In seeking culture change, leaders are best served by foregoing any negative messages and instead finding existing pockets of "good "—teamwork-oriented culture that other groups can emulate.
In a time of great uncertainty in healthcare, a catch-all phrase, and the desperate need for it, has become trendy: Culture change.
In many cases, healthcare executives are using this phrase as shorthand for the fact that old working relationships, in many cases siloed, will no longer work going forward. Healthcare organizations are increasingly being held accountable not only for specific outcomes from specific interventions, but ultimately, for the health of the populations they manage.
Executives argue, with justification, that activities that do not bring value to the service being provided will have to be excised. This is certainly true, from a strategic point of view. But at the operational level, the message that is heard is that poor culture is the employees' fault.
Of course no one says it that way, but it is implied, because culture is created not by executive decision, but by the individuals doing the work. In fact, in the trenches, the need to change culture may not be so glaringly obvious. In many cases, it may not even be necessary.
Hold the Negativity In any organization, even struggling ones, there are pockets of good—teamwork-oriented culture—already. Shouldn't you work toward delivering a positive message rather than a negative one, and toward ferreting out those pockets of "good culture" so that others may emulate them?
I think so. This subject came up recently in a group conversation I was having with several senior leaders from hospitals and health systems from across the country.
"Senior leaders always talk about the need to change culture, but I believe employees get tired of hearing that the current culture is bad, necessitating the need to change it," says Pamela Stoyanoff, executive vice president and chief operating officer of Methodist Health System in Dallas.
"I feel like every organization has pockets of great culture," she says, "and I think it's more important to root out those pockets of good culture to celebrate and replicate them within your organization versus constantly trying to say, "We've got to change our culture."
Stoyanoff offers a practical example. Emergency departments in the four-hospital Methodist system range in patient satisfaction scores from the 40th percentile at worst to the 90th (best). The emergency department is a particularly tough place to achieve great results, she says, because most of them are very busy. But the variables are not so great as to explain the 50 percentage-point difference.
"If we want to replicate our high performing results in our 90th percentile ED, we have to understand how they got there, and how they work with their staff and their leaders and their physicians," Stoyanoff says.
"So we're having our other ED leadership go to that ED to see what they do. How they hold themselves accountable. How they train people to talk to patients and to keep them informed about delays. Because there are delays in this ED. How do they still get that kind of result, and how can we replicate that through the rest of our organization?"
'Dangerous Territory' It's not that people don't want to change their culture to one that's more cooperative, less stressful, less hectic, and more accountable to patients. But they often don't know how.
Demoralization can easily set in if all they're getting is negative messaging about the culture as it exists now. And if they're getting that alone, it also shows the powerlessness of the executive behind the messaging. Because they don't know how to change the culture either.
Most employees understand that the culture is them. They therefore receive criticism of their culture as an indictment not only against their ability to work together smoothly, but more importantly, to their commitment to healthcare in general. That's dangerous territory for any leader to tread on.
"People will tell me, 'I've been here 42 years, and I've been through all the changes. I've been through 14 CEOs, and I know I can change. I survived it all before, I can survive it again,'" says Stoyanoff.
That's an extreme example, but it's an attitude birthed from inconsistency, and raised in uncertainty of goals. It also suggests that the leader who's clamoring for culture change is at best out of touch, and at worst, seeking to shift blame for a problem he or she is out of ideas to help solve.
Which is why Stoyanoff, as well as current Methodist president and CEO Stephen Mansfield, are such believers in "rooting out where the pockets of exceptional culture are, and showing others in your organization how it's done really well."
"That's peer pressure," Stoyanoff says. "Everybody learns through that. And it also celebrates that your organization does have places where you're already there."
In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. They are making a difference in healthcare. This is the story of Charles Kennedy, MD.
This profile was published in the December, 2014 issue of HealthLeaders magazine.
"This can work, and it can help the American people, and you can build a business that's not only profitable but a higher-quality product at a cheaper price."
When Charles Kennedy, MD, was training as a physician in the Bay Area in the '90s, socially, he ran not with the other physicians, but with his friends in electrical engineering or in computer sciences. Noticing the lack of technology in healthcare delivery, he managed his own patients with the help of his laptop, and so began a career bent on what he calls an opportunity to make an important contribution to the quality of healthcare.
Nearly 20 years later, Kennedy is chief population health officer for Healthagen, an Aetna company. Until recently, he had served as CEO of Accountable Care Solutions from Aetna. In his new role, he has responsibility for expanding population health endeavors with providers across all Healthagen businesses (Accountable Care Solutions, Medicity, ActiveHealth Management, and more).
Kennedy is at the forefront of transforming Aetna's business away from its role as a nationwide commercial insurance company that competes on price and access with health plans that are frequently larger and more locally dominant. The pace of Aetna's rollout of value-based plans, and Kennedy's leadership of the initiative, merited his inclusion in the HealthLeaders20.
