Healthcare leaders sometimes say they don’t see the value in health system planning because no one can predict exactly what the future healthcare delivery environment will look like. They reason that, without a crystal ball, there is little point in planning any differently than they have in the past. We believe this viewpoint is misguided because it exposes healthcare organizations to risks that – with a little proper planning and foresight – could be greatly reduced or averted.
Today’s healthcare leaders face significant challenges. These decision-makers must balance their institutions’ financial viability under the old market rules of the game – and prepare for major market and payment shifts to come.
The inconvenient truth is that organizations cannot be successful if their approach to health system planning assumes that reimbursement and delivery models will operate the same way in 5, 10, and 20 years. Dramatic shifts already underway will put push more services into lower-cost settings. There also will be pressure to reduce utilization of, and payment for, many high-cost specialty services and procedures that remain the biggest drivers of hospital margins today. In this transformed environment, many hospital beds will become obsolete or disappear altogether, while the demand for some medical specialties and procedures will decline significantly despite an aging population.
Also, without some consensus on what the future will look like, stakeholders will be headed in different directions. For example, a progressive physician-run ACO may be vetting evidence-based practices and pushing its patients toward lower-cost settings. Meanwhile, the hospital may be planning to build a new bed tower or suite of hospital-based operating rooms on the incorrect assumption that these physicians will continue to admit patients and perform procedures in the hospital setting at rates similar to historical patterns.
While it is certainly true that we cannot know detailed specifics about how the future healthcare delivery system will shape up, we have enough information to know which way the winds are blowing. We also have tools and approaches to help healthcare leaders navigate through and prepare for possible scenarios so organizations can be best positioned to thrive no matter what the future brings.
Many traditional hospital and health system planning tools and approaches widely in use today fall short when it comes to key critical planning areas, such as provider staffing, service line development, regional system planning, and mergers and acquisitions, to name just a few. For example:
∙ Traditional analyses and planning methods fail to consider fundamental changes occurring in payment for healthcare services and perpetuate the status quo by simply projecting historical utilization trends into the future. Care delivery has always been heavily influenced by payment: Recall how adoption of Medicare’s Prospective Payment System (PPS) for inpatient care in the 1980s led to dramatic shifts to outpatient care. No matter how you look at it, reimbursement mechanisms in the U.S. are changing from volume-to-value based. Even if payers in your market are not making that change today, they will in the future. This will lead to major care delivery shifts that will impact the bottom line.
∙ Many health system planning tools are static or based on dissimilar markets. Tools that are not scalable or not truly applicable to the local market or individual health system are unhelpful at best, and misleading at worst.
∙ Most states have good data on inpatient utilization, but very few have good, comprehensive data across the care continuum that can be easily acquired for health system planning and analysis. Executives can purchase data from private companies that are based on claims data, but these are often very expensive and not always available with precision in every market.
∙ Many analyses fail to factor in emerging population-based provider needs and changing industry dynamics. These dynamics will drive more services to be delivered outside of hospitals and reduce the need for some specialties. These will in turn impact hospital and health system service line and medical staffing priorities.
∙ Regarding medical staff planning, if your organization still relies on traditional physician-to-population ratios – those have been outdated for decades – and many are based on faulty physician lists. Better approaches are available, including tools that look at actual utilization data based on visit volume per specialty area.
The good news is that there are health system planning tools based on peer-reviewed research and analyses, and other practical approaches that can help healthcare executives better navigate and plan for the terrain ahead – regardless of the uncertainties. Here are three things leaders should consider as part of their health system planning efforts:
In today’s period of blurred lines, shifting definitions, and emerging payment models, healthcare organizations simply cannot and should not take previously long-held common assumptions for granted. Forward-thinking healthcare leaders see the writing on the wall, and are reassessing their traditional health system planning approaches and assumptions. Scenario planning, leveraging internal data, and robust statistical models are helpful for revisiting long-held assumptions when approaching hospital and health system planning for the future.