By January 27, 2014 1 Comments Read More →

Podcast #192: John Torinus, Solving the Employer Healthcare Crisis

MP3 File (run time 36:50)

TorinusJoining me for podcast #192 is John Torinus, author of the excellent book, The Company That Solved Health Care: How Serigraph Dramatically Reduced Skyrocketing Costs While Providing Better Care, and How Every Company Can Do the Same. John is the chairman of Wisconsin-based Serigraph Inc., a graphics parts manufacturer with ownership in ten plants in the U.S., Mexico, China and India with over $130M in annual sales. John has served as business editor and columnist at the Milwaukee Journal Sentinel.

John is collaborating with the ThedaCare Center for Healthcare Value for a new workshop: “Solving the Employer Healthcare Crisis,” to be held in Phoenix on January 28 (and hopefully again in the future).

In this episode, we talk about how Serigraph has kept healthcare costs under control while improving the health of their employees. How do concepts of consumer choice, data transparency, and focusing on preventive care help to “engage all employees in the healthcare challenge”? For example, 90% of their diabetic employees have their disease “under control” as compared to about 30% nationally. What is this “grass roots revolution” in healthcare?

For a link to this episode, refer people to  www.leanblog.org/192.

For earlier episodes of my podcast, visit the main Podcast page, which includes information on how to subscribe via RSS or via Apple iTunes.  

You can also listen via Stitcher.

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If you have feedback on the podcast, or any questions for me or my guests, you can email me at leanpodcast@gmail.com or you can call and leave a voicemail by calling the “Lean Line” at (817) 776-LEAN (817-776-5326) or contact me via Skype id “mgraban”. Please give your location and your first name. Any comments (email or voicemail) might be used in follow ups to the podcast.

Transcript:

Mark Graban: Hi. This is Mark Graban. Welcome to Episode 192 of the podcast for January 27th, 2014. My guest today is John Torinus. He is the author of a really excellent book that came out a couple of years ago called “The Company That Solved Healthcare.” That company is called Serigraph. John is the chairman (formerly CEO) of that company. They’re based in Wisconsin, a graphics parts manufacturer, primarily in the auto industry with about 130 million in annual sales.

At this company, they’ve done a lot of really innovative things to keep their healthcare cost under control while also improving the quality and the health outcomes for their employees.

We’ll talk about related concepts including consumer choice, consumer-driven healthcare, data transparency on cost and quality, and helping focus on preventive care to help, as he puts it, engage all employees in the healthcare challenge and creating what John also calls a grass roots revolution in healthcare.

Another reason we’re talking today is that John’s collaborating with my friends and the good folks at the ThedaCare Center for Healthcare Value. For a new workshop that they’re piloting called Solving the Employer Healthcare Crisis.

I wish I had gotten the podcast out sooner. The pilot is actually being held tomorrow, January 28th. Assuming that goes well, hopefully, this workshop will be held again in the future. If you want links to John’s book, to this workshop, any ways you can get involved in the future, go to leanblog.org/192.

[music]

Mark: John, hi. Thanks for joining us here on the podcast today.

John Torinus: Good morning, Mark.

Mark: What I’d like to talk about today, can you start off by talking about Serigraph and a little bit of your history there and what the company has done with Lean before we get into some of the discussion of healthcare.

John: Sure. We’re a mid-sized manufacturing company in the heart of Wisconsin. We make graphics parts. If you get in your car and you look at your instrument cluster, we will make the face of your instrument cluster. If you buy a Whirlpool clothes washer, we would make the control panel, all the graphics. Actually, we’re moving deeper into the user interface. We make the structure, and we do some of the circuitry behind them.

We’re a parts company. We have about 520 employees here and about another 500 and other countries. In our health bill, those 520 people come from more than five million bucks a year. It’s probably our second or third biggest spend.

Mark: One thing that really came through, loud and clear, in your book was, taking responsibility of managing those costs. Of managing healthcare as a supplier. Talk about, maybe, how you got started taking on that challenge of trying to manage your healthcare spending and your employee health in different ways. What prompted that?

