Spencer R. Berthelsen adds value at Kelsey-Seybold Clinic Featured

8:00pm EDT September 25, 2010

Sometimes Dr. Spencer R. Berthelsen doesn’t wear his name tag to work. On those days, he’s not acting as the chairman and managing director of Kelsey-Seybold Clinic. He’s there as a patient.

He goes incognito, literally taking the customer’s place, to better understand the value that his company offers.

“I experience firsthand what that’s like from the perspective of the customer,” he says. “I think the best way is if you can actually transport yourself into the customer’s position, taking advantage of the services that you offer or the product that your company provides.”

Berthelsen devotes himself to increasing the value that Kelsey-Seybold adds for the 400,000 patients who come in annually. Fortunately, the clinic operates under an accountable care model, so the emphasis is already on value. Accountable care organizations (ACO) differ from other health care providers by, for example, focusing incentives on the quality of services rather than the volume and regularly reporting quality and cost measurements.

“We have been oriented toward this concept of accountability in medical care since our founding,” says Berthelsen, who has been at the clinic since 1980. “Our culture has been one of providing the highest value, the most benefit to our patients for the lowest possible cost.”

While the ACO model may be unique to health care, the principles that guide it are not. At the core, it’s about adding value for your customers, in turn creating a competitive edge for your business.

“If you dedicate yourself to increasing value and if all your decisions are governed by, ‘Does this increase value to my customers?’ then you will be making decisions that will make you successful,” Berthelsen says.

Here’s how he does it.

Define value

Even though Kelsey-Seybold was founded as an ACO in 1949, Berthelsen’s challenge is maintaining a culture focused on value creation more than 60 years later.

“It requires a constant energy of activation to be applied, continuously focusing the organization on the things that create value and the need to do that (for) competitive survival and to maintain the vitality of the organization,” says Berthelsen, who oversees 365 physicians and 2,150 other employees in 20 locations.

It starts, simply, with defining what value is at your organization and why it matters.

“We need to express carefully to everybody in the organization why value is so important, and then identify the elements that increase the value of our services so that everyone understands that value creation is the ultimate goal and all decisions should be measured against whether or not it increases the value of our services,” Berthelsen says.

To make the broader message more digestible, condense it into something specific. Berthelsen does that by defining value and supporting his definition with metrics.

“Value is a ratio of quality divided by cost,” he says. “There are a number of ways to measure quality, and we use as many of those as we can: the frequency that beneficial preventive services are applied, the complication rate — for instance, infection rate in our ambulatory surgery center — the quality of the credentials of our physicians and the outcomes that we have.”

While those measurements may differ for your company, the key is that you do measure your indicators of quality — and that you make those metrics visible to employees. Thanks to electronic medical records, for example, Kelsey-Seybold employees can access patient information from any location.

“So much of what a patient needs is determined by what they’ve had in the past or what is known about them, both to avoid duplication and gaps in care,” Berthelsen says. “Having this information about what the patient has received in the past and how their problems have been approached and what worked and what didn’t turns out to be a very key thing to get the right treatment for them.”

But quality care should also come at the right price. Berthelsen keeps costs in check by benchmarking Kelsey-Seybold against other hospitals. Just because his costs are about 15 to 20 percent lower doesn’t mean he can put it aside.

“Looking for areas of unnecessary cost that we can take out is a constant search because we’re never done with that,” he says. “The basic way we do that is we ask ourselves for every decision, ‘Is this helping my patient in proportion to the amount that it costs our patients in time and money?’ So every decision has to pass that hurdle, both small decisions about whether to prescribe a generic or a brand-name medication or the large decisions about whether or not a patient should be admitted to the hospital.”

By communicating those components regularly, you plant value awareness in your employees’ minds.

Know your customer

You can look at quality metrics and cost comparisons all you want, but not everything is subject to measurement. So don’t leave the customer out of the value equation.

“The first step, of course, is to know your customer,” Berthelsen says. “And the best way to know your customer is if you can participate in receiving the service or the product that you sell directly.”

KelseyCare, the company’s health benefits plan, is available to all employees. But even if your employees don’t directly partake of your service, they’re still customers at some point, so they have a general perspective on what customers appreciate.

“Everyone has an intuitive sense for what is true value with regard to our patients’ perspective because at one time or another, we’re all patients,” Berthelsen says.

That insight can start to fill the gap in feedback where measurements alone won’t do. But in some cases, measurements and instinct won’t give you the whole story about customer satisfaction. It’s one thing to measure waiting time in minutes, for example, but you should also consider what patients think about that wait.

“With regards to the things that depend upon patient validation — as to whether or not they like it better or not—– we have a program called the M.A.G.I.C. program, which is an acronym for Making A Good Impression Count,” Berthelsen says.

