1 Course Learning Outcomes for Unit IV Upon completion of this unit, students should be able to: 4. Relate the concepts of work design, motivation, and information flow. Reading Assignment Chapter 5: Leading with Strategic Intelligence and Profound Knowledge, pp. 61-76 Unit Lesson Healthcare delivery is very procedure-driven and has a high degree of human touch. Unlike some industries where a product is produced, in health care we are providing care for people who are often in their greatest time of need. To create an organization where compassionate care is provided by a motivated team, we must foster a collaborative environment, and we must have great support systems. In this unit, we will focus on motivation, workflow design, and information flow. Motivation Any department or facility can have great systems, but what happens if the team lacks motivation? It is often said that people leave bad bosses, not bad jobs. With that in mind, let’s explore practical ways you can create a highly motivated team: Believe in others: There is a term called the looking glass self, coined by early sociologist Charles Cooley (1902), who put forth that people will often behave as they perceive others perceive them. In other words, we tend to perform to the level we think others think we are capable. To put it differently, people often “play their part.” When you think back to great leaders or coaches in your life, are they not the people who believed in you the most and saw your greatest potential? People often put a lot of stock into what they perceive their manager thinks of them, so believing in others is absolutely critical to bringing out the best in your employees. Understand that input = output: People in management positions cannot have favorites, giving that positive energy to some and only casually noticing others. Imagine seeing two staff members in the hallway, asking the one warmly how she is doing and providing praise from about her, then briefly saying to the other, “Oh hi.” The employee given the cold reception was given a low energy input, and that is likely the same type of low energy output she will show in her work (i.e., she is more likely to have low productivity and morale). The energy managers input into their staff is usually the type of energy and output they will bring about. Understand hygiene (extrinsic) versus higher level (intrinsic) motivators: Some base-level factors such as pay or unsafe working conditions can prevent an employee from feeling a sense of satisfaction, while higher level factors such as recognition, achievement and advancement lead to higher motivation. In other words, when base level and extrinsic factors that affect motivation are present (good pay, safe work environment), higher levels of motivation (intrinsic) are more likely to come about (productivity, engagement, etc.). Base-level motivators are often called hygiene factors, a concept coined by Maslow (194.

1. 1
Course Learning Outcomes for Unit IV
Upon completion of this unit, students should be able to:
4. Relate the concepts of work design, motivation, and
information flow.
Reading Assignment
Chapter 5:
Leading with Strategic Intelligence and Profound Knowledge,
pp. 61-76
Unit Lesson
Healthcare delivery is very procedure-driven and has a high
degree of human touch. Unlike some industries
where a product is produced, in health care we are providing
care for people who are often in their greatest
time of need. To create an organization where compassionate
care is provided by a motivated team, we must
foster a collaborative environment, and we must have great
support systems. In this unit, we will focus on
motivation, workflow design, and information flow.
Motivation
Any department or facility can have great systems, but what
happens if the team lacks motivation? It is often
said that people leave bad bosses, not bad jobs. With that in

2. mind, let’s explore practical ways you can create
a highly motivated team:
Believe in others: There is a term called the looking glass self,
coined by early sociologist Charles Cooley
(1902), who put forth that people will often behave as they
perceive others perceive them. In other words, we
tend to perform to the level we think others think we are
capable. To put it differently, people often “play their
part.” When you think back to great leaders or coaches in your
life, are they not the people who believed in
you the most and saw your greatest potential? People often put a
lot of stock into what they perceive their
manager thinks of them, so believing in others is absolutely
critical to bringing out the best in your employees.
Understand that input = output: People in management positions
cannot have favorites, giving that positive
energy to some and only casually noticing others. Imagine
seeing two staff members in the hallway, asking
the one warmly how she is doing and providing praise from
about her, then briefly saying to the other, “Oh hi.”
The employee given the cold reception was given a low energy
input, and that is likely the same type of low
energy output she will show in her work (i.e., she is more likely
to have low productivity and morale). The
energy managers input into their staff is usually the type of
energy and output they will bring about.
Understand hygiene (extrinsic) versus higher level (intrinsic)
motivators: Some base-level factors such
as pay or unsafe working conditions can prevent an employee
from feeling a sense of satisfaction, while
higher level factors such as recognition, achievement and
advancement lead to higher motivation. In other
words, when base level and extrinsic factors that affect

