In response to the uncertain, yet inevitable, changes that are coming thanks to healthcare reform, Michigan-based CHE Trinity Health has made some modifications to its conventional business model.
As providers brace themselves for the impact of healthcare reform on reimbursements, finance leaders are trying to make sense of new government payment models and the chaos that is surrounding the rollout of Medicaid expansion programs and the health insurance exchanges.
Hospital executives know what they are up against. In the report 2013 HealthLeaders Media Industry Survey: Strategic Imperatives for an Evolving Industry, reduced reimbursements and healthcare reform were cited as threats by 92% and 40% of respondents, respectively.
To keep pace with the unpredictable nature of healthcare reform implementation, organizations need to be "nimble," says Benjamin Carter, executive vice president, finance at Livonia, MI-based CHE Trinity Health, an 82-hospital system that spans 21 states.
"We are seeing ambiguity, slow starts, and delays related to the transition right now, particularly related to health insurance exchange implementation and which states will—and won't—expand. In the meantime, reduced Medicare reimbursements now are the cause of organizational stress," Carter said.
CHE Trinity Health is keeping a watchful eye on the evolving healthcare reform landscape in order to be prepared to make changes to its business plans when necessary.
"We are very carefully watching the development of the HIX and Medicaid expansion in each market, implementing strategic responses accordingly. We do a whole lot of monitoring and modeling to see what each specific market's situation means to us. You have to continue to adjust," he says.
Jenny Barnett, CHE Trinity Health's executive vice president, finance, interim chief financial officer, and treasurer, says the implementation of healthcare reform is not helped by the fact that many of the changes and delays that are occurring are politically driven.
"We operate in 21 states, each different politically and with different positions on health insurance exchanges and on Medicaid expansion. It's very dynamic, and every day is a new day, whether it's a delay or another development. It is difficult to predict. Planning is very difficult these days," Barnett says.
"We are also struggling with predicting what the healthcare model really is going to look like—and I don't think we are alone. All providers are wondering what the new model is going to be and how quickly they will be able to adapt. We also have to consider how we will prepare for more bundled payments and more capitation," she adds.
Carter agrees that the political nature of healthcare reform is adding to the challenges provider organizations are facing and says he doesn't expect that to change any time soon.
"Things change day-to-day, and we have to watch for these changes," he says. "They each have a different impact in terms of what it means to us."
In response to the uncertain—and yet inevitable—changes that are coming their way thanks to healthcare reform, CHE Trinity Health has made some modifications to its conventional business model, Barnett says.
"For the first time, we are employing actuaries, which is different than the traditional way of thinking in healthcare," she says. "We have to model and predict what the future holds so we can determine how it will affect us, so we can plan and adapt to implement the best response."
In addition to the use of actuaries to analyze financial risk, CHE Trinity Health is also considering passing some of the risk created by new payment models on to its physicians.
"We are also exploring clinically integrated models where the physicians are tied to the outcomes, and they share some of that risk," Barnett says. "Historically, we have been focused on treating patients after they get sick, but now we are focused on trying to prevent them from getting sick. Payments are based on quality metrics, reimbursements are changing, and we have to change our model and focus on population health management."
Although guiding the health system through these substantial financial changes is no easy task, Carter knows he and his colleagues don't have much choice because the industry is evolving rapidly.
"We are positioning ourselves well in an ever-changing environment. If you keep looking out through the periscope outward, it allows you to begin navigating the rough waters," Carter says.