"If you look at the way healthcare is bought and sold, there's really no notion of accountability. You're buying the product from a third party but then receiving the care from physicians, and hospitals [that are] not part of that organization," he says. "So it's very difficult to create accountability for cost and quality from a business model perspective. The ACO, which allows you to work within a PPO concept, offers balance, cost, and quality performance. I thought it would be a major driver of change. This was probably the most fundamental and exciting opportunity to create change that I have seen in my career, so I wanted to be at the center of it."
Aetna's ACO strategy was born from its expertise in managing costs and quality, as well as its desire to establish a different metric under which to sell its products. It allows the company to go toe to toe against its competitors in geographic areas where it doesn't have the most beneficiaries. That's the main reason Aetna has aggressively been building ACOs, perhaps more than any other competitor.
"Health insurers are large organizations because we're a fixed-cost business. We're trying to get as many members as possible so we can spread that fixed cost over large numbers of people," Kennedy says of health insurers' traditional competitive landscape. In a healthcare system focused on the volume of services provided, the combination of large size and large market share "froze the industry in place" for many years, he notes. Under that framework, the Blue Cross and Blue Shield plans, generally, had the most market share.
"In the old game, whoever had the most market share got the best deals because it was a volume-based system," says Kennedy. "Whoever had the volume kind of won, and that was generally the Blues. But the new game is about who can create the greatest healthcare value, which could potentially replace and supersede the old volume model, and that's why Aetna's so focused on it."
As a nationwide company that often played second or worse in terms of covered lives in local markets, Aetna was "a mile wide and an inch deep," says Kennedy, so it couldn't compete well in the volume game. "This gave us a new business strategy that could allow us to outcompete the other health plans and has worked out quite well for us."
Aetna is a profit-making company, so it's not jumping into ACOs without careful thought and strategic decision-making, and it's not acting out of altruism. But it is partnering closely with health systems to create narrow networks that have promising potential to reduce costs, and this makes its approach unique.
ACOs offer a promising area of growth for Aetna, but they still represent only a small part of its business. In terms of industry transformation from a volume game to a value one, Kennedy estimates that Aetna is in about the third inning, to use a baseball analogy. He says organizations like his have been able to put the financial rules of the road in place with such ACO plans. And Aetna has created the aligned incentives and shown it can sell ACO products very well, with growth rates in excess of 500%.
"We've shown we can sell it and that people will purchase it, and early data shows organizations can meet their cost of care targets in shared savings and they will be able to deliver low-cost, high-quality care," Kennedy says. "The reason it's in the third inning is we have around 50 ACOs in place, but Aetna has literally thousands of relationships. We'd still have a long way to go to create a national network and to achieve the penetration in major markets we need to make ACOs the normal way of purchasing healthcare."
The industry is still embryonic when it comes to transforming care delivery, he says. "In a value-based world, you need data on individuals, interactions, and a common understanding of what's going on to help clinicians deliver care that's consistent with the evidence base. Most IT tools today don't do much of any of that," Kennedy says.
So tech has a long way to evolve—as does the construction of most delivery systems, which aren't set up for accountable care. "They're organized, by and large, on an inpatient revenue basis," says Kennedy. "Empty beds are a bad thing because they represent a loss of revenue opportunity. Systems have to transform themselves to being more out in the community where they can work with people where they are and manage chronic disease outside the inpatient setting where it's less expensive. That work has a long way to go."
So far, Aetna's work has been successful by the metrics of cost reduction and quality improvement, Kennedy says. "I could cite the number of products we've introduced that are anywhere from 8% to 15% lower in costs, or that quality measures are in all our PPO contracts, but what's most important is we've shown that it is possible, and we have a track record of success in accountable care at a time when there are such levels of cynicism about the healthcare industry. This can work, and it can help the American people, and you can build a business that's not only profitable but a higher-quality product at a cheaper price."
So it can work, but with a healthcare equation so long resistant to improving value, will it?
"There are more reasons it could fail than reasons it could succeed," Kennedy admits. "We're trying to change an industry that is resistant. The biggest concern I have is the federal government and Medicare program. They have done a great job with CMMI [CMS' Center for Medicare & Medicaid Innovation], but because they control so much of the spending, if they don't get the ACO piece right, it will put in jeopardy to some degree the depth and breadth of the initiative."
The Medicare Shared Savings program was effective in getting organizations to participate, says Kennedy, but many organizations have not saved as much as they expected to, and many who were already efficient chose not to participate. Healthcare provider organizations are only going to reengineer when enough of the patients they treat are tied to this economic model, says Kennedy.
"The Feds are their leading payer, and in many circumstances that's the case," he says. "So if they don't get it right, it makes it much more difficult to justify the expense and risk and organizational effort involved in trying to transform."
In our annual HealthLeaders 20, we profile individuals who are changing healthcare for the better. Some are longtime industry fixtures; others would clearly be considered outsiders. Some are revered; others would not win many popularity contests. They are making a difference in healthcare. This is the story of Steve Simonin.
This profile was published in the December, 2014 issue of HealthLeaders magazine.
"Because of our culture, we've never had to pay recruitment fees for physicians. They come to us, which is odd in rural Iowa where there are more pigs and chickens here than people."
