Does Innovation Mean Cannibalization?
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This article appears in the August 2012 issue of HealthLeaders magazine.
In March, Minneapolis-based Fairview Health president and CEO Mark Eustis told an intriguing story to an overflow crowd at the American College of Healthcare Executives annual meeting. He referenced meetings, dating to 2008, with commercial payers that laid the foundation for a future of value-based reimbursement, under which his health system and payers had negotiated contracts that would penalize the system financially for substandard care but also would reward it for exceeding a set of metrics based on quality and patient satisfaction, among other patient care targets.
"We got tired of defending a broken healthcare system," he said, recalling those 2008 meetings during his ACHE session titled Soft Skills That Yield Hard Results: Leadership Lessons From the Reform Trenches. "We were not taking accountability for the work we were providing. If we don't want others to redefine how we provide care, we need to do it ourselves."
It was an admirable position of leadership at an early juncture in the healthcare reform movement, and it resulted in deals with local insurers that reward demonstrated increases in value in exchange for forgoing the usually acrimonious annual fee-for-service negotiations.
"We're still paid on fee-for-service, but we're trading the annual increase in fee-for-service we used to get in favor of changing care and being rewarded," he said. In short, Fairview was cannibalizing current business for the sake of improving the organization's long-term prospects, a tactic common in many industries but foreign to much of healthcare.
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