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Reform Readiness

HealthLeaders magazine, December 13, 2011

BRUMLEVE: We feel like we pretty much have all the pieces already—everything from wellness programs to outpatient, acute, and postacute settings and home health. But looking at the Medicaid population, that's going to require completely different models, as we've all identified We're working much more closely now with [Federally Qualified Health Centers], partially because they're the darlings of reimbursement. And those are delicate situations because FQHCs are allowed to not just take care of what they were purposed to do, but now they can take any and all commercial payer contracts and actually compete for and deliver care to patients that we would like to have come to us. We try to work cooperatively with them. The point is, we are all going to create new collaborations.

WALKER: Historically, the hospital business has been great at building hospitals. Now, we obviously need to make some other investments. It's a hard mind-set to shift from the hospital mentality to the continuum mentality, but we're making that change. We're going to find a different way to use the assets that we have and maximize their capacity, because I think probably every hospital has excess capacity, whether it's space or expensive equipment. We're clearly beginning to make decisions differently on any future capital investments. New partnerships are also important, such as flowing patients through skilled nursing in ways we haven't done before. There are new relationships, too, with community and healthcare sectors that really aren't yet on the radar. Also, we have to look at the IT support that's going to better facilitate moving information with the patient. As other organizations are going to look toward us as part of a partnership, IT will be probably one of the first things on the table.

MANNING: The game now is not about managing silos; it's about managing the transitions of care. It's a whole paradigm shift. With skilled nursing, for example, we're going through an RFP process to determine our preferred partners. We've actually been pleasantly surprised by the responsiveness of these skilled nursing facilities and their willingness to come to the table and share their quality data and talk about improving medical management.

WALKER: We have expertise that skilled nursing facilities and others have never been able to afford. As a community partner, we can help them with these needs.

BRUMLEVE: Even in a system like ours where we own everything, we're going through a full portfolio analysis, which we've never done. We're well aware of a couple of things. There is so much cash out there and investors in niches who do some things better than we do. We're now looking for ways to monetize some assets from a balance sheet perspective and, where appropriate, sell some of those assets off to strategic partners who actually know how to provide specific services better. That is, as long as they can integrate with our medical record, use our brand appropriately—all the performance criteria that you would rely on in any strategic partnership.

MANNING: Even if you are not integrated financially, the model of care we are developing is actually more integrated clinically, because right now the care delivery system has a lot of silos that don't talk to each other.

WALKER: We're the consolidators and the integrators.

BRUMLEVE: Some systems, even in the billion, billion-and-a-half [revenue] range, are going to become part of something bigger. Watching the leadership in some organizations go through that turmoil, particularly with long, proud histories in their markets, is going to be tumultuous to say the least.

HEALTHLEADERS: Does that make you nervous, to offload care processes, given that the accountability goes to you?

BRUMLEVE: Yes. Performance and use of our brand are two of the things we will be concerned about. And a third is obvious: Potentially offloading some of the human capital, not just the buildings, in a system that has so much heritage in the markets that it operates in would not be a fun thing to do.

WALKER: I see us as the quarterbacks of these systems of care. Most likely, these systems will have our names on them. But there's another variable in the market that I find interesting. For instance, when the insurance company is buying the physician groups, do the payers become the quarterbacks? What dynamic is that going to create in the market and how will it change relationships?

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