Issue link: https://beckershealthcare.uberflip.com/i/674245
38 example. It then faces a set of questions: Are those outreach clinics really successful, do they really generate revenues, do they really generate refer- rals back to the main hospital? Further, once a hospital seriously expands into another related market, does it need to have a more substantial pres- ence there to be a more dominant player? For example, while Cleveland Clinic has maintained a dominant position in the greater Cleveland area, a great question is whether some of its national efforts are truly effective. Either way, its dominance in Cleveland allows it to test those other ef- forts. Some expansion efforts are successful and some not. 3. No Single Strategy, No Static Solution Some of the best discussions of healthcare strategy recognize the obvi- ous. In essence, there is probably no single great strategy for the future. It all starts with a baseline of services. en one needs a lot of smart, creative talent constantly looking to improve upon operations. ere are countless examples of this and it takes a lot of energy. One hospital is constantly applying for every state grant it can get. In another hospital, leadership supports constant outreach to gain patients in the area with the most patients. In one case, the outreach is at the largest church in the community every Sunday. At another place, the system is trying to work with payers to test new initiatives and concepts. Another hospital has a tremendous effort underway around better use of its EMRs and better development of systems to deliver post discharge notes to patients. In other great systems, like Evanston, Ill.-based North- Shore University HealthSystem, a strategy might be constant talent de- velopment to grow the next level of leaders. ere are no static solutions. In essence, it's oen not, "We simply do this and this works for the long run." Rather, a high-performing system requires consistent, smart lead- ership that is always improving. Hence, one needs to constantly be look- ing to get better and have lots of talent in place to go aer initiatives and make the system more successful. It is the concept of an agitating system constantly trying to get better. e best businesses have a solid core and then constantly try to improve themselves. ey constantly look to apply and test new ideas and con- cepts, and they do so with discipline and cohesion. With all the discus- sion of new and great concepts in healthcare, there is no substitute for this. ere is not usually one brilliant concept from that will save the day. Rather, there is a constant evolution to get better. It's closer, if anything, to a Jim Collins perspective of constant talent and team development. Essentially, every ability to pursue initiative depends on talented people. 4. There Will Still be a lot of Fee-For-Service. Bundled Pay- ments are a Type of Fee-For-Service One of the fascinating things we see is the constant attacking of fee- for-service. In one article, for example, the author derides fee-for- service and sanctifies bundled care. Fee-for-service will likely persist at some significant level. When someone provides a bundled service, for example, someone with- in that bundle still receives fee for-service payment to some degree. For procedures and costs of treatment over a certain amount, bundled payment clearly is a concept gaining traction quickly now at the federal and the private level. 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, sav- ings and quality must be substantial enough that people are willing to actually travel for that bundled care. is is an especially pertinent con- cern for health systems seeking to forge direct contracting agreements with large employers. Cleveland Clinic, rated first in the country for car- diac care by U.S. News & World Report for more than a decade, was an attractive partner for Mooresville, N.C.-based home improvement giant Lowe's when the two finalized 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 reim- bursement for airfare and other travel costs. Cleveland Clinic has similar agreements in place with Seattle-based Boe- ing and Bentonville, Ark.- based Wal-Mart Corp. In evaluating these bundles and relationships, Cleveland Clinic does not operate on the no- tion that every patient needs to travel. Rather, its team looks for services for which travel makes most sense. Despite the growing popularity around demonizing fee-for-service reim- bursement models, even hospitals that have committed to transferring ele- ments of their payment structures to fee-for-value models still largely rely on the traditional reimbursement model. At the Becker's Hospital Review 6th Annual Meeting, Kate Walsh, president and CEO of Boston Medical Center said she is surprised about "how slow the rate of change actually is despite how breathless we all feel. We talk a lot about how pay is reforming, but I don't know a system that is not still on fee-for-service." Hospitals will need to carefully consider which elements of fee-for-service to preserve — and how. "Certain tertiary and quaternary services may al- ways have fee-for-service elements, and you need to be thoughtful about moving away from fee-for-service in these areas," Michael Moody, senior vice president of partnership integration and development at Walnut Creek, Calif.-based John Muir Health System, told Becker's Hospital Re- view in December 2015. "e decision is market-specific and influenced by the size of the population you will be taking risk for. Examples of this are transplant, trauma and burn units — essentially things that are more difficult to manage from a population standpoint." Robin Kilfeather-Mackey, CFO of Lebanon, N.H.-based Dart- mouth-Hitchcock Medical Center, pointed out that fee-for-service is the principle way providers show payers how their money is spent and what services are actually administered. ere are also health services that promote better population health but don't yield payments to providers, such as preventive care, according to Ms. Mackey. 5. Owning an Insurance Product Requires a Great Deal of Market Position and Risk Tolerance e ownership of an insurance product by a health system is periodically viewed as the Holy Grail. e goal is total control of the premium dol- lar, the perception being that this is a powerful position to be in. Many systems are finding that they are absorbing huge losses as they grow and develop their own insurance plan. e effort, while viewed as a hedge against payer power, also harms relationships with payers. Parties that excel with a plan typically have deep pockets and a great market share. ey also view it as a long-term commitment. By launching their own health plans, health systems hope to control the premium dollar as well as leverage a variety of patient clinical and cost data traditionally owned by insurers. is information can be extremely valuable for supporting population health management and better coor- dinating care across disparate providers. However, launching a provider-sponsored health plan comes with risks and questions, one such being possible retaliation from competing health plans. Attempting to maintain contracts with those plans while simultaneously competing with them could increase tension, leading in- surers to direct patients elsewhere or leave a competing system out of certain networks, according to Paul Keckley, PhD, managing editor of e Keckley Report. Whether an organization can function without those contracts is the first question providers considering creating their own plan must consider. ere is also the question of whether to build or buy and the risk of scale. Unless a health system acquires a plan that already has a substantial membership, it will have to invest capital in such things