Healthcare Management: Challenges and Issues

VMS & Vendtegrity in the Press

Check out the April issue of Staffing Industry Review (Free Registration Required). There are several great articles on the growth of VMS. One article focuses on Healthcare VMS and there is a nice write up on Vendtegrity.

Thought Shots #3

We've added Thought Shots 3. This is the next installment in our ongoing series of innovative ideas designed to help improve the quality of heathcare. In this issue, I discuss "Episode II - How to Retain 'Me Generation' Nurses: Management Strikes Back". It's worth the read, download your Thought Shot today.

RN Residency Increases First-Year RN Retention Rates

Simply brilliant! I love hearing about people who see a challenge and create innovative solutions to meet and overcome those challenges. Versant, a non-profit organization formed to help increase the retention rates of newly graduated RNs is made up of exactly those type of people.

It is estimated that first-year retention rates for new graduate nurses is between 40% and 65%. In other words, as many as 6 out of 10 new nursing grads leave nursing practice within one year of graduation. Those are alarmingly figures especially in our current nursing shortage!

Rather than blame those turnover rates on the nursing grads, their generational quirks, or their immaturity, the people at Versant assumed that the problem lay with how RNs were being transitioned into clinical practice. In other words, the problem was a management problem. Therefore, management could solve the problem.

The solution they created was a twenty-week RN residency program that helps RNs bridge the gap between academic preparation and the clinical demands of acute care. The program began at Children’s Hospital in Los Angeles in 1999 and its results are impressive to say the least!

Research on the program’s results demonstrate that first-year retention rates for new graduate nurses who participated in the RN residency program increased to 90%. In other words, they lost only 1 out of 10 nurses within the first year after graduation.

If you’ve never heard of Versant, their residency program or the research results of their program published in the July/August 2004 edition of JONA, you can visit their website at versant.org.

What can dog food teach hospital administrators about improving healthcare?

I admit the title of this blog entry is a bit provocative. However, one of the ways I enjoy challenging hospital managers and administrators is to encourange them to read articles on best management practices from outside of the healthcare industry. Why? Because people are people no matter where they work. All employees have the potential to wildly succeed and be happy with their jobs while performing at top productivity levels. This, however, doesn’t happen by accident. It takes good leadership and management practices to create the environment necessary for bringing that type of performance out of people.

With that in mind, here are my latest reading assignments for hospital leaders. Read both articles back to back in one setting. I hope that they are eye opening and thought provoking.

Management Bites Dog Food Factory

Job Satisfaction Why Your Job Isn’t a Bowl of Cherries

Nearly Meaningless Leadership

I recently attended a series of lectures on ‘Advanced Principles of Leadership’ held by one of the local business schools. During the first lecture, the assigned speaker attempted to tackle the issue of “what practical steps a business leader can take when different stakeholder groups have competing and conflicting goals within an organization”. For instance, in a hospital, nurses (one stakeholder group) may have a goal of increasing salaries while the executive team (another stakeholder group) may have a competing goal of keeping costs down, while Human Resources (still another stakeholder group) may have a competing goal of attracting and retaining top nursing talent.

How should a hospital leader deal with such a thorny issue?

According to the lecturer, the best thing a hospital leader could do under these circumstances would be to craft a mission statement that was “nearly meaningless” so that each competing stakeholder group could read their own agenda into it. (You did NOT read that incorrectly. This lecturer literally advised us to avoid siding with any particular group and instead try to appease them all by creating a ‘nearly meaningless’ mission statement. Even worse, he defended this recommendation. This is NOT leadership!)

When it came time for audience feedback, I was the first to speak. I told the speaker that his advice was ‘practically worthless’ and that the best business leaders in the country are in disagreement with his views. I recommended that he read Jack Welch’s latest book, ‘Winning’. In the opening chapters Welch gives some great recommendations about mission statements; namely, that they need to be clear, specific and measurable. I also suggested that he take some time catching up on the current backlash against vague and meaningless ‘corporate speak’ by visiting the dilbert.com website and spending some time playing with Dilbert’s ‘Mission Statement Generator’.

Afterward, I met with the leaders of the business school and demanded that I get my money back.

RN Skills and Management Skills: Are They the Same?

I walked into the nursing administrator’s office. There were stacks and stacks of papers all over her desk. She informed me that she only had a couple of minutes to talk because she had a union grievance that she needed to attend and she had never dealt with union issues before. She was frazzled, disorganized and obviously out of her element.

She had recently been promoted from the hospital’s nursing ranks into management. She let me know that she was the third RN be promoted into that position in the last 10 months. Her two predecessors had both quit their jobs after only a few months. Based on her workload and the lack of training and support she was receiving from the hospital’s executives, I knew that it was likely that she’d be leaving too. Why? Because neither she nor the managers who preceded her were qualified to hold management positions.

Harvard Business School’s ‘Working Knowledge’ website has a compelling article which tackles the question “Is Business Management a Profession?”. This is a must read article for hospital executives and administrators. Although it doesn’t deal specifically with healthcare management it cracks open the debate on whether management itself should be considered a profession. How you answer this question exposes your assumptions regarding how best to manage your organization or team.

