Is your integration strategy more focused on avoiding penalties or are you focused more on embracing full collaboration? It's a question Paul Keckley, PhD, executive director of the Deloitte Center for Health Solutions, asks CEOs all the time.
You may not have ever heard the question phrased quite like this, and you may not think you know the answer yet. That's OK, but as the senior leader in charge of making healthcare work, (that is, operate with a margin), you'll probably know where you stand on that question by the time you finish reading this column.
"These two strategies are complementary, but very different," Keckley says.
You have no choice about integrating to avoid penalties—that is, reductions in revenues that will come from failing to avoid readmissions for the same malady within 30 days, for example, or from reimbursement penalties that will occur if you experience so-called "sentinel events," but the scope of your organization will be very different from those who fully embrace collaboration.
Neither answer is necessarily "correct" for everyone, but you have to be the decision maker on what's correct for your organization. There is a right or wrong answer there. Trouble is, given the unsettled state of healthcare right now, you may not know whether you've answered correctly according to your organization's circumstances until it's too late to change course.
"If it's just for penalties, you make more prominent the role of intensivists and discharge planners, and you're much more conscious of the frail elderly and managing them in an acute setting, simply to avoid being penalized for avoidable complications or readmissions or suboptimal functional status (in the case of implants)," says Keckley. "That level of coordinated care represents table stakes."
"If it's just for penalties, you make more prominent the role of intensivists and discharge planners, and you're much more conscious of the frail elderly and managing them in an acute setting, simply to avoid being penalized for avoidable complications or readmissions or suboptimal functional status (in the case of implants)," says Keckley. "That level of coordinated care represents table stakes."
In addition to those table stakes, you may believe as a CEO that in your market a number of employers and health plans are also interested in two- to three-year contracts with a clinically integrated organization to manage a population on a capitated basis with performance incentives.
If so, you'll probably still rely on some of the same things you'll need to comply with the basic rules of the new game, but truly innovative integration requires more primary care, more mid-level practitioners, and more strategic relationships.
"Both [strategies] operate from the same chassis, but when we talk to the hospitals, they don't understand the difference in the two, saying, in effect, the first strategy is 'just compliance,'" Keckley says.
That could be as far as you want to go, and that could be the right answer for your organization. But if you step back from that line of thinking, both approaches are really addressing the same fundamental issues of how to best organize healthcare services across sites and professional groupings.
The only difference is that in the first scenario, any re-engineering of processes, relationships, and ownership structures comes from the position of avoiding giving up revenue. In the second, you're at risk for some additional income you might receive, or in order to do the deal, you might have to accept a lower base pay to participate.
"Both are tied to financial outcomes. Both are transparent. Both require interaction with payers. And both are multidisciplinary," Keckley says.
He sees a leadership attitude almost as though innovation into an ACO-type structure by definition means capitation with CMS, Aetna, or Humana or Blue Cross, for example. "It could mean that or it could mean capitation directly with Georgia Power or Wal-Mart," Keckley says. "That requires a different and broader set of clinical services."
It also requires guts and a determination to innovate.
What we're seeing, despite all the complexity surrounding re-engineering a calcified, too-expensive, and needlessly unsafe healthcare system, is an obvious race to the lower-cost operating platform. That means you can't start from the assumption that if your costs are in check, you can negotiate harder.
What may be required, if your organization is to lead an accountable care organization (in the general sense) is pretty sophisticated coordinated care management expertise. This is not something hospitals have traditionally done very well.
That's why we're seeing so many new partnerships with disease management firms, academic medical centers sharing best practices, and any other type of collaborative partnership between the strangest of bedfellows.
These folks are not shy about blowing up their operating model and trying new things. Risk is inherent in such decisions. You're halfway there if you presume that in the future, the site of care is less important than making sure that care has the best chance of improving the patient's outcome.
Your attitude is important when deciding your approach to integration and care management and new contractual relationships with payers and other healthcare providers. The key question to answer, according to Keckley, is how ambitious should you be in putting the pieces together to integrate clinically. The answer hinges on how you view the threat or opportunity from taking on risk for outcomes.
As CEO, only you can answer that question. The only wrong answer is "I don't know."
Philip Betbeze is the senior leadership editor at HealthLeaders.