Lean approach at HealthEast

  • Article by: JACKIE CROSBY , Star Tribune
  • Updated: June 9, 2012 - 4:03 PM

The state's 10th-largest hospital system has a new CEO whose aim is to increase value and reduce costs.

New HealthEast CEO Kathryn Correia about challenges, opportunities ahead for the small hospital system, which has faced some financial troubles in recent years.

Photo: Richard Tsong-Taatarii, Star Tribune

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Kathryn Correia is the first new CEO of HealthEast in 22 years, and just the third to take the helm of the state's 10th-largest hospital system. Correia comes to the post at a key juncture, with the health care industry undergoing changes and facing new regulations with state and federal reform efforts.

Though HealthEast is the market leader in the eastern metro area, it faces competition from HealthPartners and Allina and has been flagged by bond rating agencies for its poor cash flow and liquidity.

Correia is a firm believer in "Lean Business," a management framework popularized in the 1997 book by James Womack and Daniel Jones. The goal of the "lean" approach is to help companies create value and eliminate waste. It's a process Correia is bringing full bore to HealthEast.

Below are excerpts from a recent conversation, edited for length and clarity.

QWhat challenges are ahead?

AAll health care institutions, providers, insurance, pharmacy, device manufacturers, IT companies -- anyone dealing with health -- has to know that they need to be changing from the inside out. HealthEast's unique history [as a faith-based hospital system] is both a blessing and a curse. The history of people coming together, sometimes for survival, to move ahead, says a great deal about the character of the people and the passion and the commitment they have, not just to their institutions but to the community.

The flip side is we've had the misfortune to assume a lot of debt. Tim Hanson [previous CEO] put some things in place to move forward, and we're coming out of it. One of my goals is to get out of that cycle so we can always be on good financial footing. When you're financially strong you can take more risks and chart your own course.

QWhat are your priorities to get back on strong financial footing?

AWe're having the best year on top of a good year last year. But the organization needs to focus on three priorities. One is the ultimate: care across the continuum, from initial primary physician visit to hospice or aftercare. But also, how do we partner with businesses and other social agencies, and influence the social determinants of health? We need to come to the table to help solve those issues with our leadership, with our expertise.

We have two other goals in service of that. One is to make sure our electronic platforms give clinicians and staff the information they need when they need it. The other has to do with why the board was interested in recruiting me -- to take waste out of the system. When you take waste out, you take time out. When you take time out, you eliminate opportunity for error and you get a better quality experience.

Q What does that mean in a practical way?

A You know how when you're at a restaurant and you get a great meal and great service and then sit around forever and wait for the bill? You can have great service and great care, and then wait around to get discharged from the hospital. HealthEast leadership last year took on discharge planning. They lowered the length of stay, they took some cost out, and we've been able to spread it.

QHave you set specific targets?

AWe're in the process of doing that right now. My experience has shown you can use "lean" to take out waste. But you can also use "lean" to improve quality and to innovate. It's an amazing body of knowledge to handle complexity. And health care is complex. Front line staff always gravitate toward it because they are involved, but leadership has to change, too. It's not like, "Oh good, they get to do 'lean' and I get to watch or I get to tell them what to do." Managers have to change how we manage. That's a lesson that takes a while to learn.

QHow does being a "lean" organization fit in with health reform?

AWe won't be able to achieve the objectives of the [federal] Affordable Care Act if we don't create systems to make ourselves accountable. We're learning to do that, to help the handoffs at other parts of the health system go better for the patient.

QHow will you set HealthEast apart from your competitors?

AWe're focusing on where we can have the biggest impact on the community. That's where collaboration with other health players might be important. There might be some programs or a joint venture relative to providing a different service in a location where two of the same just makes no sense. Likewise, we can all choose to battle each other. Some of that's not bad. But in the end, I'm not sure it makes a big difference to the community, and it wastes a lot of resources in the process.

QCollaboration is different than consolidation. Is HealthEast vulnerable?

AOne of the questions on the table is how big do you have to be to survive in health care? It used to be a billion dollar company, and HealthEast is just a little under that. Do you need to be $2 billion or $3 billion? Do you need to be an Allina or a Sanford? That's a question. Do I feel vulnerable? I spend more time thinking about how can HealthEast be better rather than worrying about that right now.

Jackie Crosby • 612-673-7335

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  • Kathryn Correia

    Saturday June 9, 2012

    Title: Chief executive officer, HealthEast

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