Some of the questions that weigh most heavily on the minds of hospital executives and physician leaders are:
• "Are we big enough?"
• "Can we grow our existing system?"
• "Should we invest our capital to acquire related or ancillary business?"
• "Should we partner or collaborate with other health systems and physician groups?"
My colleagues and I answer these pressing questions with the same answer: "If you think you are big enough, you're not. If you think you can reach scale on your own to deal with massive challenges by yourself, you can't. And If you think that the old way of doing business - of growing or buying your way out of the situation - will work, you're wrong."
Health systems must find smarter ways to get big. Increasingly, this means achieving scale through collaborations based on a solid foundation of data and analytics.
The scale imperative
The forces affecting healthcare in the United States make achieving scale necessary for large health and physician systems to survive. These organizations are running headlong into economics that are forcing them to think about the entire patient lifecycle. To succeed in a value-based care (VBC) model, having the scale to provide services across the continuum of care while managing the total cost of care is the only way to thrive.
But it is virtually impossible for a health system to buy everything it needs to make a risk-based model work. Can you imagine a health system trying to make a chain of three retail pharmacies economically viable? Or successfully owning and operating a chain of skilled nursing facilities? How about a transportation capability or social services for fragile patients? Even if a health system has the necessary capital, it still would be economic folly to think that every health system – and patients – would be best served by owning and managing every touchpoint across the care continuum.
Beyond capital and economics, there are more questions about the wisdom of straying too far from a health system's core business and competencies. Hospitals, pharmacies, urgent care and retail clinics, and long-term care facilities all operate on vastly different business models. Healthcare "conglomerates" are not the answer.
Smart collaborations are key
What does getting big, smarter look like? The answer lies in using data and analytics to find collaborations and partners that haven't been considered possible in the past. One of those is retail medicine and minute-clinics. There is interesting work going on with clinically integrated networks and people bringing adjacent business like skilled nursing in the fold and creating brand extension and expanded protocols.
The area where health systems can fall-down is when they seek to merge and collaborate with enterprises that mirror their existing capabilities. Hospitals want to work with other hospitals. Doctors want to work with other doctors. They are looking through the wrong end of the telescope, based more on negotiating with payers than on creating the system and network needed to provide care to patients across the continuum.
Forward-thinking health systems are thinking about how to partner and collaborate with adjacent businesses – such as skilled nursing and long-term care facilities, acute care facilities, behavioral health facilities, and telehealth providers – to create a complete network for people who need care. This type of collaboration doesn't necessarily mean entering into a classic partnership.
Today, there is a smartness to partnering that didn't exist 10 years ago. That smartness comes from the ability to dissect people's real need from a data perspective and through analytics tools.
Making strategic choices
Today, there are enough big claims databases and data in electronic health records to begin to dissect and study what people need. As opposed to saying, "I have to collaborate with retail pharmacies," health systems can now say, "I need to collaborate with exactly this many retail pharmacies in these specific locations." Instead of saying, "I need to go collaborate with a social services organization that provides in-home visits," they can say, "I need to collaborate with a social service organization that provides these specific services to this specific population in this specific geography." Data analytics also give providers the ability to forecast the return on investment. With the growing availability of these tools, the industry is beginning to think about them in more intelligent ways.
Huron is doing groundbreaking economic modeling work to support these decisions on collaboration for our clients. Modeling can tell us, for example, that a client needs five behavioral health beds to deal with this specific population. Thus, when a client selects a behavioral health company to talk to about collaboration, they don't need to talk about integrated capital structures and organizational structures. Instead, they can focus on how to get to five dedicated beds. The whole conversation shifts from general structure and finances to "we commit to using five of your beds, and these are the types of patients we are going to want you to serve."
Measuring effectiveness
In addition to the economic modeling that allows health systems and physician groups to identify these collaborations and partnerships, the metrics and measurements are being put in place to collect information about multiple partnerships, so the providers have an analytical basis to begin to assess those partnerships.
These modeling tools are helpful for large healthcare systems that are seeking to find smart collaborations that both parties are eager to explore. The same economic modeling tools also provide the necessary framework for smaller hospitals to determine potential candidates to merge with for the best outcome. The reality is small community and critical access hospitals can't do this on their own. They have to be thinking about how they can merge into larger healthcare systems that then have the market influence to say to a major retail pharmacy, "We serve a million people. Will you partner with us?"
Global changes – including bundled payments, rewards and punishments for VBC performance – will continue to make smart collaborations essential.
Collaborative networks are the best, and maybe the only, way to meet these demands.
Ted Schwab is a Managing Director of Huron Healthcare with 25 years of healthcare experience, specifically in healthcare provider strategy, partnerships, and organizational transformation. He is an industry leader in innovation through his work with clinicians, executives, and governing bodies around the country, helping them design the next generation of healthcare organizations.
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