Something to teach, Something to learn


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This report aims to provide a snapshot of the thinking and learning that emerged from KPMG’s Global Healthcare summit held in Rome in October 2012. It also looks at some of the main implications of that learning for those who pay for healthcare, those who provide it and those who consume it.

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Something to teach, Something to learn

  1. 1. Something to teach,Something to learnGlobal perspectives on international
  2. 2. Something to teach, Something to learnbMarc Berg, KPMG in the Netherlands© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  3. 3. cA trulyglobaloutlookThis report aims to provide asnapshot of the thinking andlearning that emerged from KPMG’sGlobal Healthcare summit held inRome in October 2012.It also looks at some of the mainimplications of that learning for those whopay for healthcare, those who provide itand those who consume it.On the following pages we explore:• The emergence of the ‘activist payer’ –the role of this new breed of healthcarecommissioner in shaping system change,driving payment reform and influencingbehavior.• The dilemmas facing providers in a changingenvironment – to transact or transform, to growor to evolve, hospital or health system, passivepartner or active change-agent.• Patients as partners – changing expectations,shared decision-making, health literacy, lookingbeyond the rhetoric to make patient power a reality.The report concludes with a number of keyrecommendations for action and sets out someimportant next steps that we believe global healthcaresystems need to be thinking about in the comingmonths and years.© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  4. 4. Dr. Kevin Smith, St. Joseph’s Health System, Canada; Prof. Benjamin Ong,National University Health System, Singapore; Dr. Arthur Southam,Kaiser Permanente, USWai Chiong Loke, KPMG in SingaporeContentsIntroduction1Theemergenceofthe‘activistpayer’ 4Highervaluecanonlyberealizedbymovingcareupstream 4Paymentreformiskey 6Frompassivepayerstoactivistchange-agents 7Providers:transactortransform? 18Developingnewstrategies 19Puttingthestrategiestogether 28© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  5. 5. Gary Kaplan,Virginia Mason Medical Center, US Jagruti Bhatia, KPMG in IndiaPatientsaspartners 32Thecaseforchange 32Embracingthechange 34Conclusion38Systemicchange–makingithappen 38© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  6. 6. We all have something to teach and something to learn.Today,healthcare systems around the world are experiencing an eraof rapid and dramatic change as they struggle to cope withaging populations, technological advances, rising expectationsand spiralling costs.Practical answers to difficult questions are needed.With thisin mind, KPMG’s Global Healthcare practice brought 40 seniorexecutives and clinicians, representing some of the world’slargest healthcare organizations from 22 countries, togetherfor a conference in October 2012 to share their insights, ideasand outlooks.Despite the differences between their national systems, thedelegates found striking similarities in the way that payersand providers are rethinking their strategies and developingnew approaches. Overwhelmingly, participants agreed thatindividuals, organizations, systems and nations alike all havesomething to teach and something to learn.In particular, delegates identified five major trends reshapinghealthcare today:• Payers – whether governments, public sector bodies orinsurers – are becoming ‘activist payers’ by focusing on value,contracting more selectively, reshaping patient behavior andmoving care upstream to focus more on prevention.• Providers need to rethink their approach as it is becomingclear that major transformational change can no longer bedelayed. Some hospitals have the opportunity to transformthemselves into ‘health systems’, providing new forms ofmuch more extensive and integrated care and taking morerisk and accountability for outcomes from payers. Othersneed equally radical approaches to reshape their operatingmodels.• There is an imperative to engage patients in new ways sothat they become active partners in their care, rather thanpassive recipients.This requires new systems and ways ofworking – as one physician put it, clinicians need to changetheir role from ‘God to guide’.• The rise of the ‘high-growth health systems’, fromrapidly developing countries in Asia, Africa and SouthAmerica, is changing global outlooks. Unencumbered byIntroductiontraditional healthcare doctrines, they are innovating fast.It is a global phenomenon offering extensive learning,and opportunities for all.• Sustainable change and better value are increasingly beingseen as a direct result of new approaches to integration. Asurvey of our delegates revealed that 90 percent of payers,providers and professionals believed integration wouldproduce better patient outcomes, while three-quarterswere confident that it would cut costs.Our payer and provider participants (listed at the end ofthis publication) shared some anxieties over the long-termsustainability of their respective health systems and existingcare and business models, but remained confident that thesechallenges could be met.A central paradoxThe report looks at the major problems facing many healthsystems, as well as the scope for agile organizations toexploit new models and opportunities.It also highlights, however, a central paradox.While nearly all of the delegates expected ‘moderate ormajor business model change’ within the next five years,there was a consensus that too many systems are stillbehaving as though these changes only affect other people.They are focusing on minor transactional change rather thanthe major transformational reform required to address futurechallenges.Making the first step along a different path requires an act ofcourage, and committed leadership.This report is a call forsuch a journey of leadership.Ultimately, leaders and their organizations must learn to focuson patient value and outcomes.In the past, many healthcare systems have been fueled anddriven by supply-induced demand rather than concentratingon outcomes – what patients really need and want. Suchperverse incentives cannot provoke cultural change or theimplementation of best practices.Something to teach, Something to learn2© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  7. 7. Dr. Mark BritnellChairman and PartnerGlobal Health PracticeKPMG in the UKNigel EdwardsDirector of GlobalHealth SystemsKPMG in the UKShifting the balance from volume to value will not be easy.Change is hard, risky and painful. Providers will needsupport as they bear the brunt of systems’ streamliningand integration.Strong leadership will also be required to shift the focusfrom short-term goals to long-term ambitions.The bestleaders, while not shying away from the biggest challenges,will reduce complexity.They will look beyond process targetsand they will allow space for their organizations and staff toinnovate and experiment on the way to creating new modelsof care.We would like to thank our member firm clients, partnersand practitioners who have contributed their time and sharedtheir learning so generously.Anne McElvoy,The Economist; Mark Rochon, KPMG in Canada; Prof. Bastiaan Bloem, Radboud University Nijmegen Medical Centre, the NetherlandsWe hope you find this publication stimulating and lookforward to continuing this global debate. Do join us.Something to teach, Something to learn 3© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  8. 8. There should be little doubt that the worldis changing rapidly for healthcare payers,whether these are private insurers,sickness funds or, as is the case in manyparts of the world, governments.Whetherthey are dealing with subscribers,employers, taxpayers or ministries offinance the requirement is the same –higher quality and lower cost – even incountries such as India and China that arecommitted to increasing their spending. Incountries where people are largely payingout of pocket, policy makers will need tocreate mechanisms to ensure that thehealth sector is efficiently producing goodquality.Without this there are serious risksto the ability of many systems to continueto provide the current level of coverage.In the past, public payers played a largelyadministrative role, while private payersfocused mainly on reducing providerprices and managing risk. However,today we see both groups are beginningto recognize that the surest way towardslong-term viability lies in improvingthe value of the care produced, ratherthan the costs. As such, populationhealth management and value-basedpurchasing are increasingly becominga priority for public and private payers,while a focus on value means thatprivate payers are starting to realigntheir business models with the goalsarticulated in public policy.Essentially, payers are starting torecognize that providing better valueoften means ensuring that care isconsistently high in quality, lower incost, appropriate and timely.This willrequire both public and private payersto develop a very different approachto their operations.They will have tobecome, in the words of one privateinsurer, truly activist. In other words,payers will need to use their leverage tohelp redesign care delivery systems thathave existed in the same form for morethan a hundred years.This will requirepayers to experiment with innovativepayment models to move incentivestowards outcomes rather than inputs,build new alliances with consumers andpolicy makers to help providers reinventthemselves and focus much more onprevention. For government, this meansusing the full range of policy levers toimprove health, change behavior andincorporate health into all policies;for example in the creation of healthycities, dementia-friendly places, and theuse of taxation to create incentives forbehavior change.Higher value can only berealized by moving careupstreamWhile it may now seem like a given, ithas only been in the last decade thathealth organizations have recognizedbetter care – more effective, safer,more patient-centered – is usually lessexpensive care.1Indeed, by preventingdisease and the complications thatoften accompany chronic illness orunnecessary or avoidable care, we canimprove the quality of life for patientsand reduce the cost for payers.Put simply, care must be movedupstream, shifting the model from onewhere health systems prefer to waitfor conditions to become acute (andthen take care of patients in high-costmedical centers) to one where the focusis on preventing these conditions frombecoming acute in the first place.Thisincludes treating patients proactively intheir own environment. One aim of theThe emergence ofthe Activist PayerToday wesee both groupsare beginning torecognize thatthe surest waytowards long-term viability liesin improving thevalue of the careproduced, ratherthan the costs.1 Dr John Øvretveit: Does improving quality save money?The Health Foundation, 2009.Something to teach, Something to learn4© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  9. 