Temple University Health System: Crossing Boundaries - Health Executive - Red Coat Publishing - Inside Healthcare

People tend to be territorial—blame our reptile brain. For hospitals, that natural tendency can be a disaster, causing time-wasting struggles over resources and reluctance to cooperate for the greater good.

Robert Pezzoli, VP, COO, and interim CEO

One thing that helps people leave behind that territoriality is a crisis. For example, in a hospital losing scads of money and staring at financial ruin, people tend to pull together and figure out ways to work more efficiently.

That’s what Robert Pezzoli saw when he worked at Indianapolis’ Indiana University Medical Center, which delivered about $60 million of free care a year and received only $25 million in tax money to support that. “We had no choice but to figure out ways to run an efficient organization and still provide high quality care,” said Pezzoli.

He saw a similar phenomenon when he headed up St. Agnes Healthcare in Baltimore, which was heavily regulated and rate controlled by the state. “We got a rate order every year and had to stay within certain parameters,” said Pezzoli. “If we were going to make money, we had to find a way to improve our operating performance so that enough of our rate dollars fell to the bottom line to replenish the physical plant.”

Fortunately for Temple University Health System (TUHS) in Philadelphia, where Pezzoli is now executive vice president, COO, and interim CEO of Temple University Hospital, he has been able to apply his Indianapolis and Baltimore experiences to a hospital in less desperate straits.

Pezzoli joined the five-hospital system in 2002 and began an operational improvement (OI) program that yielded $14 million in savings the first year, $42 million in the second year, and cumulatively saved the health system $103 million over 45 months. On the clinical side, Pezzoli said the organization has seen shorter lengths of stay, as well as reductions in readmission rates.

“TUHS was operating, like a lot of health systems do, as a group of parts,” explained Pezzoli, who was hired as part of a management change at the health system level. “There was a management culture that was academic-hospital centric—what was good for Temple University Hospital was good for everyone. But that doesn’t really work.”

This is not optional
Starting with clinical and performance benchmarking (from CareScience and Solucient) to show how 7,500-employee TUHS compared with similar health systems, Pezzoli and his team taught administrators and clinicians how to work together to develop new, more efficient systems that would better serve patients and the health system’s bottom line.

Initial reactions to the program were positive, said Sandy Gomberg, associate hospital director at Temple University Hospital. “At first, people are excited because they’re confident their scores will be high against the benchmarks. Everyone is sure they’re operating efficiently and that their performance is superb.”

That turned out not to be true, leading to the next stage: denial. “When you get the data and see that you’re not superb, you begin to defend yourself by saying your department or hospital is different,” said Gomberg. Indeed, TUHS incorporates not only an academic teaching hospital but also a behavioral health campus and two community hospitals (Jeanes Hospital and Northeastern Hospital).

But this did not fly with Pezzoli, who knew that efficiencies can be brought to bear on any type of clinical situation. “I said, ‘This is not optional. You’re not going to wait me out. We will do this; we will hit these targets.’ We told them we would provide the support and resources necessary for management teams at the operating level to hit their numbers, but they would hit their numbers.”

Forced to ask questions
Once the message sank in, cross-functional teams began working to improve their scores. “What Bob did forced various teams to get together rather than compete,” said Gomberg. “For example, all of the departments that needed remote radiology had to get together to help radiology provide services more cost efficiently.”

She noted that the skill set to do this is completely different from the skills learned by most hospital administrators. “It’s almost a lean manufacturing concept,” she said. “And it takes two or three years for the language and concepts to become imbedded throughout the organization.”

The change is traumatic for many, Pezzoli added, because it involves viewing management as a discipline. “A lot of people don’t get to that level of clarity around management. When you apply discipline to a process, it forces you to ask yourself questions that you otherwise wouldn’t.”

It may be hard for some hospital administrators to imagine a hospital without nearly constant territorial battles. But Gomberg said that’s precisely what it’s like at Temple, leading to a very different type of budgeting and resource-approval process.

“Everyone speaks in OI terms, and a department head wouldn’t bring us a request for a new FTE unless s/he could say ‘Our volume is exceeding the 25th percentile, and I need this FTE to maintain productivity.’ It takes all the personal lobbying power out of those kind of decisions and levels the playing field.”

Integrated services
Having successfully revamped the majority of the hospital’s processes, Pezzoli, Gomberg, and their teams have turned their attention to developing and implementing six service lines that will be the focus for the health system. These include a lung center, a cancer center, a cardiovascular institute, a neurosciences center, a digestive disease center, and a center for solid organ transplant.

Pezzoli said that as an academic-medical-center-based health system, TUHS has high costs associated with academic education and medical school affiliation. “We have to look at things other than basic bread-and-butter services; they won’t pay the bills,” he said. “We can’t get enough contribution margin out of those services to cover the heavy costs of the infrastructure to support our academic orientation.”

Pezzoli explained that TUHS has embarked on a new service-line operational model that organizes clinical programs the way patients access healthcare for disease processes (as opposed to the traditional silo departmental management model).

Gomberg added that without the OI experience, the organization would not have been ready for the type of clinical and operational overhaul necessary to support the service lines.

“The OI program took a lot of the fat out of the organization so we could invest differently in people and equipment. It also taught our teams—including physicians—that they had to work together to figure out how to do things differently, always keeping the patient in the forefront,” she explained.

One example is at Jeanes Hospital, where aspects of TUHS’s cardiovascular, digestive disease, and neuroscience service lines are being deployed. “Our service line administrators are working with the traditional management teams at Jeanes to integrate the hospital into the broader service line,” said Pezzoli. “If someone has a neuroscience episode at Jeanes, that patient will immediately come to Temple instead of waiting in the Jeanes ED for someone to figure out what to do with him or her.”

This type of change is possible, said Gomberg, because rather than spending time looking at how the health system did last month, teams are always looking forward. “We can focus continuously on next week and next month and next year. Without that solid operational base, I don’t think big organizations like this can get to that next level.”

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