David Burda: Hello, everyone. This is Dave Burda, editor of Modern Healthcare. In the fall of 2008, the Center for Medicare & Medicaid Services granted deeming authority to a new private accrediting organization called DNV Healthcare. That means hospitals accredited by DNV Healthcare are deemed to have met Medicare's conditions of participation, making them eligible to treat Medicare patients. In doing so, DNV Healthcare became the third hospital accreditor to have Medicare-deemed status—the others being the Joint Commission and the American Osteopathic Association. I had an opportunity to visit with Yehuda Dror, president and CEO of DNV Healthcare, to talk about his organization's entry into a field long dominated by the Joint Commission and how that competition has affected the hospital accreditation process.
David Burda: Yehuda, for our readers who aren't familiar with DNV Healthcare, can you tell us what the company is?
Yehuda Dror: DNV Healthcare Inc. is an American corporation, a wholly owned international subsidiary of the international foundation of Det Norske Veritas. DNV, as we call it, is a foundation which is self-supported. It's interesting from an American perspective because it is a foundation that could be a not-for-profit but chose, because we are multilocal and we operate in 100 countries with local entities, we chose to be tax-paying.
David Burda: So it's a for-profit company?
Yehuda Dror: That's a good question. I'm not sure that I would use for-profit or not, but we are a foundation that is tax-paying. We chose to do that in order to make sure that when we have a local entity, that's part of the way of what we give back to the country that hosts us.
David Burda: Where is your U.S. headquarters?
Yehuda Dror: The U.S. headquarters is in Houston.
David Burda: OK
Yehuda Dror: But as far as DNV Healthcare, we have an operational headquarters also in Cincinnati.
David Burda: OK
Yehuda Dror: DNV being a foundation, we have a sole purpose, and that's safeguarding life, property and the environment. All of our services are geared toward this. We do not make or produce anything that is tangible other than evaluating organizations, because that's what a third party does. We have an organization that wants to make sure that whatever they get from a third organization is correct, and they call us. We do that.
David Burda: At what point did you decide to get into the hospital accreditation business? It wasn't your first line of business.
Yehuda Dror: No. It was not our first line of business, but what we have developed in 150 years of this organization's existence is a good system for evaluating organizations, so we knew that we understand how management system works. We have certified 85,000—we have 85,000 certificates for ISO 9,000 and ISO 14,000, so we understand management systems. We began in healthcare actually in Europe in early '90s, and we did it on behalf of several governments evaluating the management systems that the hospital had. And we even considered doing it in the U.S. in the mid-'90s because hospitals started asking, ‘What is ISO 9000?' But at the time, the problem was that we never had access to patient safety, and with that it became very superficial. After 2000, with the publication of the IOM (Institute of Medicine) report, patient safety became now much more open or accessible. And when I returned from Europe, where I dealt with the hospitals in the Netherlands and Belgium, so it was very natural for us to get into the U.S. And accreditation became one of those areas where we could make our mark very quickly, because otherwise we could become consultants—but there are so many consultants and that was not the point. If we wanted to make a meaningful impression—and not just an impression for the sake of impression—but an impression based on the experience that we have in other sectors, we wanted to do it through accreditation.
David Burda: So you decided to go the route of being deemed by Medicare?
Yehuda Dror: Correct.
David Burda: Now what is that process like? Do you fill out an application, say, ‘We want deem status?' How does that work?
Yehuda Dror: This is a very interesting process, and I think it is a lengthy and very thorough process. In this process, to fill out the application and have the paperwork is basically a side issue. What you have to do is to have a system that's proven to work. So we had to prove to CMS—the Center for Medicare & Medicaid (Services) that our system is working. For that we needed to have a good number of hospitals that would take our system and utilize it, and the interesting thing was that there was no incentive for them to do that because they would not get any reimbursement from [Unclear: 5:25 ??Medicare??] for instance. They still chose to do that, because they wanted to have an alternative. So we got our experience through working in and with hospitals for about four years before we even applied, and then when we sent the application, then it becomes much more straightforward. It is in accordance with—
David Burda: Conditions of participation?
