Becker's Hospital Review

77 Executive Briefing Health System Advisors is the leading strategy consulting firm advising the nation's best regional systems. Our teams work to transform the healthcare delivery industry, by advancing the success of regional health systems, through our advice to the health system leaders. Health System Advisors: Advise Leaders, Advance Organizations, Transform Healthcare Delivery. www. HealthSystemAdvisors.com Monetize Value Already Created Insurers have more recently been willing to pay for care management and other provider activities that reduce unnecessary care utilization. Often the services are already being provided by the group. However, these small physician groups are not capable of documenting the performance and negotiating the monetization scheme. By banding small physician groups together to form a physician-hospital organization or clinically integrated network, the health system can negotiate and implement the processes needed to monetize the value already being created in some groups. Alternatively, joint ventures with proceduralists allow physicians to monetize the technical fee profits from the work they are already doing. However, this is generally at the expense of the hospital. Facilitating this process can differentiate business models, thereby adding value to the physician-hospital alignment equation. Shift the Payment Mechanism To shift the payment mechanism, the health system must have some control over the market and participation from the insurers by virtue of size or value. For instance, to control the value equation when shifting from activity-based services to value-based services, the business model must change to include a whole range of continuum activities. Influence the Care Delivery Mechanism The third way, and perhaps most pervasive way, that health systems have attempted to effect physician alignment is through influencing the care delivery mechanism. This strategy is particularly effective when most of the care is delivered through major hospital infrastructure and in a community with only one or few health system options. Today, however, more care is provided outside the hospital's influence and through easily replicable infrastructure. This loss of monopoly over care delivery infrastructure is making it more difficult for any one organization to fully control the care delivery mechanism. Nevertheless, several actions can be effective: 1. Corner the complex specialty or infrastructure 2. Build a reputation linked to the facility rather than provider 3. Lobby for regulation that limits competition Corner the Complex Specialty or Infrastructure To effectively corner the market in a specialty and any downstream, an organization must employ a large subset of the specialists in a specific program. This is especially true for specialties that cannot stand on their own and are used often by related specialties (e.g., colorectal surgery, oncology, neurosurgery). Alternatively, the health system could capture a large subset of the specialty technical infrastructure required for a specific high acuity or complex program. For example, with the best ICU staff, infrastructure and supporting physicians, specialties that depend on a specialty ICU platform must work with the health system that owns the needed capability or infrastructure. Build reputation for care linked to the facility By bringing together multiple specialties, the health system can create a unified reputation across those multiple specialties. With this multispecialty reputation, the synergy between the specialties creates value for any one specialty. In turn, it also increases the health system's influence over those providers. This synergy and its effects can be seen in the US New Specialty Honor Roll. In 2017, any given hospital had roughly a 2% likelihood of being ranked in one specialty. However, when ranked once, there was nearly a 60% chance another specialty would be ranked. When ranked twice, there was a 77% chance of being ranked in three specialties. Lobby for Anti-Competitive Regulation The third and perhaps most effective method of controlling the care delivery mechanism is to have regulators prohibit alternative care delivery options. For example, strong certificate of need regulation may make new investments in a particular care delivery platform more expensive or difficult. In effect, lobbying would support the existing health systems' control over access to infrastructure. Summary To more rapidly effect the needed physician alignment, health systems should consider all the tools they have available. Thinking about the tools in three categories--influence over volumes, influence of the business model and influence over the delivery mechanism--can provide useful insight into new ways to effect physician alignment. Moreover, when used appropriately, the health system can create the catalyst for stronger health system-physician alignment, thereby creating higher quality, less costly, and more coordinated care for communities. n Kate Lovrien and Luke C. Peterson are Principals at Health System Advisors. Health System Advisors advises health systems on their competitive market positioning. Our team of motivated, engaged, and inspired strategists brings analysis, insight, and expertise as we facilitate your teams to new ways of thinking and strategies that advance your organization.

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