Uncertainty is in the air for hospitals and health systems across the U.S., as policymakers grapple with how to make the journey from Obamacare to Trumpcare.
Yet no matter what happens in Washington, D.C., there are four key strategies that health leaders can focus on right now to simplify the decisions in front of them and position their organizations for future success.
Underlying these strategies is the reality that the current system is unsustainable. Regardless of what changes government implements, large employers are on an unstoppable march away from the current employee health benefit system toward one with a defined contribution—in much the same way employers migrated from traditional pensions to contributing a defined amount to an employee's 401k.
Employers want to write a check, and have certainty about the amount of that check. They will supply the push to keep the healthcare system moving toward a business model that pays for value of care instead of volume of services. Here's what I believe health system leaders need to concentrate on today to begin gradually shifting their weight toward a value-based care system while the dust settles on Capitol Hill's reform efforts:
• Begin aligning physician incentives to value. Start at the smallest sub-atomic particle of the healthcare delivery system. That's the moment when the physician writes the order. Incentives must be aligned to encourage the doctor to make a value decision at that moment instead of a volume decision.
The only way the value model works is some form of premium-based payment. The physician gets paid a set amount to care for a certain population for a year at defined standards of quality. That structure creates the incentive for physicians to make the day-to-day decisions that will achieve the highest quality care at the lowest possible cost.
• Improve revenue cycle management. With health systems still having one foot planted firmly in the volume-based world, there remains the need to focus on revenue enhancement and finding money that's left on the table. Time spent improving reimbursements, coding and collections is time well spent. A financially strong, high-performing organization is going to be in the optimum position to make the innovations and investments needed to transition to the new value-based environment.
• Lean out processes. The reality is that this is a zero-sum game. Hospitals and health systems are not going to be getting more money. The government always wants to reduce the unit price and make providers do more. That means we need to get leaner.
That goes beyond just improving efficiency in operations. It applies to every buying decision. That great new app or tempting piece of technology? If it just layers on cost without adding real value, it doesn't fit the new paradigm.
• Re-tool to serve larger populations. Moving to a new business model requires a new thought process. Under value-based payment, a hospital could see 20 percent of its revenue go away. To replace that revenue, this hospital that has been serving 1.1 million people will now need to have a relationship with 1.7 million people.
The same applies to service lines and physician practices. The average primary care physician sees 2,000 people a year. To maintain current revenue in the new environment, that doctor will need to see about 3,500 people annually. It's the role of health system leaders to help physicians, service line leaders and others in the organization make the infrastructure changes necessary to care for larger populations, from the use of physician extenders to improved health information technology to telehealth and virtual office visits.
Today, I believe the most dangerous enemy for hospitals and health systems is inertia. When so many different possibilities may happen, it's easy to get stuck. But in reality, the path ahead is fairly certain and it's value-based care. These times of uncertainty are an opportunity for leaders who are willing to begin taking the initial steps to succeed in that new world. Start small, start simple, but start now.
Steve Mason is a co-founder and managing partner of CSuite Solutions, a strategic advisory firm serving health system leaders across the U.S. He formerly served as CEO of BayCare Health System in the Tampa Bay and Central Florida region with 14 hospitals, 26,000 employees and over $3 billion in revenue. Prior to BayCare, he was the COO of Texas Health Resources, an Arlington based system with 13 hospitals, 17,000 employees and $2.3 billion of revenue.
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