Yehuda Dror: Yes. And what we did then is that once we applied, we sent our application, and CMS reviewed our application for completeness. Once they found that the application is complete, then they announced it to the public through the Federal Register. At that point, the clock of 210 days starts ticking, and at the end of this 210 days—or during this 210 days—they both audited or reviewed us both as an organization—they had an office survey and then a shadow survey. They followed our surveyors when—
David Burda: When they surveyed hospitals.
Yehuda Dror: And based on this in October—actually late September, we have been given deeming authority, and, of course—
David Burda: This is September of 2009?
Yehuda Dror: It was 26th of September. Actually, 26th was when we received the word. I think 29, it was put in the Federal Register, so for all intent and purposes the 1st of October we became—we received the deeming authority—at which point we could then accredit hospitals and then they could get the reimbursement similar to the existing accreditation.
David Burda: Now, how many hospitals were part of that test phase?
Yehuda Dror: Part of the test we had about—I think correctly we could say about 35 hospitals. And some of them we had not only to come in and perform just a survey, but we also had to perform a re-survey to show that the system works. And from the outset we tried to have a system that first of all caters to the need of the industry, which is the condition of participation. After all, we all are in a sense serving the need of CMS when it came to the hospital and said, ‘In order for you to receive reimbursement, you have to be accredited.' So we started with a condition of participation as a basis, but what we tried to do as well is also to anchor it in a sustainable management system. Because one of the most critical aspects is that when you have a standard that may be shifting very frequently, hospitals have a hard time to get their hands around it because by the time they have internalized it, the process all of the sudden the standard changes. So we wanted to come up with a basis that says to the hospital, ‘If you do that, chances are the [unclear: 8:29 ??queue will do your work right??].
David Burda: And this is the ISO 9000 approach you're talking about?
Yehuda Dror: Right. The ISO 9000, because of our experience with the ISO 9000—after all we've certified so many organizations, so many sectors, including in healthcare outside the U.S. We have about 1,500 certificates in what I call ‘healthcare-related,' which is the hospitals [unclear: 8:53?clearance?] and diagnostics, etc., etc. But not in the U.S. Because in the U.S. after all, you had to have accreditation, so why would you go to another certificate? We looked at ISO 9000 as a good management system to—I will rephrase it. Let me think about it and say the right thing in this. ISO 9000 is probably the best way to standardize common sense—oxymoronic as that may sound. Because common sense is the least common. What ISO 9000 does, especially in the 2000 version, which is much more catering to process orientation, is that it enables an organization to understand what a management system is. So if you take for instance the aspect which is called ‘service realization,' you as a patient, you go into a hospital, you don't care about hospital management. You don't care what happened. You want to go in and hopefully come out—
David Burda: Better than you went in.
Yehuda Dror: Hopefully better. So the service realization has several aspects that ISO 9000 will specify in a generic way. We want you to understand what are the quality objective. We want you to understand how you measure, etc. And then, on top of it, you have now aspects that relate to what the hospital learns from this, whether it is resource management, whether it is measurement [unclear: 10:26 ?weigh?]. What did you learn? The whole learning aspect. On top of it is always the management commitment, or management responsibility, because what we learned without management responsibility, nothing happens.
David Burda: Now can you be accredited through DNV without doing ISO 9000?
Yehuda Dror: Yes. And what we—and this is a great question. What we realized is ISO 9000 is a three-letter word for hospitals in the U.S. They don't understand it. And instead of coming to them and saying, ‘You have to be ISO 9000 now, and then be accredited,' we chose the other way around. We first accredit them to the condition of participation so that [unclear 11:08] standard looks or reviews the condition of participation, which is what they would—not just the service realization but its many aspects that relate to the nuts and bolts of what's going on in the hospital. We give the hospital three years because every survey that we come in we also review them to ISO 9000, so when we for instance call either a not-worthy effort or opportunity for improvement or a nonconformity to the condition of participation, we will also cite what do they or don't they meet in the ISO 9000. And one other thing is that once they begin to understand the concept, they realize that at any given time, and I'll go out on a limb, our experience shows that at any given time any hospital that is accredited is between 60 to 80% already in ISO without even knowing it.
David Burda: Really. OK.
Yehuda Dror: They just call it in a different name.
David Burda: OK.
