Has Healthcare Reform Brought the End to "Hospital Systems?"

Many healthcare providers don't want to be known as "hospital systems" anymore. Some hospitals and health systems are taking reform into their own hands by redefining their brand, mission and business strategies to better reflect the contemporary broader values of healthcare reform. The phrase "hospital system" connotes a sense of limitation and constraint in today's healthcare environment, in which successful systems are expected to include surgery centers, physician groups, home health agencies, rehabilitation facilities and sometimes even health plans.

"The challenge for most organizations is they still think they're in the hospital business," says Casey Nolan, managing director at Navigant Health in Washington, D.C., and leader of the firm's healthcare strategic planning practice. "That's the reason railroads got into trouble years ago. They thought they were in the railroad business, not in the transportation business.

Railroads experienced a golden age for about 40 years until cars, airplanes and other forms of transportation began to take over. The railroad industry didn't redefine itself fervently enough, which led to hard times. "Hospitals need to realize they're not in the hospital business, they're in the care coordination business," says Mr. Nolan.  

Healthcare reform requires a gradual change, especially with the red tape of federal rules and regulations. Some hospital and health system leaders are choosing to take the reigns now, however. They are redirecting their organizations to focus on different success factors than they did five, 10 years ago.

"Most people would agree that the costs of healthcare are unsustainable. But in the absence of immediate, massive reform, there has to be something someone can do to start making a difference. Approaching healthcare from the broader perspective of health and wellness is a tactic hospitals and health systems can implement now," says Marion Crawford, president of Greenville, S.C.-based Crawford Strategy.

A new business strategy can take several years to complete, Mr. Nolan says, and timing is critical. An organization doesn't want to redefine its strategy as a health system too early or too late. These are the challenges of operating in an industry that is half fee-for-service, half pay-for-performance. "You'll have to be a little schizophrenic for a few years. The transformation will take several years, and the timing is very important," he says.

Missions, visions and values — some can change while one stays the same
Three of the most visible avenues for a hospital system to redefine itself are through its mission, vision and values. These anchor an organization's identity, but some are more change-friendly than others. In fact, most of today's hospitals and health systems are redefining themselves and their place in the community without altering their mission statements, which tend to remain invariable throughout the hospital's lifetime. A change in name, adoption of a new payment model, facility expansion — even a change in business strategy — rarely require a change of organizational mission.

"There are three bedrock things [comprising] an organization's strategy: mission, vision and values," says Mr. Nolan. "The mission statement is really the organization's reason for existence. That very seldom, if ever, changes. The vision may change, and business strategies may change, but missions are pretty near to being carved in stone," he said.

Mission statements usually describe tasks that can't be measured or complete, and this ongoing nature of the statement makes it less subject to change. For instance, Rochester, Minn.-based Mayo Clinic's mission is, "To inspire hope and contribute to health and well-being by providing the best care to every patient through integrated clinical practice, education and research." Rush University Medical Center's mission statement is, "To provide the very best care for our patients. Our education and research endeavors, community service programs and relationships with other hospitals are dedicated to enhancing excellence in patient care for the diverse communities of the Chicago area, now and in the future."

Visions and values, on the other hand, can be altered throughout the organization's lifetime to keep the organization abreast with issues in the community. "The vision can, and should, change pretty regularly. While you can never complete the mission, the vision is what you want to become or achieve. 'We want to make our community the healthiest in the United States.' You can measure that. You can accomplish that," says Mr. Nolan.

Trying to change how and when people think of hospitals
Health systems not only want to change how they are perceived by patients, but when people think about visiting a health system facility. Many are trying to move away from the traditional understanding that hospitals are for the sick. Instead, they want to instill the idea of hospitals as places of health maintenance. One way an organization can emphasize this renewed focus is through a name change. These days, that name change might involve the addition or omission of only one word.

Orange, Calif.-based St. Joseph Health System made a slight adjustment to its name in May when it dropped "System" from the title. The 14-hospital network says the adjusted name reflects its broader goals. St. Joseph Health's subsidiary, Lubbock, Texas-based Covenant Health System, also dropped the last word of its title to become Covenant Health. The parent system began considering this transformation in 2006, well before the Patient Protection and Affordable Care Act. It developed a plan to foster broad networks of care — "not just hospitals for treating the ill or injured," according to St. Joseph Health President and CEO Deborah Proctor.

Devising the organization's new business strategy extended beyond internal stakeholders, and St. Joseph chose to emphasize collaboration in its redefined identity: "During the past 18 months, we have received input from thousands of stakeholders — including employees, physicians, board members and a variety of community members — who are committed to our vision of bringing people together to provide compassionate care, promote health improvement and create healthy communities.

"In my role as president and CEO, I am charged with creating an environment to make this vision a reality," says Ms. Proctor. "Our strategy calls for us to recognize that we should not face our future alone. We must build new partnerships and seek like-minded partners that help us provide a continuum of care for our communities."

