City finance wheelers and dealers, they found out, to their dismay, that their CEO was acting fraudulently.

Coursework > Week 6: Philips-Visicu > Video: Philips-Visicu

  • Essentially what it means to do is to take patients out of the hospitals earlier, and to monitor them in the home.
  • VISICU has all kinds of cameras, and algorithms, and diagnostic techniques for monitoring these people.
  • What they enable is that the doctors and nurses, rather than running around visually from bed to bed- very time-consuming and costly kind of activity- can instead rely on the monitors, on the data that’s fed into computers about the health status of these people, and very smart algorithms that tell them, clang, you better get to this right away.
  • We can enable telemedicine by looking at people who’ve been discharged from the hospital earlier than they might normally be, and looking at them in their home settings.
  • So is this a good idea or not a good idea? And if it’s a good idea, Rosenfeld, who’s the lead pusher of this idea within Phillips, and his peers, they’ve got a number of decisions.
  • So one decision is, how do they price this? Do they price it by saying to the hospital, you’ve got to pay us x for installation of this hospital-to-home telemedicine system? Or do they price it by saying to the hospital, look at- you’re going to save a lot of money if you do this, and I’m going to go at risk? You’re not going to pay me, but I’m going to share the savings that we jointly create with you.
  • Second decision is, where do they start? So what kind of hospital should they go to so that they demonstrate the value of this hospital-to-home program? Should they go to a big hospital? Should they go to an academic medical center? These are usually big hospitals that have a lot of professors of medicine involved with them.
  • Should they go to a community hospital instead, which doesn’t deal with such sick people, but is a smaller kind of environment? So first question is, should they do this at all? And second question is, if the answer is yes, how do they actually do it? How do they price it? What kind of hospital should they go to first? And in addition, how should they staff it? So when they did VISICU, they provided their own staff to help the hospital adapt the VISICU model.
  • Is hospital-to-home- how well aligned is it with the six factors? Why don’t you have a group discussion of this? And let’s come back and talk about it.

Coursework > Week 6: Philips-Visicu > Video: Philips-Visicu 2

  • So if you get the patients out of the hospital earlier, there will be some clinicians who think- not without merit- that viewing this patient at home is not the same, thank you very much, as actually having that patient right there in the hospital.
  • There are some studies that show that telemedicine is cost effective, and some studies that show that it’s not cost effective.
  • What I do know is that in the United States, increasingly hospitals and doctors are no longer paid fee for service.
  • Let’s say a fixed price for everything they do for a patient with congestive heart failure who is in the hospital and is under their care.
  • If telemedicine is cost effective, it is to the advantage of that hospital to get the patient out of the hospital, and into the home.
  • I don’t know about you, the way I read the studies in the case is half a dozen of this, and half a dozen of that.
  • From the data we know about VISICU before Phillips acquired them, VISICU was very, very profitable.
  • Health care would seem to be a very promising area for them to invest in.
  • Whether it’s a better value for the money, and these things are expensive, millions of dollars to install telemedicine.
  • You’ll see oh, telemedicine, future of medicine, but don’t believe it, because the accountability data that would tell you one way or the other are still very, very primitive.
  • Anything good in here, about hospital to home? Well, one good thing is Phillips probably is very interested in this, because it’s the most promising part of their portfolio, and consumers likely, are in favor of it, We’re so busy.
  • I don’t know about you, but I would rather be in my home than in a hospital, sitting next to a guy who’s been shot by an Uzi.
  • Technology, I think this is very, very positive for Phillips.
  • So why don’t you go through this framework, and tell me whether you like the technology as much as I like the technology.

