Charles Stokes, executive vice president and chief operating officer at Houston-based Memorial Hermann Health System, recently began his term as chairman of the American College of Healthcare Executives. At the leadership society, Stokes will focus on providing educational tools and best practices that help the nation's healthcare organizations improve quality and accountability. He has a good personal track record. One of Memorial Hermann's hospitals recently won the Malcolm Baldrige National Quality Award, presented every year to organizations that demonstrate excellence. Modern Healthcare Southern Bureau Chief Dave Barkholz recently spoke with Stokes about his mission. The following is an edited transcript.
Modern Healthcare: At Memorial Hermann, what have you done on the high-reliability front?
Charles Stokes: When things happen, everybody knows about it. We openly discuss when we have bad outcomes. It's about becoming a learning organization and how you prevent these kinds of things from happening in the future and how you fix broken processes within the organization. We started this journey about 10 years ago at Memorial Hermann to become a high-reliability organization, and we started by educating our board. We had nationally renowned leaders like James Orlikoff meet with all of our medical staff leaders and all of our board members in day-long retreats. And we became very transparent with our board. So, every serious safety event that happens in our organization, we told them exactly what happened. We have brought previous patients and family members into our boardroom to say, "Here is what happened to my family member," and let the family member tell the board exactly what happened, so the board sees a real person. We have a monthly two- to three-hour risk management call with every senior leader at Memorial Hermann. We discuss every serious safety event that happened in our organization the previous month, and we conduct a root cause analysis. We have division quality committee meetings with all of our hospital leadership, and we do that on a monthly basis, talking about all the serious safety events. So, we keep it in front of the organization all the time, and everybody knows that quality and patient safety are our highest priorities. It's a core value. Our goal at Memorial Hermann is to have zero serious safety events. And a lot of people think well, you know, you treat millions of people. You have millions of patient encounters a year. Is zero a realistic goal? Well, if it's not zero, then it's not acceptable. Right now, there are somewhere around 250,000 events, and, depending on the source, up to 400,000, unnecessary medical error deaths per year in the U.S. It's the third leading cause of death in our country, which is staggering. It is the equivalent of a 737 airliner crashing every seven hours in the U.S. Now, you know, if that was happening, there would be nobody flying. There would be no airplanes flying until they figured out what was happening, right? We don't expect when somebody gets on an airplane that, "Oh, yeah, maybe one a day will go down." We don't expect that. We expect no planes to go down. And when one does go down, we do a root-cause analysis about why that airplane went down. We have to get to the same level of vigilance within healthcare to make that happen.
MH: So if you're going to make something a core value, do you have to align compensation to promote quality and safety? Does Memorial Hermann have incentives for that
Stokes: Our incentive compensation plans do include quality and safety. In fact, the highest percentage of our incentive comp is on quality and safety, even above the financial aspect. Let me make one point about senior leadership that is important. For an organization to become a high-reliability organization, there's the concept of a just culture. In a just culture, you do not place blame on employees and physicians and people who make mistakes due to broken processes in the organization. A just culture is one where people learn from those mistakes. They're not punished for making the mistakes. What would be punished is if an employee has reckless disregard for evidence-based practices, like marking a surgical site. When employees don't speak up and stop the process when those things aren't done, that's a disregard for evidence-based practice, because when those things are done on a consistent basis, there are fewer errors and less harm to patients. So you want to have an environment where people feel safe stopping the line when some evidence-based practice is not followed, and there's no retaliation, they're not going to get fired, no physician is going to act inappropriately towards that employee, and you have to have that if you're going to have a high-reliability organization, and it's up to senior leadership to implement that concept of a just culture within the organization.
MH: You just added a new position, vice president of organizational effectiveness and excellence. How does that tie in?
Stokes: We decided that instead of having all the individual hospitals getting on the (Baldrige award) journey, we needed, as an organization, to adopt the Baldrige criteria as a way of running our system. So this past year, we hired Josh Ettinger who along with his father has worked as a consultant to 40% of the healthcare Baldrige recipients in the country. He will oversee the implementation of the Baldrige criteria for our organization as a whole. Because if you're a Baldrige organization, the criteria are all about excellence.
MH: What was your capital budget this year, and where are you putting your money?
Stokes: Over the past several years, we've put our capital in growth, because we had to turn down almost 2,000 admissions last year because of capacity issues. So we look at this in five-year increments. Our strategic capital budget is a little over $2 billion. In our Katy (Texas) market, we added a new tower and a new medical office building. At our Sugar Land facility, we added a new patient tower and a new medical office building because both of those were at capacity a year or so ago. And at our flagship hospital, Texas Medical Center, we're in the process of opening a new patient tower, which will be finished in 2019.The growth in Houston has slowed a little because of the decline in the oil and gas industries. However, it's coming back, and the community is growing at like 20,000 or 30,000 jobs a year. As an organization, we're expecting to see somewhere around the 6% or 7% growth by the end of this year.
MH: You're spending the bulk of your capital on inpatient, and a lot of organizations are focusing on outpatient, but your needs must have dictated otherwise.
Stokes: No, and we're very cognizant of that. However, right now we're still turning down patients in certain facilities. And strategically we're trying to figure out how do we decant patients from Texas Medical Center that could be cared for at our other facilities, But that's our academic enterprise, and there is some complexity there in getting the academic patient out to our community hospitals. But we are working with our academic partner and are in the process of moving some of those services to accommodate the higher-end tertiary or quaternary patient down at TMC. But you're absolutely right. Our ambulatory strategy has changed. We are also investing in convenient-care centers and have eight of those that are either up and running or they're being built now, and they're geographically spread throughout the community. A convenient-care center is a 24-hour free-standing ER that has an imaging center and is anchored by a primary-care practice, and it also has physical medicine and rehab space, In some cases the facilities have some kind of flex space for other physicians to come in and practice. And the other area, our post-acute care business, is also growing, whether it's skilled-nursing beds or rehab beds. We have grown a lot in our rehab, We have franchised our TIRR brand now to multiple hospitals in the community, so a lot of the growth in the post-acute side of our business has been pushed out of a TIRR facility, which is also kind of maxed out in capacity down in the Texas Medical Center.
MH: Has the Houston market kind of consolidated? Have all the hospitals sort of aligned now or is there still more of that to come?
Stokes: In our market you have Methodist, CHI St. Luke's, Memorial Hermann and HCA. We are the dominant four organizations in this community. Personally, I don't see any merger acquisitions between the four of them or consolidation between the four of those organizations in our community. I think there's discussion out there about Catholic Health Initiatives and Dignity at the national level. I don't really know where those discussions are, but internally within the community, all four of those organizations appear to be very strong, and I'm not hearing anything about any consolidation right now.
MH: Finally, talk about your health plan. It was recently reported that you had bought Molina Healthcare patients. What's going on with that?
Stokes: Well, we had just chosen. . . . We have made a decision not to participate in Molina. I'll just leave it at that.
MH: How big is your health plan?
Stokes: We have roughly 70,000 members in the health plan.