9. health system should be to mobilize,activate and support a patient’s self-management in his or her own homeso that he or she does not have to beadmitted to an acute hospital center ornursing home, which, more often thannot, triggers further deterioration of thepatient’s condition.Delivery must be integrated andcoordinatedWhen viewed within the context ofmany of our current, highly fragmentedcare ecologies, the transition towardsvalue seems practically impossible,leading payers and providers to cometo the conclusion that care must bedelivered in a much more integrated andcoordinated way.“We need to move towards population-based care, following the patient.Thehospital is just a very small part of thecontinuum of care most patients need.Organizing our care around the hospitalturns the whole focus upside down,”said Sir Ian Carruthers, Chief Executive,National Health Service, South of England.Achieving this level of integration willrequire wholesale change that movessystems from a provider-led organizationof care towards a patient-led system ofcare.This, in turn, implies that the effortsof primary care professionals (GPs,home care, community nurses, andphysiotherapists) should be coordinatedwith those of the medical specialistsso that they work not just together, butalso with the patient, as a single teamfocused on a common goal.Case StudyChris Rex, CEO of Ramsay Health Care in Australia,articulates why some payment reform programs havenot met their objectives.He tells the story of a facility in his hospital chain which, formany years, had run a successful inpatient mental healthfacility within a certain region. But when policy makersintroduced a new capitated payment model for integratedmental healthcare, the situation rapidly changed.As the only inpatient provider in the region, the facility’sstaff started to create programs aimed at moving patientsoutwards into community care, reducing inpatient admissionsand the overall length of stay.This, in turn, improved revenueson a per capita basis, since outpatient care was less costlythan inpatient care.However, Mr. Rex points out that: “The program wassuccessful in that it moved an amount of care from theinpatient setting to the community but with an associatedadverse outcome for the inpatient facility.” This is becauseas care moved upstream, net income for the facility declined.And while this was clearly the desired outcome fromthe policy maker’s perspective, it did little to encourageinvestment and transformation from those providers whosecore business model was running inpatient facilities.Frances Diver,Victorian Department of Health, Australia and Chris Rex, Ramsay Health Care, AustraliaSomething to teach, Something to learn 5© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  10. 10. There is ample evidence to showthat by organizing care in this way,health systems and payers can bothimprove quality and reduce costs. But,to date, all signs point to the fact thatmost healthcare systems are still farfrom enacting the changes that willultimately help them realize thesebenefits.In our experience, organizations thatare able to make improvements inthe following areas should start toexperience major benefits in terms ofboth health expenditure and outcomes:• More proactive care for the elderlyand people with chronic conditions,including state-of-the-art acute carefor patients who have suffered fromstrokes, heart attacks, traumas orother acute events• High-level elective care that payssignificantly more attention to apatients’ preference for non-surgicalalternatives2• Top-level care for cancer (fromprevention and early detectionthrough to evidence-based treatment)• Integrated and personal maternitycare that is not overly-interventionistWhile the evidence in support ofthis transition may be clear, actuallydelivering it is more easily said thandone. Indeed, the current state of affairswithin most health systems seems toshow that while these insights are notnew, actual progress has been slow.Yetthere is one tool in the payers’ handsthat could quickly catalyze changeand create the necessary conditionsfor change to occur – that tool ispayment reform.Payment reform is keyThe reality is that, in most countries,current payment systems work directlyagainst the delivery of integrated care.Existing payment systems tend to payfor care activities within organizationsrather than rewarding the efforts tointegrate care across them. Similarly,instead of paying for outcomes orintegrated care paths, payment systemsusually pay for individual activitiesand other input characteristics (suchas beds used or the presence ofprofessionals).Yet most now accept thatthis approach actually stimulates highvolumes of these activities and inputcharacteristics, whether or not they addvalue to the system or the patient. Fewmarkets struggle with this challengemore than the US.”In the US, the payment system ishostile to any meaningful change,”Arthur Southam, ExecutiveVicePresident, Health Plan Operations,Kaiser Permanente, comments. “VirginiaMason almost faced bankruptcy bybecoming very efficient and lean andpreventing readmissions – it kills youfinancially. In the current system, youcannot expect high value care to arise.At Kaiser, we’re able to do the right thinglargely because we’re not paid by thepiece but by the package.”Addressing perverse incentivesThese same perverse incentives aboundin most healthcare payment systems.3Even those that have replaced their‘pay per piece’ system with a ‘pay peradmission’ or ‘per elective intervention’system seem to suffer from a clearsupply-induced demand effect. Similarly,the option to pay overall budgetsachieves little more, particularly when2 Mulley et al. 2012.3 Contracting Value: Shifting Paradigms – KPMG International, 2012.Perverseincentivesabound in mosthealthcarepaymentsystems.Something to teach, Something to learn6© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  11. 11. the system draws borders betweenorganizations whose services should bemore integrated.It is clear, therefore, that paymentreform – where perverse incentivesbecome more aligned by encouragingthe delivery of high-quality, appropriatecare – is a necessary condition for healthsystem transformation.But it is not a sufficient condition. Indeed,unless more is done to address theperverse incentives ubiquitous to ourpayment systems, any calls for leadership,cultural change or implementation of bestpractices will ultimately fail.Looking around the world, it becomesclear that there are several innovativecontracting models available to respondto these challenges. So while population-based and episode-based models eachhave their place (depending on the typeof care that is being paid for), there is a4 Contracting Value: Shifting Paradigms – KPMG International, 2012.clear move towards establishing a moreideal model.4How to get there, however, will varydepending on the characteristics of eachsystem. And while different histories,regulations, needs and payment systemswill all require different approaches, onething seems certain: success can onlybe achieved by moving away from payingfor inputs, and moving towards paying foroutcomes,or value delivered.From passive payers toactivist change-agentsFor this type and scale of change tohappen, payers themselves will have tobecome actively involved. As Brian Ruff,General Manager from Discovery HealthSouth Africa argues, ”Payers haveto reverse down their supply chains”.Moreover, they must become activelyinvolved in the required reorganizationof delivery patterns and organizationalstructures, so that higher quality carewill be delivered at lower cost.The reasons for this far outweigh simplealtruism. According to Mr. Ruff, “It isplain business sense that this expandsand sustains markets for us and soultimately is the best way to improvethe bottom line.”Among other things, Discovery Healthhas rolled out a coordinating programfor members with multi-morbidityand frailty by commissioning andfunding new multidisciplinary teams ofrehabilitation professionals. It is nowpiloting dementia services with willingcollaborators in South Africa, thusbeginning to fill a need which was notpreviously met, and is actively searchingfor other opportunities to stimulateproviders to add value. Discovery Healthis currently researching the financialfeasibility of privately provided, midwife-driven maternity services for their lowerincome members.Prof. Benjamin Ong, National University Health System, Singapore; Dr. Masami Sakoi, Ministry of Health, Labor andWelfare, Japan;WahYeowTan,KPMG in SingaporeSomething to teach, Something to learn 7© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  12. 12. Similar developments are taking place inthe US. RonWilliams, former Chairmanand CEO of Aetna Inc. notes: “Thepayer no longer sits back, just payingbills. [They are] involved in continuousquality improvement now, helpingproviders improve, and in researchingbest practices.They’re more and moreinterested in improving outcomes andthe care itself.”Similar views can be found around theworld. In the Netherlands, for example,activism has been around for a numberof years. As Pieter Hasekamp, CEOof Zorgverzekeraars Nederland (ZN),the Netherlands’ Association ofHealthcare Insurers explains: “Theactivist role of the insurer was at theheart of the system reform in 2006.That was the core idea: insurers wouldbe incentivized to selectively contracthigh-quality care and reduce costs,working with providers on how toreach this goal.”The story is the same for publicpayers. In the UK, where the NationalHealth Service (NHS) has set financialtargets, the newly formed ClinicalCommissioning Groups will be expectedto procure better care for less. Many arestarting to recognize that the only way toachieve this is by transforming how careis being delivered.“We know that we can [improve care],on a smaller scale: we have pusheddown waiting times and reducedvenous thromboembolisms, allthrough smart pressure and incentivesfrom public payer(s) to providers,”explains Sir Bruce Keogh, MedicalDirector of the NHS CommissioningBoard. Sir Ian Carruthers of the NHSadds: “We know that we now have todo it on a larger scale…yet we do notyet know how – although the ClinicalCommissioning Groups will have avital role to play.”It makes nosense paying fora perfect hipreplacement ifthe patient wouldhave been betternot getting theoperation in thefirst place.Source: KPMG International, 2013.Something to teach, Something to learn8ApproachFocusMicro focusSystem focusPopulation focusPatient/subscriberfocusSelective contractingRestricted networkshigh deductiblesMicro provider managementand utilization reviewUse payment systemsand pay for performancePayers as system plannersPay for population health outcomesIncentives for self managementStandardization and guidelinesTransactional andadversarial/coercivePartnership/value focusedFigure 1:The range of options for payers© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  13. 