Far more healthcare providers are taking on risk today than in the past as the healthcare system takes steps away from fee-for-service, toward pay-for-performance.
"There is still a wide disparity between the gains from risk-sharing and the loss of revenue from fee-for-service," said Michael Swarzman, vice president of business development and service lines at Advocate Illinois Masonic Medical Center in Chicago, at the Becker's Hospital Review 6th Annual Meeting in Chicago, May 7 to 9.
According to Mr. Swarzman, even with newly earned shared savings from payment models such as accountable care organizations, healthcare facilities may not be able to make up for the loss of net income due to a number of paradigm shifts, including an aging population, unsustainable Medicare finances as well as the previously uninsured population entering the system with no utilization history.
"Business development will be the key influencer of net income," said Mr. Swarzman. "Everyone jumps on the cost reduction bandwagon but cost reduction may not be enough."
Healthcare organizations are using a number of business development strategies, including employing physician groups. While employing physician groups helps eliminate competition, it still may result in an operating loss, noted Mr. Swarzman.
Additionally, healthcare executives are thinking about their response to retail, especially with companies such as Walgreens and CVS entering the healthcare space. "We can compete on price and access, but they are experts in consumer behavior," he said. "So we need to be open to new collaborations and joint ventures."
Business development in the future must also include the following elements:
1. New and emerging channels of distribution. The healthcare landscape no longer includes just providers and insurers. There are chiropractors, dialysis centers, urgent care centers, health and wellness clinics, physician therapy and skilled nursing facilities. Your business development team needs to have comprehensive knowledge of new channels of distribution in healthcare and be able to provide access to these channels, said Mr. Swarzman.
2. Disruptive technologies. There also needs to be an information exchange platform so that providers and different channels of distribution can better manage referrals, scheduling and results, according to Mr. Swarzman. Develop and adopt disruptive technology that supports an automated and seamless care coordination process. This also supports population health targets as it reduces fragmented care through the continuum.
3. New executive competencies. Executives will need new competencies to support business development, including the ability to marshal resources of the risk-bearing enterprise, employed physician group and site of care into a single unified market strategy. Also, business development executives need to have an instinctive ability to say, "This is an opportunity and we are going to jump," noted Mr. Swarzman.