Steve Simonin, president and CEO of Iowa Specialty Hospitals and Clinics in Clarion, slaves over a hot grill or espresso machine most Saturdays. It's not because he needs extra cash. He owns a small coffee shop and restaurant in the tiny town that still has a hospital thanks in part to his leadership. Appropriately for the kind of work Simonin does on Saturdays, the place is named "Grounded."
He calls it an "expensive hobby." Some hobby. But as the hospital CEO, he employs 500 people in a town of 2,800. What's a few more?
"It allows me to get out of the mold as just the CEO in town," he says. "Here, you employ most of the people and you're a neighbor to the rest, so it's kind of difficult for people to see me as anything other than the big boss."
That's the main reason that Simonin has held down this unpaid part-time position as a short-order cook for nearly three years—one where he wears a chef's hat and shorts to work instead of a suit. "I've been here 18 years and all I've done is hospital administration my whole adult life. I have a master's degree in hospital administration, so all I know is the corporate boardroom," he says.
He got a taste of a different perspective when one of his staff encouraged him to "take a walk in my shoes." That, coupled with an inability to sit still, led to opening Grounded. "Now that I do this every Saturday morning, I have a new respect for our support services," he says. "And I like to think they have more respect for me, as well."
Though Simonin himself would never characterize his leadership as having saved the town's hospital, there's a very good chance it's true. And if results equal respect, Simonin should have it. Those results—turning two struggling rural hospitals into one that's combined and thriving—represent one big reason he was named to the HealthLeaders 20 this year.
What makes the story all the more interesting is that Simonin was let go once—from this very same job.
At that time, Iowa Specialty Hospitals and Clinics (now two hospitals under the same corporate name) was just one hospital in Clarion, and it was called Wright Medical Center. Simonin managed it under a contract the board signed with a much bigger nonprofit hospital company that employed a large group of physicians who worked at Wright. Those physicians wanted to work for Simonin at Wright, and he wanted the same thing, but they were all employees of the managing health system. He hired them at Wright. The health system terminated Simonin's contract. The board at Wright terminated the management contract and hired Simonin back as the CEO.
"They called me up the day after Christmas and terminated my contract," Simonin says. "Best day of my life, but it was really just a transfer of employment."
Simonin didn't go off half-cocked by hiring the doctors. Months prior, he had decided, after leading Wright Medical for four years since 1996, that it was time to find a new job. But he was in the middle of a personal crisis, as his mother in Sioux City, Iowa, had been diagnosed with metastatic lung cancer. He spent many days and nights with her at the big hospital in town there.
"I had stayed the average amount of time for a CEO, and I figured I would wait out the year," he recalls of the idea to seek greener pastures. "But I had applied for jobs and got no attention. I started doing some life coaching, and realized with help that I really hadn't differentiated my hospital."
He had also suddenly been thrust into the role of patient advocate somewhere where he wasn't in charge. "I started seeing healthcare differently in Sioux City. I was wondering if my hospitals were loud, or dirty, or if the call button always brought someone quickly to the bedside. In my hospitals, can I go to the nurse's station? In my hospitals, do my patients lack a patient advocate? All of this started to resonate with me."
Simonin credits a consulting relationship with Quint Studer, founder of Studer Group, with focusing him on how to bring care and compassion back to the bedside.
In 2003, after Simonin hired that first group of physicians, word got out. By 2005, more specialists wanted Iowa Specialty to hire them.
One of Simonin's biggest risks since his new tenure began was taking another struggling critical access hospital into the fold. When the former Belmond Medical Center was absorbed, the two became Iowa Specialty Hospital. "I think they were getting ready to close it," Simonin recalls. "They had zero debt, but had a census of 0.8 and 50-some employees. Yet people were using it less than a Band-Aid station at the time."
Now boasting a bariatric surgery center as well as numerous specialty services, the Belmond hospital is in a new facility built with funding from the USDA. "It's only 15 miles away, so this was a very risky thing for us to do. It would have been easier to walk away, but we've built a new hospital, the employee base has doubled, and a bariatric center of excellence went there. Docs started coming back and patients started coming back."
Above all else, Simonin credits the system's success for making it a preferred practice location for physicians, despite the obvious disadvantages of its location and size. "Because of our culture, we've never had to pay recruitment fees for physicians. They come to us, which is odd in rural Iowa where there are more pigs and chickens here than people. There's not a lot in this county, but docs are driving up from Des Moines to work here. I'm not saying we're Mayo, but we're a destination."
Perhaps not surprisingly, both campuses are in the 95th percentile for patient satisfaction, physician engagement, and clinical quality performance, according to Press Ganey. "Our vision is to be the benchmark for all rural healthcare. We pride ourselves in getting calls from other rural healthcare organizations around the country, and we think we're setting the bar for them. It's a huge point of pride for all of us."
Simonin has a positive message for all his fellow rural CEOs who are struggling: Innovate. "There's opportunity out there. Don't see doom and gloom in your future," he cautions. "Whether it's merging with another community or bringing on some interesting services, we're interested in showing them that path. People come to visit to learn from us."