John: Back in the ’90s I was looking at this trend, where you were getting double digit increases every year on the private sector side of healthcare. It may have been in the 7-8 percent overall for the country but it was squeezed out toward the private sector. We were seeing 10, 12, 15 percent increases.

It was in 2003 that I was doing the budgets for the company. I was still CEO at that time, I’m now Chairman. We had about $5.5 million health care bill and we were looking at a 15 percent increase. It was $800,000 for 2004 that we don’t have.

In the world that I’m in, and I know you’ve been in that world too Mark, I live in a world of deflation. We get a contract with a big auto company in the up years, and you have down round pricing. You price for the first year and then you have to take it down 3 percent a year for life of the contract. That’s deflation by definition.

There I was looking at my prices going down every year and my third biggest spend going up by 15 percent a year. We just didn’t have the money. I knew we had to do something.

Back in the ’90s I had organized a coalition of local companies in Washington County, Wisconsin, which is north of Milwaukee. I got 16 of them together and we had 1,800 lines. We were going to assemble power on the buy side. By God we were going to bring down the cost of prices.

Meanwhile, the providers were smarter than we were and they were assembling power on the sell side at a far faster rate than we were. They just “roped the dope” and I was the dope. I spent a whole decade doing that.

I got to the end of the decade and did a little checking as far as the lean process and realized that we hadn’t even touched the trend. My first instinct was to try to apply quality disciplines to this problem, but I couldn’t get any of the other members of the coalition to go along with me. They just wanted to chase discounts. But discounts off of what? Off of rising sticker prices.

I left my own coalition and started searching for better answers. I started talking to the smartest people I could find in Wisconsin and other parts of the country about what they were doing to get a hold of this. It was sort of a learning expedition. One of the guys I was talking to was Larry Rambo. He was the CEO of Humana in Wisconsin.

I’ve been on podiums with him and complaining that, no, that health insurance, it ain’t going to affect my brokers, and they weren’t helping me. It got pretty heated. Yet, became friends. He called me about the middle of 2003 and said, “You know what we’re going to do John? We’re going to take the 17,000 employees in Humana based in Louisville, Kentucky, and we’re going to make them guinea pigs for HSAs, which had just passed a year earlier.”

[crosstalk]

Mark: Health Savings Accounts.

John: …Heath Savings Accounts. They were going to make their employees engaged consumers. I kept pestering him through 2003, “How’s it going, Larry? How’s it going? How’s it going?” He finally came back about mid-year and said, “John, it looks like it’s working. Instead of a 15 percent increase, we’re going to see about 4.5. “I said, “Boy, that’s good enough for me. We’re desperate for answers.”

You don’t need perfect information as a CEO to make a decision. We just decided that we…another early mover on HSAs. January 1st, 2004, we put in a consumer-driven health plan, we used a HRA, Health Reimbursement Arrangement instead of an HSA, but it’s essentially the same dynamics. It works.

I’ve did a snapshot about six months of the 2004 and our utilization was down by about 17 percent. People, because it was their money now, basically gave the money to the employees to spend on healthcare with their money, and they started spending it a whole lot more judiciously. That’s the sort of origin of the whole thing.

Mark: That first piece, maybe we can get into this a little bit more. The consumer responsibility piece. This is the HSA. Can you talk a little bit more about the dynamic or some of the examples of how putting that choice, that responsibility in the employee’s hands led to different decisions, or better health and lower costs?

John: If you know that you’re a student of lean disciplines, you know that at the heart of it is you have to engage every single member in the organization and the discipline is the philosophy and the knowledge. I look at the healthcare and I said, “It’s the same thing. I can’t do this from the top down. Certainly, it takes top-down leadership, but it’s got to also come, the change has got to come from the bottom up.

If you get a $300 deductible, these are the old standard plans, and a 20 percent co-insurance, really the employee doesn’t have much skin in the game. It just appealed to me that we had to get the incentives and disincentives right now.

