Marc J. Miller, MBA, FACHE, FACMPE, serves as Chief Executive Officer at Southeast Health Statera Network.
On April 9th, Marc will give a presentation on "ACO’s in Partnership with Large Self-Insured Employers" at Becker's Hospital Review 11th Annual Meeting. As part of an ongoing series, Becker's is talking to healthcare leaders who plan to speak at the conference, which will take place on April 6-9, 2020 in Chicago.
To learn more about the conference and Marc's session, click here.
Question: How can hospitals reconcile the need to maintain inpatient volumes with the mission to keep people healthier and out of the hospital?
Marc Miller: One of the best ways for a health system to maintain profitable inpatient volumes while increasing patient quality of care is to develop an ”Accountable Care Organization (ACO)”. The Mission of an ACO is to increase the quality of patient care while creating healthcare cost efficiencies. From my personal experience with developing Accountable Care Organizations in five (5) states, we were able to accomplish these cost efficiencies while increasing the hospital’s contribution margin.
While working for a previous health system, I recall that our ACO efforts would cause the hospital inpatient volumes to move up or down (depending on the sub-service line). And while we increased the quality of patient care, the result was a reduction in the unnecessary patient encounters and procedures, while maintaining or increasing the appropriate and necessary patient episodes. This then resulted in fewer resources needed while increasing the health system’s hospital contribution margin. Again, from my past personal experience, this strategy resulted in an average net increase in hospital contribution margin, ranging between a 1% and 3% increase.
Keep in mind that the results are a little different in an ACO market where there are multiple health systems, where your hospital holds a minority of the market share, versus an ACO market where your health system has a dominant majority of market share. In the case where your hospital and ACO are in a market with multiple health systems and your hospital holds a minority of market share, the improvement in the quality performance of your hospital will pull relatively more cases from the lower performing hospitals in your market. So, the takeaway lesson here is to develop an ACO to keep people healthier and out of the hospital, and more often than not, that will result in a weighted average increase in hospital contribution margin, regardless of the net fluctuation in inpatient volumes.
Q: What's one lesson you learned early in your career that has helped you lead in healthcare?
MM: Relationships and communication have helped me in my career. Early on I was so focused on operational success, that I neglected the importance of relationships and communication. As I’ve developed my leadership maturity and skills over time, I’ve experienced the added value of effective communication, and the nurturing of relationships. One of my favorite quotes on the definition of Leadership is given by John Haggai, in his book “Lead on”. He defines Leadership as “The discipline of deliberately exerting special influence within a group to move it toward goals of beneficial permanence that fulfill the group’s real needs”. What better way to accomplish this than to effectively communicate, and develop relationships with your team and others that are open, honest, and transparent.
Q: What do you see as the most exciting opportunity in healthcare right now?
MM: Population Health is currently one of the most exciting opportunities in healthcare. It’s undeniable that the cost of healthcare in the United States is continuing to increase as a percentage of Gross Domestic Product (GDP). And as a result, Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) are doubling down on the development of both voluntary and mandatory population health value-based reimbursement arrangements with health systems and physician provider partners.
We are all aware that the annual increases in fee for service reimbursement rates for providers are being replaced by the value-based and quality-based shared risk programs. So, given the stated mission of the Department of Justice and the Federal Trade Commission model of the “Clinically Integrated Network”, it leads me again to recommend that health systems take a strong look at including the development of an Accountable Care Organization in their long term strategic plans. Wayne Gretzky, the successful National Hockey League player once said that his success was in large part due to the fact that he would consciously “skate to where he believed the puck was going to be”. (not where the puck was at the moment). Health systems should take a lesson from this, and considering the rapid growth of value-based reimbursement, they should strategically position themselves to prepare for this trend, in order to optimize their chances for success in the evolving value-based reimbursement environment.
Q: Healthcare has had calls for disruption, innovation and transformation for years now. Do you believe we are seeing that change? Why or why not?
MM: Yes, we are seeing a change particularly in transformation. Many Accountable Care Organizations and consultants have made the mistake in the past of warning health systems that the fee for service reimbursement model is imploding. I’ve personally seen presentations on “the creaky bridge” between fee for service and value-based reimbursement models, and I’ve heard many consultants preach that the fee for service “sky is falling”. Frankly, they’ve done a disservice to the relevant ACO/CIN space, because this raging fire approach has now unfortunately developed an ACO reputation like the “boy who cried wolf”, and a mentality of disbelief among the traditional health system executives. However, the move to value-based reimbursement is very real, and it has been accelerating exponentially in the last few years. So, for the first time, I do feel that we are seeing this type of transformation in healthcare.
Regarding disruption, you could say that CMS and the commercial payors are disrupting the reimbursement model from exclusive fee for service offerings, to increasing value-based reimbursement. I’m not an expert on innovation, but I do see some progress in Information Technology in the population health and ACO space. For example, one of the biggest failures of ACO organizations in the past has been the refusal to purchase Information Technology Platforms that are specifically designed for ACO’s. We commonly refer to these IT platforms as health information exchange, or population health analytics platforms. There are a half-dozen or so IT organizations that have made great progress with innovation in this area. Unfortunately, many traditional health system executives and/or physician practice executives decided to forego this “off the shelf” ACO IT investment and instead made the mistake of trying to develop these data exchange and reporting capabilities internally or alternatively tried to “bolt-on” this type of module to their existing Electronic Health Records platform. And the lack of results should have been predictable. And as far as affordability in IT HIE platform investments, these stand-alone products have now progressed and developed enough in the marketplace to invest in one affordably.