13. Leading strategies from‘activist payers’By examining the approach taken bysome of the more ‘activist payers’, welearn that the transactional strategiesthat have characterized this sector inthe past will no longer suffice. Moretransformational approaches will beneeded.The strategic choices for payersrelate to how they want to approachthe problem. Do they want to adopt atransactional approach which will oftenput them in an adversarial position inrelation to providers and subscribers?At the other end of the continuum is amore partnership-based model focusingon value.There is also the question ofwhere to focus. Payers can focus on thedetails of care delivery, on the system,on changing patient behavior and/or onpopulations. Below, we have set out howsome of these strategies are being turnedinto action by payers in different systems.Controlling the detail of utilizationand activityTechniques such as pre-authorization,strict treatment criteria and physicianprofiling (to target variation) are generallywell understood. But they can also beexpensive to operate and unpopular withproviders and patients as they focus onindividual episodes rather than value forthe patient.This not only fragments care,but also steers dangerously close tomicromanagement where payers take onrisks and responsibilities that should sitwith providers.Setting standards and treatmentguidelinesThe use of evidence-based guidelineslinked to payment mechanisms (such aspay for performance) also creates certainchallenges by taking the payer into clinicalterritory. As a result, some of the risksthat might be – in some systems – heldby providers, instead rest with the payer.Even with the capacity that most of themajor payers enjoy, scope for change isoften limited.There is an issue about howmany different approaches providers canmanage and the costs associated withthis.This suggests that more collaborationwill be needed among payers to eitheragree on standards or use those set bynational bodies.FierceHealthcare, a respected daily healthcare newsletter,reports that starting this year, hospitals can get more moneyfrom United Healthcare (an operating division of UnitedHealthGroup, the largest single health carrier in the US) if they takeaction to reduce early deliveries without medical cause, aswell as demonstrate lower C-section rates. Similarly, healthinsurer Aetna has adjusted prices for C-section surgeries andrenegotiated maternity payments for 10 hospitals to coverthe rising healthcare costs and risks associated with theprocedure. Hospitals also are seeing no reimbursements atall for elective early deliveries from certain insurers, includingSouth Carolina Medicaid program and BlueCross BlueShieldof South Carolina.Case StudyEd Giniat, KPMG in the US, in conversation with RonWilliams, Former Chair CEO of Aetna Inc. and member of President Obama’s ManagementAdvisory Board in the USSomething to teach, Something to learn 9© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  14. 14. Influencing the patient’s behaviorand choicesThere are several approaches thatattempt to change patient behavior bydirectly altering or restricting patientchoices. For example, by restrictingnetworks to only include providers thatdeliver better value (increased cost-effectiveness and/or quality) or useincentives – such as lower premiumsor deductibles.This encouragessubscribers to accept a choice of fewerproviders and many insurers have foundthat they can increase their negotiatingpower and reduce the use of high costproviders. For their part, payers are alsostriving to influence patient behavior.Some, for example, are providingpatients with advance information onprovider costs and quality or on theeffectiveness of treatment options.Others are encouraging patients toaccess lower cost services (such asgoing to primary care rather than thehospital) through co-payments andother incentives.PreventionWhile there are some experimentswhere payers incentivize subscribersto adopt preventative health behaviors,some payers have found that aninvestment in prevention may not payback, largely because subscribers oftenshift to other plans and new patients,who have not been in preventativeprograms, replace them.To overcomethis, a few payers are now working withemployers to provide services that gobeyond conventional insurance policiesby managing health and offering arange of preventative and behavioralhealth management solutions.Thiscan be linked to incentives such aslower deductibles, premiums, or otherbenefits.Using payment mechanisms tochange provider behaviorGenerally speaking, payers aregetting much better at using paymentmechanisms, incentives and contractualmechanisms to change providerbehavior.There is a clear benefit tocreating more bundled paymentsand following the patient over longerperiods of time (including recovery, inelective care and for a whole year inchronic care).There is also an advantageto integrating doctors’ costs in thesebundled payments. Likewise for primarycare, including basic home care forthe frail elderly, and fully capacitatedpayment models (paying a fixed fee perpatient in the population per year).Yet these tools may have started toreach the limit of their usefulness asPayersaregettingmuchbetteratusingpaymentmechanisms,incentivesandcontractualmechanismstochangeproviderbehavior.Case StudySafeway Stores (a large pharmaceutical chain in the US),Unite Here Health (a health benefits trust in the US), and theemployee health plans of some states and cities (includingCalifornia, Massachusetts, Minnesota and the city of LosAngeles) all use patient communications and strong patientincentives to move market share to higher-value providers.Harvard Pilgrim, a full service health benefits company, islaunching an online software application this year called NowiKnow, which ranks doctors and hospitals based on cost andquality.The online app will give members options, includingcost estimates for a procedure and the amount alreadyspent toward their deductibles that are specifically based ontheir health plan. Meanwhile, Blue Cross (a health insuranceorganization based in the US) is rolling out a new costestimator tool called Find a Doctor to help its members findproviders and compare out-of-pocket expenses for more than100 medical services. It is also preparing a ‘very plain Englishversion’ of its explanation of the benefits form.Source: New England Journal of Medicine, 2013; 368:1-3.Something to teach, Something to learn10© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  15. 15. Case StudyDiscovery Health South Africa’s Vitality program is designedto incentivize members to be more committed to wellness byearning points for exercising, eating healthy foods and hittingphysiological targets.This is done through a unique systembased on the science of behavioral economics whereinmembers are provided with a range of immediate incentivessimilar to a consumer loyalty program.The more points earned, the steeper the discounts inaccessing the rewards, with the top of the points rangeoften being free.These are typically lifestyle promotionssuch as deals on flights, hotels, car hire as well as discountsin many stores.Wellness promoting behavior is also madeeasy because the size of the member base allows Vitality tonegotiate discounted access to gyms and retail food outletsas well as a wide range of health promoting partners. Vitalitygoes much further than similar schemes in richer countries;currently the scheme is paying for itself.Delegates include: Glenna Raymond, Ontario Shores Centre for Mental Health Sciences, Canada; Lisbeth Norman, KPMG in Norway; Unni Hembre,European Federation of Nurses Associations, Belgium; Sir Jonathan Michael, Oxford University Hospitals NHSTrust, UK; Sir Bruce Keogh, NHSCommissioning Board; Sir Robert Naylor, University College London, Hospitals NHS FoundationTrust, UKSomething to teach, Something to learn 11long as we do not incorporate theoutcomes that these care activitiesdeliver. Importantly, this includes theappropriateness of the care: it makesno sense paying for a perfect hipreplacement if the patient would havebeen better off not getting the operationin the first place.For some payers, this means stoppingany mechanism that pays for volume,and shifting wholesale to full populationmanagement – an idea that lies at theroot of many of the Accountable CareOrganization initiatives in the US. Forothers, however, that shifts too much ofthe insurance risk to providers, and justrecreates clunky, old regional budgetsfor single provider systems – with allthe problems they entail.Whicheverpath is taken, providers will have toincreasingly take responsibility fora population or an identifiable groupof patients and take some of the riskthrough capitation payments or modelswhere one provider becomes thecoordinator of the patient pathway. In allthese scenarios, the outcome of care iswhat the providers must sign up for.Therange of options for payment modelsand the implications for the shape of theproviders is illustrated in the frameworkbelow in an analysis of the US market bythe Commonwealth Fund.© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  16. 16. We’relearningthatapartnership–withsharpedgeswherenecessary–isthebestmodel.Something to teach, Something to learn12LessFeasibleContinuumofP4PdesignSimple process andstructure measures;small % of totalpaymentCare coordinationand intermediateoutcomemeasures;moderate % oftotal paymentOutcomemeasures;large % of totalpaymentContinuum of organizationSmall practices;unrelated hospitalsIndependent practiceassociations; physicianhospital organizationsFully integrateddelivery systemContinuumofpaymentbundlingFull populationprepaymentGlobal caseratesMedical homepaymentsFee-forserviceMoreFeasibleThe payer as market managerPayers are starting to use selectivecontracting techniques to influence theshape of the provider system. In theNetherlands and the UK, for example,payers are using standards set byprofessional bodies to refuse to contractwith small volume providers and requirethe centralization of specialist services.In the US, Starbucks is moving key partsof its care for employees on the westcoast toVirginia Mason and patients areflown to Seattle for some cardiac andback surgeries. In some cases payersare acting as the strategic planners forareas in which they operate.This is wellestablished in the UK, Scandinavia, Italyand other systems with strong regionalor national authorities. In the Netherlandsthere have been successful examples ofinsurance companies acting in this wayto reshape the system.Blurring the payer/provider divideThere are several cases where aperceived market failure has forcedpayers to also take on a provider role.So while the payer/provider split maybe a neat concept to policy analysts,reality has shown that the conceptis becoming increasingly blurred,particularly in cases where payersare filling a gap in the market or usingnew providers to disrupt some of thecurrent patterns of service delivery. Forexample, one Dutch insurance companyset up integrated primary care practicesin areas where general practitionerswanted to participate, leading to provenSource:The Commonwealth Fund, 2008.Figure 2: Options for organizations in the US© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  17. 