Issue link: https://beckershealthcare.uberflip.com/i/462190
45 Leadership & Management care notes to patients. In other places, like Evanston, Ill.-based NorthShore University HealthSystem, a strategy might be constant talent development to grow the next level of leaders. There are no static solutions. In essence, it's often not, 'We simply do this and this works for the long run.' Rather, a high-performing system requires consistent, smart leadership that is always improving. Hence, one needs to constantly be looking to get better and have lots of talent in place to go after initiatives and make the system more success- ful. It is not that any one of these initiatives is perfect. Rather, it is more the concept of an agitating system constantly trying to get better. The best businesses have a solid core and then constantly try to improve themselves. They constantly look to apply and test new ideas and concepts, and they do so with discipline and cohesion. With all the discussion of new and great concepts in healthcare, there is no substitute for this. There is not one brilliant concept from Dr. Michael Porter or any consultant that will save the day. Rather, there is a constant evolution to get better. It's closer, if any- thing, to a Jim Collins perspective of constant talent and team development. Essentially, every ability to pursue initiative depends on talented people. There will still be a lot of fee-for-service. It's not the villain it's made out to be, and bundled payments are a type of fee-for- service. One of the fascinating things I see is the constant attacking of fee-for-service. In one article, for example, the author bashes fee-for-service and sanctifies bundled care. Notwithstanding that it has become popular to bash fee-for-service, the reality is fee-for-service will persist at some level and someone will be paid for doing something. When someone provides a bundled service, for example, someone within that bundle still receives fee-for-service payment to some degree. For proce- dures and costs of treatment over a certain amount, it clearly is a concept that may be worthwhile. No question, this makes sense. Here, a provider needs to make sure it offers high enough quality and an organized bundle that they can deliver. It also needs to make sure there is a big enough market for their bundle that they can take share from others. Further, if someone must travel to receive care under your bundle, savings and quality must be substantial enough that people are willing to actually travel for that bundled care. Cleveland Clinic, rated first in the country for cardiac care by U.S. News & World Report for a decade, was an attractive partner for Mooresville, N.C.-based home improvement giant Lowe's when the two final- ized their direct contracting arrangement in 2010. Prior to striking the deal, Lowe's observed variability in outcomes among its employees' heart care, as roughly a quarter of a million Lowe's staff throughout the country visited different physicians and hospitals. Cardiac surgery is a big-ticket procedure, which justifies Lowe's reimbursement for airfare and other travel costs. Cleveland Clinic has similar agreements in place with Seattle-based Boeing and Bentonville, Ark.-based Wal-Mart. In evaluating these bundles and rela- tionships, Cleveland Clinic does not operate on the notion that every patient needs to travel. Rather, its team looks for services for which travel makes most sense. In short, the bundled payment concept has been discussed a great deal and while it is a worthwhile concept, I think — like many of the recipes in health- care — it is just one part of the solution and not a huge driver. Dominant systems face pushback. As hospitals get better at making shared savings and similar systems work and have a more dominant foot- print to make sure their physician hospital organization or shared savings plan is the most important one in their area, the fascinating consequences of this are twofold. First, you don't actually see costs dropping to the final payer or employer. Rather, you see the system having more leverage with the payer. Second, you often see the payer rebounding back to look for other options so they don't become so reliant on one provider. In either situation, you do not see a great deal of cost savings for employers, but you do see a reshuffling of power be- tween providers and payers. Payers also push hard for market power. Market power provides payers with power with customers (i.e., employers and indi- viduals) and providers (i.e., their suppliers). In one fascinating example, a provider network became strong enough to be a key partner for a payer. Now that payer spends a lot of its time agitating to make sure it is not too reliant upon that provider network. The moral of the story as a provider network is to keep getting stronger and stronger so you have that kind of market power. However, you should understand that once the market power becomes high enough, it will get pushback from the payer. This plays out over and over throughout the country. The core question is how does one get better and gain market power? To own or not own practices? There is no question that a health system has to own practices. If you don't own practices, your fee-for-service volume goes elsewhere. Further, if you don't own practices, in the evolving managed care world, you don't have a total delivery system to provide. Part of owning practices is retaining fee-for-service volume. Another part of owning prac- tices is being able to offer integrated packages of services. Finally, part of owning practices is maintaining dominance in an area so payers and patients are unable to go around you. The real question becomes what kind of practices to own, how big a physi- cian network do you need and how to manage it efficiently. In most places, you need the biggest physician network possible, you often want productivi- ty-driven compensation and you want to constantly improve your physician network. You may not need to break even on your physician-owned network, but you need to be close enough that the losses, if there are any, are not dev- astating to the system. Further, you have to be prepared and have contingency plans in place in case revenues drop. Consumer-driven healthcare. The only apparent long-term solution for really reducing healthcare costs is the greater use of high deductible and similar health plans. This is a useful strategy for the great majority of day-to- day healthcare costs. On bigger ticket healthcare costs, there will be a need for more care management teams and efforts to bundle, reduce and target costs. Day-to-day, however, consumer-driven plans — such as health savings accounts and high deductible plans — seem to be the best answer out there for the system as a whole. For a provider who relies day-to-day on ordinary care for a great percentage of its revenues, this is concerning. The ultimate shift of costs to consumers is the best bullet for slowing down the growth in healthcare costs on a substan- tial percentage of the dollar. Here, this is where systems need to drive patients to their lowest cost provider, allow direction to advanced practitioners versus physicians and get better at collecting upfront, since collecting from patients later is very difficult. Hence, as a basic strategy, health systems need constant internal agitation to move costs to lower points of care and constant efforts to improve billing and collections at the point of service. The best systems test new areas. The best businesses constantly re- cruiting and retaining the best talent, so they can constantly improve current operations and go after new initiatives. They also have a very clear definition of their customer. For example, is their customer the patient, the payer or some combination of the two? And if it is a combination, the system has clarity on how it is really targeting that customer. The best businesses are not static. They are constantly working at understanding and improving the core business, and then they devote time and attention to the allocation of talent to new initiatives. Hospitals have to constantly look at how they maintain a cost and margin structure so they can attack different areas while refocusing on their core areas and patients. Hence, it is an interesting concept used by business con- sultant Jim Collins to put resources into different areas, but fire bullets as op- posed to huge amounts of money. His school of thought is to test new areas but not break the bank. One of the tensions I see is that between geographic expansion versus not too much expansion. Can you do a geographic expansion without investing a ton of resources? For example, a constant theme — and a disaster in many situations — is where a health system significantly increases its cost structure at a time of change. A health system may invest a certain amount for outreach clinics, for ex- ample. It then faces a set of questions: Are those outreach clinics really suc-