Reworking its process for getting physicians credentialed, insured, and approved to see patients was time-consuming, but it yielded a "gigantic payoff" for Dayton Children's Hospital.
Hiring physicians is difficult enough. But once you find them and bring them and their families to town, paying them while they can't see patients is a serious problem.
This is especially so when many of the physicians are specialists. When they can't see patients, they're a drag on revenues; they grow quickly dissatisfied, and it might eventually be tough to retain them.
The process of onboarding—getting hospital privileges, state licenses, background checks, malpractice insurance and payer credentialing, not to mention a host of other tasks that need to be completed before a new physician can begin seeing patients—can cost hospitals and health systems big money.
In a time where much of their business is being disrupted, for hospitals, any opportunity to shorten a process that dissatisfies while it siphons precious resources away from other important tasks can yield a big payoff.
Lisa Coffey
Physician onboarding has become a key strategic priority for the senior leadership team at Dayton Children's Hospital, says Lisa Coffey, vice president of physician services at the Ohio-based organization. The physician onboarding process revision came as part of a revamp of the hospital's strategic plan, which is internally referred to as Destination 2020.
Among the strategic priorities are an extensive re-evaluation of the services the hospital should be offering, as well as physician integration, which includes improving access, meeting referring physician expectations, and partnering with physicians. All of those priorities were challenged in the old physician onboarding process, says Coffey, which meant that it was an area where the hospital wanted immediate focus. The revamp began in 2014.
Many Stakeholders One big problem with the onboarding process that can't easily be rectified is the huge number of stakeholders involved with the separate processes involved in getting the physicians to the point of being able to see patients, Coffey says. But while the number of processes can't easily be changed, they don't have to happen in succession. They can happen mostly simultaneously.
Another tactic is to educate all the stakeholders together so that each understands how critical their role is to that goal, and the ultimate goal: getting physicians ready to see patients more quickly. A single cog's role is not simply completing a bureaucratic task, in other words.
"Silos are alive and well in most organizations," says Tammy Tiller-Hewitt, CEO of Tiller-Hewitt Healthcare Strategies, who helped Coffey and Dayton Children's with the onboarding process redesign. "Everyone's juggling so much and they're trying to get their part done, but it's up to us to help them understand the critical opportunity to win big or lose huge if we don't do onboarding effectively."
In physician onboarding, any part of the process that's not done quickly is a barrier.
The organization has always spent lots of time and effort making decisions about how many physicians it needs and in what specialties, "but that's where it fell apart for Dayton Children's," says Coffey. "We had all the placement stuff well thought out, which often meant the physician was ready to go. But [they] couldn't see any patients because other work wasn't done yet."
Being unable to quickly accommodate referrals, is what really started the hospital down this road, says Coffey. In order to remain competitive with other children's hospitals, and there are several in relatively close proximity to Dayton, Children's needed immediate access for referred patients. With an institutional physician shortage to start with, and an unacceptable six- to eight-month lag before access started to improve, the team focused on reducing onboarding time.
"Before I had this role, I was director of our clinics, so I saw firsthand operationally what was happening when we brought these physicians in," Coffey says. "Often they would have to sit there for several weeks while they waited to be able to see patients…We have recruited 21 physicians over the past two years, and a lot in key specialties, so there's a lot of money wrapped up in those recruits. That's a big deal in this world."
Identifying Delays and Duplication
Having had some Lean training, Coffey and her team value stream-mapped everything that happens in the onboarding process, looking for ways to shave time and effort off a laborious and Byzantine process.
"We had rolls of paper in the conference room taped up to the wall after we met with each of the 20 members of the onboarding team separately and asked for all their steps to get their part done. Then went back and found delays, duplication, and where the process breaks down."
Another discovery was that the organization was not starting its marketing campaigns for new physicians until months after they arrived because they didn't want to release the marketing information before the physician could take the referral.
That was a dissatisfier for physicians. "Now that we fixed credentialing we can actually get the marketing out when they first start," says Coffey.
Since the redesign began in early 2014, the onboarding process has been reduced to as little as 90 days from six to eight months. The norm is about 120 days, according to Coffey. Time-to-credential and time-to-reach-full-productivity for physicians overall have been reduced from 322 days and 14 months, respectively, to 84 days and five months.
They've also reduced the amount of paperwork physicians need to complete to start the process from 30 pages to about 16.
Coffey says CEO Deborah Feldman was key to providing proper focus and a sense of urgency to the onboarding redesign.
"First you need that senior leader champion," she says. "But breaking it into individual groups and value mapping helped manage the information and the process. Dedicate the time to it, because it is time-consuming, but the payoff is gigantic."
Thriving under value-based reimbursement depends on capturing accurate measures of disease severity, says a former CMO.
Value-based reimbursement has come a long way since Anthony Oliva, MD, was implementing a gainsharing program at Kalamazoo, MI-based Borgess Health, a three-hospital system owned by Ascension Health, the nation's largest nonprofit health system, in 2011.
In two short years, the health system was able to transform its quality and safety measurement amidst a big push for physician employment that saw the health system grow from 50 to 300 employed physicians.
The use of quality metrics as part of its gainsharing program was aimed at medical staff engagement, case management improvement, and reputational improvement for the organization as a whole as much as it was about physician alignment, Oliva says.
Anthony Oliva, MD
Under that program, and following the prescriptive rules of the Office of the Inspector General around gainsharing arrangements, Borgess was able to take incentive dollars from Blue Cross Blue Shield of Michigan and pay physicians for their support of quality outcomes. Those outcomes were dependent, at least to a significant degree, on appropriate and detailed clinical documentation.
"We worked with our independent physician organization on quality metrics that would allow us to pay the physicians from that Blue Cross money for their support of quality outcomes at the hospital," says Oliva.
The problem: "The OIG is very intrusive with the paperwork required," he says.
It was cumbersome, to say the least. "It was all based on inpatient, with lots of measurement requirements, and physicians had to pay in to become part of this group," he says.
Since Oliva left Borgess in 2013, gainsharing programs—always ungainly and uncertain in the best of times—have largely been replaced by accountable care organizations at most organizations that are trying to get a handle on value-based care. ACOs are all standardized, making shared savings incentives a little easier to administrate.
Bad Data. Bad Outcomes.
But the core principles of collecting accurate patient data, and critically, acting on that data in a timely manner, are the same as they were in gainsharing. Bad or incomplete data means likely failure to achieve better outcomes, higher levels of safety, and higher levels of efficiency.
"If you can do a very good job of capturing your population both in severity as well as capturing the appropriate outcomes—and there's methodology that can help you do that—you can win at that incentive game. If you don't, you're going to be falling short and wondering why, because at the end of the day, people who do a good job of capturing metrics and data and performing interventions based on metrics and data, are the ones that are going to win," Oliva says.
Now vice president and chief medical officer at Nuance, a company that develops and market speech software for use in clinical documentation, Oliva says organizations that are laissez-faire in such data collection and usage are going to lose.
"You have to work to make sure you're truly capturing all those metrics," he says.
The biggest key to success under bundled payments and other value-based schemes is, as it is with fee-for-service, capturing all the necessary information to diagnose how sick, how severely ill, your patient population is, he says.
But not for the same reasons.
Whereas with fee-for-service, comorbidities and severity are closely associated with direct payments for services. With value-based reimbursement, it's all about setting the proper baseline risk for the population for which you're responsible. Otherwise, bonuses are all but unreachable. It can all seem pretty game-based, but Oliva says many organizations unintentionally understate the acuity of the population because of poor or incomplete clinical documentation.
Measuring Severity Pays
"The sicker it looks, the more you'll profile better in the outcomes, so that's a big piece," says Oliva. "All the measurements start with the risk of the population, and outcomes don't matter if your baseline's wrong."
For example, if your organization has a 2% mortality rate and the expected mortality of the population is 4%, you're doing really well. But if you don't do a great job of documenting illness severity and as a result your expected mortality is measured at around 2%, achieving 2% makes you look somewhat average.
"That has to be the starting point," Oliva says. "You can never drive outcomes down to a level that's below an already unrealistic view of the severity of the population." That's because the majority of outcomes are based on the disease burden and how it's measured, not your performance, he says.
It's a simple concept, but it's often not easy to understand that the baseline comes largely from proper and complete clinical documentation so that initial baseline can be accurately measured, he says.
Do you have a comprehensive clinical documentation improvement program that you can operationalize?
"If you haven't done that, you're already starting too late," he says. "There's such a delay in data. You really need to be starting now because it takes so long for that to be crunched. I would be petrified to go into a risk contract where I wasn't sure I was doing everything possible to capture the severity."
That's how payers have historically controlled the risk pool, Oliva says, to highlight the importance of severity.
Oliva says many organizations don't recognize the importance of this issue because the downside risk to the overall organization is currently not high, on average. Right now value-based purchasing sits at a meager 4% of revenue, though that varies widely geographically, he says. Fee-for-service, not value, still overwhelmingly drives revenue. But the tipping point will occur, and it gets closer every day.
"There's money on the table today, but it's not overwhelming. But by 2020, where 50% of reimbursement is value-based, that's a game changer," says Oliva. "You should be doing clinical documentation improvement right now, because it will help you win in fee-for-service too, but the added benefit is that it's setting you up for that new environment."
