The recent breathtaking flurry of mega-mergers coupled with increasingly challenging market forces and an ever shifting political landscape has cast a cloud of confusion regarding where the U.S. healthcare delivery system is heading.
So, where do you go to find the map?
Every year, the JP Morgan Healthcare Conference provides an incredibly efficient snapshot of the strategies for large healthcare delivery systems, the hub for healthcare in the U.S. Most of these organizations are also the largest employers in their respective states. The conference took place this week in San Francisco with over 20 healthcare systems presenting, including Advocate Health Care, Aurora Health Care, Baylor Scott & White Health, Catholic Health Initiatives, Cleveland Clinic, Geisinger Health System, Hospital for Special Surgery, Intermountain Healthcare, Mercy Health in Ohio, Northwell Health, Northwestern Medicine, Partners HealthCare System, WakeMed Health & Hospitals and many of the other big name brands in the market. Each provided their strategic roadmap in a series of 25-minute presentations from their “C” suite. If you’re looking for the GPS on strategy and a gauge on the health of healthcare, this is it.
How do their strategies differ? What direction are they heading in? There is a great line from Alice in Wonderland that goes, “If you don’t know where you’re going, any road will take you there.” You would think that line applies perfectly to the U.S healthcare system, but the good news is it actually doesn’t.
While the exact destination for everyone is TBD, the direction they are heading in is actually pretty clear and consistent. It turns out that they are all using a very similar compass, which is sending them down a similar path.
So, what are the roadside stops health systems consider absolutely necessary to be part of their journey to creating a more viable and sustainable value-based business model?
Based on the travel plans for over 20 of the largest and most prestigious healthcare delivery systems in the country, here’s your GPS and list of 12 things you “must do” on your journey.
1. You Must Scale
Clearly the headline at #JPM18 was the flurry of major announcements regarding major mergers. With that said, two of the mergers were front and center: teams were there to present from Downers Grove, Ill.-based Advocate and Milwaukee-based Aurora, which will be a $10 billion organization with 70,000 employees, as well as San Francisco-based Dignity Health and Englewood, Colo.-based Catholic Health Initiatives, which will be a $28 billion organization with 160,000 employees. The size and scale of these mergers is pretty stunning. While the announcement of these and the other recent mega-mergers has forced many into their board room to determine what the deals mean to them, the consensus at the conference was this: There are a number of different paths forward to achieve scale. Some, like Baylor Scott & White in Texas, have aggressive regional expansion plans. Others are betting on partnerships to provide the same or even more value. Taking a pulse of the room, two things were clear. The first is there is no definition of scale any more in this market. The second is that, despite this flurry of mergers, “getting really big” is not the only destination.
2. You Must Pursue “Smart Growth” and Find New Revenue Streams
Running counter to the merger narrative in the market, Salt Lake City-based Intermountain provided a good overview of the movement to what is called an “asset light” strategy of “smart growth.” This is a radically contrarian approach to the industry norm, which is the capital intensive bricks and mortar playbook of buying and building. As part of their strategy, Intermountain will open a “virtual hospital” delivering provider consultations and remote patient monitoring via telehealth. The system will also launch a number of healthcare companies every year, leveraging their considerable resources in a manner they believe will produce a higher yield. Other health systems outlined a similar stream of initiatives they have in motion to diversify their revenue streams and expand their business model into higher margin, higher growth businesses. One example is Cincinnati-based Mercy Health, which achieved strong growth and leverage via their investment in a revenue cycle management company. Advocate in Illinois formed a partnership with Walgreens. Together, they now operating 56 retail clinics and Advocate has made a significant impact on driving new patients and downstream revenue to their system. The bottom line is all now recognize that they must think and act differently to be able to continue to fund their clinical mission and serve their community.
3. You Must Measure and Manage Cost and Margins
While some are moving aggressively to get scale, everyone is looking to more effectively use the resources they have and get more operating leverage. Margin compression was a consistent theme, with many systems now moving into consistent, stable operating models around managing margins versus launching reactionary initiatives when they find a budget gap. What is emerging is a new discipline and continuous process around managing cost and margins that is starting to look similar to the level of sophistication we have seen in the past for revenue cycle management. To that end, there has been major movement in the market to implement advanced cost accounting systems, often referred to as financial decision support, which provide accurate and actionable information on cost and help organizations understand their true margins as they take on risk-based, capitated contracts. Some during the conference referred to it as the “killer app” for the financial side of driving value. Regardless of what you call it, all are moving aggressively to understand the denominator of their value equation.