3. motivation are present (good pay, safe work
environment), higher levels of motivation (intrinsic) are more
likely to come about (productivity, engagement,
etc.). Base-level motivators are often called hygiene factors, a
concept coined by Maslow (1942) in his
famous “Hierarchy of Needs” pyramid, which shows
physiological and safety needs at the base (extrinsic
factors), while love, esteem and self-actualization (intrinsic
factors) are at the higher levels. Extrinsic factors
are things that happen to us (the environment to which we are
exposed), while intrinsic factors come from
within and represent the care and compassion we give. One of
the roles of healthcare managers should be to
promote an environment of care, therefore it is vitally important
to make sure employees’ base-level (extrinsic)
UNIT IV STUDY GUIDE
Motivation, Workflow Design
2
UNIT x STUDY GUIDE
Title
needs (pay, equipment, safety) are met, so their higher level
(intrinsic) motivation can blossom (compassion,
caring, etc.).
Create a learning organization: Health care is so complex and
procedure-driven that it is important to have
continual education for staff. Learning leads to satisfaction in
health care.

4. Create opportunities for advancement: Many frontline jobs in
health care are restricted in by what that
certified or licensed person can provide. For example, if a
person only has a Certified Nursing Assistant
(C.N.A.) or Certified Medical Assistant (C.M.A) certification,
he or she is limited in scope of practice of what he
or she can do by nature of the certification or license he or she
holds. However, this should not limit managers
from creating opportunities to advance and be recognized.
Consider, for example, creating a “Skills Star” or
other type of recognition program where a person can earn more
Skills Stars for each level he or she attains.
Consider tying that to pay or other types of reward. For
example, a C.M.A can earn one star for becoming
phlebotomy certified, another star for becoming IV certified, or
another for becoming a Licensed Practical
Radiology Technician (LPRT).
Encourage innovation: When you want something which
requires creativity and something cerebral, the
best method is to be clear with the objectives and allow
autonomy. It is actually found that bonuses and
incentives do not work as well for creative-type (cerebral)
tasks, but they do work well for tasks that are more
procedure-driven (do this, do that).
Be the example: It is important for managers to work alongside
their team to earn their trust. Actions speak
louder than words, and the best way for people to see that they
are cared about is if they see their managers
doing their same work. This is a good way to grain employees’
trust in management.
The employee has a choice: Realize that even as managers are
doing all of the above and more, ultimately
it is the employee’s choice to engage and be satisfied.

5. Workflow Design
Let’s examine two aspects of workflow design, systems
workflow design and human resource workflow
design.
Systems Workflow Design: Consider that preventable medical
mistakes are the third leading cause of death
(Sanders, 2014), and one can quickly see why having
standardized workflows and clinical decision-making
matrixes are so vitally important. There is a big push in health
care towards standardized workflow, and
clinical decision making, or the idea of doing things in an
organized way to decrease variability and errors,
and to increase decisions made with scientific information and
recommended best practices.
As an example, consider a patient who presents at the clinic
with a chief complaint of chronic obesity. Using
the table below from the National Heart, Lung, and Blood
Institute (2010), the doctor will assess the patient’s
history and measure the person’s body mass index (BMI), as
shown in steps 2-4. Then, based on that
information, the doctor will make a decision for the patient’s
treatment plan. As you see from the diagram, if
the patient does not have a BMI > 25, the recommended
treatment plan will flow downward from step 5 and
result in education and periodic weight checks (steps 15-16). If
the patient does have a BMI > 25, the
recommended treatment plan will flow rightward from step 5
and result in goal setting (step 8), dietary
therapy, behavior therapy, and physical activity (step 11). These
types of clinical decision-making algorithms
are embedded into most major electronic medical records
(EMRs) and make it very easy for the clinician to