And they just might be asked to flip a burger or two while they're there.
Four healthcare executives discuss how providers are focusing more on liquidity in the wake of reimbursement models born out of shaky financial, regulatory, and political environments.
This article first appeared in the November 2014 issue of HealthLeaders magazine.
Health systems are positioning themselves for new reimbursement models amid shaky financial, regulatory, and political environments. The uncertainty leaves providers more focused on liquidity. Many have found medium-term capital an attractive alternative in their strategic capital formation to fill the gap between short- and long-term investments. Matching credit term length with the useful life of assets such as electronic medical records systems, clinical integration with outpatient care settings, and infrastructure enhancements (e.g., renovations, energy projects) presents many economic, accounting, and compliance benefits.
Roundtable Highlights
HealthLeaders: If the top goal for any healthcare organization is to improve the health of their community, Goal 1-A might be to marshal its financial resources such that it's able to continue to do that work. How difficult is that given the upheaval we're seeing?
William M. Snapp III: It's very difficult to estimate the impact of certain facets of reform. One example is the decrease in disproportionate share payments. You can project the impact, but trying to incorporate that impact into your budget and make sure your costs are in line is very difficult. And then to communicate to your nonfinancial people that you have to control your labor cost is a challenge as well.
HealthLeaders Media shows many health systems embracing strategies intended to improve the health of populations. But is it hype or reality?
One question I always try to ask senior leaders when interviewing them on any subject is how their organizations are progressing on population health initiatives. Sometimes the answers are short, sometimes they go on longer, but they're always illuminative. Mostly, leaders can point to a number of initiatives that add up to the magnitude of organizational restructuring necessary for competing in a population health-driven marketplace. More than occasionally, however, I hear that they're not doing much at all beyond CMS core measures.
Their reasons for holding back vary. Here are a few common ones:
We're too small
My state's dominant health insurer isn't interested in risk contracting
We'll cannibalize our still-dominant fee-for-service business
Embarking on this type of fundamental transformation is too risky
You can always find an excuse for not doing something. Ask my wife. But it seems to me that at minimum, senior leaders owe it to their organization to at least figure out how to address population health management with Medicare Shared Savings or better yet, with their own employees.
I don't ask this question of all the people I interview because I'm necessarily going to write about their preparations (or lack thereof) for population health. But I don't do it to kill time, either. I ask because I'm always curious about the degree to which big, hyped changes to healthcare's business model are translating into action. Here's what I'm trying to understand:
What size organizations are buying in? (Mainly the larger ones, as you might expect, but several small organizations are finding a way.)
Is size or lack of a coordinated care continuum a detriment, and are you taking steps to change so that your organization acquires such prerequisites through partnership or purchase?
How much of what we hear about business model disruption is hype and what is of substance?
Relying on my informal surveying alone, I would guess that adoption of population health strategies was widespread; well more than two-thirds of the senior leaders I interview are excited about how they are embracing population health and changing healthcare for the better, eliminating waste, coordinating the care that was previously siloed, and adding the pieces necessary, through partnership or acquisition, to provide healthcare instead of sick care. Many happily say that this more aligned model is why they decided to make a career of healthcare in the first place.
Curtis Kretzinger, chief operating officer of Mosaic Life Care, until recently known as Heartland Health, in St. Joseph, MO, is making population health the strategic focus of the organization, and he says it's invigorating for him personally and for Mosaic's clinicians to find innovative ways to align with the patient's best health interests. He has high hopes for Mosaic's version of population health strategy.
"The problem with healthcare is it's focusing on the wrong end of the equation," he says. "What happens if I can keep you from being sick? Most are sick not because of illness, but because of their life. Wouldn't that be cool? Would you pay for that? Of course you would. We know how to do that."
Of course there's one major problem with such anecdotal surveying: selection bias. As writers, we tend to gravitate toward those organizations that are being bold—those who are innovating. No one wants to read about the status quo. Our readers already know how to deal with the situation as it is; they want to know how to adapt to what's coming. Which is why I'm glad I can rely on one of the dozen or so major surveys our research division produces each year to balance what I'm hearing from sources. Because population health, while hot, is not taking hold quite as quickly as I would have thought.
The standout statistic in our October research and analysis report is one where my informal questioning would have led me to the wrong conclusion: that for most healthcare organizations, population health is their future and they're working as quickly as they can to move from one business model to the other. The key insight into reality is in the responses to this question: How is your organization poised to improve the overall health of a population?
While 49% say they are "fully committed and under way," and 31% have experimental pilot programs under way, 20% have not reached the experimental stage—that is, with pilot programs and the like.
Many of us have lived through the failed promise of managed care, the mixed blessings of healthcare IT implementations, the Patient Protection and Affordable Care Act, the implementation of healthcare insurance exchanges, and the endless tinkering with payment methodologies by the Centers for Medicare and Medicaid Services. Hype is a spectator sport in healthcare.