The biggest risk factor around clinical documentation improvement is to just assume you have a good program because you have people doing this work, he says.
"It's too easy to say, 'oh yeah, we do that,'" he says. "But are you measuring it, benchmarking, recording things that are vital, and dealing with lags on a diagnosis? Those are the types of things that are the biggest dangers in organizations that think they are doing this well, and really aren't."
Two top CEOs share their philosophies on fostering an environment of entrepreneurship at their organizations.
This article appears in the September 2015 issue of HealthLeaders magazine.
While healthcare innovation is alive and well in the United States on the clinical level, innovation in administration and the delivery system has been sorely lacking for decades, says Michael Dowling, president and CEO of the 19-hospital North Shore-LIJ Health System, which has an enviable track record of growth in its traditional acute care offerings, as well as a solid attempt at vertical integration through its owned insurance plan and multiple pre- and postacute care sites.
Michael Dowling
Over the past decade and a half or so of Dowling's leadership, the health system has grown to 54,000 employees with an operating budget of $7.8 billion, but growth doesn't necessarily reflect innovation, he says. In fact, growth to such a large size has a better chance of inhibiting innovation on the delivery side, which is why Dowling is so focused on making sure he fosters a work environment that encourages innovation and risk-taking.
Unlike deciding whether to acquire a physician practice, an insurance company, or a competitor hospital, a CEO can't develop an innovative culture with his or her signature. It's a softer skill, and the best an organization's top leader can hope to do, according to Dowling, is set the stage.
The CEO's role
The most important contribution the CEO can make toward innovation is fostering a culture through which it can thrive, says Dowling. The CEO certainly can't drive the innovation, but he or she can certainly squelch it if not careful.
"It's almost impossible to sustain innovation if it's driven by the CEO," he says. "That said, if the CEO or senior level of the organization puts a wet blanket on new thinking, you won't get any new thinking. I've been in organizations with CEOs who basically had the attitude of 'The way we've done it is the way we will continue to do it,' so from that perspective, the CEO's role is critical."
Dowling says the first order of business for a CEO in creating the right atmosphere is by evaluating the leadership at the senior, management, and supervisory levels. That's where you evaluate whether you have open-minded leaders who are quick to percolate and evaluate new ideas through the organization, he says.
"You can talk about it a lot from on high, but if you don't have the people who want to support such an effort, you're dead," he says. "Early in my tenure, I focused on the leadership, and we've made enormous strides."
Dowling came to North Shore-LIJ in 1995 and became president and CEO in 2002. Many of the current leaders at North Shore-LIJ were not leaders 10 years ago, he says, adding that during his tenure, hospital leadership positions have experienced close to 100% turnover. He says that's not necessarily because he's fired people, but that he's found people who welcome the opportunity to grow and expand, so you promote those people or you lose them.
"Most were people who were in the system but not in leadership," he says. "Being given responsibility is a positive motivator and it has to happen over time—you don't make it happen over a weekend."
Cross-promotion
What excites Dowling the most as a senior leader, he says, is releasing the potential in people by allowing them the freedom to evolve, grow, and experiment.
He recently promoted a person to head of human resources at North Shore-LIJ who has never worked in the field. It's not the first time he's promoted people across disciplines.
"When you're not wedded to having done that before, you come in with a fresh view," he says.
Not that Dowling does all the evaluating when seeking leaders to promote, but he looks for certain attributes: people with creative minds, people who are not hostage to precedent, people who allow others the freedom to express themselves, and who are not risk-averse or otherwise afraid of failure.
"We know that quite a few of the things we do will fail, but we misuse the word failure," Dowling says. "When you improve based on that, you learn the failure is largely a success."
One example: In the early 2000s, North Shore-LIJ decided to take a full-risk contract with Oxford Healthcare (then independent but now a subsidiary of UnitedHealthcare). The contract called for North Shore-LIJ to take full capitated rates for all of Oxford's Medicare lives. Dowling says fundamentally, the deal, which North Shore-LIJ exited after three years, was a financial albatross for the health system, largely, because the physicians refused to take risk.
By all measures, the experiment was a failure, "but we learned a wonderful lesson that was very instructive when we decided to create our insurance company, and very helpful in how we do risk today," Dowling says. "While it was a financial failure, it was a learning success. Success is going from failure to failure without losing enthusiasm."
Presenting new ideas
Another part of building a culture of innovation lies in providing a structure for employees to share ideas. North Shore-LIJ offers an opportunity for frontline employees to present their ideas before a committee every six weeks or so, Dowling says. From those presentations, further action may be taken, up to and including developing new products for commercial use, even outside the organization (see related story, page 40).
And every year, the health system holds a formal innovation awards ceremony that recognizes innovation and other achievements at the annual board meeting. Dowling says the majority of the meeting time is reserved for presenting these awards, which can go to individuals or teams of employees.
Dereesa Reid
At Hoag Orthopedic Institute, a 70-staffed-bed joint venture hospital between physicians and Hoag Memorial Hospital Presbyterian in Irvine, California, CEO Dereesa Reid agrees that the top leader's role is to empower the culture of innovation.
"Innovation is not just one person," she says. "There's no greater legacy than to create an environment where people are proud of what they're doing."
To create that kind of atmosphere as the CEO, she says, both she and her physician partners continuously recognize individuals for their contributions that improve the patient experience, that cut waste, or that improve employee morale. "I'm a big believer that our few leaders need to get out in front of this," she says.
At Hoag Orthopedic, that happens largely through the Quality Process Improvement committee, which has between 30 and 40 members at all times, including top leaders representing pharmacy, administration, the hospitalists, nursing, orthopedists, and physician board members.
"It's a really tightly run meeting, less than 1½ hours, but includes a series of presentations, often by individuals who are encouraged to develop their professional growth by making such presentations in front of an influential group," she says.
That's an important part of elevating all employees such that they understand the organization's top leaders are willing to listen and recognize the importance of that employee. Getting past some employees' reticence is a big key toward building the culture of innovation, she says.
That doesn't mean the process isn't somewhat grueling, and competitive.
Setting priorities
"One of the things I try to be disciplined about is, there's only a few things we can do very well," says Reid. "In highly innovative organizations, you have more ideas than you can possibly do."
The highest priority ideas, not surprisingly, are the ones that drive value. And while data is very important, Reid eschews overanalysis, leaning instead on the right thing to do for the patient. She says Hoag Orthopedic's philosophy toward whether to launch an idea is very data-heavy, but that she hasn't invested in data-mining software or other ways to crunch data. Instead, they pull data out of their systems and analyze it with simple Excel spreadsheets.
"We want speed, to stay as close to the source of truth in the data, and not spend a lot of extra money for additional applications to grind up this data," she says. "We're going to do it simply with Excel worksheets because I can get to the data faster." Successful efforts are valuable, in and of themselves, but also can boost morale.
"You have to recognize all the wins, but as leaders we can't forget that when people take risk, where there's an opportunity to do well and they do achieve something, they feel better about themselves," she says. "And as they feel more empowered and confident, they treat people better. And when souls get fed with personal accomplishments, they take better care of patients."
Beyond healthcare
Exposure to other industries is a big plus for top leaders in a healthcare organization, says Dowling, noting the lack of evolution in the delivery systems and administration of healthcare. There's only so much one organization can do to bridge an innovation gap that's been abetted by the antiquated fee-for-service payment structure that still dominates much of healthcare, but organizations can better prepare themselves by seeing how other industries deal with a payment structure geared on value, as almost every other industry does.
"We're the exception," Dowling says. "This is why I believe you've got to expose yourself to organizations outside of healthcare as well as those who are trying new things all the time in healthcare. Go to other parts of the country, because there are great things happening everywhere."
Hoag Orthopedic gained exposure to innovation culture outside healthcare directly through its CEO. Reid is an accountant by training whose career developed in both semiconductors (she once worked for Texas Instruments) and in the agriculture industry before coming to healthcare several years ago. She's led Hoag Orthopedic for the past four years.
"I was with TI for a very short time, where I was a cost accountant, but that experience really taught me what innovation was," Reid says. "There was an expectation that everyone in the organization had to be on a multidisciplinary team. Those teams had to do white papers that went straight to the top of the organization, so, frontline or midmanagement, you had a deliverable that you knew the very top of the organization would look at critically."
She's implemented very similar work groups at Hoag to develop not only an esprit de corps, but to really ferret out ideas that are already there. More than even the specific ideas that germinate from such groups, the exercises stress that anyone can contribute to bettering value.
The long view
Dowling says innovation means looking at the healthcare delivery world not as it is, but where you think it should be years from now. "And not being happy with what exists," he adds.
"If you look out years from now, you'd realize a couple things quickly. One, the customer is going to be a huge determinant of what healthcare is going to be in the future, so look at your organization from the outside in, not from inside out. It's not 'What makes you comfortable,' it's 'What does the patient/consumer demand?' "
He says consumers/patients will have more choices, they'll be more technologically savvy, and they will be more educated. A helpful motivator: "If you're 50 years old and you have a 20-year-old kid, spend your time asking whether that person would tolerate the way we currently operate," Dowling says. "He would not."
Many health systems create divisions charged with value-based care, but if they are to succeed, the other parts of the organization must also see transformation as part of the overall mission.
