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Red-Tape Mandates Spark Innovation

Philip Betbeze, for HealthLeaders Media, March 20, 2012

Bringing it all together

One way some organizations are trying to limit their investments in compliance is by trying to make sense of the new regulations as a whole. In that way, perhaps it's ironically helpful that most of the deadlines are within a relatively short five-year time frame. 

"Leaders are overwhelmed that all of these initiatives are really happening at the same time. It's very expensive for healthcare organizations and very labor intensive, and mandatory regulation compliance issues are exhausting their budgets," says Jacobs. "I've been in this industry for 30 years, and I don't remember so many things going on at the same time before."

Still, Fifer says finding a way to look at all of the work holistically is important so that duplication of efforts doesn't happen or that work by one group on ICD-10, for example, doesn't set back work on meaningful use. 

"We're trying to find the common ground among all of these regulations so everyone is not duplicating efforts," he says. "That's hard to do because they are so specific and we have totally different work teams. But we're trying to raise that level of awareness."

How? By encouraging the groups to meet together formally and informally such that "you've got hundreds of people looking for that common ground instead of one or two," Fifer says.

For his part, Rowan says it is helpful to integrate the regulatory requirements and compliance into a plan that incorporates the strategic goals of the organization, so that compliance doesn't feel like mandates that force investments that will never pay off. 

"First, we're trying to get paid for high performance by utilizing some of the metrics and indicators they have out there with HCAHPS and lowering readmission rates, and not reimbursing for mistakes that are made. They're trying to create a focus on preventive appropriate care, and move away from the idea that we get paid more for doing more volume," says Rowan. "Third, we'll all be better off if we digitize and automate all the data. Putting all that together has created a number of significant strategic initiatives for us."

For Baptist's Bradford, he sees the regulations as a framework that hospitals can use to create tools and processes to meet the goal of better care and cost control.

"Process is very important. We utilize Lean throughout our organization, and it works on all things we're talking about. It's part of the equation."

Hospitals: An endangered species?

All of this is fine for these organizations, which are multihospital systems with entrenched positions in their respective marketplaces. But what about smaller hospitals without the scale these organizations have?

Deloitte's Keckley argues that senior leaders of organizations without these advantages have good reason if they are among the pessimistic.

"It's going to be very Darwinian over the next six to eight years," he predicts. "The insurance market will shift dramatically, the economic recovery will be slow, and there will be a lot of pressure on folks to compete."

Keckley, as part of his research, recently completed interviews with 25 different hospital and health system CEOs about their coping mechanisms and strategies surrounding healthcare reform. 

"And I'm hearing the same things," he says. "Many of them are just tired. It's almost a thankless job."

In these economic times, perhaps it's a little hyperbolic to call such a well-compensated job thankless, but the turmoil is causing even some of the bigger organizations to rethink their role in the care delivery process.

"We're recasting ourselves from a hospital company to being an integrated delivery system," says CHI's Rowan.

CHI now employs a vice president of hospitals, a VP of ambulatory care, and a VP of home health, for example.

"They're not subsets of the hospital; now they're on peer," he says. "To lead in the market, we're no longer looking for hospital administrators, but market leaders who have an understanding of the whole continuum."

Technically, says Keckley, many hospitals that are too small to compete won't completely go away, but a number will.

"There will be a shrinking of the market. A number [of hospitals] will be converted away from acute care and into something else. They cannot operate with high safety and quality, which require a certain volume level. That will force small hospitals to either be absorbed or relicensed to long-term care."

That also means scale is the key to sustainability.

"You can't assume acute care can be delivered safely and efficiently where you're operating fewer than a couple hundred beds. There will be exceptions to that in rural areas," he says. "But mapping to all of these incentives that change from volume to value or outcomes means these hospitals have had or will have to put 6%–8% of revenue in IT systems. You just can't survive. You're not big enough to do everything you have to do."

Reprint HLR0312-2


This article appears in the March 2012 issue of HealthLeaders magazine.


Philip Betbeze is senior leadership editor with HealthLeaders Media.
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1 comments on "Red-Tape Mandates Spark Innovation"


S Daniels (3/20/2012 at 11:17 AM)
For whatever reason, hospital execs still ignor the 800 lb gorilla in the room.....physician practice behaviors. If the hospital wants to bring cost per case down from $15000 to $12000 they don't have to look furthr than individual physician practice profiles. The opportunities are there for all to see.