TITLE(s): The role of the CFO in CQI. (chief financial officer; continuous quality improvement) (Panel Discussion) illustration photograph Summary: Chief financial officers see themselves playing various roles in the continuous quality improvement (CQI) programs at their organizations. While some perceive themselves as teachers and role models, some believe they play the role of leaders and coaches. They all agree, however, that the CQI offers opportunities for them to broaden their roles and effectiveness in their respective organizations. Healthcare Financial Management p60(7) April 1994 v48 n4 DESCRIPTORS: Chief financial officers_Management Quality control_Management Hospitals_Quality control QUALITY This article was developed from a panel discussion held at HFMA's 3rd Annual Institute Linking Quality and Finance. The panel moderator was HFMA National Board Member Charles Santangelo, FHFMA, CPA, senior vice president-finance, Capital Health System, Harrisburg, Pennsylvania. Participants included four CFOs: Mike Bernard, vice president for business affairs and CFO of West Tennessee Health Care Company, Jackson, Tennessee; William Bestor, executive vice president for Community Health Care Services, Community Memorial Hospital, Menomonee Falls, Wisconsin; Gary Karsner, CFO of Memorial Medical Center, Jacksonville, Florida; and Catherine LeMay, associate hospital director for finance, Maricopa Medical Center, Phoenix, Arizona. The CFOs each described the continuous quality improvement (CQI) programs in place at their organizations, explained the driving forces behind their CQI initiatives, and detailed their own roles within their organizations' CQI efforts. How did the CQI programs come to exist at each of your organizations? Bernard: About four years ago, we formed an exploratory committee at West Tennessee Medical Center from a cross-section of staff, and sought information on the TQM/CQI process from some of the better known sources, such as Deming seminars, Crosby College, and the Juran Institute. We also talked to some CQI consultants. In the end, we made the decision that we would do it ourselves. We liked some things from Deming, some of the things from Crosby. Our program was not created by an outside consultant. Bestor: Like West Tennessee Medical, we studied a number of models, assessed what was happening in the marketplace, then decided to go our own way. We did use a facilitator from a local technical institute initially to help us with some of the training, but now have our own structure. We first created a steering committee made up of employees, staff, and management. They studied different approaches to total quality management and continuous quality improvement, and arrived at a vision statement. Karsner: Our experience was a little bit different. In 1988, Ernst & Whinney was retained to do a major downsizing. After that was over, they wanted us to be an alpha site for development of their own CQI effort. We worked with them for about six months, and the bottom line was that it was not a good match. Perhaps that should have been foreseen--after all, they were the guys who came in and did the axing, so why would we ever want to do business with them about CQI? Anyway, we tried it and it did not work, but we learned from them. About that time, the CEO and chairman of Memorial Medical Center became interested in kaizen--that is what the Japanese call an organized program of work with specific goals and deadlines aimed at improving processes, and thus improving quality. He even took board members and senior managers to a week-long kaizen institute. We studied that for a while but decided that maybe that was not where we wanted to go, either. Beginning with Ernst and Whinney, we spent probably 12 to 18 months just learning about CQI. We did not do business with the people we were learning from, but we did learn. Then, we happened to hire a new president who had had a positive experience with Quorum Health Resources of Nashville. He suggested we retain Quorum, and that began a three-year arrangement that was a teaching/coaching/mentoring relationship. It was intense at first, with people from Quorum coming to our facilities monthly. The second year they only needed to come in quarterly, and the third year just semi-annually. Now, they just come as we ask them to work on special projects. LeMay: We got involved in total quality management in my organization because we thought it was the right thing to do--and, in fact, we do think it is the right thing to do. But we really got involved because we thought our survival depended on it. In the early 1990s, those of us on the senior management team and some of our physician leaders took a critical look at where we were, at what was happening in our environment, and at what was likely to happen with healthcare reform and said, "We are in trouble." We were not customer focused and we had an image problem in the community. The healthcare environment in Phoenix is very competitive, and Maricopa Medical Center was not positioned well to compete. We formed a quality council that was, and still is, chaired by our CEO. We are lucky, because we have tremendous support from our CEO--that is critical. We also have pretty strong involvement from our physicians. The time commitment is difficult, but they believe in it and