Healthcare Reform Mythbusting

Hearing constant chatter about healthcare reform as I do on this job, you would think any hospital or health system CEO who isn't busily making job offers to all his physicians or feverishly putting together the pieces of her institution's accountable care organization structure is also not too focused on keeping his or her job for much longer.

But that's not necessarily so. While indeed those two strategic moves are very popular and might ultimately prove essential to many hospitals or health systems, they're certainly not any kind of panacea—and they may not be right for everyone—even in the long term.

Ultimately, your institution will be judged on your ability to add value to healthcare delivery and improve health, which is why it's no surprise that in our just-released (and free) 2012 HealthLeaders Media Industry Survey, care coordination and quality of care is the single biggest strategic challenge for 30% of organizations.

(Incidentally, respondents were only allowed to pick one of 10 possible answers so this choice by 30% of respondents represents a huge amount).

For perspective, improving patient experience and patient flow was the top priority for only 17%, the next most common choice. These findings, however, arrayed against others in the report, don't suggest that there's a universal prescription for achieving care coordination and improving quality of care.

In fact, the dominant idea that physician employment and the move to an ACO is essential to long-term survival may yet be proved a myth—at least for some organizations.

Mina Ubbing, chief executive officer of 222-bed Fairfield Medical Center outside Columbus, OH (in Lancaster, to be specific), is doing neither of these things—at least not in the strictest sense. Yet the 25-year veteran of the health system and 11-year CEO isn't standing still on business strategy either. So let's attack these two possible myths using Ubbing's logic.

1. You don't have to employ all (or even most) of your physicians
"By definition our hospital is a tweener," Ubbing says. "We're a voice in the healthcare industry that's sometimes missed. We're not rural, but we're also not in the same box as the major metros."

Fairfield, she says, only employs about 10% of the physicians with privileges at the hospital. And she's fine if it stays at about that level. She's also fine if it starts to creep up, but that will be dictated by market conditions, not by a free-for-all of recruiting inducements and salary guarantees that often come with physician employment.

"Everyone around us has their physicians employed," she says. "We're fine the way we are."

She concedes that many new graduates from medical school and residency programs are the ones who are currently seeking employment, but for now, the many joint ventures and other agreements she's signed over the years with physicians are doing just fine, she insists. 

"We are not seeking to buy practices. Instead, we're doing a lot of work through co-management agreements to align with our staff, and that's going very well." With the uncertainty surrounding healthcare reform and the emphasis on work/life balance from new grads, however, she's open to employing them. The key there is in being selective.

2. You don't have to develop an ACO
Ubbing says Fairfield is operating under the philosophy that if it can manage and coordinate care for its own employees and bring down costs, there's not necessarily a driving need to focus so much on creating, or especially owning, the ACO structure.

Having achieved demonstrable success with its own employees over three years, Fairfield is beginning to market its own internal health plan model to other self-insurers in the county.

Ubbing  is careful to take a measured approach to the idea, and to stay nimble enough to switch gears if that plan fails to yield the expected results. For that reason, she says Fairfield won't bear risk under such deals.

"That's the kind of model, working with our physicians, that we're offering to other employers," she says. "I'm hopeful that is the right decision. We're not the size to do an ACO."

She's hoping other employers will see the value created when certain expectations for health are placed on employees, and that tiered premiums based on health risk factors will encourage patient compliance.

"What it will take on our part is to price the model and teach them how to do it." The program starts with a health screening.

"We have done it for two years officially following one year for practice," she says. "It's voluntary, but if you don't participate, you will pay a higher premium."  Lowest premiums, naturally, go to employees who pass all screens.

"Beyond that your premium is increased," says Ubbing, and all have the opportunity to appeal. "You have to lead from the top," she says, in selling the idea to employers in the community. "This starts from inside your hospital."

Creating an ACO, she says, would mean much more capital risk. Developing an ACO "depends on the breadth of the organization. We do not own a home care, hospice, or a nursing home. Consequently, the care coordination in our market has to be done with other entities."

But Fairfield has good partners, she says. The federally qualified health center for the area is on the hospital campus, and it does own a palliative care unit.

"We all realize that in healthcare reform, an unfunded mandate is the idea that we implement community case management. The penalties for not doing it are extreme."

She recognizes the hospital's leadership role, but bristles at what she calls an "unfunded mandate" from the federal government.

"We have to have a quarterback, which has to happen sooner rather than later," she says. "To do that we have to measure the quality of care our partners are providing, and we may have to narrow the field. The federal government expects the hospital to take the lead but it's an unfunded mandate."