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ROLE OF STATE AND HOSPITAL LEADERSHIP IN CMS PROCESS MANAGEMENT: EFFECTS ON ART AND SCIENCE OF CARE

CLAIRE SENOTDepartment of Management Sciences

Fisher College of BusinessThe Ohio State University

Columbus OH 43210

ARAVIND CHANDRASEKARANThe Ohio State University, Columbus

KENNETH K. BOYERThe Ohio State University, Columbus

ABSTRACT

We examine the effect of Hospital and State Leadership on the public reporting of healthcare quality measures by U.S. hospitals and its impact on the Science (technical aspect) and Art of Care (interpersonal aspect) delivered in these hospitals. We use both primary and secondary data collected at different time intervals to investigate these relationships. Results suggest that the relationship between Hospital Leadership and CMS Process Management is positively moderated by State Leadership. In addition, CMS Process Management is positively associated with Science of Care but negatively associated with Art of Care. Institutional theory is employed to explain this tradeoff.

INTRODUCTION

In 1999, the Institute of Medicine (IOM) published an alarming report titled To Err is Human, which documented that as many as a million people a year are injured and 98,000 people a year die as a result of preventable medical errors in the U.S. (Kohn et al., 1999). In a major initiative undertaken in 2003, the U.S. Center for Medicare and Medicaid Services (CMS) adopted a set of core process measures for common and serious health conditions that arise due to preventable medical errors. These measures are now used to systematically evaluate the Science of Care delivered to patients at over 4,000 acute care hospitals within the United States. Science of Care refers to the technical aspect of medicine and is focused on “what type” of treatment the patient receives from the healthcare provider (Donabedian, 1980). We define CMS Process Management as a structured approach designed to facilitate both the reporting of CMS process of care measures and performance on the measures themselves. In recent years, there has been a growing emphasis on improving the Art of Care in addition to the Science of Care delivered to the patients (Epstein & Peters, 2009; Weng, 2008). Art of Care refers to the interpersonal aspect of healthcare delivery and is focused on “how” the treatments are provided to patients (Donabedian, 1988). In general, medical research argues that both Science and Art of Care are critical elements of healthcare delivery quality (Bates & Gawande, 2003; Hong et al.,2010; Hawn, 2010).

While non-medical professionals generally accept the role of standardized process management initiatives as key elements of effective operations, there is limited acceptance among healthcare providers (Gawande, 2010). In particular, healthcare providers often view

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CMS Process Management as an undesired disruption to the existing mode of healthcare delivery (Christensen et al., 2009). While numerous medical professionals are dedicated to improving patient safety, operations management research has much to contribute, including insights regarding medicine as a complex system which can employ standardized processes to achieve higher reliability (Boyer & Pronovost 2010; Sutcliffe et al., 2001).

Numerous operations management scholars have examined process management in healthcare settings (Edmondson, 2003: Meyer & Collier, 2001; Tucker et al., 2007), yet there are two major limitations in prior research that we seek to address. First, research in general has looked at the effect of organizational factors on process management implementation. Yet studies have generally ignored the effect of external factors, such as state legislation, that can also drive implementation. Research on state level leadership can inform and help frame policy decisions regarding patient safety (Christensen et al., 2009). Accordingly, we examine the question: How do Hospital Leadership and State Leadership jointly influence CMS Process Management implementation efforts? The second limitation of existing healthcare operations management research involves the choice of outcome measures. Several researchers have employed subjective measures of healthcare quality or safety which are difficult to interpret (Meyer & Collier, 2001; McFadden et al., 2009), or have focused primarily on the Science ofCare as an outcome without concurrently assessing outcomes in terms of the Art of Care (Porter & Teisberg, 2007; Tucker, 2007). Our research fills this gap by investigating the following question: What is the effect of CMS Process Management initiatives on both the Science and the Art of Care in U.S hospitals?

CONCEPTUAL FRAMEWORK

Multilevel Leadership and CMS Process Management

In 2009, a ten-year anniversary report was published, titled To Err is Human- To Delay is Deadly with the subtitle Ten years later, a million lives lost, billions of dollars wasted (Jewell &McGiffert 2010). It states: “With little transparency and no public reporting […] we give the country a failing grade on progress on select recommendations we believe necessary to create a health care system free of preventable medical harm” (p.1). This report attest to the fact that leadership and process management within hospitals has gained increased attention from medical professionals, yet substantial hurdles remain.

