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Five Strategies that Prove Healthcare is Still a Growth Industry

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Political rhetoric surrounding how much healthcare costs, how much waste exists in the system, and how to cut reimbursement has dominated headlines for the past year, ever since President Obama made healthcare reform a prime focus of his presidential term. Regardless of how it's eventually done, the truth is that reimbursements are going to ratchet down and shrink—or at best, growth will slow dramatically.

But smart leaders know the future of healthcare reimbursement isn't a zero-sum game, and you don't have to resign yourself or your organization to tepid growth. Adaptable and innovative organizations will still reap rewards under whatever healthcare reforms come to pass. Here, the editors of HealthLeaders offer a review of growth opportunities that will increase revenue, decrease costs, or enhance services in the areas of leadership, finance, physicians, technology, health plans, quality, and outcomes.

1. Filling the gaps in continuity of care
Smart leaders aren't waiting for the government to spell out what it's going to do; they are moving ahead with strategies and tactics that will work regardless of Washington's intervention. If they do wait, they fear (rightly), that they'll be left behind.

"We know two things and that is enough," says Frank Perez, CEO of Kettering Health Network, with five hospitals in its Dayton, OH, marketplace. "In the future, we'll be looking at higher transparency and lower reimbursement."

Perez and his team have been experimenting with ways to stay ahead of the pack for years, and their achievements have come from developing a culture that is entrepreneurial in both quality and revenue, and focuses on filling the gaps in continuity of care.

One of the key successes for Kettering is development of ambulatory care centers for independent and system-employed physicians.

"We've broken out of our main campuses into mini-campuses that contain ambulatory facilities and partnered with physicians in those. We're able to bring their patients a much higher level of integrated outpatient services [such as rehab or imaging, for example] that are very difficult to provide for physicians in small practices of less than five."

Physicians in those centers have access to Kettering's financial and electronic medical record systems, increasing the likelihood that the patients will receive better and non-duplicative care, and its hospitals' quality metrics mean they'll have no qualms about sending their patients there.

"Our length of stay is 20% shorter than the competition, but readmissions and mortality are also lower than the norm at all of our hospitals," Perez says. "That's the beauty of this."

Kettering's hub-and-spoke system has proven itself through entrepreneurship of physicians encouraged by service line managers and the executive team. "For us, the key is to look for opportunities in which we engage our medical staffs as partners. They're the ones coming to us with ideas."

The ideas have been largely successful at filling needs that administrators might not have known existed, except that physicians see the hospital as a collaborative capital partner. For example, Kettering has developed a hand surgery center in partnership with physicians who saw a need because the nearest other place for such procedures was far away in Indianapolis.

"They were coowners of a freestanding surgery center, but this opportunity was so attractive that they sold their ownership in that and came to us to develop the specialized hand center," Perez says. Kettering's neuro rehab and balance center, meant to provide therapy to patients who have suffered strokes or other brain injuries, is another example of that collaboration. Further, Kettering is in the process of developing a pelvic center, intended mainly for women suffering from urinary incontinence.

"When they bring these ideas, we don't just give them a blank check, but they are indentifying the champions that can make that happen," Perez says. Instead, physicians write business cases with service line leaders, which are then reviewed and tweaked.

"We have to rank and stack and measure these to make sure it's not a wacky idea," says Perez, "but in all of these cases, no one else was addressing these health issues."

Philip Betbeze

2. Extracting value from clinical benchmarking
Benchmarking physicians isn't new. Most hospitals and practices already track a handful of clinical outcomes and compare them with both internal and external benchmarks. But the industry as a whole has so far only scratched the surface of benchmark-driven cost and quality improvements.

Dean Health System, which has 60 healthcare facilities in southern and central Wisconsin, recently began studying every clinical utilization measure that it could quantify with the goal of rooting out waste in clinical processes. Leaders already had success cutting costs in administrative and operational processes with Lean-like process improvements, and they wanted to take a similar systematic approach to clinical expenditures, says Craig E. Samitt, MD, MBA, Dean's president and CEO.

Physicians were benchmarked on any clinical indicator for which an evidence-based guideline or external comparison was available: admission rates for specific conditions, frequency of surgical intervention, length of stay for specific procedures, appropriateness of inpatient versus outpatient treatment, indications for imaging and lab testing, generic versus brand drug prescription, and so on.

On the prescription benchmark alone, physicians discovered significant areas for savings. "When we looked at the analysis, for every 1% of prescriptions that we could prescribe 90 days versus 30, we saved $100,000 in dispensing costs. We've improved patient service and reduced clinical utilization costs all at the same time," says Samitt.

Altogether, Dean saved about $9 million in 2009, simply by discovering clinical inefficiencies that most providers weren't even aware of. Although Samitt sees a shift toward performance-based payment in the future, physicians at Dean currently work predominately on a productivity-based compensation formula and made the changes without financial incentives. In fact, data alone is often a major driver of physician utilization changes, he says.

Although clinical data is often used to drive quality improvement, cost and quality are not separate problems, says Eula McKinney, director of orthopedics, spine, and general surgery at the University of California-San Francisco Medical Center. "Oftentimes, we have to redefine quality to get at a true definition, which includes cost effectiveness and value," she says.

Clinical overutilization is frequently blamed on defensive medicine, physician profit motives, or misaligned reimbursement incentives. And while those may all be factors, often physicians simply don't know about inefficiencies in their own practice methods because they don't have information for comparison.

Finding the right information remains a big challenge. Comparisons are most relevant when they are with similarly structured organizations. Moving toward more widespread adoption of electronic health records is a key step in getting more robust data and a clearer picture of what physicians should aim for, Samitt says.

Improving the value of healthcare is a goal of healthcare reform efforts. But Samitt believes providers can already make some of these changes without waiting for a top-down change.

"We're bending the cost curve," says Samitt. "Costs are still rising, but we're turning the curve so it's not rising at the same pace, mostly by reducing the waste. Data alone can bend the curve."

Elyas Bakhtiari

3. Transformational power of payer-provider relations

Payers and providers are generally not on friendly terms. In fact, they have spent the past couple of decades sniping at one another.

Emad Rizk, MD, president of San Francisco-based McKesson Health Solutions, understands the decades of mistrust on both sides, but he also suggests that better payer-provider relations could transform healthcare. In this age of declining employer-based members and greater governmental scrutiny, growth opportunities for health insurers seem minuscule. But one area that experts point to is establishing data- and information-sharing technology solutions that would benefit both payers and providers.

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