6. know the recommended treatment plan. Click on the image
below to view a larger version of the algorithm.
3
UNIT x STUDY GUIDE
Title
Common examples of systems workflow design in health care
are the standardized order sets in the EMR.
For example, a doctor will have a pre-formed order set of
diagnostic labs or radiologic studies for a given
problem, so that all he or she has to do is click Order. These
order sets are based on the most up-to-date
science and recommended treatment algorithms. Let’s say a
patient with diabetes is presenting in the clinic
and he or she has an A1c lab value > 7.0, a hard stop order set
will appear for the doctor and have the
recommended orders pre-built. All the doctor has to do is click
Order and the lab orders will populate, as well
as a referral to the Registered Dietician for dietary counseling.
This push toward workflow standardization is largely based in
the “Triple Aim” to:
1. Improve the Health of Populations
2. Improve the experience of customers
3. Reduce per capita (per person) healthcare costs
The Triple Aim was authored by the Institute for Health
Improvement (IHI) and is frequently referred to and
utilized by different healthcare quality improvement
organizations.

7. Human Resource (HR) Workflow Design: There are two aspects
of HR workflow design that will be
discussed in this section, helping employees excel, and
promoting teams of inter-dependence.
Regarding helping employees excel, talented people tend to find
themselves in valuable positions in an
organization and they are often turned to by colleagues for help
(regardless of their position on the company’s
organizational chart). This is often known as the informal
organization, or the concept that work gets done
through the path of least resistance and by those who are the
most expert. Managers’ focus is to help
employees excel and have the right person for the right job.
Managers should have the sagacity to know
someone’s talent, and the creativity to find the best work
possible for that person. They should always be
invested in someone’s growth, rather than in their own interests.
Leadership is about the employee, not the
manager, and it is about helping people to find their gifts and to
be their best.
Regarding promoting teams of inter-dependence, the sign of a
good healthcare manager is that things run
well when he or she is not there. If everything has to go through
the manager, it is a bureaucracy and a crutch
of co-dependence. In contrast, the sign of inter-dependence is
that the team trusts each other and holds each
other accountable, and they are empowered with information
and systems such that they can make their own
decisions without the manager present. This skill of creating
inter-dependence is so important in health care,
as operations are a symphony of inter-disciplinary teams (IDTs)
of various people with varying licenses and
certifications, each working together in harmony for the

8. patient’s outcome.
A few practical tips for healthcare managers to encourage IDT
collaboration include:
National Heart, Lung, and Blood Institute algorithm for obesity
(National Heart, Lung, and Blood Institute, 2010)
https://online.columbiasouthern.edu/CSU_Content/courses/Busi
ness/MHA/MHA6501/15G/UnitIV_Diagram.pdf
4
UNIT x STUDY GUIDE
Title
training,
possible,
it’s safe to make mistakes and to
speak out (silence kills in health care), and
e, and encourage trust.
Information Flow
Withholding information is a form of control, yet often in
management, we are bound to not share too much
information. Employees are usually more motivated and
productive when they are given the information about

9. why what they are doing is important, or what is sometimes
called “sharing the whys.”
Share as much information as you can with your team, and be
sure to paint the picture of mission and
importance.
References
Cooley, C. H. (1902). Human nature and the social order. New
York, NY: Scribner.
Maslow, A. H. (1943). A Theory of Human Motivation.
Psychological Review (50), 370-396.
National Heart, Lung and Blood Institute. (2010). Assessment
and treatment algorithm for overweight and
obesity [Image]. Retrieved from
https://commons.wikimedia.org/wiki/File:Assessment_and_treat
mentalgorithm_for_overweight_and_o
besity.png
Sanders, B. (2014). Medical mistakes are third leading cause of
death in U.S. [Press release]. Retrieved from
http://www.sanders.senate.gov/newsroom/press-
releases/medical-mistakes-are-3rd-leading-cause-
of-death-in-us
https://en.wikipedia.org/wiki/medical_algorithm
https://en.wikipedia.org/wiki/overweight
https://en.wikipedia.org/wiki/obesity
Running head: SCHOOL DRUG TESTING 1
The running head is a shortened version of the paper’s full
title, and it is used to help readers identify the titles for