Yehuda Dror: For instance, if ISO talks about the quality policy, it would be a vision or even a hospital calls it policy. What we talk about—ISO 9000 talks about management responsibility. They would call it leadership, and so forth and so on. We have a whole list of—so it's more the uncovering of what ISO 9000 means than something completely new. And once they understand it—we have a very thorough process—and what we do because we are coming to the hospital every year, and that was another big change that we introduced—
David Burda: OK, so you're saying the accreditation cycle is one year or three years?
Yehuda Dror: The accreditation cycle is three years subject to an annual review. And the reason why we went to annual review is that hospitals already did some things on an annual basis—mock audits, all sorts of preparation. And what we wanted to do is make sure that the hospital is in a constant readiness—not to us, but to themselves.
David Burda: Right.
Yehuda Dror: So when we come in once a year, then it's no longer becoming something that they do for us, then as soon as we leave, it disappears or they go back to what they did. This is the way that you do that now; 12 months from now, we are coming back again, so there is no point to do something for us. It becomes more the way, actually the way of life.
David Burda: Now when did you accredit your first hospital? You had your test group of about 35 and then you get your deemed status.
Yehuda Dror: Once we got our deemed status, we worked—I remember the first hospital that we did accredit, I believe, was Citizen hospital in Victoria, Texas. They were accredited in a few weeks to a month after we got the deeming.
David Burda: And how many do you have now?
Yehuda Dror: At this point, we have contracted 120 hospitals of which 80 are already fully accredited because it takes some time when they contract us, we have several weeks before we do the survey, and then once we do the survey, there is the process that we would go through that shows when they can receive the certificate of accreditation.
David Burda: OK, now as your organization has grown, can you tell us how many surveyors you have at the moment?
Yehuda Dror: We have—I think that I will give you a range. We are training—maybe I'll spend some time about how we train. All the people that we have are coming from hospitals. By definition, and I think that any accreditation is doing the same, we have teams that consist of clinical, which would be medical doctors or registered nurses, usually a management or what we would call a generalist that is usually coming from hospital management and a physical environment. And the physical environment, for us, is extremely important because we—again, looking at any sector that we have been in—you cannot have safe patients without having a safe environment. So the physical environment is somebody that goes through life safety and [unclear: 15:41], etc., etc. These people we hire from the industry.
David Burda: OK
Yehuda Dror: Not with audit experience. So when we bring them in, we train them at our expense and then after they go to a regular training, which is both the [unclear:16:07 ?9-0?] standard, the ISO for the [unclear 16:09] course, the NFPA course for those who are physical environmentalists. We send them for observation, and that proved to be the best thing that ever happened to us.
David Burda: They're employees of DNV, or they're certified to work for you?
Yehuda Dror: When we train them, we train them to be potential employees. Some of them—we employ quite a few. But some of them actually wanted to work part time, or to work—I wouldn't call it freelance because they may have other issues—but then they work for us at the time that we need them. And we give them enough work. So we have qualified at this point in time about close to 100 surveyors, of which I would say that 25 are working for us nearly all the time.
David Burda: Now can you disclose your annual budget?
Yehuda Dror: If I may not relate to this at this point in time, because we are in a growth mode and there is no point to do at this point in time. Suffice to say, that we are—in 2010—we started the year very much surpassing targets.
David Burda: Can you disclose a range of survey fees? If I'm a hospital, what would be my expectation?
Yehuda Dror: The survey fees are very much—and we have a lot of data on this—the survey fees that we have is very much in line with what the other accreditation is using. Probably for smaller hospitals, we may be a little bit more expensive. For larger hospitals if you factor in all the costs that the hospital has with mock audits, preparation, etc., we have seen significant reduction in coming to us. But if you look at the direct, how much they pay to DNV and how much they pay to other accreditation, we would probably be on par with one exception: We give them three times the service because we come in once every three years, and the other accreditation—
David Burda: So that annual checkup is part of the—.
Yehuda Dror: The annual checkup is part of the cost. You have to think about it—I can give you a range, but it's almost like going to zero and 100—because it's very much depends on the size of the organization. So we may have hospitals with 48 off-sites that, of course, the price would be much different than a small hospital. So, I don't know, we have hospitals that cost $10,000 a year and some that cost $80,000 a year, but it very much—
David Burda: Depends on operation.
Yehuda Dror: Depends on the size of the operation. There's no point to talk about a typical because one of the things that we learned—there are really no typical hospitals. Hospitals are very, very far [unclear 19:03 ??and few between??].