But the fact is, many healthcare providers are still paid based on fee-for-service contracting, which is a disincentive for the radical changes that have to occur with a strategic pivot to a population health-based strategy.
Here's what I can say with some confidence: Whether today's population health strategies aimed at providing right care at the right time in the right setting will ultimately be successful is undetermined, but I applaud the efforts and the early results of those who are innovating efficiency into a bloated and often pernicious healthcare sector. By the time it is clear enough to distinguish hype from reality, it will probably be too late to change course.
The state's all-payer global budget model is helping hospitals justify investments to reduce avoidable utilization. Leadership from LifebridgeHealth's Sinai Hospital is in the forefront.
For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the message was lost.
For want of a message the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.—Ancient Proverb
As the proverb says, minor actions can result in major consequences. Amy Perry, president of Sinai Hospital and executive vice president at LifeBridge Health in Baltimore can testify to its wisdom.
Amy Perry
President of Sinai Hospital
For want of a stove, a diabetic was unable to prepare proper meals. For want of a proper meal, this diabetic experienced problems that worsened her health. For lack of a ride to the doctor's office, this diabetic was unable to secure a regular supply of insulin. For lack of a regular supply of insulin, she frequently visited Sinai's emergency room, generating thousands in healthcare costs.
Since she's been enrolled in Sinai's revised community outreach program, which began in this year, she hasn't seen the inside of an emergency department.
"In this case, we have a center for health and active aging, and we were able to connect them with her so she could learn how to prepare healthy meals. We found a community organization that paid for a stove," Perry says. "Things like that can make an enormous impact. She has not been readmitted since enrollment and she [had been] near the top of our frequent utilizer group."
Though not a perfect analogy to the ancient proverb, Perry says many frequent visitors to her 504-bed hospital's ED could tell variations of the same story.
But things are changing. Part of the reason why is Maryland's unique approach to try to get healthcare organizations to integrate population health strategies that keep people healthy and away from expensive, avoidable utilization.
Because of the way LifeBridge Health and other health systems in the state are paid, they can quickly ramp up population health activities that range far afield of inpatient care. Unlike other payment systems that still feature a mishmash of contracts and difficult-to-decipher incentives and disincentives, the ROI for such work is abundantly clear.
'Global Budget Revenue'
Your organization has a budget determined at the beginning of the year. Revenue is already known. To the extent you can keep people healthy and away from the most expensive treatments and utilization, the bigger your margin. Simple.
"Our new agreement with the state at the beginning of this year, which we call 'global budget revenue,' is essentially a cap on the dollars they give to the health system, which accelerated our effort to reduce avoidable utilization," says Perry.
"So when we were looking at what we could do with population health, we wanted to start with reducing the health disparities in the communities we serve."
Maryland has long been an outlier in healthcare. For 36 years, the state operated under a Medicare waiver that allowed it to operate the nation's only all-payer hospital rate regulation system. Essentially, it allowed Maryland to set rates for hospital services, and all third-party purchasers paid the same rate.
But the state changed the system significantly in 2014, as CMS and the state announced a new "all-payer model" to better help hospitals make the transition toward management of the health of populations.
Essentially it requires the state, over a five-year period, to move away from its statutory waiver in exchange for a new "innovation center" model. In practice, it's essentially using a formula to determine hospitals' revenue from the beginning of the year, rather than tallying it at the end.
Capitation The new model requires the state to limit its annual hospital cost growth to the 10-year growth rate of the state's gross product (kind of like state GDP, in economics terminology). If the state fails at this metric, it will have to transition back to the national Medicare payment systems.
"The state is really providing an accelerated way for our hospitals to engage in these kinds of proactive wellness programs and helping us bridge the financial challenge of moving from fee-for-service," she says.
And Perry couldn't be more excited about the jolt it's given to the organization's population health initiative, particularly its community outreach activities, which brings us back to the stove, and how Sinai's new care team even figured out that it was a problem.
Perry says the postal zip code where the hospital is domiciled was a great place to start, because of the health disparities within it.
"Our zip code, 21215, has a much lower life expectancy than its surrounding neighborhoods," she says. "With our goal of reducing health disparities, we looked at what resources we had and what we could develop to help us improve the health of the entire community."
So began an intensive effort on the 60 blocks or so that is commonly referred to as the Park Heights community. Perry says Sinai mapped out transit systems, youth services, employment, housing and community development, social services and religious organizations, and looked at movement patters of people who lived in those neighborhoods.
Building a Network The broad goal is eventually to create a social services network that will consist of people who don't necessarily have clinical skills, but who can help provide support, even if it's transporting a patient to an appointment.
As part of the program, the hospital hired 22 outreach workers who keep in regular contact with high utilizers to make sure they are getting what they need in follow-up care. The program started with a diabetes outreach group that helps with education, insulin access, and yes, stoves and other household impediments to proper management of this chronic condition.
One of the largest untapped resources was houses of worship. There were 67 of those in the immediate area. In addition to the outreach workers, the hospital has also created an "ambassador" program for religious organizations and the hospital's employees who live in 21215 to help build trust, and integrate the hospital into the community's social services network.
