Finding growth opportunities through partnerships while managing the disruptive nature of healthcare transformation is difficult but necessary, say hospital and health system chiefs attending HealthLeaders Media's annual CEO Exchange.
Despite the regional differences that exist in hospital markets across the country, CEOs of hospitals and health systems are responding to the pressure to improve clinical quality, patient experience, and healthcare costs in similar ways.
More than 40 healthcare executives gathered this week at the annual HealthLeaders Media CEO Exchange in Colorado to share ideas and challenge conventional strategies that hospitals have leaned on in the past.
"No matter how good you are, [and] how much waste you've reduced, there is still waste in the system. But you can't there through cutting, it's through redesigning," says Mark Laney, MD, President and CEO of Heartland Health/Mosaic Life Care, an integrated healthcare delivery system based in St. Joseph, MO.
Heartland Health achieved the highly coveted Malcolm Baldrige National Quality Award in 2009. Laney says operating costs have been reduced by $8–10 million using Malcolm Baldrige strategies, but with a population that isn't growing, the system had to think creatively for growth opportunities.
The system built eight clinics in north Kansas City, and the gamble has paid off.
"The model is focused on optimal health versus disease management, and in about 18 months, have an 11.2% market share," he says. "You have to grow, but the sweet spot for the futures is reinventing yourself."
Most leaders say they are starting to feel the pressure of consumerism in their communities. With high deductible plans gaining ground, patients want more pricing transparency, and they are looking more closely at where they are spending their healthcare dollars.
Some systems, like Crouse Hospital, a 506-bed nonprofit hospital in Syracuse, New York, are responding by posting prices online. The average cost of procedures does not include physician fees, and the price a patient will pay varies depending on his insurance plan.
But the step to include healthcare cost information online is a direct reaction to the rising tide of consumerism.
Looking for Growth Opportunities
The value equation for hospitals also hinges on reducing variability in quality and utilization while at the same time trying to grow sometimes razor-thin margins.
One area of promise remains outpatient services, which hospital executives say will be key to maintaining or increasing the bottom line. Results from HealthLeaders Media Industry Survey 2014 echoes that sentiment. Expanding outpatient services was the number one way healthcare executives said they will fuel their financial growth over the next five years (60%).
An informal survey of the healthcare executives attending the CEO Exchange bear that out in even stronger numbers.
Amy Perry, president of Sinai Health and executive vice president for LifeBridge Health, a regional healthcare system in Baltimore, MD with a wide spectrum of patient care services, including hospitals, physicians, skilled nursing, and rehabilitation centers, says increasing the outpatient focus means increasing access for patients and expanding LifeBridge Health's portfolio of partnerships.
"We've invested in retail pharmacy, home health, ambulance, Medicaid managed care, all the various pieces of the continuum," says Perry. "We're either owning them completely or partnering with people who know how to run those businesses in the most effective way."
Hospitals Look at Retail Pharmacies With Renewed Interest
Partnerships can stitch together the often fragmented nature of healthcare. When patients are discharged, the locus of control shifts from the hospital to the next care provider, which can significantly impact the patient's health outcome.
When partnerships are formed, either formally or informally, the goal of better patient care is easier said than done because agreeing on similar quality metrics can be tricky, says Joe Harrington, President and CEO of Lodi Health, a private, nonprofit health system in Lodi, CA.
Establishing common quality goals
Lodi Health is participating in a bundled payment care improvement program (BPCI) with CMS for total joint replacements. Bundled payment initiatives have caught on with some payers and providers for procedures that are episodic by nature. Harrington says partnering with skilled nursing facilities (SNFs) has emerged as an important point in order to control costs.
Strategies for Managing the Post-Acute Environment
Over 70% of Lodi Health patients who had a total joint replacement were being discharged to SNFs, which is a cost disruptor. Harrington says it was family members of patients that were driving the decision to go to SNFs, not the orthopedic surgeons.
After developing a plan with the surgeons to release the patients home with the help of home health, nurses, physical therapists, and appropriate family support, the percentage of discharges to SNFs has fallen significantly.
"The model is get them in on Monday morning, do the surgery, and back home on Tuesday or Wednesday, and cut out that SNF," says Harrington. "In the first year, we went from about 74% going to SNF to 30% going to SNF."
For patients who are going to SNFs, Lodi Health looks for quality. He says SNFs have to meet Lodi Health's quality benchmark in order for them to be considered a good partner.
Looking for growth opportunities with partnerships while managing the disruptive nature of healthcare transformation is a difficult charge, say leaders, but it's key to their role as CEO, especially now, post-Obamacare, post-health insurance exchange, post-health information exchange.
Overwhelmingly, leaders say they are falling back on the mission of their organizations and reinvigorating the culture that has been at the core of their business model.
"You celebrate. You recognize," says David Brooks, FACHE, President of St. John Hospital & Medical Center, a 772-bed faith-based hospital in Detroit that is part of Ascension Health. "When we're presenting a safety award, I'm there. It's what we spend our time on that reinforces what's important."
Jacqueline Fellows is a contributing writer at HealthLeaders Media.