CapStar Health System Case Study

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CapStar

Health System

Case Study

National Institute of Standards and Technology � Technology Administration � Department of Commer

Baldrige National Quality Program 2002

The CapStar Health System Case Study was prepared for use in the 2002 Malcolm
Baldrige National Quality Award Examiner Preparation Course. The CapStar Health
System Case Study describes a fictitious not-for-profit health system. There is no con-
nection between the fictitious CapStar Health System and any health system, eith

named CapStar Health System or otherwise. Organizations cited in the case study als

are fictitious, with the exception of a few national organization

CapStar Health System scored in band 3, showing that the organization demonstrates a

effective, systematic approach responsive to the basic requirements of most Items, bu

deployment in some key Areas to Address is still too early to demonstrate results. In
addition, early improvement trends and comparative data in areas of importance to ke

organizational requirements are evident. If this were an actual Baldrige application with
this scoring profile instead of a case study, the CapStar Health System probably woul

have been evaluated by a group of Examiners, each working independently during the
Stage

—Independent Review. For the 2002 Examiner Preparation Course, the CapStar
Health System Case Study was evaluated using the Stage 2—Consensus Review Process,
and site visit issues were developed and included as part of the case study scorebook.

National Institute of Standards and Technology � Technology Administration � Department of Commerce
Baldrige National Quality Program 200

CapStar
Health System
Case Study

CONTENTS

2002 Eligibility Certification Form …………………………………………………………

Organization Charts …………………………………………………………………………

2002 Application Form ………………………………………………………………………

Organizational Profile ……………………………………………………………………… x

Glossary of Terms and Abbreviations ……………………………………………………… x

vii

Category 1—Leadership

1.1 Organizational Leadership …………………………………………………

1.2 Public Responsibility and Citizenship ……………………………………

Category 2—Strategic Planning

2.1 Strategy Development ……………………………………………………

2.2 Strategy Deployment ………………………………………………………

Category 3—Focus on Patients, Other Customers, and Market

3.1 Patient/Customer and Health Care Market Knowledge …………………

3.2 Patient/Customer Relationships and Satisfaction …………………………

Category 4—Information and Analysis

4.1 Measurement and Analysis of Organizational Performance ………………

4.2 Information Management ………………………………………………… 1

Category 5—Staff Focus

5.1 Work Systems………………………………………………………………

5.2 Staff Education, Training, and Development……………………………… 2

5.3 Staff Well-Being and Satisfaction ………………………………………… 2

Category 6—Process Management

6.1 Health Care Service Processes ……………………………………………

6.2 Business Processes …………………………………………………………

6.3 Support Processes …………………………………………………………

Category 7—Organizational Performance Resul

7.1 Patient- and Other Customer-Focused Results ……………………………

7.2 Financial and Market Results …………………………………………… 4

7.3 Staff and Work System Results ……………………………………………

7.4 Organizational Effectiveness Results………………………………………

2002 Eligibility Certification Form Page 1of 5

Malcolm Baldrige National Quality Award

1. Applicant

Official Name Headquarters Address_______________________________________________ __________

_____________________________________

Other Name_______________________________________________ _______________________________________________

Prior Name_______________________________________________ _______________________________________________

2. Highest-Ranking Official

❏ Mr. ❏ Mrs. ❏ Ms. ❏ Dr.

Name Address_______________________________________________ _______________________________________________

Title_______________________________________________ _______________________________________________

Applicant Name_______________________________________________ _______________________________________________

Telephone No.

Fax No._______________________________________________ _______________________________________________

E-mail_______________________________________________

3. Eligibility Contact Point

❏ Mr. ❏ Mrs. ❏ Ms. ❏ Dr.
Name Address_______________________________________________ _______________________________________________
Title_______________________________________________ _______________________________________________

Applicant Name Overnight Mailing Address (Do not use a P.O. Box number.)_______________________________________________ _______________________________________________

Telephone No._______________________________________________ _______________________________________________

Fax No._______________________________________________ _______________________________________________
E-mail_______________________________________________

4. Alternate Eligibility Contact Point

❏ Mr. ❏ Mrs. ❏ Ms. ❏ Dr.

Name_______________________________________________

Telephone No. Fax No._______________________________________________ _______________________________________________

5. Applicant Status (Check one.

)

Has the applicant officially or legally existed for at least one year, or prior to April 16, 2001? ❏

Yes

❏

OMB Clearance #0693-0006—Expiration Date: October 31,

2002

This form may be copied and attached to, or bound with, other application materials.

If you are unable to answer any questions or answer any questions “No,”
please contact the Baldrige Program Office at (800) 898-4506 before submitting your form.

CapStar Health System, Inc.

N/A

Joe Picardson

President & Chief Executive Officer

CapStar Health System, Inc.

(513) 555-

jpicardson@capstar.com

Leslie Smith

Health Care Excellence Manager

CapStar Health System, Inc.

(513) 555-42

(513) 555-44

lsmith@capstar.com

Rupert Manning

(513) 555-4212

1000 Wellness Way

Cincinnati, OH 45202

1000 Wellness Way
Cincinnati, OH 45202

(513) 555-3108

1000 Wellness Way
Cincinnati, OH 45202

same as above

(513) 555-4424
X

Malcolm Baldrige National Quality Award

2002 Eligibility Certification Form Page 2 of 5

6. Award Category and For-Profit/Not-For-Profit Designation (Check as appropriate.)

❏ Manufacturing (For-Profit Only) ❏ Education ❏ Health Care

❏ Service (For-Profit Only) ❏ For-Profit ❏ For-Profit

❏ Small Business (For-Profit Only) ❏ Not-For-Profit ❏ Not-For-Profit

Criteria being used: (Check one.)

❏ Business ❏ Education ❏ Health Care

(For-profit Education and Health Care organizations may also choose to use the Business Criteria and apply in the Service or Small
Business categories.)

7. Industrial Classification

List up to three of the most descriptive three- or four-digit NAICS codes. (See page 19 of this booklet or the PDF version of
Baldrige Award Application Forms at www.quality.nist.gov/Award_Application.htm.)

a. _____________ b. _____________ c. _____________

8. Size and Location of Applicant

a. Total number of
• employees (business) ________
• faculty/staff (education) ________
• staff (health care) ________

b. For the preceding fiscal year,
• Check one financial descriptor: ❏ Sales ❏ Revenues ❏ Budgets

• Check amount: ❏ 0-$1M ❏ $1M-$10M ❏ $10M-$100M ❏ $100M-$500M ❏ $500M-$1B ❏ Over $1B

c. Number of sites: U.S./Territories _______ Overseas _________

d. Percentage of employees: U.S./Territories _______ Overseas _________

e. Percentage of physical assets: U.S./Territories _______ Overseas _________

f. If some activities are performed outside the applicant’s organization (e.g., by an overseas component of the applicant, the
parent organization, or its other subunits), will the applicant, if selected for a site visit, make available in the United States
sufficient personnel, documentation, and facilities to allow full examination of its operational practices for all major
functions of its worldwide operations?
❏ Yes ❏ No ❏ Not Applicab

g. In the event the applicant receives an Award, can the applicant make available sufficient personnel and documentation to
share its practices at the Quest for Excellence Conference and at its U.S. facilities?
❏ Yes ❏ No

h. Attach a line and box organization chart for the applicant organization, including the name of the head of each unit or
division.

If you are unable to answer any questions or answer any questions “No,”
please contact the Baldrige Program Office at (800) 898-4506 before submitting your form.

ii
X
X
X
X
X
X

622 6214 62

4981

12 0

100% 0

100% 0%
X

iii

2002 Eligibility Certification Form Page 3 of 5
Malcolm Baldrige National Quality Award

9. Subunits (If the applicant is not a subunit as defined on pages 6-7, please proceed to question 10.)

a. Is the applicant _____ a larger parent or system? (Check all that apply.)

❏ a subsidiary of ❏ a unit of ❏ a school of

❏ a division of ❏ a like organization of ❏ owned by

❏ controlled by ❏ administered by

b. Parent Organization

Name Highest-Ranking Official___________________________________________________________ _____________________________________________________________

Address Name___________________________________________________________ _____________________________________________________________

Title___________________________________________________________ _____________________________________________________________

Number of worldwide employees of the parent ______

c. Is the applicant the only subunit of the parent organization intending to apply? (Check one.)

❏ Yes ❏ No (Briefly explain.) ❏ Do Not Kn

d. Name of the official document (e.g., dated Annual Report, press release) supporting the subunit designation.

____________________________________________________________________________________________________________________________________

e. Briefly describe the organizational structure and relationship to the parent.

Attach line and box organization chart(s) showing the relationship of the applicant to the highest management level of the
parent, including all intervening levels. Each box within the chart should include the name of the head of the unit or
division.

f. Is the applicant’s product or service unique within the parent organization? (Check one.)
❏ Yes ❏ No

If “No,” do other units within the parent provide the same products or services to a different customer base? (Check one.)
❏ Yes ❏ No

If “No,” please provide a brief explanation of how the applicant is distinguishable from the parent and its other subunits
(e.g., market/location/name).

If you are unable to answer any questions or answer any questions “No,”
please contact the Baldrige Program Office at (800) 898-4506 before submitting your form.

Malcolm Baldrige National Quality Award

2002 Eligibility Certification Form Page 4 of 5

9. Subunits—continu

g. Business only. Are 50 percent or more of the applicant’s products or services sold or provided to
customers outside the applicant’s organization? ❏ Yes ❏ No

h. Business only. Are less than 50 percent of the applicant’s products or services sold or provided to the following?
(Please indicate “Yes” or “No” for each part of this question.)

• the parent organization ❏ Yes ❏ No

• other organizations controlled by the applicant or parent ❏ Yes ❏ No

i. Business only. (Check all that apply.)

• Does the applicant have more than 500 employees? ❏ Yes ❏ No

• Do the applicant’s employees make up more than 25 percent of the
worldwide employees of the parent? ❏ Yes ❏ No

• Was the applicant independent prior to being acquired—and does
it continue to operate independently under its own identity? ❏ Yes ❏ No

j. Business only. Briefly describe the major support functions provided to the applicant by the parent or by other subunits
of the parent. (Examples might include human resources, legal, accounting, information technology, etc.)

10. Supplemental Sections (Check one.)

❏ The applicant has: (a) a single performance system that supports all of its product and/or service lines; and (b) products or
services that are essentially similar in terms of customers/users, technology, types of employees, and planning.

❏ The applicant has: (a) multiple performance systems that support all of its product and/or service lines; and (b) products
or services that are essentially similar in terms of customers/users, technology, types of employees, and planning.

Note: The applicant’s Eligibility Contact Point will be contacted if the second option is checked. Applicants may have two or
more diverse product and/or service lines (i.e., in different NAICS codes) with customers, types of employees, technology,
planning, and quality systems that are so different that the application report alone does not allow sufficient detail for a fair
examination. Such applicants may submit one or more supplemental sections in addition to the application report. The use of
supplemental sections must be approved during the Eligibility Certification process and is mandatory once approved.

(Please describe briefly the differences among the multiple performance systems of your organizations in terms of customers, types
of employees, technology, planning, and quality systems.)

If you are unable to answer any questions or answer any questions “No,”
please contact the Baldrige Program Office at (800) 898-4506 before submitting your form.
X

v
Malcolm Baldrige National Quality Award

2002 Eligibility Certification Form Page 5 of 5

11. Summary List of Questions

Have each of the questions that follow been answered “Yes”or have the applicable responses been checked? (Answering
any of these questions “No” or leaving a response blank means that the applicant is not eligible for the 2002 Malcolm
Baldrige National Quality Award.)

• Question 5: Has the applicant officially or legally existed for at least one year, or prior to April 16, 2001?

• Question 6: Have an Award Category and a For-Profit/Not-For-Profit Designation been checked?

• Question 9g: Business only. Are 50 percent or more of the applicant’s products or services sold or provided to
customers outside the applicant’s organization?

• Question 9h: Business only. Are less than 50 percent of the applicant’s products or services sold or provided to
its parent and other organizations controlled by the applicant or parent? Question 9g and both
parts of question 9h should be answered “Yes.

”

At least one of the responses to the three questions included in Question 9i must be answered “Yes.”

• Question 9i: Business only.

–– Does the applicant have more than 500 employees?

–– Do the applicant’s employees make up more than 25 percent of the worldwide employees of the
parent?

–– Was the applicant independent prior to being acquired—and does the applicant continue to
operate independently under its own identity?

12. Self-Certification Statement,

Signature of the Highest-Ranking Official

I certify that the answers provided are accurate and that my organization is eligible based on the
current requirements for the 2002 Malcolm Baldrige National Quality Award. I understand that
at any time during the Award Process cycle, if the information provided was inaccurate, my
organization will no longer be eligible for the award and will only be eligible to receive a
feedback report.

X
Signature

Printed Name

The Malcolm Baldrige National Quality Program is launching a pilot program in 2002 that enables one member of
each eligibility applicant’s organization to become a member of the 2002 Board of Examiners. To take advantage of this
opportunity, self-certified eligibility applications must be postmarked on or before March 15, 2002.

❏ We are sending _________________________________________________ to serve on the 2002 Board of Examiners.

If you are unable to answer any questions or answer any questions “No,”
please contact the Baldrige Program Office at (800) 898-4506 before submitting your form.

March 14, 2002

Joe Picardson, MD

X Dr. Mark Worfman

The following information is needed by the Malcolm Baldrige National Quality Award Program
Office to provide the most effective evaluation possible by the Board of Examiners.

1. Site Listing and Descripto

Please refer to the instructions on page 15 of this booklet or the PDF version of Baldrige Award Application Forms at
www.quality.nist.gov/Award_Application.htm to complete this Site Listing and Descriptors form. It is important that the
totals for the number of employees, faculty, and staff; percentage of sales, revenues, and budgets; and sites on this form
match the totals provided in response to questions 8.a., 8.b., and 8.c. on page 2 of the 2002 Eligibility Certification Form.
For example, if you report 600 employees in response to question 8.a., the total number of employees provided in the Site
Listing and Descriptors form should be 600.

Provide all the information for each site, except where multiple sites produce similar products or services. For multiple site
cases, refer to “c” under item 8, which is titled Size and Location of Applicant. See page 8, 2002 Eligibility Form—Instructions,
of this booklet or the PDF version of Baldrige Award Application Forms at www.quality.nist.gov/Award_Application.htm.

Use as many additional copies of this form as needed to include all sites.

2002 Additional Information Needed Form Page 1 of 3
Malcolm Baldrige National Quality Award

Address of Site(s) Percentage
❏ Sales
❏ Revenues
❏ Budgets

Number
Employees,

Faculty,
and/or Staff

Description of Products, Services, and/or
Technologies for each sit

Excelsion Medical Center
1000 Wellness Way
Cincinnati, Ohio

Founders Hospital
1 Faith Hill Road
Stoneville, Ohio

Roseleaf Community Hospital
9 Daniel Way
Crockett, Kentucky

Hergh Community Hospital
8 Tupelo Avenue
Benjamin, Indiana

CapCare Centers (6)
(Cincinnati Metropolitan

Service Area)

2212

1161

41.2%

20.8%

14.3%

11.6%

7.3%

General hospital services and
tertiary care specialties in cardiac
services, oncology, trauma, stroke,
sports medicine, and physical
rehabilitation; medical student and
resident training.

General hospital services, with
specialties in women’s care,
geriatrics, general and plastic
surgery, and behavioral health

General hospital services, including
pediatrics, with regional strength in
orthopedics and arthritis care

General hospital services,
pediatrics, and dialysis

Primary care physician offices with
selected specialties, including
cardiology, pediatrics, obstetrics

gynecology, dermatology, and plastic
surgery

continued on next page

If you are unable to answer any questions or answer any questions “No,”
please contact the Baldrige Program Office at (800) 898-4506 before submitting your form.

vii

1. Site Listing and Descriptors (continued)

2. Key Business/Organization Factors—List, briefly describe, or identify the following key organization factors:

A. List of key competitors

B. List of key customers/users

2002 Additional Information Needed Form Page 2 of 3
Malcolm Baldrige National Quality Award

Riverport University Hospital
Goldenrod Hospital System
Zefram Memorial Hospital
CNT Integrated Care
Veterans Health Administration
Outpatient diagnostic and treatment centers (various)
River’s Edge Surgical Center, Inc.

Active Inpatients, Outpatients, Home Care Patients, and Families of

Patients

Potential or Inactive Patients
Physicians
Payors
Employers
Community Organizations

Address of Site(s) Percentage
❏ Sales
❏ Revenues
❏ Budgets
Number
Employees,
Faculty,
and/or Staff
Description of Products, Services, and/or
Technologies for each site
X

Galaxia Home Health Care
405 Inverness Drive
Cincinnati, Ohio

CapStar Corporate Office
1000 Wellness Way
Cincinnati, Ohio

203

2.1%

2.7%

Durable medical equipment and IV home
services

Corporate administration, financial
services, information services,
legal, compliance, CapCollege, and
regional affiliations

If you are unable to answer any questions or answer any questions “No,”
please contact the Baldrige Program Office at (800) 898-4506 before submitting your form.

viii

C. List of key suppliers

D. Description of the major markets (local, regional, national, and international)

E. The name of the organization’s financial auditor

2002 Additional Information Needed Form Page 3 of 3
Malcolm Baldrige National Quality Award

Beaver and Newton (Medical/Surgical Supplies)
Middleton and Green (Office and Other Nonmedical Supplies)
South Summit Laboratories
Express Pharmaceuticals
Twin Scientific Products
Stoneyridge Foods
Majestic Housekeeping
ERCare, Inc.
Calmstate Anesthesiology

Services

InsideYou, Inc.
Healthcognizant, Inc.
Reliastate Insurance Management System (Insurance Contract Management)
Uriwise, Inc. (Dialysis)

Ninety-one percent of CapStar’s patients reside within the 13 counties of the Greater Cincinnati
Metropolitan Service Area (MSA). This encompasses five counties in southern Ohio, two counties
in southeast Indiana, and six counties in northern Kentucky. Seven of the counties constitute
the Primary Service Area, and six counties fall into the Secondary Service Area. The remaining
9 percent of patients come from other areas in the tristate region.

Upper Middle States Accounting, an independent auditor, audited CapStar’s consolidated financial
statements in accordance with generally accepted auditing standards.

If you are unable to answer any questions or answer any questions “No,”
please contact the Baldrige Program Office at (800) 898-4506 before submitting your form.

Corporate Staff Organizational Chart

Chief Financial
Officer*

Sheila Rikert

Vice President
Managed Care

Contracts
Sara Dax

Senior Vice
President
Nursing*

Jessica Troien

Chief

Information

Officer*

Charles Spocket

Vice President
CapStar Medical

Services
Joshua Chokatee, MD

Vice President
CapStar

Physicians

Group

Jared Fisher, MD

Director, Galaxia
Home Health Care

Emily Diego

Vice President
Billing &
Collection

Ogden Bailey

Vice President
Finance

(Vacant)

Vice President
Community

Services
Jane Tuvek

Residency
Program Directors

Process
Improvement
Office (PIO)

Comptroller
Bailey Ulhurn

Hergh Sr. Vice
President &

Executive Officer*
Paula Janewell

Founders Sr. Vice
President &

Executive Officer*
George Sulus

Senior Vice President
Medical Affairs &

Chief Quality Officer*
Mark Worfman, MD

Executive Vice
President*

Eileen Kirks

Senior Vice President
Human Resources*

Joan Chang

Senior Vice President
Strategy & Ventures*

Hugh Scott

* Member of CapStar Executive Leadership Team (ELT)

CapStar Health System, Inc. (CapStar)
Board of Directors

Corporate
Compliance Officer

(Vacant)

CapStar

Charitable Trust

Executive Director
Jerri Ryan

President & CEO*
Joe Picardson, MD

Excelsion Sr. Vice
President &

Executive Officer*
William Treskler, MD

Roseleaf Sr. Vice
President &

Executive Officer*
Robert Siskline

CapStar Corporate Structure

Excelsion Medical
Center

Founders Hospital
Roseleaf Community

Hospital
Hergh Community

Hospital
CapStar Medical

Services

CapStar
Physicians

Group

CapCare
Centers

Galaxia Home
Health Care

Healthcognizant, Inc.
(Total Health

Centers—planned)

Indicates joint venture with partner

CapCollege
CapStar

Charitable Trust

Community Health
and Renewal, Inc.

(CHR)

CapStar Health
System, Inc.

xi
Signature of the Highest-Ranking Official

Date________________

X__________________________________
❏ Mr. ❏ Mrs. ❏ Ms. ❏ Dr.

Name_____________________________________

Title_____________________________________

Applicant Name_____________________________________

Mailing Address_____________________________________

_____________________________________
_____________________________________

Telephone No._____________________________________

Fax No._____________________________________

OMB Clearance #0693-0006
Expiration Date: October 31, 2002

This form may be copied and attached to, or
bound with, other application materials.

Release Statement

We understand that this application will be reviewed
by members of the Board of Examiners.

Should our organization be selected for a site visit,
we agree to host the site visit and to facilitate an
open and unbiased examination. We understand
that our organization must pay reasonable costs
associated with a site visit. The range of site visit
fees is $20,000 – $35,000.

If our organization is selected to receive an Award,
we agree to share nonproprietary information on
our successful performance excellence strategies
with other U.S. organizations.

Applicant
Name_____________________________________

Mailing Address_____________________________________
_____________________________________
_____________________________________

Award Category (Check one.)
___ Manufacturing ___ Service ___ Small Business
___ Education ___ Health Care

For small businesses, indicate whether the larger
percentage of sales is in service or manufacturing.
(Check one.)
___ Service ___ Manufacturing

Criteria being used (Check one.)
___ Business ___ Education ___ Health Care

Official Contact Point

❏ Mr. ❏ Mrs. ❏ Ms. ❏ Dr.
Name_____________________________________
Title_____________________________________
Applicant Name_____________________________________
Mailing Address_____________________________________

_____________________________________
Overnight
Mailing Address (Do not use P.O. Box number.)_____________________________________

_____________________________________
_____________________________________
Telephone No._____________________________________
Fax No._____________________________________

Alternate Official Contact Point

❏ Mr. ❏ Mrs. ❏ Ms. ❏ Dr.
Name_____________________________________
Telephone No._____________________________________
Fax No._____________________________________

Application Fees (See page 23 for instructions.)

Enclosed is $________ to cover one application
report and ________ supplemental sections.

Make check or money order payable to:

The Malcolm Baldrige National Quality Award

2
3
5
6
7
Malcolm Baldrige National Quality Award

2002 Application Form

4
CapStar Health System, Inc.
1000 Wellness Way
Cincinnati, OH 45202
Leslie Smith
Health Care Excellence Manager
CapStar Health System, Inc.
1000 Wellness Way
Cincinnati, OH 45202
same as above
(513) 555-4210
(513) 555-4424
Rupert Manning
(513) 555-4212
(513) 555-4424
X
X
X
X

5,0

May 24, 2002

X
Joe Picardson

President and Chief Executive Officer

CapStar Health System, Inc.
1000 Wellness Way
Cincinnati, OH 45202

(513) 555-36

(513) 555-3108

Organizational Profile

P.1 Organizational Description

P1.a Organizational Environment

Based in Cincinnati, Ohio, CapStar Health System, Inc.
(CapStar) is a not-for-profit health care system providing
services in southern Ohio, northern Kentucky, and south-
east Indiana. CapStar is composed of its corporate office,
four hospitals, six outpatient centers, and a home care
operation. Net patient service revenues were $754 million
in 2001. The Operating Units (OUs) of CapStar are
Excelsion Medical Center (Excelsion); Founders Hospital
(Founders); Roseleaf Community Hospital (Roseleaf);
Hergh Community Hospital (Hergh); and CapStar Medical
Services (CapStar Medical), which includes the six outpa-
tient CapCare Centers (CapCare), CapStar Physician’s
Group, Galaxia Home Health Care, and the joint venture
with Healthcognizant, Inc. CapStar was founded in 1994
through the merger of Excelsion in downtown Cincinnati
and Founders in a northern suburb following a coopera-
tive relationship. Both were among the first Ohio members
of the Preeminent Hospitals of North America (PHNA)
hospital alliance. The alliance enabled independent hospi-
tals to jointly develop strategies and gain other advantages
such as discount supply purchasing. The two hospitals
merged from positions of strength as a proactive move to
protect their financial performance and to retain their
market shares as Managed Care Organizations (MCOs)
sought deep pricing discounts. In addition, a competitor,
Riverport University Hospital (RUH), started to reverse
its isolationist tendencies by developing relationships with
other hospitals in the area. Roseleaf in Kentucky and
Hergh in Indiana joined CapStar in 1997 and 1998,
respectively. Both were concerned about becoming isolat-
ed as other hospitals in the region merged and managed
care companies continued to receive pricing concessions
from independent hospitals. Hergh was vulnerable since it
had a comparatively weak balance sheet and a physical
plant that was seriously outdated.

Like many health care organizations, CapStar incurred
operating losses in 1999 and 2000. Losses were due to the
combined effects of the reduced reimbursement resulting
from the Balanced Budget Act (BBA), increased costs of
drugs and technology, accelerating costs to recruit staff in
several shortage disciplines, and costs associated with the
Roseleaf and Hergh mergers. CapStar improved its
financial performance in 2001 and 2002 year-to-date
(YTD) and has been able to protect its balance sheet. In
addition, CapStar has a limited amount of unrestricted
assets. As the stock market declined in 2001, investments
were moved into conservative investment portfolios,
resulting in negligible losses in capital to date.

The CapStar Charitable Trust is the principal fundraising
arm of the health system. Its subsidiary, Community
Health and Renewal, Inc. (CHR), works with other com-
munity-based organizations to provide access to health
services and to support neighborhood renewal.

