How to Keep Hospitals Healthy

Susan Sontag, in her text Illness as Metaphor, observed that: "Everyone who is born holds dual citizenship, in the kingdom of the well and in the kingdom of the sick." In preparation for our luncheon address today, you will notice from my crutches that I have been researching the kingdom of the sick. No personal sacrifice is too great for The Empire Club!

The medical profession has always been fair game for the satirical mind and the eloquent pen. As early as the 17th century, Moliere took a swipe at the medical faculty of the University of Paris in his Le Malade Imaginaire. It might be thought of as some kind of ironic justice that poor Moliere was seized with a consumptive attack while performing as the hero of the play and died a few hours later. But he left us with one of the great classics of medical satire.

It is not only geniuses and eccentrics who have been absorbed by health and medicine. Probably no aspect of the human condition concerns all of us more than our health and, by extension, medicine and hospitals. In fact, hospitals evoke strong emotional responses. Ask our speaker, Peter Ellis, President and CEO of Sunnybrook Health Science Centre. We, as consumers of health-care services, criticize everything from the cost of medical care, to the quality of the food in hospitals, to the lack of attention we think we should be getting. A recent survey by the Ontario Hospital Association, however, found that three-quarters of the people polled were satisfied with hospitals. And American observers, against the backdrop of an impending health-care crisis in the U.S., look enviably at the Canadian health-care system; they view it as being part of the kinder and gentler society about which U.S. citizens can only dream.

Statistically, there are more patients for hospitals to treat these days. This was discussed by Peter Ellis in a letter to the Editor of The Star in June where he commented on the doubling of day procedures and ambulatory care visits. He wrote in that same letter about health-care costs which, he claimed, have actually declined in relation to their percentage of the GDP in Ontario over the past 10 years. That will probably come as a surprise to most of us who are familiar with the suggestion that hospitals should install a recovery room next to the cashier's office!

Additionally, most of us are living a lot longer. Approximately 10 per cent of the population is over age 65, and this age sector consumes 40 per cent of our health-care dollars. Early in the next century, that age group will be twice as large. Sunnybrook capitalized on this trend in its recently-launched fundraising campaign. One billboard focused on aging with this pitch: "George Burns just signed a $3 million contract with Caesar's Palace ... Some 95-year-olds get all the breaks!"

The comedian, Jackie Mason, once commented: "It's no longer a question of staying healthy. It's a question of finding a sickness you like." Many of us perceive a hospital as a facility that takes out your tonsils or, from recent personal experience, deals with ankle fractures. A hospital or health-care system is significantly more complex than the layperson's perception. Like any multi-million-dollar operation, a hospital requires cutting-edge management techniques and human resource strategies. Part of the challenge is to bring together many varying professions and so many different activities with one overreaching goal in mind. How to manage the most effective and efficient use of our health-care facilities in a political and economic climate of limited financial resources is a challenge that our speaker today is uniquely qualified to discuss.

When Peter Ellis was named CEO of Sunnybrook in 1987, growing service demand was stretching its resources to the limit. In the past four years, he has introduced major changes to the organizational structure of the hospital, with an emphasis on individual decision-making at the level that is closest to the patient.

Under Peter Ellis's direction, Sunnybrook has also pioneered in the computer handling of patient cost records. This efficiency-improving development has become more urgent as the Ontario Ministry of Health, that golden goose, is now laying fewer eggs. Peter has a wide range of experience in health-care management. In addition to 14 years in senior executive positions at Sunnybrook, he has been a management consultant specializing in health-care management in Canada, Nicaragua and his native Great Britain. Sunnybrook's efforts and achievements in the area of medical research, and Peter Ellis's contribution to this initiative, have been described as forward looking. And now we can look forward to hearing his views on how hospitals can keep healthy.

Ladies and gentlemen, please welcome Peter Ellis.

Peter Ellis:

Thank you John. I should say John's kind remarks are probably premised on the fact that on Friday afternoon he returns to our care, so he can't say anything else but complimentary things. You will also notice he has a wrist tag which actually was supposed to ring if he left the premises to alert security.

I want to thank The Empire Club for this opportunity and I also want to thank the Mayor and our guests today for attending. It is also nice to be surrounded by so many familiar faces although I hope I am not preaching to the converted.

John has touched on some aspects of my presentation. What I want to bring to you was epitomized by a recent Star editorial. I had been away for a week in August, which is unusual for me, and returned to find an editorial written about hospital funding difficulties and the pleading of the Ontario Hospital Association, and then went on to make some reference to the hospitals being part of the medical-industrial-complex.

