Executive Interview with Cardinal Health Senior Vice President Bill Owad

Friday, October 11, 2013
Bill Owad

Healing Health Care

Target Online spoke with Bill Owad, senior vice president at Cardinal Health, about how to solve the patient information and billing problems using lean techniques.

Target Online: What is the biggest opportunity that you now see in health care to simplify and reduce costs?

Owad: I see the health care industry’s biggest opportunity in coordinating care from end to end. When I look at Cardinal Health — a health care services organization — I think about how manufacturing, distribution, support services and the providers are linked — so I see all kinds of opportunities to optimize the supply chain.

The biggest one? If I tie it out to the Institute of Medicine Report — “Best Care at Lower Cost: The Path to Continuously Learning Health Care in America,” published in 2012, they summarized the opportunities in six big buckets:

1.      Unnecessary service

2.      Inefficiently delivered service

3.      Excess administrative costs

4.      Prices that are too high

5.      Missed prevention opportunities

6.      Fraud

Cardinal Health continually strives to be a lean enterprise, but the biggest challenge is aligning the value stream across the continuum of care to create efficiency gains that can be invested elsewhere in the delivery of care. If we look at providers and see the value chain, and apply it to the delivery of care — link the physician with acute with post-acute — then we are looking at streamlining and improving the patient experience over their entire journey.

Here’s a personal example: My parents are both are in their 80s, and in the past couple years they’ve each had some health issues. My dad had a cardiac event and his care end to end, from ER to acute to post-acute, was nearly flawless. He was at a well-known Integrated Delivery Network (IDN) and that’s their sweet spot. The only bump was we had to always make sure he had a list of medications to take with him everywhere he went. He was moving between the cardiologist, the cardiac surgeon and his primary physician.

Mom had a different event that required care, and it was the same issue of having a medications/information log/trail. She went into the ER, acute care, post-acute rehab and finally an ambulatory home experience. When she was told they were going to do a certain test, I would always remind her, “Did you ask ‘why,’ and tell them you just had this test two weeks ago and then tell them the results.” If we take that experience, it is a good example of how the patient-centered view, connected with the patient’s needs for supplies and treatments, the supply chain connections represent a huge opportunity. It’s all about connecting end to end the chain of care, making sure the information moves effectively and that cost-effective solutions are offered at all points.

There was a bit on Stephen Colbert’s show with Eric Topol — http://www.colbertnation.com/the-colbert-report-videos/424776/march-26-2.... Topol, a cardiologist, was wearing a wrist device to measure heart rate, caloric intake, burn rate, etc. Colbert explained that he had a blown out eardrum, so Topol offered to take a look at it, attaching a device the doctor uses to examine an ear to the end of his iPhone. The doctor and everyone else could see that Colbert’s eardrum was healing! It was all very cool and funny, but Topol really illustrated what we are talking about with capturing and integrating patient information.

If I think about one of biggest of the opportunities in health care reform, it’s helping patients figure out how they can partner in the delivery of care, and making it easier to do that. How do we tell them it’s OK to ask questions and make decisions? Remember, we’re dealing with people across all ages. Instead of health care being done to them, we want to give them some tools to allow them to connect, so how do we find simpler tools? What are the simply elegant tools that we can give to the patient to help educate and empower them?

Target Online: Let’s talk about spend management in health care. How much work does it take to take out 5 percent costs from a large medical facility? How about 10 percent?

Owad: To get 5 percent, the initial opportunity is connecting the end-to-end components of care, asking what is truly value-added? And how do we pull that out of the system now? We’ve got duplicate events, duplicate tests, etc., so to get to the 5 percent cost reduction, it’s bigger than inside the four walls of the hospital. It’s really looking at the full-on view. Hospitals for years have been good at looking at costs inside because they’ve been under cost pressures for an extended period and they’ve already picked the low-hanging fruit. Now we have to connect the value chain. That’s why Francois de Brantes’ (Health Care Incentives Improvement Institute) presentation at the Lean Health Care Summit was so interesting. If we look at the variation in care, we can easily find the 5 percent.

To get 10 percent, we’ve got to keep connecting the longer-term value chain. It’s linear, like value chains or concentric circles. Put the patient at the center, optimize efficiencies and service there, then go to the next circle that covers pre- and post-hospital care until we’re fully extended to the patient’s home. Move from responding to illness to providing preventive care that focuses on keeping patients well.

