Is it the beginning of the end of CON? 

We’re picking up on a growing concern among health system leaders that many states with “certificate of need” (CON) laws in effect are on the cusp of repealing them. CON laws, currently in place in 35 states and the District of Columbia, require organizations that want to construct new or expand existing healthcare facilities to demonstrate community need for the additional capacity, and to obtain approval from state regulatory agencies. While the intent of these laws is to prevent duplicative capacity, reduce unnecessary utilization, and control cost growth, critics claim that CON requirements reduce competition—and free market-minded state legislators, particularly in the South and Midwest, have made them a target. 
 
One of our member systems located in a state where repeal is being debated asked us to facilitate a scenario planning session around CON repeal with system and physician leaders. Executives predicted that key specialty physician groups would quickly move to build their own ambulatory surgery centers, accelerating shift of surgical volume away from the hospital.

The opportunity to expand outpatient procedure and long-term care capacity would also fuel investment from private equity, which have already been picking up in the market. An out-of-market health system might look to build microhospitals, or even a full-service inpatient facility, which would be even more disruptive.

CON repeal wasn’t all downside, however; the team identified adjacent markets they would look to enter as well. The takeaway from our exercise: in addition to the traditional response of flexing lobbying influence to shape legislative change, the system must begin to deliver solutions to consumers that are comprehensive, convenient, and competitively priced—the kind of offerings that might flood the market if CON laws were lifted. 

From Amazon to New Balance, consumer brand execs bring ‘outsider’ perspective to healthcare

boardroom with woman leading team meeting

Massachusetts-based health system Wellforce recently appointed its first ever chief consumer officer, tapping an executive from a well-known sneaker brand.

Christine Madigan joined the health system to lead marketing and consumer engagement, Wellforce announced in January. She comes from New Balance Athletics, where she led the global marketing and brand management organization. Madigan was attracted to what she termed the “challenger brand” because of its nimble innovation strategy and its mission to help people live healthier. “I can’t imagine a more purpose-driven culture than that,” she told Fierce Healthcare. 

“As a marketing veteran from consumer products, Christine understands the importance of envisioning and building services around consumer needs. She will be a great asset in improving and modernizing the way consumers engage with the health care industry,” David Storto, Wellforce’s executive vice president and chief strategy and growth officer, said in the announcement. 

The move comes amid a rising trend in healthcare: executives sourced from outside the industry, and in particular from consumer brands, to lead innovation strategies. Fierce Healthcare spoke to several, some of whom have been in their roles for years. They agree that while there are many transferrable skills, there is also an advantage to being an outsider. 

To Madigan, the core challenge remains the same business to business—understanding who the consumer is and the different ways they engage with one’s brand. 

Aaron Martin, chief digital officer at Providence St. Joseph Health, who joined the health system from Amazon in 2016, echoed Madigan. “Bringing the patient focus—what we called at Amazon ‘customer obsession’—to Providence was key,” he told Fierce Healthcare.

Society is bombarded by healthcare marketing messages, Madigan noted. She wants to “drive some simplicity into the process.” While the system is built to provide reactive, acute care, Madigan sees preventive care as just as important. And a crucial part of facilitating that is establishing not only awareness of but trust in a provider. “Every detail matters in what you communicate in an experience,” she said.

And for organizations that don’t innovate, “somebody else is going to disrupt us,” Martin said.

To drive innovation at scale, Martin sees a disciplined strategy as key. At Amazon, that looked like picking an area to impact and measuring the value of closing that gap. Applying that to Providence, Martin worked with the clinical team to discover patients in need of low-acuity care were going to other providers instead of to Providence. So Providence launched ExpressCare, offering virtual appointments to recapture those patients and establish continuity of care.

Like Madigan, Novant’s chief digital and transformation officer Angela Yochem, who has held chief information officer roles at Rent-A-Center and BDP International, believes passive care is not enough to eradicate health inequities. “We’ve optimized for fixing things,” she said of the healthcare system. “I’d like to see the healthcare industry become more engaged continually. We need to understand our patients beyond what their last condition is,” she added, referring to social determinants of health.

“In retail, we used to say that customers shouldn’t have to shop our merchandising organizational chart,” said Prat Vemana, Kaiser Permanente’s chief digital officer, who transitioned in 2019 from chief product and experience officer at The Home Depot. To streamline how patients navigate an already highly fragmented healthcare system, Kaiser starts with the patient and works backward when developing digital experiences. 

