In this new era of payment reform, providers face a changing environment that will require new strategies and structures for managing growth and performance, according to Bill Woodson, senior vice president at Sg2, a healthcare analytics company located in Skokie, Ill.
The company gave permission to cite the following 10 factors for success in the new reform era, developed by Mr. Woodson in a recent article and based on discussions he had with numerous healthcare executives in the past few months. "If you are already doing many of these things, ask yourself how well you are doing them and how you plan to scale them," he said. "If you are not doing these things, it is probably time to get started."
1. Make plans for cost savings. Most healthcare organizations have identified the need for a cost savings target of about 15-30 percent in the next five years. To reach this high figure, executives must look well beyond the usual factors, such as full-time employee productivity ratios and supply chain improvements, and work on areas such as disease management, new primary care delivery models and post-acute care coordination.
2. Develop a physician strategy. "It is no longer enough to say that your organization is rapidly expanding physician employment," Mr. Woodson said. Organizations now have to look beyond hiring and organize physicians into a cohesive structure with aligned incentives and professional management. Furthermore, employed and independent physicians must work together in a system-wide clinical leadership model. "Physician leadership must move beyond a relative handful of business-minded clinicians into an overall approach to leading and managing clinical care," Mr. Woodson said.
3. Choose key programs. Healthcare organizations have a choice between a wide variety of new models to adopt, such as the medical home model, chronic disease management clinics, transition coaching and palliative care programs. Since it can be difficult and time-consuming to develop each one, organizations need to focus on a few. "The tough decisions lie in how to prioritize what you do and how to justify the economics in the near term," Mr. Woodson said.
4. Collaborate with payors. Providers have been entering into a variety of new contracting relationships, clinical management pilots and data-sharing arrangements with commercial payors. "In many markets, providers and payers have recognized that future success may require new ways of doing business together," Mr. Woodson said. Providers are well advised to explore options with commercial payors before joining an accountable care organization.
5. Make regional clinical partnerships. As an alternative to full-asset mergers, many organizations are exploring other ways to work with each other to share scarce capital and resources. They have been working together in specific service lines and disease areas, such as regional stroke networks, interstate telemedicine programs and tumor-specific cancer networks. These partnerships "can be relatively simple to implement and their success can be measured against pre-identified growth and performance targets," he said.
6. Develop ties with post-acute care. Integrated care models like ACOs make it more important for hospitals and health systems to be involved in post-acute care. Some leading systems are either purchasing these entities or partnering with them and they are examining the clinical care provided in various locations to patients in many disease states. While the economics of skilled nursing facilities and home health care are likely to remain precarious, organizations need to update their post-acute care strategy.
7. Expand primary care volume. Under ACOs, organizations need a strong primary care base to manage patient care. "Success in growing your business over the long-term will increasingly require a focus on attracting new patients to your system and ensuring same-day access to community-based care resources on their terms," Mr. Woodson said. Organizations need to learn how to place employed primary care physicians into secondary service areas and accelerate referral streams.
8. Help board shift focus to care transformation. Turning from more traditional issues construction or even implementation of electronic medical records, many boards of trustees are beginning to educate themselves on clinical care transformation, new approaches to measuring quality and an overall physician strategy. "This is not to say that minding cash flow and the bond rating are no longer important, but that the definition of effective governance is evolving rapidly," Mr. Woodson said.
9. Improve measurement and accountability. High-performing organizations tend to have a more rigorous approach to measurement of processes and linking it to accountability. "In the reform era, metrics are no longer just an outcome of an initiative; they are an essential part of vision and strategy," Mr. Woodson said. From the highest levels to the front line, health systems have become more fluent with new clinical metrics.
10. Develop a culture of innovation. To implement all the changes needed in this new era, senior management must get employees on board. That means changing the culture of the organization. "Just because you know what you’re supposed to do doesn’t mean your culture is ready to do it," Mr. Woodson said. Management is engaging in short, focused education sessions with every employee in the organization. Leadership is articulating "the implications of reform, the new vision, the new metrics, and how it all translates to the ways frontline employees will perform their jobs differently," he said.
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