The primary foundation of a quality management philosophy is that “leadership drives the system which creates results” (Malcolm Baldrige National Quality Award). We therefore expect hospital leadership to greatly impact CMS Process Management. However, the legislative or institutional emphasis on healthcare reform attests to the fact that quality of care and patient safety are no longer the task of healthcare organizations alone. Government initiatives, often carried out at the state level, suggest that multilevel leadership, both internal (i.e. hospital leadership) and external (i.e. state leadership), is instrumental in fostering substantial change. Through legislation, states exert coercive pressure, which shapes the structure and activities within hospitals (DiMaggio & Powell 1983). However, to date, there is no empirical evidence on the effect of state legislation in shaping the use of process management practices in healthcare. This leads us to the following two hypotheses:

Hypothesis 1: Hospital Leadership is positively associated with CMS Process Management

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Hypothesis 2: The impact of Hospital Leadership on CMS Process Management will be moderated by State Leadership

CMS Process Management and Science and Art of Care

The link between CMS Process Management and Science of Care seems intuitive. Indeed, an increase in CMS Process Management within hospitals promotes greater adherence to scientific standards, thereby increasing the Science of Care performance. In contrast, a more subtle relationship is likely to exist between CMS Process Management and Art of Care. First, by increasing the ease and quality of information sharing, CMS Process Management will not only free-up the healthcare provider’s time but also provide the right type of information regarding the patient health conditions (Porter & Teisberg, 2007). This allows for better quality of interactions between the healthcare provider and patients. Second, by promoting transparency through CMS measures reporting, CMS Process Management educates the patient, thereby increasing patient autonomy, which is a key concept of patient-centered care, which in turn allows for shared decision making (Epstein & Peters, 2009). This leads us to the following two hypotheses regarding the performance implications of CMS Process Management.

Hypothesis 3a: CMS Process Management is positively associated with Science of CareHypothesis 3b: CMS Process Management is positively associated with Art of Care

Effect of Science and Art of Care on Patient Satisfaction

In their study of the Mayo Clinic, Berry and Seltman (2008) present the patient as a detective who “consciously and unconsciously filter clues embedded in the experience […] Specific clues carry messages, and the clues and messages converge to create the customers’ service experience that influences customers’ feelings.” (p.160). They identify functional clues which focus on the technical quality, i.e. the “what” of the process, and humanic clues which are derived from the behavior and appearance of healthcare providers, i.e. the “how”. This definition of functional and humanic clues maps to the Science and Art of Care (Donabedian, 1980), which leads us to the following hypothesis:

Hypothesis 4: Both Science of Care and Art of Care are positively associated with Patient Satisfaction

DATA COLLECTION AND MEASUREMENT

A combination of both primary and secondary data is used to test our hypotheses. Our final sample comprises 273 acute-care U.S. hospitals across 43 states. The following section describes our research design and measurement model.

Primary Data

The primary data used in this research was collected as a part of a larger web-survey investigating process management practices across US hospitals. Four constructs used in our framework, namely Hospital Leadership, CMS Process Management, Organizational Trainingand Hospital Experience – are measured through this survey and are based on existing scales.The survey data collection took place between September 2009 and November 2009 across all regions within the United-States. We received surveys from 284 U.S. acute care hospitals across 43 different states. The number of participating hospitals within each state varied from one

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(Wyoming) to forty (Florida). We also controlled for Hospital Training, Hospital PreviousExperience, Number of Full Time Equivalent (FTE), Hospital Size (ln # of beds), Ownership Structure (i.e. private or public) and Corporate Goals (profit or non-profit) in our analyses.

Secondary data

State Leadership is measured using two different methods. First, we use state-enacted reporting laws concerning HAI prior to January 1 2009 - A binary variable with states enacting HAI laws prior to January 1, 2009 coded as 1 and other states coded as 0. Second, we also measure State Leadership in years by the year in which the state enacted its first HAI reporting law which varied from 2003 (e.g. Illinois) to 2008 (e.g. Massachusetts). This data allows us to analyze the timing effect of early versus late adopting states on CMS Process Managementimplementation.

Science of Care is evaluated using CMS process of care measures which are based on patient medical records and reported on the CMS Hospital Compare website. Three common and serious health ailments are considered in this study: Heart Failure (HF), Pneumonia (PN) and Surgical Care Improvement Project (SCIP). We matched data from the period April 2009 -March 2010 from the CMS Hospital Compare website with data for all hospitals that completed our survey.

Art of Care represents the interpersonal quality of the care provided and is measured using items asking patients about the extent of communication with healthcare providers (i.e. doctors and nurses), the control of pain, the speed of delivery of help, the explanation of procedures and the post-treatment instructions for recovery. The Art of Care score is based on six items contained in the HCAHPS survey and is collected for same time period April 2009 - March 2010.

Patient Satisfaction is based on overall satisfaction as rated by patients in the HCAHPS survey (scale from 1 to 10) over a twelve-month period (April 2009 - March 2010). We coded answers using CMS classification based on the following scheme: 6 or lower (coding variable = -1), 7 or 8 (coding variable = 0) and 9 or 10 (coding variable = 1). Total satisfaction score for each hospital was calculated as the average of those coded answers.

ANALYSIS

The largest observed correlation between any two predictor variables in the study is 0.51 (between Training and CMS Process Management). Multicollinearity therefore does not appear to be a significant concern in our analysis. In addition, the variation inflation factors (VIF’s) for all estimated models were below the acceptable limit of 3 (Hair et al., 1998).