4. You Must Become a Brand
Investing in and better leveraging their brand has become a strategic must for health systems. The level of sophistication is growing here as providers shift their mental model to viewing patients as “consumers.” Aurorain Wisconsin cited their dedicated Consumer Insights Group and outlined their “best people, best brand, best value” approach that has been incredibly effective both internally and externally. At the same time, the bigger investments for many health systems relative to brand are more on brand experience than brand image, with a focus on understanding and radically rethinking the consumer experience. As an example, at Danville, Pa.-based Geisinger, close to 50 percent of ambulatory appointments are scheduled and seen on the same day. And every health system is making meaningful investments in their “digital handshake” with consumer, creating and leveraging it via telehealth as well as mobile applications to enhance the customer experience.
5. You Must Operate as a System, Not Just Call Yourself One
One clear theme at #JPM18 is different organizations were at different points along the continuum of truly operating as a system vs. merely sharing a name and a logo. There are a number of reasons for this, but you are increasingly seeing tough decisions actually being made vs. just kicking the can down the road. There has been a great deal of acquisitions over the last few years coupled with a new wave of thinking relative to integration that is more aggressive and more forward-looking. This mental shift is actually a very big deal and perhaps the most important new trend. Many health systems are heavily investing in leadership development deep into their organization to drive changes much faster.
6. You Must Act Small
The word “agile” is quickly becoming part of everyone’s narrative with health systems looking to adopt the principles and processes leveraged in high tech. Chicago-based Northwestern Medicine is an example of an organization that has grown dramatically in the last five years, now approaching $5 billion in revenue. At the same time, they have still found a way to operate small, leveraging daily huddles across the organization to drive their results. The team at Raleigh, N.C.-based WakeMed has achieved a dramatic financial turnaround over the last few years, applying a similar level of rigor yielding major operational improvements in surgical, pharmacy and emergency services that have translated into better bottom line results.
7. You Must Engage Your Physicians
Employee engagement was a major theme in many of the presentations. With the level of change required both now and in the future, a true focus on culture is now clearly top of mind and a strategic must for high-performing health systems. That said, only a handful articulated a focus on monitoring and measuring physician engagement. This appears to be a major miss, given that physicians make roughly 80 percent of the decisions on care that take place and, therefore, control 80 percent of the spend. One data point that stood out was a 117 percent improvement in physician engagement at Northwestern. Major improvements will require clinical leadership and a true partnership with physicians.
8. You Must Leverage Analytics
Many have reached their initial destination of deploying a single clinical record, only to find that their journey isn’t over. While health systems have made major investments big data, machine learning and artificial intelligence, there was a consistent theme regarding the need to bring clinical and financial data together to truly understand value. Part of this path is the consolidation of systems that is now needed on the financial side of the house with a focus on deploying a single platform for financial planning, analytics and performance. The primary focus is to translate analytics not just into insights, but action.
9. You Must Protect Yourself
As organizations move deeper into data, there is increased recognition that cybersecurity is a major risk. Over 40 percent of all data breaches that occur happen in healthcare. During the keynote, JP Morgan Chase CEO Jamie Dimon shared that his organization will spend $700 million protecting itself and their customers this year. Investments in cybersecurity will continue to ramp up due to both the operational and reputational risk involved. Cybersecurity has become a board room issue and a top-of-mind initiative for executive teams at every health delivery system.
10. You Must Manage Social Determinants of Health in the Communities You Serve
Perhaps the most encouraging theme for healthcare provider organizations was the need to engage the community they serve and focus on social determinants of health. As Intermountain shared: “Zip code is more important than genetic code.” To that end, Geisinger refers to their focus on “ZNA.” They have deployed community health assistants, non-licensed workers who work on social determinants of health and have implemented a “Fresh Food Farmacy,” yielding a 20 percent decrease in hemoglobin A1c levels along with a 78 percent decrease in cost. Organizations like ProMedica Health System in Ohio have seen similar results with their focus on hunger in Toledo. WakeMed has an initiative focused on vulnerable populations in underserved communities that has resulted in a significant decrease in ER visits and admissions and over $6 million in savings.