we do have our champions. We also became part of a quality management network, so we had an opportunity to get together with our peers in a nonthreatening environment, that is, no one else in the network was from the Phoenix area or a direct competitor. We learned from others, talked about what we were doing, what we were trying to do. Bernard: The vision statement of our CQI program, which we call "Quality Plus," is: "We do all that we do right, the first time, all the time, every time." When we announced this, of course, a few people in our organization said, "We cannot say that, it cannot be done." I mean, in a large hospital the pharmacy dispenses, what, a couple million doses of medications a year? And we all know that, chances are, it will not portion out the prescribed dose of the correct medication at the right time, every time. But this was the vision of where we wanted to be. To reach it is a journey--and we may or may not get there. But it is what we are striving for. Karsner: Our definition of quality is: "Meeting or exceeding customer's expectations." That can mean a lot of things, and it is not something that is necessarily well suited for quantitative analysis. But for us, CQI is not a program, it is a business strategy. It is the way we do business. We take the position that we are already paying for some level of quality, and we want to improve on that level of quality. Bestor: Our steering committee--now a quality improvement council--came up with a set of continuous quality improvement goals, based on their own deliberations as well as logical precepts set out by others. They included customer focus, total involvement of all members of our organization, a commitment to measuring and monitoring quality, a high level of organization support, and some of the other principals of continual improvement. How was CQI training handled? Bernard: The one thing we felt was important for our organization--all 3,200 employees--was that each management layer had to do its own training. And obviously, you first have to learn CQI concepts to teach them. First, all our vice presidents--that includes me--were sent out for training. Then each vice president had to train those who report to him or her, so I trained the eight or nine people who report to me. Then my people had to go to all the managers that reported to them, and train them. I was present, but they did the teaching. And those managers trained the employees who report to them. As you can imagine, everyone got the message quickly that, "This is for real." It was not something some consultant could come in and do. Karsner: Quorum trained the management team and by that, I mean, the president and vice presidents. Shortly after that, the senior managers trained the middle managers. But we did it in a little different way it was done at West Tennessee Healthcare. We split up the curriculum, and the senior managers and executives focused on areas in which we felt we could--or should--become a little more knowledgeable. And then we became the faculty that taught the middle managers. After the middle managers were trained, we developed what we call the Quality and Daily Work Life course. It is a four-hour course that equips the participants (managers, the supervisors, and willing employees) with enough information to participate in teams. We supplement this program with "just in time" training as we actually get involved in forming work teams. We have not trained everyone, yet. All efforts have been voluntarily up to this point. As might be expected, there has been variation in how individuals from different areas of the organization have responded. If there is a "reason" for that, it is probably reflective of the management of those areas, and those managers' level of participation in the CQI effort. There is bound to be variation in that, and we understand that different individuals are at various points in their learning curves and have different levels of commitment. LeMay: When we run training sessions, it is across the board. For example, I do not train only finance staff. Actually, people get to schedule their training based on what is convenient for them, whether it is Thursday afternoon or first thing Wednesday morning. We have specialized in certain areas, obviously, so that we can be a little more fluent, but our hope is that eventually any senior manager can fill in for any other senior manager. No, that does not mean I am going to direct nursing practice, nor would the physicians and nurses let me, but it does mean that as a manager, as a senior manager, I should be able to cover for any of my peers. Karsner: But you have to have a sense of humor. I know that because when I first started leading quality teams, I had not been trained in how to do it. But the circumstance was that we had some intolerable situations, and I had no alternative but to take them on. And I did it all wrong. I mean, for any situation you name, I probably have a story about how not to do it. Because I personally did it wrong. But, I did it out of ignorance. I thought I was doing the right thing. I think my heart and mind were in the right place. But I came to know later that I did it wrong. And you have to be able to laugh about some of those things, take them as learning experiences, and try not to do them the same way a second