Chuck Lauer: Naming the No. 1 challenge for health system CEOs is now a challenge in itself

As many readers know, I like to keep a close eye on what healthcare CEOs and other top leaders are thinking. Of course, they are always thinking about the financial bottom line and the competition. These days, though, their plates are overflowing with concerns. Health reform and its focus on value-based payment and population health, the changes in the insurance market, the enormous shift toward consolidation in markets and other factors are making it hard to get a clear read on the C-suite.

If you look at surveys done over the past year, each one seems to highlight a different challenge.

The big news in this year's American College of Healthcare Executives annual CEO survey was the rise of the issue of personnel shortages to fourth on the list of concerns. Organizations are also concerned about recruiting and retaining the right talent to help lead the care transformation underway. 

Meanwhile, the Advisory Board's annual CEO survey highlighted the need among nearly half of respondents to meet consumer expectations and improve patient engagement. Nearly half of executive respondents indicated that they were extremely interested in addressing the challenge of rising consumer expectations for service.

"Health systems are facing a push toward consumerization, fueled by more patient financial accountability, as well as the push to population heath and managing the total cost of care," said Lisa Bielamowicz, MD, chief medical officer and executive director, research and insights at the Advisory Board. "Health systems are seeking strategies that bring together these potentially conflicting market forces." 

A Prudential survey in Economist magazine found the shift from fee-based to value-based payments is the single biggest challenge facing U.S. hospitals, affecting institutions across every region, size, location and type of ownership. The reason is clear. The ACA focuses on the quality of care given to patients rather than quantity or volume. Thus performance-based indicators will increasingly determine hospital income rather than the fees based on service volume.

A PwC survey found CEOs worrying about the disruptive impact of changing regulations and customer behavior. They're focusing on using technology to create value in new ways, developing diverse and dynamic partnerships and cutting costs.

Modern Healthcare's latest CEO Power Panel survey reveals leaders are bracing for uncertainties and challenges generated by the law, formally titled the Medicare Access and CHIP Reauthorization Act, also known as MACRA. Anxiety is rippling through the healthcare industry as the initial reporting period for Medicare's new payment system for physicians fast approaches. The CEOs are worried physicians are already stressed and burned out, and not ready for change. 

The Deloitte Center for Health Solutions conducted a series of interviews with CEOs across the country. You get the impression there is great concern about the next 10 or 20 years. "Hospital and health system CEOs understand that they face unprecedented changes and a dramatically different market in the coming decade," the report said. "CEOs recognize that to be successful they need to choose a path forward now and that their organization will likely  require new capabilities to meet anticipated challenges."

CEOs told Deloitte that value-based payment will change the nature of the industry. Profits will be hard to come by. Most services will be outpatient or home-based. Consolidation will only continue to accelerate among hospitals and physicians because it has the potential to increase market access to capital, increase market leverage and expand capabilities, which are all believed necessary to be successful in under value-based care.
CEOs believe a major drive to consumerism is already here, and that will mean hospitals will have to be more accessible, transparent and offer services and interactions when and where the consumer desires. The CEOs agree that the following are their biggest challenges: "Finding the resources to invest in VBC and consumerism, which is particularly difficult when margins are tight. Investments may include developing a clinically integrated network, partnering with others, changing practice patterns and developing and analyzing data. Being more consumer-centric may include investments in care redesign, e-visits, expanded hours and staff training."
Many CEOs are apparently still on the sidelines trying to figure things out while others experiment with new forms of payment and provider networks, as well as big data.

I find that growing consumerism seems to have many CEOs perplexed. They realize that healthcare consumers have different expectations than in the past. They also realize that the consumer is generally unwilling to accept hospital- and physician-centric business models. They realize patients now seek better access to care, more involvement in care decisions and improved customer service. As a matter of fact, respondents to the Deloitte 2015 survey of healthcare consumers cited the treatment process, customer service and other points of interaction as the largest drivers of their dissatisfaction with hospitals.
Healthcare is changing so fast that I can't keep up with it all. I can only imagine being a senior leader with decades of experience with fee-for-service and now there are new financial systems coming into play, along with new trends that are going to change the industry dramatically. Yes, it is an exciting time to be in healthcare, but it is also complicated. It is going to take leaders with great courage and resilience to work their way through the maze that all leaders have to contend with to be successful. My sense is most of them will be.

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