CEO Exchange: Different Problems, Shared Solutions for Survival

Top hospital and health system executives gathering for the fourth annual HealthLeaders Media CEO Exchange say they're prepping for a future that's more accountable, less remunerative, and consumer-oriented.

Nearly 50 top healthcare leaders will join me and colleagues on the HealthLeaders Media editorial team next week at the Grand Del Mar resort in San Diego for strategic discussions during our fourth annual CEO Exchange.

These leaders are looking for answers from one another at the invitation-only event. The biggest challenges for their organizations vary, of course, but they're all facing the same trends, says Bill Thompson, president and CEO of SSM Health, the nonprofit health system based in St. Louis that operates 20 hospitals, more than 60 outpatient care sites, and an insurance subsidiary.

The Future Will Be Accountable

Thompson says regardless of the mechanism that will take them there, healthcare organizations will be increasingly more accountable not only for the quality and safety of the care they provide but also for the cost associated with that care. Broadly, the move from volume to value, he says, requires prioritizing the creation of a network of care mechanisms, either through contract or acquisition, to deliver substantially all the care necessary for a population.

"If you're on a capitated payment methodology, there is no downstream revenue," he says. "You get one bite of the apple. We'll get a fixed sum of money for that member. That means we're motivated and incented to provide the most cost effective care possible. If that means counseling or memberships to health clubs to avoid that hospitalization, those are the things we'll have to do."

SSM, which operates across four states, is building the capability to be accountable in some regions, while others are already effectively integrated, he says.

"In Wisconsin, we're already there," Thompson says. "In St. Louis, it'll be there in three to five years, and it may take a little bit longer in Oklahoma. But we believe the best way to predict the future is to create it so we should be in front of the curve, trying to influence that future as opposed to being reactive."

Many smaller organizations that once did well as inpatient centers—that is, standalone hospitals—are working to create that accountable network, whether in an ACO structure or with less restrictive partnerships and the construction of clinically integrated networks, says Kimberly Boynton, the president and CEO of Crouse Hospital, a 506-bed nonprofit hospital in Syracuse, NY.

"You can't just be concerned with your hospital organization; you have to pursue growth of your organization as a system," she says. "We're providing much more care outside the inpatient setting than we have in the past."

Crouse has been working furiously to implement its outpatient strategy by expanding the physician support component to both its employed and independent physician staff, she says, as well as independent primary care physician offices through the Crouse Health Network—its clinical integration arm, which also builds on relationships with pharmacies, store-based clinics, and urgent care.

Crouse is still paid almost entirely through fee for service but Boynton sees the need to move to a new model built around keeping people out of the hospital and keeping their care in the right setting.

But how can leaders of provider organizations fund that shift?

For Crouse, one way is to develop relationships with outlying, more rural and smaller hospitals, which is keeping its inpatient volume steady thanks to transfers from those organizations.

"We're a major city, but there are outlying hospitals that cannot provide the level of care they have in the past," she says.

As for moving toward a more value-based future of reimbursement, Crouse is starting with its own employees.

"Our plan is to start with them and get together a program that we can take out to other employers in town," she says. "We're placing money into wellness today, making sure each employee has a primary care physician, that they're getting wellness visits, diagnostic testing. That will pay off in the long term."

Doug Luckett, president and CEO of 435-bed CaroMont Health in Gastonia, NC, is also heavily involved in an employer direct contracting strategy.

"It's one of our highest strategic priorities," he says. "We know and we can demonstrate that if we get a high finish rate with our six-week wellness programs, an employer group's adherence to disease management is off the charts. We're taking a hit on admissions but we can manage that as time goes on."

You'll Probably Be Paid Less

To get a handle on a future where the organization will likely be paid less than now for the same interventions, Crouse is investing in positions that will improve the efficiency of care to prevent small health problems from becoming bigger and tougher to treat. It has hired additional people in health coaching and disease management. Boynton says Crouse has also invested heavily in IT, both in systems—a new overall patient data platform will roll out in 2016—and people.

SSM's Thompson says such investments are critical because less money will fund patient care in the future, he says.

"We have to have better analytics to manage total cost of care, not just the cost of the individual episode," he says. "Not only to be extra efficient in delivery and venue, but also to make sure we're delivering it at the appropriate venue—that we're reducing unnecessary admissions and not performing unnecessary procedures. That will allow us to manage not only health but the total cost of care."

Luckett's recipe for doing more with less depends on the robust new EMR that CaroMont Health just debuted and its ability to bridge both inpatient and outpatient care seamlessly. Luckett says the EMR integration will allow the building of a much more information-heavy and timely "story" every time a clinician touches a patient's electronic medical record.

"If the clinicians take time to look at it, going forward, their decisions should be more informed and faster," he says.

Better and faster is also key to expanding primary care panels in the face of a physician shortage, he says, adding that even smaller organizations like CaroMont should "embrace wearables and encourage consumerism in the population."

He thinks a physician's panel of 2,500 patients, for example, could "optimize" at up to 10,000 patients by reducing inappropriate visits and other efficiency gains.

That said, organizations like CaroMont are betting on the come, so to speak.

"If you are investing in a medical home, these are the kinds of things you want to do," he says. "We're trying to lead the way. They [payers] could care less—they don't want to pay for it—but for us this type of work is a necessary operational integrator."

Reorient to Retail and the Consumer

SSM's Thompson says hospitals and health systems must recognize that healthcare is already more retail- and consumer-oriented than in the recent past, and that trend will only accelerate.

"We have to be able to establish a price that is market-competitive and recognize that transparency is becoming the norm."

He says SSM is already seeing dramatic effects from the significant percentage of patients who are in a defined contribution health plan, and he expects that percentage will only increase—and quickly. How a health system is able to respond to that trend could go a long way toward assuring its relevance as healthcare is disrupted.

"Patients will be shopping using insurance company websites or other tools that will help with comparative shopping, and they'll do this accurately," he says. "If you're in a retail market, you have to attract the wallets but also the hearts and minds. That's one reason why we're expanding our continuum of care to meet the patient where they want to be met."

Michael Ugwueke, president and chief operating officer with Methodist Le Bonheur Healthcare, a seven-hospital health system based in Memphis, TN, says that while payers in his market aren't embracing the notion of passing risk on to healthcare provider organizations, Methodist is still gearing up for that eventuality and making the necessary investments.

For one, Methodist's HealthChoice clinically integrated network will allow the health system to begin to investigate how taking risk will affect the organization. It certainly can't be done without loads more information about treatment patterns and utilization patterns measured against evidence-based protocols. The CIN, which has more than 2,000 physicians, is in the process of aggregating data on those variables as well as addressing care variation. As for when the payer mix might shift toward paying for value, the timing is still early in Memphis.

"We've talked about possibly developing a narrow network with key payers, but they have to market it and get some demand for it in the market," Ugwueke says. "If they are able to do that, it will shift patients and reduce costs, we think, but it's just not happening."

Like Crouse Hospital, Methodist is in a growth phase in the inpatient side, says Ugwueke.
 
"We are beginning to see a lot of regional referrals, so we're going to be spending close to $400 million on capital improvements over the next several years with a major expansion of the [flagship, 617-bed] Methodist University Hospital," he says. "It's a good problem to have."