The 1990s called — They want your hospital's operating model back

Since one can remember, health systems have based their operating models around hospital-centric service lines, such as orthopedics, cardiology or cancer. Although this fragmented approach has survived for decades, it rarely leaves care teams confident about who is responsible for a patient's overall journey through the healthcare system. But as the industry has evolved, this standard way of operating must also shift.

This content is sponsored by Premier

Operating models — the organizational structure, processes and performance management underlying patient care — based on hospital centric-services and fee-for-performance payment "won't work anymore," said Chris Smedley, vice president of physician enterprise at Premier Inc., a healthcare improvement company networking with more than 3,900 U.S. hospitals and more than 150,000 other provider organizations.

Health systems are made up of several departments, spanning acute and ambulatory care, each of which has its own span of control, management team and staff members who fulfill specialized roles. This siloed operating model too often results in fragmented care because the care team is designed in a way where no one feels a sense of responsibility for the entire patient experience. More tangibly, the broken operating model often results in patients left to fend for themselves, navigating the complex care processes, and missed opportunities for health interventions — all of which drag down a hospital's bottom line.

Instead, survival in today's healthcare ecosystem requires integrated delivery networks, in which the modern-day hospital operating model supports providers to deliver a continuum of care in a comprehensive and coordinated way and fully aligning all physicians – employed or affiliated – to work toward a system's overall mission of better outcomes while reducing costs.

This article discusses critical steps in which health systems can foster a holistic sense of accountability for patients within their organizations as they collaborate with newly-acquired or affiliated healthcare providers and physician groups outside the hospital. The piece also examines the necessary role data plays when measuring progress and informing future value-based operating decisions.

Accountability: The bedrock of value-based operating models

The writing is on the wall: health systems must make cultural and structural changes in the organization to survive.

Currently, Medicare contracts represent about 30 percent of the covered lives in Accountable Care Organizations (ACOs) and that number is expected to grow. As fee-for-service payments are phased out and steadily replaced with value-based reimbursements, hospitals should look to support more effective employed and non-employed physician care coordination in efforts to reduce variation and eliminate inefficiencies while continuing to enhance the patient experience both inside and outside the four walls of the hospital.

Hospitals moving toward value-based operating models are working closely with their affiliated physician groups and physician practices to identify opportunities to standardize care and achieve greater clinical efficiencies. These conversations are critical, as there is no one-size-fits-all operating model for a health system today.

"When systems start on this journey, they must design a model that is tailored to their organization," Mr. Smedley said. One place to look first? "Focus on breaking down silos and don't let the organization fall short by making unfair compromises," he said.

Dyad leadership models and improved physician engagement through committees or leadership roles are two strategies by which health systems can eliminate longstanding divisions between departments, sites of care, administrators and clinicians.

1. Dyad leadership model. A dyad leadership model comprises a hospital administrator and a physician champion. These dynamic pairs, when effective, help health systems navigate the quadruple aim.

Pairing an administrator with a physician is an effective way to get physician buy-in with systemwide performance targets. What makes an effective dyad? Finding the right chemistry is critical and the two must operate with a clear understanding of their roles and responsibilities both separately and together.

Ultimately, they should function better because of their relationship to one another, communicating and coordinating their efforts to reduce operating costs and elevate patient care.

Consider a common goal of administrators and physicians: reducing readmissions through improved post-acute care delivery. Approached disparately or on their own, administrators and physicians might direct resources in different ways, only to discover key stakeholders are not on board or that critical elements were overlooked. A dyad holds an administrative and physician leader accountable to make decisions that factor in the broad spectrum of considerations required to navigate the complex healthcare landscape. A dyad can help reduce blind spots that administrative and clinical roles often face as they execute their respective duties.

"When a dyad is functioning well, patients can avoid costly readmissions, have better experiences and outcomes during and after their care, and face lower expenses for the same episode of care," Mr. Smedley said.

Melding administrative expertise with clinical excellence ensures patient-centric care across multidisciplinary groups — a win-win for boosting a hospital's quality- and financial-based objectives.

2. Align employed and non-employed clinicians through better engagement. A recent Premier survey found nearly 80 percent of healthcare executives agree the alignment of employed and affiliated providers is essential for efficient operations.

"As health systems grow and acquire new hospitals and physician groups, new operating models must also be deployed to support the coordination of care across the whole system," said Mr. Smedley. Physician committees, or teams of multispecialty clinicians, are an effective model to maintain accountability as new providers join the ranks.