17. Something to teach, Something to learn 13cost reductions through better referraland prescribing habits.there aresome similar small experiments withthis in South africa. in the US, optumHealth Solutions works with employersto reduce costs through bettercare management, prevention andpsychological support to their insurees.A partnership with a healthytensionPayers may be wondering how theymight become more activist in theircurrent environment. Clearly, neitheran overly confrontational attitude of“i’m going to transform you”, noran approach that simply appeals toa sense of social responsibility toencourage cooperation will work.there is simply too much at stake.this does not, however, mean thatproviders and payers cannot create amodel for partnership that recognizesthe functional and healthy tensionbetween the two parties. Much likemany supplier relationships found inindustry, partnerships are a logicalmodel that allows providers and payersto rally around a common goal ofproviding first-class services to theirmutual clients.Data sharingin many countries, insurance companiesand providers have taken a strong firststep towards this goal by sharing theirdata. in many cases, professionalsand providers are simply unaware ofthe outcomes of their care, or howthese outcomes compare with theprices they charge, and so payers canmake a significant difference just byshowing them their results.this willrequire linked data sources betweenproviders and insurers, which areoften best managed through a trustedthird party (ttP) solution due toregulatory concerns.this, in turn, laysthe groundwork for incentivizing goodoutcomes. in time we might expectthese data sources to increasinglycover issues of prevention and usedata to facilitate and incentivize patientengagement in their own healthcare.”Such partnerships are beginning tocome to the fore in the US now,” saysron Williams, former Chair Ceo ofaetna inc. and member of Presidentobama’s Management advisory Board.“this is quite something, becausepayers and providers used to fighteach other to the ground until only afew years ago.that was the default,they were enemies.that is changingnow, enlightened payers understandcollaboration is the only way to createmore value.”Pieter Hasekamp, Ceo of theHealth insurers association in thenetherlands, adds: ”We’re learning thata partnership – with sharp edges where necessary – is the best model. Just ‘tough negotiating’, seeing each other as adversaries, will not work, that’s clear.”Cost sharingas overall healthcare spending in mostcountries is expected to increase overthe coming years, both payers andproviders can reasonably expect theirmarket to grow. indeed, there are notmany sectors where conditions forconstructive partnerships betweenpayers and providers are so this market, payers may considersharing some of the costs for necessarytransformation processes, or supportingproviders as they go through atemporary dip in revenues.of course, partnerships do notcome without risks. For instance,payers will want to ensure that theydo not become overly entangledwith pre-existing providers for fear ofobstructing the disruptive change thatmight be required. Clearly, a healthytension in the partnership remainsessential.”the painful moments will comewhen the waste is really pushed out ofthe system; when you cannot help thehospitals to survive relatively easily;when organizations will simply notmake it.Yet we have to face that,” saysron Williams. ”With many of our largerhospitals, it is much more likely thatthey will be thoroughly transformedthan that they will just fall over anddie. and we can help them with thattransformation – we must.”Perhaps the most importantpartnership in the future will beforged between patients and thewider population. Supporting patientsin managing their own health,coordinating their own care andfacilitating their participation in keydecisions has huge potential.© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  18. 18. Orsida Gjebrea, Supreme Council of Health, QatarSomething to teach, Something to learn14There is a strong logic influencing the way that payers are adapting and changing;based on this logic, the steps they need to take are quite clear.• Pushing care upstream (towards prevention, self-management and home care)has become the clear mission for everyone who wants to increase quality whilereducing overall healthcare costs.This will mean finding new ways to connectto patients and influence their behavior, which includes being more active in themanagement of their conditions and adopting more healthy lifestyles.To makethis possible, delivery models need to become more integrated which, in turn,means that current payment systems (that maintain fragmentation and pay forwaste) urgently require reform. And while there are choices about how much riskshould be transferred to the providers, it is clear that much more attention mustbe placed on the management of population health.• Public and private payers increasingly find themselves in the driver’s seat; they canplay a crucial role in realizing payment reform and influencing provider behavior.They are becoming increasingly engaged in actively pushing care upstreamthemselves – whether through interacting with providers or with their own clients.• Incentivizing change will be essential. Change can be hard and the pain of thatchange should be shared between payers and providers. Payers will need to beopen-minded and creative about how they support and incentivize providers inboth the medium to longer term.• Up-skilling in key areas such as data analytics, outcomes measurement, contracting,and care system design will be key, as will the inevitable leadership complexities thatarise when moving from a traditional passive payer to a leader of the system.Key take away points for payers© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  19. 19. Something to teach, Something to learn 15De Friesland Zorgverzekeraar – How the insurers took thelead in reshaping hospital careThis initiative started when De Friesland Zorgverzekeraar(DFZ), a Dutch healthcare insurer primarily active in thenorthern part of the Netherlands, had the ambition toprovide the right care at the right place at the right time, nowand in the future.The burning platform for this ambition is aset of familiar challenges including a rapidly aging population,a lack of specialist doctors and nurses and the risk thatsmall hospitals will not be able to meet quality and volumerequirements.A driving force to realize the ambition was the outlineagreement between the Association of Dutch HealthcareInsurers, healthcare providers and the government, whichmade the health insurance companies primarily responsiblefor improving quality and efficiency.This changed the role ofhealthcare insurers that could become commissioners of carewith a strong responsibility for appropriateness and continuityof care in the region (a sort of private organization with someparallels with regional health authorities). DFZ was one of thefirst to pick up a leading role.While some health insurancecompanies used purchasing power to negotiate withproviders, DFZ had a strong commitment to cooperating withthe providers in the region. It was their belief that only in thisway could change of such magnitude be realized sustainably.What did they do?DFZ took a coordinating role by working with healthcareproviders in the region to shape networks of care for criticalcare and care close to home.The networks of care included:emergency and intensive care, birth care, oncology, complexvascular care, elective care and chronic and elderly care.How did they do it?To realize this ambition they set up a program with:• A steering committee intending to reach commondecisions, consisting of: an independent chairman, theboard of directors of DFZ, CEOs, chairmen and boardmedical staff of the five hospitals, a board member of theregional university medical center, patient and generalpractitioner representatives and KPMG;• A program office, consisting of DFZ and KPMG employees;• Seven expert groups, which made proposals for change.Every expert group consisted of a chairman (an independent,leading medical specialist), representatives of the hospitals,general practitioners and representative of the patients; and• a ‘Council of Experts’ which could provide the steeringcommittee with advice upon request, consisting of nationalrecognized governors/medical leaders.Phase 1May−July 2011Phase 2July−November 2011Phase 3December 2011−June 2012Phase 4 5July 2012−February 2013Preparationof theprogram:GettingacquaintedData collection andGAP analysisExploring anddeveloping scenariosBusiness cases (regional level multi-annual budget per hospital)Decision-makingConditions from governance perspectiveCase StudySource: KPMG International, 2013.© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  20. 20. What decisions were made?• DFZ composed their healthcare procurement plan for 2013.In this plan the first irreversible steps towards the futurewere made. For instance, no contracts will be made withcertain providers for some forms of complex care if qualityand volume requirements can’t be met.• First fundamental decisions on scenarios.What were the lessons learned?• Speed during the process is necessary, but too much speedis detrimental.• A program of this magnitude can count on attention in thelocal media; make clear agreements on media handling.• Importance of independent chairs for expert groups;bringing in independent professional medical leaders is animportant driver for change.• The program brought the professionals and the clients/patients back in the lead. Management followsprofessionals – as one expert said, “We are currentlyrealizing something that our management should havedone 10 years ago.”• Relocating the care in the network will result in increasingpressure on primary care.• Importance of maintaining the project infrastructure afterending the program; creating a platform for collectiveinnovation from professionals.Outcomes• DFZ has delivered new medical centers that better connectprimary emergency treatment; the centers claimed topprize in the Friesland patient representative body’s latestannual healthcare awards.• The pathway approach is delivering authoritative care plans,based on proven data and financial modeling, overturninglegislative, practitioners and administrators’ assumptionson healthcare and the supply agreements. In particular,the insurer has reduced its use of complex care contractswhere providers could not guarantee its new volume andcare quality targets.• DFZ’s new program is already having a profound effect oncommissioners, providers and patients. Local treatmentcenters are more accessible to elderly patients. Primarycare teams are working more closely with the new carecenters and hospitals – providing better, multi-disciplinarycare closer to local communities.