It is essential for healthcare leaders to understand the differences between disruptive innovations that will influence our industry long into the future versus transient concepts that lack sustainable long-term impact to our many fundamental challenges.
I have 38 years of executive management experience and am in my third year as president and CEO at Norfolk, Va.-based Sentara Healthcare. Sentara Healthcare is an integrated system of 12 hospitals, 1,000 employed providers, over 300 sites of care, a managed care division with almost 500,000 covered lives and nearly 30,000 employees across Virginia and North Carolina.
I have seen many promising healthcare innovations trumpeted on the covers of trade publications with the promise to solve many or all of healthcare's problems. Yet most of us know that there is no "silver bullet fix" for the challenges that face our healthcare system.
Some of the biggest contemporary healthcare trends and their real-world effects are far from the picture painted by many pundits and policymakers. I have outlined some changes that healthcare leaders across the country might make to transform these concepts into long-term fixes.
1. ACOs. Healthcare leaders look to ACOs to reduce costs as long as providers deliver efficient and effective care. These leaders rarely consider how administrative costs and government demands for data on quality and price have largely outstripped the savings generated by many ACOs. Some systems have generated cost savings in excess of what they have put in, and these systems are to be commended. These questions remain, though: Can health systems scale ACOs to manage populations beyond those provided in the Medicare CMS Demonstration Program? Can health systems depend on ACOs on a large-scale basis to solve the problem of high costs given the current regulatory environment?
I do not believe the ACO model can be scaled up under the current structure. Most ACOs are not able or willing to take on significant financial risk, especially on the downside.
ACOs are volume-based care with a value-based modifier. Providers will not take risk that is worthy of that investment, and neither will insurance companies until some changes are made. There must be better attribution models in which ACOs have clear structure upfront and providers understand who their members are. ACOs should have equal upside and downside risk. Performance scorecards on granular levels created by the physician or groups are also a necessity.
2. Health plans. The idea of health systems jumping into the health plan business has taken the industry by storm three or four times in recent decades. The dream that big integrated care systems can be purveyors of population health and assume risk for individuals is very alluring. In reality, it is not impossible but it is taxing. Incredible amounts of data management, culture transformation, financial risk and, most importantly, financial capital are necessary to effectively execute a health plan. Even if you have all that, new regulations make it difficult to successfully run plans. Health systems that sign up healthy populations to their health plans must pay into funds to support payers with unhealthy populations. Suddenly the business becomes far different than you imagined.
People must realize most integrated health systems that created insurance plans that started in the 1970s and 1980s lost money learning these hard lessons. The financial environment was more forgiving at that time, and many of those health plans could afford to lose money. Today is a much less forgiving environment. The idea of health plans keeps coming back because providers think they are great population health managers and want to go upstream to control the premium dollar. Even if they are able to, they must be sure to have the capital to sustain losses in order to leverage data and turn it into profits.
3. Consumerism. This trend is fast approaching a pivotal moment, in which it will have the opportunity to transform our industry and go from popular rhetoric to an agent of substantial change. Certain providers chase the notion that patients' consumerist urges can be satisfied through a simple app or digital portal. Everyone wants to tout their system's consumerism reforms by pointing to their online scheduling platform, when they should be focused on more fundamental ways to help patients leverage their electronic health records to better understand and customize their care.
Hospitals and health systems can realize the ultimate goal of consumerism by finding a way to use digital tools to coordinate care in a comprehensive way and personalize a patient's connection with physicians and care team. Utilizing these technologies to demystify healthcare's complex delivery and payment processes will unlock the true promise of consumerism in a meaningful way. It also will be a wonderful example of harnessing the power of emerging technologies to bring us back to the basic goals of our industry and away from the fragmented system we currently have. Consumerism is a trend I believe will transform our industry and must be a focus for all healthcare systems today. It is much more than moving the needle on your HCAHPS score. It is connecting with your customer when and where they want to connect.
The term "trend" does not imply these concepts do not have staying power. It warns providers that they must do the hard work of crafting meaningful strategies, infrastructure and policies around these forces instead of simply expecting them to act as some sort of panacea.
Our environment is going through rapid change in many dimensions, and this is an exciting time to be in healthcare. The successful organizations will be ones that focus on those strategies that will transform our industry for the long-term and avoid chasing many of the short-term trends that have the potential to be distractions.