11. You Must Help Solve the Opioid Epidemic
The opioid issue is one that healthcare professionals take very personally and feel responsible for solving. It came up in virtually in every presentation, and it’s an emotional issue for the leaders of each organization. This is good news, but the better news is that they are taking action. As an example, Geisinger invested in a CleanState Medicaid member pilot that resulted in a 23 percent decrease in ER visits and 35 percent decrease in medical spending, breaking even on their investment in less than 10 months. While many would rightly argue that the economic rationalization isn’t needed for something this important, the fact that it’s there should eliminate any excuse for anyone not taking action.
12. You Must Deliver Value
The Hospital for Special Surgery in New York is the largest orthopedics shop in the U.S. and a great example of how value-based care delivery is taking shape. Perhaps the most revealing stat they shared is that 36 percent of the time, patients receive a non-surgical recommendation when they are referred to one of their providers for a second opinion. This is exactly the type of value-based counseling and decision-making that will help flip the model of healthcare. Some systems are farther along than others. Northwestern currently has 25 percent of its patients in value-based agreements, but other systems have less. As the team from Intermountain re-stated to this audience this year, “You can’t time the market on value, you should always do the right thing, right now.” Well said.
It’s time to get started or get moving even faster.
As the saying goes, “It’s the journey, not the destination.”
Dr. Roy Beveridge has served as CMO of Louisville, Kentucky-based Humana since 2013. Two years into his tenure, he opened the MedCity ENGAGE conference with a discussion calling for the democratization of healthcare.
In a recent phone interview, Beveridge discussed everything from value-based care to social determinants of health.
This exchange has been lightly edited.
What has been Humana’s biggest accomplishment in 2017?
From a physician and patient standpoint, we’re really moving quickly into value-based arrangements with MACRA and MIPS. There’s been a mind shift around physicians recognizing that in order to accomplish their goals of population health and value-based reimbursement, the whole discussion has changed around the need for analysis of data and a very different type of communication between the payer and the provider. Without that data, they can’t close gaps or improve the quality metrics that are becoming the norm.
A few years ago, I mistakenly thought value-based care was something that was going to be focused on the primary care physician and would not impact the specialist as much. But what you’re seeing is specialists recognize this value-based payment system is something they have to participate in.
From our standpoint, what that has resulted in is this continuous focus around community relationships. If payers like Humana are going to be successful, we need to be engaging our physicians’ patients. Services are needed for patients in the home. That’s the shift we have thought about and been successful at as we continue to recognize that an increasing amount of care will be in the home.
Why is it important to incorporate social determinants of health, and what work is Humana doing in this space?
When I was early in my practice and would see someone with diabetes, I remember having this belief that my role was to recognize what the patient’s diagnosis was and give a prescription for insulin. And then I thought I’d done a good job.
That was the mindset up until recently. Simply giving someone a prescription is the easy part. The more complicated part is explaining what their disease is and helping them take their medicine. We used to think that was a social worker’s problem. But if giving someone a prescription that they can’t fill doesn’t really help them.
As we look into the social determinants of health, transportation is big. Social isolation is a big one, and food insecurity goes hand in hand with diabetes and everything else.
I don’t think five years ago you’d be asking a question about social determinants of health. But at this point, the recognition of social determinant health issues is fundamentally linked to population health.
If you’re looking at a fee-for-service model, writing the prescription is all I need to do. If we shift the model to health outcomes, then you’re aligning everyone’s incentives to make sure people are thinking about these social determinants of health.
The other thing we have learned in the last year or two is that care really is local. We as a society have to recognize that what happens in South Florida is different than what happens in Texas or Minnesota or Massachusetts. There’s not one size that fits everything.
Humana recently released its inaugural value-based care report, which outlines numerous topics, including how Humana Medicare Advantage members affiliated with physicians in value-based models typically have healthier outcomes. Which finding from the report most surprised or shocked you?
I don’t think anything shocked me. There were parts of this that I think a couple years ago would have shocked people.
Five or 10 years ago, I would have said to you that in order to improve quality, you have to make an investment globally and that investment is going to cost the system more.
What’s pretty clear in the report is quality metrics do all the right things, yet at the same time, they lower the global cost of care. I don’t think that’s shocking, but it’s something that’s still hard for people to recognize and internalize. Fundamentally, as we improve the quality of healthcare, costs decrease.