or third time. LeMay: It is very important to have a sense of humor. Fortunately, I really do not take myself too seriously, most times. If that were not the case, I probably would not have been able to see the reengineering process through the end. What are the key elements of your CQI programs? Bernard: What really drives our system is what we call "opportunities for improvement." The ones we address have three components: they have a high potential for reoccurring, they require substantial effort to be realized, and they must be able to be defined as a problem to be solved, not a foregone solution. By that, I mean, if you have a parking problem at a hospital, most people will say, "A parking problem? You need more parking spaces." What they have done is define the problem with an obvious solution. What should have been done is define the specifics of the problem--for example, there is not enough parking between 3:00 p.m. and 5:00 p.m. when the shifts change. Maybe you can develop a better schedule that staggers the hours people work instead of constructing a parking garage. That is what is key to CQI: To fix something, you first have to be able to define it as a problem. At West Tennessee Healthcare, our CQI effort starts with our quality council. For the last three years we have not had an "administrative staff." The vice presidents and the senior managers of our healthcare system form the quality council. In our program, respect for people is very important. If you do not have team players and you do not take care of your people, your quality system is not going to work. Another important aspect of our program--and this certainly is a big buzz word--is "empowerment" of employees. We take it seriously, and we really have tried to challenge what the responsibilities of our people are. This is the most difficult aspect of the whole CQI process. What you have to remember is Deming's 85-15 rule--that 85 percent of problems in an organization (or "opportunities for improvement") can be addressed by changing systems, which are largely determined by management, and less than 15 percent are under a worker's control. How many people have said, "You know, if only Harry would straighten out, this department would run much better. If we could replace Harry or get him to turn around...." Most likely the problem is not with Harry, but with the system. And we in finance control a good part of the systems in an organization, certainly the information systems and the management reporting systems. We have organized our effort into quality improvement teams and quality action teams, the difference being that one is intra-departmental-- within the department--and one is interdepartmental, which is where most hospital problems exist. For example, if the lab tests do not get entered on the charts, it is not just a lab problem, it is an interdepartmental problem. It affects everybody. A quality action team is a group of employees--it could be directors, it could be managers, it could be nonmanagers--that can be established only by the quality council. The team members are given a mission. And here is the "scary" part of it: they are empowered to fix it. All kinds of committees and teams can be set up to work on a problem, but it takes empowered people to fix it. And when I say fix it, I mean that as long as they stay within the mission guidelines, they can say "do it," just like the CEO can. We once had something called a "uniform policy quality action team." We had a situation where it seemed everyone wanted uniforms. Admitting wanted uniforms. Security wanted uniforms. Everybody wanted uniforms. So we formed a team to handle the issue--an empowered team. The next thing you know, after going off on some tangents, they were making their final recommendations to our quality council. They had decided that individuals in departments that required uniforms should be given five sets of uniforms instead of the three sets they had received in the past. The cost of purchasing the two extra uniforms for each person plus the cost to maintain them for a year came to $61,000. If we had said, "No, you cannot do that," all our talk about empowerment would have been just that--talk. So it cost us $61,000 to really be able to say we have empowered our teams. And we learned from the experience. Each team now has sponsor. For example, I am the sponsor of the accounts payable/purchasing team. The team is still empowered to make decisions, but I try to keep it focused. Bestor: We have a CQI council, too. It's job is to track current progress and focuses on future development. It started as a staff-based guest relations committee and evolved into the CQI council we now have, replacing the initial steering committee. And we now have board and medical staff participation in that council. The council meets monthly, and like at West Tennessee Healthcare, sanctions continuous quality improvement teams. Some teams also develop within departments, but any teams that will be active hospital-wide, crossing organizational lines, must work through the CQI council. The council actually assigns a facilitator to that team. Three broad categories of activity have developed: employee involvement, customer satisfaction, and quality improvement. Employee involvement covers guest relations, employee "social" activities, employee