What if organizationally, you could be an arbiter of value? What if you could choose the partners you will work with in the care continuum based on how well they perform their mission of keeping patients well?
You wouldn't have to own it; you could just as easily partner for your acute care needs as you partner with another company that owns nursing homes in your area. But your partners use your data. They adhere to standards your medical staff has formulated. You create the standards by which partners work within your network.
Sound like an impossible Utopia? The good news is that creating such an amalgam of partners, whether owned or contractually bound together, is possible under value-based care principles.
You might not be able to lead this, but the fact that it can be done should lend great importance and meaning to what you do as a healthcare executive. In fact, I heard as much at last week's HealthLeaders Media CEO Exchange. This is the kind of stuff, finally, that you got into healthcare to do in the first place.
No, you can't necessarily control the tipping point at which value-based care becomes predominant, because, you know, "follow the money," but you can manage your organization to be ready when that phase of healthcare transformation hits, and it will hit.
Avoid Poor Strategic Alignment
Jim Giordano, a partner and the director of population health management and value-based care services at Kurt Salmon, and former CEO of Good Samaritan Hospital in Suffern, NY, says the hospitals and health systems he works with to try to move to a more value-oriented posture are generally making the mistake of poor strategic alignment.
They may preach the message of a holistic health system, but by creating an arm of the organization charged with going forward with value-based care, the rest of the organization may not see it as part of their responsibility or even the overall mission of the organization. But assuming you can get strategic alignment, how do you manage the transition?
"One of the opportunities is to think beyond primary and secondary service elements and start to think about aggregating in your network a continuum of care partners in such a manner that you're increasing scale and the size of your market reach," Giordano says. "And that doesn't always require acquisition of a lot of physician practices."
Ah, the elephant in the room: Physician practice acquisition. Is it necessary to get physician alignment? Many experts would instinctively say that employment does not equal alignment. But acquisition can be a powerful knee-jerk reaction to perceived threats without which, you may fear, your organization may get carved out of the narrower networks that are becoming commonplace.
Jim Giordano
Yet, "there's a limit to one's capital access and ability to make this [transformation] happen with an acquisition approach," says Giordano. So if buying them isn't the answer, how do you get the organization, especially when it consists of a large cohort of independent contractors, pulling in the same direction toward value?
One way is tying them together through technology. Another is investments in clinical infrastructure, understanding the gaps around risk contracting, and creating value from partners who at some point will be asked to share a portion of payment for an array of services, or for a flat, per member, per month fee. Sound familiar?
The truth is, even the largest, most influential of organizations will find themselves carved out to some degree. As data and analysis of that data becomes more granular, it becomes ever more important to tie pieces of the care continuum together such that data can be acted upon before it impacts health, and before it impacts the reimbursement cut your organization gets. Whatever you decide is your organization's strategic fit in the market, your job is to manage down the cost of your piece, says Giordano.
"Not everyone should lead the market," he says. "Aggregate a network and bring value and demonstrate it through performance. That will allow you to go to payers and create partnerships."
For hospitals and health systems, it often starts with an ACO, a transitional one-sided risk model, but that's desirable because physician and acute care centers are risk-averse, and doing something on this level is manageable, says Giordano.
The next step though, is critical, because the ACO is not sufficiently capable of producing a lot of upside.
Find Your Niche
"We say to health systems that are ready, 'take some risk on your self-employed. This is a population you're already taking risk for. You also have access to their data, claims history, and you can influence them,'" says Giordano.
"Much of the time, that population is already using your network. Once you can manage that population well, now you have a track record and can take it and create future value—direct to employer—working with payers with a wrap-around network around the narrow network. But this is a journey-pieces of this take years to develop."
Not every provider organization can lead this transition, so find your niche. Where do you bring value? Maybe your organization is high-quality, low cost. Maybe your organization has a geography that's valuable to a larger system engaged in value-based care. Find your niche and participate where you can be important.
Unsurprisingly, one of the most significant success factors, says Giordano, is creating the right economic value.
"Understand that if you're ultimately moving in the direction of partnering with a payer or becoming a payer yourself, think broadly," he says. "You can create generous revenue-sharing constructs, even with an ACO as a loss leader, because the goal is to create a robust network that can be further cultivated with other constructs as the network matures."
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.
Bill Thompson
"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.
Kimberly Boynton
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.
Doug Luckett
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.
Michael Ugwueke
"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."
The pace of transition can be breakneck or slow and measured; but in either case, some senior leaders are proving old dogs can yet learn new tricks—because they must.
This article first appeared in the March 2015 issue of HealthLeaders magazine.
Healthcare is changing in significant ways. The industry is migrating to a highly connected world that is growing more transparent. Meanwhile, the very measures of success for healthcare organizations are shifting.
In such an environment, physicians, nurses, and other employees look to the C-suite to make sense of it all and to help them understand their organization's place in healthcare's future. But effectively developing and translating a strategy into a new set of policies, expectations, and desired results would be difficult for anyone, especially those who have reached their lofty positions by excelling at a business model that becomes more outdated and irrelevant with each passing day.
The pace of the transition can be breakneck or slow and measured; but in either case, some senior leaders are proving old dogs can yet learn new tricks, because they must.
A change in mind-set
First, CEOs must understand the major shift around the concept of value, says Al Cornish, system vice president and chief learning officer at Norton Healthcare, a Louisville, Kentucky–based system that includes five hospitals, 12 immediate care centers, and more than 90 physician practice locations. Cornish built and developed the leadership development component of Norton University, which provides education, organizational development, and training for the system.
Then, CEOs have to translate that understanding into actions they expect other leaders in the organization to undertake, even if the course may be risky and experimental.
"The value proposition really depends on patients and their perspective about the care they receive," Cornish says. "That's different from the way we've always looked at things. But value looks at cost of the service and the amount of satisfaction the patient receives. Healthcare execs of today really need to focus on that."
Cornish says Norton University and the system as a whole try to focus on skill sets that all healthcare leaders will need in the future, and on developing those leaders internally. Skills include instruction on strategic thinking, change leadership, and inside of that, concepts of flexibility and adaptability. The curriculum is structured around team-building and relationship development and orientation.
"You have to wrap your head around the idea that less is more, and less is good."
"Execs will need to be collaborative because they will need to create partnerships," he says.
A culture of innovation
For Nancy Schlichting, CEO at Henry Ford Health System, a six-hospital system based in Detroit, the crux of navigating through healthcare reform isn't so much new skills but open-mindedness, a culture of innovation, and a non-punitive orientation associated with attempts at innovation.
Schlichting says Henry Ford has long been "changing the game" by integrating its own large physician group practice and a health plan, among other offerings along the continuum.
"Most systems are hospital-centric, driving inpatient, surgical, and ER volumes; but today it's becoming a very different game because we're trying to change that mind-set," she says. "You have to wrap your head around the idea that less is more, and less is good."
Hospital-centric organizations that are looking to better integrate a continuum of care into their system with an eye toward population health management are collaborating and working through difficult, sometimes seemingly intractable problems.
"You're going to be working with people whom you've probably never talked to," she says. "You're going to be working with physicians in a different way, as they are looking to take on risk. So you have to have very strong collaboration skills, while at the same time bringing your management team together."
In that endeavor, she recommends finding people who have done "difficult things" in their career, and who have demonstrated courage in risk-taking and an ability to "change it up and try new models and new designs."
"Obviously there are different ownership models, but most were created to serve the community, so I've been doing this—including cooperation with competitors even when it was strange—for 35 years," she says. "Mentors taught me and we are continuing to get better at it."
She says part of the management of such change includes a thoughtful process on demonstration projects, where anxiety is high, and so are the risks of getting it wrong. But that's the only way to learn what works in an interconnected and value-driven world.
She credits David Nerenz, PhD, the director of Henry Ford's Center for Health Policy and Health Services Research, as a key decision-maker on determining with which projects the health system could succeed and which could wait. Then, she says, all senior leaders take on a particular project as leader to try to understand better why some innovations work and some don't. For example, she led the system's readmission work personally, which she calls a "game-changer."
"For the first three years of five, it wasn't going really well, and I learned about the complexity of it. You have patients without any support at home, for example," she says. "It's been really tough, but we've just kept at it and I've become a better leader because of that commitment. My work with the readmission team was a deliberate strategy to learn and help lead the change process."
Developing a culture of innovation sounds daunting, but doesn't have to be, says Cornish, who brought in a guest speaker two years ago to run a workshop on innovation for the senior leadership team at Norton. The purpose arose from a recognition that healthcare generally hadn't been forced to innovate around business and clinical processes in any meaningful way in the past, and even senior leaders were intimidated by the concept. He says that is changing rapidly.
Turns out that many of the leaders believed that innovation required insights and talents they didn't have, including a creative temperament. The "teacher" used some simple examples of things those leaders were currently doing and walked them through the innovation process.
The response: "'This isn't as difficult as I thought it was,' " says Cornish. "If you asked most people if they are innovative, most say they aren't, but we all have it in us. So providing a framework to practice innovation was very helpful to us. In order for us to continue to be the leader in our region of the country, we need to out-innovate our competitors in the marketplace."
"Teamwork must start at the top and be structured to operate that way at all levels. It's the only way to improve care in a system."
Cornish says one reason for this particular exercise is that any behavior that senior leadership wants replicated throughout the organization starts with the top leaders modeling that behavior.