"This is absolutely a grass roots engagement and that's one reason it moves slowly," Perry says. "We need to develop trust to make progress, and we are leading it with funds, infrastructure, and data, but if it's going to be successful, it needs an organic component where our neighbors will see the benefit of participating."
Some Quick Wins
Identifying the critical needs of the community based on health indicators helped the outreach team decide where it could make the most impact the most quickly.
"Getting that baseline info helped us target key health issues in our neighborhood and helped us make an early impact," Perry says.
The first initiative was a diabetes medical home extender program. The hospital sends coaches to people who are willing and who are frequent ED visitors because their diabetes is not well controlled. With home visits and phone follow-ups, trained outreach workers can identify other social pressures that are causing noncompliance and help solve them.
The woman with the stove problem, not surprisingly, had many other impediments to good diabetes management. She was on limited income, on disability, and had no sense of how to prepare healthy meals. She was given taxi vouchers to help travel to follow-up appointments, and Sinai was able to set her up with a primary care physician, who can help ensure regular insulin access.
The program is so new that Perry won't have outcomes data for another six months or so, but the anecdotal evidence that a significant difference is being made is compelling.
"Addressing these things can make an enormous impact," says Perry. "It shows what you can do when you get out into the community and leave our campus. That's really what population health is, and it's very rewarding to make a difference in people's lives."
When it comes to creating an accountable care network based on population health, some organizations believe ownership is overrated; contracts to share accountability may work just fine. But will insurers play ball?
As healthcare reform has begun to mature, many top leaders and boards are finding that for one reason or another—they can't get access to capital, they don't have scale, they don't have accountable care partners to bridge the continuum of care—they need the help and negotiating heft that a bigger partner can bring. Most often, this means selling to a larger enterprise, a trend that has raised suspicions of monopolistic behavior and fears of much higher healthcare costs.
But besides mergers or acquisitions, there are many ways to find your place in a future where organizations are accountable for outcomes and can earn financial reward for efficient care, or get hit with penalties for inefficient care. Which of these options is right for your organization is perhaps your most critical leadership challenge.
While acquisitions of smaller hospitals and systems by bigger ones is continuing at a strong pace, many other, more creative deals are also taking place in which assets are not merged. Just one example is the recently announced partnership between Ochsner Health System and St. Tammany Parish Hospital in Louisiana.
So the question before leaders is not necessarily whether you can remain viable as an independent organization. Independence can be relative. You will be forced to develop business relationships with areas of the healthcare continuum that are missing from your system, but you don't necessarily have to own those pieces and they don't necessarily have to own you. The real issue is whether you can find the right recipe for your organization's unique circumstances.
Keep sight of the genuine goal
Some of these crucial strategic decisions can be made simpler. Many CEOs (and boards) are convinced their hospital or health system doesn't have the tools, the expertise, or the scale to participate meaningfully in a future where reimbursement is determined more by outcomes and health maintenance and improvement than by services rendered. More cynically (or more realistically), they're also motivated by knowing that they don't have the market clout to obtain the same reimbursement rates as their bigger competitors. So they proceed almost automatically to the conclusion that they need to sell before all is lost. But selling the hospital is not the real goal. Improving health is.
There are many options to go about improving care. Selling out, or buying up, is one possibility. But it's far from the only one, says Joe Lupica, chairman of Newpoint Healthcare Advisors in Phoenix, who works on strategic alternatives with mostly independent hospitals and health systems in nonurban settings.
No need for ownership?
There are other tools besides ownership to make the shift to value and transform care, he says.
"I'm not saying the people who own don't do it right, but you don't have to," says Lupica.
On paper, ownership is without question the simplest approach, but governance and a share of revenues can be arranged through other structures. Hospitals and health systems can enter into joint operating agreements, where governance and assets remain separate but operations and financial results are shared. Another option is a clinical affiliation, where the costs of population health management and infrastructure are shared, IT costs, equipment, and tools are integrated, and clinical pathways are agreed upon by both organizations. Further, joint ventures allow creation of new businesses in which both organizations have an agreed-upon share of governance and profit and loss sharing.
"If you're properly aligned with proper value attribution, and you are aligned by a well-designed, actuarially sound risk-sharing network, that's alignment, and it doesn't matter if you don't own them," says Lupica.
Creative arrangements mean taking risks. But isn't that what all of this is about anyway?
"Psychologically, people believe ownership is permanent," says Lupica. "But you can design a definitive agreement with a network and joint venture, for example, to last longer. It is harder for the investment banker and the lawyers though, I admit."
Potential poison in the well
One problem that has recently surfaced is a reluctance from health insurers to negotiate with so-called clinically integrated networks if both organizations are separate in terms of assets. Basically, that means that although you can coordinate care and coordinate incentives between organizations, you can't necessarily count on the cooperation of commercial insurers when it comes time to negotiate contracts.