P.1a(1) Main Health Care Services
Each hospital offers general medical, surgical, and obstet-
rics inpatient services. Roseleaf and Hergh also offer
pediatrics because Riverport Children’s Hospital is distant
from their service areas. In addition to basic inpatient
services, Excelsion, Founders, and Roseleaf specialize in
several areas:

Excelsion: trauma, cardiac services, oncology, stroke,
sports medicine, physical rehabilitation

Founders: women’s care, geriatrics, plastic and recon-
structive surgery, behavioral health services

Roseleaf: orthopedics, arthritis

Hergh has long served as the sole general acute care hos-
pital in a rural area of Indiana with a declining popula-
tion. The six CapCare Centers are primary care centers for
family practitioners and internists in the Cincinnati
Metropolitan Service Area (MSA). Several specialists,
including allergists, gastroenterologists, and neurologists,
rent space in these centers.

CapStar is a teaching organization with resident training
programs in internal medicine, general surgery, family
practice, emergency medicine, radiology, and orthopedics.
It also provides training in association with the Central
Ohio School of Public Health for physical therapists,
nutritionists, and nurse anesthetists. CapStar purchased
11 physician practices as an offensive strategy to secure
influence over primary care services and has reduced sig-
nificantly early losses in operating these practices.

Discussions are under way to sell Galaxia Home Health
Care to a third party, since this segment faces lower
Medicare funding.

P.1a(2) Purpose, Destiny, and Values
Since its founding, CapStar has been devoted to service to
people. CapStar’s fervent belief in Purpose, Destiny, and
SPIRIT Values (shown in Figure P.1-1); Commitment to
Excellence; and Critical Success Factors (CSFs) (Figure
P.2-1) is the result of two tragic events that occurred in
1993. Although Excelsion was an adopter of quality man-
agement in the late 1980s, these early efforts were not
fully productive. Early in 1993, a six-year-old boy hospi-
talized for a routine hernia repair died in the operating room
due to a medication error. Two months later, the wife of
one of the internists on staff died following many years of
severe diabetes with multiple complications requiring fre-
quent admission to the hospital. Several days following

xii

xiii

her death, her husband addressed the hospital’s Board and
described in detail the problems experienced during her
hospitalizations, including charting and medication errors,
miscommunications, delays in administering pain medica-
tion that caused his wife to suffer unnecessary agony, and
staff and physician insensitivity. The retelling of this expe-
rience by this well-regarded member of the medical staff
had a profound effect on the organization. Both tragic
events highlighted the need for Excelsion to explore new
ways to become a better health care provider. By the time
CapStar was formed, the pursuit of excellence had become
pervasive throughout the organization and served as a
foundation for the new CapStar system.

P.1a(3) Talent Profile
CapStar employs 4981 colleagues in 315 job classifica-
tions. The workforce is primarily female (71 percent).
Over 90 percent of colleagues are in non-management
roles — 41 percent professional, 22 percent technical,
14 percent clerical, and 13 percent service. Forty-one

percent of full-time colleagues are licensed clinicians.
Nurses at Excelsion have been represented by Nurses
Unity Local 32 since 1981. Local 77 of the Pinewest
Engineers Council represents the plant engineering and
maintenance staff. There are no other unions at CapStar.
CapStar colleagues generally represent the demographic
makeup of their respective communities.

CapStar employs 34 FTE hospital-based physicians,
including residency program directors and 14 hospitalists
(see Glossary) in various administrative/clinical capacities,
in addition to the 11 primary care physician practices
acquired since 1996. CapStar contracts centrally for radiol-
ogists, anesthesiologists, pathologists, and emergency
physicians except at Hergh, which continues to contract
separately for these services. CapStar provides training for
102 residents in internal medicine, general surgery, family
practice, emergency medicine, and orthopedics. There are
711 independent physicians on the active staff of all
CapStar hospitals. CapStar has had workforce reductions
of 807 FTEs since 1996. These reductions included 484
FTEs affected by the closure of Romland Hospital in
2000. CapStar acquired Romland in 1995 and closed it
after five years of losses. Located northwest of Cincinnati
in an area that had lost significant population, Romland
could no longer exist in the midst of downward pricing
from insurers. In each layoff, CapStar offered affected
employees job placement and retraining support uncom-
mon for the health care industry.

P.1a(4) Facilities, Equipment, and Technology
All CapStar facilities (Figure P.1-2) use an extensive array
of surgical, diagnostic, and therapeutic equipment. In the
past year, CapStar’s systematic technology evaluation
method has focused on radiological imaging and medical
error elimination technology. As a certified trauma center,
CapStar is a part owner with other area trauma centers in
a shared air ambulance company, RiverStar Rescue. For
over a decade, CapStar has made significant investments
in operational, clinical, and financial information systems.
All CapStar facilities are connected via the Knowledge
Information System (KIS), which is becoming increasing-
ly Web based. CapStar has won several “Most Connected
Awards” in the past six years. CapStar plans to invest
$5–8 million/year in KIS during the next ten years.

P.1a(5) Regulatory Environment
Health care is a highly regulated industry focusing on
patient and employee safety, compliance, and business
processes. CapStar is licensed to operate by the states of
Ohio, Kentucky, and Indiana and is subject to numerous
state agency regulations dealing with hospital licensure,
land use, state charitable agency provisions, trauma center
certification, and staff licensure. On the federal level,
CapStar is subject to regulations of the Centers for
Medicare and Medicaid Services (CMS), Occupational
Safety and Health Administration (OSHA), EnvironmentalFigure P.1-1 CapStar Purpose, Destiny, and Values

OUR PURPOS

“To cherish, preserve, and improve health. We exist to
enrich the human experience and fulfill the needs of our
patients. We pledge to honor the dignity of every person
we serve.”

OUR DESTINY

“To seek out, embrace, and nurture the finest talent,
knowledge, and science possible to deliver role model
health services to people.”

OUR VALUES

Our Values guide individual and collective work toward
achieving our Purpose, our Destiny, and our CSFs. Our
SPIRIT Values are a constant reminder of the impor-
tance of our work and the vitality of our culture.

Service We excel in surpassing even the unexpressed
expectations of our patients and customers.

Pride We celebrate our contribution to society and
find in it the energy to excel.

Integrity We make our promises to patients, customers,
and each other come true.

Respect We appreciate the talent each of us brings to
improving health and extending life.

Innovation We are all explorers and creators of ways to
improve how we serve.

Teamwork We learn from each other and work together
to achieve our Purpose and to capture our
Destiny.

xiv

Protection Agency, Nuclear Regulatory Agency, and
Centers for Disease Control and Prevention. In addition to
government regulatory requirements, CapStar participates
in numerous accreditation programs, including the Joint
Commission on Accreditation of Healthcare Organizations
(JCAHO), the American College of Surgeons, the College
of American Pathologists, and multiple accrediting bodies
related to CapStar’s teaching programs.

P.1b Organizational Relationships

P.1b(1) Patient/Customer Segments and Requirements
Ninety-one percent of CapStar patients reside within the
13-county MSA that encompasses 5 counties in Ohio, 2 in
Indiana, and 6 in Kentucky. Cincinnati is located in
Hamilton County. Seven counties constitute the Primary
Service Area (PSA), and six counties fall into the
Secondary Service Area (SSA). The remaining 9 percent
of patients come from other areas in the tristate region.
The population of the MSA has increased 8.9 percent
since 1990 to 1,979,553. Although the overall population
is expected to continue its growth rate, the population has
declined slightly in Hamilton County, Ohio, and nearby
counties in Kentucky. In addition, 10.2 percent of the
overall population is uninsured. CapStar has identified six
customer segments as shown in Figure P.1-3.

CapStar did not fully engage in the practice acquisition
frenzy of the mid-1990s and acquired only 11 primary
care physician practices that staff the six CapCare
Centers. Instead of using reserves to buy physician prac-
tices, CapStar differentiated itself by systematically inte-
grating physicians into the highest levels of leadership
and policy-making, developing and deploying industry-
leading methods of patient focus, cultivating the potential
of the staff, and adopting Compassionate Operational

Excellence (COE) as the operating model. CapStar
believes that the best approach to retaining the loyalty of
an independent medical staff is to earn it instead of trying
to control physicians through ownership. Consequently,
CapStar has developed a physician leadership grooming
process unique among health care systems and enjoys
extensive physician involvement in its key clinical and
operational initiatives.

Year(s) Staffed FTE
Facility Built Condition Beds

Colleagues

Excelsion 1925–89 Good 461 2212
Founders 1949–94 Very Good 267 1161
Roseleaf 1993 Excellent 142 739
Hergh 1968 Fair 107 460
CapCare 1995–99 Very Good NA 88
Galaxia NA NA NA 118
Corporate
Office NA NA NA 203
Excellent=requires no significant improvements.
Very Good=more than adequate for current needs; may
require minimum improvements in the future.
Good=adequate for current needs; will require
significant facility revision to meet future needs.
Fair=inadequate to meet contemporary medical delivery;
requires extensive to total near-term replacement.

Active Inpatients,
Outpatients, Home Care
Patients, and Families.
Subsegments include
age, gender, medical
condition, clinic relation-
ship, referral source,
insurance coverage

Potential or Inactive
Patients. No services
received within the last
three years by CapStar

Physicians. Primary care,
specialists, referring
physicians, and physician
competitors

Payors. Government,
managed care, indemnity,
billing

Employers. Local busi-
nesses/organizations in
the communities served

Community
Organizations. Local
government, schools,
churches, tristate civic
associations such as Civic
Stride, local chapters of
heart and diabetes
associations

Access to effective
24/7/365 error-free care,
compassionate/caring
environment, reliable/
consistent information,
participation in health
care decisions, accommo-
dations for visitors

Easy access, compelling
reasons to seek care at
CapStar vs. elsewhere,
accurate answers to
inquiries, knowledge of
how CapStar is better

Knowledgeable, pleasant
colleagues/staff; easy
access to technology and
facilities; real-time clinical
information; input into
CapStar policies and
decision making; high
patient satisfaction

Low costs, quality care,
responsiveness, accuracy,
range of services

Convenient access; healthy,
satisfied employees;
quality care at lowest
possible cost; wellness
and disease prevention
information and services

Community health
improvement; provision of
volunteer support; finan-
cial aid and access to
health information; support
of school-based clinics;
violence prevention pro-
grams; and economic and
development councils

Customer Segments Requirements

Figure P.1-3 Patient/Customer Segments and
Requirements

Figure P.1-2 CapStar Facilities

P1.b(2) Key Suppliers and Partners
CapStar belongs to PHNA, one of the largest national
group purchasing organizations. Annually, CapStar spends
over $185 million on goods and services. Five nationally
known suppliers provide 68 percent of the purchased
supplies: Beaver and Newton for general medical/surgical
supplies, Middleton and Green for office and other non-
medical products, South Summit Laboratories, Express
Pharmaceuticals, and Twin Scientific Products. Key serv-
ice contracts include Stoneyridge Foods; Majestic
Housekeeping; Uriwise, Inc. (for dialysis); Reliastate
Insurance Management System (for insurance contract
management); and multiple agencies for temporary staff.
CapStar continuously seeks to reduce the total number of
suppliers.

Key clinical partners include ERCare, Inc., for emergency
physician services; Calmstate Anesthesiology Services for
anesthesiology services; InsideYou, Inc., for radiologists;
and Healthcognizant, Inc., for the ten new ambulatory/
fitness facilities CapStar plans to open in selected popula-
tion growth areas of the region. The Veterans Health
Administration (VHA) has patient transfer agreements with
CapStar and RUH and leases space in four CapCare
Centers for Community Based Outpatient Centers.

P.2 Organizational Challenges

P.2a Competitive Environment

P.2a(1) Competitive Position
The health care services industry in the region has been in
a state of change since the early 1990s when MCOs
entered the marketplace. By 1997, MCOs had achieved
significant market penetration and clout with over 50 per-
cent of the total commercial Medicare and Medicaid mar-
ket. WellOhioCare (WOC), the largest MCO, has over
600,000 members and has secured deep pricing discounts
from hospitals and physicians. Hospitals that were not in
the network lost significant market share. The cumulative
effect of WOC’s and the other MCOs’ contracting strategy
forced the closure of four hospitals, including Romland.

CapStar is the second largest health care system in the
region in terms of staffed beds and net revenue. In 2001,
CapStar’s overall market share based on percent of admis-
sions was 20 percent in the MSA. Excelsion receives

percent of all the patients referred to hospitals in
Cincinnati for advanced care from across the region.
CapStar’s principal competitors are as follows:

1. RUH (1236 beds) includes Riverport Children’s
Hospital and Collin Institute of Psychiatry. RUH is
located on the campus of the Exeter School of Medicine
(Exeter). RUH and Exeter receive in excess of $110
million per year from government agencies, founda-
tions, and corporations to support medical research.

RUH is an organ transplant center and a vigorous com-
petitor in oncology services. Riverport Children’s
Hospital is a highly regarded and cherished asset in the
community and dominates the pediatric marketplace.

2. Goldenrod Hospital System has two hospitals (488
beds). One in downtown Cincinnati serves as a trauma
hospital and has strong services in cardiology, neuro-
surgery, and burn care. Its other hospital is located in a
southern Cincinnati suburb near Kentucky.

3. Zefram Memorial Hospital (404 beds) is located two
miles from Founders with strong programs in psychia-
try, physical rehabilitation, and geriatrics.

4. CNT Integrated Care has three hospitals (643 beds)—
one in Cincinnati, one in a northwestern suburb, and
one in Kentucky. CNT is owned and managed by
Klingrom Health Management, a national for-profit
hospital company.

5. The VHA operates two hospitals and several medical
facilities. Veterans who have dual health care benefits
are eligible to use CapStar facilities or VHA facilities.

6. Several competitive outpatient diagnostic and treat-
ment centers have opened, including eight diagnostic
imaging centers and two surgical day centers.

7. River’s Edge Surgical Center, Inc., specializing in
short-stay surgery—3 days or less—is opening a new
80-bed hospital in the same service area as

Founders

(CapStar’s best financial performer). River’s Edge
focuses on amenities for surgeons, patients, and fami-
lies to make the surgical experience as dignified and as
comforting as possible.

P.2a(2) Principal Factors for Success
CapStar’s Purpose and Destiny would be promises unkept
were it not for the commitment of senior leadership and
colleagues who believe in the SPIRIT Values and demon-
strate them every day for CapStar patients, customers, and
colleagues. CapStar’s success depends upon its ability to
achieve its seven CSFs (Figure P.2-1).

P.2b Strategic Challenges

RUH Threat: During the last five years, RUH has
become increasingly aggressive in targeting CapStar as its
chief competitor. RUH continues its intense pursuit of
CapStar’s key physicians. Although CapStar has main-
tained physician loyalty, shifts in loyalty are possible. In
addition, RUH has expanded its outreach activities to
increase its share of patients referred for advanced care,
one of Excelsion’s most profitable services. RUH recently
announced a new service excellence initiative and a $

million endowment to establish a Neurodegenerative
Disease Institute to recruit world-class talent and to provide
services for patients with Alzheimer’s, Parkinson’s, and
Multiple Sclerosis. RUH, as the area’s only multi-organ

xvi

transplant center, has captured the advanced care image in
the region. CapStar constantly strives to differentiate its
products and services to compete with this image.

Managed Care Price Pressure and Increasing Drug
Costs: Extensive changes in the health care system in the
United States have brought challenges to the relationship
between the insurance market and hospitals. CapStar is
impacted by the downward price pressures from
Medicare, Medicaid, and MCOs despite increases in oper-
ating costs due to manpower shortages and steep increases
in drug costs. Additionally, the insurance market itself has
been in turmoil, with several companies competing for
market share. Consequently, it is difficult to establish
mutually beneficial, long-term relationships with insurers,
who influence where patients seek care. Despite these
challenges, CapStar is committed to working with MCOs
and other key organizations in promoting and protecting
patients’ health, as well as seeking opportunities for
developing common goals to ensure quality health care
services are delivered to its patients.

River’s Edge Surgical Center: This new hospital threat-
ens the profitable ambulatory surgery service of Founders.

Uncompensated Care: Excelsion is adjacent to one of
Cincinnati’s most economically depressed neighborhoods.
Consequently, it carries a disproportionately high volume
of Medicaid and free care. Medicaid reimbursement is the
lowest among all insurers. CapStar’s uncompensated care
in FY 2000 was $42 million.

Aging Plant: Excelsion is aging and no longer suitable for
easy adoption of emerging technology. Extensive facility
expansion will cost an estimated $80 million. However,
the population has declined 9 percent in the immediate
area surrounding the hospital.

Increased Access: CapStar is opening ten Total Health
Centers (THCs) in partnership with Healthcognizant, Inc.
These centers will house physician offices, fitness facili-
ties, rehabilitation services, and counseling/preventive
health services. THCs represent CapStar’s primary strate-
gy to increase presence in and provide access for higher
population growth areas.

Achieving Systemwide Quality, Productivity, and
Medical Staff Collaboration: Although CapStar has
made measurable progress in service excellence, produc-
tivity, and clinical processes, the full advantages of creat-
ing CapStar remain to be leveraged. CapStar continues to
align once independent physicians from four separate hos-
pitals into a collaborative medical staff.

Staffing Shortages: There is a regional and national
shortage of therapists, technicians, and nurses, many of
whom are approaching retirement age without sufficient
numbers of qualified candidates to replace them.

Hergh Performance: The decision to join CapStar in
1998 was controversial and not unanimous within the
Hergh community. Consequently, Hergh was a reluctant
partner in several CapStar initiatives. Until recently,
Hergh’s performance lagged well behind the rest of the
system. Since then, the CEO has retired, and Hergh has
made progress in catching up with the other OUs.

P.2c Performance Improvement System

The performance improvement system begins with the
Executive Leadership Team (ELT) and each Interlocking
Committee (IC) responsible for assuring high perform-
ance targets are met. This system is mirrored at each OU
with a Senior Leadership Team (SLT) and OU-level ICs
(Figure 1.1-1). The new service design and improvement
processes, the Process Evolution Cycle (PEC) (Figure
6.1-1) and the Process Improvement Cycle (PIC) (Figure
6.1-4), respectively, have been developed and fully
deployed to all OUs. Since 1998, the Baldrige framework
has been used to design the culture and performance
improvement system. CapStar completed a high-level
Baldrige self-assessment in 1998 and a more in-depth
assessment in 2000. The Baldrige Criteria and Core
Values serve as the foundation for the leadership system’s
strategy development and are referenced frequently as the
Baldrige nomenclature becomes the common language of
the organization.

1. Patients First: Why We Exist

2. Physician Distinction: Our Key Partners

3. High Performing Colleagues: Extraordinary Talent,
Employer of Choice

4. Compassionate Operational Excellence: Efficient,
Effective, Affordable, and Caring

5. Finance and Market Strength: Bottom Line
Performance

6. Information Anywhere Anytime: Belief in
Knowledge

7. Community Support: Citizenship

Figure P.2-1 CapStar’s Critical Success Factors (CSFs)

xvii

Glossary of Terms and Abbreviations

ADE
Adverse Drug Event

AP
Agility Process

AMI
Acute Myocardial Infarction

BBA

Balanced Budget Act

Board
Board of Directors

BSC
Balanced Scorecard

CABG
Coronary Artery Bypass Graft

CapCare
CapCare Centers

CapStar
CapStar Health System

CBC
Complete Blood Count

CCR
Customer Concern and Recovery Process

CHF
Congestive Heart Failure

CHR
Community Health and Renewal, Inc.

CIO
Chief Information Officer

CMS
Centers for Medicare and Medicaid Services

CNT
CNT Integrated Care

COE
Compassionate Operational

Excellence

COPD
Chronic Obstructive Pulmonary Disease

CQO
Chief Quality Officer

C-section
Cesarean Section

CSF
Critical Success Factor

CT
Computerized Tomography

CXR
Chest X-Ray

Dialogue
Colleagues’ Dialogue

DRG
Diagnosis Related Group

ED
Emergency Department

EKG
Electrocardiogram

ELT
Executive Leadership Team

EPI
Excellence Performance Institute

EVP
Executive Vice President

Excelsion Medical Center

Excelsion

Exec Med
Executive Medical Staff Team

FMS

Finance and Market Strength

Founders
Founders General Hospital

FTE
Full-Time Equivalent

Galaxia
Galaxia Home Health Care

Gyn/Oncologist
Gynecologic Oncologist

Hergh

Hergh Community Hospital

HIPAA
Health Insurance Portability and Accountability Act

Hospitalist
Full-time physician directly employed by CapStar

HPC
High Performing Colleagues

HR
Human Resources

I2
Inspiring Ideas (CapStar’s suggestion program)

IAA
Information Anywhere Anytime

IC
Interlocking Committee

ICU
Intensive Care Unit

Integrated Health Information Systems

IT
Information Technology

JCAHO
Joint Commission on the Accreditation of Healthcare
Organizations

KB
Knowledge Board

KIS
Knowledge Information System

LVEF
Left Ventricular Ejection Fraction

MCO
Managed Care Organization

MLT
Medical Leadership Team

MRI
Magnetic Resonance Imaging

MSA
Metropolitan Service Area

NB
National Benchmark

OB
Obstetrics

OKU
Ohio/Kentucky University

OR
Operating Room

OSHA
Occupational Safety and Health Administration

OU
Operating Unit

PACT
Patient Centered Team

PDA
Personal Digital Assistant

PDSA
Plan-Do-Study-Act

PDV
Purpose, Destiny, and SPIRIT Values

PEC
Process Evolution Cycle

PEP
Performance Evaluation Plan

PFC
Patient Focused Care

PHNA
Preeminent Hospitals of North America

xviii

PIC
Process Improvement Cycle

PIO
Process Improvement Office

POES
Physician Order Entry System

PSA
Primary Service Area

PT
Physical Therapy

RAC
Regulatory and Accreditation Committee

RIMS
Reliastate Insurance Management System

Roseleaf

Roseleaf Community Hospital

RUH

Riverport University Hospital

Rx
Prescription

S&P

Standard and Poor’s

SD
Standard Deviation

SLT
Senior Leadership Team

SPP
Strategic Planning Process

SSA
Secondary Service Area

SVP
Senior Vice President

TAP

Triannual Action Process

THC
Total Health Center

VHA
Veterans Health Administration

WOC
WellOhioCare

xix

1 Leadership

1.1 Organizational Leadership

Immediately following the creation of the CapStar Health
System in 1994, senior administrators, medical staff lead-
ers, and members of the newly combined Board of
Directors (Board) met in a three-day retreat to establish
the fundamental philosophical and operating principles
of the new system. Discussion reaffirmed CapStar’s com-
mitment to excellence as the region’s preferred advanced
care provider that would compete directly with RUH and
other community hospitals. CapStar would differentiate
itself from other providers by offering only the highest
possible compassionate service and clinical excellence in
the practice of medicine. To reflect these lofty ideals, the
CapStar Purpose and Destiny were established followed
by the SPIRIT Values. The Purpose, Destiny, and SPIRIT

Values (PDV), shown in Figure P.1-1, guide the entire
organization.

Last year, the Board was streamlined from more than

to 22 members. Six members of the Board are physicians,
consistent with the CapStar commitment to Physician
Distinction. For a health care system the size of CapStar,
this streamlined Board is designed to provide effective
and agile governance. The Board meets quarterly, and its
Executive Committee, consisting of twelve members (four
physicians and eight community members), meets month-
ly. Each Operating Unit (OU) has a local Advisory
Committee, appointed by the Board, to serve as a vital
communication link between the system’s Board and local
needs and interests. One member of the Advisory
Committee from each OU serves on the Board.

1.1a Senior Leadership Direction

In 1998, Joe Picardson, CEO of Founders, was promoted
to CapStar President and CEO following the retirement of
Gene Roddwine, CapStar’s first CEO. Picardson adopted
the Baldrige framework as the fundamental method to pro-
mote a culture that would enable achievement of CapStar’s
PDV and Critical Success Factors (CSFs). Figure 1.1

-1

depicts the CapStar leadership system of seven
Interlocking Committees (ICs) that support the Executive
Leadership Team (ELT). There is one IC for each CSF to
assure alignment. At least one ELT member serves on each
IC with at least one additional executive who overlaps with
another IC to establish the interlocking function. To assure
a systematic approach throughout the leadership system,
each OU uses an identical IC system in support of its
respective Senior Leadership Team (SLT). Each OU deter-
mines how often its ICs meet by using the Agility Process
(AP) (Area 1.1b[1]).

1.1a(1) The ELT is composed of senior executives at the
CapStar level (see Organizational Chart). Each OU is led
by its respective SLT, which mirrors the ELT and is tai-
lored for the size and unique circumstances of the OU.
Every member of the ELT and SLTs is actively engaged
in living and deploying the PDV. The CapStar leadership
succession process (Item 5.1) emphasizes the selection
and grooming of leaders who not merely support deploy-
ment of the PDV but who use the PDV as guides to self-
assessment and encourage and inspire colleagues accord-
ingly. The SPIRIT Values were established over a nine-
month period in 1996. Multiple colleague teams drafted
the first CapStar Values, which were then presented to the
entire workforce for comment. The PDV are revisited
annually by the ELT and the OUs. This ensures that the

Fi
na

nc
e

&
M

ar
ke

t
St

re
ng

(F
M

S)
C

>
3

C
om

m
un

it
y

S
up

o
rt

C
9

C
om

passionate

O
perational

Excellence

(

C
O

B
3

P
hysician

D
istinction

B
6

High

Performing

Colleagues

(HPC)

Info
rma

tion An
yw

her
e An

ytim
e (IA

A)
A6

Patients
First
A3

ELT*

Figure 1.1-1 Interlocking Committees—CapStar
System and OU Levels

*Each OU uses an identical leadership system model
of ICs with its respective SLT in the center instead of
the ELT. Each OU sets its own meeting frequency
using the Agility Process (AP). Example: B3 = COE
Committee meets every three weeks during “B” week.

There is one Interlocking Committee (IC) for each CSF:
1. Patients First
2. Physician Distinction
3. High Performing Colleagues (HPC)
4. Compassionate Operational Excellence (COE)
5. Finance and Market Strength (FMS)
6. Information Anywhere Anytime (IAA)
7. Community Support

PDV remain relevant and inspiring as the practice of med-
icine continues to change and also gives new colleagues
the opportunity for input. As a result of this process, the
CapStar Values were revised in 1998 to become the SPIRIT
Values after input was received from new colleagues at
Roseleaf.