• Friesland’s new primary care-led network is lifting demandfrom hospitals, with a 40 percent substitution from acute tocare beds in one case.• Improved quality of care with better targeting and reducedcosts; the program’s comparison of GPs found those withhighest quality results also had the lowest costs.• DFZ is now commissioning services more flexibly inline with anticipated local care demands because of thepathways’ comprehensive number-crunching. DFZ also hasthe model to transform its cost base as well as those of itsprovider hospitals in the next few years.• ‘Incentivized’ patients are becoming more active partners inthe management of their own healthcare.• The program put the professionals and the clients/patientsin charge.• Management follows professionals – as one expertsaid: “We are currently realizing something that ourmanagement should have done ten years ago.”Something to teach, Something to learn16© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  21. 21. Three key words perhaps summarize what we can observein the immediate and near-term future for emerging markets:growth, buzz, and leapfrog.Almost by definition, emerging countries are experiencingeconomic growth while most of the developed worldcontinues to face a slowdown which looks increasingly tobe long-term. Populations are still growing at a fast clip, andwith populations that are both growing and aging, somecountries are experiencing the ‘double barrel’ impact of publichealth issues. Increasingly crowded urban centers, changinglifestyles and diets can be linked to a chronic diseaseepidemic among the middle-class, who also come with higherand harder to meet expectations.Emerging healthcare trends in high-growth markets:• Focus on prevention and primary care;• Technology is seen as a key enabler to accelerate growthand is being rapidly implemented;• There is much less nervousness about using private-publicpartnerships;• Providers in these markets work their assets much harder; and• Greater willingness to try innovative or novel approaches.Within healthcare, as a fast-growing sector, the buzz ispalpable.There is increasing private sector involvementand a rise in the number of public-private partnerships,as many governments realize their need to rely on privatefinance. New models for funding and financing healthcareare constantly being experimented with and implemented.We are seeing innovative use of information technology,the rise of remote care delivery models (through tele-care,mobile health and the like), and social networking playinga role in chronic disease management where lifestyle andbehavioral changes are important. In a way, “green fields”and “white spaces” in underserved regions and countriesoffer more opportunity for truly disruptive innovations, whichare often simply new ways in which a product or a service isproduced, delivered, used or valued.Indeed, we can expect to see healthcare technology adoptionand innovation in emerging markets leapfrog their moredeveloped cousins, and not just play catch-up.This can alreadybe seen in telecommunications in developing countries,where the ubiquitous mobile phone has replaced landlines toprovide connectivity reaching into the most rural of areas.There are advantages of being a follower – not beingburdened by the past or historical policies and structures,and the opportunity to learn from and not repeat themistakes made by developed countries which havetreaded the well-worn path of traditional healthcaresystem development. Already, we see electronic medicalrecords and broader electronic health records impressivelyimplemented in hospitals and systems in India, China andother developing countries. Mobile health in rural settings,retail-based clinics and other dis-intermediation modelsare thriving where primary care is weak. Low-cost deliverymodels and point-of-care diagnostics and interventionsare capturing the imaginations of care providers, drug anddevice manufacturers and investors alike, and may well leadthe next wave of “reverse innovation” which could see thedeveloped world learning valuable lessons from their upstartcousin nations.This is the space to watch and the scale and speed of changeis extraordinary.Lessons from high-growth health systemsSomething to teach, Something to learn 17© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  22. 22. As payers become more activist,the role of the provider is also beingchallenged by old and emergingpressures. How should providers reactto the rise of ‘activist payers’? Howwill providers adapt to demographicand epidemiological change?What isachievable given the ongoing financialand economic challenges in most partsof the world?At KPMG’s global summit, a numberof providers from various regionssuggested that the current modelactually delivers strong margins for somehospitals.Why should they change, theyasked, if profits are still flowing?But looking around the world, we seemounting evidence that the status quocannot last. Even in the fastest growingemerging economies, the currentsystem seems in trouble. Indeed, thewriting has been on the wall for sometime, but it is only now starting to gettough. Provider executives in emergingeconomies and systems that are stillgrowing have an opportunity to leapfrogsome of the outdated models in themore established systems.For providers, today’s challenge is tobalance the pressure of becomingas efficient as possible within theircurrent models, while creating theright environment for transformationalProviders: transactor transform?Lookingaroundtheworld,weseemountingevidencethatthestatusquocannotlast.Prof. Benjamin Ong, National University Health System, SingaporeSomething to teach, Something to learn18© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  23. 23. change to new models. For some,this will lead to a more integratedsystem; for others, different optionswill emerge such as specializing orfocusing their operations. Just aboutthe only option that is not on thetable, however, is to do nothing. Ourdelegates were clear that bold andinnovative approaches would need tobe combined with forward thinking and(in some cases substantial) changes tooperational and business models forreal and lasting change to emerge.At the outset, providers will need toconsider their objectives and futurestrategies based on two main sets ofconsiderations: what markets theywant to operate in (both in terms ofgeography and products) and whetherimprovement or transformation isrequired.This will invariably leadproviders to three broad, overlappingsets of approaches:• Continue to grow the current modelwhile improving operations anddelivery;• Adopt new approaches built onexisting models; or• Develop very different models fornew or current markets.Regardless of the approach, the scaleof change is huge. Opportunitiesabound for those providers prepared tomove ahead, take risks and try to shapethe future rather than respond to it. Insome cases, the ambition and pace ofchange (particularly in the emergingeconomies) has been breathtaking; inother parts of the world, progress hasbeen slower to come.Over the following pages, we will lookat the different components of eachstrategic option to show how providersacross the globe are adapting andadvancing their strategies.“What we can learn is that regardlessof what payer system we’re in or whatnational scheme we’re in… at the root ishow do we care for people and how dowe motivate those people who do thecaring,” says Dr. Kevin Smith, Presidentand Chief Executive Officer of St. Joseph’sHealth System, Hamilton, Canada.Developing newstrategiesContinuing to grow and improveIn some markets, there is still theopportunity to grow the current modelwhile driving improvements acrossoperations and delivery. But aboveand beyond the organic growth thatwill naturally come from changes indemographics, aging populations andepidemiology, many providers arekeen to explore new opportunities forrapid growth.Mergers and acquisitionsFor many providers, the purchase andconsolidation of facilities and servicesremains a highly popular growthstrategy.When fully realized, MA canbring reduced costs through the sharingof functions, improved market powerand greater negotiating clout. In othercases, governments and payers havelooked to MA as a solution to poorservice quality or financial failure. Butthere are significant challenges withconducting MA, and the track recordin the health sector is not impressive.According to KPMG research, manyof the root causes of poorly-executedMA transactions come down to threemain mistakes: a lack of clarity about theobjectives, failure to conduct rigorousdue diligence and a lack of attentionto culture change and integration bothbefore and after the merger.That is not to say that mergers cannotbe effective. Indeed, some jurisdictionshave enjoyed strong success by usingmergers as a strategy to shrink theoverall size of the hospital system. Inthe Canadian province of Ontario, forexample, the government imposedconsolidations on independent hospitalcorporations and, as a result, reducedthe number of providers from 220 to150, while also closing 35 individualhospital sites.Expansion into new marketsThere are a number of ways providerscan take advantage of new markets todrive growth. In the US, for example,a recent health tracking study foundthat in all 12 markets studied, hospitalsemployed one or more types ofgeographic competitive strategy,including buying or building full-servicehospitals or freestanding emergencydepartments, buying or establishingphysician practices, and developing aregional presence through emergencymedical transport systems.5In most cases, the aim of expansionis to improve efficiency and captureadditional patients with moreadvantageous reimbursement rates.However, many payers fear this strategywill lead to price increases, a notionsupported by recent data on mergers inthe US market.5 Emily R. Carrier, Marisa Dowling, and Robert A. Berenson-Hospitals’ Geographic Expansion In Quest Of Well-Insured Patients: WillTheOutcome Be Better Care, More Cost, Or Both? Health Affairs 31, No. 4 (2012): 827–835.Something to teach, Something to learn 19© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  24. 24. There are numerous examples of thisstrategy at work around the world.• Facing restricted growthopportunities in their domesticmarket, Ramsay Health Care inAustralia looked for opportunities totake its operating model into differentenvironments.The organization woncontracts to deliver elective surgeryin the UK, acquired a 57 percent stakein French operator Groupe Proclif SAS(now known as Ramsay Santé SA),and is now actively looking for furtheracquisitions in other markets.• Narayana Hrudayalaya, a group ofhealth centers based in India, isadapting its model to support entryinto a number of different countries,including the Cayman Islands, whichhas given the organization quickaccess to the huge US market withoutthe daunting regulatory hurdles.