"That's crucial to better managing population health because, at its crux, it's about having a fully integrated group of caregivers working together to manage that population," he says. "Teamwork must start at the top and be structured to operate that way at all levels. It's the only way to improve care in a system."
That shift to team-based care is an important cultural change, which usually happens slowly; but in the current environment, it must be done quickly because no healthcare system has the luxury of time.
"You have to set the environment where people can take calculated risks and not be in fear," Cornish says. "We're blessed with a president who stands before the senior leadership team and says we're not going to be punitive to people if things don't work, because that's how we grow a healthcare organization: 600 leaders must be on the same page."
Though other organizations create urgency around an innovation by naming czars to lead certain initiatives, Norton has not done that, instead favoring an approach of making population health management integral to the current roles of leaders in the organization.
"For us that has worked very well. Other companies have created these czar roles to coordinate the functions," he says. "My only concern about that is that it sometimes makes people in the organization feel they can abdicate their responsibility to be involved because we have these czars. That's one thing to guard against."
Crucial communication role
Today's healthcare CEO is demonstrating a new focus in managing the uncertainty associated with healthcare reform. For the organization's internal audience, the CEO must have a communication strategy that packages the new vision in a clear and compelling way so staff can find and understand their individual place in a new paradigm, as well as the organization's.
"This may involve staffing up on the senior leadership teams to manage that interface, but there's also a lot of working with external speakers and training departments on awareness building on what this change from volume to value, from sick care to healthcare, really is going to mean," says Andrew Garman, PsyD, CEO of the National Center for Healthcare Leadership, a Chicago-based nonprofit, and also professor of health systems management at Rush University in Chicago. "It's not so much that CEOs need new competencies as much as emphasizing to a greater degree the vision and why certain decisions are being made, thus ensuring people develop and maintain trust in the senior leadership team."
Top leaders also need to forge external relationships that didn't exist in the past. This can be done through mergers, partnerships, and relationships with public health-providing entities or the emerging trend of working with nontraditional providers of services. But leaders shouldn't think that collaborative work is the goal in and of itself.
"There's broad recognition that we need to move to a team-based care model but you can't think it's the magic bullet," says Garman. "As soon as you have a team, you run the risk of expanding cost. So figuring out that balance between providing that coordinated service on behalf of the healthcare consumer while at the same time maintaining efficiency is a big challenge."
He says senior executives largely understand that healthcare is moving toward a value-based system, but at the same time, there's a lot of uncertainty about optimal timing on moving various parts of the business toward a value-based approach, and there's concern regarding the risk in dismantling parts of the operation that contribute significant income to the organization.
"They want to be ahead of the game but they don't want to risk running out of resources needed to make the transition," he says. "They're coping by bringing in outside expertise to, as best they can, get a third-party, objective perspective of the markets they're in and what they'll look like as they transition to a new model. You merge that with information from the policy climate and timing and make your best educated guess on the impacts of these type of things. That's the reality of environmental uncertainty—there is guesswork involved."
Paul Macek, who as CEO led a once-independent hospital into a merger with UnityPoint Healthcare, a 10-hospital, 28,000-employee system based in West Des Moines, Iowa, says internal communication and transparency can't be overdone given the seismic changes top executives are asking other leaders and employees to buy into. Macek now serves as UnityPoint Health Peoria's vice president, affiliations and partnerships.
"While there were some board members who felt we could continue to remain independent, trends dictated it would be a very tall order," he says of the work that led him to his current position. "But to make it work, the process to evaluate alternatives for our organization involved a lot of people: physicians, key leaders, leaders on the staff, key community leaders, and everyone else who had a stake in our organization; so it wasn't just a CEO or executive team plan. Taking that time to hear from them on the front end of the strategy was extremely important."
One of Macek's favorite sayings is that a CEO needs to be willing to have his or her position be influenced. One example proved the importance of this belief. In a prior CEO role in a turnaround situation, Macek had made up his mind on relocating clinical programs from one campus to another because of low utilization. One particular sore spot was with a behavioral health program that he was determined to close.
"The CFO came in and asked me to rethink my position on behavioral health," he says. "She told me if you do that, it will significantly reduce the disproportionate share payments to the hospital by several million dollars in the midst of a $19 million turnaround. I had been convinced the best thing to do would be to close it." But with that input, behavioral health remained.
Inspiring confidence
CEOs should never underestimate the importance of attitude and conviction in selling the work associated with transformation, says Garman. "The CEOs I've seen who are really effective in keeping folks working and optimistic about the future are the ones who live and breathe this perspective of the organization's mission, which is supporting the health of their consumers," he says.
Through their actions and their visible optimism, such leaders—and they don't always have to be the CEO—are conveying the message that yes, the future is unclear, but we're on the path to making things much better for our patients and we'll reach a very exciting future. There's an opportunity to do what's never been done because of the adverse incentives, says Garman. Part of that culture of optimism involves recognizing publicly to prepare people for the reality that their jobs will change, income levels may change, and the nature of the way they get paid for things will change, but the mission of the organization can finally be fully realized.
To achieve that lofty goal, says Macek, organizations have to have a leadership team that shares the same values, is transparent with each other, that's willing to be a little vulnerable, and that has a coach in the CEO who is recognizing, rewarding, and celebrating as the staff tackles the complexity of the transformation.
"We're going to be okay," he says. "People need to feel safe in high-risk environment—that their team has got their back. If they stub their toe, the CEO is going to support them. We're working in and leading multidisciplinary teams. Care coordination is going to take a lot of work on the part of those teams and leaders of the future are going to have to comfortable working in that environment. This includes physicians, insurance execs, and other partners we never thought we would be sitting at the same table with."
There is good news for senior healthcare leaders. Even with massive consolidation that seems poised to continue, opportunities in senior healthcare management aren't consolidating with them, says Garman, who recently completed a study on healthcare executive trends for the American College of Healthcare Executives.
"In general, senior leadership jobs in freestanding hospitals are expanding rather than contracting, with respondents reporting they added 1.6 positions for every one they removed over the past two years, and on average planning to add 2.8 positions for every position being removed in the coming two years," writes Garman in the report.
Limitations are that hospitals that comprise the study are 32% of the total hospital population, and represent only ACHE membership. Garman found that there is little standardization of job titles across healthcare management, often because titles represent coverage of one or more senior roles, and are designed around the talents specific individuals bring to them.
Such individuals can blaze their own trail, but industry job growth centers on efforts to manage the complexity and environmental uncertainties in which the sector currently finds itself, he says, and although the net overall picture for senior leadership is one of growth, results still point to substantial changes at the individual position level, with roughly three positions being removed for every five that were added.
One of the most important challenges for senior leaders can be getting out of the office and understanding the work that's being done on the front lines, says Garman, adding that the value can't be underestimated.
"This is managing through walking around or rounding, which I would put in the same bucket," he says. "There's no substitute for having that direct experience and understanding the work that's done on the front lines, the care units. The CEO who never hears this is operating with a significant information deficit."
In an industry desperate for innovation in care delivery, the CEO's job is to encourage employees to think differently, and more critically, to speak up when they see a better way.
Where do you get your ideas?
John Steinbeck, a writer for which my father and I shared a love, like many authors, constantly had to answer that question. Famously, he said to one such query, "Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen."
The key, it seems is learning how to handle them.
As the ground beneath healthcare organizations shifts in unpredictable ways, who couldn't use a few dozen rapidly multiplying good ideas? But the question to you as a leader is how to handle them, because nothing destroys morale quicker than a CEO (or other top leader) who solicits ideas for improvement, but has no process for evaluating them, or for putting the best ones into action.
Dereesa Reid
That's why writing this month's leadership story for HealthLeaders magazine was so much fun. I interviewed the CEOs of two very different organizations. Dereesa Reid heads Hoag Orthopedic Institute, a specialty hospital joint venture between orthopedists and Hoag Memorial Hospital Presbyterian in Orange County, CA. Michael Dowling leads a rapidly growing integrated delivery system, Northshore-LIJ Health System (soon to be renamed Northwell Health) in the New York metro area.
Innovation Doesn't Magically Happen
Despite the vastly different organizations they lead, what was striking was how similar their approaches to innovation were.
Both told me lasting innovation isn't something that just happens. It's the result of a carefully nurtured process involving dozens of important decision makers who evaluate ideas for prime time, or at least, for further development.
At Northshore-LIJ, Dowling starts with the acknowledgement that healthcare has been extraordinarily innovative on the treatment and technology side of medicine—the science of medicine. But innovation in delivery systems and the administration of healthcare has been highly lacking by comparison.
Let's be honest, much of the innovation in treatment and technology is sparked by the knowledge that there's been money to be made. New treatment modalities and new technology have always had well-understood reimbursement possibilities. The incentives have been in place.
Long-Term Vision
Until recently, and except for a few pioneers, innovating delivery and administration has been somewhat less remunerative. But as health systems grapple with a new gold standard of improving value, however, such innovations have become more common. Those that hope to thrive in the coming years are investing in that form of innovation.
For example, Dowling says one area of innovation that's paid off for Northshore-LIJ—education—was certainly not a no-brainer. But the organization recognized several years ago the value of building and creating the talent it needed for a future where value was king. In that respect, the innovation was building the health system's Center for Education and Innovation, he says.