Systematic methods used by the ELT/SLTs to reinforce
and deploy the PDV throughout all OUs include the
following:

• Triannual Colleagues’ Dialogues (Dialogues), held by
senior leaders, are round-the-clock forums in each OU
that are well attended. Each Dialogue focuses on one or
more of the SPIRIT Values, in addition to reviewing and
discussing recent operating results tracked in the
Balanced Scorecard (BSC) (Figure 2.2-1).

• Each month, a member of the ELT or an SLT writes a
column in the CapSpirations newsletter about the PDV,
referencing specific examples of how one or more col-
leagues supported another colleague or met even the
unexpressed needs of a patient or other customer.

• There are more than 100 Knowledge Boards (KBs)
posted throughout all OUs. Each KB contains the PDV,
the SPIRIT Value of the Month, and recent operating
results, including volume, revenue, expenses, and cus-
tomer satisfaction data. Approximately one-third of
each KB is devoted to specific departmental results,
customer feedback, and other information.

• At the beginning of a shift or workday, each colleague
logs into the Knowledge Today (KT) e-mail system at
his/her personal workstation or at a PC in a Knowledge
Information System (KIS) kiosk and receives a brief
message from an ELT or SLT member about CapStar or
about feedback received from a grateful or concerned
customer.

Always present at Dialogues, ELT members are visible
and approachable, consistent with the CapStar Open Door
Policy. Each quarter, systemwide and OU Inspiration
Awards are given by senior leaders to colleagues who
demonstrate passionate and effective commitment.

The ELT systematically integrates physicians into the
highest levels of leadership and policymaking, consistent
with the Physician Distinction CSF and the strategy to
uniquely empower and communicate with independent
physicians (as opposed to buying physician practices).
Physicians hold several key leadership positions, as noted
on the CapStar Organizational Chart, and are well repre-
sented on each of the systemwide and OU ICs. A key
measure of ELT and SLT members’ performance is the

ability to actively and comfortably engage physicians in
operational and strategic policies. This is also a key deter-
minant of leadership selection. ELT and SLT members
seek out physicians for input, engage physicians in discus-
sion in the hallways and cafeteria, visit physicians in their
offices, and remain open and accessible. Daily interaction
with physicians is an expected leadership behavior and
key to CapStar’s culture. Issues of medical staff policy
and clinically related decisions are addressed by the
Executive Medical Staff Team (Exec Med) for CapStar
overall and by the respective Medical Leadership Teams
(MLTs) for each OU. Each member of the medical staff
receives, via KIS, the monthly BSC update. The full med-
ical staff meets three times per year—two times by OU
and once systemwide—to review organizational perform-
ance, provide input on improving performance, and antici-
pate and address emerging issues.

CapStar uses a Triannual Action Process (TAP) to develop
and rapidly adjust short- and longer-term directions and
performance expectations. TAP meetings are held in
January, May, and October. Longer-term directions are
established at the May TAP meeting when the ELT, SLTs,
Exec Med, and MLTs meet in a “Drill Down” process to
evaluate thoroughly multiple external and internal trends,
issues, and outcomes and to set a one- to four-year organi-
zational direction as explained in Item 2.1. Short-term
directions and expectations of one year or less are consid-
ered at all three TAP meetings, during which all ELT and
SLT members report progress on their 120-day plans and
propose priority actions for the next 120 days. ELT 120-
day plans are shared and deployed to the SLTs, which in
turn deploy them to operational management staff and
then to all colleagues. TAP actions are taken whenever
any result falls below the BSC target. For example, in
January 2000, the Emergency Department (ED) at
Founders was hit by the sudden loss of four physicians
due to illness, accidents, and military assignment, causing
very long waits and a precipitous drop in patient satisfac-
tion. While all critical care patients are seen immediately,
ED management established a temporary fix that enabled
all other ED patients to be seen by a caregiver within 18
minutes of arrival. Annual performance targets are pre-
sented in the BSC and are posted on all KBs.

CapStar senior leaders are passionate about the focus on
patients. CapStar’s PDV and first and fourth CSFs empha-
size the provision of health care services to people as its
highest priority. However, CapStar senior leaders recognize
that statements are only words unless converted into action.
Accordingly, several systematic processes presented in
Figure 1.1-2 are used by all ELT and SLT members to
reinforce the importance of patients and other customers.

1.1a(2) CapStar CEO Joe Picardson has long been a
student of CEOs of high-performing manufacturing and

service companies with sustained success. He believes in
aggressively benchmarking best practices that have proven
results. On the basis of his observations of other mergers,
he concluded that each employee needs to feel empowered
and that failure to empower would lead to OU silos.
Accordingly, Picardson replaced the term “employees”
with “colleagues.” (The term “staff ” also is used, given its
prevalence in the health care sector.) To assure that the
use of “colleagues” was more than simply a change in
terms, Picardson focuses much of his efforts in establish-
ing a culture of excellence around the belief that employ-
ees should be treated as, and behave as, colleagues.
Patient Centered Teams (PACTs), described in Item 5.1,
function as somewhat self-governing teams of caregivers,
a key example of delivering on this promise.

The CapStar-level High Performing Colleague (HPC) IC
and the respective HPC ICs in each OU are responsible
for identifying and overseeing the implementation of
empowerment initiatives. Some specific methods include
the following:

• SLT members visit different parts of their facilities, giv-
ing colleagues ongoing opportunity to discuss issues
and make recommendations.

• Since information is empowering, current financial,
operational, and satisfaction results are posted on all
KBs throughout the OUs and on KIS.

• The ELT and SLTs maintain an Open Door Policy in
which any colleague, at any level, can access a member
of the senior staff. At CapStar, there is no such thing as
an end-run—any colleague can, and is expected to, talk
to anyone at any level, anytime; to put patients first; and
to get the work done.

• Inspiring Ideas (I2, pronounced I-Too) is a formal inno-
vation process in which colleagues and physicians are
encouraged to submit ideas and experiences to improve
service and/or operating performance. These ideas and
experiences also can be submitted through the KIS elec-
tronic chatroom. All participants are recognized for
their participation in the process.

• In the Rapid Recovery $ Program, each colleague is
given up to $50 or more if needed with a supervisor’s
approval to correct service miscues or to replace lost
items.

The AP (Area 1.1b[1]) was established to address an
improvement opportunity identified during the first
Baldrige self-assessment in 1998. As a relatively new and
growing system, CapStar learned in this assessment that it
had not established the expectations, structure, or processes

to be agile in an ever-changing health services market-
place. The AP provides a three-week meeting cycle of key
CapStar-level ICs and OU ICs that enables CapStar to be
an agile decision maker at the strategic and policy levels.
Agility on a daily operational basis is fostered through the
PACTs, in which each colleague is authorized and encour-
aged to meet or exceed patient service expectations and to
ensure patient and colleague safety without first seeking
permission. CapStar borrowed an approach from the air-
line industry to create a culture of no blame. Without
placing blame, any CapStar colleague is permitted—even
expected—to voice concerns about any practice that may
put a patient or colleague at risk.

1.1b Organizational Performance Review

1.1b(1) CapStar’s AP is a unique three-week meeting
cycle schedule and performance review process. Each of

• Each ELT and SLT member conducts walk-through
rounds and personally surveys five patients/families
per month about their care experience, asking them to
compare their CapStar experience to other hospitals.
Results are reviewed at each ELT/SLT meeting.

• A member of the Customer Focus Team trains all
colleagues to be advocates, supported by senior lead-
ers. These leaders rotate responsibility for assisting
colleagues in handling patient complaints.

• Senior leaders personally respond to patient
correspondence.

• Senior leaders benchmark Baldrige recipients and
other companies known for uncommon attention to
customer service. New senior leaders attend a two-
day customer service excellence course.

• ELT/SLT members rotate the responsibility of pre-
senting at new colleague orientation. They explain
the CapStar history and the PDV and teach a two-
hour segment on customer service excellence.

• Senior leaders hand out individual and team customer
service Inspiration Awards.

• ELT/SLT members talk about the PDV, patients, and
customer service excellence, always reinforcing
CapStar’s purpose for existing, culture, and common
language that guide its service to mankind.

Figure 1.1-2 Senior Leadership Commitment to
Patients and Customers

the three weeks is designated as “A,” “B,” or “C,” and
each IC or other standing committee is assigned an “A,”
“B,” or “C” week. For example, the Patients First IC is
designated as A3, meaning that it meets every third week
on an “A” week, whereas the Physician Distinction IC is
B6 and meets every six weeks on a “B” week. Teams meet
during off weeks only by exception if more frequent meet-
ings are needed. The AP reinforces organizational agility
and establishes the importance of frequent interaction and
timely decision making. This process also enables CapStar
to balance committee and team assignments so that a dis-
proportionate number of meetings do not occur during the
same week of the month. In addition, since “A,” “B,” and
“C” weeks are designated two years in advance, physi-
cians on committees can schedule around patient visits.
Team members can schedule vacations, travel, and other
obligations in weeks in which their key teams are not
meeting. The AP has evolved into a simple-to-follow
process that enables the ELT and SLTs to review perform-
ance and act quickly. It provides discipline and opportuni-
ty for empowerment by encouraging extensive team par-
ticipation by colleagues. The IC AP schedule is depicted
in Figure 1.1-1.

The BSC is reviewed by the ELT, SLTs, and each IC
according to the AP schedule to track and review per-
formance compared to short- and longer-term goals.

1.1b(2) The ELT and SLTs use two methods to identify
and take action on priorities for improvement. (1) Issues
that surface or results that fall below expectations are
assigned to an IC for corrective action. The assigned IC
establishes a time frame and target measure for each
issue. If the issue requires input from several colleagues
or is cross-OU or cross-departmental, a Process
Improvement Cycle (PIC) Team is established. Since
many ICs meet on a three-week schedule, problems are
raised, assigned, and addressed with little delay. Identified
corrective actions are added to the 120-day TAP reviews
and monitored to ensure that changes produce sustained
improvement. (2) All CapStar and OU senior leaders and
managers have 120-day plans that cascade from the CSFs
to assure that opportunities to improve are deployed to all
OUs. Every 120 days, each manager reports on progress
related to his/her 120-day plan. Since all of CapStar’s key
partners (including ERCare, Inc., Calmstate Anesthesiology
Services, and InsideYou, Inc.) have staff on site, they also
attend 120-day TAP reviews and participate on ICs and
PIC Teams.

1.1b(3) The October TAP review is the final TAP meet-
ing of each year in which ELT and SLT members discuss
leadership performance issues. The BSC and the Baldrige
self-assessment constitute the leadership report card used

to identify strengths and weaknesses of the senior leaders,
the ELT/SLT system, and ICs. Each senior leader is allo-
cated up to $4000 a year for off-site training for knowl-
edge or skill improvement tied to a BSC measure, the
Baldrige self-assessment, or the personal Performance
Evaluation Plan (PEP). Alignment among performance,
senior leadership compensation, and leadership system
improvement is reinforced by basing 100 percent of ELT
and SLT incentive compensation on achievement of the
operational, clinical, and financial measures in the BSC.

1.2 Public Responsibility and Citizenship

1.2a Responsibilities to the Public

1.2a(1) The CapStar Compliance Officer chairs the
CapStar Regulatory and Accreditation Committee (RAC),
a joint subcommittee of the Patients First and Finance and
Market Strength (FMS) ICs. The RAC is responsible for
tracking, linking, providing guidance on, and monitoring
organizational compliance with laws and accreditation
standards. CapStar believes it has an obligation to its cus-
tomers to achieve the highest possible accreditation sur-
vey scores as one indication of its performance. The ELT
is adamant that CapStar comply with all regulations to
protect the assets of CapStar which, as a not-for-profit
organization, are owned ultimately by the communities in
which it operates. Accordingly, CapStar has established a
systematic approach to assuring compliance. An ongoing
committee supports the RAC and the JCAHO and General
Accreditation Committee. OUs have similar committees
to assure consistent deployment. For example, the
CapStar-level JCAHO and General Accreditation
Committee meets at nine-week intervals. The JCAHO and
General Accreditation committees at the OU-level also
meet in nine-week intervals, increasing to three-week
intervals and then weekly as their respective accreditation
survey date draws closer. The CapStar-level committee
promotes systemwide sharing of best practices and estab-
lishes policy and procedures related to new accreditation
standards and other operational issues that may have
accreditation implications. The RAC committee is respon-
sible for assuring state license regulatory compliance. The
CapStar Patient Care and Rights Committee, under the
direction of a newly recruited Patient Rights Officer, has
been meeting at three-week intervals during the past year
to develop policy related to JCAHO’s Sentinel Event stan-
dard on medical errors and to prepare for the impact of
the Health Insurance Portability and Accountability Act
(HIPAA), new federal legislation that limits access to
patient information in hospitals and physicians’ offices. A
sample of targets for regulatory and legal performance is
provided in Figure 1.2-1.

Earlier this year, the RAC began a proactive initiative to
identify laws, regulations, and standards that, if exceeded,
would provide competitive advantage related to one or
more of the CSFs. The RAC recommendations are expect-
ed in September 2002.

1.2a(2) Although the importance of eliminating medical
errors only recently has emerged in the public arena fol-
lowing the release of two reports by the Institute of
Medicine, CapStar’s efforts to identify and prevent errors
date back to the tragic deaths of the six-year-old patient
and diabetic spouse of a member of the staff as described
in P.1. Excelsion’s first efforts were to understand the
causes of certain mistakes and to create a culture in which
it was acceptable to report mistakes. Initial efforts have
focused on accurately reporting and then analyzing data
on medication errors, medical service errors, and clinical-
ly avoidable skin ulcers for home care patients.

The responsibility for understanding and addressing other
potential public concerns with CapStar services resides
with the ELT and SLTs. Picardson and the Executive
Officer and Advisory Board of each OU are responsible
for maintaining contact with business and civic leadership
in their communities. They are actively involved in the
respective Chambers of Commerce, Civic Stride, and
other community organizations. These relationships are
used to obtain feedback from community leaders about
the quality of health care services. On a biennial basis,
CapStar plays a leadership role with other hospitals in the
region to complete an areawide analysis of health care
needs, disease rates, and key demographic trends. CapStar

participates in collaborative efforts with its competitors
on disaster planning and other specific public concerns,
such as the potential spread of the West Nile Virus.

1.2a(3) The ELT holds firm to its conviction that every
patient and customer encounter, every interaction among
colleagues, and every business transaction follow the
highest ethical standards. The SPIRIT Value of Integrity
allows no room for compromise. Ethical behavior is sys-
tematically reinforced to ensure a culture committed to
excellence. Ethical expectations are spelled out in detail
in The CapStar Pride and Ethics Handbook given to each
colleague upon recruitment. Ethical requirements are
delineated in the CapStar Compliance Commitment given
to each colleague during new colleague orientation. Every
colleague signs a compliance statement as a condition of
employment. The CapStar Compliance Officer is a high-
level and visible member of the leadership staff, reporting
directly to the ELT and the Board, if appropriate. The
Compliance Officer serves as the focal point for the OUs
to drive conformity to compliance requirements through-
out CapStar. The Compliance Committee reviews audits
of billing and coding compliance and assigns related
issues to the appropriate ICs for evaluation and action.
The ongoing focus on ethics includes ethics discussions at
each Dialogue; a toll-free hotline to report ethical con-
cerns; and an Ethics Consultant Team to provide guidance
to physicians, colleagues, and patients on ethical dilem-
mas and to reinforce the use of the hotline. Colleagues
with contact with business partners and suppliers attend a
three-hour session on business transaction protocol each
year.

1.2b Support of Key Communities and
Community Health

Fulfillment of CapStar’s Purpose and Destiny as an organ-
ization devoted to cherishing, preserving, and improving
health includes responsible citizenship in everything it
does. Shortly following the national tragedy of September
11, 2001, and the subsequent anthrax-related events,
CapStar helped form a regional emergency preparedness
task force composed of other hospitals and the Greater
Cincinnati Business Roundtable. CapStar actively pro-
motes United Way giving and provides manpower support
to the United Way in each community served. Leaders and
managers are encouraged to serve on civic boards and can
do so on CapStar time. Eight of the twelve ELT members
serve as adjunct faculty at the Central Ohio School of
Public Health. At the October TAP meeting, the CapStar
Charitable Trust evaluates community needs and recom-
mends community support activities and priorities. Based
on analysis of demographics and community needs, CapStar
has selected four long-term priorities for community

OU/Program
Requirement Impact Goal
JCAHO Each OU, including >92%

Galaxia Home score
Health Care

All House Staff Departments with Full
Trained residents accreditation,

>95% match
College of All laboratories Full
American accreditation
Pathologists
Ohio, Kentucky, All OUs Full license
Indiana Licensure
CMS All OUs No financial

denials*
HIPAA All OUs 100%

compliance

* ELT BSC measure

Figure 1.2-1 Sample of Regulatory/Legal Performance
Targets

development and support. Colleagues who participate in
any of these four priorities or other CapStar-supported
programs are eligible for paid time off at the discretion of
their managers.

CapStar developed a unique system that tracks monetary
and in-kind contributions to community support pro-
grams. This information was used to identify the four
ongoing priorities. Over 80 percent of the CapStar com-
munity support budget of $4 million is earmarked for
these priorities. The remaining 20 percent is used for
community support programs requested by colleagues or
other agencies that meet a compelling community need or
are emergent in nature. The Community Support IC moni-
tors activity to assure that community support levels
remain on target.

The following examples illustrate recent efforts in support
of CapStar’s community priorities.

1. Healthy Community Programming
• Counseling for battered women (Hergh)
• Advisors for Healthy Kids/School health program in

partnership with Riverport Children’s Hospital (all
OUs)

• Management for Alzheimer’s Caregivers and Breast
Cancer Survivor Counseling Groups (Excelsion and
Founders)

• Free occupational safety consultation (Roseleaf)
• Free physical exams for high school athletic teams

(all OUs)
• Pharmaceutical company partnerships to provide

prescription drugs for indigent citizens
• Blood drives
• Free use of conference rooms for community-

sponsored health

meetings

2. Support of K-12 school districts to develop future
health care workers
• Health Career Days at local schools
• Ongoing classroom presentations from colleagues

representing various health care disciplines
• Job “shadowing” in nursing, physical therapy,

nutrition, pharmacy, and radiology for high school
seniors

• Volunteer opportunities for high school students in
CapStar hospitals

3. Regional economic development
• Tailored employee health programs and a clinical

liaison program, joint efforts to control health care
costs to encourage prospective employers to select
the CapStar service area for new employment, and
meeting with new companies in the service area to
introduce CapStar.

• Programs to help low-skilled, low wage earners
return to school to achieve the necessary certifica-
tions and licenses to enter higher paying health care
disciplines.

• An ongoing partnership with the Department of
Economic Security to identify health-related issues
in areas of high unemployment and to provide appro-
priate education, prevention, and health care services
to address these issues.

4. Community Renewal and Health Services, Inc.
• This subsidiary of CapStar Charitable Trust supports

residential neighborhood renewal as a not-for-profit
community-based organization and includes renova-
tion of housing in the Excelsion area.

• Community Renewal and Health Services also pro-
vides access to health services for residential neigh-
borhoods.

CapStar operates a fully equipped diagnostic van used at
health fairs and other locations, such as assisted living
facilities, churches, synagogues, shopping centers, and lower
income neighborhoods, including government-funded
Community Health Centers for the underserved. The
van is also used by the Veterans Health Administration
(VHA) in a unique venture to reach out to disabled
veterans.

2 Strategic Planning

2.1 Strategy Development

2.1a Strategy Development Process

2.1a(1) Following his appointment as CEO of CapStar,
Joe Picardson recognized that a comprehensive process of
strategic development and deployment could serve as the
glue to effectively integrate the organization. Conse-
quently, CapStar studied the planning frameworks of other
members in the Excellence Performance Institute (EPI)
and of Baldrige Award manufacturing and service recipi-
ents. Following these external evaluations and several
years of refinement, the Strategic Planning Process (SPP)
was developed as seven steps that align with the TAP. The
linkage of the SPP with the TAP creates a systematic and
fluid strategy process that is directly tied to operational

performance review. This linkage eliminates the separa-
tion between strategy and operations that is a weakness in
other strategic planning approaches.

Figure 2.1-1 illustrates the SPP framework, including its
alignment with TAP and the “bottom-up” input from the
OUs. Much of the SPP effort is conducted in the months
preceding and during the three-day May TAP meeting and
Drill Down Retreat. The Drill Down results in identifica-
tion of strategic options, with sufficient time to enable
budget preparation. Then these options are articulated into
specific strategies that are rolled out to the organization
through the ICs. The set of strategies serves as the basis
for developing action plans and improvement plans across
the ICs and through the OUs, using the PEC and PIC
processes described in Category 6.

Figure 2.1-1 Strategic Planning Process

ELT/SLT

Drill Down:

12 Parts

1. Review PDV and CSFs

2. Link quality and
financial performance

3. Identify strengths and
weaknesses

4. Consider environmental
factors

5. Identify threats and
opportunities

6. Forecast clinical,
operational, and
financial performance

7. Analyze explicit
competitor strategies

8. Generate strategic
options

9. Address political
implications

10. Identify initial resources

11. Select one- to four-year
strategic objectives

12. Select system-level
targets

January TAP
Prior year review
and refinement
of targets

October TAP
Review of YTD per-
formance and review
and approval of next
year’s action plans

and budget

Interactive IC
process to deploy
strategic objectives
to OUs and receive
action plan input

Obtain strategy
and budget
approval from
Board of
Directors

Develop action plans,
human resource plans,

and budget

ELT, SLTs, ICs
prepare for
Drill Down

May TAP and Drill Down
Strategic Planning Retreat

Environmental
Factors

• Economic
• Competitor
• Regulatory
• Technology
• Insurance
• Clinical break-

throughs

New
customer
market

segment
process

Stakeholder
Needs

• Patients/
Families

• Colleagues
• Suppliers
• Payors
• Residents
• Others

2 3

The Drill Down is a twelve-part process facilitated by the
Senior Vice President (SVP) for Strategy and Ventures,
Hugh Scott. The Drill Down enables senior leaders to
revisit mission and goals (Parts 1 and 2); assess multiple
external and internal issues, trends, potential outcomes,
and newly identified actions (Parts 3–7); generate strate-
gic options (Part 8); consider these in the context of local
and broad industry knowledge, best practices, and
resources to understand the implications of the scenarios
and project the initial and future resource implications
(Parts 9 and 10); and then concur on system-level, one- to
four-year strategies and targets (Parts 11 and 12). This
extensive planning effort is accomplished in only three
days due to the preceding months of careful preparation
by the ICs. In addition to the ELT and SLTs, selected
Board representatives and IC members from the OUs par-
ticipate in the TAP Drill Down to ensure representation
from all organizational levels.

Following the Drill Down, the CapStar and OU ICs play
an essential role in providing a bridging function across
OUs to establish action plans, as shown in Figure 2.1-2.
Within each OU, department and program leaders are
charged with identifying those factors most significant to
their work. Then they develop specific and measurable
actions using forecasting, scenario planning, projections,
and identification/analysis of options as appropriate.
Where recommendations cross OUs, the IC structure
ensures smooth collaboration and avoids duplication of
effort. The final plan prepared for the October TAP incor-
porates a series of action steps articulated over a one- to
four-year horizon.

2.1a(2) Each IC begins to prepare for the Drill Down fol-
lowing the January TAP meeting (Step 1). The ICs gather
and analyze information to address the key planning fac-

tors noted in Figure 2.1-1 (Step 2). For example, the
Physician Distinction and IAA ICs prepare reports on new
technology, and the Patients First IC prepares updates on
patient satisfaction. The Customer Focus Team prepares
three-year customer satisfaction trends for all customers/
stakeholders, including patients, families, medical staff,
referring physicians, residents, employers, and payors.

The FMS IC prepares updates on local and national insur-
ance trends, competitive surveillance, and regulatory
changes with the assistance of the Office of Marketing
and Business Development. The ICs from each OU assist
in the preparation of the analyses for the Drill Down to
assure that “bottom-up” input is secured from the very
beginning of the SPP. These results are analyzed in prepa-
ration for and used during the Drill Down to reach con-
sensus on strategic objectives. For example, as a result of
referring physician input, a one-call method was imple-
mented in 2001 that offers a referring physician a single
call to begin and complete a patient referral.

2.1b Strategic Objectives

2.1b(1) Key strategic objectives defined through the Drill
Down are aligned with the CSFs to ensure that all strategic
initiatives guide individual and collective work towards
achieving CapStar’s Purpose and Destiny. The strategic
objectives for 2002 through 2005 and targets adopted at
the October 2001 TAP are presented in Figure 2.2-1. The
figure also shows some key Balanced Scorecard metrics
that support the accomplishment of the CSFs.

2.1b(2) The strategic objectives address the challenges
described in P.2 of the Organizational Profile. The needs
of patients and other key customers/stakeholders surface
as the first priority during the Drill Down since Patients
First is the first CSF considered. In addition, patients
and/or payors often are invited to a portion of the Drill
Down to share their CapStar experiences. FMS is consid-
ered last during the Drill Down since CapStar leaders
understand that performance in these areas represents
lagging indicators of patient care and human resource
excellence. An example of this is a new initiative to
address community needs through the commitment of
fiscal reserves to open ten Total Health Centers (THCs)
in high population growth areas. This new approach is
one that environmental scanning revealed to be a poten-
tial high-growth and revenue-generating activity that also
will build considerable goodwill within CapStar’s local
communities.

Customer and health care
market needs, expectations,
opportunities
Competitive and
collaborative environment
Technological and other
key changes
Strengths and weaknesses,
including colleagues and
other resources
Supplier/partner strengths
and weaknesses
Financial, societal,
regulatory, and other
potential risks

Patients First
Community Support
COE
FMS
COE
IAA
Physician Distinction
All ICs

FMS

FMS
Community Support

Key Planning Factor Responsible ICs

Figure 2.1-2 IC Responsibility for Key Planning Factors

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2.2 Strategy Deployment

2.2a Action Plan Development and Deployment

2.2a(1) As demonstrated in Figure 2.1-1, annual action
plans are developed at the CapStar and OU levels follow-
ing the May TAP and Drill Down for review and approval
at the October TAP. The October TAP serves as the third
systematic review of current year performance and the
review and approval of action plans and budgets for the
upcoming year. Approval of next year’s budget at the
October TAP enables review and endorsement and/or
approval by the OU Advisory Committees and the
CapStar Board in December. The strategic objectives
agreed to at the Drill Down begin the cascading of strate-
gy throughout the organization. They are used by the OUs
to develop specific actions plans, measures, and budgets
at the OU level. A sample of the CSFs, related strategic
objectives, action plans, and performance targets are
included in Figure 2.2-1.