• India’s Fortis Healthcare Limitedand the Apollo Group have bothleveraged their clinical leadership innew markets to build new hospitalsthroughout the country and acrossthe Asian region.• In Japan, SECOM Co. Ltd. a leadingsecurity firm, andToyotaTsushoCorporation, a trading and supplychain specialist, have formed analliance with Kirloskar Group, amajor supplier of high-tech medicalequipment based in India to developgeneral hospital services.Thepartnership works because of theadvantages that each party brings tothe table:ToyotaTsusho can mobilizea global network and rapid businessdevelopment capability; KirloskarGroup brings its local knowledgeand networks; and SECOM bringsoperational expertise.• In many markets, expert operatorsare taking over the managementof public hospitals or bidding forcontracts in service areas that,traditionally, have been the exclusivepreserve of the public sector but arenow being moved into the privatesphere to reduce government liabilityand investment.The success of any expansion into newmarkets relies on the organization’sability to effectively transfer theirmanagement model and methodology.To achieve this, organizations willwant to ensure they secure a majoritystake in any takeover, or win long-termconcessions that allow sufficient timefor new approaches to be appliedand investments to be returned.Those expanding into new foreignmarkets may also consider creatingMosthealthcareprovidersstillhaveampleopportunitiestoimprovetheirqualityandmargins.Something to teach, Something to learn20Cynthia Ambres, KPMG in the US and Marc Berg, KPMG in the Netherlands.© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  25. 25. ProcesscriticalityProcess performancePoorNon-coreCoreExcellentRe-engineerContinuouslyimproveFix structuraldefectsTransformationaloutsourceCo-source/micro-captive/BOT/captiveshared servicesSimplify/streamline/out-task/staffaugmentationTransactionaloutsource/offshoreAlliance/JVoutsourceInnovate and allyjoint ventures with local partners as away of navigating often complex localregulatory regimes while securingorganizational capabilities in marketing,staffing and adjusting to local culture.Redesign and improvementIn many systems it has been easier tofocus on improving revenue. Reducingcosts is difficult but techniques for doingthis, and the areas where there is themost scope, are generally well known.In our experience, most healthcareproviders still have many opportunitiesto improve their quality and margins.However, the more adventurous ofthese strategies may well requirecollaboration with other organizations,especially where there is a need toreshape the whole local health system,for example through the closure of sites.This may be an area of opportunity forpartnership where an ‘activist payer’ canhelp to unlock change.Outsourcing clinical and non-clinicalservicesOutsourcing non-clinical services iscertainly not a new phenomenon.Indeed, in mainland Europe, providershave a long history of outsourcingfunctions such as cleaning, laundryand catering. Over the past fewyears, there has also been a strongtrend towards the outsourcing of keyoperational functions such as facilitiesmanagement, office services, financialfunctions, IT systems management,the transactional components of humanresource management, procurementand logistics.Today, there is growing interest inmoving outsourcing closer to the frontline in areas such as sterilization, patienttransport, pharmacy, imaging, reportingimages, laboratories and the operation ofspecialist clinical services such as dialysis,mental health, chemotherapy and evenintensive care. Philips eICU (part of RoyalPhilips Electronics of the Netherlands,a diversified health and well-beingcompany), for example, provides remotesupport to a large number of communityhospitals in the US.At the same time, the approach tooutsourcing has matured significantlyover the past few years, leadingto a much wider set of modelsfor improving value and efficiencythat go beyond simply outsourcingindividual function areas. Indeed, manyorganizations are now taking a muchmore strategic approach to outsourcingby considering their various optionsagainst the importance of the processto the business and the extent of theimprovement required.Something to teach, Something to learn 21Figure 3: Strategic decision-making on outsourcingSource: KPMG International, 2013.© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  26. 26. Getting the best out of the workforceGiven that the most significant costsfor most healthcare organizations stemfrom the workforce, it is not surprisingthat many providers are seeking waysto increase productivity and enhanceemployee efficiency.This will, in turn,require providers to pay closer attentionto job design, pay and conditions,and developing the basic systems toimprove workforce management.However, we have also noted afundamental shift away from crudeapproaches to reducing cost, focusinginstead on more strategic options basedupon engagement and improvement.According to our research, leadingproviders exhibit five key habits to driveefficiency and productivity.1. A strategic focus on value forpatients is embedded into the DNAof the organization and reflected inthe recruitment, staff objectives,appraisals and reward systems.2. Professionals are empowered totake responsibility for creatingvalue, supported by a focuson teamwork, the granting ofappropriate autonomy, control overwork processes and high-qualityleadership at the front-line.3. Task and process redesign isencouraged and supported.4. Staff performance is activelymanaged using outcome measures.5. High-quality staff managementpractices are embedded into theoperating model of the organization.6Building new approacheson existing modelsQuality improvement at scaleWhile all organizations aim to improvequality and efficiency, some areusing quality improvements to createtransformation on a much larger scale.• Intermountain Healthcare, a hospitalsystem in Utah and Idaho, usesmeasurement, data systems,pathways, process improvement andstructures to enhance accountabilityand – as a result – has made majorcost and quality improvements. Justone of its new protocols to reduceunplanned caesarean sections andinduced labor, for example, savedUSD50 million in Utah alone –equivalent to USD3.5 billion acrossthe US.7• The Geisinger Health System inPennsylvania is focused on removingunjustified variation, fragmentation ofcare and poorly-designed incentivesas a way to move patients frompassive to active recipients of care. ItsProvenCare products offer advancedprimary care (a medical home), carebundles to ensure reliable chronicdisease management, improvedtransitions of care, warranties forsome treatments (those in which thesystem delivers best practice) andevidence-based care.The product alsotakes responsibility for complications.• In Sweden, the Jönköping CountyCouncil’s health system has a25-year history of using quality astheir key business strategy.This‘whole system’ approach is basedon a culture of systems thinking,process improvement and thedevelopment of a learning system.6 Value walks: Successful habits for improving workforce motivation and productivity. KPMG International, 2012.7 Brent C James Lucy Savitz – How Intermountain trimmed healthcare costs through robust quality; Health Affairs May 2011, doi:10.1377/hlthaff.2011.0358.Whileallorganizationsaimtoimprovequalityandefficiency,someareusingqualityimprovementstocreatetransformationonamuchlargerscale.Something to teach, Something to learn22© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  27. 27. TheTrillium Health Centre in Ontario,Canada has taken a similar approach.• Salford Royal NHS FoundationTrustin the UK has used patient safety asa key driver for improvement in theirorganization.• The Institute for HealthcareImprovement in the US andthe Initiative Qualitätsmedizincollaboration in Germany, Austriaand Switzerland have also foundbenefits to being part of a widernetwork for improvement.In examining the practices of theseorganizations, we have found thatsuccess in this area relies on theconsistent implementation of a widerange of interventions over a long periodof time. Moreover, the ability to defineand measure value while developinga methodology to help staff and front-line leaders to make improvements isvital. For example, theVirginia MasonMedical Center in Seattle and theRoyal North Shore Hospital in Sydneyhave both successfully deployed leanmethodologies to strip out non-valueadding activities and streamline pathways.In Canada, the province of Saskatchewanis now rolling out lean processes acrossthe entire health system to support theirPatient First Review.However, it is also worth noting thatsome initiatives have met with lesssuccess, suggesting that the model forscaling up quality improvement is stillpoorly understood.IntegrationThe definition of this varies betweensystems, but at its heart the strategyaims to offer coordinated care acrossthe whole patient journey. As payersstart to move towards purchasingoutcomes and value rather thanindividual interventions, more risk ispassed to providers, thereby making acompelling case for ensuring that careis properly integrated.The US offersstrong case studies of how changes inpayment methods and payer policy candrive organizational strategy and design.We have also noted growing interestin Europe and elsewhere in gettingproviders to be more accountable foroutcomes for populations. (See below.)Hospitals into health systemsThe question is how to build a bettersystem without losing the advantagesthat primary care can offer. Oneanswer may be for hospitals and otherproviders to be encouraged to enterthe market. Another option wouldbe for primary care to become morespecialized or to focus on particularsegments of the population. However,in many countries, the model ofprimary care is currently not set up toadapt to meet these challenges.Hospitals and health systems dohave the potential to develop newpartnerships to support home careproviders and residential and nursinghomes to deliver a range of servicessuch as: improving care for patients,medicines management, end-of-life care, and the prevention andmanagement of acute illness. Closerworking relationships with mentalhealth services can also reducehospital admission and the lengthof stay, particularly for older peoplewith dementia. Similarly, depressionand anxiety are important aspects ofchronic disease and, by ensuring high-quality mental health support for thesepatients, providers can help to reducetheir use of other services substantially.Clearly, hospitals will need to make aconcerted effort to reach out to – andwork with – these service areas.Different definitions of integrationPayer driven integration: The Blue Cross Blue Shield(BCBS) Massachusetts Alternative Quality Contract andBCBS Michigan Physician Group Incentive Program have anorganized system of care programs that incentivize physiciangroups and hospitals to collaborate in order to produceimproved outcomes. A number of payers in Europe are alsopromoting vertical disease management and models thatimprove the primary/secondary/rehabilitation interface.Government driven integration: Scotland, Catalonia andthe Basque regions of Spain are creating integrated healthand social care provision. France and Sweden have both beenexperimenting with various types of provider networks forchronic disease.Provider-led integration: In the US, our research suggeststhat many providers will quickly move to integrate withmedical groups.There is also increased interest in hospitalsystems acquiring primary and ambulatory care, homehealth, skilled nursing facilities, rehabilitation and other partsof the supply chain.Something to teach, Something to learn 23© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  28. 