Fixing Healthcare a shared services at a time
Healthcare Shared Services
Barbara Hodge: Lee, you took on a new role at Ascension Health last year. Can you tell me what it involves and why you were a good fit for Ascension?
Lee Coulter: Sure. Ascension Health is an amazing organization with a history that goes back more than 400 years. It’s a $16 billion health system. It’s not a third party payer. We run more than 80 acute care hospitals and another 400-odd health services delivery locations in 22 states. We have over 115,000 employees and touch almost 19 million patients every year. It’s very strategically run with long-term vision; the current strategic horizon was formed in 2005 and looks out to 2020. Every other year, the strategy goes through a refresh, and about four years ago, Ascension adopted a vision to lead the transformation of healthcare in America; a fairly bold goal, to say the least.
Healthcare, as you may know, is a very broken industry in the United States. Ascension recognized that to make good on leading the transformation of healthcare in America, transformation needed to begin at home – so the very first thing was to get its house in order. They were looking for somebody who could lead the transformation into a new operating model and hired me as CEO of Ascension Health Shared Services, which is a shared services organization of fairly epic proportion. It’s epic because of its breadth and its depth, not necessarily because of its size – with 600-700 people, we’re not that big in the world in terms of numbers of people; but we’re transforming Hire-to-Retire, Procure-to-Pay, Record-to-Report and Masterdata, putting 25 services into the center. In fact, we’re moving about 50-75% of the HR, finance and procurement functions, and putting them into the Shared Service Center. What’s different is that it’s not just the standard stuff of back office work you typically find in shared services, but we’re moving squarely into the mid-office and even the front office. A couple of examples would be that we’re putting recruitment and contingent staffing in the center; that impacts the hiring of 30,000-35,000 temporary and permanent jobs a year. We’re putting all of purchasing and requisitioning into the center; that’s $2.8 billion in direct spend and another half a billion dollars in indirect spend – and this isn’t just about gloves and toilet paper; this is about hip implants, pacemakers … it’s the real deal.
Ascension was looking for somebody who was familiar not only with shared services, but service delivery in multiple functions as well as in a core business environment. In addition to a long track-record in multi-function shared services, I actually started my career, with GE Healthcare, delivering mission-critical services to hospitals and health systems – so it was a good match.
So you’ve kind of come full circle?
Yes, I started in delivering technology services to healthcare and now I’m actually in healthcare, arguably my fifth or sixth industry, depending on how you count them. I’ve been in health science, technology services, financial services, CPG, and now healthcare. This is a really exciting challenge – it’s literally a "greenfield" build – I was employee number one. In fact, when we filed the paperwork with the State of Indiana creating the new shared services company, I had to use my cell phone number. When we opened up the bank accounts for accounts payable and payroll, I also had to use my cell phone number. These are bank accounts that we’ll be moving over $9 billion a year through. I was literally given a blank sheet of paper. We are not taking a core of some existing shared service and growing it. This is a build from the ground up.
Where did the vision for this project come from?
The vision came from a group of leaders led by Tony Tersigni, then CEO of Ascension Health and Bob Henkel, then COO (and just recently taking over as CEO) and the group of senior leaders known as the President’s Council. Ascension Health is a very interesting organization, Barbara, because it is faith-based, tax exempt, and not publicly held. This is all new for me, coming from a publicly held, for-profit based world. The services part – building a service center, shutting down operations, offshoring, insourcing, outsourcing … I know all that stuff; but the world of not-for-profit, faith-based healthcare means that you have a vital part of the organization called ‘sponsors’.
Our sponsors are the faith-based part of this, and the vision for this initiative really comes from them. While Ascension Health was only formed in 1999, our sponsor organizations have been around for over 400 years and literally invented healthcare. Our key sponsors are the Daughters of Charity, the Sisters of Saint Joseph, and the Sisters of Saint Joseph of Carondelet. If you look at the vision for Ascension Health you’ll see things like: access to care; holistic reverent care that treats the whole individual; care that leaves no one behind; care for the poor, vulnerable and disadvantaged; and these things have very specific metrics attached to them. The organization has absolute, numerical, quantitative measures around what they mean. These are not just goals, but a statement of purpose that is deeply ingrained in the organization.
