5 Ways Population Health is Transforming Hospital Strategy
Hospitals across the country face a unique combination of pressures and competition right now. Population health and the proliferation of value-based reimbursement and risk-sharing structures are incentivizing providers to keep patients out of the hospital. More insurers and employers are rewarding patients for receiving care in less costly settings. Retail clinics and health information technology are only growing in sophistication and availability, slowly redefining patients' expectations for accessibility and convenience.
Combined, this flurry of forces is driving a very big risk — that hospitals and health systems may become less relevant in the healthcare industry. Most hospital leaders agree that it is a question of when to implement population health strategies rather than if, since the industry's transition to pay-for-performance will be gradual, and hospitals take chances by moving either too quickly or slowly. But health systems that fail to adjust their strategies and capabilities for growth, effectiveness and relevancy to better match the goals of population health in a timely fashion may very well lose their place in the market.
Here are five ways population health and its new care delivery methods might alter hospitals' and health systems' strategies in the years to come.
1. Traditional measurements of market share are less telling. A few years ago, hospitals' market share was defined by quantifiable measures like bed counts, the number of facilities and how many physicians were on their rosters. This corresponded well with a fee-for-service industry. "The traditional understanding of hospital market share is the more discrete units you have, the better off you are — the more patients, beds, procedures, facilities. [It's] all a volume game," says Kathryn Lovrien, principal of strategy with Health System Advisors, a strategic consulting firm based in Minneapolis.
Population health management is shifting this focus from discrete units of care to systems' ability to keep people out of inpatient settings, through strategies such as disease registries and disease management programs for groups of patients. This imperative will make a hospital's "growth" less quantifiable, to some degree. "There are some elements to growth, but it's more about effectiveness in keeping people healthy instead of pure growth," says Ms. Lovrien.
And although hospital-hospital acquisitions continue to occur at a steady rate, health systems may want to reconsider the strategy behind these transactions as the industry makes its transition to value-based care. "One of the questions we've had — is it really relevant to be thinking about acquiring hospitals? That's one of the highest cost equations," says Luke Peterson, principal of strategy with Health System Advisors. "They're heavily dependent upon a model that is based on patients who are sick instead of populations that are healthy." Instead, Mr. Peterson poses the question of whether organizations should invest energy and capital in capabilities around outpatient care services, physician delivery models or direct patient delivery models, like virtual care and urgent care.
2. Appointments will become archaic. Healthcare consumers will not only value the quality of their healthcare, but also its convenience. Clinics in pharmacies, supermarkets and shopping malls are becoming more robust competitors to hospitals. A recent Health Affairs study found a four-fold increase in retail clinic visits between 2007 and 2009, and it seems that rate will continue to grow as retail clinics proliferate. CVS Caremark, for instance, hopes to expand from 600 existing MinuteClinic locations to 1,000 nationwide by 2016.
Increased use of retail care settings is also shaping consumers' expectations for healthcare delivery. "If you tell someone who is a young professional to make a doctor's appointment three weeks in advance, they will more than likely not do it," says Mr. Peterson. "They'll get their flu shots at Walgreen's. [Appointments are] not relevant to them."
These pressures are driving many hospitals and health systems to get their skin in the retail game. Essentially, it will become too risky and costly to sit on the sidelines in what is becoming a new norm of care. "[What if] virtual care becomes ubiquitous and that's how every one gets their care first before scheduling appointments with physician — they go through virtual care first," says Mr. Peterson. "What would happen if you didn't control that portal?"
3. Providers' new competitors may not even have a pulse. Consumer health apps and other mobile health services may not have posed much of a threat to brick and mortar hospitals or personable physicians in the past, but a combination of forces are altering that precedent.
First, the number and scope of apps and mobile offerings continues to grow. About three years ago, most healthcare apps were focused on screenings, such as those for cholesterol, blood pressure or glucose levels, according to Ms. Lovrien. Technology has since become more sophisticated and robust, with new tools like a cardiac defibrillator apps or ultrasound apps.
Secondly, most patients now expect mobile health options in their care delivery. A recent survey from PricewaterhouseCoopers found roughly half of patients said mobile options would improve healthcare, and 59 percent of patients already use mobile health. Most providers and payors are overcoming their initial skepticism of mobile health as the latest tech trend. Instead, they face uncertainty in how to most effectively incorporate apps and mobile health into their organizational strategy. Sixty-four percent of physicians and insurers said they are excited about mobile health but that there are too few proven business models for the strategy.
4. Team-based care will become the standard. Hospitals that deliver care through multidisciplinary teams with providers matched to their competencies will have a better chance in increasing patients' access to care, thus managing population health and retaining relevance.
"As you move to the population health model, you're seeing an uptick in organizations looking at how to use different providers, [such as] nurse practitioners and mid-levels to improve access to traditional primary care services," says Ms. Lovrien.
The nationwide physician shortage is also pressing hospitals and health systems to make the most of their physicians and ensure they practice to the top of their degree. This imperative is especially evident in certain care delivery models, such as accountable care organizations and patient-centered medical homes. "How do you move people out of the cardiologist's office into primary care so nurse practitioners can screen them? You don't need to come in every day to manage blood sugar," says Mr. Peterson. "[Providers are] trying to use technology and [advanced practitioners] to manage competencies and move things into the home. That's what I see in accountable care organizations and patient-centered medical homes — a team based approach to manage populations."
But accountable care organizations and patient-centered medical homes aren't the only places emphasizing team-based care. For example, the Ohio State University College of Nursing in Columbus recently announced plans to open its first nurse practitioner-led health clinic — a development that reflects the expanding role of nurses and other care providers in the delivery system.
Nurses at the clinic will focus on the management of chronic conditions and preventive care, which are central tenets in population health management. Bernadette Melnyk, dean of the College of Nursing and chief wellness officer at Ohio State, has said she predicts that "in the not-too-distant future, a substantial portion of primary care will be provided by nurse practitioners and physician assistants."
5. There are new factors to consider for partnerships. An American Hospital Association survey from April 2012 found many hospital CEOs plan to look beyond traditional collaborations with providers and form ties with less orthodox entities to improve population health management. For example, 67 percent of CEOs said they would explore a partnership with a community, public health or government agency, and 56 were willing to explore partnerships with payors.
Hospital size also determines the types of partnerships leaders should consider, as the larger the patient base, the larger the push to explore population health solutions. Smaller hospitals, or those in rural locations, may not have the capital nor workforce to implement population health strategies the way a larger organization can. The same AHA survey found about 98 percent of CEOs who led hospitals with more than 500 beds were focusing on population health strategies, while the same was true for about 87 percent of CEOs from 100- to 199-bed hospitals. Thus, smaller hospitals will need to find compatible partners that can also provide the IT, analytics, payor contracts, disease management resources and access to care that will best drive population health management.
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