10. published articles (even if your paper is not intended for
publication, your paper should still have a running head).
The title should summarize the paper’s main idea and identify
the variables under discussion and the relationship between
them.
School Drug Testing
Roger Wilco
The author’s name and institution should be double-spaced and
centered.
The title should be centered on the page, typed in 12- point
Times New Roman Font. It should not be bolded, underlined, or
italicized.
School Drug Testing
Thesis: With the increased pressure to perform at a highly
competitive level, the use of steroids in secondary schools is
becoming more common; therefore, schools have an ethical
responsibility to test athletes for steroids and other performance
enhancing drugs.
I. Drug testing benefits the school.
A. Pre-season testing can deter students from conduct that will
affect the school.
1. Steroid users seek opportunities to perform without detection
and achieve high goals (Byrd, 2010).
2. Testing for abuse of steroids prior to the beginning of the
season is effective in preventing abuse (Byrd, 2010).
B. Steroid testing maintains a school district’s reputation.
1. Steroid free athletes establish a positive and successful
atmosphere for other athletes and students (Crain, Pool, &
Schmidt, 2009).
2. Education is the best approach to successfully avoiding drug

11. use of any form on any school campus (Lundberg, 2012).
II. Steroid testing protects a school district’s employees.
A. Testing helps avoid other drug abuse by students, as well as
protects the school district staff by ensuring proper conduct.
1. School district employees have a moral and general
obligation to provide a safe campus and prevent harm (Johnson
& Johnson, 2012).
2. Volunteers, custodians, cooks, and internet technologies
professionals are all a part of the school day and should factor
into the testing parameters (Johnson & Johnson, 2012).
To complete a proper outline, if you have a Roman numeral I,
you must have a Roman numeral II. If you have an A, you must
have a B and so forth.
The sentences should represent support from the sources that
have been used in research for previous work.
B. Some southern school districts offer treatment programs for
student and student athletes that test positive for steroids and
other drugs.
1. Students are permitted to remain a part of the team and in the
program if they volunteer to complete an extensive treatment
program specifically tailored for specific abuse (Skinner, 2013).
2. Accepting responsibility for circumstances that permit or
allow drug abuse is key in prevention and recovery for both
students, student athletes, and staff (Skinner, 2013).
III. School district drug testing can protect the community.
A. Staff members and other support staff of the school district
should be drug tested.

12. 1. Staff members of the school district that personally have
issues with drug abuse or addiction cannot properly manage
awareness and prevention (Lundberg, 2012).
2. “It is a crime that all states do not institute drug testing
programs for every member of the school district staff”
(Lundberg, 2012, p. 77).
B. Bus drivers should be drug tested.
1. Bus drivers should be tested for alcohol as well as
prescription and recreational drugs to provide the highest level
for safety for student athletes that travel for competition
(Abeln, 2011).
2. Driver education teachers are not outside the testing laws that
would provide the safest circumstances for all students (Abeln,
2011).
References
The title (References) is centered, but not bolded.
Abeln, L. (2011). A sobering law for bus drivers. School
Business, 55(3), 51+. Retrieved from Business Source Complete
database.
Byrd, J. D. (2010). Drug testing in the workplace. Professional
Protection, 22(7), 22. Retrieved from General OneFile database.
Crain, D., Pool, E., & Schmidt, S. (2009). Essential elements of
a drug-free school zone program. School Fundamentals, 52(11),
52-63. Retrieved from Academic OneFile database.
Johnson, C. R., & Johnson, M. S. (2010). Intrapersonal and
professional ethics: Decision making for personal integrity &
social responsibility (4th ed.). New York, NY: Longman.
Lundberg, L. (2012). Drug treatment and school ground testing:
Politics and organizational dilemmas. Behavioral Sciences &
Law, 9(3), 77. Retrieved from LexisNexis database.
Skinner, M. A. (2013). Risk factors for alcohol and other drug
use by school professionals. Substance Abuse Treatment,