So the vision to transform healthcare in America has very strong origins from within the sponsoring organizations and their commitment to the Vision, and Mission of Ascension Health.
And what exactly is this sponsoring organization?
You really need to delve back into the history of Catholic Health Ministry to understand this. Up until the creation of Ascension Health, most Health Ministries had an individual religious entity sponsoring an individual hospital or group of health facilities. Ascension Health’s origins started by gathering together a group of 28 different sponsoring organizations and their 28 different Health Ministries and putting them all together. The largest three I mentioned earlier. This initiative is one of the major steps in the overall transformation of what began as 28 different organizations into a single operating Health Ministry system leveraging shared services.
So you’re really sitting outside these organizations? It’s a shared services in its original definition ... is that correct?
Yes, that is correct. And when it was first put together 11 years ago, it was a bit like a holding company structure – a cash, capital and credit organization. Healthcare is very capital intensive, but there’s also a lot of cash flow if you can manage it well. Establishing a good credit rating and having access to capital is really important for a healthcare system, because of its need for capital. So during the first five years, it was about establishing a legal entity structure, which enabled them to have a single balance sheet, a single credit rating, and a single face to the banking community; despite the fact that there are 500 plus facilities and 600 legal entities. So there’s been a real transformation.
Ascension Health has created several external operations that serve the overall system. We have a biomedical group, TriMedics that is a separate entity, and Ascension Health Information Services, the IT organization that operates as a separate legal entity, as well as CHIMCO that provides financing and CHAN Audit Services. It is part of Ascension Health’s strategy to create companies that can serve it with a longer view to serving healthcare more widely. So we now have Ascension Health Shared Services; and we are also creating a procurement organization or GPO – Ascension has a very progressive strategy in this respect.
What kind of leaders are driving this extraordinary change?
The leaders of this organization are not what you would expect in a not-for-profit healthcare organization. These are people that could go toe-to-toe with any of the C-suite of any of the Fortune 250; accomplished heavy hitters with very strategic thinking. The sponsoring organization can lay claim – validated claim – to literally inventing healthcare. We actually have the first known documented treatment and discharge plan created by two Sisters with the Daughters of Charity back in France 440 years ago. This organization has very deep roots. Because of its long history, we think, and plan along timeframes that are uncommon for any organization.
Can you define the sponsoring organization?
It is a little bit complicated, if you aren’t familiar with such things. In September 2011, Ascension Health transitioned to a non-congregational Public Juridic Person (PJP) sole sponsorship model. The new PJP is known as Ascension Health Ministries and is authorized to carry out a ministry or apostolate in the name of the Catholic Church. Previously, there was a Sponsor’s Committee centrally, and each of the individual Health Ministries had its own Sponsor Committee. Today, Ascension Health as an organization has the PJP made up of lay leaders with representatives from the largest of the Catholic sponsoring organizations in addition to local sponsor boards in the individual ministries.
It sounds like a one in a million opportunity.
It is, and for people who get excited by building stuff, by starting something from nothing … this is am amazing opportunity. I definitely get my kicks from building and transforming and this has lots of both! We’re building something to transform ourselves to position us to lead the transformation of something larger still: healthcare in general. All of this is anchored in one of the noblest visions of any organization you could find.
I signed up for two reasons: one, to be on the vanguard of leading the transformation of healthcare in America; and two, because, for the first time in my career, I found a job I’m qualified for. All the jobs I’ve had before required a leap, meaning I jumped into something brand new. This role leverages everything I have done for the last 25 years, so it’s pretty cool.