This might seem to be an insurmountable obstacle if other insurers follow the intentions of Blue Cross & Blue Shield of Illinois. This particular decision by a major commercial insurer to ignore affiliations when negotiating stemmed from a clinical affiliation that Advocate Healthcare reached recently with the much smaller Silver Cross Hospital. Both are in Chicago. While it's the smaller hospitals that will be hurt by such a decision, it could have a chilling effect on any cooperation between partners short of asset transfer or "change in control" deals.
Even "change in control" deals may be impossible because of potential antitrust scrutiny that could follow, which would reduce smaller hospitals' options even further.
Even so, small hospitals likely still have attributes that bigger healthcare organizations covet.
Your challenge, as the leader of the organization large or small, is to be creative and make the most effective use of these options.
As healthcare organizations reevaluate their strategies for growth, we examine three very different approaches.
This article first appeared in the October 2014 issue of HealthLeaders magazine.
Hospitals and health system leaders are facing both the biggest threats and the biggest opportunities for their organizations over the coming half-decade, as healthcare reform moves more firmly from theory to action. In the aggregate, they're already facing declining inpatient volume and declining reimbursements. Those challenges are felt unevenly, but universally. Further, even those with the blessing of favorable demographics are competing ever more directly with narrowly focused competitors that are nibbling away at outpatient volume as well.
Should hospitals and health systems be the consolidator of those growing services or should they partner with someone else who does it better? How important is leverage in each of dozens of potential markets? How do you, as a leader, ensure basic survival, and what does that look like?
Senior executives wrestle with all of these questions and more every day, and yet not all of the attempts to reshape their organization in this time of upheaval will succeed.
Regional Health's CEO discovered he couldn't just pull levers and push buttons to get clinicians to change practice patterns aimed at reducing sepsis mortality. Instead, he had to get out and lead that change.
This article first appeared in the December 2014 issue of HealthLeaders magazine.
Charles Hart, MD
As president and CEO of Regional Health for the past 10 years, Charles Hart, MD, thought he had a good relationship with physicians at the rural South Dakota health system, which has five adult hospitals, two specialty hospitals, and 24 clinics. He's one of them, after all, and that is a good thing when you're trying to get them to change practice patterns. You speak their language. Hart is something of an institution himself, having led the system for the first decade of its existence after having been associated with the system and its flagship, 329-bed Rapid City Regional Hospital, for the past 31 years. But all that goodwill and familiarity still wasn't enough.
But when the leadership set about trying to address the organization's greatest cause of mortality—sepsis—Hart found that meetings, evidence, and cajoling didn't work very well. After all, sepsis wasn't a problem that could be traced to one person or even one department.
"It doesn't live in one place within the organization like coronary artery disease or orthopedics or total joints," Hart says. "It's just everywhere." Sepsis is a problem in most inpatient organizations where patients must remain attached to IVs, catheters, ventilators, or other places deadly germs can lurk.
Which can mean that it's everyone's problem, and also no one's.
Hart and his leadership team decided to attack the problem through the practice patterns and care protocols of Regional Health's nurses and physicians. But they found they had trouble convincing staff that changes could make a difference in mortality and hospital stays. Clinicians didn't really know what they were doing suboptimally, says Hart. Without faith that any changes would be helpful, getting buy-in became the fulcrum on whether the system would be able to improve on this important metric, which increases mortality, unnecessarily extends hospital stays, and contributes to patient misery and even mortality.
And that's where Hart recognized a problem with the way he, as a leader of the organization, was approaching the issue. Running a large organization is sometimes like being the Wizard of Oz, he says. Others in the organization can't necessarily see all the levers he's pulling and buttons he's pushing. So he made sepsis an organization-wide target, and took on the problem personally by visiting sites of care frequently and asking questions about problems with the guidelines or their implementation.
"Our highest cause of mortality and our highest cost per patient was sepsis," he says. "But as CEO, you find out that you can't hide behind the curtain."
Instead, leaders have to get out there and deliver the message about why it's so important and how to drop incidence of sepsis.
A key is to find an improvement tool that you feel comfortable with and "live" that tool, he says. For Regional Health, that tool is Lean, borrowed from auto manufacturing giant Toyota Motor Company but since used successfully by many healthcare organizations to cut down on waste, duplication, and mistakes.
The hard part: engaging physicians
"The hardest group for us to bring on board were the physicians," Hart says. "But once we got them involved in some of these initiatives and they began to see the differences they could make, it really helped spark some confidence."
Strict adherence to evidence-based care protocols has made a huge difference. "We cut the cost of care probably 30%, and we cut our mortality 10%," he says.
Getting physicians and nurses to believe the changes would make a difference was the key to obtaining good results, says Hart. He says earlier successes with Lean process management set the groundwork for physician buy-in with sepsis protocols.
"The cultural change was when the physicians saw the differences we made [in other areas with Lean]. That was what got them engaged."
"They said, 'Hey, we can do this [with sepsis],' and that created the cultural change," says Hart, who will retire in January 2015. "I'm looking out from behind that curtain now, and seeing that they are going down the yellow brick road and they're doing the work."
