Six Critical Disciplines To Integrate For a Transformed Healthcare Delivery Model

Blog,Affiliation/Mergers and Acquisitions,Business Planning,Financial Planning and Feasibility,Medical Staff Planning,Strategic Planning,Transformation

Changing market forces across the healthcare industry will have major reverberations across key provider, consumer, and other stakeholder communities that operate both within and outside of traditional healthcare system networks. And as a new and dramatically different type of healthcare delivery model emerges, healthcare executives can no longer afford to embrace a “business as usual” mindset.

To ensure financial viability and success in this complex and evolving environment, healthcare leaders must move away from using traditional, check-the-box approaches to strategy and planning. One-off, siloed, planning engagements managed by different external parties that don’t talk to each other and don’t leverage important insights and synergies across the entire organization will inevitably fall short.

Today’s leaders must adopt a more holistic, integrated, and synergistic view towards strategy and other key disciplines, including medical staff planning, financial feasibility, and service line planning. Focus and engagement levels must be long-term, evolving, and ongoing – and include regular monitoring, analysis, and assessments so adjustments can be made as market and institutional conditions change.

In this blog, we outline six key hospital and health system disciplines that should be integrated to ensure success under a transformed healthcare delivery model.

Discipline 1: Strategy

Hospitals and health systems should ask themselves, “What do we want to become under a transformed healthcare delivery model?” If your inpatient utilization were to drop 30 percent, would you still be financially viable? If not, how should you restructure or reinvent your organization to prosper under that scenario? For some, this might mean reducing or eliminating inpatient beds and surgical suites altogether in select markets, while still operating a profitable ER, nursing home and primary care Patient Centered Medical Home (PCMH).

Discipline 2: Mergers, Acquisitions and Affiliations

Once you have determined what you want to be, you next need to determine if you can actually get there as currently structured. If not, what type of business structure (merger, affiliation, partnership, etc.) can help move you toward your goal? Do you need to partner with a larger organization? What specifically would you gain in doing so, other than simply achieve economies of scale in purchasing?

Under a transformed system, some partnerships and affiliations that may have made sense in the past may no longer be beneficial — and may even be detrimental to helping you move toward where you need to go. Conversely, just because your facility is in a financial position to maintain your independence now doesn’t mean it will be able to continue to do so under a transformed system. Now is the time to start thinking about what partnership opportunities would make the most sense for your facility under a transformed system.

Discipline 3: Regional and System Planning

Healthcare system and hospital executives need to determine how to best distribute and align resources and services across the region being served. They also need to understand how the right regional distribution can offer a competitive advantage that will enable growth and success under a transformed healthcare delivery model.

Discussions should involve determining the best care access points under a future transformed system, so your organization can capitalize on and benefit from the coming service consolidation — rather than be harmed. Consider which facilities in your network should be expanded, which should be repurposed into something else (and what that should be), and which you might need to close altogether. For example, a suburban facility will want to make sure it has enough outpatient and other facilities, such as primary care centers, in convenient locations for patients across the region. This may include servicing populations that reside in outlying submarkets.

Discipline 4: Service Line Planning

For several years now, we at Ascendient have been predicting – through the use of our Healthytown™ model – that under a transformed healthcare delivery model, many orthopedic procedures, including joint replacements, will be performed outside the hospital setting. To that point, CMS recently approved new Medicare payment rates to encourage greater use of less expensive Ambulatory Surgery Centers (ASCs) for these procedures.

Additionally, there are specific service lines hospitals invest in heavily today (cardiology among them) that will become vulnerable as payment starts to be determined based on value. For example, clinical studies have shown that cardiac catheterizations don’t provide clear benefits to some categories of patients and may even do more harm than good. Under value-based payment, doing more of these procedures will hurt – not help – the hospital’s bottom line. Healthcare executives need to reexamine which commonly performed, high-cost services they will still be delivering in the future, in what settings, and in what quantities.

Discipline 5: Medical Staff and Provider Planning

Healthcare executives need to know that they are planning under the right model for the right volume of encounters, the appropriate mix of encounter type, the right number of providers by specialty, and the right provider type. Physician-to-population ratios traditionally used for medical staff planning purposes will simply no longer work.

Instead, executives should review the composition of the organization’s current provider base, conduct an external market assessment to determine unmet needs and ensure compliance, perform an internal assessment to understand the provider complement necessary to support the organization’s strategic direction, and understand provider supply and needs throughout the market and broader community.

Additionally, executives should look to using updated, dynamic statistical models that show what a transformed healthcare landscape will look like on the local level. This will allow them to envision different scenarios and understand how provider and patient needs will change as different population health and delivery model methods are implemented. These approaches and tools can help determine the right recruitment targets necessary for meeting growth objectives.

Discipline 6: Financial Feasibility

Most hospitals and health systems are heavily dependent on profits generated from outpatient and procedural services. But payers are already putting pressures on providers to shift these to lower cost settings. For example, Anthem Blue Cross Blue Shield is no longer paying hospitals for select outpatient imaging. Under a transformed system, these pressures will intensify. Payments to providers will become fixed and not based on volume. Payments will become site neutral, meaning there won’t be a differential paid for procedures done in higher-cost settings. Changes in physician reimbursement under Medicare will prompt many to shift services to outside the hospital.

As these services shift to lower cost care settings, hospitals will need to find ways to adjust. Again, using updated, robust statistical models will allow executives to see how these and other changes will alter the specifics of their local community. This, in turn, can help them more accurately plan on which services to provide and in which settings. It will also help executives understand the extent to which they need to change their current cost structures to stay viable and thrive.

Conclusion

Dramatic changes in reimbursement, technology, and other forces will continue to significantly reshape the healthcare delivery landscape in the coming decades. Short-term, siloed approaches to hospital and health system strategy and planning can no longer be effective in this complex, evolving environment that will inevitably put many hospitals and other institutions at risk. Healthcare executives must take a long-term, integrated, and holistic approach, factoring in not just the institution’s needs and goals, but emerging local community and provider needs as well. Doing so will help executives ensure the viability and success of their facilities in both the short and long term.

 

 

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