A challenge in healthcare, Vemana acknowledged, is the lag in data around health outcomes. Whereas in retail, results are immediately visible, healthcare is less straightforward. “We have to develop workarounds to get directional information while waiting to see the results,” he said. 

The transformation of the sector won’t happen without diversity of thought and experience, Yochem said. It’s less about hiring from a particular sector and more about hiring from all over. Those people will have seen the potential for consumer engagement and will be able to “apply what we know to be possible,” Yochem said. Without those outsider insights in the insular sector, “you create an echo chamber, because you respond to problems in the same way.” 

How “Goliaths” that adapt can retain industry dominance

5 Steps for Defeating Digital Goliaths - Adthena

A thought-provoking piece in this week’s Harvard Business Review about the underrated advantages longstanding industry giants have over disruptors got us thinking about health system strategy. The authors highlighted several companies that have enjoyed sustained success over a century or more, including agricultural behemoth Deere and Company, and shipping giant company A.P. Møller-Maersk, which wielded “strategic incumbency” to successfully innovate and pursue new strategies, leveraging scale, trusted customer relationships, and long-term planning capabilities—attributes that new market entrants often lack when looking to disrupt established consumer channels. 

The Gist: In a market where healthcare unicorns constantly garner headlines, the article offers a counterintuitive perspective about the value of incumbency.

Health system leaders might look to the experience of Maersk, which moved from a supply-driven focus (pushing its products to customers), to a demand-driven strategy (navigating customers through logistical pain points), using technology to maximize its vast asset portfolio.

Likewise, health systems have an abundant “supply” of care delivery assets, and now need to build the connective tissue to make the care experience across those point solutions seamless for patients. 

Can we take the long view on physician strategy? 

https://mailchi.mp/d57e5f7ea9f1/the-weekly-gist-january-21-2022?e=d1e747d2d8

Editor's note: Taking the long view | Campaign US

It feels like a precarious moment in health systems’ relationships with their doctors. The pandemic has accelerated market forces already at play: mounting burnout, the retirement of Baby Boomer doctors, pressure to grow virtual care, and competition from well-funded insurers, investors and disruptors looking to build their own clinical workforces.

Many health systems have focused system strategy around deepening consumer relationships and loyalty, and quite often we’re told that physicians are roadblocks to consumer-centric offerings (problematic since doctors hold the deepest relationships with a health system’s patients).

When debriefing with a CEO after a health system board meeting, we pointed out the contrast between the strategic level of discussion of most of the meeting with the more granular dialogue around physicians, which focused on the response to a private equity overture to a local, nine-doctor orthopedics practice. It struck us that if this level of scrutiny was applied to other areas, the board would be weighing in on menu changes in food services or selecting throughput metrics for hospital operating rooms. 
 
The CEO acknowledged that while he and a small group of physician leaders have tried to focus on a long-term physician network strategy, “it has been impossible to move beyond putting out the ‘fire of the week’—when it comes to doctors, things that should be small decisions rise to crisis level, and that makes it impossible to play the long game.”

It’s obvious why this happens: decisions involving a small number of doctors can have big implications for short-term, fee-for-service profits, and for the personal incomes of the physicians involved. But if health systems are to achieve ambitious goals, they must find a way to play the long game with their doctors, enfranchising them as partners in creating strategy, and making (and following through on) tough decisions. If physician and system leaders don’t have the fortitude to do this, they’ll continue to find that doctors are a roadblock to transformation.

HCA Healthcare and Tenet Healthcare acquire more outpatient assets

https://mailchi.mp/0b6c9295412a/the-weekly-gist-january-7-2022?e=d1e747d2d8

FGI releases outpatient facility guide | 2018-01-10 | Health Facilities  Management
  1. HCA has purchased MD Now Urgent Care, Florida’s largest urgent care chain, adding 59 urgent care centers to its existing 170. Meanwhile Tenet’s $1.1B deal to buy SurgCenter Development cements its position as the nation’s largest ambulatory surgery center (ASC) operator, eclipsing Envision-owned AMSURG and Optum-owned Surgical Care Affiliates. 

The Gist: Healthcare services are increasingly moving outpatient and even virtual—a trend only accelerated by the pandemic. With this latest acquisition, Tenet will now own or operate nearly seven times as many ASCs as hospitals. Such national, for-profit systems are looking to add more non-acute assets to their portfolios, to capitalize on a shift fueled by both consumer preference for greater convenience, and purchaser pressure to reduce care costs.  