13. Prevention & Policy, 31(5), 26-39. Retrieved from Business
Source
Complete database.
The references are also listed in alphabetical order. Pay close
attention to the small details of formatting different types of
sources. Look closely at things such as punctuation, font
formatting, and capitalization, as these do change depending on
the type of source you are using.
1
Course Learning Outcomes for Unit V
Upon completion of this unit, students should be able to:
5. Analyze the decision-making process for designing and
redesigning organizational structures in
health services organizations.
Reading Assignment
Chapter 6:
Changing Health Care Systems with Systems Thinking, pp. 77-
103
Chapter 10:
Three Case Studies: Mastering Change, pp. 191-256
Unit Lesson
Let’s set the stage and stress why it is important to have solid
systems in healthcare operations:

14. of death in the United States, claiming
the lives of some 400,000 people a year, or more than 1,000
people per day (McCann, 2014). There
is no price that can be put on a life.
dollars each year (McCann, 2014).
To protect patient lives and decrease our nation’s staggering
healthcare costs, systems thinking is vital for to
embrace as healthcare leaders. Systems thinking is the idea of
looking at how each system affects the
complete entity and larger system, just as one would look at an
ecosystem.
In Unit IV, you explored decision making, including medical
algorithms based on best practices, and
operational workflow diagrams, including process flow charts.
In this unit, you will continue your exploration
into designing and redesigning organizational structures in
health services organizations.
In this unit lecture, you will examine the changing payment
methods and how they are causing a
reorganization of health service organizations. You will also
explore advanced tools that healthcare managers
now use to organize internal systems and organizational
structures, including Six Sigma, Lean, and Failure
Modes Effects Analysis.
Changing Payment Methods
Historically, most industries within health care have been paid
on a fee-for service (FFS) basis, which
promotes quantity over quality. Now, payers (Medicare,

15. Medicaid, commercial insurance) are rapidly
changing the way providers (hospitals, clinics, facilities,
doctors, etc.) are paid, moving away from production-
based reimbursement methods and into value-based methods.
Below is a summary of positive changes
taking place in payment methods to promote patient outcomes
and value, including Pay For Performance, the
Patient Protection and Affordable Care Act, Accountable Care
Organizations, Bundled Payments, and Risk
Payments.
Pay for Performance
Speaking on how reimbursement is driving a culture of value
and organizational change in health service
organizations, Congressman Paul Ryan in 2015 noted that while
fee for service (FFS) is the popular
payment method now, by 2020 pay-for performance (PFP)
methods will be the majority (Ryan, 2015).
UNIT V STUDY GUIDE
Decision Making, Designing
Organizational Structures
2
UNIT x STUDY GUIDE
Title
This timeline was also mentioned in 2014 by the Centers for
Medicare and Medicaid Services (CMS) Director, Kathleen
Sebelius, who indicated that up to 75% of payments from CMS
will be value-based by 2020.

