Healthcare Leaders Seek Strategic Sweet Spot
That means better care coordination of such patients can pay off more substantially, and, to Murphy's thinking, means the idea of providing clinical oversight and team-based care for such high-cost populations is a great opportunity for hospitals and health systems where urgent care clinics can't and don't want to compete.
Many hospitals' strategies surrounding primary care involve acquiring practices and employing physicians with an idea of introducing such team-based care strategies. But even with the opportunities such partnerships can represent, the physician practice acquisition boom has detractors who suggest it's not a strategy to pursue in hopes of downstream revenue, says Ron Wince, president of Guidon Performance Solutions, the Mesa, Ariz.–based consulting unit of TeleTech, an Englewood, Colo.–based business process outsourcing company.
"I see the primary care acquisition binge as a shortsighted grab for referrals," he says, referencing the rules of the fee-for-service world. "I don't know of many organizations that are not doing it, and moving fairly quickly, but there's a fairly decent amount of cannibalization on the primary care side. The relevance of the primary care referral network will be less and less, and people will self-refer to what's most convenient."
So if you can't compete on price (low-cost storefronts) and you can't compete on volume (high-dollar inpatient procedures), then where can you compete?
Wince says the answer lies in connectivity and what you do with it: "The health system of the future won't be a building or group of buildings, but it will be a cloud."
Wince uses the term to refer to the similarity he sees with cloud-based computing, but he could just as easily be talking about team-based care.
Changing definition of primary care
So how does a leader create the "cloud" that keeps patients and future patients under the organization's management umbrella? Like most successful ventures, it involves a team of people with varied talents working toward the same goal: management of populations.
"The model of the future is much more team-based with interdisciplinary roles," says Deloitte's Keckley. It's a very different operating model, which includes prophylactic dentistry, mental health, nutrition, and vision care as part of a comprehensive view of primary care, he says. Hospitals and health systems can't and shouldn't want to own it all.
"It's a much bigger set of services than most primary care docs are comfortable with, so you'll see entrepreneurs enter the community and become the mainstream," he says.
That suggests partnerships with such entrepreneurial groups (including but not limited to storefront clinics) can be effective. Hospitals and health systems should go about their primary care strategy with forethought but instead, they're often responding to market opportunity.
"That's nonstrategic and reactionary," Keckley says. "Only in communities where insurance companies or a large employer have forced health systems to be strategic on primary care is there evidence they've built out a strategy."
Instead, most CEOs are spending time and effort on opportunities to reduce costs substantially and quickly, he says. Primary care may come into the discussion as a lower priority, which leads Keckley to believe that hospital and health system leaders are misjudging the strategic threats they face as healthcare transforms.
Traditional practices noncompetitive?
Partnering with big national chains is not the answer, at least not by itself. While a partnership with retail clinics may broaden your reach, and it's better than pretending a threat doesn't exist, hospitals can get caught in the crossfire between the economics of such clinics and those of a traditional practitioner, Keckley says.
That's because the profitability of the storefront clinic is not dependent on the visit itself. Though retail clinics will see fewer and less-complex patients generally than the physician office, the cost structure is substantially lower than that of a physician office–based clinic. For instance, retail clinics treat people at half the cost of the doctor's office, but average only 1.5 full-time equivalents compared to the average practice, with 3.5 FTEs, Keckley says.
- CMS Sets 2014 Pay Rates for Hospital Outpatient and Physician Services
- New G-Codes to Pay Doctors for Broad Array of Non-Face-to-Face Care
- FDA hopes hospitals will switch to newly regulated pharmacies
- States Rejecting Medicaid Expansion Forgo Billions in Federal Funds
- Douglas Hawthorne—A Chance to Do Something Big
- Why You Should Involve Patients in Nursing Handoffs
- Not-for-Profit Hospitals Find Opportunity Amid Uncertainty
- The 5 Biggest Healthcare Finance Trouble Spots
- Substance Abuse Resurfaces Among Anesthesiologists in Training
- 'Country Doctor of the Year' Embraces Challenges of Rural Medicine