The ELT and SLTs ensure the accomplishment of action
plans via the IC review process and the TAP reviews.
Each SLT, on behalf of its OU, or the supervisor of any
department in an OU must prepare a correction plan and
budget for any measure that falls short of target. For
example, at the October 2001 TAP, the FMS IC reported
that it was falling short of achieving aggressive revenue
cycle improvement targets needed to increase the cash
flow cushion. In response, action was taken to cross-train
staff to reduce the Medicare coding cycle time for inpa-
tients post-discharge. Since the AP and the TAP meetings
enable the frequent review of progress on performance
targets, agility and responsiveness are ongoing functions
and strengths of the leadership system.

2.2a(2) Key short-term action plans and related measures
are presented in Figure 2.2-1. Consistent with CapStar’s
focus on organizational agility, action plans can be modi-
fied at any TAP meeting as necessary to reflect key
changes observed in the internal or external environment.
The migration of population from the Excelsion area to
the suburbs, including—in particular—to nearby
Kentucky, prompted CapStar’s decision to initiate a joint
venture with Healthcognizant to plan for the new THCs.

2.2a(3) In March each year, the HPC IC starts to prepare
staffing scenarios for the May TAP and Drill Down.
Following the Drill Down, the HPC IC coordinates the
development of action plans and targets for the HPC CSF.
In addition, since virtually all strategic objectives have
staffing implications, the CapStar-level HPC IC orches-
trates an interactive process with the HPC ICs in the OUs.
Each OU identifies the staffing implications of the strate-
gic objectives and action plans and prepares its recom-
mendations on FTE increases or decreases, special skill
recruitments, in-house training, cross-departmental shar-
ing opportunities, and budget impact. These staffing plans
go through interactive IC review cycles and endorsement
in anticipation of approval or adjustment at the October
TAP.

2.2a(4) The CapStar BSC provides a framework for per-
formance measurement and evaluation; helps CapStar
illustrate how it translates strategic objectives into a
coherent set of performance measures; and shows how
CapStar aligns disparate elements of clinical, financial,
and operational performance objectives and indicators.

ICs have major responsibility for identifying relevant
measures and work closely with the OUs to ensure that
the identified data can be collected in ways that are both
reliable and valid. The alignment of performance meas-
ures throughout the organization’s operations is discussed
in greater detail in Category 4.

2.2b Performance Projection

During Part 12 of the ELT and SLT Drill Down, projected
performance targets are defined. These are established
after first determining related performance projections for
key competitors. For example, during the strategic plan-
ning process in 1998, RUH’s projected performance in
Community Quality Image—Best Hospital Overall caused
CapStar to set aggressive improvement targets to over-
come a growing gap. Figure 7.1-17 shows the positive
results of CapStar’s action plans. It strives to equal or
exceed the performance of competitors and overall indus-
try performance. Category 7 provides information on how
CapStar’s performance compares with competitors, key
benchmarks, goals, and past performance.

3 Focus on Patients, Other
Customers, and Markets

3.1 Patient/Customer and Health Care Market
Knowledge

3.1a(1) The core business of CapStar is delivery of
evidence-based, patient-centered care, characterized by
extraordinary quality, service, and value. It is not
CapStar’s goal to excel by aggressive competition in
duplicative services that ultimately add cost to the com-
munity and to patients; CapStar’s goal is superior per-
formance matched to community need. CapStar segments
its key customer groups as shown in Figure P.1-3.

In 1998, Executive Vice President (EVP) Eileen Kirks
realigned planning and marketing resources and processes
to support the PDV and to respond to marketplace chal-
lenges by creating the Customer Focus Team. This team, a
subcommittee of the Patients First IC, is led by the SVP
of Strategy and Ventures, Hugh Scott, and includes OU
representatives and staff from the centralized Office of
Marketing and Business Development. The approach links
with the CapStar strategic planning process and integrates
technical expertise and staff support with operational
requirements, processes, and accountability. Responsibil-
ities of the Customer Focus Team include

• performing strategic market analysis and making
recommendations to the ELT

• coordinating customer data/information for strategic
planning

• supporting leaders in reviewing and acting on customer
satisfaction, dissatisfaction, and loyalty data/information

• evaluating and improving methods for customer satisfac-
tion determination, access, and relationship building

• identifying “best practices” in customer service through
benchmarking

• leading Baldrige self-assessment in Category 3 and
related Results Items and overseeing action plans

The Customer Focus Team ensures that CapStar targets
customers and markets and continuously receives internal
and external customer market and market segment
data/information. The New Customer/Market Segment
Analysis Process (Figure 3.1-1) is used by the ELT during
the Drill Down and in the PEC.

CapStar identifies new customer groups and market seg-
ments by making its products and services known through
outreach programs to new community residents and new
employers. CapStar partners with community organiza-
tions to distribute the CapStar SpiritPak, a new neighbor
packet describing CapStar services and providing contact

information. CapStar follows up with a personal letter to
interested residents identified through this program.

To understand employers’ needs, CapStar senior execu-
tives are active in the Greater Cincinnati Business
Roundtable. They meet with any company moving into
the service area of an OU to introduce CapStar and to dis-
cuss the company’s needs. A similar process is used for

Customer Focus
Team identifies
new opportunity

Review analysis
by Marketing
and Business
Development

Make
recommendation
to ELT at TAP

meetings

Still
attractive?

ELT
approves

Aligned
with

PDV?

To PEC (for
process design)

Figure 6.1-1

Internal
Data/

Information

External
Data/

Information

To PIC
(for process

improvement)
Figure 6.1-4

New product/
service launch
and/or market

entry Opportunity
rejected or
deferred

yes

yes
yes

Figure 3.1-1 New Customer/Market Segment
Analysis Process

Include as
strategic

objective/
action plan

companies moving out of the area to understand how
health care services and costs may have influenced their
decision to move. Such discussions contributed to
CapStar’s decision to partner with Healthcognizant to
launch the THCs.

3.1a(2) CapStar uses a variety of listening and learning
approaches to understand and respond to the drivers of
satisfaction and loyalty for its key customers (Figure
3.1-2). CapStar uses a national market research firm to
conduct an annual telephone survey of service-area
household health decision makers on their perceptions of
the “best doctors,” “best nurses,” and “best hospital for
…” (key common conditions). This research shows how a

representative cross section of the community perceives
CapStar relative to competitors. Respondents are divided
into CapStar patients, patients of competitors, and patients
with no service experience at a marketplace hospital.
Results on the two latter segments are used by the market-
ing staff to target programs to attract these potential
patients and to counter, for example, efforts by RUH to
promote its high technology reputation.

CapStar’s Office of Marketing and Business Development
conducts focus groups to explore specific topics with key
customer segments. For example, CapStar held focus groups
with seniors, family members of seniors, and community
agencies serving seniors. Resulting programs developed
include the Behavioral Health’s Memory Loss Clinic at
Founders to strengthen its service to Alzheimer’s patients.

CapStar satisfaction surveys are used to listen to and learn
from all key customers. Patient satisfaction surveys,

designed and jointly administered by a third party, pro-
duce monthly qualitative and quantitative reports shared
throughout CapStar. The surveys are tailored to CapStar
services and patient needs (e.g., inpatient, ambulatory,
lab/ancillary, emergency, behavioral health, and home
health services). Open-ended questions encourage com-
ments and allow patients to request follow-up. Initially
offered only in paper format for return by mail, the survey
became available on-line on the CapStar Web site in 1999.
Web site access allows CapStar to send an e-mail prompt
and a reminder if necessary, which results in higher return
rates while reducing mailing and data entry costs. Patients
who do not receive service at CapStar within 12 months
automatically receive a health education message and a
query about possible use of services outside CapStar,
including what services they used and the factors that
caused them to choose a source outside the CapStar
system.

For the majority of physicians, CapStar uses an electronic
survey to measure satisfaction and gather feedback. Every
physician is surveyed annually. A portion of the physi-
cians are surveyed monthly so that leaders have a steady
stream of feedback. The on-line survey questionnaire was
further improved to gather specific feedback from key
members of the physicians’ office staff. Their feedback
has contributed to numerous improvements implemented
by the Physician Distinction IC, including direct follow-
up scheduling of ED patients seen nights and weekends
and on-line pre-admission “paperwork” for elective and
direct admissions from physicians’ offices.

CapStar’s Physician Referral Office facilitates patient
referrals from physicians outside the 13-county service
area who contact the health system directly. Each physi-
cian is surveyed two weeks after patient discharge.
Questions assess the referring physician’s experience with
CapStar and with the physicians who participated in the
patient’s care. The Physician Referral Office summarizes
this feedback for physicians and for quarterly review by
the MLT in each OU.

Customer-initiated communications are a rich source of
information—written comments, calls on the system’s toll-
free phone line, and Web site messages. The Office of
Marketing and Business Development aggregates, ana-
lyzes, correlates, and distributes results to the relevant
work area. This approach prevents handoff failures.

The commitment to listen to and learn from customers is
demonstrated by many methods used to put Patients First,
identify individual and family expressed and unexpressed
needs, and gather feedback about the care experience.

Listening and
Learning Methods

Market Research X X X X
Focus Groups X X X X
Satisfaction Surveys X X X X
Complaints (CCR) X X X X X
CapStar Toll-Free Number X X X X X
Web Site X X X X X
ELT/SLT Affiliations X X X

P
a
ti

e
n

ts
/F

a
m

il
ie

s
In
d
e
p
e
n

d
e

n
t
P
h

y
s

ic
ia
n
s
R
e

fe
rr

in
g

P
h

y
s
ic
ia
n
s

P
a
y
o

rs
/E

m
p

lo
y
e

rs
C
o
m
m
u
n
it
y

Figure 3.1-2 Listening and Learning Approaches for
Key Customers

Examples include

• scripted daily rounds by nurse managers and adminis-
trators on patient care units and in clinics

• periodic “through the patient’s eyes” walkthroughs
• customer comment cards in clinics and at the bedside
• patient/family interviews at discharge, especially from

complex care units, such as the Intensive Care Unit
(ICU)

More and more, patients themselves are directly involved
in the design and redesign of care and, in some cases,
even care delivery. For example, many departments have
established patient advisory groups that act as informal
focus groups and sounding boards for proposed changes.
The Prostate Cancer Improvement Team and Prostate
Cancer Patient Advisory Group developed a peer counsel-
ing approach that links active patients with former
patients for education and support.

CapStar colleagues share their listening and learning
approaches and improvements at Patients First fairs. Best
practices are incorporated into customer service training
and development programs for deployment across
CapStar.

3.1a(3) CapStar’s satisfaction surveys always include two
questions: “Is there something we should have asked
about (but did not) that would have been important for us
to know?” and “Is there another method by which you
would have preferred to communicate with us?”
Responses to these questions are used by the Customer
Focus Team to validate CapStar’s understanding of cus-
tomers’ needs and their communication access require-
ments. Responses also guide revision of CapStar’s listen-
ing and learning methods to capture issues of greatest
importance to customers by methods convenient for them.
Responses to these questions resulted in the use of the
Web site to obtain satisfaction survey information, which
is an example of how listening and learning methods are
kept current.

3.2 Patient/Customer Relationships and
Satisfaction

3.2a Patient/Customer Relationships

3.2a(1) Redesigning care around the needs and prefer-
ences of patients and their families is the fundamental
CapStar approach to acquiring, satisfying, and retaining
patients. The ELT decided that redesign was essential
since a patient typically interacts with 70 or more care-
givers in an average traditional hospital stay—far too
many for a caring partnership with patients. Patient

Centered Teams (PACTs, Item 5.1) were formed to reduce
the number of different staff contacts and to focus on
patient needs. This radical redesign of inpatient care char-
acterizes CapStar’s commitment to the care of each patient
as a unique individual. PACTs are key differentiators of
CapStar from more traditional hospitals.

Patient and Family Satisfaction and Loyalty
Some features of CapStar’s hospital experience that make
it a caring partnership are provided below.

• On admission, each patient receives a booklet about his/
her PACT core team members. Additional copies are
provided for family members.

• Within 24 hours of admission, each new patient is visit-
ed by a senior nursing or administrative leader. Using a
consistent scripted message, the patient and family are
invited to contact him or her with any questions or con-
cerns.

• During daily visits, bedside cards allow patients to note
questions they have for doctors or other colleagues. At
shift change, PACT members greet patients and ask if
any questions have not been answered.

• CapStar’s in-room video system offers entertainment
programs and a wide range of educational offerings
related to common procedures, conditions, and medica-
tions.

• At discharge, every patient receives a one-page exit sur-
vey to identify any surprises (good or bad) for the
patient or family. This information is used to recognize
positive colleague actions and to identify opportunities
for improvement.

• Three to five days after discharge, every patient receives
a follow-up phone call from a PACT member.

• All patients with e-mail and Internet access are encour-
aged to complete an on-line survey post-discharge.

The CapCare Centers reinforce patient loyalty. One of the
most effective loyalty strategies is the open access schedul-
ing process that guarantees patients of CapStar physicians
same-day appointments. The Laboratory has established
easy-access, first-floor testing sites with an under 15-minute
wait guarantee (or there is no co-pay for the test), with con-
venient complimentary parking—a service particularly val-
ued by patients who need frequent lab tests (and therefore,
whose loyalty is particularly important).

Physician Satisfaction and Loyalty
The Physician Distinction IC focuses on creating strategic
leverage by partnering with physicians. Three approaches
have been central to the CapStar strategy. First, CapStar
deployed a cadre of hospitalists in the new work design
(PACTs) to enable independent physicians to spend more
time in their offices or operating rooms (ORs). Second,
CapStar involved physicians as partners in the leadership

of the delivery system, strategic decisions, and operations
improvement. Third, CapStar established an electronic
linkage with physicians via KIS. They will have Web-
based Internet access from home or office by year-end
2003 so that all independent physicians can monitor and
direct the care of their patients from any location. In addi-
tion, physician benefits include the following:

• The Physician Distinction IC annually surveys the satis-
faction of independent physicians, as well as the satis-
faction of their office staff.

• CapStar provides independent physicians with patient
satisfaction survey results for their practices, including
physician-specific results, at no charge.

• The Physician Referral Office provides specific feed-
back related to referral relationships from referring
physician satisfaction surveys.

• Physicians’ offices can receive, free of charge, a daily
on-line summary of key health care news items from
local, state, and national publications.

Employer and Payor Satisfaction and Loyalty
CapStar’s approach to building and maintaining employer
and payor loyalty is to make communication simple, con-
venient, and direct (e.g., CEO breakfast meetings with
employers and insurers) and to have prompt responses
targeted at employers’ needs. CapStar tracks health serv-
ice usage by major employers and annually prepares rec-
ommendations for reducing health care benefits expenses.
Work-site clinics and wellness centers are two such exam-
ples of CapStar’s responses to employers’ needs.

3.2a(2) To determine key patient/customer contact
requirements, the Customer Focus Team analyzes data
and information from multiple listening and learning
approaches (Figure 3.1-2), as well as health care and other
industry standards, best practices, and emerging applica-
tions. Timeliness and convenience are foremost for all
customer groups. In addition, all customers rank efficiency,
accuracy, and courtesy in their top five requirements. For
telephone access, CapStar adopted a rule that permits only
one transfer of a phone call. The colleague receiving a
transferred call is responsible for handling that call to
completion unless a medical emergency dictates
otherwise.

CapStar uses multiple methods to deploy key customers’
contact requirements to all colleagues and independent
physicians. Principal among them are inclusion of a set of
core requirements in all job descriptions, new colleague
orientation, customer service training, newsletters, and
distribution of customer satisfaction surveys. CapStar’s
customer service standards were first developed in 19

when it benchmarked a national hotel industry leader for

its design and deployment of customer service training
and reward and recognition programs. As a result, CapStar
holds brief daily discussions with all colleagues on some
aspect of customer service. Discussions occur at the
beginning of each shift change at all OUs.

3.2a(3) CapStar strives to prevent problems by thorough-
ly understanding customer requirements and providing
services to match. However, customer concerns do occur.
CapStar sees them as recovery opportunities. The Customer
Concern and Recovery (CCR) Process, shown in Figure
3.2-1, is deployed at each OU. This process empowers any
colleague who identifies a customer concern to resolve it
on the spot. If that is not possible, the colleague stays
with the problem until resolution and then reports it for
further analysis.

Customer concerns most often are received and addressed
locally, but the Process Improvement Office (PIO) aggre-
gates the data into monthly reports by OU departments
and SLTs for quarterly review by the Customer Focus
Team. The reporting/resolution and aggregation/analysis
processes became more efficient when CapStar automated
the process on KIS throughout CapStar (except at Hergh,
where the same paper-based process is used). KIS permits
tracking of individual customer concerns in real time by
department managers and includes an automatic escala-
tion mechanism to ensure that problems are resolved
promptly. Any colleague (all the way to the executive
level) may activate the escalation mechanism immediately,
if required, to ensure rapid and appropriate intervention.

3.2a(4) The Customer Focus Team monitors the effective-
ness of CapStar’s methods to build strong customer rela-
tionships and provide access to customers. To ensure con-
tinual improvement and innovation, the team provides its
analyses and recommendations at each TAP meeting and
makes changes via a PIC.

3.2b Patient/Customer Satisfaction Determination

3.2b(1) As indicated in Area 3.2a(1), all inpatients and
CapCare patients with e-mail receive a survey. Inpatients
without e-mail receive a paper survey within one week of
discharge. The survey, conducted by a third party,
includes comparison with a national group of similar
organizations using the same instruments. CapStar retains
the database and uses it to perform additional analyses by
various demographic factors and Diagnosis Related
Groups (DRGs). This has enabled the organization to pro-
file key patient segments, such as asthmatics.

3.2b(2) In addition to the methods previously described,
all inpatients and ambulatory surgery patients are called

three to five days post-discharge by a PACT member or
colleague specifically trained in soliciting feedback.

3.2b(3) CapStar participates in a health care provider
“report card” sponsored by the Greater Cincinnati
Business Roundtable. This annual report card compares
clinical outcomes and satisfaction results among area
health care providers on a list of common conditions and
treatments (e.g., asthma, pneumonia, stroke, cardiac care,
hip and knee replacements, bowel surgery, C-section)
using a one- to three-star scale (i.e., better than, good as,
worse than expected). CapStar correlates this information
with household perception survey results and with other
internal data for strategic planning and clinical improve-
ment initiatives. CapStar also participates in various
national collaborative improvement activities in which sat-
isfaction results are shared and compared with similar
health care provider organizations and used to drive spe-
cific improvement initiatives.

3.2b(4) The Customer Focus Team ensures that satisfac-
tion determination methods remain current with health
care service needs and directions. Annually, the Office of
Marketing and Business Development assesses the effec-
tiveness of satisfaction determination methods as part of a
comprehensive review.

CapStar anticipates a continuing shift to the use of elec-
tronic methods and prefers these when they also are con-
venient for the customer. At the same time, in recognition
of the diversity of its customer groups, CapStar remains
committed to using diverse methods so as not to exclude
or underrepresent the needs of any customer segment.

Aggregate data
are compiled in report to
Customer Focus Team.

Yes

Figure 3.2-1 Customer Concern and Recovery Process

Action items are iden-
tified and prioritized.

PIC Team formed
to address systemic

problem.

Improvement plan
is tracked in KIS.

Is the
concern

systemic?

Data are categorized
and analyzed by PIO.

Colleague-owner
signs off on

CCR.

Is the
customer
satisfied?

Colleague takes
ownership and initiates

CCR.
No

Customer has concern.

Next-level colleague
takes ownership.

Yes

4 Information and Analysis

4.1 Measurement and Analysis of Organizational
Performance

4.1a Performance Measurement

4.1a(1) When CapStar was formed in 1994, senior lead-
ers committed the organization to managing through data
acquisition and analysis. They recognized that an efficient
and effective performance management system was criti-
cal to achieve the maximal benefit of the merger. CapStar
continues to invest in management information systems to
support this belief. The leadership also recognized that to
maintain the best relationships with its independent physi-
cians, the organization needed to be on the cutting edge in
providing systems that optimized their time and resources.
Also, CapStar’s commitment to patient safety has
enhanced the focus on implementing clinical systems
designed to minimize medical errors.

As a result of CapStar’s first Baldrige self-assessment in
1998, the performance measurement system became the
responsibility of the IAA IC. This committee is chaired by
the Chief Information Officer (CIO), Charles Spocket,
with representatives from Information Technology (IT),
Quality, and Finance, as well as clinical unit managers
from each OU. The principal mission of the IAA IC is
integration of the varied performance measurement sys-
tems found across CapStar into a coordinated, easily
accessible, and comprehensive information delivery sys-
tem. The IAA IC develops a strategic plan called the
“State of IT” that takes into account geographic disper-
sion issues, existing hardware and software at each facili-
ty, and the multiple types of information (including finan-
cial, operational, and clinical) required to measure, ana-
lyze, align, and improve daily operational performance.
The IAA IC determined that the hardware and software
systems at each facility were incompatible with each other
and recommended to the Board that the existing system
be replaced with a centrally controlled, Internet-based sys-
tem. This plan required significant capital investment
($50 million over three years) to replace computer hard-
ware at each site since many of the computer systems
were mainframe based and not easily converted to Internet
integration. After a competitive bidding process, CapStar
settled on a software suite from Integrated Health
Information Systems (IHIS), a nationally recognized
leader in health information technology. The new system
created by this combination of hardware and software was
named the Knowledge Information System (KIS) (Figure
4.1-1). KIS was designed to support current needs as well
as future expansion, which CapStar plans to phase in over
the next five to ten years. Added value for performance
measurement and analysis is provided through national

benchmarks from the IHIS national database that are rou-
tinely integrated into standardized reporting from KIS.
These include clinical severity adjusted process and out-
come data, as well as operational and financial data from
over 125 similarly sized health care systems nationwide.

The centralized IT Department, with satellite departments
in each OU and roving support for the CapCare Centers,
is responsible for maintaining KIS. The system is based
locally on file server technology, but each file server
transfers its data to a central mainframe computer for
more efficient information sharing among sites. This sys-
tem is supported by a backup mainframe computer locat-
ed at a remote site, which mirrors all mainframe data.
This backup can replace the mainframe within 30 seconds
of a primary mainframe computer failure. CapStar makes
extensive use of advanced data entry tools, including bar
code technology, coupled with scanners for patient track-
ing, process control, and supply management.

Information management systems must be responsive to
the CSFs of the organization. One example of this respon-
siveness is demonstrated by KIS support of the Patient
Safety initiative. Bar coding of patient identification
bracelets, coupled with medication bar coding, reduces
errors, helping to ensure that the right patient receives the
right medication at the right time. The computerized
Physician Order Entry System (POES), when fully opera-
tional in 2002, will further reduce errors in medication by
eliminating the potential for transcription errors associat-
ed with illegible handwriting. In July 2001, CapStar began
supplying physicians with personal digital assistants
(PDAs) linked to KIS using wireless links located at every
clinical area. These PDAs offer physicians instantaneous
access to current clinical information on any patient with-
in CapStar and will enable handheld medication ordering
when POES is fully operational. CapStar-affiliated physi-
cians have the option of contracting for billing services
through the Reliastate Insurance Management System
(RIMS). They can code and initiate the billing process for
professional in-patient services directly from their PDAs
via a wireless electronic link to the RIMS billing system.

The Administrative Decision Support System (Figure
4.1-1) allows for analysis of performance and reporting
with benchmarking against regional and national best
practices, sorted by DRG, OU, and provider.

4.1a(2) The SLT for each OU orchestrates the develop-
ment of clinical, financial, and operational measures that
align with the CSFs and strategic objectives. The ICs in
each OU work with operating departments to ensure that
the cascaded measures through the entire OU and the

functional components of each OU, such as the PACTs,
remain aligned.

The IHIS software is a powerful data integration tool that
enables collegues with access to KIS components (some
components, such as patient information and certain
financial reports, are restricted for security and confiden-
tiality purposes) to link these components to produce per-
formance reports with a number of variables. An example
of this linkage between CSFs and daily operations can be
found in the improvement of overall patient satisfaction
with wait times to the 90th percentile nationally in FY
2001. To accomplish this, CapStar outpatient radiology
services committed to a goal of reducing wait time by

percent. The PIO, working with each radiology site, used
the PIC model to help all the sites adopt the Roseleaf
Radiology Department system for tracking patients.
Roseleaf had developed its system through a PIC in 1999,
achieving a 50 percent wait time improvement in one
year, with Roseleaf wait time satisfaction at the 90th per-
centile. By bar coding patient arrival and departure at

each step of the radiology process, radiology site man-
agers can instantaneously monitor and report patient flow.
Each manager identified the bottlenecks associated with
patient flow through radiology, unique to each site, result-
ing in every outpatient radiology department now match-
ing Roseleaf ’s results. Through the use of novel technolo-
gies, such as bar coding and the soon-to-be implemented
Wireless Web System, KIS allows for significant flexibili-
ty in tracking and reporting process measures and indica-
tors for meeting CSFs.

4.1a(3) While decentralized use of reporting features is
encouraged, the PIO serves as an internal consultant to
help users access comparative data and information avail-
able on KIS, especially those that relate to the internal
(internal sites) and external (national database) bench-
mark capabilities integrated into KIS. Comparative data
are collected through a number of sources, including the
EPI and IHIS, which provides coded comparative data
with 125 hospitals of similar size.