For Hart, the success with sepsis was also a reminder that leadership decisions can't be made and executed in a vacuum. Leaders have to get to those who are doing the work and solve issues that crop up quickly. That is, the CEO has to be there in person. Not at every moment, but staff has to know he or she is there to help solve problems that inevitably interfere with implementation.
"What has made a difference for me personally is getting to the floors and bedsides to observe the processes and interacting with the doctors, nurses, and ancillary staff," he says. "Do they understand these new processes and protocols? Are there barriers we could remove? What works and what doesn't work? These interactions have been invaluable to great buy-in."
And as importantly, invaluable in teaching the CEO a lesson of his own.
When something means different things for different people, goals and milestones get muddled. Are today's physician alignment mechanisms about quality and lowering costs, or are they more about bunkering in for financial survival in turbulent times?
If you ask CEOs about their top five worries, most of them will put physician alignment somewhere on that list.—For many , it is the top concern, because without it, an organization can't grow, can't evolve to meet quality or cost targets, and might not be able to survive.
But knowing what CEOs are worried about doesn't tell us much. Let's look into why physician alignment is so strategically important.
Like most terminology meant to simplify difficult concepts into shorthand, the meaning of physician alignment has been garbled, lost, folded, bent, mutilated, and spindled such that what one CEO means by it could be completely different from another's view. And you can be sure physicians see it differently than do executive leaders.
What I think most hospital executive leaders mean by physician alignment, is that, broadly, their physicians' goals are similar to the organization's, or, at least, don't work in direct opposition to the goals of the health system. But if value-based reimbursement is the future, such a definition falls well short of what alignment should be geared to achieve.
What's clear from HealthLeaders Media's most recent survey and analysis of physician alignment is that for most respondents, physician alignment means financial alignment. Of the top three business staffing or organizational objectives or motivations behind organizations' physician alignment strategies, two are pointedly about the money.
Some 63% of respondents ranked "improve system margin," as among their top three, while 50% picked "ensure coverage for strategic service lines" and "maximize system revenue." Nothing wrong with that in theory, but let's dispense with the idea that physician alignment is mostly about improving care coordination or reducing the cost of care.
It's not that physician alignment can't help improve on some of these things, but for executive leaders, that's not the overall goal. The goal is to improve the margin and to improve revenue. I might also add that physician alignment is secondarily about gaining market share, servicing debt, and covering the uninsured, among other concerns.
No Margin, No Mission
Without margin, there's no mission, as the saying goes. Yet that's somewhat incongruous to the idea that physician alignment as a necessary condition for implementing population health strategies that will ultimately lower healthcare costs.
Executives shouldn't confuse physician alignment with the other, more esoteric goals of healthcare reform. And they shouldn't confuse physician alignment with the goals of population health, either. Plenty of execs talk about them as though they are one and the same.
Physician alignment is necessary for population health, but by itself, it's certainly not sufficient. The goals of the physician and the organization must be aligned to make that sort of system work, but you can have physician alignment without reducing the cost of care and even without improving the quality of that care.
When physicians are incented to actions that are detrimental to the goals of lower-cost care, better care management, reduction of overutilization, and patient safety and quality, they may be, perversely, aligned with the current environment that remains heavily fee-for-service-based.
Only if compensation, for both hospitals and physicians, is put at risk for meeting the goals of lower cost, better quality and health improvement for populations, will we have a chance at lowering the cost of care.
Some organizations—voluntarily or not—are beginning to experiment with risk-based compensation. But that type of compensation is difficult to implement. According to our survey, 32% of organizations have some compensation at risk for all of their employed physicians while 21% have no compensation at risk for any of their employed physicians.
Pushing Ahead, Taking Risk Some 48% of organizations have compensation at risk for at least some of their employed physicians. Those numbers have to get better for anything more ambitious, like population health.
But how many health systems themselves are truly incented to deliver lower-cost care, better care management, et al? If my experience as the moderator of several sessions at HealthLeaders' annual CEO Exchange can be instructive, many are—but only at the margins.
Most healthcare organizations still derive the majority of their reimbursement from fee-for-service medicine, which is not ideally suited to tying the financial fates of both hospitals and physicians together. The brave ones are pushing ahead with taking risk. The majority are still watchfully waiting. I don't know which is the smarter move.
Yet many organizations still see a benefit to trying, and they're leveraging their minimal experience with value-based reimbursement to try to make the connections between institution and physician that will serve both well as healthcare reform matures and reimbursement theoretically becomes more risk-based.
More than 77% of respondents are already heavily into physician employment, 67% are undertaking clinical integration, and 54% have created a patient centered medical home. But only 31% are under any form of shared savings contract, and only 29% are currently engaged in bundled payments.
None of this means healthcare as an industry can't cut costs and improve quality. There are hundreds of good stories about this around the country. But those stories appear to be the outliers.
If physician alignment is a bridge to better value, consumers, payers, and those healthcare organizations that have invested in it will benefit. But if all physician alignment improves is hospital and health system margins, then they're the only ones who will be better off. And that would be a shame.