Coursework > Week 6: Philips-Visicu > Video: Philips-Visicu 3

  • I think the consumers are positive, and the technology is positive.
  • Phillips, whether or not the other of these six factors are positive- and they’re not, they’re not negative, they’re not positive they’re a question mark- Phillips really needs to take a bet on this.
  • So what about the technology? Well, what is the technology? It’s like Computers 101.
  • So there are lot of cameras, and other camera based instruments, and electrical instruments that take a look at your eyes, and they take a look at your skin, and they measure your heart, and they measure how much oxygen you have in your system compared to the drug that we looked at with Alexion, understanding the black box.
  • Yeah, I think we’ve got a lot of research, and we understand how this stuff works, and a lot of research that shows it works very well.
  • There are downside risks to this technology.
  • Of course, good as all these instruments are, they’re not that good, and there it is the danger of that some important clinical risk- clinical, I mean something happens to the patients at home- will be missed, and that patients can be at the home, and you’re going to have a longer time in being able to do something about it.
  • Let’s look at the financial considerations with this technology.
  • I think if it is adopted that doctors will have an easier time of monitoring their patients, and nurses who do most of the monitoring will also have an easier time of it.
  • So I think it’s not that this technology pits one kind of doctor against another kind of doctor, or doctors against nurses.
  • So if Phillips also acquired a firm in which people wore monitors around their necks, and if something happened to them, if they fell, for example, they have a system where the monitor alarms, and there’s a whole customer call center, which is responsive to those alarms.
  • Does this technology create a pipeline of other technologies? You bet.
  • Among the things, just for example, there are yarns that measure things that are going on around the skin.
  • This is a technology that is already being used, and it’s called Medical yarns.
  • If they can show that these technologies are cost effective, the regulators will be all over this.
  • Yeah, the regulators will like this, especially because it’s non-invasive technology.
  • Potential competition from other technologies? Could be.
  • One of the companies that makes these pills was just purchased for about $1 billion, but it’s still a very nascent technology.
  • How do you give it a shot? How do you price it? Do you staff it yourself? What kind of hospital do you go to? And before you do all that, is this a really viable business model? “.

Coursework > Week 6: Philips-Visicu > Video: Philips-Visicu 4

  • I believe Brian Rosenfeld, and the reason I believe him is he’s done this before.
  • Question number two- what am I? What kind of venture is this? And the reason we want to answer this question is there are business model issues that followed that are unique to different kinds of ventures.
  • So what do you think this is? Is this a consumer-facing venture? Is this an integrator venture? Or is this a technology venture? Lots of people think that this is a technology venture.
  • The real play here is that this is an integrator venture that promises to make health care quality more consistent, and by making it more consistent to lower the costs of health care, and to do it in a number of sites so that the cost of the telemedicine itself drops because they achieve economies of scale.
  • The reason it’s important to identify what this is is we want to make sure we’ve got the right kind of management for managing an integrator venture as opposed to a technology venture.
  • So one aspect of the business model is what kind of competitive strategy do they have? Are the a first mover? Are they a fast follower with managerial excellence that will learn from somebody else’s mistakes? Or are they the kind of strategy where they have legal barriers, patents, or other legal barriers to competition? Hospital to Home is a first mover strategy.
  • It’s a fantastic first mover strategy because once you have those computers and those diagnostic and monitoring instruments installed in the home and in the hospital, who the heck is going to come and tear that all out and replace it with something else? So even though the six factors were not so clear, I’m beginning to warm up to this thing.
  • So Philips has the cost of developing the algorithms and developing the connectivity between the computers and the monitoring instruments in the home, but that’s a more or less one time cost.
  • According to the exhibit, these savings are roughly around $26,000 by taking that baby out of the hospital and putting that baby in the home.

Coursework > Week 6: Philips-Visicu > Video: Philips-Visicu 6

  • INTERVIEWER: So Brian, how’s it going? DR. BRIAN ROSENFELD: It’s going very well.
  • We have sites all over the country that we are testing different components of the entire care continuum, from Banner Health down in Phoenix, where we’re testing this intensive ambulatory care program, which is very counter to the patient-centered medical home, which is getting a lot of press.
  • So it’s a different way of approaching care.
  • Maybe subsequent generations will be more tech and less touch.
  • So that’s some of those experiments where we’re experimenting with discharging patients from the Emergency Department into the home, utilizing different devices.
  • Phillips has a device for measuring white blood cell counts at the point of care.

Coursework > Week 6: Philips-Visicu > Video: Philips-Visicu 7

  • So I hope that you will go out and innovate the health care system.
  • Not going to happen from anybody except for people like you.

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