Researching Health Care—the Owen Way

With close ties to the medical community, it's not surprising that Owen faculty to do innovative research into the business of health care.

From the Winter 2013 edition of Vanderbilt Business

Management students in health care tracks at Owen have the advantage of taking courses from professors who not only know their subject but are also adding to best practices and the national policy discussion. Here are just a few examples of faculty researching health care issues, particularly those that focus on improving efficiencies.

How does health care consolidation affect pricing?

With Luke Froeb, the William C. Oehmig Professor of Free Enterprise and Entrepreneurship, Larry Van Horn is working to quantify and evaluate industry consolidation in health care. Froeb and Van Horn measure how consolidation influences market power and pricing.

A key concern, explains Van Horn, associate professor of management and executive director of health affairs, is whether increasing consolidation results in undue market power for providers or greater efficiencies that lower costs, a question that any merging or consolidating delivery system must face. That concern is of particular interest to the Federal Trade Commission in evaluating market power versus efficiency in health care consolidation.

That concern is of particular interest to the Federal Trade Commission in evaluating market power versus efficiency in health care consolidation.

Van Horn is also collaborating with two Vanderbilt University Medical Center physicians, Dr. Matthew Resnick, assistant professor of urologic surgery, and Dr. David Penson, the Paul V. Hamilton, M.D. and Virginia E. Howd Professor of Urologic Oncology, to investigate how Medicare coverage potentially affects the likelihood that patients receive treatment.

“What we find very clearly is that patients or patients and providers hold off addressing certain medical issues until age 65, when there is a precipitous spike once Medicare is in place,” Van Horn explains. The challenge is to determine how to change incentives so that patients seek care when it is clinically appropriate, he says.

The research team also has studied outcomes among prostate cancer patients treated with surgery versus radiotherapy.

Encouraging compassion reaps benefits

Tim Vogus, associate professor of management, looks at compassion practices and their impact on patient perceptions of their care experience.

“You might think compassion and cost effectiveness would be incompatible. But the two drive in the same direction,” he explains.

Compassionate practices, or care, represent the extent to which a hospital recognizes and rewards compassionate acts by its caregivers—and supports its employees in coping with the stresses and traumas experienced at work. Vogus has found that compassionate care leads to higher quality and more personalized care, which in turn leads to incentive payments from the Centers for Medicare and Medicaid Services (CMS) value-based purchasing program.

Tim Vogus

“When hospitals implement support for compassion practices, they are actually associated with patient perceptions of higher quality care and a greater likelihood of recommending that hospital to others,” he says. In addition, overall ratings of quality of care improve, and both of those markers are criteria for determining the incentive payments awarded under the CMS program.

Just recognizing people who have gone beyond the call of duty—something that costs hospitals little or no money—significantly improves the ability of the entire organization to offer compassionate care, Vogus has found.

Interacting compassionately among caregivers themselves—by providing forums of support when they have personal issues, lose a patient or need pastoral care—improves overall quality as well, he explains.

“It’s about thinking differently about how we do the work we do in ways that help us deliver higher quality care,” Vogus says. “It’s not costly. It’s just smart management.”

Vogus also has a stream of work, some with Bruce Cooil, the Dean Samuel B. and Evelyn R. Richmond Professor of Management, on “mindful organizing,” or how people best work together to detect and correct emerging errors and unexpected events. A continuous improvement mindset, he says, is linked to a higher performing team. And a higher performing team is more likely to retain higher quality employees, saving money in hiring, training and team integration.

His research, he explains, is all about “shifting the way people think about work and managing work. We want to drive things that grow revenue and reduce cost.”

Reducing inefficiencies improves quality of care

Research spearheaded by Ranga Ramanujam, associate professor of management, looks into the notion that reducing inefficiencies and waste is an important measure of quality that is not necessarily in conflict with the goal of improving patient outcomes.

“The key is to facilitate active, ongoing, real-time involvement of employees on the front lines detecting problems and using their skills to fix problems on the go,” he says.

“Health care is a very complex distributed system that cannot be controlled from the top down. It has to be managed in real time at the point of care. To do more with less, it is important to get your employees more engaged and empowered,” he says. “A lot of my work centers on employee voice and encouraging the voluntary expression of ideas.”

Ranga Ramanujam

Several studies have looked at the conditions that encourage nurses to speak up. Ramanujam has found that much of it has to do with the behaviors and managerial qualities of the nurse manager.

The implementation of many efficiency-enhancing practices, he discovered, depends on effective coordination between and across various professional groups—nurses, physicians, pharmacists and other health care workers.

Ramanujam is currently examining hospitals that consistently deliver quality care even while keeping costs and inefficiencies low. He says the U.S. system can potentially learn from the experience of hospitals in other countries, such as the Aravind Eye System in India that performs high-quality cataract surgeries at a fraction of the cost in the West.

Lessons from other industries improve efficiencies

After years spent studying learning curves in organizations, particularly the airline industry, Michael A. Lapré, the E. Bronson Ingram Research Professor of Operations Management, turned his attention to health care.

Lapré’s recent research focus has been on improving efficiencies among surgical teams in operating rooms—the most expensive unit in a hospital—as an important potential cost-saving area for hospitals.

Specifically, he has looked into whether individual, team and organizational experience improved efficiencies. The research showed that when an experienced surgical team works together regularly and effectively, it is able to perform surgery faster when more cases were on the schedule.

IT can impact quality of care

Eric Johnson, the Ralph Owen Dean and Bruce D. Henderson Professor of Strategy, is newest among the active health care researchers at Owen. He is part of a recently announced multiuniversity National Science Foundation grant focused on trustworthy information systems for health and wellness.

The work springs from the large financial incentives provided by the Affordable Care Act for hospitals to adopt electronic medical records. The project’s multidisciplinary team has studied 3,500 hospitals making IT investment decisions and found that hospitals meeting the government’s requirements for the use of electronic medical data and related technology (reaching what is defined by the government as “stage one meaningful use”) do have measurably better results. Even so, those usually follow a predictably difficult first year of implementation, he says.

He says that while it’s difficult to alleviate all agendas or bias, Owen can function as a more impartial observer of the health care landscape.

“Since we’re not in the health care business, we’re able to have these conversations about these vexing issues that health care faces without having any perceived agenda or goals,” he says.