wellness programs, and our employee suggestion program. Customer service involves evaluation of customer needs, expectations, and satisfaction, not only for external customers--patients--but also the internal customers, the physicians and other staff. Finally, there is quality improvement. What used to be a quality assurance activity has evolved to one of continuous quality improvement and really is tying in now to clinical areas. We also have accredited, internally run management excellent programs that were established through our education department. It is our primary method of ongoing training in CQI and other management principles. What is the role of the finance department in CQI? Karsner: What we try to do is identify opportunities for the quality teams, determine what they are going to be measuring, and try to get them to measure transactions just as they occur. That could be daily, hourly, or whatever. You do not want to wait for a monthly report to come out. First of all monthly reports are usually an amalgamation of a lot of information that may or may not be useful. And what you are measuring really needs to be measured on a more frequent basis. What encourages me the most is when I can walk into an area in the hospital and on the wall, stuck up with thumb tacks, are the run charts. You want to keep it simple. You do not need people bogged down trying to use the computer. We have an elaborate local area network system with several hundred PCs operating, but we really ask people not to go in that direction with reports. Put it on the wall, make a dot with a pencil and connect your dot with the one from before. Pretty soon, you will have enough data points to tell whether the process is in statistical control, you can predict it's function, and if you want to make a change, you will have a good idea about what is going to happen. And you can do it as the work occurs. If you do it with the computer, you get all balled up in making the legends and comments, then putting all that into the computer, then people forget to save the information they just entered, then it is lost.... Originally, the various departments came to finance looking for a lot of the data. We tried to steer them back to their processes and help them identify what was in their processes they were trying to measure. So, from a finance perspective we try to stay out of it, except for the highest level needs for global data. It is also important for the finance department to maintain a customer-oriented perspective. Historically, we in finance have been viewed as "having all the answers." We were all trained with great technical emphasis, and most of us were certified or accredited in some way. We were looked to as experts, and when questions came up, then the natural reaction was to step forward and provide an answer. And that is not necessarily a customer orientation. I think we are doing a better job today than we used to do. And we are probably not doing as good a job as we are going to do. But I think it is critical to strive for progress in this area. LeMay: At Maricopa Medical Center, we do not have sophisticated information systems. Our financial resources are such that when we have money, we spend it on the basic patient care equipment, not computers. When you do not have wheelchairs and gurneys, you usually do not buy information systems first. My staff has developed data collection into a fine art. Their role is not to do that for managers, other staff, team members. Their role, rather, is to facilitate, to give training, to point people in the right direction, to give support, and to validate the methodologies that are used. To provide meaningful reports and to provide whatever support and training people need is important. We also have had almost all of the staff members of the finance department involved in cross-functional teams. This is my opportunity to brag a little. One of the projects that we took on in the financial area was one of the biggest things we have attempted in the entire organization. It was also phenomenally successful. The project was the patient accounting process improvement project or PAPIP--a re-engineering of all the patient accounting processes. Rather than go thorough all the details, what I would like to stress is why this project was so successful. First and foremost was good communication and management support. It was made very clear that this project had both my support and the CEO's support and we made sure that support visible to all levels of the organization. We promoted the fact it had the "local" support of the business office manager and her staff supervisors. We involved staff at all levels. We spent an awful lot of time in this, and not being a very patient person myself, I got a bit frustrated, but it was the right thing to do. We had lots of meetings. We had lots of planning sessions. We had lots of discussions. We had lots of arguments. We had debates. We reached the point where I was ready to say, "Enough, enough, please, humor me--try this." But we had buy-in from the staff. We also did something that I thought was a good idea at the time, but I did not realize how important it was. As we went through this project, every time we made some major change, we were threatening people. People who had done a specific job for years and