* = operational in March 2002
+ = currently operational in ICUs and the ED, with remainder of units to be phased in 2002–2003

** = Managed by Reliastate Insurance Management System (RIMS)

KNOWLEDGE

INFORMATION

SYSTEM

(KIS)

Hospital Information System
Admission/Discharge/Transfers

Outpatient Appointment Scheduling

Clinical Information
System

Electronic Medical Record*
Physician Order Entry System+

Ancillary Departments
Office of Medical Records

Utilization Management

Administrative Decision
Support System
Cost Management

Marketing
Strategic Planning

Benchmarking

Finance/Operations
System

Health Insurance Contracts**
Managed Care Operations

Patient Billing
Budget

General Ledger
Accounts Payable

Asset Management
Purchasing, Inventory

Human Resources, Payroll
Benefits

Information Management
E-mail

Quality Assurance System
Clinical Benchmarking

Patient Satisfaction
Colleague Satisfaction

Patient Safety*
Risk Management
Infection Control

ICU Database
Trauma Database

Physician Credentialing

Figure 4.1-1 CapStar’s Knowledge Information System

4.1a(4) The performance measurement system is kept
current through a variety of steps. The “State of IT”
Strategic Plan, prepared for the Drill Down (Figure 2.1-1),
includes an evaluation of the performance measurement
system. The focus during the past two years has been on
finding and reporting medication errors. The PIO, in col-
laboration with the ELT, continuously reevaluates the per-
formance measurement system to maximize its value.

4.1b Performance Analysis

4.1b(1) The ELT recognizes that management by fact
requires critical examination of results for effective deci-
sion making. Rather than specifying the type of analysis,
the ELT has adopted a continuous and systematic per-
formance review, based on the CSFs, which serves as the
primary focus for ELT meetings. The BSC is used to track
CSF results. Those CSFs on target are characterized as
“Status Green.” If a measure is falling short of the goals
established in the TAP or is not equal to or better than the
projected performance of competitors, the CSF changes to
“Status Yellow” on the BSC. The responsible IC re-
evaluates the CSF results to identify opportunities for
rapid improvement to return to “Status Green.” This effort
is coordinated and monitored by the PIO. The IC chair is
expected to present to the ELT an analysis of why the
operations associated with the “Status Yellow” CSF are
falling short and to outline a 120-day plan to improve per-
formance to expected levels. All “Status Yellow” CSFs
must be presented at the ELT meetings until performance
improves sufficiently. If a “Status Yellow” CSF fails to be
corrected to “Status Green,” it is categorized as “Status
Red.” Additional actions might be considered, including
outside consulting support. An example of the effective-
ness of this system was the ability to address ED physi-
cian staff shortages at Founders that were negatively
impacting the Patients First CSF submeasure of waiting
times in January 2000. The Patients First IC investigated
and improved waiting times within two months of being
“Status Yellow.”

4.1b(2) CapStar communicates results of high-level
analysis through two principal methods that support its
belief in open access to information. First, a formal yet
rapid cascading of performance results through the IC
structure enables communication to and from the ELT,
SLTs, and ICs at the CapStar and OU levels. Second, the
BSC is available on KIS and all KBs. In addition, the PIO
prepares special organizational, OU, or departmental
analysis upon request.

4.1b(3) As outlined previously, organizational-level analy-
sis is focused on the CSFs, the strategic objectives, and

action plans. By integrating CSFs formally into the agenda
of the ELT, IC, and TAP meetings, analysis and results,
objectives, and action plans remain aligned. By centraliz-
ing performance measurement, the PIO serves as an insti-
tutional resource for improvement efforts. By focusing
maximum improvement efforts on CSFs designated as
“Status Yellow” or “Status Red,” resources are prioritized
to ensure corrective action and continuous improvement.

4.2 Information Management

4.2a Data Availability

4.2a(1) KIS is accessible from personal computers and
distributed kiosks with high-speed T1 lines connecting all
sites. KIS is available in both clinical and administrative
areas, as well as in physicians’ offices and remotely at
physicians’ homes, to facilitate access to medical and
administrative information necessary to make clinical,
financial, and operational decisions. Independent physi-
cians use KIS to manage their outpatient office records,
integrating both the inpatient and outpatient medical
records, which facilitates transfer of information to the
hospitalists. Over 65 percent of the independent physi-
cians are on KIS. Direct database linkages between
PHNA and the Purchasing Department allow for “just-in-
time” stocking and reduced inventory costs. Data inter-
change with CapStar’s partner, RIMS, is accomplished
through nightly data downloads via dedicated phone lines.
Certain areas of KIS are made accessible to both insurers
(extensively used by their case managers) and employers
(used by benefits managers) to enhance their understand-
ing of CapStar’s quality improvement efforts. Finally, the
BSC is widely distributed throughout the organization
through KIS and on the KBs.

Digital radiography is being phased in at all OUs over the
next 18 months. Currently, Excelsion is fully digitalized,
and Founders anticipates complete digitalization by July
2002. Integration of this system into KIS allows sharing
of radiographic images to any site with a PC workstation,
eliminating the need for transportation of physical X-ray
films to health care providers. Radiographs taken outside
the CapStar system are readily scanned into digital format
at each OU for inclusion in patient records.

In its next major cycle of improvement, the Electronic
Medical Record, piloted by Founders in March 2002, will
optimize timeliness and accessibility of medical data at
all system locations, eliminating dependence on a paper
record that might not be where the information is needed.
History and physical examinations, progress notes, con-
sultations, and operative records will be dictated and

transcribed digitally. Transcriptions are expected to be
entered into the electronic chart within one to four hours
of dictation, depending on criticality. Currently, these doc-
uments can be reviewed instantaneously, prior to tran-
scription, by listening to the dictation.

4.2a(2) The IAA IC and the CIO establish policies and
procedures to ensure data and information integrity, relia-
bility, accuracy, timeliness, security, and confidentiality
(Figure 4.2-1). CapStar must contend with the uncertain-
ties of the new federal HIPAA regulations governing secu-
rity and confidentiality of patient information. The
HIPAA Task Force is responsible for reporting on meas-
ures of performance related to the policies and procedures
outlined in Figure 4.2-1. The new Electronic Medical
Record will significantly improve the security manage-
ment of confidential patient information. Access codes
will be restricted to authorized caregivers and others with
a verified need to know.

4.2a(3) CapStar recognizes that significant funds must
be spent to keep the data and information availability
systems current. To spend assets wisely and to keep sys-
tems integrated, all IT purchase requests greater than
$10,000 and all requests for additions to the core KIS
functions are reviewed by the IAA IC and require IT
Department input and sign off for inclusion in the “State
of IT” Strategic Plan. The IT Department keeps KIS
hardware functioning and, through a service contract with
the primary vendor, IHIS, keeps the software components
upgraded to most current versions. Additional requests
for improvements in data gathering or information avail-
ability are channeled through the IAA IC. System relia-
bility is tracked through measurement of the IT Help
Desk and complaint process results, including frequency
of complaints and rapidity of resolution. The IT
Department or IAA IC appoints PIC Teams as necessary
to address recurring IT problems.

4.2b Hardware and Software Quality

4.2b(1-2) Hardware and software assessment, purchase,
and implementation occur in a modified PEC process,
managed by the IT Department. Any request for new
hardware or software must include quotes from at least
three potential competitive vendors, accompanied by a
complete assessment of the relative benefits, risks, and
costs of each option. The IT Department also identifies
any other potential vendors. A competitive review of the
product then occurs by both end-users and IT support per-
sonnel. The two top selections then undergo review
through site visits at other facilities where the
hardware/software already is installed and in use. Prior to
purchase, an implementation plan is formulated. Prior to
full implementation of any new system, organization-wide
software or hardware is installed at one of CapStar’s facil-
ities for beta testing. In a formal process, all functionality
issues are evaluated fully by colleagues who will be using
the hardware and software on a regular basis. Training,
functionality, and reliability problems must be resolved, in
a formal sign-off process, by an implementation team.
The team includes managers and end-users of the new
system at both the beta test site and the roll-out sites.

Data and
Information

Requirement Policies and Procedures

Integrity Automation of data entry with
Reliability, bar coding and scanning, database
Accuracy scanning for inconsistencies of coding

using special software, computer
access logs, message authentication
codes, a 24-hour crisis team,
passwords linked to authority level,
CSFs linked to accuracy, a mirrored
backup system activated within

seconds of main system crash.

Timeliness CSFs linked to timeliness of
admissions, labs, and X-ray; bonuses
and penalties for timeliness in RIMS
billing activity.

Security and Formal risk assessment of security
Confidentiality and confidentiality, unique identifiers

for all operators, access code
restrictions, auto logoff, educational
programs on HIPAA compliance.

Figure 4.2-1 Data Requirements and Approaches

5 Staff Focus

5.1 Work Systems

At CapStar, colleagues are skilled and empowered
employees operating in an environment of pride and joy.
Joe Picardson feels that it is the role of Human Resources
to foster this environment. CapStar’s ability to achieve
industry-leading clinical outcomes and to compete in the
regional market is based first and foremost on how
CapStar secures and develops extraordinary talent. Staff
programs are designed to stimulate collegiality, teamwork,
commitment, and well-being.

5.1a(1) As part of its study of best-in-class work system
innovation, the HPC IC recommended an evidenced-based
practice used in hospitals nationwide called Patient
Focused Care (PFC). The driving philosophy behind this
practice places the patient at the center of the care-
process—with a team of professionals consistently deliv-
ering high-quality care over time. Organizationally, this
approach clusters patients with similar diagnoses and care
needs together with a small, multidisciplinary team that is
able to deliver high-quality services at the location that
minimizes disruption for the patient—the bedside. The
whole approach is designed to emphasize patients’ needs
as opposed to the traditional emphasis on departments,
units, and caregivers. The result is a strong, caring rela-
tionship between the patient and team.

PFC is the care model at Excelsion, Founders, and
Roseleaf for chronic diseases and other clinical priorities.
These include congestive heart failure, physical rehabilita-
tion, oncology, asthma, chronic obstructive pulmonary
disease, and diabetes. Roll-out at Hergh is pending physi-
cal plant improvements, which currently are unscheduled.

CapStar applies the PFC through Patient Centered Teams
(PACTs). Each PACT is a small team that includes an RN
and a Care Partner, Patient Support Partner, Pharmacist/
Pharmacist Technician, Administrative Support Partner,
and Attending Physician/Hospitalist trained to deliver
extraordinary care for patients with a particular diagno-
sis/problem. The RN and the Care Partner form the “core
team,” caring for an average of 6–10 patients on a shift,
with assistance from the Patient Support Partner,
Pharmacist, and Administrative Support Partner, who
“bridge” several core teams (i.e., the Patient Support
Partner, Pharmacist, and Administrative Support Partner
will typically handle 2–3 PACTs). Each PACT member
functions as a colleague for health care delivery. Staffing
is reduced to the core team for evenings, night shifts, and
weekends. The PACT approach to work design is support-
ed by physically relocating support services traditionally
provided in distant locations from patient units (e.g.,

admitting, laboratory, radiology, business offices). These
are integrated into PACT units and decentralized through-
out the care system. Figure 5.1-1 details the roles of each
member of the PACT. Supplies are located in patient
rooms (rather than a central supply system), medications
are placed in medication cabinets in patient hallways
(activated by electronic mechanisms to ensure access is
limited to those authorized), and computers for charting
are at terminals in hallways to facilitate more caregiver
time at the bedside.

CapStar does not use PACTs for many acute-focus dis-
eases such as heart attack or stroke or labor and delivery
for which patient recurrence is less frequent/predictable.
Work design for these diseases follows a more traditional
care pattern with an emphasis on patient-centered care,
teamwork, and cooperation.

Much of the work culture at CapStar has been designed to
ensure alignment with the organization’s commitment to
Physician Distinction. Key practices in this area include
the following:

• Hospitalists are full-time, salaried, hospital-based physi-
cians responsible for the care of inpatients. They pro-
vide coverage for and improve communication with
admitting physicians. Hospitalists are integral to the
work design to provide the 24/7/365 clinical continuity
and expertise necessary to achieve best-in-industry
clinical outcome targets.

• Effective and personal communication systems ensure
that physicians have patient information when they need
it. All nurses carry cordless phones while on duty.
These are used to page physicians so that when the
physician returns a page or needs information about a
particular patient, the nurse who is responsible for that
patient responds directly, ensuring a high level of
responsiveness to the physician.

• Before any nurse hangs up a phone when speaking to a
physician, he or she asks a simple question, “I have the
chart in front of me; is there anything else you need?”
This ensures CapStar physicians feel a level of commu-
nication and teamwork that is absent in most hospitals.

Volunteers are also an important component of CapStar’s
human resources. More than 1,945 volunteers support
CapStar in various capacities and average more than five
hours of service monthly per volunteer. Volunteers are
supported through a Volunteer Office, under Jane Turek,
Vice President, Community Services.

5.1a(2) CapStar uses a variety of techniques to motivate
colleagues and to help them achieve their full potential.
The performance management system and associated
recognition activities described in Area 5.1a(3) provide
shared opportunities for colleagues and their supervisors.
CapStar also provides course offerings and financial sup-
port for colleagues to achieve their personal and career
development goals (Item 5.2). In addition, the Colleague
Opinion Survey has repeatedly shown that CapStar col-
leagues find tremendous satisfaction in being empowered,
informed partners in delivering excellent patient care.
They are motivated by many of the practices at CapStar
that support the Patients First CSF:

• participation on PACTs and involvement in PECs and
PICs

• Rapid Recovery $ and I2

• Dialogues, KBs, Knowledge Today, and the
CapSpirations newsletter

• quarterly Patients First fairs

5.1a(3) The performance management system has been
redesigned to reinforce the commitment that employees

are skilled colleagues who increasingly are empowered,
nurturing a culture of pride and joy. The Performance
Evaluation Plan (PEP) views the supervisor and colleague
as partners on a path of professional development. Each
colleague’s PEP is a “template” for career development,
personal growth, and performance expectations linked to
the reward system. Performance evaluation is based on
achieving and exceeding expectations in three key areas
established through the PEP: career goals/personal
growth, organizational performance targets, and the PDV.

Each colleague’s PEP is a simultaneous top-down and
bottom-up approach to staff development that includes
monthly coaching sessions by the supervisor and six-
month formal reviews. Discussions focus on goals
attained, modification or amendment of goals, and devel-
opment of new goals for the coming six-month period.
Additionally, supervisors and colleagues identify learning
and development goals, which are documented and trans-
ferred to the Colleague Development Plan (Item 5.2). Part
of each supervisor’s performance is determined based on
his or her ability to support colleagues in their personal/
career goals and operating goals via the PEP. The PEP
cycle also includes a review of leadership-management

Figure 5.1-1 Roles of PACT Multidisciplinary Team Members

Focus on
Patients and
Their NeedsPharmacist/Pharmacist

Technician Partner
• On-unit dose

dispensing
• Medication preparation

for administration
• Medication

Administration Record
maintenance

• Enhanced clinical
pharmacy and patient
education

Administrative Support
Partner
• Admissions
• Financial counseling
• Cash collection
• Chart maintenance
• Unit reception

Patient Support Partner
• Patient room cleaning

and discharge
• Minor facility repairs
• Dietary tray passing

and pickup
• Feeding assistance and

intake
• Escort patients
• Stock supplies

RN and Care Partner
• Nursing services
• Basic respiratory

intervention
• Blood draws
• Order processing

Attending
Physician/Hospitalist
• Diagnosis
• Treatment plan
• Discharge authorization

level competencies via a Nine-Box Matrix “promotabili-
ty” model and self-assessment system that are used to
support succession planning (Area 5.1a[4]). Supervisors
at CapStar are evaluated against their ability to support
the mentoring, coaching, and development of the col-
leagues they supervise.

Celebration is a highly visible and frequent component of
CapStar’s culture. Quarterly Inspiration Awards reward
colleagues who demonstrate the PDV. The award
Improvement Team has expanded the award program to
include two tiers—colleague awards and team-level
awards. Colleagues may be nominated for Inspiration
Awards by a supervisor, physician, any colleague, or a
patient/customer. Team awards (nominated by Department
Vice Presidents, the ELT, SLTs, or an IC) are given to
PACTs, improvement teams, and ICs that collectively
demonstrate the PDV and CSFs. Nomination forms are
available on KIS, on the Web site, and in printed format.
The most distinctive recognition occurs annually through
the selection of one or two colleagues from each OU who
demonstrate role model performance. These special col-
leagues become CapSTARS and are recognized by the
Board at its November meeting. In addition, each OU has
an active recognition program unique to that OU. For
example, Roseleaf has a “Special Moment” program in
which colleagues are recognized on the spot for distinc-
tive efforts. Founders uses a “Founders Best” program that
recognizes both individual and team contributions to
patient satisfaction. Each year, CapStar leaders honor its
volunteers through an awards banquet with 5-, 10-, and 25-
year service awards.

5.1a(4) Nearly 80 percent of CapStar senior positions are
filled internally by CapStar colleagues. The Succession
Planning Team, composed of management and frontline
colleagues, is a subcommittee of the HPC IC. It identified
and defined key leadership competencies needed at
CapStar to be a successful leader, including having vision,
having communication skills, being highly respected,
being a mentor/teacher, having integrity, and having busi-
ness acumen. The team adopted a succession planning
process modeled after the approach of a former Baldrige
Award recipient that uses a Nine-Box Matrix Assessment.
Colleagues utilize the matrix to determine where they are
in their growth and development and review concerns
with their supervisors during a formal six-month PEP.
Colleagues who are noted as high performing and high
potential on the matrix are reviewed at least annually by
the HPC IC in each OU for potential advancement. Each
year, the ELT and the Board discuss the succession needs
of CapStar. Joe Picardson presents a succession plan for
all ELT/SLT positions, and the Board meets in executive
session to discuss any succession concerns about the CEO
or members of the ELT.

5.1a(5) The Human Resources Department reviews key
work and colleague performance measures semiannually
to determine the skills and recruitment/retention needs of
the organization identified during the Drill Down and
subsequent action planning. CapStar uses traditional
recruiting approaches (newspaper classifieds, recruiting
health fairs, electronic job boards, and job postings). In
addition, because of the diverse communities served and
the shortages for health professionals (especially nurses
and pharmacists), CapStar uses innovative approaches to
meet its recruiting and hiring needs and the three-year
goal of becoming the employer of choice in the geograph-
ic areas served. These include flexible benefits described
in Area 5.3b; signing bonuses for new colleagues and
bonuses for referrals that result in a hire; and extended
recruitment overseas to attract foreign health care profes-
sionals, especially in the Philippines and Ireland.

5.2 Staff Education, Training, and Development

CapStar has continued to invest in extensive training and
development despite recent and ongoing unfavorable
trends in reimbursement throughout the health care indus-
try. The establishment of CapCollege in 1996 is evidence
of this commitment. A competent workforce is a corner-
stone of the organization’s ability to deliver role model
health services. In addition, all ELT and SLT members
understand that having an empowered workforce depends
upon the continuous nurturing of colleagues’ talents.

5.2a(1) One of the most important functions of the HPC
IC is the development of a comprehensive annual plan for
staff education, training, and development. The challenge
is creating such a plan that can be accommodated by the
available budget. Accordingly, this plan must balance the
short- and longer-term organizational objectives with indi-
vidual staff needs. The CapStar Education Plan results
from and aligns with the strategic objectives emanating
from the Drill Down, annual action plans, and individual
Colleague Development Plans from the six-month PEPs.
In addition, industry forecasts for staffing needs and
expected shortages drove CapStar to include targeted
approaches for ensuring that it offers career development
opportunities to help retain key talent. In addition, the
annual plan must track the requirements for and include
education and training opportunities to support CapStar
colleagues in meeting their licensing and credentialing
requirements.

5.2a(2) The CapStar Education Plan is developed through
an interactive exchange among the HPC ICs of the OUs.
Input is gathered from colleagues and their supervisors
through a variety of mechanisms. These include focus
groups conducted by the system-level HPC IC, colleague

suggestions submitted via I2, feedback obtained from exit
interviews, and specific areas identified in the annual
Colleague Opinion Survey. For example, last year’s
Education Plan included the broad deployment of training
on conflict resolution. This particular need was identified
in focus groups with PACTs and residents. A sample of
training offerings is presented in Figure 5.2-1.

5.2a(3) For CapStar to achieve its Destiny of “finest tal-
ent, knowledge, and science possible,” it must stay abreast
of changes in technology. These changes include not only
those associated with delivering patient care but those that
permit it to be more efficient. The 2002 Education Plan
includes detailed course offerings to support increasing
capability among colleagues in using the expanding fea-
tures of KIS. Specific KIS-related training will focus on
the POES to reduce medication errors and the Electronic
Medical Record, piloted at Founders in March 2002.

Another critical area is management and leadership devel-
opment. Through the evolution into a less traditional work
system with more empowered colleagues and teams,
CapStar has an increased need for leaders at all levels and
in a variety of functions throughout the organization.
Management and leadership development can no longer
be reserved for the senior executives or newly promoted
first-time supervisors. In partnership with Ohio/Kentucky

University’s (OKU’s) Organizational Development gradu-
ate studies program, CapStar has created a curriculum for
each colleague segment: nurses, pharmacists, patient sup-
port staff, administrative support staff, residents, and
independent physicians. Costs have been minimized by
OKU, which has assumed the primary responsibility for
course development, curricula management/administra-
tion, faculty, and training facilities. In turn, CapStar pro-
vides OKU’s graduate program with a “living laboratory”
for research in Organizational Development.

CapStar’s new colleague orientation includes a presenta-
tion of the PDV, an overview of KIS, discussion about the
PEC and PIC models, and safety awareness.

The organization has a goal of a minimum of 50 hours of
training per year for each colleague. CapCollege currently
offers more than 26 courses at no cost to colleagues, inde-
pendent physicians, and volunteers. CapStar also offers a
generous tuition reimbursement package for colleagues
who wish to pursue an undergraduate or advanced degree
along their career paths. In addition, CapStar is commit-
ted to providing as many courses as possible to satisfy
continuing education, licensure, and recertification
requirements.

5.2a(4) CapCollege provides in-classroom courses, self-
study programs, video conferences, and a limited number
of computer-based learning opportunities. Additionally,
some training programs are provided at OKU campus
locations. However, given the number of CapStar facilities
and additional complexity of multiple shifts and critical
functions, it recognized the need to explore training meth-
ods beyond conventional in-classroom delivery. Training
occurs every day as each colleague logs onto the
Knowledge Today e-mail system to receive a brief mes-
sage from the ELT. Dialogues, CapSpirations, KBs in
each facility, and quarterly Patients First fairs also are
educational vehicles. In addition, the organization has
recently begun to benchmark other “corporate universi-
ties” with strong distance learning components. A goal is
to launch the first CapCollege course via KIS in early
2003.

Training effectiveness is evaluated as part of the develop-
ment of the annual Education Plan. Inputs include post-
training feedback surveys from participants and results
related to training from the Colleague Opinion Survey. In
addition, CapStar has begun working with OKU to imple-
ment the Kirkpatrick Model, which includes levels of
evaluation beyond participant satisfaction. For a limited
number of courses, it is defining organizational perform-
ance measures that it expects to change as a result of
deploying a particular training program. One example fol-
lowing a training program is the monitoring of associated

Key Area Training Courses
Health, Safety, Basic Safety, First Aid, CPR,
Wellness Ergonomics at the Bedside,

Establishing a Culture of Safety,
Preventing Lower Back Injury

Documentation Medication Error Reporting,
and Reporting Computer Training (word processing,

spreadsheet, e-mail, database)
Management Supervisory Training (how to coach,
and Leadership mentor, support on-the-job training),

Mini-MBA, Time Management
Customer Listening and Learning Skills—How
Service to Hear Your Customer, Conducting

Patient/Family Member Focus
Groups

Orientation and New Colleague Orientation, Ethics
Organizational in Health Care, SPIRIT Values,
Culture Cultural Diversity and Awareness,

Teamwork
Quality Process Improvement—basic and
Improvement advanced levels, Baldrige 1

Clinical Excellence Clinical Excellence Series
Communication Communication Skills for MDs/MD
and Negotiation Executives, Communication Skills

(non-MD)

Figure 5.2-1 Sample Training Courses

clinical outcomes on reducing agitation in Alzheimer’s
patients. This program was provided to the entire staff of
the Geriatrics Service/Behavioral Health Services and has
shown very positive results (Figure 7.1-5).

5.2a(5) Knowledge and skills are reinforced on the job
through various methods. Supervisors and managers are
encouraged to work with their colleagues to define not
only the training and development they need but how they
will apply what they have learned in their jobs. Cross-
training is an important component of empowerment and
high-performance teams, and it serves to reinforce learn-
ing for both parties involved. The PACT approach to
inpatient care creates a daily forum for skill-sharing and
reinforcement since team members are in constant discus-
sion of clinical processes and patient service needs. An
exchange of learning across the team occurs every time a
PACT colleague attends an educational program. Finally,
there is a natural culture of mentorship that exists within
CapStar. More experienced colleagues provide guidance
and coaching to less experienced colleagues. Nowhere is
this more evident than in CapStar’s residency programs,
where residents are reinforced in their knowledge and
skills through the direction and feedback of the depart-
ment heads where they are assigned.

5.3 Staff Well-Being and Satisfaction

5.3a Work Environment

Although Eileen Kirks, CapStar EVP, is responsible for
the overall safety program throughout the organization,
every manager considers colleague safety a fundamental
tenet of CapStar’s Purpose, “To cherish, preserve, and
improve health.” All members of management are held to
the highest possible standards of workforce safety and
communicate their personal commitment throughout the
organization. This persistent focus on colleague safety is
one of the ways the ELT and SLTs earn colleague loyalty
and high performance. Several safety measures, including
lost work days and needle stick injuries, are monitored at
the highest level on the BSC. Every lost work day is con-
sidered a training or process failure and is viewed as
preventable.

The Colleague Care Committee (C6), chaired by Ms.
Kirks, is a subcommittee of the HPC IC that comprises
managers and frontline colleagues from each OU. With
the assistance of the Safety Office, this committee closely
monitors all aspects of colleague safety, including the
measures cited above as well as others such as workers’
compensation claims. The centralized Safety Office
assigns safety experts to each OU for teaching and moni-
toring purposes.