Here’s my 2 cents. It is an erroneous assumption to believe that a great RN will make a great manager or administrator. RN skills are much different than management skills. In order to succeed in management people need training on managerial practices and strategies.

Nurses don't quit jobs...

I’ve been meeting with hospital administrators and discussing the follow up article that I am writing about retaining ‘me generation’ nurses. While most administrators agree there is no ‘magic bullet’ for solving the issue, Lorie Shoemaker, CNE at Palomar Pomerado Health told me how her health system is attacking the issue by proactively raising the competencies of their management. Said Shoemaker, “Nurses don’t quit jobs, they leave bad managers.”

Thought Shots #2

We've added Thought Shots 2. This is the next installment in our ongoing series of innovative ideas designed to help improve the quality of heathcare. In this issue, I discuss "How to Retain 'Me Generation' Nurses". It's worth the read, download your Thought Shot today.

Feeling 'Sharp'

A short time ago, we were invited to present our VMS services to Sharp Healthcare in San Diego. It didn't exactly make sense. Sharp's management team is outrageous! They live and breathe excellence, and they have been the cutting edge implementers of the absolute best practices in hospital management for years. They've won multiple awards including the 2003 Compass Award, and they were a bronze medalist in the healthcare category for the Malcolm Baldrige National Quality Award. Something told me that they were not going to need our services. But, when you're invited to present at a hospital, you never turn the invitation down. Boy was I glad we went!

We met with two members of the management team of Sharp's Supplemental Nursing Services Staffing Resource Network. Our presentation went off without a hitch. Their questions were fantastic and showed their mastery of the issues! Our answers were brilliant! It was one of our best hospital presentations, yet. We were having a blast! Then, one of them let us know that they were already doing everything that we were offering them in our VMS service.

Had we just wasted our time? Not at all! The conversation turned from a presentation of our services to a complete validation of our business model. We were talking shop with some of the world's best hospital administrators. We talked at length about their internal VMS practices and the millions that it has saved them year after year. We discovered that our practices mirror theirs almost point for point, and they confirmed what we already knew; staffing companies have no business offering VMS. (They actually said it a lot stronger than that, but I'd like to be somewhat polite in how we say things on this Blog).

Why had they invited us? Because they make it a practice to monitor the market to insure that they keep up with the latest innovations.

Our time at Sharp ended with both managers agreeing to tell other administrators at other hospitals about Vendtegrity. And why wouldn't they? The way I see it, Vendtegrity is offering hospitals the ability to implement some of the same practices as Sharp Healthcare. Not only are the cost savings to these hospitals huge, but who knows? This could help put them in contention to win the next Malcolm Baldrige Award.

They call it "Winning the House"

All companies have a profit motive. Even my beloved Vendtegrity must make a profit it if plans to stay in business. Contrary to popular notions, however, the desire to make a profit is not an evil one. In fact, it is a very noble goal and purpose. Companies that make a profit contribute in a positive way to the economy and provide scores of people the means to pay for mortgages, groceries, retirement and their kid's college. This is accomplished through salaries, dividends and investment returns.

However, profit motives take a turn to the dark side when they are pursued at the expense of others. A clear example of this would be those who traffic in illegal narcotics. Drug cartels' and dealers' profits are achieved only by destroying the lives and health of their consumers. Their profits are a form of blood money.

This leads to an important point for hosptials. In the VMS market, there are many companies that are offering VMS services that literally are designed to make a profit at the expense of others. The profit motives of these companies are dubious at best. It's not hard to spot these companies because each and every one of them have one thing in common; they're staffing companies.

Here's the play. A staffing company who is trying to figure out how to increase their market share and get an edge over their competition begins offering Vendor Management Systems (VMS) services. Their goal, however, has a lot more to do with gaining control of a hospital's staffing dollars and less to do with helping hospitals regain control of their registry budget. How can I make such a claim? Simple! The registries that offer VMS have coined a term for this goal. They call it 'Winning the House'. In a nutshell, 'Winning the House' occurs when one staffing registry controls 51% to 80% of a hospital's staffing business. The greatest victims of this tactic are not competing registries who find themselves X'd out of a hospital that they've been serving for years, rather it is the hospitals themselves. Let me explain.

If the goal of a registry is to 'Win the House', (forget the fact that they'll tell you to your face that they're 'Vendor Neutral'), then they've designed their services in such a way that they're really not profitable unless they "Win the House". I could easily name a few big players in this market where this is the case. If they don't succeed at "Winning the House", then they are more likely to drop you as a customer or provide less than stellar service as a means of controlling their losses. Once that scenario plays out, you will be left to pick up the pieces of a failed VMS implementation and will be in a worse situation than when you started. On the other hand, if they do succeed at "Winning the House" then they've achieved a monopoly in your hospital, and once that happens they can begin raising rates. You will be at their mercy. One thing that you can count on, however, is that no registry is going to be motivated to help a hospital lower their demand for their services. So, whatever short-term gains you may see from VMS will be erased in the long-term.

What you need instead is a VMS company that doesn't compete against the vendors it manages. What you need is a company that has created a profitable VMS model.

If your hospital is preparing to take on a VMS project, then you need to ask yourself, "Is it really in our best interest to have our house 'won' by a staffing registry?"