This terminology confused me. The only thought I had was that maybe the Pravda editorial writers who had been laid off because of the changes in Russia now had a new, home. To be described as part of the 'medical-industrial-complex' seemed to be attempting to imply some Machiavellian plot to undermine the government of Ontario which, I don't believe, is the goal of hospitals here. Nor does this type of commentary help to foster understanding of the issues we have to deal with.

This rhetoric and the consequences of it concern me from two perspectives; one--what does it do to our organizations and how they function as organizations and, two--it suggests to me that we are not getting our message out there which puts the onus back on our shoulders to try and take more time to explain to people what does go on in a hospital and what they are about. In order to do that I am going to use a few slides. You will notice I do not have any notes, and without the slides I have no idea of what I am supposed to be saying.

I want to start by talking about the international scene and then gradually bring it down to the hospital level. For those of you not familiar, the first slide shows the positioning of Canada relative to the other industrialized nations and shows the general pattern of the different countries relative to their GDP over the years. As you can see, Canada, after putting on a little bit of an early spurt, tends to cluster around the majority of the other industrialized nations and has recently been showing some slight improvements. Three countries are off the standard curve--the United States way up, and then Japan and the United Kingdom way down. While we understand some of the problems as to why the United Kingdom is somewhat lower, Japan remains a mystery to many of us, partly because they seem to have different accounting procedures and different admitting practices.

What is important is to tie those costs back to wealth. As we keep hearing these days, we cannot improve health-care facilities without improving the wealth of the nation. Looking at how those two particular parameters correlate, you can see on this second slide that Canada is right on the line in terms of the slope, which suggests that the amount of money in total to be spent on health relative to the wealth of our nation is appropriate when measured against other countries. Again you can see a number of other countries that are way off the chart. Either they are spending much too little relative to their wealth, or spending far too much.

This third slide looks at length of stay, the number of beds per 1,000 population, and the number of physicians per capita. You will see again that Canada performs very well among industrialized nations.

This next slide demonstrates some of the measures of health and again shows Canada's performance relative to life expectancy, infant mortality rate, and life expectations. Again it would suggest to us that we do have a well-performing system when we look at ourselves in comparison to other industrialized nations.

This is not an excuse for complacency as there are other jurisdictions which show a better record. There are opportunities to improve, both the financial effectiveness and the overall quality of our system.

Getting down to the provincial level, which is where responsibility for health care rests in this country. (It is a mistake to talk about the Canadian health-care system, when in fact health care is a provincial responsibility and there are some significant differences between the systems in different provinces.)

You can see the government of Ontario's problem when we look at this slide. Notwithstanding the fact that health care expenditure has retained its relativity to wealth as a cost to the province, the year-over-year increase in dollars spent on health increased at an average of 12 per cent. This is a major concern for us all and it must be one of the province's most difficult financial problems. I am sure Dr. Barkin has spent many a long hour in his previous role trying to deal with this escalation.

What is important is to understand where that money is going and this is more toward the topic that I want to talk about, which is the issue of hospitals. You will see from this slide that hospital expenditure has diminished in their share of the province's health-care dollars. We were consuming some 50 per cent of that dollar just over 10 years ago; it is 43 per cent of that dollar today, so that relative to the other components of the health-care pie, we have been doing fairly well. This is further amplified on this slide, which shows Ontario hospital expenditure as a percentage of GDP, and we more recently see the initial blip is relatively stable and going down. What you can see are increases in the percentage of GDP being spent on professional services, predominantly physicians and other practitioners' fees, and particularly on the drugs and products section, which is the drug benefit plan, and the assistive devices programs which provide orthotics, prosthetics and support to people in the home. These are the growing component in the cost of our healthcare system.

What I am trying to demonstrate is that from a hospital's perspective we believe that we've done a relatively good job at holding the lid on our expenditures. This is particularly significant in relation to our activities. For not only have we been keeping control from a dollar perspective, but during that same period the volume of what we do has increased dramatically. In this chart, you will see in-patient activity is unchanged, notwithstanding the increase in the demands of the population. But what we have been able to achieve is to provide more and more care on an ambulatory and community basis.

The slide shows that the amount of outpatient visits and treatments and ambulatory surgery has more than doubled over the last 10 years. These changes in activity are lost in the rhetoric; and in this regard we have, perhaps, been our own worst enemy in not getting this message across. Even to construct this particular diagram, I had to get my Executive Assistant to ask Statistics Canada for the individual data to accumulate it. Similarly, we had to construct data on hospital expenditures at Sunnybrook.

