To remain successful amid a rapidly changing healthcare industry, hospital and health system leaders are prioritizing specific clinical, financial and operational improvements to achieve greater efficiency in 2018.
Streamlining care delivery and hospital operations can make hospitals more agile when responding to industry changes, according to Donald Wegmiller, chairman of the Scottsdale Institute, a nonprofit healthcare membership organization, and CEO of the healthcare consultancy group C-Suite Resources, both located in Maple Grove, Minn.
Mr. Wegmiller joined Brita Hansen, MD, CMO at Minneapolis-based LogicStream Health, to discuss the challenging political, financial and clinical issues hospitals face in 2018 and what healthcare leaders can do to ensure their organization's success.
Dr. Hansen and Mr. Wegmiller both have extensive experience in hospital and health system leadership. Prior to joining LogicStream, Dr. Hansen served as chief health information officer and medical director of inpatient quality and informatics at Minneapolis-based Hennepin County Medical Center. Mr. Wegmiller served as CEO of Minneapolis-based Allina Health for 15 years.
The two leaders shared their thoughts on major trends shaping the current healthcare landscape with Becker's Hospital Review ahead of a Feb. 20 webinar on the same topic.
Note: Responses have been lightly edited for length and clarity.
Question: What challenges will healthcare leaders face in 2018?
Don Wegmiller: There are many. The state of Medicaid reimbursement and other related policy issues, along with implications from the tax reform law, are putting pressure on hospitals' finances. Another challenge for healthcare leaders is trying to continually improve operations from both an efficiency and quality perspective. Clinical performance improvement is a different way of looking at maintaining or improving margins and quality. The third challenge will be keeping up with technology and cybersecurity risks. This is an increasingly difficult task for all industries, especially healthcare.
Dr. Brita Hansen: The big picture pressures of changing payment models, narrow margins and the continual evolution toward value-based systems poses a challenge to hospitals. I've lived in the trenches as a physician, and I'm most concerned of how we will address these big picture trends and do the necessary performance improvements. A big gap we're facing within health systems is how to control care delivery and care processes and how we spend our money to do that. It's a big frontier we need to be able to handle.
From the technology aspect, most health systems are in the five- to 10-year range of implementing an EHR. It's still very siloed. Clinical workflows and EHR workflows aren't coming together in an optimized way, and we're really ignoring how much EHRs impact care delivery. It's a major challenge to truly embrace EHR technology as a crucial tool.
DW: To build off of that, hospitals have a great deal of data, but they're not utilizing it as effectively as they can. The challenge will be discovering how to use this data to improve clinical performances and automate or routinize the care delivery process.
Q: How can leaders ensure their organizations remain successful amid these challenges?
DW: There are a couple things CEOs are doing, or attempting to do, to deal with tight margins. There are more than 100 great systems that own and operate their own health plans. It isn't because hospitals want to become insurance companies — they're looking for an alternative revenue stream to provide enough financial stability to stay in business. CEOs are also employing any strategy they can think of to reduce inefficiency and rethink how care is delivered. We can improve upon it day after day, but we can't do major studies on every clinical process unless we employ automation.
Many leaders are investing in ways to prepare for and remain successful under value-based care. Insurers are very interested in what health systems are doing to become more efficient, especially amid the shift toward this payment model. The hospitals that harness technology to lower costs and boost quality will become the most valuable for insurers to partner with.
BH: Taking vast quantities of data and turning them into actionable insights will be important for hospitals. The old world of data analysis focused on individual patients. We've theoretically moved beyond that, but this mindset is still deeply entrenched in hospital leaders. Instead of looking at one-on-one patient encounters, hospitals need the ability to see the entirety of their care delivery process and assess the various groups that are practicing medicine. Hospitals need to be able to provide feedback to clinicians within the context of their peer groups. So benchmarking across bigger areas is crucial. Clinicians and clinical leaders are very starved for information right now. It's impossible for clinicians to provide high-reliability care without being able to understand how this care affects outcomes and compares to care provided by peers.
The second big thing is we need to continue to transition to clinical teams the operational ownership of technology tools. The industry is moving toward an IT-first approach by embracing EHRs and other health IT investments, so clinical tools for this will be crucial.
Q: What goals or improvements should healthcare leaders prioritize this year?
DW: For many organizations, a key priority is financial improvement. Clearly, we see payments from Medicare and Medicaid declining. So one of the most significant improvements has to be around cost structure. This change needs to be driven by processes that identify where hospitals are not efficient. It's not just a matter of merely reducing costs — it's about improving margins to boost efficiency. A hospital's biggest costs revolve around care delivery, so hospitals must undergo clinical performance improvement processes to become more efficient.
Another issue leaders should focus on this year is drug costs, which are rising far beyond normal inflation costs. Every year drug costs go up 8 to 11 percent, when everything else goes up 2 to 4 percent. Four health systems recently created a generic drug company as a long-term approach to the issue. I think this shows a bit of the desperation everyone is feeling. While most hospitals can't control drug costs, they can control how efficiently they're using the drugs. Hospitals should look at where their major cost drivers are for medications and see if they can clinically improve this aspect of care, as well.
BH: So much money is spent on care delivery initiatives to improve care quality or the patient experience that, in a lot of cases, it's actually harming patients. For example, regularly completing small, relatively inexpensive lab tests is leading to excessive costs for both patients and hospitals. The practice also causes numerous downstream implications, such as increased length of stay or the development of anemia from excessive blood draws. So there is a large opportunity to improve that care and decrease costs. As a clinician, I can tell you clinician burnout is real. It negatively affects patient care, clinicians and hospital's bottom line, so that is another area leaders should prioritize this year.
Q: With a stronger focus on cost pressures, what are some ways health systems can reduce the cost of care delivery without sacrificing quality?
DW: One big strategy is the entire consolidation of hospitals into systems. Hospitals believe they will be able to operate more efficiently if they either acquire other hospitals to expand or get consolidated into an existing system. Health system leaders see pharmaceutical companies and insurers merging and growing, so they think they must also. Whether this is an effective cost strategy is open to serious debate.
BH: Hospitals must first tackle smaller issues surrounding appropriate utilization and unnecessary variation. Healthcare leaders should also emphasize the overall clinical improvement process. Doing performance improvement within healthcare is a costly, resource-intensive endeavor. Being able to give the people and teams doing this work the ability to scale and sustain projects with the right information is crucially important. The process takes a lot of resources and time, so it's important hospital employees standardize and monitor the hospital's improvement efforts to ensure multiple employees in different areas aren't doing the same work. Standardizing care processes across multiple places must be replicated reliably across the health system.