It’s a real-time feedback program where patients are polled about various areas of the clinic at the time of their visit, as opposed to receiving a card in the mail weeks later. About every three months, Kelsey-Seybold surveys patients about their experience at the front desk, with a nurse or with a doctor by handing them a card with six questions and room for comments.

The cards give a scale of response options for questions such as how patients’ waiting times match their expectations or how likely they are to recommend the clinic to a friend. The questions are quick and simple enough that patients can drop cards in a collection box before they leave and the responses get back to employees within a couple days.

“We have indicators when we’re doing things that improve the quality by these quality metrics that we mentioned, but we also know when our patients like what we do,” Berthelsen says.

Give employees a voice

Once employees understand what value is and what it means to customers, give them opportunities to create it. This can be as simple as allowing their ideas to come forward.

“First is to be sure that everyone can be heard,” Berthelsen says. “The best ideas will come from anywhere in the organization, so those ideas should have a forum where they can be raised and considered, regardless of the station or the rank of the person having the idea.”

Kelsey-Seybold has two annual retreats with the senior leadership and the board of managers, giving them off-site opportunities to share their ideas. Other employees get the chance to share during regional meetings at their locations. And of course, ideas don’t have to go straight to the top; anyone can bring something up through their department.

Even if employees have avenues for feedback, don’t necessarily leave the responsibility to them. Berthelsen actively solicits opinions before he makes decisions.

“If we plan to bring in a new service, for instance, inevitably that involves more than one department,” he says. “So the discussion should involve all the departments that potentially will be involved with the new service early on so that they’ve contributed their best ideas and they have a sense of participation and ownership in the success of a new service.”

Some people will always speak freely. The ones who don’t will require extra solicitation effort.

“You can tell those that are engaged in solving the problem because they’re usually vocal about their ideas or their critique of other ideas,” Berthelsen says. “It’s the person who’s quiet in the room that is of most concern because that person may be thinking that they have an idea that wouldn’t be constructively received or that they’re not concerned about the success of the organization.

“As managers and leaders, if we see someone who is not participating, that’s the time to open up the opportunity for private communication. Ask them what they think about the problem that we’re trying to solve in a private setting and let them express their opinion privately.”

Empower employees to act

Besides just listening to ideas, empower employees to act on them. Berthelsen expects that once employees understand value creation and buy in by participating in discussions about it, they won’t go against that.

“We wouldn’t expect that any employees would intentionally do something that’s not consistent with that overall principle of raising value,” he says. “It’s not that they’ll always be successful, but that will always be the intent.”

Empowerment is, after all, the caveat when you provide visible metrics for making decisions. Keeping track of quality measurements, for example, doesn’t do much good if employees aren’t allowed to access and use the information.

“Information is always a powerful thing for change and for making adjustments to an organization’s effectiveness,” Berthelsen says. “Having information and having it available where and when it’s needed is a critical component to the advancement of the quality and value of medical care.”

Some employees at one Kelsey-Seybold clinic, for example, realized that test records weren’t available, and patients weren’t receiving necessary tests. So they developed a system of tracking and logging results to make sure patients receive the right tests at the right time.

“That’s an innovation that began just locally,” Berthelsen says. “It didn’t require any sanction from senior management. They saw a problem that existed at their clinic and they came up with a system to address the problem, and it turned out to be quite successful.”

Giving employees access to information won’t just spur ideas; it also gives them the tools to monitor whether their ideas are successful.

“As we see these quality measures, we’re constantly trying to improve against a benchmark, so we can see if we’re being successful or not,” Berthelsen says. “When success occurs in a localized area, it’s usually not hard to see the value of what they’re doing.

“Certainly not every variation that is proposed and practiced results in a benefit or an improvement in value. The ones that don’t, even the site that’s trying the variation in practice can see that it’s not working, and usually they move on to a different approach.”

Of course, you can step in if you don’t like the results you see. But Berthelsen’s employees have been successful at monitoring their own ideas.

In that case, your role is simply acknowledging their success. Berthelsen has done plenty of that, as Kelsey-Seybold’s revenue grew from $465 million in 2008 to $600 million in 2009. And that success is still spreading.

“We can think of organizational improvement kind of as an evolution, where you have innovation that occurs maybe on a small scale initially, which gets put together either as a pilot or an informal change in the way of doing things,” he says. “As success is experienced at the local level, then that can be leveraged across a larger organization.

“And so one of the roles of leaders is to identify when that success occurs. Give it the recognition and credit it deserves. Then do what you can to extend that success to other areas in other departments.”

How to reach: Kelsey-Seybold Clinic, (714) 442-0000 or www.kelsey-seybold.com