Michael Dowling
"Well over a decade ago, we created our own center for learning and innovation, our own university," he says.
A lot of organizations do this now, but Northshore-LIJ was learning as it went, including the creation of a new senior executive title associated with the program: chief learning officer. Now the program has one of the largest training simulation centers, says Dowling.
"These leadership training programs are based upon a commitment that if we're going to deliver a different product 15 years from now, we have to do it differently." Although much credit accrues to him for such programs, he tries hard to deflect it, because he says it's almost impossible to sustain innovation if it's driven by the CEO.
"That said, if the CEO or senior level of the org puts a wet blanket on new thinking, you won't get any new thinking," he says. "You know that quite a few of the things you do will fail, but we misuse the word failure. When you improve based on that you've learned the failure is largely a success."
Reid, tasked with executing the vision for an entirely new organization by both the physician partners and the parent hospital organization, hired a team that matched the vision. That laid the groundwork for innovation, which she says is critical part of the orthopedic institute's original organizational model. One of the more important lessons she learned in a career that began outside of healthcare is that a culture of innovation can be self-sustaining.
"In a startup, you have to recognize all early wins, but as leaders, we can't forget that when people take risk, when they do achieve something, they feel better about themselves," she says. "As they feel more empowered and confident, they treat people better. When souls get fed with personal accomplishments, they take better care of patients."
Rather than driving the innovative spirit, the CEO's role, as well as other leaders in the organization, is to clear the way for the nurturing employees, who are exposed to plenty of areas ripe for innovation that never reach the notice of senior leaders.
If your organization is one that truly values innovation, she says, there should be many more ideas than can possibly be approved or executed. There are only a few things the organization can try to do and that it can do very well.
The process of winnowing down the ideas, testing them and refining them, is an area where senior leaders should make their impact, she says. The highest priority ones best line up with organization's mission and vision, and drive value, she says.
"No," she adds, is a powerful word. You don't discourage innovation by telling folks no, she says. You discourage it by failing to follow up, or by forgetting that working together for the improvement of the organization also requires valuing the impact and importance of the individual to the success of the whole organization.
"They can discover their inner talents," she says. "There's no greater legacy than to create an environment where people are proud of what they're doing."
The ability of consumers to shop for healthcare services based on price and quality won't take hold until innovative providers take some risk and a dose of faith.
This article appears in the May 2015 issue of HealthLeaders magazine.
Why can't it be easy to shop for healthcare services? All too often, it is a Kafkaesque experience. There's no single place to go.
As a patient, you can't easily compare prices for services as you would when buying a TV. You can call your insurer—which really sets the prices—and you might make some headway, only to then run into brick walls. When you're pointed back to your physician's office for a code in order to continue discussions with the insurer regarding your obligation for, say, a colonoscopy, you'll circle back into discussions about codes and preventive and elective care. You might get it resolved before your scheduled procedure. You might not. For most patients, that is the world of healthcare billing as it is.
All this despite the fact that each of the three key players in the healthcare transaction—the payers, providers, and employers/patients—agrees that patients should be able to receive accurate price estimates for healthcare services prior to consuming them. But bringing that vision to reality is considerably more complicated than it may seem.
Complexity of healthcare procedures and coding, along with a system of misplaced financial incentives and a populace that's traditionally been shielded from the details about the cost of care or even the decision-making around care (relying on the judgment of others) are just a handful of the historical reasons few have wanted to dedicate the time, effort, and expense to make the process easier.
Increasingly, however, it is possible to manage those variables. The tools to discover value are getting sharper as the pressure for transparency mounts.
How should smart hospital and health system operators position their organizations to compete in this rapidly changing environment? They must start by accounting correctly for their own costs, then figure out how to work with payers, partners, and third parties to position themselves for value. Their organization's place on the bell curve measuring price and quality might mean the difference between success and failure for the entire organization, and this work needs to begin urgently.
Patients have always had to pay some share of their medical bills, but that amount historically has been so insignificant that it did not enter into the decision on where to access services. But that's changing.
The percentage of the cost of care borne by the patient is increasing dramatically as more employers drive their employees to health savings account–qualified high-deductible health plans—plans that place a greater share of out-of-pocket payments for healthcare services on the patient. Those plans have grown an average of 15% a year since 2011, and nearly 17.4 million patients have them, according to a survey by America's Health Insurance Plans released in July 2014.
Payers have tried, with varying degrees of success, to link payments to outcomes, while the federal government has introduced several pilot programs that introduce financial risk based on clinical outcomes. It plans to do much more in the future, going so far as to set a timeline that calls for at least 50% of all Medicare payments to be made through alternative value-based payment models by 2018.
That puts pressure on providers—whether critical access hospitals or giant multistate healthcare organizations—to quantify their own costs so they can start the process of reducing them in what many envision as a more competitive price environment.
Robert Pendleton, MD
"If you're an individual health system and you don't know your costs for an encounter or episode of care for which those prices are public, you are in an undesirable place to understand where this is going," says Robert Pendleton, MD, associate professor of medicine at the University of Utah and chief medical quality officer at University of Utah Hospital and Clinics in Salt Lake City.
The system, which operates 770 licensed beds and had $1.04 billion in patient revenue in 2013, unveiled its value-driven outcomes costing tool in 2013. The tool has been lauded for its ability to measure the system's healthcare delivery costs at the granular level. Furthermore, the VDO tool is able to break down those costs over the full cycle of a patient's care and to compare those costs to outcomes in a Web-based format. The tool is intended for use by consumers, but a critical piece of its functionality is for internal consumption to enable the organization to understand the cost of inputs necessary to deliver care across a wide variety of procedures.
"VDO is the underpinning of our data infrastructure to really understand our care delivery costs down to the patient encounter level," says Pendleton. "Understanding costs at that level helps us learn from variation. It allows us to really prioritize and direct improvement efforts on a system level and imparts a sense of ownership for individual providers in context of their peers."
Until recently, most healthcare delivery organizations have managed their business quite differently. Under fee-for-service, inputs don't matter as much because of a direct relationship between activities and revenue: More inputs have meant more revenue. But that relationship is breaking down quickly.
Most healthcare organizations "don't have a handle on activity-based costing, and they don't understand what it costs them to deliver a service," says Rita Numerof, president of St. Louis–based Numerof & Associates, a healthcare consulting firm. "We are moving toward a more capitated system, so they need to understand those costs in a more horizontal way."
Over the past several decades, most systems have focused on their biggest cost—personnel—in a vacuum as opposed to looking at and rethinking care delivery processes, she adds.
"So part of the reason they haven't made these care delivery changes in the past is they haven't had to."
Do they have to now?
Some hospitals and health systems are moving faster than others, usually dependent on their market, but competition will force the issue, and large employers and entrepreneurs are adding to that pressure. "Together, those things will make it such that you'll see more movement in this direction for several years," says Numerof.
What about quality?
Knowing your true costs is only part of the equation.
"The issue going forward is, if you're really higher-quality, how do you demonstrate to the world that you deserve a higher price?" says David Newman, executive director of the Health Care Cost Institute, a nonprofit that aims to create a comprehensive national claims database with information on public and private sector healthcare utilization and costs.
He observes that the quality measures in use today are a grab bag of metrics that vary from organization to organization. In other words, there's no standard definition for quality care and, thus, no easy way to measure one provider against the other, which makes it difficult, if not impossible, for providers to compete on a common metric and, ultimately, to receive higher reimbursement than lower-quality competitors.
Historically, there hasn't been a general consensus about what to measure and how to measure it, Newman says, and unless a consensus is reached, consumers, and to some degree employers and even payers, generally will lean more heavily on price in determining networks.
"The onus is on [HealthLeaders Media's] audience to rally around measures development for quality and consensus," Newman says.
When HCCI launched in 2011, says Newman, he had many conversations with healthcare provider executives about how to go about measuring quality and what measures to include in any future tools. "But what some people were really doing was trying to convince me to adopt measures on which they look good," he says. "That's going to be a problem going forward."
When it comes to consumer comparison shopping, both price and quality measures really matter for certain discretionary services: imaging, elective procedures, and other nonemergency services. But that narrow range may be enough to cause major disruption. HCCI data shows wide variability in prices for many services; prices for the same service can range from $10 to $1,000. Besides, even if consumers won't shop for very expensive services—under the theory that they will meet their out-of-pocket maximum anyway, so why shop?—employers will and increasingly are doing exclusive deals directly with hospitals or health systems for certain procedures.
Many healthcare leaders depend on an increasingly outdated argument that high prices for a few popular procedures can subsidize the cost of money-losing services. "What we hear from some hospitals is that 'I can charge whatever I want for my MRI because I have a captive audience,' " says Newman. "But what they don't understand is that patients don't have to be able to shop for every service. If they shop for even a few, the ability to cross-subsidize will be reduced."
Pendleton says University of Utah Health Care's VDO tool helps with understanding outcomes, as well as internal costs, to help present a full picture of the value of obtaining all possible healthcare services from that organization. As a provider, it wants loyal patients, not one-and-done customers. As the organization reviews inputs and outcomes on clinical conditions, part of the analysis helps its leaders understand variation by mapping and measuring complications and outcomes.
