SSM Health Tackles Transformation by Building Business Models

Carter Dredge shares the scoop on inspiring change in the 24-hospital Catholic system located in America's heartland.

One year ago Carter Dredge joined SSM Health as chief transformation officer (CTO). While the title is a bit unusual, it signifies an organization that is positioned for change. I spoke with Dredge about what's happening at SSM and what other hospital systems can learn from his system's experience.

Based in St. Louis, SSM Health is a Catholic, not-for-profit health system operating in Illinois, Missouri, Oklahoma, and Wisconsin. The fully integrated healthcare delivery system includes 24 hospitals, more than 300 physician offices and other outpatient and virtual care services, 10 post-acute facilities, comprehensive home care and hospice services, a pharmacy benefit company, a health insurance company, and an accountable care organization. The organization has more than 40,000 employees and 10,000 providers.

As CTO, Dredge provides strategic leadership for SSM Health’s continued transformation from a traditional, fee-for-service system to one focused on creating value and managing the health of populations. He oversees the areas of advanced analytics, digital medicine, managed care contracting, population health, post-acute care, and value-based care models across the organization’s four-state system.

HealthLeaders: This is a great time of great transformation and innovation in healthcare. Where do you think the biggest opportunities lie for health systems?

Carter Dredge: Health systems have a deep repository of clinical expertise and a long-tenured and empirically tested know-how about delivering care. In the grand scheme of things, delivering evidence-based care is difficult. Collectively speaking, health systems have the most experience in this area to date.

With that said, in terms of evolving consumer-patient expectations, ease of use, convenience, and transparency, health systems are typically lacking and less experienced than players in other industries. From my perspective, this is where significant potential for transformation and innovation exists, along with identifying key partners who excel in some of these other critical areas like consumer digital engagement, streamlined financial services, and processing transparency. If we can take out that administrative friction and allow health systems to continue to double-down on evidence-based clinical care, there's a strong potential to make very significant, positive changes in the industry.

HL: Let's bring this bring this concept home. What is your vision for transformation at SSM?

Dredge: One of the paramount and overarching concepts for transformation at SSM is focusing on business model solidification. The kind of scaled transformation that we need to go through is not just about adding a few new services. It's about fundamentally defining and investing in strong and clearly defined business models.

I'll give you an example. As the baby boomer generation continues to [age and require more healthcare resources], some services these individuals might need today are not paid for under traditional insurance, like a CPT code. We have to change the way we get paid to risk and partner on Medicare Advantage if some of the services they need require a more complex way of capturing diagnostic codes, so we can have a more progressive way of doing disease management and reaching out to them. If we have to redesign elements of the EMR, that's going to require investment too. They also may have other issues regarding transportation or engaging with certain types of technology might require adaptation.

HL: How do all these pieces come together?

Dredge: Instead of looking at each of those decisions as an isolated service, if we can articulate a clear business model, it will inform the way we need to get paid; the types of resources we need to invest in, such as technology; the type of people we should hire; and the type of partners we should work with.

We're focusing on translating a lot of disparate events into clearly defined business models. Ultimately, we'll decide which models we're going to continue to significantly invest in, which models we're going to partner with others to take joint ownership of, and in which business models we're going to potentially become a minority player because someone is in a better position to provide those in the grand scheme of services.

We've kind of openly declared that we're not going to build everything. We realize for us to be successful, we have to continue to rapidly identify those other partners.

HL: Tell me about your priority initiatives.

Dredge:

1. First, those business models will drive where we need to secure risk, where we need to build operational capabilities, and which type of talent we need to reallocate or hire into the company. Those business models are critical.
    
2. Second, we're doing a lot of analysis to clearly identify what we call value drivers—the significant service components within a business model, whether that might be a key strategy related to surgery costs and outcomes, a population health management initiative, or a care management intervention for an at-risk population. So once we understand the macro business model, then we get really focused on what are the most material drivers of the key services in that business model.
    
3. We also have a category in our priorities called disruptive enablers where we categorize things like virtual care, telehealth, analytics—new types of things. We call that the sharing or gig economy, kind of the "Uberization" of healthcare, if you will. Rather than seeing these as discrete departments, we would [determine] how we connect those functions into various services. Once you have a clear business model, several components of it could be undergirded by a virtual service.
    
4. We need to design certain kinds of analytics that would also support [each] business model.
    
5. And, finally, there are certain things, again, within the sharing or the gig economy, [that we need to determine] how to mobilize resources much more fluidly than we do today.
    

I know I'm talking in broad generalities, but it proves the point of how we're fundamentally looking at this differently than many health systems. [Rather than enable the capability to offer] a video visit, we'd ask, "What business model are you trying to undergird with that? Which populations do you think you're going to serve with that? And is it fundamentally critical to all populations?" Those would be the kind of questions we would ask rather than just simply setting up an isolated service.

HL: Are you willing to be a little more specific about the business models or partnerships you're creating?

Dredge: Several of us in the industry recognized there was a problem with a really high prices and drug shortages on certain generic medications. SSM is part of Civica Rx that was recently announced. The users of the drugs have an incentive to keep prices low. If they also became the producers of the drugs, there is no incentive to increase the price. We didn't want to have individual equity in the business, so we set it up as a basically a publicly owned asset, a collaborative. We knew that to solve the problem, it was beyond an individual system; it required multiple systems. So that kind of larger scale, multi-partner new business model is indicative of the things that we intend to do in mainstream healthcare once we identify a need.

Editor's Note: I invite you to visit HealthLeaders' Innovation page later this week for more from my discussion with Carter Dredge.