Human beings are not entirely economic animals as you well know. If you have misaligned incentives, you are going to get misbehaviors. I always think back to one of my lines in my book as I remember back when I was in the Marine Corps. We had Friday night happy hours at the officer’s club. They served martinis for 10 cents, and I occasionally was over-served. No skin in the game.

It made sense to me that a good place to start would be with the number one incentives and disincentives and then couple it, of course, with the engagement piece. You’ve got to engage your people in helping solve problems. The healthcare hyper-inflation was a problem that needed solving, and you cannot do it without the engagement of the troops.

That’s what we did. We did a lot of education communication. The first thing they said to me was, “OK. Now you’ve made me into a consumer. Now give me the information. It’s one thing to put money in my account, but how do I spend it if I don’t have adequate information?”

We immediately started this transparency model, where we exposed the prices of procedures at the different hospitals and clinics around the region, and tried to expose the quality metrics as much as we could. There wasn’t much back then, but there’s a whole lot more now.

They started asking questions, like, “How much is this going to cost?” Doctors would respond, “Well, I don’t know.” They were real disingenuous responses. Then you call the front office of the hospital or the clinic and they said they didn’t know.

It was ridiculous, but they started asking the questions, and we started unearthing the information. They started behaving like adults like they are in every other economic segment in their life. We started to drive the cost into some kind of a more moderate picture.

The last ten years, we’ve averaged…Our inflation has been at less than three percent. We’re now operating at less than 40 percent under the national average. We’re paying about $9,000 per employee, the national average, according to Kaiser’s, is about $15,000-$16,000.

When you multiply, what is it, $7,000 per employee times 500 employees, I’m saving $3.5 million a year. Ow.

Mark: I want to come back to the question of these measures of cost and quality, and helping drive choices around, maybe where to go for care. Let’s talk first, there’s a big emphasis in your book about the importance of primary care over specialty care, making it easier and more accessible, and maybe this comes back to some of the incentives. Can you talk about some of the things that you did to help encourage primary and preventative care?

John: Yeah, I said before that I’m a learner, and I am, but sometimes I’m a slow learner. We were into this, as I said, we got serious about this in 2003, although I’d been flailing around back in the ’90s.

About three years into it, in fact, I remember the moment, it was I was in the shower, it was July 4th, 2006. I’m starting to think about everything I’d heard at this seminar. It’s everything you hear over and over and over again, wherever you go in the healthcare world is 80 percent of the cost comes from 20 percent of the people who have one of the 15 chronic conditions.

In other words, it’s the unhealthy people that drive the nation’s healthcare bill upward. The old 80/20 rule applies in a lot of places. Sometimes you’ll hear 90/10, sometimes you’ll hear 5 percent and 50 percent.

Mark: It’s the old Pareto principle.

John: Yeah, the preponderance of the costs are in a small part of the population. I went, “Duh.” I’m supposed to be a professional manager, that’s my bag.

I’ve been spending the last 13 years if I count the ’90s, trying to manage the 20 points. I should be over here trying to manage health, which is 80 points of the proposition. Just a Pareto analysis, Mark.

The next week when I came back to work after the holidays, I sat down with my HR exec and said, “Look, we’ve got to start managing health. We’ll never get a sustainable picture here until we start managing health, because that’s where the health costs reside.” We just decided to start.

I said, “Well, let’s start with diabetics. That’s one of the top three chronic diseases.” I set out a challenge, and said, “Let’s get 100 percent of our diabetics under control.”

The sad statistic for the nation was only about a third of the diabetics follow their regimens, strangely enough. It can be a very tough disease, resulting in amputation, blindness, and, of course, high costs.

We were right there on the national average, and we just started putting measures into place. We started with an incentive of a hundred bucks a month, no, a hundred bucks a quarter, for a diabetic under control.

Later, we shifted that, like a number of other companies have to say that, “We’ll give you your insulin free if you’re under control.” If it’s under control, the metrics are three blood tests, the A1C, the lipid panel, and cholesterol.

Today, we have over 90 percent of our people under control at Serigraph. It’s a lot of education, it’s a support system, it’s the incentives in the right place, and people start responding to it. You’re in, you’re out. It can be done.