"Team-wide accountability is impossible if only affiliated physicians are integrated into cost-containment and outcome improvement strategies. Successful physician committees embrace stakeholders from both employed and nonemployed physician groups and foster productive communication and buy-in between physicians on the frontline, regardless of affiliation," Mr. Smedley said.

Dyad leadership models and diverse physician committees strengthen administrative and clinical accountability and keep the focus on patients and their journey through the system as hospitals navigate quality improvement and cost-cutting initiatives. However, it is short-sighted to say hospitals are in the clear after implementing these new accountability models. The work has only just begun — hospitals must now track and leverage trusted physician performance data to ensure their organization is functioning as a sustainable, integrated delivery network.

Driving progress with data: 5 critical steps

To effectively gain physician buy-in and promote clinical integration, health system leaders must possess actionable data that physicians and clinicians trust. Mr. Smedley described five critical steps hospitals and health systems should take to succeed at driving progress with data.

Step 1: Develop well-defined outcome metrics with targets. To achieve a culture of accountability, clinicians need to start from the same baseline. They must understand their organization's current performance and where they need to go to meet goals shared across their hospital or health system for length of stay, readmission rates and hospital-acquired infections, among other metrics. To gain physician trust and buy-in, dyad and physician committee leaders must establish standard metrics informed by robust, detailed and highly accurate data.

"This is a top priority, and it is not a one-time exercise, either. Leaders must update the metrics to align with organizational goals and areas of need on a routine basis," Mr. Smedley said.

Step 2: Set new performance goals and measure progress fairly. Once an organization has its outcome metrics in place, it must then work with clinicians to devise new performance goals. These goals are only important or meaningful if organizations measure physician performance in a fair and transparent manner with evidence-based quality measures, complete and accurate data sources, and standardized data collection methods.

Step 3: Buy or build intelligence software to track changes. Mr. Smedley said, "The shift to value-based operating models requires organizations to synthesize data and make it actionable. Often hospitals get stuck in report development without getting to the point where meaningful analysis or action can be taken. This is where a solution, such as Premier's Physician Practice Performance Management solution, comes into play."

Physician Practice Performance Management is a software-as-a-service platform designed to bolster physician practices' operational and financial performance. The solution synthesizes data to assist healthcare leaders in improving operational and financial performance by providing greater insight into the medical group.

"By implementing business intelligence, and using data to inform decision-making, health systems can often identify 5 to 7 percent uptick in bottom-line improvement relative to their annual patient revenue on the medical group side," Mr. Smedleysaid. The financial opportunity is dependent on an organization's reimbursement model and appetite for change.

Hospitals can get Physician Practice Performance Management up and running in three to four months. Mr. Smedley said it is "vital that business intelligence systems, whether purchased or built inhouse, are interoperable with a health system's EHR to generate a truly coordinated operating model across the care continuum."

Step 4: Share data and collaborate for best practice. Once trusted information has been shared, there is a natural progression toward enhanced provider engagement. Engaging with internal and external peers can accelerate learning, influence healthcare policy and inform best practices. Premier has a strong history of successfully helping hospitals and health systems outperform the market by providing a facilitated forum that brings together healthcare leaders to strategize on how to tackle common challenges.

Step 5: Implement and adapt. Efforts around performance improvement are not executed in a vacuum nor are they a onetime occurrence. Using data to drive change requires continuous and effective communication, appropriate buy-in, cultural transformation, and the discipline to hardwire these changes. It is important to take inventory as to when you need a fresh set of eyes or extra hands. Sometimes it means recruiting additional personnel because there are not enough resources to do the work or a specific skill set is required. Often times, it may require reprioritizing work efforts or engaging an outside consulting firm who can help accelerate performance improvement in the areas of need.


About 45 percent of healthcare leaders predict quality-based reimbursement will increase in 2018, a recent Medical Group Management Association poll found. The time for hospitals to transition from historically inefficient, hospital-centric operating models to value-based delivery is now.

The essential component of this shift is accountability. Physicians and administrators must collaborate in improving a patient's journey across the care continuum. Dyad leadership and physician committees are two ways in which hospitals can align operational goals and root employed and affiliated physicians in accountability. Physician performance data feeds insight into how new modes of accountability are functioning and is necessary to inform future operating decisions geared toward improving patient outcomes while trimming total cost. 

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