28. It is worth noting that it is not alwaysnecessary to create new organizationsor restructure them to provideintegrated care. Indeed, the keycomponents of a new system are morefocused on creating the right processes,systems and ways of working than theyare about governance.While the technical aspects ofintegration are certainly important,it is the cultural component that isperhaps the most critical element.In other words, organizations willneed to develop effective ways forprofessionals to work together, takinginto account their differing approachesand attitudes to risk.This may be particularly difficult forhospitals whose costs are locked intobuildings and infrastructure. However,change is ongoing: some forward-looking hospital boards are starting torecognize their organization’s role in notonly running health systems, but alsoin taking responsibility for the health ofthe population.NetworksIn a well-known article, Americansurgeon and journalist Atul Gawandesuggests that there is a growingtrend towards creating networks ofhospitals with the potential to developstandardized approaches that takeadvantage of economies of scopeand scale, emulating developmentsin other sectors.8This goes wellbeyond sharing back office servicesand procurement by focusing on thedevelopment of networked approachesto laboratories, imaging, sharedspecialist expertise and the use of largevolumes of network information. As aresult, these organizations are refiningand improving processes as a keysource of competitive advantage. Insome markets, such as the UK and theNetherlands, networks are also seen asmechanisms for rationalizing capacityand regionalizing specialist work.Networks may also be made up ofindividual sovereign organizations thatcome together to organize particularservices in areas where it is necessaryto share scarce expertise or havereferral pathways for complex patients.Some challenges do exist with thismodel however, particularly in decision-making. Experience suggests the driveto secure the full benefits of networksoften requires a single managementstructure for the network which allowsindividual operating units a high levelof autonomy to respond to their localmarket.The US, in particular, has beenactive in this area, led by private equity8,itistheculturalcomponent thatisperhapsthemostcriticalelement.Prerequisites for an integrated system• A clearly defined population.• The ability to stratify risk reliably and develop registries.• Accountability for outcomes, supported by alignedcontracts and incentives.• Systematic clinical care.• Staff and systems to support coordination.• Shared records.• Shared quality governance arrangements betweenparticipants.• Payment mechanisms that support these arrangements.• The development of a workforce with new skills includingthe ability to manage multiple morbidity including dementiaand work in multidisciplinary teams.Something to teach, Something to learn24© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  29. 29. groups who are purchasing communityhospitals to create chains. It is, however,too early to tell whether this strategywill succeed.A number of attendees of our healthcaresummit also noted that they wereengaged in developing informalnetworks, including:• International networks that linkthose institutions undertakingvery specialist work in order toachieve efficiencies in research andpool expertise for image reading,interpreting results and advice oncomplex cases.• Networks that provide increasedreach for referrals and the opportunityto extend the brand of centers ofexcellence.• Networks for learning and sharing,largely made up of alignedinternational players.Hospitals as healthcare hubsFollowing the logic of outsourcing andnetworks, some small hospitals may findbenefits from becoming an outsourcedvenue for care delivery by granting otherproviders concessions for hospital spaceand service delivery.That being said,this route can create some interestingcomplexities and may be easier toachieve in situations where the hospitalis part of an existing network.Research and academic linksFor those providers closely aligned toresearch universities, opportunities existto develop academic networks that notonly provide competitive advantagesin recruiting, but also allow for thedifferentiation of services on quality. Atthe same time, fully-fledged academichealth networks may also be able toleverage large amounts of additionalresearch funding to create efficiencies inservice delivery.There are a number of existingapproaches to achieving this.• Charité-Universitätsmedizin Berlin, amajor university hospital in Europe,has a close collaboration withpharmaceutical giant Bayer to supportdrug development.• King’s Health Partners, an academichealth sciences center in London, hasbrought mental health together withacute hospital services in order to aligntheir research interests with the mainburden of ill health in their community.• UCLPartners, an academic healthsciences partnership in London,is building on areas of clinicalexcellence and conducting strongtranslational research throughparticipation in a network thatgoes beyond the boundaries of thehospital.• The Karolinska Institutet in Sweden,the Mayo Clinic in the US, PartnersHealthCare in Boston, the Universityof California, San Francisco MedicalCenter and Johns Hopkins Medicinehave a similarly broad multi-specialty approach.• The Cleveland Clinic, a not-for-profitorganization operating in the US,offers a strong example of a focusedstrategy capitalizing on their expertisein specialist areas.• For-profit organizations – such asthe Apollo Group in India, who haveresearch and academic excellence asa key part of their strategy – are alsofocusing on specialist areas.Asian hospitals, in particular, seem wellpositioned to take advantage of theirresearch and academic links, oftensupported by significant governmentand commercial backing. Singapore ismaking progress and forging powerfulcollaborations with academic centersin other parts of the world, while SouthKorea has become an increasinglypowerful player with big investmentsat theYonsei University Health System,the Severance Hospital and the AsianMedical Center.Their experienceshows that, in addition to largecaseloads, networks and specialistexpertise, the ability to mobilize largedatabases that will allow the study ofcomplex factors in big populations willbe a key competitive advantage forproviders going forward.According to Claudio Lottenberg,Chairman of the Albert EinsteinIsraelite Hospital in Sao Paulo,Brazil, “Things that I thought werehappening just in my country, we cansee all over the world. One of themost important learnings for me isthe importance of adding value forthose that are going to take part in theresolution of the problem. Doctors…have to be more and more involvedbecause they are close to the patientsand can be the best teachers and explainwhat quality really is.”Something to teach, Something to learn 25Georgina Black, KPMG in Canada in conversation with Christine Roughead, KPMG in the US© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  30. 30. New models are emergingWhile some providers adapt existingmodels to create new benefits, othersare building entirely new modelsthat stand in stark contrast to thetraditional hospital.FocusOrganizations implementing strategieswhere providers focus on a process(e.g. ambulatory surgery or imaging), aprocedure (e.g. cataracts, heart surgery,hernia repair or joint replacement), ora disease area (e.g. kidney disease) alllargely follow the same five-step process,as outlined below.1. They gain deep skills in a limitedrange of activities and create singleprocesses that do not interact oroverlap.2. They standardize as many activities,consumables, implants and operatingprocedures as possible.3. They develop approaches tocontinuously improve theirspecialty areas.4. They redesign work processesand shift work to the mostappropriate level.5. Finally, they move to highutilization models that ensurethat only the equipment neededfor the range of activities ispurchased.However, for a focused strategy towork, providers must have access tohigh volume markets where consumersare willing to travel for reduced price andimproved quality.Well known examples of this approachcan be found at the Shouldice Hospitalin Canada (hernia repair), India’sAravind Eye Care System and NarayanaHrudayalaya (cardiac), Finland’sCoxa Hospital for Joint Replacement(orthopedics) and Singapore’s FortisHealthcare, which has recently openeda hospital purely focused on colorectalconditions. Others are focused onspecific patient sectors such asVaatsalya in India which has developeda low-cost model focused on deliveringcare to middle-income patients basedon high utilization and streamlinedprocesses.LifeSpring Hospitals Private Ltd. in Indiaoffers a strong example of this strategyat work.The organization offers low-costmaternity care using high throughputunits where non-clinical tasks havebeen removed from clinicians, casesthat need high-cost interventions aretransferred to a specialist unit, hospitalsare leased rather than bought or built,and outsourcing is extensively used.Channel shiftingKaiser Permanente, a US-basedhealthcare consortium, is aiming to shiftmany of its patient contacts to online ortelephone channels.To achieve this, theyhave created a graduated approach thatspans a range of different interventionsdesigned to improve care coordination(see figure 4). Kaiser already usesvideo conferencing to provide specialistinput to consultations with familydoctors, internists and other front-lineclinicians. Similarly, theVeterans HealthAdministration in the US enjoys veryhigh rates of virtual contacts.However, in our experience, the healthsector seems to lag far behind othersectors of the economy in their ability (orwillingness) to move services to online,telephone and other modes. And whilethe use of applications running on smartphones and tablets is starting to makesome inroads, evidence shows that feworganizations have embedded thesetechnologies into their strategy.Thehealthsectorseemstolagfarbehindothersectorsoftheeconomyintheirability(orwillingness)tomoveservicestoonline,telephoneandothermodes.Something to teach, Something to learn26© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  31. 