We have to spend more time as an industry getting our message across. Other health-care interest groups have politicized their activities and, to counter the anti-institutional rhetoric that is going around, we have to become professional in dealing with the local concerns that are expressed about our activities and performance.

I also want to point out something else about the hospital sector and that is what it brings in terms of added value to the community. This graph shows the number of jobs in the different sectors which are direct spinoff jobs as a result of the hospital sector in Toronto. This other chart shows the total financial benefits. This is work that was done by the Hospital Council of Metropolitan Toronto to quantify the economic benefits of hospitals to the Toronto community. There are many indirect benefits, particularly from academic hospitals. There is much we can do and are doing in the research and development area. Through base support and attracting research-oriented companies in the pharmaceutical and medical device industry, we can use hospital research capabilities to create wealth.

If any of you have listened to Fraser Mustard talk about the linkage between a country's wealth and the existence of wealth creating jobs in research and development, you will know this is where the future growth of the nation lies. We have a great opportunity in our academic hospitals to create that critical mass and use it to attract major players in the pharmaceutical and medical technology fields. However, it will mean we have got to welcome these industries and our health-care strategies must not be in conflict with our industrial strategies, thereby dissuading major companies from settling in Toronto.

Having dealt with the world scene and Ontario, I am going to talk more specifically about our hospitals and how they operate, about some of the challenges they face, and why they are such complex organizations. John Bankes, in his kind introduction, made reference to this complexity factor. Peter Drucker has written about hospitals as the most complex organizations that exist. The complexity has many dimensions.

The first is due to the fact that we are accountable to so many different parties, agencies, etc. This slide is a list of the sort of accountabilities that I feel Sunnybrook has as an organization.

Financially, we are accountable obviously to government for 80 per cent of our operating revenue that they provide. We are accountable to our patients, as clients/customers, and should be directed by their needs and requirements. We are accountable to the various communities that we serve and have to demonstrate that we are responsive to their needs.

As an academic hospital we have educational accountabilities. Sunnybrook has 1,400 students. We are also a major research organization. Again, speaking from the Sunnybrook perspective, we have over $10 million of peer reviewed research going on every year.

We also have major ethical and legal responsibilities, whether this is through government regulation and accountability or just our ethical responsibilities as part of the health-care system in ensuring that we live up to the highest ethical standards.

We are also accountable to the system as a whole. That is a very important responsibility. We have to recognize that we work within a system. One of the major criticisms hospitals currently face is that they are somewhat autonomous and self-interested. Part of the problem, I believe, is that nature abhors a vacuum and, as such, hospitals fill the vacuum which is created by the lack of definitive goals and strategies for hospitals. In many ways, their competitiveness and independence is more due to the lack of an integrated framework within which to function.

We are also accountable to our peer hospitals. One of the things which certainly attracted me to Ontario was the degree to which hospitals are autonomous but, through such systems as accreditation, are accountable for their performance. We have to be open and willing to allow our peers in to assess how we are performing and demonstrate we are doing an effective job and using our resources well.

We are also accountable to our staff. As many of you are aware, hospitals are predominantly people: 75 per cent of our budgets are spent on people. How those people behave and interact and how we manage to excite them and enjoy their commitment to our organization is the measure of our success as organizations. I mentioned to Mayor Lastman quite recently that, with the downsizing of DeHavilland in North York, Sunnybrook is now once again the largest employer in the city of North York with more than 4,000 employees.

Finally, we depend on referrals from other organizations or other professionals and we have to demonstrate that we effectively deal with the clients and customers they send and provide appropriate feedback for what we do. Each of the previously mentioned accountabilities has a unique dimension to it and is one of the reasons why hospitals need to be free to balance those accountabilities.

I came from a system in the United Kingdom which was a government-operated system. The only accountability appearing to be to government, we lost our sense of accountability to the patient and the client. I think one of the reasons why the idea of self-governing hospitals is again gaining hold in England is the recognition that if there are to be healthy hospitals, they have to be relatively free to meet the many demands of accountability upon them and not be seen to be just accountable to government. The second major dimension is similar to that faced by all organizations. We face the same challenges that many of you face in whatever business or organization you are a part of. This particular slide, which I have borrowed from the American Management Association, identifies the key components that, if managed well, create a healthy well-run organization.

Leadership is obviously crucial. Our organizations have to be led. In fact, in many ways, leadership is more critical in hospital situations than many others because of the multiplicity and diversity of professions and disciplines which we try to bring together to work in a cohesive fashion. How we are able to provide that leadership internally between different departments, disciplines and professions, and overall as an organization, is the key to the whole future of the organization. Similarly the culture and climate of our hospitals is the glue of our organizations.