"We map out a composite of outcomes with the provider input and define what we call perfect care," Pendleton says, describing the term as a positive clinical outcome delivered in the safest, most economical way. "What are outcomes we should avoid? What we've found very consistently is when you deliver perfect care your costs are always lower. What we don't want is being more efficient and cost-effective to be at the cost of clinical outcomes."
Disruption by data
The industry has been roiled in recent months by the disclosure from the Centers for Medicare & Medicaid Services of the prices paid to hospitals, outpatient facilities, physicians, and other suppliers. The disclosure was intended to provide greater transparency about what hospitals are paid, along with discrepancies in such payments based on geographic and other differences around the country.
Commercial payers have been slow to release price data; this information has traditionally been part of confidential negotiations between hospitals and payers. But Blue Cross Blue Shield of North Carolina may be at the head of a new trend of such disclosures. In January, the payer released a tool that allows consumers to research prices and their likely share of those costs depending on the provider. Critically, it reveals the actual payment levels for a wide variety of services that each institution charges.
The decision surprised many hospital and health system executives in the state, among them Linda Butler, MD, vice president of medical affairs and chief medical officer at Rex Healthcare, a member of UNC Health Care in Raleigh, North Carolina, which reported net patient service revenue of $2.35 billion in 2013.
Butler, who had no advance notice of the disclosure, says the numbers can be misleading and don't always present the complete picture of what goes into the price listed. For instance, a search for colonoscopies will list prices, but the procedures have different CPT codes, she says. "Giving you a defined price is much more complex than just giving you a range, and sicker patients will cost more," she says.
Continuing with the colonoscopy example, outpatient centers can perform procedures on only a certain subset of healthier patients. A patient might be able to get the procedure at one of these facilities for $2,000, whereas if one comes to a hospital, it might cost $5,000. Butler says the difference is attributed to capability to handle the increased complexity that the hospital-based procedure may require.
"If you're sicker, [outpatient centers] won't do you," she says. "Here, we'll have the morbidly obese, the diabetics, people who have had a surgery or two. Outpatient centers will not touch them." Hospital-based procedures will involve more equipment, two nurses instead of a tech, and "you're paying for all that complexity," she says. "The way a patient might search it, they might not be aware of that being the reason it's more expensive in the hospital."
In other words, quality, and in this case, potential quality, is hard to quantify.
Complicating the issue, says Butler, is that hospitals and health systems don't set their own prices. "Blue Cross and other payers are the ones who negotiate these rates," says Butler. "We at UNC Health Care don't have latitude to pick numbers out of the air and say, 'This is what you'll pay us.' We've always met their quality targets and sometimes get quality bonuses for doing that. But on the other side, they're telling patients, 'Here are the ones who are most expensive,' and yet there's nothing about quality or the context on why. I can only speculate the reason they did this was to pressure hospitals to be willing to negotiate lower rates and drive customers to lower-cost facilities."
The North Carolina data release is an example of why hospitals and health systems need to try to get ahead of these disclosures. Consumers want specific information on their own situations.
"There are about 8,000 diagnostic codes, about 13,000 CPT procedure codes, and hundreds of thousands of plan designs," Newman says. If a consumer wants to know ahead of time, and obtain a price relative to where he or she is with respect to the deductible in the course of a year, "you need a fantastically large, thick data set."
For now, Butler says the BCBSNC action has had little effect on patient volume, perhaps partially because Rex sees many patients transferring in from other hospitals.
"We have a very busy surgical program, and we're blessed with good volumes in oncology and heart and vascular," she says. "As an industry, we are trying to reduce costs, eliminate waste, and there's opportunity and we own that. People are going to shop but they tend to want to stay local unless their employer negotiated a contract for their specific condition."
Massachusetts is a hotbed of transparency efforts, at least with price, thanks to a law that forces physicians and hospitals to provide cost information for patients who request it. The law took effect in October 2014. Anticipating a call for transparency, Tufts Health Plan (which has more than 1 million members and reported 2013 revenue of about $4 billion) started working on price disclosure in 2012, when it was approached by Castlight Health, a publicly traded healthcare information company that has developed a cost information tool available under a business-to-business subscription model. Traditionally associated with large employer groups, Castlight was the vendor Tufts eventually chose to provide the information and its tool for Tufts members.
Athelstan Bellerand
Athelstan Bellerand, director of commercial product strategy at Tufts Health Plan, says Castlight saw Massachusetts as being on the leading edge of transparency efforts and saw health plans as a growth opportunity.
"We were primarily interested because more members have transferred from copay-based insurance, where out-of-pocket is largely easy to predict, to others where what's most relevant is their share of the cost," he says. "That said, there was no groundswell of members asking for this."
Tufts Health Plan sees transparency as the future, and wanted to be at the leading edge, Bellerand says.
He says Tufts, in the past, has had tools that attempted price transparency, but that those did not take into account members' specific plan design, and sometimes used regional or national data. There was no connection to actual, real-time amounts for members.
"For a lot of our members, it was a pure guessing game, and that's not really how it should be," he says. "For years, members have had to wait for a bill in the mail. That will be completely unsatisfactory going forward, and we wanted to get out in front of it."
One complexity for Castlight that it doesn't face in the employer world is the number of plan designs an insurer administers. While an employer might offer up to three or four health plans, a payer such as Tufts has hundreds, making the attempt to provide a customized accurate estimate more difficult.
"The complexity of that offered a major learning opportunity for Castlight. We needed to build something that our consumers could rely upon," Bellerand says.
The tool, called EmpowerMe, has been live for a couple of months now, and members have been using it, Bellerand says. With "extensive testing," 90% of estimates have been within 10% of the real price.
Despite this big step toward transparency, Bellerand says he does not believe it gives Tufts Health Plan any competitive advantage. The tool is simply a cost of doing business going forward. "The reality is all the plans in Massachusetts are required by state law to do something like this," he says. "One of our major competitors is using same vendor and tools that are virtually identical."
A critically important aspect, he says, is that Tufts' member services department also has been trained to work outside the tool to provide estimates for the small number of procedures the tool can't handle, if necessary.
Though it might not be a competitive advantage for the health plan, it could conceivably be one for providers, assuming they stand out from the competition on price and quality metrics.
For its part, Castlight casts a long shadow among healthcare executive leaders. They know many employers use its tools, and those of competitors, to make healthcare choices. Leaders are less sure about its impact on revenue. Until recently, most of Castlight's efforts have been toward price transparency, but it's positioning itself to use predictive analytics to further help customers manage their healthcare spending. Already, the company uses prompts, based on the levers that employers want to use, such as reference pricing or centers of excellence.
An example: If a patient searches his or her employer's health site for what to do about a sore throat or stuffy nose, he or she might get an alert that offers other options than for a physician office; by clicking on the prompt, the patient can schedule an online appointment quickly.
"But without transparency we can't do that stuff," says Jennifer Schneider, MD, Castlight's chief medical officer.
Castlight helped design a solution for Kraft Foods Inc. for a problem it didn't necessarily know it had. A large portion of its employees in one geographic location used the emergency room inappropriately, for minor ailments. "Nighttime shift workers did not have access to regular doctors' office hours," says Schneider. "That was the reason. There was nowhere else to be seen."
Castlight offered the option of telehealth for such workers. Since added, this approach has saved both the employer and its employees significant costs, she says. Hospitals and health systems are also large employers, so Castlight has a number of them as customers, too, including Cincinnati Children's Hospital and Providence Health & Services in the Pacific Northwest.
"Those groups have learned a lot about their own systems by working with us," says Schneider. "They might not understand all their pricing structures in all their markets, for example."
How should providers prepare?
Schneider recommends three areas in which hospitals and health systems should concentrate as transparency becomes a staple. First, they should analyze their costs of providing an array of services and make those figures available internally. Second is something many hospitals are already doing: measuring, tracking, reporting, and acting on quality metrics. Third, "think about the other value you bring to the healthcare arena, such as in patient satisfaction, ease of appointments, or care coordination. Make sure you're driving value for the end user in helping them make better and more informed choices."
Pendleton says one of the critical building blocks of a transparent organization—one where people can rely on price estimates and quality ratings—comes from creating a physician culture that embraces transparency as a key driver of change. One result of that focus at University of Utah Healthcare has been external transparency, whereby comments and reviews from patients are posted for all to see, which is fairly common in the consumer retail sector.
For example, the website shows Marisa R. Adelman, MD, receiving scores ranging from 4.6 to 4.8 (on a five-point scale devised by patient-experience consulting firm Press Ganey Associates, Inc.) across nine dimensions of care, along with dozens of verbatim comments from patients. A sampling:
I always enjoy seeing Dr. Adelman. She is friendly and thorough, goes over whatever I have questions on and clearly explains the details of the plan we form together.
Not my normal dr. I didn't know I was going to be getting a shot. I would have liked a warning and more information to make me feel better about it (why it is necessary, etc.).
Adding patient reviews in this public forum didn't happen right away, but came from more than a year of internal debate and measurement. That interim gave physicians time to "recalibrate" after comparing their patient experience and satisfaction scores with internal peers, Pendleton says.
"That allowed us to create external transparency. If we had not done that, would we have still had this same broad embrace on moving along the value equation? I think we probably would not have been able to move as quickly."
Pendleton is grateful the process started years ago because of the speed of change now.