16. To give an analogy, healthcare providers have historically lived
in a water-world (called Fee For Service) where the boat and
paddle was the means of keeping afloat and advancing, but
now providers are evolving and quickly coming ashore to the
new land-world (called Pay For Performance) where their feet
and innovation are the means of survival and prosperity. This is
that precarious moment where healthcare
providers still have paddle in hand and feet are in both
reimbursement worlds. There will be more natural
selection in this new world…and only the fittest and brightest
will not just survive, but thrive!
The Affordable Care Act
While people have mixed feelings about the Patient Protection
and Affordable Care Act (ACA) of 2010, the
Act expands the use of PFP approaches, which is an umbrella
term for initiatives aimed at improving the
quality, efficiency, and overall value of health care. These
arrangements provide financial incentives to
hospitals, physicians, and other healthcare providers to carry
out such improvements and achieve optimal
outcomes for patients (Health Affairs, 2012).
Accountable Care Organizations: The main vehicle of the
Affordable Care Act to promote outcomes and
value is the creation of many new Accountable Care
Organizations (ACOs). These are groups of providers
(hospitals, doctors, payers, labs, radiology groups, nursing
homes, home health agencies, etc.) which have
voluntarily come together to give coordinated, high quality care
to Medicare patients under a contract with
CMS. ACOs have significant advantages for patients and
providers including the following:

17. services, usually receiving the help of a care
navigator or case manager at no charge.
other,
creating their own network to ensure referrals
and business.
they (the ACO) generate, ensuring a new
source of income.
o Please read more about ACOs on the CMS website link below,
study and understand their
mechanics and importance here:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/ACO/index.html
Bundled Payments
Bundled payments are also referred to (depending on the type of
healthcare industry) as an episode payment,
global payment, or case rate. A bundled payment is where the
provider (hospital, surgeon, nursing home,
etc.) is paid a single, comprehensive payment and must provide
all expected costs for that episode of care.
As such, the provider is motivated to make sure the quality of
healthcare delivery and outcome for the patient
is as optimal as possible, as any complications in the patient’s
care would result in increased costs and
financial loss to the provider against its fixed payment. Let’s
look at two common examples of bundled
payments you will see in practice, hospital bundles and surgical
bundles.

18. receives a larger payment than it would
if was just billing CMS for the hospital stay, and with that
larger payment the hospital is expected to
become the payer for that patient’s entire episode of care.
For example, the hospital becomes the payer for the nursing
home and home health agency for a
patient’s episode of rehabilitation (instead of the nursing home
and home health billing Medicare
separately). This reimbursement method encourages the hospital
to coordinate the patient’s entire
episode of post-acute care (PAC) by:
o partnering with a select few skilled nursing facilities (SNFs)
and home health agencies (HHAs),
thus, the hospital narrows its network.
o having its hospitalist medical doctors’ oversee the care in the
nursing home (the hospitalists are
also the SNFists).
(Free Clip Art Now, n.d.)
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/ACO/index.html
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/ACO/index.html
3
UNIT x STUDY GUIDE
Title
o Having its hospital case management team have a proactive

19. presence with the SNF and home
health case management teams
surgeon receives a Bundled (global)
Surgical Payment, he or she is expected to cover all
professional evaluation and management costs
before, during, and after the patient’s care rather than billing
the insurance for each patient visit.
o Obstetrics: A common example of this is obstetrics, where the
OB is paid a set, global rate and is
expected to provide all prenatal, labor & delivery, and postnatal
care for a normal vaginal delivery,
with an increased payment for a Cesarean delivery
o Orthopedics: A less common but forthcoming example
recently announced by CMS is its intention
to pay orthopedic surgeons in a bundled method for knee and
hip replacement surgeries. Under a
surgical bundle, the surgeon becomes responsible to pay for any
post acute care (PAC) the
patient needs, including paying the nursing home and/or home
health agency.
This Surgical Bundle method:
1. Increases Patient Outcomes: Surgeons will be financially
incentivized to coordinate the patient’s
whole episode of care across the continuum of the patient’s
need, minimizing post-acute infections
and reducing hospital readmissions.
2. Increases Surgeon’s Risk & Benefit: Financial risk is
increased if the bundled amount is overspent,
financial benefit value is created through PAC collaborations