News recently surfaced that Humana will acquire a 40 percent stake in Kindred Healthcare’s home care business for approximately $800 million. What does this mean for Humana?
We’ve only made the proposal. We haven’t gotten government approval for anything.
We’re thinking about, “How can we always get closer to the patient? How do we help improve someone’s health by being where someone is more of the time?” [Patients are] not in the hospital most of the time — they’re at home most of the time. We recognize we need to get closer to where people are if we’re going to help them in their destination of improving health.
What is your number one prediction for healthcare in 2018?
My number one prediction in healthcare is the pace of change within the system is going to continue to be fast.
CMS is pushing — and appropriately so — down a health orientation that moves from fee-for-service to quality-based outcomes.
My prediction for ’18 is that we’re going to hit an inflection point where the light bulb goes off because of the number of patients in the system who have moved from fee-for-service into this health outcomes model. Once it hits a certain amount of engagement within your hospital, then it becomes something everyone is aligned around.
In May 2016, Tony Slonim, MD, DrPH, met fellow New Jersey native Joe Grzymski, PhD, at a Starbucks for coffee. Dr. Slonim, CEO of Reno, Nev.-based Renown Health, said he expected to trade stories about their home state, but they soon found their professional interests as compatible as their personal ones.
“Like all good things, it started at Starbucks over a coffee on a Saturday morning,” Dr. Slonim said, “As we let our minds expand and started thinking about complementary ways we could collaborate, this idea came up.”
This idea is a partnership between Renown and the Desert Research Institute, where Dr. Grzymski is senior director of applied research.
The duo began to think of ways they could combine the clinical data 946-bed Renown had on hand with the DRI’s environmental data to better understand the ways outside factors affect health outcomes in their community.
But the idea didn’t stop there. The pair also recognized that social determinants play an equally influential role in shaping a person’s health, so they made sure to include social data from the Governor’s Office of Economic Development in their new project, which did not yet have a name, but more importantly had a purpose.
“If we believe in population health, and the vision for population health, we’ve got to do a better job of understanding the health and the wellbeing of the people we’re serving,” said Dr. Slonim. “As an organization that’s got a large market share, it’s incumbent upon me as the CEO to think about how to use the most efficient resources for the most benefit for people that need it.”
At first, the collaboration was seen as a data-sharing project that would connect skilled researchers and analysts at the DRI with a wealth of combined information that had been inaccessible to a single provider in the past. However, it was only once Dr. Slonim and Dr. Grzymski took their idea to the 2016 BIO International Convention in San Francisco that they were able to find a third partner to provide them with yet another data set that would help them fully see the big picture of a person’s health.
Representatives from retail genetics firm 23andMe approached Dr. Grzymski following his talk at BIO. The company offered to provide genetic testing and sequencing for the project. Dr. Grzymski jumped at the opportunity, which would enrich the already robust data collection he and Dr. Slonim had begun to compile.
With genetic information as a fourth pillar of their potential data set, Renown and the DRI founded the Renown Institute for Health Innovation. The IHI’s most important initiative would go on to be named the Healthy Nevada Project.
At a September 2016 press conference, Dr. Slonim and other IHI leaders teamed up with Nevada Gov. Brian Sandoval to announce that the first 5,000 Reno residents who signed up to submit genetic samples would receive free access to the test results. Dr. Slonim believes offering this access to community members is what encouraged 5,000 people to sign up in only the first 24 hours of the enrollment period. With such an enthusiastic response, the leaders at the IHI decided to open up 5,000 more slots, which took one more day to fill. In only 48 hours, the Healthy Nevada Project had succeeded in enrolling 10,000 local residents to submit samples for genetic testing.
The project was off and running — quickly. And Dr. Slonim’s work was only just beginning.
Once 23andMe completed genetic sequencing of all 10,000 study participants in December, the Healthy Nevada Project still faced a looming question: What to do with all the data they’d collected?
“One-hundred more people per 100,000 die of cardiovascular disease in northern Nevada than national estimates. Our cancer rates are significantly higher and nobody knows why. So [we’re] trying to understand what the backdrop and the context is,” Dr, Slonim said. “Is it the mines that we have here? Is it the weather patterns that change because we’re in a valley? Our air pollution is higher, our particulate matter is higher — is that what causes lung cancer? We’re trying to figure this out, but you can’t do anything without data, so we started there.”
