Q&A: CHI Franciscan CEO shares insights on adopting continuous improvement model

As president of CommonSpirit Health’s Pacific Northwest Division, Ketul Patel leads one of the most prominent units in the health system’s national network. He’s also CEO for CHI Franciscan, having joined the organization in December 2014. One of the more pivotal decisions Patel made over the last five years was forging an alliance with Virginia Mason Medical Center, which resulted in CHI Franciscan adopting Virginia Mason’s famed approach to continuous improvement. Patel recently met with Modern Healthcare’s editorial board. The following is an edited transcript.

MH: Can you tell us a little about how the Dignity-CHI merger is playing out so far? 
Patel: I’ve been here for five years, part of Catholic Health Initiatives’ Pacific Northwest Division. We’ve been very healthy financially. We’ve typically accounted for about 31% to 35% of the bottom line for CHI. 

We have really strong occupancy … which has two issues in and around it. One is there are a lot of consumers in the market who are really driven to us because of our halo and our brand and certainly our quality and our patient experience. But … there’s an area we’re all struggling with—bed capacity and access, because the population is growing. The need for healthcare in our community continues to rise and so for us, we’re in a great place.
 
When you’re a division that is performing at such a high level and you’re coming into an organization that is building to be able to reshape healthcare policy around the country—we’re going to touch 1 in every 4 lives being in 21 states—it’s a great place for us in the Pacific Northwest division.
 
We cover 13 hospitals in my division, most of those around Puget Sound. We have two hospitals in Oregon, one in Roseburg and one in Pendleton. There’s not a lot of continuity between the two just because of distance and the type of hospitals they are.
 
But our system within what I call the Tacoma-based region of Franciscan Health is truly an integrated system as part of a national organization. We do things collectively as a division. We look at things other than just what’s hospital-specific and medical group-specific. We look at what’s clinically good in all the Puget Sound area and are able to make decisions around that as part of a larger system.

MH: Looking at day-to-day operations, does a merger like this change governance and your reporting structure? 
Patel: The merger closed in February. The first year is all about making sure we have a very good understanding of what the portfolio is all about and how that impacts the community—how it folds into a larger enterprise.

I’ve got a new person that I report to who I have tremendous respect for, Marvin O’Quinn. He used to be the chief operating officer for Dignity. He’s now president and chief operating officer of CommonSpirit.

As we did when we were CHI, we have regular meetings just to make sure, operationally, we’re in alignment through the entire country. But I think it’s still early. The runway is huge for us, given the fact that we’re now a $29 billion system covering 21 states. 

MH: Where does most of your revenue come from for the 13 hospitals in your division? 
Patel: We are about a $3 billion (enterprise); $300 million-plus of that comes from our medical group, top line revenue perspective. There are a couple of nuances in that. For the first time in my career, I’ve not seen the type of medical staffing we have right now. About 80% of our revenue comes from our employed medical group. It’s very different from many other organizations where you saw a lot more independent physicians who were part of the staff, but that’s just the nature of Puget Sound. Most physicians in that community are part of a larger system, part of Kaiser Permanente or of what was Polyclinic, now part of Optum. 

We don’t cover (north) Seattle, but we have a prominent partnership with Virginia Mason Medical Center that’s continuing to blossom. Virginia Mason has tremendous cache in quality, safety and patient satisfaction. When I got here, I felt very strongly that we needed to have a presence of sorts.

In 2017, we announced what we’re calling a strategic partnership and clinical affiliation and recently we announced that we’re going to be joint-venturing an OB unit in Virginia Mason; they’ve been out of OB for almost 17 years. So now, in essence, Franciscan Health will have a prominent presence in Seattle. 

MH: How does Virginia Mason’s work on continuous improvement fit into the partnership? 
Patel: That was one of the things that drew us to Virginia Mason. 

Our board actually went to Virginia Mason. We got an opportunity to see the impact of the (Virginia Mason Production System) and got a chance to talk to a lot of the staff. 

I’ve always believed that people support what they help to create. What I mean by that is the more you endear people to what you are trying to do as an organization, allow staff to truly build what the outcome is at the end, the more that the organization will praise it. And that’s something that I found to be pretty relevant to the core of what the production system is all about. 

Rather than just spread it through all of Franciscan, we piloted it at one of our campuses. We took it to a large ambulatory center where we were having some challenges in productivity and getting patients in and out at the appropriate timing. We went through the discipline to train people on the Virginia Mason Production System. We opened up a production office at Highline Medical Center. And we’ve seen our physicians’ productivity go up by 40%.
 
You want to do it slowly just because you can’t move a ship the size of Europe overnight. A key decision is which campus do we pick next? Do we pick our largest medical center, which is St. Joseph? Do we pick campuses that are opening in the next calendar year? 

MH: How will that work with the potential for continued standardization across CommonSpirit? 
Patel: It’ll play very well. One of the other things we’ve talked about is that this is something that could be scalable throughout CommonSpirit. We want to test this first within Franciscan before we take it the heart of the system. 

MH: How is Franciscan addressing costs for its patients? 
Patel: Virginia Mason has focused on cost now for 17 or 18 years and built a name on cost and quality, no doubt about it. I want to take you back a little bit to when I first started at (CHI Franciscan). There are a few things that were very prevalent in Franciscan, also Pacific Northwest. We had tremendous financial stability and sustainability in performance, but there are two areas in particular that I was very interested in when I came in and those get to your cost question.

I didn’t believe that we could address the cost curve without making sure quality was at the highest level expected. Three years ago Leapfrog Group—and you could like, not like, believe, not believe them—but they do grade. We had a system of seven hospitals … three C’s, three D’s and one F. It happened to be front page news in the Tacoma News Tribune. 

I brought our team together and said, “I know we’ve been working hard at this, but I think it’s good that the Tacoma News Tribune put us on the front page to show us our grades.” It was going to motivate people. I guarantee there’s no clinical nurse or staff person that says, “Hey, I’ve done enough.” 

We now have … five A’s and two B’s and one of those B’s is a .05 (points) away from being an A. We’ve done that in two years and that was extremely valuable for our organization. 

I told our team that we’re not going to be a division that is known for financial prominence. We’re going to be known as a division that’s doing what’s right for our patients. 

We ended last year (according to the) CHI dashboard as first in the country in quality and safety. Many people were shocked. I wasn’t because we were very clear about our focus and our objectives. We were very clear that our leadership team was going to be held accountable.