Cleveland Clinic CEO: Four ingredients in our 'secret sauce'

Annual contracts, salaries incent physicians to focus on the patient

In an interview with Business Insider last week, Cleveland Clinic CEO Delos Cosgrove outlined factors that contribute to the renowned health system's success.

"You've seen by the recent shout-outs we got in the presidential debates that we're being looked at [as a] model of how to go forward," Cosgrove said, adding, "And I really think our model is our secret sauce."

Cosgrove in the Business Insider interview identified four "secret sauce" ingredients that have helped the system reduce costs and improve quality:

  • One-year contracts and annual reviews: All Cleveland Clinic physicians are salaried and hired with one-year contracts. "We have no financial incentives to do more or less," Cosgrove said. In addition, the health system conducts annual performance reviews that address "all individual contributions to the organization, and that contributes to our decisions about what we do about salary or whether we reappoint" a physician. These two policies encourage physicians to focus on what is best for the patient rather than "what gets them paid," Cosgrove said.
  • Universal data sharing: Every division of the system publishes its patient outcomes and costs of performing a procedure, according to Cosgrove. In one instance, analyzing cost variability of prostatectomies at different hospitals enabled the health system to become more efficient and reduce procedure costs by 25%.
  • Creating an infrastructure around the patient: Hospitals are typically organized by department and service lines, but Cleveland Clinic did away with that model and instead organized itself around patient needs. For example, "if you've got a headache, you don't know whether you need to see a psychologist, a neurologist, or a neurosurgeon," Cosgrove points out. To simplify its organization for patients, Cleveland Clinic organizes any provider "who deals with a neurologic system in a neurologic institute." According to Cosgrove, this organizational system is more efficient and less costly because patients spend less time transitioning between hospital departments.
  • Small changes matter: Reining in costs involves smaller efforts, too, and being a physician-led hospital has enabled the Cleveland Clinic to achieve such efforts, Cosgrove said. For example, OR supplies are all marked with prices. "In the past, if a doctor thought he needed a suture he would just grab it, open it, and throw it away. Now, they see the price," Cosgrove said.

However, Cosgrove said that organizational change may not come instantly at many hospitals. U.S. hospitals are "entrenched in a different system," he said, explaining, "We're going from an individual sport to a team sport, and getting everybody to change their headspace is a big deal."

Nonetheless, he said, "I think the pendulum is moving fast" (Nisen, Business Insider, 12/5).

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