In addition, the organization’s commitment to colleague
safety is further reinforced through the implementation of
corrective and preventive actions submitted as suggestions
through I2. The following practices promote an ongoing
focus on colleague safety:

• Weekly Safety Rounds—As part of the weekly rounds,
each patient care unit and PACT hold 10- to 15-minute
discussions on relevant safety topics selected by team
members. The safety expert assigned to the OU provides
information on the latest safety and prevention methods
related to the topic.

• New Colleague Orientation—Safety is first addressed by
the ELT/SLT member who presents the PDV and empha-
sizes the related importance of colleague safety. Then,
the most recent trended data from the safety measures
are presented for each major job classification. A col-
league from the Safety Office facilitates small breakout
sessions so new colleagues can discuss potential safety
concerns they may face and to identify prevention meas-
ures. The amount of time spent on safety in orientation
communicates both CapStar’s commitment to colleague
safety as well as ensures that new colleagues understand
their own roles in providing a safe work environment for
themselves and others.

• CapCollege provides safety courses on site at the request
of each OU. Courses include ergonomics, prevention of
repetitive motion injuries, lifting techniques to reduce
back strains, infectious disease control management, per-
sonal self-defense, and needle stick prevention. All cours-
es are taught by certified health and safety professionals,
and many qualify for continuing education credits.

5.3b Staff Support and Satisfaction

5.3b(1) As indicated in the HPC CSF, colleague well-
being and satisfaction are considered among CapStar’s
highest priorities. ELT and SLT members, as described in
Item 1.1, are selected, in part, as a result of their demon-
strated commitment and ability to focus on colleague
competency, satisfaction, and safety. Management under-
stands that the BSC measures of clinical, satisfaction,
operational, and financial results are the lagging indica-
tors of how well CapStar colleagues perform. Further,
management also understands that the performance of
colleagues is related to their well-being, satisfaction, and
motivation.

Initially, the key factors affecting well-being, satisfaction,
and motivation were determined by an organization-wide,
multidisciplinary team along with an outside consultant.
Over time, focus groups discussing results of the

Colleague Opinion Survey have provided additional
insights in order to refine and revise, if needed, these fac-
tors. CapStar monitors performance against these factors
on a regular basis. Senior leaders keep abreast of the cur-
rent workplace climate through SLT daily rounds,
Dialogues, new colleague orientation, Inspiration Award
participation, and the important Open Door Policy at
CapStar. In addition, the Colleague Opinion Survey that is
administered to all colleagues throughout the year provides
quarterly updates. This process is described further in
Area 5.3b(3). CapStar also looks for insights and human
resource best practices from Baldrige Award recipients.

5.3b(2) CapStar intends to be the employer of choice. As
such, it offers a wide array of unique benefits beyond the
traditional ones of health and dental insurance, vacation
days, and pension plan. Benefits at CapStar include the
following:

• long-term care insurance
• tuition reimbursement (including all courses provided by

CapCollege and up to $1500/year for all other approved
course/degree programs)

• reimbursement for health club memberships (up to

percent covered)

• reimbursement for child care services (up to $300 per
month) where on-site child care is not provided

• health and wellness screening services (e.g., breast can-
cer screening, cholesterol monitoring, and “Way to
Wellness” program)

• colleague health services access
• flexible work week (full- and part-time options of various

work days/shifts)
• four-week paid sabbatical following ten years of service

with CapStar

CapStar’s diverse workforce includes colleagues from
inner-city neighborhoods as well as small farm communi-
ties, highly educated and technically trained colleagues as
well as those with limited schooling, and single parents as
well as colleagues nearing retirement. CapStar makes
every effort to provide flexibility in colleague services,
benefits, and policies. For example, each OU is permitted
to offer other fringe benefits (within a prescribed budget)
beyond the standard items listed above to meet the unique
needs of its workforce. This tailored approach also
enhances CapStar’s ability to attract, recruit, and retain tal-
ent since the employment markets differ dramatically
across its 13-county region. Wage scales at Excelsion are
higher than at CapStar’s other facilities to compensate for

the higher cost of living and extremely competitive job
market in Cincinnati. On the other hand, vanpools are
offered at some other locations to mitigate the costs and
difficulties associated with commuting.

5.3b(3) The Colleague Opinion Survey is administered to
each colleague during the quarter of his or her birth date.
The 34-question survey can be completed via hard copy
or on-line through KIS. All answers are anonymous
although respondents are asked to identify themselves by
major job classification and location to enable meaningful
analysis and corrective actions to occur. This approach to
surveying colleagues throughout the year permits the
organization to quickly identify potential problem areas
and intervene in a timely manner.

The on-line suggestion program, I2, is another source of
information regarding colleague well-being, satisfaction,
and motivation. Human Resources monitors these sugges-
tions and trends other related measures such as turnover,
absences, disciplinary actions, complaints and grievances,
and work-related injuries. Other sources of information
include exit interviews, focus groups, and participant sur-
veys from the OKU-led management/leadership courses.
Although all related data are aggregated and analyzed in
depth for use during the TAP Drill Down in May, ad hoc
PIC Teams may be formed by the HPC IC at any time
throughout the year to address unfavorable trends or
emerging issues of colleague dissatisfaction.

5.3b(4) As mentioned previously, senior managers treat
results of colleague well-being and satisfaction as early
indicators of organizational performance. During the
Strategic Planning Process and TAP Drill Down, they
establish priorities to address issues that cut across the
organization. If they determine that a service, benefit, or
policy that would meet the needs of colleagues does not
exist, the PIO charters a cross-organizational PEC Team
to develop one. The introduction of a paid sabbatical for
ten years of service is an example of such an effort.
During the 1999 strategic planning cycle, it was identified
that CapStar was struggling to retain key talent in a highly
competitive job market. In addition, there was a marked
increase in dissatisfaction in the colleague segment with
seven years or more of service. Using the PEC process,
the PEC Team benchmarked with several leading hospital
systems (in other geographic areas) that were facing
strong competition for talented resources. The paid sab-
batical was one of several practices that the team brought
back as recommendations to senior management.

6 Process Management

CapStar systematically uses two key processes to manage
the design and development of process steps and the
efforts required to keep CapStar processes current and
effective. The traditional Deming Plan-Do-Study-Act
(PDSA) cycle is fundamental to both these processes.
Through the efforts of the Physician Distinction IC, physi-
cians—particularly the hospitalists—play substantial roles
in the design and improvement of CapStar processes.
Although there are differing levels of maturity in the use
of these models across the organization, the ELT and the
SLTs expect to bring all OUs to systematic deployment by
Summer 2002.

6.1 Health Care Service Processes

6.1a Health Care Service Design Processes

6.1a(1) The Process Evolution Cycle (PEC) (Figure
6.1-1) is a customized version of the PDSA cycle. The
PEC takes the resulting objectives of the strategic plan
(Figure 2.2-1); identifies the need for new operational,
business, or support processes; and provides the frame-
work for designing, benchmarking, and pilot testing the
new processes so they can be introduced error-free. The
PEC integrates the four stages of the PDSA cycle with a
focus on the needs of the strategic, business, and action
plans; metrics needed to monitor expected progress;
results of the pilot project; and full implementation of the
tested process. Measures are focused on four key clinical
areas: functional health status, satisfaction compared to
need, total costs, and clinical outcomes. The first respec-
tive area is primarily a patient measure, the second a
patient and family measure, the third a payor measure,
and the last a patient measure. PEC Teams are assigned by
the ELT or SLTs and are composed of medical and sup-
port staff and management, as well as frontline col-
leagues. They are supported by expert staff from the
Office of Marketing and Business Development. Their
primary goals are to design and deliver the best quality
health care at the lowest cost. The results from these
teams are delivered to either the appropriate IC or the
ELT or SLT, depending on the scope of the service.

6.1a(2) The need for new or significantly modified health
care processes is first identified during the 12-part Drill
Down and then further explored between the May and
October TAP meetings prior to budget approval in
October (Figure 2.1-1). Sources for suggested new or
improved processes include all OUs, ICs, clinics, patients
and customers, and support offices. PEC Teams have
access as needed to any of the ICs for their review of
these suggestions and to draft a prioritization list for
review and approval by the ELT. The financial impact of

TAP
Drill Down:

satisfies market,

customer, and strategic

requirements

Envision
1) ELT or SLT assigns team and process

champion
2) Identify needs
3) Prioritize by considering

• CSFs • Supplier needs
• Customer needs • Desired results
• Health/safety/environmental needs

Plan
1) Review business factors and predict change
2) Design process, flow, specifications
3) Develop implementation plan
4) Review/select appropriate metrics/

benchmarks/comparisons

Pilot
1) Implement pilot
2) Identify lessons learned
3) Compare results with predictions
4) Develop improvements

Close Gaps
1) Complete implementation
2) Integrate improvements
3) Summarize learning for transfer
4) Monitor results/compare to PDV

Feasible but needs
refinement

Not feasible,
eliminate new

product, process,
or service

Engage data
evaluation from
Figure 3.1-1 for
market analysis

purposes

Deliver new
product, process, or

service to PIC

Yes
No

New Process Requirements
Identified in Figure 3.1-1

Figure 6.1-1 Process Evolution Cycle (PEC)

these suggestions is considered by the FMS IC and is an
important factor in the prioritization and approval of new
or modified candidate processes. The FMS IC at the
CapStar and/or OU level, depending on the proposed new
service, is involved at each of the Envision, Plan, Pilot,
and Close Gaps steps of the PEC. This close interaction
between the PEC Teams and the FMS IC enables the
teams to avoid downstream surprises if the project fails
financial performance requirements.

6.1a(3) The PIO identifies best practices, both within and
outside medicine, to maintain a leading edge focus on
topics such as health outcomes, service, patient safety,
and employer coalitions. Since staff assignments to the
PIO (under the direction of Dr. Mark Worfman, Chief
Quality Officer [CQO]) rotate among the best colleagues
from all OUs, the success at keeping up with these chang-
ing needs has been high. For instance, the Patients First
IC has implemented an institution-wide, Five-Step Safety
Audit that is applied by PACTs on a continuous basis to
all phases of patient care (Figure 6.1-2). As changing
patient/customer needs are identified, solutions are devel-
oped through the IC and PACTs, with the PIO serving to
coordinate the efforts. A few examples of safety initiatives
prompted by this process are the bar coding of medical
records and medications (Area 4.1a[1]) and appropriate
equipment selection.

6.1a(4) To focus on changing patient needs and to main-
tain a leading competitive position, the IAA IC assesses
requests submitted by staff to adopt new technologies. The
IAA IC systematically evaluates requests in relation to the
PDV, current strategic priorities, and resource availability.
This IC prepares the “State of IT” Strategic Plan during
the TAP cycle and an ongoing list of advances that were
not acquired for funding reasons in case funds become
available during an off-budget cycle. The recent bar cod-
ing of medical reports (see Item 4.2) was accomplished as
a result of this prioritization process. The IAA IC has cre-
ated a partnership with CapCollege to keep abreast of
emerging technology that may benefit CapStar’s delivery
of valued medical care. CapCollege has contracted with
an outside vendor whose expertise is evaluation of
advances in medical technologies. IAA IC success stories
include CapStar’s planned introduction of PDAs to cap-
ture patient and staff information in real time. Also, the
increasing use of teleconference facilities reduces deci-
sion-making cycle time and facilitates telemedicine tech-
niques as part of the strategy to improve relationships
with and to increase referrals from rural hospitals.

6.1a(5) The PEC Process is managed through the central-
ized PIO. The PIO monitors the progress of these teams,
provides support as necessary, and researches and identi-
fies best practices and benchmarks applicable to desired

results and improvements. Because the PIO works with all
OUs, service on the PIO is considered career enhancing.
Efficiency and effectiveness factors are included in the
performance monitoring module of KIS. As a rule, bench-
marks are set at the top 25 percent of industry perform-
ance when comparative information is available. Lessons
learned are collected from each PEC Team before it is dis-
banded. These lessons are catalogued on KIS for review
by other teams prior to embarking upon new projects.
Benchmarking conducted as part of the PEC provides
stretch goals that serve to ensure high-quality products,
processes, and services and high value for all stakehold-
ers. Sample measures are listed in Figure 6.1-3. Learning
from past projects and other OUs is an inherent feature of
the interlocking system. The ICs at the OU level are
responsible for learning transfer.

6.1a(6) During the design process, with the assistance of
the Compliance Officer, all relevant performance require-
ments are identified, including regulatory and accredita-
tion standards. If CapStar does not have internal expertise
when new or radically different requirements are identi-
fied, external consultants are employed to assess the issue
and provide appropriate solutions. Performance measures
related to compliance are established and assigned to the
RAC for periodic review and are also included on the
BSC on a regular basis. This ensures that noncompliance
is recognized early before a situation becomes too diffi-
cult to correct in a timely fashion. These measures are
tracked with the Status Green, Yellow, and Red process
outlined in Area 4.1b.

6.1a(7) To minimize errors and rework, CapStar has
incorporated a test phase into the PEC to coordinate the
processes among the OUs. All new programs are pilot
tested at a noninitiating site and, when proven successful
and adjustments completed, are rolled out in a systematic
fashion across the entire organization. Recently, this pilot
process has been enhanced. When new processes include
workplace or workflow modifications, a mockup with
end-user testing is mandatory, even prior to live-site pilot
testing. Feedback and performance metrics are included in
this step to assess progress before and during full imple-
mentation. To promote the SPIRIT Values (particularly
“Service”), PACTs provide valuable patient and customer

Five-Step Safety Audit Questions
1. What are the ways that this process can fail?
2. If this process fails, how can it harm a patient? Staff?
3. Is there somewhere in CapStar that the safety of this

process has been audited already?
4. Can we apply those lessons to this situation?
5. What do we need to do to prevent patient harm?

Figure 6.1-2 Safety Audit Check Sheet

feedback for existing and newly designed processes
(Area 5.1a[1]).

6.1b Health Care Service Delivery Processes

6.1b(1) While the PEC is focused primarily on new
processes and their conformance to strategic objectives,
CapStar’s Process Improvement Cycle (PIC) (Figure
6.1-4) is used by individuals and teams to focus on the
effectiveness of existing patient care processes and their
continuing success in a changing marketplace. Both the
PIC and the PEC are designed to support CSFs fully with
effective processes that can be employed by virtually any
team throughout CapStar. Figure 6.1-5 shows key clinical
patient delivery processes, key requirements, and their
measures. CapStar is particularly proud of its use of
focused Improvement Teams to develop a broad range of
clinical pathways that can be tracked on KIS, starting as
early in the patient’s course of treatment as the arrival at
the physician’s office or the ED. Clinical pathways are
evidence-based, scientifically validated clinical process
steps used in the diagnosis and treatment of disease.
PACTs use them to guide the care of patients and to
reduce variation in the care process. Pathways have been
developed for most major diseases and procedures. They
are a key component of CapStar’s approach to assure that
it never again has to deal with the avoidable death of a
young child or learn of fragmented or insensitive care of a
patient.

6.1b(2) The process to learn of patients’ expectations
begins during initial intake, in which the hospital first
learns of a clinician’s intent to hospitalize a patient. The
Central Intake Office uses a standardized Intake Process
to record the patient’s medical condition and evaluate

social and family circumstances and care expectations.
The Intake Record serves as the consistent patient input
documentation. Since an increasing number of patients
are admitted and cared for via a decentralized PACT, the
process to learn and address patient expectations contin-
ues as PACT members complete a single care plan that
has been designed as part of the clinical pathway for the

Root Cause
Are we addressing
the root cause of

the problem?

Goal:
What problem are we trying to solve?

Metrics
What tells us that

our change is
an improvement?

Potential Alternatives
What changes can we make that,
based on our metrics, we predict

will drive improvement?

Plan the Pilot
Who does what, when do things happen,

what resources and training are
needed? Collect baseline data.

Do the Pilot
As we execute the Pilot,
what are we learning?

Study:
What did
we learn?

Assess:
Did original
performance

improve?

Act:
What are the
next steps?
Assess our

achievements
and formalize

implementation.

Yes
No

Figure 6.1-4 Process Improvement Cycle (PIC)

Category 7
Factor Sample Measure Figure

Design Quality Readmission rates 7.4-5
Cycle Time Time from inception 7.4-1

of new program to
implementation

Improved Reduction in # of 7.4-1
Outcomes changes following

implementation of
new process during
systematic roll-out

Efficiency Number of new 7.4-1
design processes

Effectiveness CSF performance 7.4-6
Safety Staff safety 7.3-9

Figure 6.1-3 Sample Measures for Assessing Quality of
Service Design Processes

patient’s condition. By the time the care plan is complet-
ed, all caregivers, the patient, and the patient’s family
have a complete and common understanding of the care
plan based on information known at the time of admis-
sion. An integral component of the PACT approach to
care is the inclusion of patients and/or family members as
caregivers where medically appropriate. Patients and
family members as caregivers can view (but not enter
information into) their medical record. Since the PACT is
an interactive team of colleagues assigned to the care of
the patient, any changing needs or expectations are
quickly identified and documented. The Electronic
Medical Record, piloted at Founders in March 2002, will
significantly enhance the ability of caregivers to access a

single record of patient needs, expectations, and plan of
care. While the care plan offers real-time understanding
of needs and expectations, follow-up phone calls and
patient satisfaction surveys provide an after-the-fact per-
spective of expectations and needs. As previously indicat-
ed, these results are analyzed by the PIO and used to
identify improvement opportunities.

Each clinical pathway incorporates assessment of patient
expectations and understanding at the initiation, mid-
course, and completion of the pathway. Colleagues use
this information to assess the match between the standard-
ized pathway and the individual patient and to tailor it to
individual patient needs and expectations.

Key Health Care Related
Service Processes Key Related Key Operational Key Performance Category 7
(Responsible IC) Subprocesses Requirements Measures Figure

Screening (HPC) Admitting Timeliness Admitting cycle time 7.4

-2

Treatment and Treatment Appropriate care Percent of patients on 7.4-7
Therapy (HPC) pathways

Satisfaction report 7.1-9–11
Readmission rates 7.4-5
Medical errors 7.1-7

Patient Outreach Discharge Discharge plan, Discharge services arranged, 7.4

-3

(Patients First) instructions understood by patient

Quality of care Follow-up Percent follow-up 7.4-4
Effectiveness Low costs Cost per case 7.2-8

Laboratory Diagnostic Availability Wait times **
(COE) Pathology Accuracy

Satisfaction report **

Cost effectiveness Cost per test **

Radiology— General Availability Wait times **
InsideYou, Inc. Diagnostics Accuracy Physician satisfaction report **
(COE) Ultrasonography Cost effectiveness Cost per service **

Angiography
CT/MRI
Radiation Therapy
Nuclear Medicine

Emergency Services Diagnosis Timeliness Wait time to be evaluated **
—including ERCare Coordination of by MD
(COE) care Effectiveness ED patient satisfaction 7.1-12

CapCare Centers Medical visits Time with physician Patient satisfaction 7.1-13
(COE) Telephone access Timely appointments

Ease of access
Staff courtesy

Anesthesiology— Quality of Timeliness OR delays **
Calmstate (COE) service Effectiveness Pain Index 7.1-4

Satisfaction report **

** Note: Due to the limited length of this application, many of these results are not included in Category 7.
These data are available upon request.

Figure 6.1-5 Clinical Patient Delivery Processes, Measures, and Related Results

6.1b(3) The PACTs are responsible for assuring that the
performance expectations in the clinical pathways are met
for each patient on a pathway. The hospitalist collaborates
with the patient’s admitting physician to ensure that the
PACT follows the pathway or follows an alternative care
plan established for those patients whose pathway is not
their best course of care. As described in Area 1.2a(1), the
meeting of key regulatory requirements is orchestrated by
the RAC and its subcommittees, which prepare regulatory
policies with the assistance of the Compliance Officer.
Each OU is responsible for implementation of regulatory
policies as they relate directly to patient care services.
Payor requirements are met at a macro-level and an indi-
vidual patient level. At the macro level, Chief Financial
Officer Sheila Rikert is responsible for assuring that all
negotiated contracts with payors have clearly specified
requirements. In addition, CapStar differentiates itself in
terms of its relationships with insurers by having the Patient
Support Partner of the PACT remain in contact with the
insurer if situations beyond a typical care process are
encountered. For example, the Patient Support Partner will
contact the insurer if a patient develops complications and
needs to remain in the hospital longer than for a typical case.

6.1b(4) Real-time patient/customer and supplier/partner
input is sought by the medical staff, ICs, and PACTs
through both a structured interview process and the clini-
cal pathway patient input described before. For instance,
at every change of shift, the charge nurse of the PACT
stops in each patient’s room and asks if there was any-
thing that occurred during the previous shift that was not
performed well and could have been performed better. This
information is used immediately at the PACT level for in-
process service correction and recovery, as well as ana-
lyzed longitudinally to see if entire processes need adjust-
ment. If this input involves contract services, a report is
provided by the PACT to the administering service. All of
this information is collected and provided for review in
the KIS, along with the metrics described in Area 6.1b(1)
and the CapStar BSC (Figure 2.2-1). The results achieved
and reported for these measures are compared to the
expectations captured in both the clinical pathway and
internal survey methods described in Area 6.1b(2). The
clinical process owners, ICs, and PACTs investigate any
disparities and may initiate a PIC at their discretion.

6.1b(5) CapStar uses a prevention-based approach to
minimize inspection and audit costs. Standardized prac-
tices that make up the clinical pathways are used in the
processes implemented throughout the organization and in
training staff, patients, and customers. This helps raise the
awareness level so that mistakes are minimized and acci-
dents are eliminated. These pathways are integrated into
KIS, allowing for real-time automated auditing of pathway
compliance. This minimizes the costs of inspection and

auditing. Clinical pathways will be loaded into the soon-
to-be implemented Electronic Medical Record. Deviations
from a pathway will raise a flag and require the clinician
to give reasons for the departure from the pathway (e.g.,
patient age or disease complexity). The clinical depart-
ment chairs and the MLTs in each OU review quarterly
reports on clinical pathway compliance and establish PICs
at their discretion. For example, to reduce costs and
improve performance, the Five-Step Safety Audit (Figure
6.1-2) probes for existence of prior learning about safety
factors for a process, as well as uses a simplified failure
mode and effects analysis to prevent future errors.
Membership in PHNA maximizes the use of long-term
contracts that incorporate minimal incoming and source
inspection requirements.

Figure 7.1-1 presents CapStar’s improving performance
for acute myocardial infarction (AMI), congestive heart
failure (CHF), stroke, and pneumonia. These multiyear
improvements are the results of PICs that were established
by a MLT or the Patients First IC in response to perform-
ance targets established in 1999 by the Centers for
Medicare and Medicaid Services (CMS) 6th Scope of
Work Program.

6.1b(6) Process improvements are achieved through the
systematic application of the PIC model and the coordi-
nated activities of the process owners, PIO, ICs, and
PACTs. Using real-time patient and process information
about performance relative to patient/customer needs,
these groups apply the PIC model to continually improve
process performance. Additional improvement is achieved
through the use of patient satisfaction surveys (Area
3.1a[2]), Colleague Opinion Surveys (Area 5.3b[1]), and
supplier and partner surveys and interviews (Areas
6.2a[2] and 6.3a[7]), as well as through direct interven-
tions. As improvements are identified and quantified from
all of these sources, they are posted on KIS, on KBs, and
in CapSpirations. Changes that result in substantial
improvement in care or cost savings are highlighted in
Dialogues and are used to update training course content
at CapCollege. In all cases, potential improvements are
cycled through the PIC to ensure that a thorough, cost
effective solution is achieved.

6.2 Business Processes

6.2a(1) The key business processes CapStar uses to lead
business growth and success are identified in Figure
6.2-1. Responsibility for oversight of the performance of
business processes is assigned to the most appropriate IC.

6.2a(2) The focus of business processes is to ensure
that CapStar remains close to its fundamental purpose as

a provider of health services and to help the organization
avoid distractions of business that are external to the
improvement of health. Consequently, requirements for
key business processes are established at TAP reviews and
during the SPP, and they flow directly from the health
services strategies of the organization.

Key providers such as ERCare, InsideYou, and other part-
ners noted in P.1b(2) are integral to CapStar’s delivery of
health services. Accordingly, they are treated as if they
were employed colleagues of CapStar. They participate on
PEC and PIC Teams. They are held accountable for
achieving 120-day plan targets and attend TAP meetings,
including the Drill Down. For example, the contract with
Majestic, CapStar’s housekeeping partner, requires it to
achieve >90 percent on patient satisfaction surveys for
cleanliness. Failure to meet this objective means Majestic
faces financial penalties. ERCare is held to similar per-
formance standards that deal with patient satisfaction and
wait times in the ED. To further integrate key partners
into the daily operations of CapStar, their performance is
entered into KIS and reported to the ICs and colleagues as
described in Item 1.1.

6.2a(3) The PEC is used to design business processes
that link to strategic requirements and result in cost effec-
tive accomplishment of business goals while providing
quality health care services. Like clinical design and
delivery processes, performance of each business process
is monitored with sets of measures. The processes are
improved through a streamlined adaptation of the PIC
model.

6.2a(4) The key performance measures used to monitor
progress and to control and improve business processes
are listed in Figure 6.2-1. In-process measures are entered
into KIS; are reported out for TAP performance review by
the ELT, SLTs, and ICs in similar fashion to all other
operations; and are improved by PEC and PIC Teams as
warranted.

6.2a(5) Prior to joining PHNA, Excelsion and Founders
each managed a supply base of 750 suppliers and no part-
ners. Through its partnership with PHNA, CapStar has
reduced its supply base to 530 suppliers and has devel-
oped 16 partners. These initiatives have led to reductions
in incoming inspections, product testing, and performance
audits. CapStar expects to have a supply base of only 1

suppliers and 75 partners by the start of FY 2004.