years, suddenly did not know what their job was all about. It was very threatening to them. So we took every opportunity we could to celebrate. (And sometimes believe me, we had to look really hard for a success.) We did it in big ways, we did in little ways. We communicated, first of all, and we had clearly defined goals. We monitored progress. We let everyone know how we were doing. And as soon as we saw a little blip in terms of improvement, we celebrated that. It kept people going. We also did something that sounds negative, but was not so bad, at least after I had done it the first few times: we acknowledged when we had some failures, when we had bad ideas. You have to stand in front of 50 or 60 angry people, who have told you all along that what you were doing was not the right thing to do, and you have to say, "You were right. It was not the right thing to do. I screwed up. Help me fix it." The first couple of times it is painful, but after that, it is not so bad. So we did that. And we gave staff the freedom to do that too. We said, "Try. Reach. Take risks. And if it does not work, then we will figure out how to fix it. It is better than staying where we are and not trying to do anything new." We also developed methods for monitoring and for measuring. We still have a long way to go in that, throughout the organization, but it was very important. We know where we are going, we know where we are, and we can see it. It is something visible. There were three major things that we accomplished. We simplified the processes, reduced cycle time, and reduced layers of management. We increased cash collections and reduced the days in receivables. But more important--and trust me, it is a big deal for me to say something is more important than cash--is that we set the stage for continued improvement of the long-term health of the organization. We have staff at all levels who now have the tools and who have the confidence to take what they have learned and what they have seen and continue making improvements. And where does the chief financial officer fit in continuous quality improvement? Karsner: The CFO must teach. I do a lot of teaching and I find I enjoy it. I was a little apprehensive about it at first, but then saw the people who report to me teaching those who report to them, particularly in quality-related aspects of daily work. And then I saw the people they taught teaching other employees. I think that the CFO serving as a role model is important--if you "talk the talk," you have to be able to "walk the walk"--and that is the benefit the CFO and the finance department can contribute. Bernard: CQI is the CFO's ultimate challenge, but it should not be his or hers alone. Everyone in the organization must use the organization's resources--money, personnel, equipment, and physical plant--to increase quality, lower costs, and add value. That is where we have been missing the mark in health care. We do good things, but adding value is where we probably need to apply the principles of CQI. Bestor: CQI provides an opportunity for us as financial managers to expand our organizational role and effectiveness in our organizations. At our organization, we have related CQI very much to our strategic position in terms of organizational development, trying to improve our competitive position and expanding to healthcare reform. It requires leadership and involvement and support of top management. We have had to rethink how we do business, and rather than imposing solutions by jumping to conclusions ourselves, we empower our employees to come up with those solutions. LeMay: As CFO, I am a member of the quality council. On the senior management level in my organization, we think that it is very important that we operate as a team, and that we are perceived as a team. We have worked very hard, each in our own areas, to make it obvious to the rest of the organization that we are a team, and we are following a team approach. I see my role as CFO quite clearly as one of providing leadership, of being a mentor and a coach, not just to my managers, supervisors, and staff, but throughout the organization. I believe that we have been pretty successful in developing and communicating a shared vision within our organization. Others have commented on the importance of senior executives demonstrating support of CQI programs, and I echo that. It is critical. It is very easy to talk about empowerment, employee involvement, and risk taking. I personally find it a whole lot more challenging to "walk the walk"--and walk it consistently. Within all the units in my area, quality improvement efforts are all top agenda items. Every time we get together, it comes back to that. There are policies to talk about, and procedures to talk about, and reports to talk about, but we try to continue focusing on quality. I also echo the importance of the CFO's role as a teacher within the organization. All of us at the management level must be teachers. Part of what has happened through our CQI initiative has been the opportunity for my staff and I to become more involved in the business that we are in. I think that is important. It removes us a bit from the role of only saying, "Sorry, you cannot do that because there is no money," and lets us say, "I understand what we are trying to achieve. How can we do it?"