"Some of the things that concern me a little bit is if third-party payers unleash price transparency," he says. "Such as when Medicare released their price data for physicians, because there was not that time frame for providers to understand, compare, or self-direct improvements."
Matthew Heywood, president and CEO of Aspirus Inc., the parent company of Aspirus Wausau (Wisconsin) Hospital, a 220-staffed-bed hospital serving patients in 14 counties, says the state's progressive attitude toward putting quality and price information in front of patients has spurred the health network to post pricing and quality information on the state's website. It does not have all the functionality of a Castlight tool, but the site does provide estimated average prices for many common adult procedures. But that's as far as his system is willing to go at this point, because he doubts that the effort and expense necessary to provide deeper information will influence people to have their care at Aspirus.
Heywood recognizes the need to establish a standardized definition of quality, and says the hospitals in Wisconsin are getting close to that. "Starting with quality as the most important driver, you have to have a common definition," he says.
From his perspective, price is more difficult, "because charges are nothing but a number that gets discounted by the payer." Charges may help decision-making on some level, but not at the patient level. "It's hard for us to offer that capability if we have insurance as the middleman," he says. "It's one of those questions about how much resources and time you have versus the outcome you're going to get for it."
Instead, he says Aspirus is trying to offer proof of both high quality and low cost compared to peers and to manage the care of the population. As part of that philosophy, in the short term, the organization has to do a good job getting the quality information out in an accurate and clear way. He cites high ratings or awards from the usual complement of quality rating providers, including Healthgrades, Truven Health Analytics, and U.S. News & World Report.
"We have a lot of traction with ratings. If we continue to provide low-cost service and keep our charges down, over time, we're going to be able to market that and illustrate that in many ways," Heywood says. "Right now, posting charges and letting people know we are lower cost in general and continuously improving ourselves is our start."
In a state of Wisconsin analysis on cost and quality (measured by market), Aspirus ranked among the lowest cost while maintaining upper-quadrant quality scores in the region. Heywood's leadership team used that data to find like-minded organizations to form a collaborative alliance. Heywood calls it a "super-ACO" known as AboutHealth, with initial members Aspirus, Bellin Health in Green Bay, ThedaCare in Appleton, Gundersen Health System in La Crosse, UW Health in Madison, Aurora Health Care in Milwaukee, and now ProHealth in Waukesha.
While the group's members do not yet contract as a single entity with payers or employers, its members see that as an eventual main function. For now, they collaborate on cost reduction and quality improvement programs. Eventually, Heywood says the ACO will provide "one-stop shopping" for employers and patients.
"Purchasers will be able to go to our Aspirus ACO and won't have to worry about separate contracts for care," he says. "We have 80% of what patients need, and for the rest, we would work with UW or one of our other partners for care that we cannot provide."
The key question for leaders is how to get tied into a network that offers that one-stop shopping. If you're the lowest cost, employers will want your organization in their network and will help sell it, says Heywood.
"If you're a major employer like Menards [a chain of 280 home improvement centers in 14 states, headquartered in Eau Claire, Wisconsin], you don't have to go to us individually; you've got the state covered in one contract," he says. "We are a strong believer that you don't have to be a $3 billion revenue organization to survive. About a billion dollars is large enough to make capital investments to provide for the future state of the organization."
As hospital and health system leaders consider the infrastructure necessary to support their transparency efforts, they have to consider how far down this road they want to take their organization.
In building the value-driven outcomes tool at University of Utah Healthcare, "we took an unusual approach with budgeting in that we did not add cost to our system," says Pendleton. "We reprioritized the work of the entire development team to allow them to be successful. Our costs were taking these data people offline to build VDO with a keen understanding on how we would manage their absence in our daily operation."
It was more a leadership than a cost function, he adds, in contrast to a lot of organizations that look at "how many thousands or millions we need to hire a consultant to do this."
The organization pulled 25 data and design specialists off their daily tasks for between three and six months to create the VDO tool. A large core working group was formed from an eclectic group of data warehouse architects, finance experts, biomedical informatics experts, and, of course, clinicians.
"The catalyst was a belief in embracing the responsibility to deliver high-value care within our organization," he says. "That really resonates. We were also looking around the corner and seeing that this is a necessary thing for us to do to prepare for the future."
For smaller organizations like Aspirus, focusing on cost and quality improvement is a big enough bite. "Right now, it's not just money; you can't get enough IT people to throw at the problem," says Heywood.
Getting to true transparency
Transparency in healthcare is at its infancy, so investing major dollars in public-facing price and quality ratings is an uncertain bet at best for providers.
"Anyone who says they can predict how changes in healthcare will exactly play out are fooling themselves," says Pendleton, notwithstanding University of Utah Healthcare'sown investments. "I think we're still in an era where patients' No. 1 determinant for getting care at a particular place is convenience and trust in that provider. Those trump everything else."
In part, that's because patients have a hard time understanding and choosing care. He points out that CMS' Hospital Compare website, for all its positive aspects, hasn't led to consumer shopping. Consumers may want information beyond price and quality indicators, as difficult as those are to obtain.
"We do know that if you provide information that resonates with the patients, you can get their interest," says Pendleton. "For example, by posting our patient satisfaction statistics and the unedited comments, our Web traffic to our provider profiles goes up exponentially. That makes sense. People want those ratings."
The payer role in transparency remains a key unknown.
"As a healthcare system, it's not clear to us how insurers attribute a patient to our system versus another," Pendleton says. "To look at cost or price to the patient, that becomes really muddy water. Selective transparency makes it challenging for a hospital or healthcare system."
Heywood says he welcomes transparency for Aspirus, as long as it's true transparency that doesn't obscure the payer's role in the price for healthcare services.
"The challenge for payers is, once they release what the prices are, they have to be ready to answer questions about their margin and what value they're bringing to the table for what they're charging their customers," he says. "You can die by the same sword you're using."
Trying to create something like a pricing tool that takes into account plan differences and patient copays and coinsurance is best left to insurance companies, he argues, and is duplicative and costly for hospitals or most health systems to develop.
"When we have more direct linkage to the purchaser, which will happen in the future to eliminate that middleman, it will make more sense," he says. "Right now, a big chunk of our business is going through insurance, and it's not the best strategy to duplicate it."
He says measuring care and design improvement should be driven exclusively by what's right for the patient rather than doing things in response to changes in the market. "If you have that aspirational view of this, you avoid the pitfall of needing perfection in measurement," he says. "If you can avoid those pitfalls, you can move in a direction that will allow you to be successful no matter how the dominoes fall from a payer level."
But from the payer perspective, the path ahead is unclear. Transparency will be driven by consumers, says Tufts Health Plan's Bellerand.
"We can illuminate some of the price differences, and they can be very significant," he says. "Patients have to make a decision on the quality as they perceive it, but the truth is these are the types of decisions consumers will have to grapple with. As there's more visibility and providers are curious about how they stack up against each other, they will feel some pressure to moderate their prices. To the extent that happens, it's a good thing for the market. How soon, and to what magnitude, is unclear at this point."
One cost containment strategy some big employers such as Lowe's are using is to enlist sophisticated help to steer employees toward higher quality, lower cost healthcare.
Thanks to high deductibles and coinsurance, people are shopping for healthcare—a little bit.
Some of them are shopping for the modalities you already know about—imaging, office visits, maybe some lab work—and elective procedures, to a small degree.
But if you think shoppable healthcare will forever remain limited to blood tests and MRIs, with the occasional knee or hip thrown in, you probably ought to think again.
Much of the rest will likely be subject to severe pricing pressure too. That pressure won't come from the consumer/patient. Shopping for healthcare is too complex for them to do it alone. The pressure is coming from employers.
What's different this time is now many of them are getting sophisticated help, in the form of patient navigators who know at least most of the secrets of negotiating with an industry many say is unshoppable because it is monolithic, has inscrutable billing methods, and whose difficulties are exacerbated by the stress ill patients are already under.
It's happening already. One place it's evident is with large employers. Many of them, notably, Boeing, Pepsico, Lowe's Inc., and others, have integrated cost and quality into where they steer their employees for care, and patient navigators are busily deploying their capabilities on behalf of employers and their employees.
In many cases, navigators are embedded within benefit programs, acting as an essential tool in bringing efficiency to employer-provided healthcare. This is especially true for companies that employ traditional health plans as third-party administrators only.
Bob Ihrie runs one of the more innovative and experimental employers in the United States when it comes to healthcare. In his 15 years as senior vice president of human resources at Lowe's Inc., the home improvement retailer has struggled with many of the same health issues among its employees as every other employer: obesity, diabetes, hypertension—conditions that stem from unhealthy lifestyles, and which are associated with expensive and disruptive health interventions for those who cannot control those conditions.
Ihrie says that despite the complicated nature of the work patient navigators do on behalf of Lowe's employees, the services of patient navigators are the last thing employees at Lowe's want to give up. The company's simple message to employees resonates with them. "Get the care you need, use the system wisely and participate in improving or maintaining your health over the longer term."
Patient navigators make that task much simpler.
Bob Ihrie
Telemedicine's Role
For example, nearly half of Lowe's employees don't have a primary care physician and consequently struggle with scheduling issues. For those folks, the navigator might recommend a service called Teladoc, in which the patient is able to consult with a physician over the phone for diagnosis of minor issues, and for referral to other professionals if it's something that can't be handled on the phone. A Teladoc visit also costs half the patient co-pay of a traditional physician office visit, and there's no waiting.