The future of hospitals will be outside of hospitals

https://www.axios.com/the-future-of-hospitals-will-be-outside-of-hospitals-b3074182-a3cb-466e-89cb-66d2a0a27a72.html

Illustration of a medical red cross with beams of light cast from one side

Hospitals in the future will look far more tech-enabled and consumer-focused — when patients are actually even getting care in a hospital building itself.

Why it matters: Hospitals were already pushing more care outside their four walls before the pandemic. COVID accelerated that shift, forcing hospitals to reimagine what’s possible to deliver in patients’ homes, experts say.

The big picture: One way to picture what hospitals of the future will look like is to look at two brand new hospital buildings opened this fall by competing Pennsylvania health systems.

  • The buildings, by Penn Medicine and Highmark Health both offer hotel-like amenities such as better food, streaming services, and better-positioned outlets for cell phone charging. They’ve also made medical records more accessible to patients, executives say.
  • But they were also designed with the belief that, in the future, only the most complex care might be delivered in them.

State of play: Every medical room in Penn Medicine’s new $1.6 billion health pavilion can be turned into an ICU-capable room when needed.

  • It added 7% in costs to the project, but made sense considering the ICU demands of the pandemic and “not knowing what the future will be,” CEO Kevin Mahoney told Axios.
  • The hospital also offers patients bedside tablets that allow patients to control the light and temperature of the room, and to activate frosted privacy glass on the doors of their rooms.
  • The benefits are two-fold: patients really like it and it can help free up staff to focus on more critical tasks, Mahoney said.

“The pandemic was an amplifier for natural trends that were already starting to develop,” Highmark CEO David Holmberg told Axios. “The complexity of medical procedures [in hospitals] is going to be significantly higher.”

The bottom line: Tech advances will change the entire hospital experience no matter where the care is delivered.

  • Wearables will provide digital biomarkers to allow better patient monitoring from the home. “Smart” infrastructure will help patients find parking and navigate massive hospital campuses when they need to go into the hospital.
  • And 5G will allow doctors to pull up massive amounts of personalized data on a wireless screen in seconds, Hon Pak, chief medical officer at Samsung Electronics told Axios.
  • “The perspective we want to bring to the smart hospital is it’s not just about caring for the condition or the disease, but it’s about caring for the whole,” Pak said.

Private equity rolls up veterinary practices, with predictable results

https://mailchi.mp/da8db2c9bc41/the-weekly-gist-april-23-2021?e=d1e747d2d8

Amazon.com: The Private Equity Playbook: Management's Guide to Working with Private  Equity (9781544513263): Coffey, Adam: Books

Given regulatory barriers and structural differences in practice, private equity firms have been slow to acquire and roll up physician practices and other care assets in other countries in the same way they’ve done here in the US. But according a fascinating piece in the Financial Times, investors have targeted a different healthcare segment, one ripe for the “efficiencies” that roll-ups can bring—small veterinary practices in the UK and Ireland.

British investment firm IVC bought up hundreds of small vet practices across the UK, only to be acquired itself by Swedish firm Evidensia, which is now the largest owner of veterinary care sites, with more than 1,500 across Europe. Vets describe the deals as too good to refuse: one who sold his practice to IVC said “he ‘almost fell off his chair’ on hearing how much it was offering. The vet, who requested anonymity, says IVC mistook his shock for hesitation—and increased its offer.” (Physician executives in the US, take note.) IVC claims that its model provides more flexible options, especially for female veterinarians seeking more work-life balance than offered by the typical “cottage” veterinary practice. 

But consumers have complained of decreased access to care as some local clinics have been shuttered as a result of roll-ups. Meanwhile prices, particularly for pet medications like painkillers or feline insulin, have risen as much as 40 percent—and vets aren’t given leeway to offer the discounts they previously extended to low-income customers. And with IVC attaining significant market share in some communities (for instance, owning 17 of 32 vet practices in Birmingham), questions have arisen about diminished competition and even price fixing. 

The playbook for private equity is consistent across human and animal healthcare: increase leverage, raise prices for care, and slash practice costs, all with little obvious value for consumers. It remains to be seen whether and how consumers will push back—either on behalf of their beloved pets, or for the sake of their own health.