Ms. Crawford has helped hospitals communicate new business strategies and visions. One relatively small regional hospital she worked with undertook a complete rebrand in order to better reflect their new approach to health. "Not only did they want to embrace health clinically, but they recognized that they needed to embrace wellness and life in their marketing throughout the community. As a part of their new plan, all marketing campaigns emphasized 'X Health' rather than 'X Hospital.' The hospital system's leaders wanted people to think of them before they got sick."

This particular hospital also revised its vision as part of its rebranding campaign. The new vision emphasized partnerships, the promotion of individual health and vibrant communities — three contemporary values that underscore the major principles of healthcare reform.

Still, it's not entirely a matter of "out with the old, in with the new." Hospitals should not go too far in rebranding efforts, or they may mistakenly reach a point of alienating the community and patients. The goal isn't to abandon the purpose of caring for the sick; it's to emphasize the broader values of American hospitals. "The role of a hospital is still to care for the sick, but that there is also a very valid role in promoting health and wellness initiatives," says Ms. Crawford.

If missions don't change, what do they do?

A hospital website is not the only place a hospital's mission should "go live" — it should be the pulse of the organization, starting with the C-suite. It should be second nature for healthcare leaders to base decisions, ideas and strategies on the mission, says Kathleen E. Kuck, president and CEO of Pocono Health System in East Stroudsburg, Pa. Those decisions are subject to change over time as organizations grow and evolve, but their agreeance with the organization's mission serves as the deciding factor.    

Ms. Kuck often asks herself a series of questions to remain acquainted with the mission of Pocono Health System. "As leaders, [the mission] should become so routine that we begin and end every meeting with a reaffirmation of our commitment to our mission. It should be the first question that is habitually asked at every decision point: Is it consistent with our mission? Does it support our mission? Will it enhance our mission? Does it live our mission?"

Mission statements differentiate one hospital from another in any given market, but leadership shouldn't confuse them with taglines. This can be a dangerous misunderstanding. Dan Pallotta, a writer for Harvard Business Review, has scrutinized organizations' mission statements across all industries and has forewarned leaders that missions run the risk of becoming public relations gimmicks.

"The commitment is the source of the mission. The statements are merely the byproduct of the commitment. A mission statement can't create a commitment. And a commitment can't be thwarted by lack of a mission statement," Mr. Pallotta wrote in a January 2011 HBR blog post. "Nelson Mandela didn't have a mission statement for creating a free South Africa. But man, was he on a mission."

Merged organizations need to ask one question of themselves
One of the few external circumstances that requires change to a hospital's identity and mission is a transaction. This tends to be less of an issue when one hospital buys another one, since the latter typically adopts the buyer's values, vision and mission. Mergers, however, call for new thinking. As hospital consolidation continues to climb, there is likely to be a wave of new trends and values in hospital missions.

"When you're truly doing a merger and creating a new organization, you have to establish a new mission statement," says Mr. Nolan. This seemingly daunting task can only take a few hours of focused team leadership, primarily focused around one question: Why do we exist?

"We ask that question four or five times. Then you can boil the answer down to why an organization truly exists," says Mr. Nolan. The point is to find a mission that resonates internally with the organization, and to keep those ideas short, concise and easy to understand. Healthcare reform has also unleashed a new lexicon of healthcare values, and many of those terms and ideas are likely to be more prominent in merged systems' identities.  

For instance, some of these key values can be found in the mission statement of St. Peter's Health Partners. The system formed in 2011 through the merger of St. Peter’s Health Care Services in Albany, N.Y., with Troy, N.Y.-based Northeast Health and Seton Health. Leaders from the three organizations crafted the following mission: "Founded in community-based legacies of compassionate healing, we provide the highest quality comprehensive continuum of integrated health care, supportive housing and community services, especially for the needy and vulnerable." The organization's name and logo of three interlocked geometrical shapes was carefully crafted to emphasize collaboration and partnership, and the word "system" was noticeably left out of its name.

It all starts with one decision
The creation of new business strategies or organizational values is no small task — it involves multiple stakeholders, community input, a financial outlay and a considerable amount of communication and marketing savvy. Still, despite this involved and complicated process, the decision to propel an organization forward in a reformed healthcare industry begins with a simple realization that a different approach is necessary.

"Sometimes it's the hospital system that organizes everyone, other times it's a governmental body," says Ms. Crawford. “But it takes somebody to say, 'You and you and you should all join forces for the broader objective of creating a healthier community — together.'"




More Articles on the Future of Hospitals and Health Systems:

3 Tips for Creating a Hospital Strategic Plan in Times of Uncertainty
Who is the Medical Staff of the Future?
The Future of the American Hospital: Role and Relevancy in the Next Decade


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