Executing on the company's "use the system wisely" instruction to employees, a navigator fronts all the company's health plans, and the phone number on the back of the employee's insurance card goes straight to the navigator.
"This is based on our assumption that our people are infrequent users in the healthcare system and that it's impossible to be an expert," Ihrie says.
Navigators help employees with everything from getting an appointment, to knowing what questions to ask doctors or hospitals. All of it is directed toward eliminating what Ihrie estimates is 30% of spending on health that represent waste, "because it's a significant cost as an employer."
For more complex issues, the navigator might refer the patient to Lowe's centers of excellence program, which offers eligible medical plan members access to hospitals and health systems preapproved by Lowe's that have demonstrated high quality care and high patient satisfaction for a host of select procedures.
One such program is Lowe's agreement with Cleveland Clinic for necessary heart procedures, which has been ongoing since 2010. Patients have no copay or coinsurance if they choose to use the Clinic for such procedures.
"The pitch [to employees] is get the best care for free," Ihrie says. "That really got our employees thinking about the fact that there are alternatives to what your doctor recommends. Almost every situation has lots of options and we want people to make informed choices."
Ihrie says using navigators to help employees with their healthcare choices is essential to being able to continue to provide healthcare benefits long term, which he says many large companies want to continue to be able to do. He predicts many small employers will eventually move toward moving their employees to the public exchanges and paying the penalty for doing so under the PPACA because they can't or won't use such tools.
"Almost all small employers are moving in the exchange direction," he says. "I haven't seen any large employers move that way for a number of reasons. We want to do this as long as it makes sense. We talk openly with employees that we're a self-insured plan, and we all need to participate, and improve health over time to make it affordable for all of us."
Currently, Lowe's uses three navigators—Accolade, Quantum Health, and an Optum product, and Ihrie says the company is having "a little bit of a bake-off to see who provides the best service in controlling costs and customer satisfaction."
All three are proving successful at improving employees' appreciation of benefits and "they hit a home run" in terms of customer satisfaction, Ihrie says.
"When I came back to run the health plan, I was getting stopped by employees who said, 'whatever you do, don't get rid of [the navigators].' I think we've finally got some real momentum on our people understanding our strategy and helping us control claims."
Collaboration between hospitals and drugstore chains can improve access to healthcare by helping to fill gaps in the continuum.
This article appears in the July/August 2015 issue of HealthLeaders magazine.
If any philosophy could capture what success looks like in both patient care and the efficiency needed to alter the steepening slope of healthcare cost increases, it's a saying many in healthcare have adopted: Right care, right place, right time.
It's trite, but it's also accurate and succinct. That phrase, often cited by wonks, policymakers, hospital and health system leaders, employers, and commercial health plan leaders, is the key to many of the challenges that plague healthcare, such as uneven quality, overutilization, and high variation and cost. The difficulty, as always, is in the execution, because providing the right care in the right place at the right time requires coordination of a vast array of complex moving parts, not to mention the cooperation of the patient.
An innovative research and practical partnership between Baltimore's Johns Hopkins Medicine, a $7 billion integrated global health enterprise, and Chicago-based drugstore giant Walgreens is aimed at simplifying and operationalizing the coordination necessary to deliver the right care in the right place at the right time. In essence, the two organizations are doing clinical and economic research and development in Baltimore to create clinical pathways that can be effective on a national scale, which Walgreens can provide with more than 8,200 stores in all 50 states and fiscal 2014 sales of more than $76 billion.
Jeanne M. Clark, MD
At the core of the pilot program in development is the attempt to route patients to the most appropriate site for their condition and, in particular, to move patients who require nonemergent care out of the emergency department and into lower-cost, more coordinated sites.
From the ED to the corner drugstore
Where much of the program takes place is at the Walgreens store that opened in late 2013, adjacent to the Johns Hopkins Medicine campus. The facility is not just a drugstore; it's also a training site. This is the tangible result of an idea that an acute-focused major academic medical center can work in the nonacute setting to develop new models for improving patient care and making it more efficient, says Jeanne M. Clark, MD, director of Johns Hopkins' division of general internal medicine and a professor of medicine at the medical school.
"The store was an outcropping of the idea of how to partner together, but a lot of it had to do with research incubation," she says. "Because the Walgreens is a provider of a number of clinical services, we review protocols on whether they are using the right research to develop educational programs for their workforce, including pharmacists and nurses."
Clark says the collaboration will develop efficient best practices and educate the public, providers, and policymakers about how to implement some clinical care to lower-acuity sites.
"If you have a rare condition, there are probably only a few places to have your care," she says. "But a lot of other care—like where people get their flu shots—that doesn't need to be in Johns Hopkins."
She says that Johns Hopkins is partnering with Walgreens simply because "there are a lot of issues they can and should be addressing."
Types of care
Clark says much care can be done cost-effectively outside the hospital, or even outside the physician's office. Flu shots are an example, but there are more. For example, within the store, Walgreens and Johns Hopkins have focused on developing and implementing novel clinical programs. Two of the most developed examples focus on rabies vaccinations and some treatment of sexually transmitted diseases.
The need for a rabies vaccination is uncommon, Clark notes, but there's no clinical reason to administer it in the emergency room, which, at the moment, is the only place in Maryland where the vaccine is stocked and administered. And it's a multiple-visit treatment, requiring follow-up injections after the initial evaluation and shot. "After the initial shot, really, anyone who gives shots could give the additional shots." Clark says.
The program being developed at the store encourages patients to get follow-up care at Walgreens after initial treatment in the ED. "If this works here, Walgreens could partner with other hospitals to do this in other areas," she says.
Another example of the partnership is that both organizations are involved in shifting the handling of patients with sexually transmitted infections from the ED to the Walgreens.
"There's no need for someone with high clinical knowledge to do this," says Clark. "And the health department is overrun and not open on evenings and weekends. They could get this treatment right there in Walgreens. It doesn't need to be in ER or the health department. Things like this are a part of why other countries have higher quality and lower cost than the U.S."
Developing joint programs with Walgreens dovetails with the health system's mission of improving the health of the community and finding ways to do it outside the walls of the hospital. The program also serves its mission to try to reduce the cost of care when possible. "That's is what I find compelling about a partnership like this," she says. "It's why I get up every morning and come to work."
Walgreens' bet on services
Harry Leider, MD, Walgreens' chief medical officer, says the implications for cost savings across Walgreens on a national scale are enormous.
Harry Leider, MD
"Now with nurse practitioners and digital tools, we're interacting with 8 to 9 million people a day," he says. "Hopkins is, of course, a world-renowned health system and research center but is still limited to a geographic region, even though they have some international sites. The idea here is to leverage this incredible intellectual capital around clinical innovation."
The store allows testing and learning on a small scale, but that can quickly be ramped up, as Leider says is happening with the STD and rabies examples, which are the farthest along in testing.
"We're still in the pilot and exploration phase around the STD example, but we can offer treatments right there in the store that are much more cost-effective and quicker than if you received them at a hospital."
The joint effort is investigating a range of other programs around services such as hepatitis C treatments, and an innovative way to use computer technology for smoking cessation, although those collaborations are farther down the road.
Richard Grossi, Johns Hopkins' senior vice president and chief financial officer, boils down the attractiveness of the partnership for both sides.
"Walgreens wants to be seen as an attractive place for patients," he says. "So from their point of view, they get the value of more foot traffic, and they're sort of feeding their patient care delivery model."
From Johns Hopkins' point of view, he says, "readmissions cost money, and they're going to cost more money in the future. We have a new reimbursement system in Maryland, and we have more at risk here than anyplace else in the country. Maryland has a high readmission rate, so focus is imperative."
Grossi says he thinks of the Walgreens partnership as a way of addressing some of the issues hospitals and health systems are going to face in the near future, including capacity issues in the acute care setting due in part to Medicaid expansion. "If we're taking care of more people, we are going to need greater capacity, and we already have some shortages," he says.
Utilizing nurse practitioners and changing the role of pharmacists to a more interactive and consultative one with the patient is a way to do it.
Walgreens is providing the initial funding to expand on what the partners have developed already through the on-campus store by establishing with Johns Hopkins the Brancati Center for the Advancement of Community Care. Named after the late director of Hopkins' division of internal medicine, the center will aggregate the care model research under one organization.
Richard Grossi
Grossi and Clark both envision the Brancati Center as a place where healthcare leaders can come to see and train on certain protocols they develop, and where Hopkins and Walgreens can assist in evaluations on whether such innovations can be integrated into other hospitals and health systems in a high-quality fashion.
"We can't be everything to everyone in this new healthcare marketplace," Grossi says, "but within our sphere we have to be able offer everything. Wherever there's a responsible partner, we're interested in talking to them."
As for what might come of the partnership eventually, in terms of cannibalization of traditional hospital-provided services, Grossi is philosophical about the financial impact to hospitals and health systems.
"We don't know who's going to win or lose in this. This is more a learning experience," he says. "Walgreens is trying to get as close to our operations as possible and we to theirs to understand where there is a meaningful opportunity to support the patient care mission. This is the only joint venture between a large medical center and a drugstore company that I'm aware of, and their new leadership team is as committed as we are to live in each other's worlds as much as possible."