We don't have issues like market share or profitability to hold our organization together and focus our attention. What we have to work at is creating a cohesive set of values that drive our organization. The overall culture and climate and the health of that culture and climate is vitally important. This is why I get very upset about some of the inappropriate criticisms that are handed out to the hospitals and institutions.

Institutions are not popular in today's climate. As hospitals, we are doing what I believe is sterling work for our many patients and clients in difficult stressful circumstances. It is very hard to maintain the ethos, culture, and values that keep people motivated if they are constantly seeing themselves being berated in the media for somewhat less than clear reasons. Our overall health is very much tied as organizations to the health of the internal culture.

Planning is an important function as I mentioned, both internally and how we fit within the larger system.

How we organize is also a major challenge to us as hospitals. We have to organize in a way that brings together our many diverse parts. This slide is an example of a simple organization chart which you would find in many hospitals. If you walked into a hospital out of the blue, you would think that the role of the hospital was in fact the feeding and nurturing of various professions--nurses, dieticians, social workers, etc. etc. The only thing you can see on many hospital organization charts are lists of different professions. You get no sense that they are organized in trying to deal with the needs of the client or the customer. This slide is an example of a matrix organization. I think we have to spend more time on the horizontal dimension. We have to show that the main focus of our organization is the patient, the client. In fact the majority of problems I face as President of Sunnybrook are concerned about where the system breaks down in the interface between different departments, divisions, professionals. How we process patients through and provide a smooth interaction with those many departments is the challenge. This is what determines a successful outcome. We have therefore to look at our organizations and focus more on what we want to achieve than the somewhat self-interested needs of the different professions and disciplines who typically find comfort in herding together in great numbers.

In addition to organizing, we have to develop our people. Again, we are a people-dependent industry, we have to focus on ensuring our personnel are excited by our organizations and by working for us. We have to find ways to identify and develop those people and ensure that they have opportunities to reach their full potential, and, conversely, find ways of helping the people who no longer fit in our organizations to find other avenues and careers which would best suit them.

Finally, controlling and monitoring. Hospitals have been very slow off the ground at providing the type of information they need to effectively control and monitor their performance. This is a major responsibility, a very expensive responsibility. Potentially hospitals should be spending two to three per cent of their budgets on this activity. If you look at a large institution with revenues well in excess of $200 million, that is a significant number of dollars being spent on information to help manage effectively and be accountable for the use of our resources.

None of these points work independently, they are all interdependent. Leadership brings together all the points. The development of people is obviously crucial and part of the overall culture and climate of the organization. How people develop affects the organizational structure. How we monitor people's effectiveness affect how we develop them. Each of the points interrelates to the others and has to be looked upon again as a balanced whole. The health of our hospitals as organizations comes from how well we are able to integrate those respective points.

My final point is to talk about the freedom to maintain our hospitals as healthy organizations. I made reference to the fact that the autonomy of our organizations is a crucial component of their ongoing success. People, particularly people like myself, are stimulated by the challenge and the opportunity to make a difference. We can only make a difference if we have an area of freedom within which to work. That does not mean as organizations we want total autonomy and that we are going to work as anarchists just doing what we wish.

We do need a framework, but a framework that leaves a large enough space for me to determine how I am best able to do my job. The framework, we recognize, is formed by the fact that there are external cultural influences, there are legal requirements, and there are external moral and ethical boundaries put upon us as organizations.

Similarly, there are policies and procedures that are determined externally. There are external planning systems that will influence what we do as part of a health-care system, and budgets that we will have to live within and be committed to.

And finally there are going to be specifications of performance and descriptions of what we should do as organizations and as individuals. Bearing these limitations in mind, there still has to be a large enough area of freedom to provide our organizations with exciting opportunities. This similarly applies to the governance of those organizations. We are only going to attract trustees to our Boards if they feel they have some freedom to make a difference. It is to my mind the ethos of healthy organizations that they have the freedom to pursue the strategic foci I talked about.

Having created the area of freedom for the organizations, it is my challenge to provide an area of freedom for each of the departments and employees of my organization. Thereby they are challenged and they are free to make a difference in their own areas. It is through this particular approach that I believe we can truly improve what is important to us as hospitals--the quality of services to our clients and customers.

The appreciation of the meeting was expressed by Marcia McClung, President, Applause Communications, and a Director, The Empire Club of Canada.