Dr. Slonim understands epidemiologists and analysts will have to spend many careful hours with the data to come to any concrete conclusions, but he believes the Healthy Nevada Project represents an essential first step for the future of the healthcare industry. If he and his colleagues could begin to harness the power of data in EHRs, then he sees a world of untapped potential that can help his community improve their health while also improving Renown’s organizational efficiency.
“This is the ultimate in strategic planning. If I figure out that our community is more at risk for cardiovascular disease 10 years from now, I can be thoughtful about how I go about recruiting cardiologists. If I know that the population is growing in pediatrics, I can start a program for pediatric residents at the medical school and grow my own pediatricians,” Dr. Slonim says. “The horizon for planning can be kept in view because we’re learning about our population’s health and disease. The second reason why I did this is because it’s the best way to engage consumers in their own healthcare to modify their behaviors.”
Dr. Slonim’s advice to hospital leaders looking to improve their capacity for innovative data concepts is simple: Take the first step. For the most part, the benefits of the Healthy Nevada project still lay ahead, as it has been only 15 months since that coffee meeting, but the game-changing potential cannot be understated. Dr. Slonim is confident that putting in the work to collect and analyze this comprehensive data will revolutionize the way Renown cares for its patients, and he believes other providers can follow suit.
“If you’re a large contributor to your market in healthcare with full range of integrated services across the continuum, get the environmental data. Get partnerships with the social data,” Dr. Slonim says. “Figure out how you can exercise your clinical EMRs and the great repository of data that are in there and put them in a big data warehouse and figure out how to analyze them. We’re not using predictive analytics in healthcare the way that other industries are, and we need to be better at that.”
Henry Ford Health System, Kaiser Permanente Health Plan and Hospitals and Rush University Medical Center are among nine healthcare systems working on a new initiative to reduce inequities in health and healthcare access, treatment and outcomes.
The Institute for Healthcare Improvement (IHI) launched its two-year “Pursuing Equity” initiative on Monday. Its goal is to break new ground by explicitly addressing institutional racism and by identifying ways healthcare organizations can reduce clinical disparities of care as well as improve equity in employee wellness and social determinants of health.
The other systems participating in the project include HealthPartners in Bloomington, Minnesota; Main Line Health in Newton Square, Pennsylvania; Methodist Le Bonheur Healthcare, Memphis, Tennessee; Northwest Colorado Health, Steamboat Springs, Colorado; and Southern Jamaica Plain Health Center, Brigham & Women’s Hospital, Jamaica Plain, Massachusetts.
Each system will build on the work they’ve already done within their institutions, including launching programs to reduce clinical disparities, track equity in process and outcomes data, and improve knowledge and capability.
“We see a future where every healthcare system in the country pursues equity as part of daily work and core skills, ensuring that individuals and communities can attain their full health potential—and we believe Pursuing Equity is an important step in creating a blueprint for other organizations to follow,” said Derek Feeley, IHI president and CEO, in an announcement (PDF). “Pursuing Equity is part of the next phase of IHI’s ongoing commitment to address the unjust, costly, and persistent inequities in health and healthcare across the nation. We are energized and ready to continue this critical work.”
The initiative will be funded by theRx Foundation, Bristol-Myers Squibb Foundation, and the participating health systems.
Many U.S. communities saw gains in their health and health care between 2011 and 2014, but wide variation in progress indicates there is room for improvement across the country, The Commonwealth Fund’s newly updated Scorecard on Local Health System Performance finds.
Those areas of the U.S. that improved did so largely because more people had insurance coverage and could afford to get the care they needed, and because health care providers performed better on quality and efficiency measures—such as limiting hospital readmissions. The Affordable Care Act (ACA) has contributed to many of these improvements, the researchers say.
Still, the analysis of 306 U.S. local areas on health care access, quality, avoidable hospital use, costs of care, and health outcomes shows that while care improved more than it worsened in nearly all communities, the gains were often modest. Among the more worrisome trends are the rise in obesity rates in more than 100 areas and the stagnation in preventable death rates nearly everywhere.
The Commonwealth Fund’s interactive scorecard features data visualizations, an online tool enabling comparisons of U.S. communities, and complete area-by-area results on the scorecard’s 36 health system indicators.