Given the healthcare industry’s current state – how broad it is and how much improvement can be implemented – will you be sharing your learnings?
You know, I’m on the Global Steering Committee for SSON and on several other industry boards. I’ve always been active in the industry and it’s important to me to maintain this. When accepting the job, I told the leadership I was active as an industry leader, and I wanted to make sure they would continue to support that. I wanted to make sure I was free to share our story as we set about this work. They went one step further, and said: in order to lead the transformation of healthcare in America it is a requirement that we share our story and give away all that we learn to anybody who can use it.
I think that is crucial. If Ascension really wants to be transforming from the front end you have to tell the story, you have to show what can be achieved. Fixing healthcare, one shared services center at a time – what do you think?
What’s interesting here is the scope of our shared services transformation. The primary reason that the typical services you find in a center are there is because people are reluctant to put mid-office and front office processes into shared services. This is not without good reason. But that’s where the biggest benefits are: the ability to get not just the back office processes under control, but also core mid office and front office processes under control, and then to transform them in a predictable and controlled fashion for better effectiveness. That is where the big value is. David Prior is the Chief Medical Officer and he’s considered one of the top leaders in healthcare. He is very influential in the industry and with the government. He is one of the primary visionaries at Ascension Health. He is thinking about all of this in the much larger context of healthcare overall. He is thinking about a different framework for healthcare along a different timeline.
The core answers to fixing healthcare are centered in arming clinicians with data for decision-making. Today, we don’t connect the dots because every patient is unique and their conditions are unique; it’s hard to connect the data from assessment, diagnostics, treatments and outcomes, while all along the way tracking resource decisions that were made in support of the treatment of that individual. To arm clinicians with decision support data they can use at the bedside requires data from clinical operations combined with data from healthcare operations.
There’s another transformation that’s going on across the clinical landscape to get control over master data for patient assessment, diagnostics, treatment and outcomes. The data from that effort and from the operational transformation are all headed into something we call the Ministry Intelligence Center, where the long-term goal is for us to become more efficient in supply chain and in HR and some other stuff, to save money. But really, to transform healthcare, you have to change the way healthcare is delivered, which means changing it from, I’m going to say an almost artistic, practice to one that is primarily data based, where the decisions that commit a finite healthcare resource pool are made based on data.
It sounds a bit like the Japanese practices that were adopted 20 years ago, where every engineer at their station was responsible for maintaining and fixing their equipment; it wasn’t about data, it was about knowledge expertise or equipment expertise. But you’re talking about the same thing: enabling clinicians to make more decisions based on correct data – right?
Yes, and one of the examples that’s often used is the case of pace makers. There’s a manufacturer rep who is scrubbed up and gowned and in the OR, and once the surgeon has the chest opened up on the patient and sees exactly what’s going on, the salesman opens a case in which there are six or seven different kinds of pacemakers and they range in price from $6,000 or $7,000, to $100,000. In the absence of solid decision support data, you might guess which one is chosen more often than not. Generally the choice will be to use the more sophisticated device or technology, because there isn’t sufficient data that says that the long-term outcome for this patient is fully met by choosing a lesser device. So the resource decisions that are made today are made with an understandably conservative bias, based on a lot of factors that are mostly concerned with preventing a bad decision. Collectively, we are devoting an enormous amount of resource often without strong data justification.
It’s an intensely emotional and professional decision for physicians in a litigious society, and a really tough nut to crack. The answers lie in data; and, in order to get data, we first have to normalize and standardize the clinical practice, so that we can get data, and then line it up with all of the administrative and cost data so that we can eventually connect all of the dots and give that data to clinicians at the point of service.
The cool thing is … I tell people: be prepared; the team I’m hiring will be in project execution mode for, I don’t know, ten years at least.
It’s an industry in need of a really good fix, so I think a lot of people will be watching to see what kind of results you can achieve.
I think they will, and we look forward to being able to tell the story.