31. Mobileservices• New venues to access healthcare• Changing paradigm of time and distance• Personal technologyEmployerclinicsKaiser Permanente – Coordinating care in many settings• Capital investment• Resource intensity• Length of implementationPrimary carewith ancillariesWebMobilehealthLOWHIGHHospital withhospital-basedspeciality careMicro-hospitalSpecialty hubwith primary careMicro-clinicsTele-medicineHome asthe hubDisintermediationIn other industry areas, organizationsare reducing costs and increasing valueby taking steps out of the supply chain.But this approach seems – to date – tobe less prevalent in the healthcaresector. However, the growth of retail-based clinics with a narrow repertoireof diagnosis and treatment servicesfor primary care conditions, remotepharmacy with postal fulfillment andother potentially disruptive modelswill increase over the coming years,bringing both threats and opportunitiesto sector participants.Strong examples of success do exist,however. MedLion Direct PrimaryCare, a health insurance companyin California, has contracts directlywith employers. WhiteGlove Health,a medical care provider based inTexas, offers a similar model butwith a telephone front-end and theoffer to come to the patient’s homeor workplace. In both examples, theprovider has essentially removedthe need for insurance claims to bemade for the use of primary care andeliminated the retail pharmacy from thevalue chain by using postal fulfillment.Particularly in regions where primarycare is poorly developed, we have alsoseen the rise of approaches that takeprimary care out of the value chain byoffering vertical disease managementprograms, direct access to specialists,and vendors who can providescreening services directly to thepublic. Similar examples arise in caseswhere the primary care service valuesare not a key part of the service, suchas in the example in thenext chapter.Something to teach, Something to learn 27Figure 4: New approaches to coordinating careSource: Kaiser Permanente, 2012.© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  32. 32. Patients and their networks as asource of valueAs other service industries moveto involve the consumer into theproduction and design of products,we have seen growing interest fromproviders in working with patients toredesign care pathways. Other ideasare also starting to trickle into the healthsector, such as self-serve models inwhich the customer does much of thework, supported by technology andonline tools.For the health field, this approachrepresents a huge shift in the wayproviders operate and requires both amind-set and an organizational culturetransformation to succeed (more onthe implications of this approach canbe found on the opposite page). Likeall transformational strategies, thisapproach will take time and significantexperimentation to succeed.Leveraging Big Data to deliver better,more targeted servicesWhile a few payers and providershave toyed with healthcare CRMtechnologies in the past, the evolutionof data analytics now offers healthsystems new and powerful tools forincreasing efficiency, enhancing safetyand reducing costs. Predictive patientbehavior models, highly-accuratedemand forecasts or even guidelinestailored to individual risk factors wouldundoubtedly catalyze significantchange.It is likely that the greatesttechnological catalyst for drivingmore coordinated and effective care,however, will be the adoption ofcloud technologies.The power of thecloud to assemble, analyze and sharedata in real time will be critical inbuilding successful partnerships andaffiliations between payers, providersand patients; will transform the waypatients move through the carepathway; and will deliver tremendousinsight to payers on the performanceof their contracts.And while the cloud will require healthsystems to understand and manage bigissues like enterprise security, identitymanagement and network management,it is clear that Big Data and cloud will bekey to health systems unleashing thepower of coordinated care.Putting the strategiestogetherWhile these strategies are not mutuallyexclusive, there are limits to how manycomponents can be viably pursued atonce.There are a number of dimensionsof the strategic choices available.Perhaps the most significant arequestions about the scope of marketbeing served and the extent to whichthe model is reimagined.This informsthe strategy map in Figure 5 and it canbe seen that some of the options covermore of the territory.The reality is that there is no silver bulletor off-the-shelf solution for providers;each will need to develop their ownunique approach based on localconditions and the decisions made bythe different players in the system.Moreover, strategies based onsmall improvements and growth,while important, are not going to besufficient to meet the challenges;Wehaveseengrowinginterestfromprovidersinworkingwithpatientstoredesigncarepathways.Something to teach, Something to learn28© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  33. 33. wholesale change will be needed.Indeed, many hospitals will needto change their clinical, operationaland business models much morefundamentally.This will requireexperiments and investment.Small hospitals, in particular, findthemselves threatened in thisenvironment and will increasinglyfind benefits to being part of widernetworks both locally (with primaryand home care) and across widerareas (working with specialistproviders). In many systems,primary care will also have to changeradically to be able to provide thelevel of services and scale that isneeded. Providers that have grownaccustomed to running servicesin institutions are going to need todevelop a range of new skills, take adifferent approach to managing riskand ultimately move many of theirservices out of their buildings and intothe wider community. It seems likelythat hospitals will need to reimaginethemselves as the core of a healthsystem and start to retrain staff,rethink their business models andthink about their buildings and otherassets in new ways.Strategiesbased on smallimprovementsand growth, whileimportant, arenotgoing to besufficienttomeetthe challenges.Source: KPMG International, 2013.CostimprovementLeanFocusedfactoryNetworksEnter newmarketsAcademic HealthScience CentersNew channelsIntegrated careQuality as adifferentiatorCommunities asassetsImprove existingmodelReimagineModelCurrentNewMarketSomething to teach, Something to learn 29Figure 5: Strategy map for providers© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  34. 34. 9 Value walks: Successful habits for improving workforce motivation and productivity. KPMG International, 2012.Prof. ShanWang, Peking University Peoples Hospital, China, meets Amit Mookim, KPMG in India.Something to teach, Something to learn30Providers will have to act quickly to meet these challenges. Health system leadersat our summit in Rome were very clear about what needs to change in theirorganizations in order to fundamentally alter the status quo.• Invest in leadership at all levels – University College London Hospitals has aninternal leadership academy targeting the top 400 leaders in the organization.• Rethink internal structures – for example, the Erasmus Medical Center in theNetherlands has moved away from structures based around medical disciplinesto ones closer to the needs of patients with multiple conditions.• Develop a focus on value and create new relationships with physicians andpatients. Gary Kaplan, CEO ofVirginia Mason in Seattle, has developed a newcompact between the medical staff and the organization to engage them inhelping to drive forward improvement focus of value.• Invest in strategies to get the best out of the workforce – for more on this,see Value walks: Successful habits for improving workforce motivation andproductivity, a report by KPMG International.9• Use measurement, improvement and information to gain strategic advantage.• Build networks – both internally and internationally.• Learn from other markets and industry sectors.• There needs to be a greater focus on outcomes not inputs. Leaders need toempower managers and physicians and give them the freedom to innovate andact in order to deliver quality and best practices.Key take away points for providers© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
  35. 35. Leadership and cultureKPMG’s Global Healthcare conference featured a number of speakerswho focused on the vital importance of leadership.This was notjust about their personal contribution as leaders (which was clearlysubstantial) but rather about the importance of their teams, beinghumble about what needed to be accomplished, and being passionateabout improvement. Indeed, much of the emphasis within organizationstended to fall on the followers (mid-level leaders and front-line staff), andhow the leadership team created an effective culture that includes:• a clear set of values;• consistent leadership towards a shared purpose over a long period oftime and, in particular, considerable stability and longevity amongsttop leaders;• commitment to real and deep engagement from the medical staff;• a strong focus on the front-line, particularly the need to nurture anddevelop front-line and mid-level leaders. In all systems, this part ofthe organization was perceived as being both vitally important andunderdeveloped;• an expectation that teams and individuals act according to the cultureand are prepared to be held accountable for their performance;• the alignment of measures between medical, patient andorganizational perspectives;• transparency of information, both internally and externally; and• curiosity about how other high-performing organizations achieve results.This requires health system leaders to get basic operations, internalcoordination, and the processes that support clinicians running verysmoothly which, in turn, will improve quality and the experience of bothpatients and staff. But it is also the entry ticket to being taken seriouslyas a strategic leader.It was clear there is a growing complexity facing all systems aroundthe world.These include: regulators that are demanding ever moreinformation; the growing complexity of the patient and the services theyneed; and the growth of internal and external monitoring systems.The best leaders were finding ways to manage and even reduce thiscomplexity by directing staff as much as possible by using outcomes(not detailed process targets) while at the same time creating space forthem to innovate, experiment and continuously improve.“I believe people should learn how to make more mistakes, take morerisks, and risk public humiliation in the service of seeking new solutionsand finding creative approaches to solve problems,”saysTim Harford,author and columnist, the FinancialTimes.Leaders needto empowermanagers andphysicians and givethem the freedomtoinnovateand actin order to deliverqualityand bestpractices.Something to teach, Something to learn 31© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.