Mark: Would you know what the national average is for the percentage of diabetics that would have their condition under control?

John: It’s about a third. I don’t think the needle has moved much. It’s moved in companies that have gotten serious about it. Briggs & Stratton also has a diabetics control program. They’re up where I am, with a very high percentage of their diabetics under control.

We’ve moved a lot of pre-diabetics out of that category. I remember one guy coming in to me and saying, “I just found out I’m pre-diabetic.” He just took it to heart, and about six months later, a year later, he came in and said, “I’m out, I’m no longer pre-diabetic.” I said, “What’d you do?”

He said, “I just started,” he was overweight, he said, “I just started…” He lost 60 pounds. He played tackle football in college. He lost 60 pounds.

I said, “Did you do anything?” “No, I just started walking every day and watching my diet, and bingo.” It isn’t always profound stuff, but it’s one engaged employee by another, and repeated over and over again. The stuff can be managed, both at the managerial level, but also down at the personal level.

Mark: Do you still have, as you described in the book if I remember right, the on-site clinics, and free primary care, and free preventative care to reduce the barriers to people getting exams and tests.

John: Yeah, we do. I’m going to fit this into a mosaic here.

My basic thesis in my second book, which is just coming out in the spring, is that there’s a whole new business model being formed in the United States in the private sector for the delivery of healthcare. It’s a whole new disruptive business model. An innovative, disruptive business model.

One of the pieces, of course, is self-insurance. The next piece is get the consumer-driven thing in place. The next one is get after chronic diseases. Then next one is transparency, which I talked about. You got to know what the price is, and the quality metrics are.

Another one that’s stampeding across the country is large employers, for sure, and even now middle-size employers, are putting in their own primary care clinics.

If you think about it, what’s happening there is, basically, the large employers are saying, “Hey, the existing business model just isn’t working for me. You big hospital corporations say you’re vertically integrated, you’ve eliminated hand-offs, but anybody who’s been in them knows that’s not true. We’re the few exceptions.”

They’re basically saying, “Hey, I’m going to look at this as a supply chain, in business terms. I’m unhappy with my vendors of my supply chain. We’re going to take back the front end of the supply chain, namely, primary care.”

They set up their own clinics with their own doctors, contracted usually, contracted doctors. Now, it’s my doctor. We have such a clinic here at Serigraph. It’s part-time, but I have three doctors on-site a half a day a week. We have a nurse practitioner, and we have a dietitian, and we have a chiropractor, we have a nurse coach.

It’s my doctor ordering the prescriptions, which are always generic. He orders the tests only as necessary. Anybody in this world knows that we over test like crazy. The fourth, he orders the admissions in collaboration with the patients, and he orders a specialist, but only when necessary. In effect, you’re back in control of the supply chain.

There’s two big levers going on on cost there. You’re controlling the supply chain, and my doctor is only ordering services as necessary. He’s going to the, what I call, the centers of value, which are the guys that offer the best prices and quality.

On the medical side, you’re getting super serious, proactively serious, about health care of the workforce. The problem with the American medical system is it’s a reactive system. When you got a problem, you’ve got a symptom, you go in, they fix your symptom, they fix the issue of the day, and then you’re out of there.

You get a six to eight minute visit, literally, with your primary care doctor. Our docs are with their people 45 minutes, and it’s holistic and it’s longitudinal. They’re looking at the whole family history over time and they’re managing health for the long-term.

It’s a completely different philosophy of delivering of delivering primary care. In the big systems the primary care doctors are the gatekeepers, they’re the loss leaders. They’re even bonused to make sure that the expensive procedures happen inside their system.

In our system the employees, who have a long-term interest in their own health, and the company, which has a long-term interest in their health, and their doctor, who has a long-term interest, are all in alignment about long-term health of the individuals and in the workforce as a whole. It’s a completely different business model for the delivery of primary care and it fits into this larger model, that’s a disruptive model, for the delivery of care in America.

Mark: Now, the impact on the pocketbook of the employees. Can you talk about the balance between things that are free, lower cost versus things where they may have higher deductibles part of this approach? How does it net out for the employee?

