Part 1 of 4, Full Interview
Gary S. Kaplan, M.D. has been chairman and CEO of the Virginia Mason Medical Center (VMMC) in Seattle since February 2000.
We had some very lofty organizational aspirations and no method to get there. For us the question was less about ROI than ‘Do you have a better alternative? Do you have a better way to become the quality leader? To take out defects? To embed safety and quality in your products and services every single day?’ And nobody had a better method.
For us the ROI question wasn’t front burner, but I will tell you, I believe that the ROI from this investment is greater than from any other investment we’ve ever made – whether it’s been new operating rooms or critical care units, more MRIs or imaging suites. The ROI on this – particularly since we adopted it as a management system – is omnipresent. We’re reaping the ROI every single day.
There are lots of metrics that we track. We track our financial metrics; we track our operating margin; we track our cost-per-dollar of revenue generated. We look at inventory; we look at return on net assets. Our professional liability expenses have been trending down in the millions of dollars for several years now. And our reserves – we’re self-insured up to a particular level – and our self-insured retention requirement, are dramatically lower than they previously were, without tort reform, without all of these other things that are supposed to be necessary. It’s because we are a safer, more transparent place for patients. That returns economic benefits every single day.
We just finished our best year by far in our organization’s history. And the year before that was the best year in our organization’s history. Our FTE growth is much lower than it’s ever been despite volume growth. We’ve forgone capital expenditures – things that we had planned to invest capital in – because we didn’t need to. Primary care – which is a really interesting service line that most integrated health systems and multi-specialty groups have come to think of as a loss leader to feed inpatient beds and specialty services – is profitable on its own here because of the work done by our primary care teams to create flow in the ambulatory setting.
We track staff satisfaction. We track patient satisfaction. They’re all trending upwards and many are at the highest levels they’ve been in our organization’s history. I believe, and our executive team and our board believes, that if we had not embarked on the VMPS journey many of those metrics would not be trending at the levels they’re at today.
[...] 1) Long- and Short-term ROI [...]