Predicting CMS Process Management Implementation

Our first two hypotheses examine the effect of Hospital Leadership and State Leadershipon CMS Process Management implementation. We employ a multilevel random effects regression procedure using maximum likelihood estimation approach to test these hypotheses. A Huber-White sandwich estimator also corrects for multicollinearity and provides robust standard errors in the clustered data sample (Rabe-Hesketh & Skrondal, 2005). Group mean centering is done before computing the interaction effects between State and Hospital Leadership(Raudenbush & Bryk, 2002). Result indicate that Hospital Leadership (β=0.17, ΔR2=4.32; p<0.01) is significantly associated with CMS Process Management, providing support for

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Hypothesis 1. Results also suggest that State Leadership moderates the relationship between Hospital Leadership and CMS Process Management as evidenced by the significant interaction term (ΔR2=4.05, p<0.01). This result provides empirical support for Hypothesis 2. The full model explains 38.55% of the variation in CMS Process Management. Figure 1 shows the moderation effect of State Leadership for the relationship between Hospital Leadership and CMS Process Management.

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Figure 1 about here-------------------------------------------

Effect of CMS Process Management on the Science and Art of Care

A random effect regression is used to investigate the effect CMS Process Management on Science of Care. We control for the effect of both State and Hospital Leadership in this model. This result indicates that CMS Process Management is positively associated with Science of Care (β =1.45, p<0.01). This result supports Hypothesis 3a, and the model explains 24.28% variation in Science of Care.

Similar analysis with Art of Care as the dependent variable shows that CMS Process Management is negatively associated with Art of Care (β=-1.28, p<0.05). This suggests that an increase in emphasis on CMS Process Management within these hospitals inhibits communication/interactions between healthcare providers (i.e. nurses and physicians) and patients. The model explains 38.46% of the variation in Art of Care. This result not only rejects Hypothesis 3b but indicates a relationship in the opposite direction to that hypothesized. We explore this counterintuitive result in our post-hoc analysis.

Hypothesis 4 suggests that both Science and Art of Care are positively related to Patient Satisfaction. Results indicate that Science of Care is not significantly related to Patient Satisfaction (β = 0.92; p>0.10) while Art of Care has a strong positive significant association with Patient Satisfaction (β = 1.46; p<0.01). These results offer partial support to H4.

Post-hoc Analysis -------------------------------------------

Figure 2 about here-------------------------------------------

Our earlier result suggests that high level of CMS Process Management is positively associated with Science of Care but is negatively associated with Art of Care. We use institutional theories to explain this tradeoff. Using insights from DiMaggio and Powell (1983)we argue that early stages of institutionalization are characterized by limited institutional forces. Thus, early adopters of CMS Process Management have more liberty to adapt institutional guidelines to the particularities of their organization, which leads to great efficiency gains (Westphal et al., 1997). By contrast, late adopters of CMS Process Management are confronted with more fully developed practices and are much more likely to face isomorphic pressures (i.e. pressure to conform by adopting practices that have become standard) and lose the ability to customize new requirements to the specificities of their organization (Haveman, 1993).

To test this institutional effect, we created an interaction term between State Leadership in Years and CMS Process Management, with both variables centered to avoid multicollinearity issues (Aiken & West, 1991). Our results indicate that State Leadership in Years positively moderates the relationship between CMS Process Management and Art of Care (β = 0.51; p<0.05). That is, the effect of CMS Process Management on Art of Care is both strong and

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positive in hospitals located in states that were early to adopt HAI reporting laws. Our results also show a positive moderation of State Leadership in Years for the relationship between CMS Process Management and Art of Care. Taken together, these results suggest that hospitals in states with early regulations tend to demonstrate no trade-off regarding Science and Art of Care. Figure 2 represents the conditional effects plot for this interaction effect. Our results remain robust to several checks on regression model specification, omitted variable issues and alternative definitions of predictor variables.

KEY CONTRIBUTIONS TO RESEARCH AND PRACTICE

Studies in operations management have often looked at the impact of process management in healthcare settings, yet there are several substantial shortcomings which are addressed in our study. We find that the positive association between hospital leadership and CMS Process Management is moderated by state leadership. This finding, supported by institutional theory, underlines the critical role played by external factors such as policy makers and the need for future research to consider both internal and external drivers when studying the development of organizational structures and processes. The post-hoc analysis also confirms the absence of tradeoffs between Science and Art of Care in early adopting states reinforcing the need for policy makers to be aggressive in their initiatives.

Second, results from our study provide support to the relationship between CMS Process

Management and Science of Care. This is important since, despite a few success stories

(Pronovost et al., 2006; Blackstone, 2010; Toussaint, 2009). Third, we examine the effect of

CMS Process Management on both the Science and Art of Care dimensions, which is relatively

rare. Finally, because patient satisfaction should be considered as an end in itself (Duggan et al.,

2006; Porter & Teisberg, 2007; Vuori, 1991), we test the impact of both the Science of Care and

Art of Care on patient satisfaction.

REFERENCES AVAILABLE FROM THE AUTHORS

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Figure 1: Conditional Effects Plot for State and Hospital Leadership

Figure 2: Conditional Effects Plot for CMS Process Management and State Leadership

in Years

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