John: You know it’s win, win, win, win till about the eighth power for the employees. They just come out every which way, if you think about it. First of all, the primary care is free. The docs are free.

By the way, there’s going to be a shortage of primary care doctors come January 1st when all those new people jump on to the insurance rolls. It’s free prevention and wellness. Because they’re staying healthy, and because we’re buying right, they’ve got lower charges against their deductible and against their co-insurance.

They’re getting a buildup in their health reimbursement accounts and it carries over. They are missing fewer days of work because they’re healthier. Their morale is better because they’re healthy and when morale is better, typically, people are more productive, so they’re probably going to be in line for raises and promotions more likely than a person who is unhealthy.

In retirement, this is one of the statistics I unearthed when I was in upstate New York, they connect health and wealth. They did some analysis, and it shows that a healthy couple, in retirement, spends about a quarter of a million dollars less than an unhealthy couple which makes perfect sense.

In other words, it’s just win, win, win up and down the line for the employees. I might add, that when we manage these costs, I and my employees, we manage them together. I manage total cost.

I don’t manage the employer cost, I manage total cost. Because I’m concerned about the pocketbooks of my employees, just like I’m concerned about the bottom line of the company.

Mark: Let’s talk a little bit more about the centers of value and using data incentives for employees to make choices that maybe give better outcomes for them and lower cost for you as a self-insuring employer. I think it’s really fascinating, reading the book.

A lot of people think about “medical tourism” of sending people half way around the world and it seemed like you are sending people just up the road in Wisconsin or that there’s such great opportunities to make better choices within their own state or within the US. Can you talk more about that approach and how it works and the types of better decisions that are being made?

John: Yeah, it’s probably just a matter of time, Mark, until medicine goes global. In fact, the statistics I’ve seen, 750,000 Americans go abroad for services. Typically out-of-pocket stuff, like plastic surgery or people that are uninsured and need a new hip and they’ll go to India and you can buy one for $5,000.

We were actually part of a medical tourism experiment with Blue Cross. We said, “Yeah, we’ll send our people to the famous Apollo Hospital in Bangalore.” IBM was the other company doing it. But nobody went. It didn’t work.

People just aren’t willing to travel that far, at least my employees. What we did do, is when we were unearthing the quality metrics and the price metrics we started to see these monumental variations in price and quality.

Literally, and I’m not exaggerating, the variation on prices is as much as 400 percent. We can buy a hip at the best orthopedic hospitals in the region for about $28,000, but you can pay over 100,000. The average in the Milwaukee region is about $47,000.

The prices very all over the place and the bell-shaped curve on quality performance is also all over the place. Some hospitals have very high rates of infections and readmits and others. Some of the lean hospitals and I think you’re familiar with some of them, Mark, have literally driven the infections out of their operating rooms. That’s astounding.

I’m just obsessed about the infection rate of hospitals. I had my own hip replaced in 2006 and I talked to five different orthopedic shops until I found the one with the lowest rates of infection, and that’s where I went.

I would pose a question to the other CEOs in this country, “Don’t you have a moral obligation to steer your people to the best providers?” In other words, if you just let your people go anywhere they could go Dr. Hack or some hospital that has a high infection rate. Don’t you have a moral obligation to acquaint your people with the best places to go?

That’s what we do. We actually will say to our employees, “If you go to one of our centers of value, where they have low prices and high quality, we’ll give you a check for 2,000 bucks.” We actually give them part of the savings.

We just bought three hips, two hips and a knee and we paid $28,000, a bundled price by the way. They can do that. They say they can’t but they can. Another guy decided, one of our employees I don’t know who it was because of HIPAA, decided to go and buy one for $43,000 at another hospital. That’s a $15,000 difference.

I split the cost 75 percent employer, 25 percent employee. He cost his fellow employees and his employer an extra $15,000, and he wasn’t even going to the best shop in town. Now it turns out the surgeon he had was a good one.

We just incentivize people to not do that. This guy ended up paying a couple grand more because he maxed out his deductible and it cost him a couple grand. It cost him a couple thousand more and he forewent $2,000 that we would have rebated him.