Key Business
Processes Key Related Key Operational Key Performance

(Responsible IC) Subprocesses Requirements Measures

Figure 6.2-1 Key Business Processes

Technology Acquisition
(IAA, Patients First)

Knowledge Management
(IAA, Patients First)

Supply Chain
Management (COE)

Supplier Partnering
(COE)

Nonclinical Revenue
Activities (FMS)

Community Outreach
(Community Support)

Successful Business
Growth (FMS)

State-of-the-art capabilities
Affordable technologies

Integrated information systems
Proactive data gathering
Pertinent patient and supplier

access
Data reliability
Reliable suppliers
Capable suppliers
Low inventory costs

Limited suppliers
Minimum inspections
Funding for operational and

infrastructure improvements

Admissions by physicians
(insurance vs. self-paying)

Outreach to physicians

Return on assets
Currency of technologies (age

of technology assets)
Funds expended (7.4-10)
IAA budget (7.4-10)
User satisfaction
Accuracy of data

Supplier effectiveness (7.4-8)
Inventory accuracy (7.4-8)
Order fulfillment (7.4-9)
Number of partners
Number of inspections
Investment income per budget

Gifts in dollars (7.2-10)

Physician referral rate (7.2-16,
7.1-21, 7.1-22)

Local usage rate
Community involvement (7.4-13)
Physician recommendation rate

(7.1-21)

Technology Research
Technology Analysis
Contracting

Information Systems
Data Gathering
Systems Integration

Supplier Selection
Supplier Performance

Partner Selection

Investment Income
Charitable Gifts

Physician Relationship
Management

6.2a(6) The PIO monitors business trends in the health
care industry and compares CapStar business process
performance with market leaders. Additionally, the TAP
reviews provide benchmark and best practice information
to the PIO for use in comparative analysis. The PIO uses
these comparisons to present the ELT and SLTs with busi-
ness processes that might benefit from PEC or PIC Team
actions. Resulting improvements are posted on KIS, on
KBs, and in CapSpirations.

6.3 Support Processes

6.3a(1) Key support processes used by CapStar to sup-
port daily operations and the delivery of health care serv-
ices are described in Figure 6.3-1. Responsibility for over-
sight of the performance of support processes is assigned
to the most appropriate IC.

** Note: Due to the limited length of this application, many of these results are not included in Category 7.
These data are available upon request.

Key Support
Processes Key Related Key Operational Key Performance

(Responsible IC) Subprocesses Requirements Measures

Human Resources
(HPC)

Education/Training
(HPC)

Knowledge Information
System (KIS) (IAA)

Facilities Management
(COE)

Billing and Payment
(FMS)

Corporate Compliance
(FMS, COE)

Accuracy

Processing time
Compliance with federal and

state regulations (health,
safety, and environment)

Readiness for productivity/
safety audits

Competence
Timeliness
Compliance with federal and

state regulations
Equity among staff
Resident training and

education
Accurate, available patient

information
Computer reliability
Access to best practice/

benchmark research
Accessibility to staff
Regulatory requirements
Availability to customers and

suppliers as necessary
Safe, clean work environment
Privacy for patients
Environmentally compliant

Accuracy

Timeliness
Training

Compliance assessments

Cycle times
Regulatory compliance
Turnover (7.3-12)
Safety (7.3-7, 7.3-9)
Grievances
Union contract completion

Training per employee (7.3-8)
Regulatory compliance

Effectiveness
Resident board certification rate

Computer up-time
Data validation
Data security
Help Desk cycle time
IT user satisfaction
IT budget support (7.4-10)

Regulatory compliance
Environmental findings
Facilities-related injuries
Compliance with safety standards
Isolation of patients

Cost per case (7.2-8)
Cash flow (7.2-1)
Net revenue (7.2-9)
Safety training

Labor relations
Recruitment
Hiring
Rewards
Incentives
Productivity

Assessments
Retention
Learning opportunities
PEC/PIC training
Resident education

programs

Identification of
hardware/software
needs

Evaluation of options
Medical records
Information library
Data analysis

Security
Maintenance
Renovation
Housekeeping
Patient transport

Service cost capture
Revenue cycle

collections
Ethical compliance
Regulatory/legal

compliance

Figure 6.3-1 Key Support Processes

6.3a(2) Like key business processes, requirements for key
support processes cascade from TAP reviews, strategic
objectives, and action plans. These requirements are
identified through daily interactions among the clinical
and administrative staffs, surveys of internal customers
and key suppliers and partners, and information gained by
PACTs. For example, the COE and FMS ICs worked
together to reduce the cost per case when severe reim-
bursement reductions hit due to the Balanced Budget Act
that lowered Medicare payments. These two ICs closely
monitor this performance measure and have been able to
keep the cost per case below 1997 levels in support of the
strategic objective to achieve an A+ rating. The key met-
rics involved with support processes, including key opera-
tional requirements, are described in Figure 6.3-1.

6.3a(3) The same PEC Process used to design health care
and business processes is used to design support process-
es. Similarly, a system of metrics accompanies each sup-
port process (Figure 6.3-1), and the PIO and the appropri-
ate IC monitor progress.

6.3a(4) The combination of continuous staff interaction
and the ease of obtaining real-time data from KIS ensures
that the day-to-day operations of support processes satisfy
key performance requirements.

6.3a(5) Key performance measures used to monitor the
progress of and control and improve support processes are
listed in Figure 6.3-1. A high level of interaction among
participants of these processes, plus the Colleague
Opinion Survey—a proactive survey system that is used

to systematically assess expectations versus results—pro-
vides CapStar with internal customer feedback necessary
to manage the success of these processes. The Colleague
Opinion Survey includes questions on satisfaction with
support services such as KIS, medical records, and patient
transport.

6.3a(6, 7) Oversight by the PIO ensures that support
processes satisfy performance requirements. This oversight
further minimizes the need for additional inspections,
tests, and process audits. Individual support departments
also are encouraged to reduce auditing and inspection
costs. The PIO monitors cost per patient data through KIS
to identify opportunities for improvement. One report
demonstrated a high rate of reimaging of portable films in
the ICU, especially at Founders. The Radiology
Department created a PIC Team, which reported directly to
the COE IC. Further investigation by this team revealed
the problem to be one of poor radiological technique due
to inconsistent standards. An Improvement Team examined
Excelsion’s methodology, which had a significantly lower
rate of reimaging. The PIC Team adopted clear parameters
for a technique based upon both the patient’s body size and
the type of portable X-ray machine. The team then devel-
oped a standardized imaging approach that resulted in a
dramatic reduction in reimaging at Founders. This
improvement cycle was extended over the next year
throughout CapStar, including an additional cycle of
improvement at Excelsion. Significant improvements
resulted throughout CapStar in both quality of X-rays and
costs associated with obtaining portable ICU X-rays.

7 Organizational Performance Results

7.1 Patient- and Other Customer-Focused Results

7.1a Health Care Service Results

Recognizing that health care service delivery processes
drive outcomes, CapStar has focused on efforts addressing
the CMS 6th Scope initiative. To this end, CapStar has
participated over the last three years in a number of
regional and Medicare collaboratives, including the
Medicare Heart Council Acute Myocardial Infarction
Process of Care Program and Congestive Heart Failure
Program, the Diabetes Association Screening Program,
and the Ohio Immunization Project, and has integrated
their findings into its pathways program. CapStar has shown
steady improvement in all cardiac care, pneumonia, and

stroke management measures (Figure 7.1-1). Founder’s
Women’s Health Center developed a mammogram screen-
ing program in 1998 that has been rolled out to the rest of
CapStar, resulting in mammogram rates exceeding the
90th percentile of the Greater Cincinnati Employers
Coalition Healthcare Scorecard (Figure 7.1-2). In

2000

and 2001, CapStar scored in the top tier for all 6th Scope
measures used in this scorecard.

In addition to the 6th Scope measures, CapStar follows a
number of other outcomes measurements. Figure 7.1-3
demonstrates selected results for functional outcomes for
specialized programs in rehabilitation, sports medicine,
and trauma care. An increased emphasis on pain control,

NOTES: All measures—higher is better.
Benchmarks, as reported in medical literature:
• National = mean of all state averages + 2 SD (~97th percentile level)
• Regional = mean of Ohio, Indiana, and Kentucky averages
AMI = Acute Myocardial Infarction (Beta-blocker therapy when appropriate)
CHF = Congestive Heart Failure (Angiotensin prescribed when appropriate)
LVEF = Left Ventricular Ejection Fraction (a critical measure of cardiac function)

AMI Treatment
• Beta-blocker Rx
• Smoking cessation counseling
CHF Treatment
• Angiotensin Rx
• LVEF measured
Stroke Treatment
• Antiplatelet Rx
• Anticoagulation with atrial fibrillation
Pneumonia
• Timely antibiotics
• Patient screened for flu vaccine

65%
30%

64%
70%

57%
80%

84%
16%

72%
42%

72%
76%

61%
84%

88%
20%

83%
52%

78%
80%

68%
88%

94%
23%

Figure 7.1-1 Representative Treatment Results

C-Section Rate
(lower better until Mammography Rate PAP Smear Rates

15% minimum safe) (higher is better) (higher is better)
1999 2000 2001 1999 2000 2001 1999 2000

2001

CapStar 21% 18% 17% 63% 68% 72% 85% 84% 88%
Greater Cincinnati Employers 18% 18% 19% 53% 53% 53% 78% 81% 82%
Coalition Healthcare
Scorecard (90th percentile)
C-section rate = % of total deliveries
Mammography rate = % of women (aged 40 or older) with biannual mammograms performed at CapStar, who KIS

identifies as having a primary care MD associated with CapStar
PAP screening rate = mean U.S. rate of % of women aged 18 or older with screening within three years

Figure 7.1-2 C-Section, Mammography, and PAP Smear Rates

Benchmarks
Initiative 1999 2000 2001 (National / Regional)

81%/63%
65%/39%

85%/63%
84%/66%

67%/53%
91%/82%

99%/82%
23%/20%

stimulated by the JCAHO focus, has led to several initia-
tives to improve both the recognition and treatment of
pain in Oncology and Trauma Services (Figure 7.1-4).
The number of annual pain service consults increased
from 254 in 1999 to 605 in 2001. Geriatric Services has
made a major effort to reduce falls in the geriatric popula-
tion and to improve the treatment of memory loss in the
elderly with the establishment of a comprehensive
Memory Loss Clinic (Figure 7.1-5). Behavioral Health
Services also has made major improvements in its use of
restraints and seclusion (Figure 7.1-5). Roseleaf has estab-
lished a specialization in orthopedic surgery, specifically
joint replacement, along with rheumatology, which has had
outstanding outcomes in both inpatient and outpatient
management of disease (Figure 7.1-6).

A program of cultural change has been put in place, spear-
headed by the CQO, to increase reporting of patient-related
incidents. To this end, reports of incidents have dramatically
increased over the last three years (Figure 7.1-7). This should
not be interpreted as an increase in the number of actual
events occurring but rather an improvement in the culture
of reporting. CapStar is now analyzing these incident
reports to identify areas of focus to reduce the frequency of
events. A significant increase in the recognition of potential
problems has resulted in changes in ordering, transcription,
dispensing, and administration that, in turn, have resulted in
a decrease in completed adverse drug events. The comput-
erized POES, which will be activated in 2002, should
reduce these events even further. Oncology Services has
also dramatically improved the quality of its clinical serv-
ices as demonstrated by the number of patients included
in experimental protocols for treatment (Figure 7.1-8).

Comparative benchmark performance is presented where
available. However, except for Figure 7.1-1, which makes
use of Medicare data, no local or regional competitor data
are available on the other measures since hospitals are not
required to release them.

7.1b Patient/Customer Results

7.1b(1) Figure 7.1-9 shows overall inpatient satisfaction
scores for CapStar’s four hospitals. The percentile bands
on the right-hand axis permit comparison of CapStar hos-
pital performance to a national group of hospitals provid-
ing similar services as reported by Loyalty Finders, Inc.
Both Excelsion and Founders have improved performance
over the last five years, with satisfaction in the top quar-
tile of comparison hospitals for the last two years.
Excelsion leads the system, with overall inpatient satis-
faction scoring at the 85th percentile for two years. With
new executive leadership at Hergh since 2000, results
show a return to improving performance in 2001.

Listening and learning methods have identified satisfac-
tion with physician care as the second most important
influence on overall satisfaction. Results for three of the
four CapStar hospitals are shown in Figure 7.1-10.
Excelsion is known for the clinical and service quality of
its heart and oncology programs. Figure 7.1-10 shows sat-
isfaction with physician care in these programs consistent-
ly superior for six years, with performance in the past two
years improving to well above the 75th percentile.

The most important influence on overall satisfaction is the
patient’s perception of the quality and caring of the nursing

Stroke Arthroscopy Trauma
(higher is better) (lower is better) (lower is better)

1999 2000 2001 1999 2000 2001 1999 2000 2001
CapStar 55 67 72 17 14 12 4.8 4.5 4.2
Top 25th percentile 64 67 68 15 15 14 4.4 4.2 4.2
of Best (National) Results
Stroke = % of patients who have complete recovery or require minimal assistance
Arthroscopy (Common Sports Medicine Surgical Procedure) = average days to full ambulation without assistance

following arthroscopic surgery
Trauma = average number of months to return to pre-injury occupational status for all patients who suffered major

trauma (Injury Severity Score >15)

Figure 7.1-3 Selected Results of Functional Outcomes—Rehabilitation after Stroke, Arthroscopy, and Trauma

Percent of Patients Whose Pain Was
Self-Characterized as Well Controlled 1999 2000 2001

Oncology (Top 10th Percentile = 79% in 2001) 67% 78% 81%
Trauma (Top 10th Percentile = 85% in 2001) 78% 87% 89%
NOTE: All measures—higher is better.

Figure 7.1-4 Satisfaction with Pain Control—Oncology/Trauma Services Patients

Selected Measures 1999 2000 2001
In-Hospital Falls, Aged 65 or older 0.4 ( N.B.= 0.3) 0.3 ( N.B. = 0.28) 0.28 (N.B. = 0.3)
(Falls/100 Patient Days)
% Patients Referred to Memory Loss Clinic after 17% 38% 75%
Diagnosis of Alzheimer’s Disease
Restraint Use (Events/1000 Discharges) 68 (N.B. = 62) 41 (N.B. = 43) 40 (N.B. = 45)
Seclusion (Events/1000 Discharges) 53 (N.B. = 51) 40 (N.B. = 41) 30 (N.B. = 38)
Top Benchmark = (Top 25th% Percentile)

Sample Results 1999 2000 2001
Return to Unassisted Ambulation Following 42 days 35 days 32 days
Hip Replacement (days) (lower is better) (42 days) (40 days) (38 days)
Rheumatoid Arthritis Patients—% Days Rated 89% 92% 92%
As Well-Functioning (higher is better) (82%) (85%) (85%)

Figure 7.1-6 Orthopedic and Rheumatology—Top 10th Percentile from Eastern U.S. Indicators, Inc. shown in ( )

1999 2000 2001
Incident Incident Incident
Reports/ Potential ADE Reports/ Potential ADE Reports/ Potential ADE

100 ADE/ Events/ 100 ADE/ Events/ 100 ADE/ Events/
Patient 100 100 Patient 100 100 Patient 100

100

Days Admis Admis Days Admis Admis Days Admis Admis

CapStar 15 2 3 52 4 2 110 6

1.5

Expected — 6 2 — 6 2 — 6 2
Incident Reports = All incident reports submitted
Potential ADE = Potential events intercepted by physician, nursing, or pharmacy staff before incident led to complication
ADE event = Actual completed event that led to prolonged hospitalization, patient injury, or death
Expected = As reported in medical literature

Figure 7.1-7 Incident Reports, Adverse Drug Event (ADE) Reports

Number Entered in National or Regional

Treatment Protocol (higher is better)

Total New Cancer Cases Per

Year

u
m

b
e
r

Year
0

500

1000

1500

2000

20012000199919

Figure 7.1-8 Patients Enrolled in Regional or Mid-
America Cancer Treatment Trials

Figure 7.1-5 Geriatrics/Behavioral Health Services
N.B. = National Benchmark Top 25th Percentile. Eastern U.S. Indicators, Inc.

Hergh

Roseleaf Founders

Excelsion

01
3Q
00
1Q
00
3Q

1Q
99
3Q
98
1Q
98
3Q
97
1Q
97
3Q

1Q
96

R
a
w

S
c
o
re

e
rc

e
n
t

50
75
100

P
e
rc

e
n
tile

Better

Figure 7.1-9 Inpatient Satisfaction—Overall

staff. Founders leads the system for satisfaction with nurs-
ing care. Figure 7.1-11 shows patient satisfaction with
nursing care for two key patient segments at Founders—
childbirth patients and geriatric patients. In both cases,
Founders outperforms comparison hospitals, with satisfac-
tion scores above the 75th percentile, and it continues to
improve.

Improvement of CapStar’s ED processes is an ongoing
high priority because the ED is a main portal of entry for
CapStar patients—about 40 percent of admissions at

Excelsion and Founders and 32 percent at Roseleaf and
Hergh come through the ED. Patients admitted through
the ED typically rate their satisfaction lower than patients
admitted on an elective basis or directly from a physician
office. Figure 7.1-12 shows Excelsion performing near or
at the 75th percentile for two years with Founders reach-
ing a similar level in 2001. Performance during the past
year also shows improvement at Roseleaf and Hergh.

Figure 7.1-13 shows improved patient satisfaction at the
CapCare Centers. Significant improvements in all meas-
ures were obtained upon implementation of newly
designed open access systems that enable all patients to
get a same-day appointment. Although valid comparative

80
85
90
95
3Q
01
1Q
01
3Q
00
1Q
00
3Q
99
1Q
99
3Q
98
1Q
98
3Q
97
1Q
97
3Q
96
1Q
96
R
a
w
S
c
o
re

P
e
rc

e
n
t
75
100
50
25
P
e
rc
e
n
tile
Better
Hergh
Roseleaf

Excelsion Oncology

Patients
Excelsion

Figure 7.1-10 Inpatient Satisfaction—Physician Care

80
85
90
95

Founder’s Geriatric Patients

Founder’s Childbirth Patients

3Q
01
1Q
01
3Q
00
1Q
00
3Q
99
1Q
99
3Q
98
1Q
98
3Q
97
1Q
97
3Q
96
1Q
96
R
a
w
S
c
o
re
P
e
rc
e
n
t
75
100
50
25
P
e
rc
e
n
tile
Better

Comparison Hospitals

Figure 7.1-11 Inpatient Satisfaction—Nursing Care

80
85
90
95
3Q
01
1Q
01
3Q
00
1Q
00
3Q
99
1Q
99
3Q
98
1Q
98
3Q
97
1Q
97
3Q
96
1Q
96
R
a
w
S
c
o
re
P
e
rc
e
n
t
75
50
25
P
e
rc
e
n
tile
Hergh
Roseleaf Founders
Excelsion

100
Better

Figure 7.1-12 ED Satisfaction—Overall

50
60

80
90
100

Staff Courtesy

Ease of Access

Time with Physician

Timeliness of Appointment

2001

200019991998

P
e
rc

e
n
t

S
c
o
ri

n
g
V

e
ry

G
o
o
d

o
r

E
x
c
e
ll

e
n
t
Better

Figure 7.1-13 Patient Satisfaction with CapCare Centers

data for outpatient satisfaction are difficult to find, these
satisfaction results place CapCare in the top quartile
compared to hospitals providing similar services. Figure
7.1-14 shows patient satisfaction with marketplace com-
petitors as reported in the Greater Cincinnati Hospital
Profiles. Published by a coalition of businesses and their
health care partners, the hospital “report card” reaches
350,000 area residents with a marketplace comparison
based on data that participating hospitals agree to report.
Founders and Roseleaf are market leaders in patient satis-
faction with childbirth care, while Excelsion is the only
hospital in the market to earn the highest rating for med-
ical care. Roseleaf is also top rated for surgical care, in
particular because of its orthopedic service, which is rec-
ognized throughout the region.

Figure 7.1-15 shows sustained superior performance in
independent physician satisfaction by Excelsion, Founders,
and Roseleaf, which demonstrates the effectiveness of the
Physician Distinction strategies. Under new leadership
since 2000, Hergh shows steady and significant improve-
ment in independent physician satisfaction from third
quarter 2000 through 2001.

7.1b(2) Figure 7.1-16 shows dramatic increases in patient
concerns captured as a result of efforts to surface and
resolve customer concerns, with a steady decrease in the

number of concerns that could not be resolved immediate-
ly at the point of first contact. Figures 7.1-17, 7.1-18, and
7.1-19 show CapStar’s quality image in the minds of com-
munity residents compared with marketplace competitors.
Figure 7.1-17 shows steady progress against RUH,
CapStar’s principal competitor, as the best hospital over-
all. Figure 7.1-18 shows continuing superiority over RUH,
as does Figure 7.1-19 showing market leadership for “best
nurses.” However, in both cases, CapStar’s performance
has experienced slight declines over the past three years.

Figure 7.1-20 demonstrates CapStar’s success in meeting
the needs of the independent physicians and strengthening
their loyalty to the system. In 2001, more than 90 percent
of independent physicians at Excelsion, Founders, and

Figure 7.1-14 Greater Cincinnati Hospital Profiles: A
Consumer Guide—Patient Satisfaction

Teaching Child- Medical Surgical
Hospital Status birth Care Care

Goldenrod A major *** ** **
Goldenrod B minor NA ** **
Excelsion major ** *** **
Founders major *** ** **
Hergh none ** ** NA
Roseleaf minor *** ** ***
RUH major ** ** **
VHA network major NA ** ***

Patient satisfaction with
seven dimensions:
• respect
• care coordination
• information and

education
• pain management
• emotional support
• preparation for

discharge
• involvement of family

and friends

Scores compared with
national norm:
*** Better than
** Same as
* Worse than
Major Large training

programs for
new doctors

Minor Small training
programs for
new doctors

None No teaching

R
a
w
S
c
o
re
P
e
rc
e
n
t
60
70
80
90
100
Roseleaf
Hergh
Founders
Excelsion
3Q
01
1Q
01
3Q
00
1Q
00
3Q
99
1Q
99
3Q
98
1Q
98
3Q
97
1Q
97
Better

Figure 7.1-15 Independent Physician Satisfaction

0
2
4
6
8
10
12
14

Not Resolved Immediately (lower is better)

Total Complaints

200019971996

P
e
rc
e
n
t
o
f
P
a
ti

e
n
ts

National Average

Figure 7.1-16 Patient Complaint and Resolution Rate

NOTE: CNT and Zefram declined to participate.

Roseleaf would recommend their hospital to a colleague
seeking a good place to practice. Hergh physicians rate
their hospital better since 2000. Figures 7.1-21 and 7.1-22
show similarly positive ratings from referring physicians
in their willingness to recommend and likelihood to refer
again (given similar patient requirements).

7.2 Financial and Market Results

7.2a(1) CapStar uses a variety of measures/indicators of
financial performance, based largely on the requirements

to retain a Standard and Poor’s (S&P) “A” rating to
demonstrate current levels and trends of consolidated
financial performance. In addition to using the S&P as a
benchmark, CapStar benchmarks with comparable hospi-
tals/health systems identified as best in class and for
which data are available. CapStar has received an S&P
“A” bond rating. It has maintained this rating in the pres-
ence of a continued decline in basic measures of financial
health seen across the industry. Overall, CapStar demon-
strates strong financial performance as evidenced by its
“healthy” ratio of cash flow/current liabilities, shown in
Figure 7.2-1. Figures 7.2-2 and 7.2-3 indicate that

0
5
10
15
20
25

Zefram

Goldenrod

CNT

RUH
CapStar

200120001999

P
e
rc
e
n
t
Better

Figure 7.1-17 Community Quality Image—Best
Hospital Overall

0
5
10
15
20
25
Zefram
Goldenrod
CNT
RUH
CapStar
200120001999
P
e
rc
e
n
t
Better

Figure 7.1-18 Community Quality Image—Best Doctors

0
5
10
15
20
25
Zefram
Goldenrod
CNT
RUH
CapStar
200120001999
P
e
rc
e
n
t
Better

Figure 7.1-19 Community Quality Image—Best
Nurses

0
10
20
30
40
50
60
70
80
90
100
Hergh
Excelsion
Founders
Roseleaf

2001200019991998

P
e
rc
e
n
t
Better

Figure 7.1-20 Independent Physician Satisfaction—
Would Recommend as Place to Practice

CapStar’s Days Cash on Hand is strong and has exceeded
the S&P target for two years.

Figure 7.2-4 illustrates trends in long-term debt and capi-
talization for CapStar. It has avoided increasing debt in
recent years despite severe pressures on earnings and the
need to preserve cash flow and liquidity. Strong financial
control is shown in Figure 7.2-5, which depicts reduced
days in accounts receivable.

CapStar’s ability to, with agility, recover from the severe
Medicare cutbacks imposed on health care providers and
continued downward pricing pressure from payors is demon-
strated by its operating margin shown in Figures 7.2-6 and
7.2-7. CapStar has recovered through astute cost management
expansion to a stable financial position. In addition, Figure
7.2-8 shows CapStar’s return to controlled budget versus actual
expense in line with revenues, reflected in cost per case.

Figure 7.2-9 shows the revenue trends over four years,
noting the negative impact of the BBA of 1997.

Over five of the past six years, CapStar’s investment per-
formance exceeded the S&P average. A modest portion of
the endowment was invested in a stock fund composed of
high-performing companies. More recently, funds have
been placed in more conservative instruments and have
been shielded from most of the downturn in the invest-
ment market. In 2003, CapStar plans to kick off a major
capital campaign to raise funds for upgrading or replacing
the Excelsion and Hergh facilities. This goal should be
achievable based on the history of increasing gifts to the
CapStar Charitable Trust (Figure 7.2-10).

7.2a(2) Several indicators of volume and market share
show stable to improving trends. Figure 7.2-11 shows that
market share at Excelsion, Founders, and Roseleaf has

0
10
20
30
40
50
60
70
80
90
100

FoundersExcelsion

200019991998
P
e
rc
e
n
t
Better

Figure 7.1-21 Referring Physicians’ Willingness to
Recommend to Colleagues

0
10
20
30
40
50
60
70
80
90
100
FoundersExcelsion
200019991998
P
e
rc
e
n
t
Better

Figure 7.1-22 Referring Physicians’ Likelihood to
Recommend Again to Patients

0
5
10
15
20
25

19.2%

16.4%

13.4%

20.4%

Better

R
a
ti

o
2000
S&P
2001

Compar.