Spend management in pharma and devices also is so large it can’t be ignored. There are opportunities in spend management if you take a look at product comparability of different products’ features and benefits. In several cases there are comparable products in terms of their quality and impact on outcomes, yet organizations struggle to standardize to defined products that really don’t affect outcomes but have a big impact on costs. We need to become more disciplined with the product selection process.

Target Online: What were your impressions of the Lean Health Care Summit? In what areas are you most hopeful for change? What are your models of excellence?

Owad: I really was excited to see the summit, to have 600 people in attendance and to have had the opportunity to be involved since the inception of the Health Care Value Network and its annual summit. Cardinal Health was privileged to serve as a sponsor of the network. As I recall, the first summit drew maybe 200 people in the hotel right in the Orlando airport. The participants were mainly individuals from the member network hospitals, of which there were 15 to 18. Now the network has grown to 60, a good mix of health systems from across the U.S. and Canada, including a number of organizations that are influencing how to live and survive in the era of reform. We’re seeing a lot of thought leadership, a high energy level, and the levels of understanding and engagement people demonstrated, the topics people are talking about, I just thought it was outstanding. I felt like I was at a big charging station and plugged in and got two and a half days of a recharge!

Where I am most hopeful is in the momentum around creating a consistent vision of what it is going to take to change the way we operate the health system. So it’s the momentum that’s impressive. In fact, I was in conversation with a team from the Netherlands and we talked about the value of constancy of purpose, which is the message of the Network (ThedaCare, etc.).

We should be paying for value not volume. Think about some of our current reimbursement systems where we are seeing some shifting, moving into medical home and ACO models. But so much of industry is focused around the number of procedures you complete, so the industry has struggled a bit with, “Gosh, if I find a way to become more efficient and effective, then we won’t need as many tests or procedures to get the same outcome, then that means we’re at risk of chopping off some revenue.” And I don’t know if the industry has a clear roadmap on how to transition from a pay-for-volume model to pay-for-value.

I think people are well intended, but that is where the constancy of purpose comes in. We can deliver as high a quality and higher without the same volume of tests and procedures. We’ve gotten better, the technology has advanced. But we need transparency around the data, and we need to understand and be driving lean at the core. That constancy is encouraging.

Prior to Cardinal Health, I worked in a $1.5 billion delivery system and I watched the influence of external associations bouncing around on regulatory standards related to performance improvement. In the ‘80s and early ‘90s, it was all about TQM, some experiments with ISO 9000 and then PDCA models. The outside influences in the health care space have been interesting, but it’s the constancy of view and purpose that are what it takes to reform. The Health Care Value Network has the opportunity to create a lasting sustainable message to align the industry.

William P. Owad, Jr. (Bill), senior vice president of Operational Excellence with Cardinal Health, is responsible for the development and implementation of an enterprise approach to operational excellence and the pursuit of becoming a lean enterprise. Owad also supports the extension of Operational Excellence external to Cardinal Health as the executive sponsor for the company’s relationships with the Lean Enterprise Institute (LEI) Partner’s Program, the Health Care Value Network (ThedaCare Center/LEI partnership), the Ohio State University Fisher College Center for Operational Excellence and the Conference Board Quality Council.

During his tenure, Owad served as the primary architect of the company’s enterprise-wide deployment of lean six sigma, which, in three years, yielded significant improvements in customer loyalty, employee engagement, operational performance and working capital utilization. This platform is now in the ninth year and is focused on fulfilling our vision of being a sustainable lean enterprise.

Currently, Owad serves as a board member for the The Partnership for Excellence, the Mid-Ohio Foodbank and The American Society of Hospital Pharmacists Foundation Board.


Named by Fortune magazine a "Pioneering Woman in Manufacturing," Patricia E. Moody, The Mill Girl at Blue Heron Journal, tricia@patriciaemoody.com, is a business visionary, author of 14 business books and hundreds of features. A manufacturing and supply management consultant for more than 30 years, her client list includes Fortune 100 companies as well as start-ups. She is the publisher of Blue Heron Journal, where she created the Made In The Americas (sm), the Education for Innovation (sm) and the Paging Dr. Lean series. Her next book about the future of manufacturing is The Third Industrial Revolution. Copyright Patricia E. Moody 2013. All rights reserved.