That’s how we do it. We just go searching for the best providers. By best I mean the highest quality, and, by the way, they typically end up being the lean hospitals.

Here’s one for you, and I just got to through this in and I’m sorry to interrupt, but, what we’re finding, through the Wisconsin Collaborative on Healthcare Quality, the old conventional wisdom was higher price means higher quality.

I saw an article in the Wall Street Journal about six years ago where they went a radiologist out with a black belt and an investigative reporter. They did 10 snapshots and they found out there was absolutely no correlation. No correlation between price and quality.

What’s emerging today, is, as some of these hospitals go lean and get their act together, is that there’s an inverse correlation. In other words, if you’re going to go get your heart bypassed find the cheapest place you can find. Because the low-price guys are also the high-quality guys that are in the upper left-hand quadrant.

Quality’s on the Y axis and price is on the X. There are guys now operating at a good number of them but operating in the upper left quadrant. Amazing.

Mark: Now have you been in one of those lean hospitals, and I’ve interviewed you John Toussaint and Dean Gruner, from ThedaCare and listeners are probably pretty familiar with the ThedaCare story. Since you’re down the road from Appleton, have you been able to partner with them? Being part of the supply chain, the value chain, for your employee’s health. I’m curious what chances you’ve had to work with them.

John: Yeah, we’re north of Milwaukee, about 45, minutes. Most of to them used to head to Milwaukee for their surgeries and we’re now sending them north to ThedaCare because it’s lean, and they’ve driven the infections out of their operating room in Appleton memorial.

I’ve been up to see their report offs on Fridays. It’s incredible how engaged their employees are in eliminating waste and defects across the street from them they’ve got a good competitor called the Orthopedic and Sport institute. They also have very, very low infection rates.

I just had my meniscus fixed and I went up there and because the infection rates are so low. We got a bundled price going in of about $7,000. I’m walking the talk. I’m doing it myself. We’re mustering. We’re starting mustering north of us, depending on where I live, instead of going south to the big hospitals in Milwaukee.

Mark: I want to talk a little bit about other employers and we can talk about the workshop you’re doing with the ThedaCare Center. Have you seen these ideas, some of the practices from Serigraph, spreading to other employers? You mentioned Briggs & Stratton. What do you see, in terms of trends, going on out there?

John: I’ve been in a lot of these shops and talked to a lot of these CEOs and executives and the companies, and my contention is there’s a grassroots revolution going on across the country shaping up this new business model. It’s moving very, very fast.

Just a couple of data points. There’s now 40 million people covered by HSAs or HRAs and there’s another 30 million that are on high deductible plans that don’t have the offsetting HSA. You’ve got 70 million Americans out there who have high deductibles, some of them offset with savings accounts. These guys are engaged consumers.

That’s an army of consumers that didn’t exist 10 years ago. The HSAs are just 10 years old. That’s one example. About a third of the large corporations now have their own clinics in place, and that’s just racing across the country. The Centers of Value. You’ve probably seen some of the news.

Pepsi just cut a deal with Johns Hopkins to send their elective surgeries up there. Geisinger just got 10 or 12 major corporations that are sending people their way. The Cleveland Clinic has just signed up with Lowe’s and Walmart to do their elective surgeries.

This search for value-based healthcare is rampant in the land, at least in the private sector. Now it is even starting to seep over into the slow-moving public sector. The government agencies don’t move very fast but some of them are.

Indiana has done consumer driven for their own employees. A local school district here, in West Bend has its own clinic and it’s consumer driven, and it has self-insurance. They’re delivering healthcare for a 98/50 and employee. They’re saving about 10 million bucks a year on their 1,100 employees.

It’s starting to at least seep into local government and state government. It hasn’t, obviously, penetrated the national debate yet.

Mark: Yeah. John Toussaint is trying to help influence the national debate. Hopefully, through your book and your speaking and this class at the ThedaCare center, you’ll be able be able to help influence, if not the national debate, at least the employers who are coming to that workshop on January 28.