20. and the payment is under-spent.
3. Increases SNF Risk & Benefit:
1. SNF Risk: Surgeons will want to get patients to a less
expensive form of care (Home Health) as
quickly as possible, bypassing or minimizing SNF Length of
Stay (LOS).
2. SNF Risk: SNFs not selected by the surgeon or hospital who
are used to receiving some of the
Surgeon’s referrals now will lose that referral source.
3. SNF Benefit: SNFs who are selected by the surgeon or
hospital will gain more share of that
referral source.
4. Increases Payer Value:
cost efficient surgery and recovery
possible (least input of cost for the best outcome).
ll be billed for one global payment, not separately as
is current practice (surgeon,
radiologist, hospital, nursing home, and home health).
Historically, the risk has been on the payers, but now the payers
are creating shared risk payment models, a
canary in the coal mine of what is to come. Shared risk creates
risk for underperforming providers and
rewards for top performers. Shared risk creates alliances,
collaboration, and communication, which creates
better quality for patients and cost efficiency for payers.
Capitated Payments

21. Last in our list of payment reforms are capitated payments.
These refer to a payment model where the
provider (doctor, health plan) is paid a fixed amount of money
Per Member Per Year (PMPY) or Per Member
Per Month (PMPM) to provide all contracted care for that
patient. Let’s look at two common examples of
Capitated Risk payments you will see in practice:
Pediatrics) is paid $35 PMPM for each
patient on her/his panel and has 500 patients assigned to
her/him ($35 PMPM x 500 patients =
$17,500 a month, or $210,000 a year payment to the doctor).
This reimbursement method
encourages the doctor to be proactive with her/his highly
utilizing (frequent flying) patients.
Capitated doctor payments are most common in Staff Model
HMOs, which are organizations that
have doctors, hospitals and health plans all under one common
Federal Employment Identification
Number (FEIN). Kaiser is our country’s largest Staff Model
HMO.
(United, Blue Cross, Cigna, Aetna, etc.)
receives about $9,000 PMPY for each Medicare beneficiary it
enrolls into its Medicare Advantage
Plan (Secure Horizons, AARP, Blue Advantage, etc.). The
health plan (insurance company) then tries
4
UNIT x STUDY GUIDE

22. Title
to contract with providers (hospitals, medical groups, nursing
homes, home health agencies, labs,
radiology, ambulance, etc.) on a similar, capitated method.
For example, an ambulance company for a given geographic
region receives a contract from the local
Medicare Advantage Plan to provide all non-emergency
ambulance services for that health plan’s
members in that area. Many people do not realize that a
Medicare Advantage Plan (Medicare
administered by the insurance company) is a capitated (fixed
amount) payment made by Medicare to
the insurance company; the insurance company naturally wants
to underspend that amount.
Advanced Tools to Organize and Reorganize
Now that we have explored payment methods and their effect on
how we are reorganizing our health service
organizations, let’s examine advanced tools you will use to
create a solid system of care. These tools derive
historically from Total Quality Management (TQM) and
Systems Thinking models of manufacturing, the most
prolific of which being auto manufacturing and the Toyota
Production System (TPS). Toyota was so effective
in its focus on quality and cost that by the mid-1980s and into
the 1990s, more Americans were buying
Japanese sedans than American. The U.S. auto industry took
note and began its transformation, embracing
quality tools and now American sedans are arguably as good as
Japanese-produced, and Japanese-
produced sedans are largely manufactured in the United States.
The story of transformation for health care is one that goes like