2001
Compar.

2002
CapStar

Projected

2001
CapStar

18.9%

Figure 7.2-1 Cash Flow/Current Liabilities

0
40
80

120

160

200

161 1

173

2000
S&P
2001
Compar.
#1
2001
Compar.
#2
2002
CapStar
Projected
2001
CapStar

D
a
y
s

Better

170

Figure 7.2-2 Days Cash on Hand

increased and that Hergh has reversed earlier declines
with three years of increased market share. Figure 7.2-12
reveals that the number of ED visits has increased in three
of the four hospitals since 1996.

Two key measures presented in Figure 7.2-13 are evidence
of CapStar’s success with the CapCare Centers. The num-
ber of visits to CapCare Centers has grown to almost

20,000 per year. With the increased access by new
patients, the number of hospital admissions for Founders
and Excelsion has increased to almost 900.

In CapStar’s market share areas of emphasis, Excelsion is
the market leader in open heart surgery, with a significant
increase in 2001 (Figure 7.2-14). Roseleaf has successful-
ly implemented its strategy as a regional orthopedic and

0
40
80
120
160
200

150

156 158 153

168 170

D
a
y
s

1996 1997 1998 1999 2000 2001
Year

S&P Target for A+ to A— Rating (161 days)

Better

Figure 7.2-3 Days Cash on Hand, 1996–2001

0
10
20
30
40

200120001999199819971996

Better
P
e
rc
e
n
t

S&P Target for

A+ to A- Rating

Year

36 35
33

35
32 31

Figure 7.2-4 Long-term Debt and Capitalization

30
40
50
60
70
80
90

67.3

74.7
7

1.8

68.6 69.2 68.4

2000
S&P
2000

Actual

2001
Actual
2001

Comp.

#1
2001
Comp.
#2
2002
CapStar
Projected
D
a
y
s
Better

Figure 7.2-5 Days in Accounts Receivable

-3
-2
-1
0
1
2
3
4
5

1.4

-2.14

1.8

2.5

2000
S&P
2001

Comparison

#1
2001
Comparison
#2
2002
CapStar
Projected
Better
P
e
rc
e
n
t

Figure 7.2-6 Operating Margin

-2
-1
0
1
2
3
4
5
6
7

20012000199919981997

Better

5.9*

3.7

-1.2
0.2

1.6P
e
rc

e
n
t

*BBA (Balanced Budget Act)

S&P Target (1.3 percent)

Figure 7.2-7 Operating Margin, 1997–2001

arthritis center, with increased admissions since 1997 and
recent volume in excess of target (Figure 7.2-15). A key
source of tertiary care cases and a measure of the Physician
Distinction strategy as it relates to physicians in rural areas
is the number of referrals from outside the PSA. As shown
in Figure 7.2-16, Excelsion has increased the number of
referred cardiac and oncologic cases since 1999, and the
total number of referred cases for all diseases has increased,
with results in the past two years exceeding aggressive
growth targets.

7.3 Staff and Work System Results

7.3a(1) Figures 7.3-1 through 7.3-5 show results of the
Colleague Opinion Survey for key indicators of colleague
satisfaction that lead to higher performance and retention.
(Positive results reflect “very satisfied” and “mostly satis-

fied” responses. Negative results reflect “mostly dissatis-
fied” and “very dissatisfied” responses.) Data are seg-
mented by applicable OU and reported to the CapStar
HPC IC or to the OU HPC IC for performance review and
action as described in Items 1.1 and 4.1. However, since
no statistically significant differences have been observed
among OU results, only CapStar overall results are pre-
sented in this application. The comparative normal nega-
tive mean is obtained from the Peoplego Institute.

Figure 7.3-1 shows an increase over three years in col-
league satisfaction with CapStar as a place to work.
Dissatisfaction has been consistently less than the aver-
age of the national comparison group of similar organi-
zations. Figures 7.3-2 and 7.3-3 show similar results for

D
o
ll

a
rs

Month/Year

Budget Actual Revenue

700

800

900

5000

5100

5200

300

400

5500

12/

01
12/
00
6/
00
12/
99
6/
99
12/
98
6/
98
12/
97
6/
97

Figure 7.2-8 Cost per Case -Mix Adjusted Discharge

0
20
40
60
80
100
120
12/
01
6/
01
12/
00
6/
00
12/
99
6/
99
12/
98
6/
98
12/
97
6/
97
P
e
rc
e
n
t
o
f

u
d
g
e
t

Higher is Better

Month/Year
BBA

109 106 104 101 97 93
100 104

105 108

Figure 7.2-9 Net Patient Revenue as Percent of Budget

0
1
2
3
4
5
6
7
8
9
10
2002

(predicted)

200120001999199819971996
D
o
ll
a
rs

(
in

M
il

li
o
n
s
)

Year
Better

Figure 7.2-10 Annual Gifts to CapStar Charitable
Trust

0
5
10
15
20
25
30
35
40
45
50
Excelsion
Roseleaf
Founders
Hergh
200120001999199819971996
P
e
rc
e
n
t
Better
Hergh
Roseleaf Founders
Excelsion

Figure 7.2-11 Overall Market Share by OU

dissatisfaction with the work group and type of work.
Particularly important is CapStar’s superior performance
on the positive side, with 70 to 80 percent of colleagues
expressing satisfaction with their work group and type of
work. Figure 7.3-4 shows a three-year record of increasing
satisfaction and decreasing dissatisfaction with colleague
recognition. This result correlates with the increase in col-
leagues receiving Inspiration Awards over the same peri-
od. The percentage of colleagues receiving Inspiration
Awards has increased steadily since 1999 from 8 percent
to 14 percent in 2001. Colleagues are increasingly more
satisfied (and less dissatisfied) with the quality of servic-
es provided for the CapStar workforce, illustrated in

Figure 7.3-5. CapStar recognizes the industry challenge to
recruit and retain top nurses and tracks multiple measures
of its performance with respect to this key colleague seg-
ment. Figure 7.3-6 shows that CapStar nurses are slightly
more satisfied than the overall workforce with the organi-
zation as a place to work, and the dissatisfaction among
nurses is lower than the comparison.

CapStar’s six-week “Way to Wellness” program includes a
personal health risk profile, appropriate preventive care,
and a variety of educational and behavioral supports.
Figure 7.3-7 shows the improvement made in all five
standard health risk factors.

0
5
10
15
20
25
30
35
40
45
50

60
65
70
200120001999199819971996

N
u
m

b
e
r

(i
n
T

h
o
u
s
a
n
d
s
)

Better
Hergh
Roseleaf Founders
Excelsion

Figure 7.2-12 Number of ED Visits

500

600

700
800
900
1000

1100

1200

Excelsion RUH

Goldenrod
200120001999199819971996
N
u
m
b
e
r
o
f

C
a
s
e
s

(

in
T

h
o
u
s
a
n
d
s
)
Better

Figure 7.2-14 Open Heart Surgery Cases: Excelsion
Versus Primary Competitors

8.0

9.5

1.0

12.5

4.0

5.5

17.0

18.5

0.0

200120001999
550

600

650

700

750

800

850

900

950

N
u
m
b
e
r
o
f

C
a
p
C

a
re

C
e
n
te

r
V

is
it
s
(i
n
T
h
o
u
s
a
n
d
s
)
N
u
m

b
e
r o

A
d
m

is
s
io

n
s
to

F
o
u
n
d
e
rs

a
n
d
E

x
c
e
ls

io
n

AdmissionsVisits

Better

Figure 7.2-13 Hospital Admissions, Not Including
Obstetrics, Resulting from Increased
Patient Access

In
p
a
ti

e
n
t
C
a
s
e
s
N
u
m
b
e
r
o
f
A
d
m
is
s
io
n
s
2000

2500

3000

3500

4000

4500

Target Actual

20012000199919981997
Better

Figure 7.2-15 Roseleaf Orthopedic/Rheumatology
Volume

7.3a(2) Figure 7.3-8 shows CapStar’s training investment
per FTE over the past three years. Although CapStar’s
investment does not match other industries, it far exceeds
the health care industry average. This level of investment
is particularly significant in the face of financial pressures
in 1999 and demonstrates the depth of CapStar leaders’
commitment to colleague development and competency.

CapStar’s focus on safety extends to colleagues as well as
patients, as shown in Figure 7.3-9. Needle stick injuries
have decreased steadily over three years, with results con-
sistently lower than the national average. The amount of
workers’ compensation claims has dropped 38 percent
since 1997 to $94,000, compared to the Soranez Institute
amount of $185,000.

P
e
rc
e
n
t

Positive Negative Norm Neg Mean

0
10
20
30
40
50
60
70
80
90
100
200120001999

Better — Negative

Better — Positive

Figure 7.3-1 Colleague Satisfaction with Place to Work

P
e
rc
e
n
t
Positive Negative Norm Neg Mean
0
10
20
30
40
50
60
70
80
90
100
200120001999
Better — Negative
Better — Positive

Figure 7.3-2 Colleague Satisfaction with Work Group

P
e
rc
e
n
t
Positive Negative Norm Neg Mean
0
10
20
30
40
50
60
70
80
90
100
200120001999
Better — Negative
Better — Positive

Figure 7.3-4 Colleague Satisfaction with Recognition

N
u
m
b
e
r
o
f

C
a
s
e
s
R

e
fe

rr
e
d
—

A
ll

D
is

e
a
s
e
s N

u
m
b
e
r o

f C
a
rd

ia
c
&

O
n
c
o
lo

g
y
C

a
s
e
s

400
600
800
1000
1200

1400

1600

1800

2000

2200

2400

CardiacOncology

4000

250

4500

4750

5000

5250

5500

5750

6000

TargetActual

2001200019991998
Better

Figure 7.2-16 Tertiary Care Referrals to Excelsion from
Outside PSA

P
e
rc
e
n
t
Positive Negative Norm Neg Mean
0
10
20
30
40
50
60
70
80
90
100
200120001999
Better — Negative
Better — Positive

Figure 7.3-3 Colleague Satisfaction with Type of Work

Redeployment of inpatient basic laboratory and ancillary
services from central locations is an essential feature of
work system and job redesign to implement PACTs.
Figure 7.3-10 shows that redeployment, with process
changes reducing the number of steps, results in substan-
tial reduction in the time required to perform a complete
blood count, chest X-ray, electrocardiogram, and physical
therapy. Results are from Excelsion in 2000. Excelsion’s
independent physician satisfaction with these procedures
increased after service redeployment to PACTs, as shown
in Figure 7.3-11.

Figure 7.3-12 illustrates that although nurse turnover has
increased dramatically throughout the health care indus-
try, CapStar earns loyalty. CapStar pharmacists are
deployed to the patient care units as essential members of

each PACT. There is a growing national shortage of phar-
macists. Although vacancies in approved pharmacist posi-
tions have increased in the last three years, CapStar’s per-
formance is substantially better than the industry average.

The success of any sound business strategy depends sub-
stantially on leadership continuity. The percentage of
management vacancies filled by internal candidates
increased from under 50 percent in 1997 to a remarkable
79 percent in 2001 as the ELT focused on investing in
colleague development and offering colleagues promo-
tional transfers within the system into other OUs as a way
to strengthen collaboration within CapStar.

P
e
rc
e
n
t
Positive Negative Norm Neg Mean
0
10
20
30
40
50
60
70
80
90
100
200120001999

Better – Negative

Better – Positive

Figure 7.3-6 Nurse Satisfaction with Place to Work

P
e
rc
e
n
t
0
10
20
30
40
50

Smoking

High Cholesterol

High Blood Pressure

Overweight

Low Fitness

20011997

Better

Figure 7.3-7 Health Risk Factors in CapStar
Colleagues

P
e
rc
e
n
t
Positive Negative Norm Neg Mean
0
10
20
30
40
50
60
70
80
90
100
200120001999
Better – Negative
Better – Positive

Figure 7.3-5 Colleague Satisfaction with Quality of
Services

H
o
u
rs

/Y
e
a
r/

F
T

E
CapStar

Hospitals/Health Care

Financial Services

Hotel Services

Government

0
10
20
30
40
50
60
70
80
90
200120001999
Better

Figure 7.3-8 Training Investment per FTE

7.4 Organizational Effectiveness Results

7.4a Operational Results

7.4a(1) Operational performance outcomes achieved for
key design and service delivery processes and business
and support processes are demonstrated in Figures 7.4-1
through 7.4-10.

One effect of the implementation of the PEC and PIC pro-
cesses is the substantial decrease in cycle time necessary
to pilot and deploy a tested process change. Figure 7.4-1
shows, among other things, that the cycle time necessary
to implement a conceptual idea for an improvement
decreased from about ten months in 1997 to three months
in 2001 from idea generation to implementation.

Figure 7.4-2 depicts how patient check-in time has
decreased over the past five years due to standardization

of the check-in process and the implementation of PACTs.
The total time for a PACT to check in an emergency patient
from the time of his or her arrival in the ED to arrival in
an assigned inpatient room decreased from almost 4 hours
to about 45 minutes. As the check-in cycles have improved,
so has the process for patient discharge. Figure 7.4-3
shows the improved satisfaction levels achieved through
the increasing use of a standardized process.

One of the key measures for operational effectiveness is
patient follow-up. CapStar follows up with patients three
to five days after discharge. This practice enables the staff
to obtain feedback affecting medical and administrative
care and to assess various value-related issues. Figure
7.4-4 reports the percentage of discharged patients who
have been contacted in these follow-ups.

As a measure of clinical effectiveness, CapStar tracks the
percentage of patients who return to the hospital with sec-
ondary effects from procedures. Figure 7.4-5 shows
CapStar compared to the national average for similarly
sized hospitals.

N
u
m
b
e
r

p
e
r

1
0
0
B

e
d
s

CapStar

Industry Average

0
10
20
30
40
50
60
70
80
90
100
200120001999
Better

Figure 7.3-9 Needle Stick Injuries

0
10
20
30
40
50
60
70

PTEKGCXRCBC

M
in

u
te
s

Prior to PACT PACT

Better

Figure 7.3-10 Work Time Reduction Resulting from
Implementation of PACT

P
e
rc
e
n
t

V
e
ry

M
o
s
tl

y
S
a
ti

s
fi

e
d
0
10
20
30
40
50
60
70
80
90
100

PACT UnitsTraditional Nursing Units

PTEKGCXRCBC
Better

Figure 7.3-11 Physician Satisfaction with Services

P
e
rc
e
n
t
Industry Average
CapStar
Industry Average
CapStar

Nurse Turnover Pharmacy Vacancies

0
5
10
15
20
25
200120001999
Better

Figure 7.3-12 Nurse Turnover/Pharmacy Vacancies

Figure 7.4-6 reports that, within three years of adopting
the current CSFs, all have achieved “Status Green,” which
means that all CSFs are satisfying current goals. Both
“Red” CSFs existing in 1998 were improved to “Status
Green” by 2001.

Figure 7.4-7 demonstrates CapStar’s commitment to path-
way management success with admitting patients into
CapStar’s clinical pathways.

Figures 7.4-8 through 7.4-10 report outcomes for key
service delivery processes. CapStar has a very active

program for promoting supplier involvement, supplier
partnerships, and linkage between supply chain and opera-
tional effectiveness. Figure 7.4-8 demonstrates CapStar’s
success at increasing supply effectiveness (the right sup-
plies for the procedure), inventory accuracy (an internal
measure for reporting accuracy of inventory reports), and
the amount of supplies being procured from partners (38
percent in 2001).

Order fulfillment is CapStar’s key indicator for overall
supply chain performance. CapStar’s success at fulfilling
orders across the entire network is reported in Figure
7.4-9. Improving supply chain performance for its clients
is an important part of PHNA’s strategic objectives. PHNA

P
e
rc
e
n
t

S
a
ti

s
fa
c
ti
o
n
Year
0
20
40
60
80
100

New Process for Follow-up

Appointments Implemented

Patient Support Partner Included

in Discharge Planning

Discharge Process Standardized

20012000199919981997
Better

Figure 7.4-3 Discharge Process Improvements
P

e
rc
e
n
t
o
f
P
a
ti
e
n
ts

C
o
n
ta

c
te

W
it

h
in

3
–
5
D

a
y
s
P

o
s
t-

D
is

c
h
a
rg

e
Year
Better
0
10
20
30
40
50
60
70
80
90
100
200120001999199819971996
Hergh
Roseleaf Founders
Excelsion
0
2
4
6
8
10
12
14
16
18
20012000199919981997

Idea Generation to Pilot (Months)

Pilot to Full Implementation (Months)

Average # Changes after Full Implementation

# of Projects Completed

M
o
n
th

s
/C

h
a
n
g
e
s
/P

ro
je

c
ts

Better
Better

Figure 7.4-1 New Service Delivery Process

0
50
100
150
200
250

From Decision for Admission to Arrival in Room

Arrival to Decision for Admission

Arrival in ED to Admission to Inpatient Bed

01/100/200/199/299/198/298/197/297/1

M
in
u
te
s

Years/Half

Better

Figure 7.4-2 ED to Inpatient Room Time

Figure 7.4-4 Follow-up Practice Effectiveness

is working with CapStar to develop a benchmark for this
measure. CapStar also is reviewing factors involving
lower-than-expected fill rates, a process measure, to
enhance improved order fulfillment.

Consistent with the IAA CSF, CapStar allocates 4.4 per-
cent of the operating budget for information systems
operations and improvements. As shown in Figure 7.4-10,
CapStar is in the top 13 percent of health care organiza-
tions in terms of financial commitment to information
systems capability.

7.4a(2) Key results that reflect CapStar’s success at
deploying its organizational strategies are the number of
returning (loyal) and referred patients. These results are
shown in Figure 7.4-11.

The results of CapStar’s Baldrige-based self-assessments
have shown substantial progress toward incorporating the

Health Care Criteria for Performance Excellence into
CapStar’s short- and long-term directions. Due to the
length restriction of this application, results from these
self-assessments will be available upon request.

7.4b Public Responsibility and Citizenship
Results

7.4b(1) All CapStar inpatient OUs were surveyed by the
JCAHO in 1999 and compared favorably to the Ohio
average (Figure 7.4-12). All regulatory and legal goals
noted in Figure 1.2-1 have been met since 1998. In addi-
tion, CapStar has received no findings from OSHA, the

0
1
2
3
4
5
6
7
8

“Status Green”

“Status Yellow”

“Status Red”

2001200019991998
N
u
m
b
e
r
Year

100% CSFs “Green”

Better
Better

Figure 7.4-6 CSF Performance

P
e
rc
e
n
t
o
f

R
e
a
d
m

is
s
io
n
s
Year
0.0

0.5

1.0
1.5

2.0

2.5

3.0

National AverageCapStar

200120001999199819971996
Better

Figure 7.4-5 Readmission Rates

0
10
20
30
40
50
60
70
80
90
100
200120001999199819971996
P
e
rc
e
n
t
Year
Better
Hergh
Roseleaf Founders
Excelsion

Figure 7.4-7 Appropriate Patients on Pathways

Year
P
e
rc
e
n
t
Better
0
10
20
30
40
50
60
70
80
90
100

Inventory Accuracy Supplies from Partners

($ based)Supply Effectiveness

200120001999199819971996

Figure 7.4-8 Supply Chain Performance

EPA, or state and regional environmental and safety agen-
cies over the past five years.

7.4b(2) CapStar enjoys a high level of colleague partici-
pation in professional associations and community events.
Figure 7.4-13 summarizes key avenues of participation.
CapStar’s current community health initiatives were listed
in Area 1.2b.

Year
P
e
rc
e
n
t
Better
50
60
70
80
90
100
Hergh
Founders
Roseleaf
Excelsion
200120001999199819971996
Hergh
Roseleaf Founders
Excelsion

Figure 7.4-9 Order Fulfillment

Year
N
u
m
b
e
r
Better
0
500
1000
1500
2000
2500
3000

Patients Referred to CapStar

CapStar Returning Patients

200120001999199819971996

Figure 7.4-11 Returning and Referred Patients

P
e
rc
e
n
t
o
f

O
p
e
ra

ti
n
g
B

u
d
g
e
t
Better
CapStar
0.0
0.5
1.0
1.5
2.0
2.5
3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

0
20
40
60
80
100
P
e
rc

e
n
t o

f H
e
a
lth

C
a
re

O
rg

a
n
iz

a
tio

n
s

Figure 7.4-10 Percent of Budget Devoted to
Information Systems

N
u
m
b
e
r
Year
Better
0
50
100
150
200
250
300

350

400

Professional Society Memberships

Health Community Programs

Presentations

CapStar-Sponsored Events

200120001999199819971996

Figure 7.4-13 Community Involvement

50
60
70
80
90
100

HerghFoundersRoseleafExcelsion

1
9
9
9
J

C
A

H
O

S
c
o
re
s

Better Ohio Average

Figure 7.4-12 Results of 1999 JCAHO Assessment

T0000

Baldrige National Quality Program

Baldrige National Quality Program
National Institute of Standards and Technology
Technology Administration
United States Department of Commerce
Administration Building, Room A600
100 Bureau Drive, Stop 1020
Gaithersburg, MD 20899-1020

The National Institute of Standards and Technology (NIST) is a nonregulatory federal
agency within the Commerce Department’s Technology Administration. NIST’s primary
mission is to develop and promote measurement, standards, and technology to enhance
productivity, facilitate trade, and improve the quality of life. The Baldrige National
Quality Program (BNQP) at NIST is a customer-focused federal change agent that
enhances the competitiveness, quality, and productivity of U.S. organizations for the
benefit of all citizens. BNQP develops and disseminates evaluation criteria and manages
the Malcolm Baldrige National Quality Award. It also provides global leadership in
promoting performance excellence and in the learning and sharing of successful perfor-
mance practices, principles, and strategies.

Call BNQP for

• information on improving the performance of your organization
• information on eligibility requirements for the Baldrige Award
• information on applying for the Baldrige Award
• information on becoming a Baldrige Examiner
• information on the Baldrige Award recipients
• individual copies of the Criteria for Performance Excellence—Business, Education,

and Health Care (no cost)
• information on BNQP educational materials

Telephone: (301) 975-2036; Fax: (301) 948-3716; E-mail: nqp@nist.gov
Web address: www.quality.nist.gov

American Society for Quality
600 North Plankinton Avenue
P.O. Box 3005
Milwaukee, WI 53201-3005

The American Society for Quality (ASQ) advances individual and organizational
performance excellence worldwide by providing opportunities for learning, quality
improvement, and knowledge exchange. ASQ administers the Malcolm Baldrige National
Quality Award under contract to NIST.

Call ASQ to order

• bulk copies of the Criteria
• case studies
• Award recipients’ videos

Telephone: (800) 248-1946; Fax: (414) 272-1734; E-mail: asq@asq.org
Web address: www.asq.org

Design: RCW Communication Design Inc.

ORGANIZATIONAL ASSESSMENT WORKSHEET

Organizational Profile

This category is a snapshot of the organization, the key influences that affect how it operates, and the key challenges that it faces.

– Briefly describe the organization, including its services; its size; its geographic community; its key patient or customer groups; the number of patients it services; and its current facilities, equipment, and technology.

– Briefly describe the organization’s key challenges

Leadership

This category examines how the organizational leaders address values, directions, and performance expectations as well as how focused they are on customers, stakeholders, empowerment, innovation, and learning. This category also examines how the organization addresses its responsibilities to the public and how it supports the community.

– Based on the above indicators, describe one to three key strengths of the organization’s leadership.

– Based on the above indicators, describe one to three areas in which the organization’s leadership can improve.

Strategic Planning

This category examines how the organization develops strategic objectives and action plans and how progress toward the chosen strategic objectives is measured.

– Based on the above indicators, describe one to three key strengths of the organization’s strategic planning.

– Based on the above indicators, describe one to three areas of the organization’s strategic planning that can be improved.

Focus on Patients, Other customers, and Markets

This category examines how the organization determines requirements, expectations, and preferences of patients, other customers, and markets. It also examines how the organization builds relationships with patients and other customers and determines the key factors that lead to their acquisition, satisfaction, loyalty, and retention and to healthcare service expansion.

– Based on the above indicators, describe one to three key strengths in how the organization focuses on patients, other customers, and markets.

– Based on the above indicators, describe one to three opportunities that the organization can take to improve how it focuses on patients, customers, and markets.

Measurement, analysis, and Knowledge Management

This category examines how the organization selects, gathers, analyzes, manages, and improves its data, information, and knowledge assets.

– Based on the above indicators, describe one to three key strengths of the organization’s measurement, analysis, and knowledge management approaches.

– Based on the above indicators, describe one to three opportunities that the organization can take to improve its measurement, analysis, and knowledge management approaches.

Staff Focus

This category examines how the organization’s work systems and staff learning and motivation enable all staff to develop and utilize their full potential in alignment with the organization’s overall objectives and action plans. It also examines the organization’s efforts to build and maintain a work environment and a staff support climate conducive to performance excellence and to personal and organizational growth.

– Based on the above indicators, describe one to three key strengths in how the organization demonstrates staff focus.

– Based on the above indicators, describe one to three opportunities that the organization can take to improve its staff focus.

Process Management

This category examines the key aspects of the organization’s process management, including key healthcare, business, and other support processes for creating value for patients, other customers, and the organization. This category encompasses all key processes and all departments and work units.

– Based on the above indicators, describe one to three key strengths of the organization’s process management.

– Based on the above indicators, describe one to three opportunities that the organization can take to improve its process management.

Organizational Performance Results

This category examines the organization’s performance and improvement in key areas: healthcare delivery and outcomes, patient and other customer satisfaction, healthcare services, financial and marketplace performance, staff and work system results, operational performance, and governance and social responsibility. This area also examines performance levels relative to those of competitors and other organizations providing similar healthcare services.

– Describe one to three key areas in which the organization demonstrates strong performance, and describe the nature of the data that document these performance areas.

– Describe one to three areas in which the organization can improve performance and why you selected these performance areas.

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