Hospital and health system leaders are moving carefully toward being accountable for the health not only of individual patients, but of populations. How nimbly they move, and how astutely they make strategic decisions will land them in either the winners' column—or the losers'.
Healthcare is being disrupted from all angles. And disruption, in the business sense, means there will be winners and losers. Standing still will put you squarely in the latter category. But even dealing with disruption aggressively could land you there, and more quickly, if you make the wrong strategic decisions.
Uncertainty, and yes, even fear is what I hear when hospital and health system CEOs describe the quandary. They've got one foot in the boat and one foot on the dock as they move toward being accountable for the health not only of individual patients, but of populations.
Usually, they're saying that as they're describing the 180-degree turn they're having to make from fee-for-service to value-based care. But the metaphor could just as easily stand in for discerning proper long-term strategy decisions.
This month's HealthLeaders magazine cover story deals with three health systems that are seeking that strategic sweet spot. It's difficult to do when you're considering years-long investments in technology or acquisition and integration of pieces of the healthcare system that hospitals and health systems have never had before.
Whether you decide to own or contract with post-acute providers or physician practices, their operational and financial performance is inextricably linked with your own, for better or worse. After doing this story, I'm convinced that no one knows whether they have the right answers. But I do know that eventually, someone will have them. The huge variety of potential linkages to achieving population health accountability is being tested right now.
For the cover story, I used extensive conversations with three leaders of some of the most innovative health systems in the country about how they're hedging their bets on remaking how their systems do business. They're learning to live with the uncertainty, but they're far from paralyzed by it.
Though the strategic urgency doesn't end with figuring out your primary care strategy, much of preparing for a very different operating environment starts there, because that's what's being disrupted first, says Jesus Garza, interim CEO of Seton Healthcare Family in Austin, TX.
"The urgent care centers and the clinics inside Wal-Marts are less an issue for us and more for primary care physicians," he says.
But a leader has to look past the immediate effects of commoditizing much of the primary care space.
"We have to be mindful of the referral network because they have an established ecosystem, and that disruption begins to disrupt referral patterns," he says.
In that way, primary care can be seen as a precursor to further disruption, and Garza and his team are doing their best to prepare for the next dominoes that will be affected.
"If your primary care network refers to your specialty network, who then refers to the hospitals, and you change that dynamic, I don't know necessarily what the implications could be, but there will be impact," he says.
But Garza isn't waiting for a consultant study to tell him that those effects could potentially be dire for systems that ignore their referring physicians' pain.
"Part of our approach is to see if we can do an alliance with those primary care docs," he says. "The first thing you have to think through is the cultural. Many are 2–4 person practices, while we're a large organization that works in several counties."
Seton, part of nonprofit healthcare giant Ascension Health, is already well-situated for integrating care, but like any hospital-centric organization, one of its biggest risks is disruption to its primary care network. One of the only components it doesn't have is a full service commercial health plan, but it's working out some of the kinks through its Medicaid HMO risk product.
"We are really in the process of becoming a healthcare system," he says. "We want to deemphasize the hospital system. The future is how you coordinate with partners, so that care gets delivered to the right place at the right time. We want to move away from episodic [and toward] more managed care."
Many systems think they are moving in that direction by employing a large portion of their medical staffs, but Seton is partially prevented from doing that outright because Texas is one of a few states that prevents hospitals from directly employing physicians through its corporate practice of medicine law—at least according to many interpretations of it.
Many find those laws to be outdated, and there are differing opinions on whether the law prevents hospitals and health systems from legally employing physicians, but for now, the law isn't keeping Seton from the strategic imperatives its leadership thinks are most important.
"That doesn't mean Seton won't discuss and acquire physician practices if we need to, but that's not where we are today," says Garza.
But primary care is still critical, and care is going to have to be coordinated in a very different way—that is, it will have to actually be coordinated.
"Your primary care home would be the coordinator for all that care," says Garza. "That's why we entered into the Pioneer ACO so we could begin to learn about that coordination of care. Under that legal scheme, you can do shared savings and a bunch of other products in the structure of the ACO."
The Pioneer ACO, he envisions, could be the vehicle to do that connection without ownership.
"That's the tuition we wanted to pay," he says.
Further, Seton is developing its community care collaborative network of more than 500 physicians, where it takes risk. As well, its owned community care clinics and possible contractual relationships with federally qualified health centers should be fruitful in getting into population health management.
"We're also doing this through the health plan, a Medicaid HMO risk product, and our own associates, some 22,000 of whom are part of the health plan, so all of those are elements."
Of course, Seton's is only one approach. Three others are profiled in the cover story, but yours will be unique—as long as you develop and execute it.
One thing is clear: Now is no time for standing still.
Philip Betbeze is the senior leadership editor at HealthLeaders.