Can you talk a little bit about the workshop? Who it’s intended for, the types of things that you plan on covering?

John: Yeah. John Toussaint and I and some of our executives and our onsite doc are going to run a full day seminar on the 28 of January. We’re inviting private company managers, executives, CEOs in to learn.

I say it’s like a three-year program to get to best practices. You can’t just jump all the way in at once because it also involves a culture change in your organization. You can’t just wave a magic wand and get that done.

You sort of start with self-insurance, and then you move into the consumer driven. This is a one day seminar and John and I are just going to walk people through it a three-year game plan to get to best practices. If they do they can save 20, 30 percent.

The onsite clinics have been proven to save 20, 30 percent on your healthcare bill. There’s been five longitudinal studies that prove that consumer-driven plans saved 20 to 30 percent of your bill. These are big numbers, so you can knock your health costs down assuming you’re not doing anything right now, you’re undermanaging. You can knock 20, 30, 40 percent off your healthcare bill.  And improve your workforce health.

Mark: Do you get incredulous responses from people who say either on the one hand, that 30 to 40 percent just couldn’t be possible and that you’re going to have lower cost and better quality? Is there that disbelief that prevents some leaders from looking more deeply into this?

John: Yeah, you do get that, it is a little bit incredible. You can’t just it all at once, you’ve got to move consistently and managerially through this to these best practices. It can be done. You remember what happened in the auto industry, the mantra of Toyota was “Cheaper, better.” It’s counterintuitive unless you know lean disciplines, lean disciplines drive out waste and they drive out defects. As your costs come down, your prices come down. Quality goes up, prices come down.

Why would healthcare be any different than any other economic segment of our country? Way down to the bottom of this, why I feel so good about this and why I know it’s so valid, is because it’s based on fundamental principles, almost on philosophy.

You’re keeping people healthy, you’re relying in marketplace dynamics, i.e. a search for value. You’re getting the incentives and disincentives lined up, you’re engaging your people in solving the problems of your corporation. It’s all based on good human psychology and good marketplace dynamics.

Mark: I hope people definitely check out the workshop. People can go to createvalue.org and find the link to the workshop.

I really recommend checking out John’s book, “The Company that Solved Healthcare.” It’s available on Amazon, I see it here. The new book coming out, it looks like it says April, John, “The Grassroots Healthcare Revolution.” Can you tell us a little bit about that book before we wrap up?

John: The first book, Mark, was a story about how one company tackled this stuff and sort of stumbled its way forward, learning as we went. The second book is, I’ve gone all over the country talking to people about this, it’s best practice from lots of different companies about what they’re doing. For instance, IBM stresses medical homes, Hewlett-Packard stresses prevention and wellness.

I mentioned Lowe’s and Pepsi looking for centers of value. They’re all doing different pieces of this, but when you put all these pieces together, which is what I thought I’d do in the second book, you get a mosaic, and you get what amounts to a new business model for the delivery of healthcare in America.

I want to leave you with one metric. We were sailing along through 2004 on our hospital missions at about 71 per 1,000. We put our clinic in and we went consumer-driven and all of a sudden in 2007, it started to fall off. We’re now down around 35, 40 admits per 1,000. In other words, we cut our hospital admission rate in half, that’s something. The virtuous circle of this thing is if you get your costs down by improving workforce health, how does it get any better than that?

Mark: It’s a great story, and I want to thank you, John, for sharing that. Not just in your books in different ways, but here with us as a guest on the podcast. Thanks for joining us.

John: Thank you, Mark, for having me.


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Now Available – The updated, expanded, and revised 3rd Edition of Mark Graban’s Shingo Research Award-Winning Book Lean Hospitals: Improving Quality, Patient Safety, and Employee Engagement. You can buy the book today, including signed copies from the author.

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

1 Comment on "Podcast #192: John Torinus, Solving the Employer Healthcare Crisis"

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  1. Mark Graban
    Twitter:
    says:

    Intel is now following this same playbook, of managing healthcare like a supplier, using Lean principles to improve.

    See this HBR article:

    The Employer-Led Health Care Revolution

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