23. this: medical errors are the third leading cause
of death in the United States; our current healthcare cost
trajectory is unsustainable; Congress and payers
have created shared risk models and are rapidly shifting
payments to value-based; healthcare providers are
taking note and have earnestly begun our transformation toward
increased quality.
One cannot blame providers, as there was no financial incentive
in the former Water-World of Fee For
Service—the risk was on the payers. One must applaud all, from
Congress to Payers to Providers, as we are
synchronizing now more than ever before to bring about
collaborations and alliances, outcomes and value.
Let’s briefly explore three models you will see in health care
for quality improvement and systems thinking:
Six Sigma, Lean, and Failure Mode Effects Analysis. You can
become belt certified (green to black) in these
methods (and you will make yourself very valuable as you do):
1. Six Sigma (decreasing defects): decreasing defects in our
systems and striving for a nearly perfect,
very disciplined and data-driven outcome. To have Six Sigma
means your product or service has a
99.99966% chance of being within control limits of what you
expect for your outcome ( i.e. the
process or procedure can only have 3.4 defects per million). Six
Sigma is a fanatical desire to follow
methods to improve processes and promote operational
excellence (Gygi, DeCarlo, & Williams,
2005).
2. Lean (operational efficiency): is arguably best captured in the
Toyota Production System (TPS)

24. model, which strives to use as few resources as possible, to be
faster than competitors, and to
eliminate waste.
a. One such Lean system is Just In Time (JIT), or the idea of
having supplies arrive just when
needed—not carrying costly and unnecessary inventory.
b. Lean also involves supplies standardization. As an example,
Salt Lake City-based Intermountain
Healthcare built a $40 million Supply Chain Center in 2012 to
have an all-inclusive approach,
managing the administrative, material management and logistics
in one location. Intermountain
standardized as many items as they could, from the patient
plastic water mugs to hip replacement
joints. Intermountain projected a $200 million savings just in
the first five years (Sullivan, 2013).
3. Failure Mode Effects Analysis (FMEA) (addressing what can
go wrong): identifies all possible failures
in a design or process, identifying those effects and creating
fail-safes and redundancies to rectify
any possible issues.
c. A great example of Failure Modes is the airline industry,
which starts at the design phase of an
aircraft and looks at all modes on an aircraft (hydraulics,
electrical, landing gear, etc.), studies
what possibly could go wrong with that system, predicts the risk
of failure of that system,
prioritizes risks, and designs redundant systems for fail-safes.
d. Another great example is NASA, which step-by-step collects
knowledge about possible points of
failure in a design, deciphers the consequences, determines how

25. frequently a failure might occur,
ranks the failure by importance then reverse engineers solutions
to maximize safety and controls.
5
UNIT x STUDY GUIDE
Title
Six Sigma and Failure Modes are sometimes called a fanatical
approach to commitment to quality. Quality is
value and in health care we are talking about human life, which
in invaluable. Join the journey, study and
become expert in your industry of health care, become a Change
Agent and bring about good in your part of
the healthcare world!
References
Free Clip Art Now. (n.d.). Kayak [Image]. Retrieved from
http://www.freeclipartnow.com/recreation/boating/kayak.jpg.ht
ml
Gygi, C., DeCarlo, N., & Williams, B. (2005). Six sigma for
dummies. Hoboken, NJ: Wiley Publishing.
Health Affairs. (2012). Pay-for-performance. Retrieved from
http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_
id=78
McCann, E. (2014). Deaths by medical mistakes hit records.
Healthcare IT News. Retrieved from
http://www.healthcareitnews.com/news/deaths-by-medical-
mistakes-hit-records

26. Ryan, P. (2015, February) Health Care Value Summit. Salt Lake
City, UT.
Sullivan, K. (2013, October). Intermountain’s supply chain
boasts efficiency, lower cost. Fierce Healthcare.
Retrieved from
http://www.fiercehealthcare.com/story/intermountains-supply-
chain-center-boasts-
efficiency-lower-cost/2013-10-28
Suggested Reading
ACOs are increasing in numbers, and as a major vehicle of CMS
to bring about outcomes and value, and
they are changing how health care is delivered. The article
below presents one example of this.
Spencer, G., & Hines, S. (2015, February). Preparing for the
future: Using analytics to drive clinical &
operational excellence. Health Catalyst. Retrieved from
http://www.slideshare.net/healthcatalyst1/preparing-for-the-
future-using-analytics-to-drive-clinical-
operational-excellence