Top 10 Challenges Today's Service Line Leaders Face

Top 10 list of challenges facing service line leaders today and strategies for addressing them

As more healthcare organizations consolidate and the imperative to reduce cost heightens, service line leaders — executives with strategic, operational and clinical responsibilities for a like group of patients such as cardiovascular or musculoskeletal — are increasingly challenged to manage costs with new strategies. At the same time, their scope of responsibility expands across multiple hospitals and outside the walls of acute-care settings. For them, cost reduction opportunities are becoming more complex as they work with providers to change practice patterns, now requiring strong alignment, meaningful data and clinical coordination. In addition, they face evolving financial risk through value-driven contracting, government programs such as the Value-Based Purchasing program and payer risk contracts, such as bundled payments.

Knowing these factors, here is my top 10 list of challenges facing service line leaders today and strategies for addressing them:

10. Developing a management model that creates accountability and empowers and aligns leaders across multiple hospitals and non-acute settings even when there is not a direct reporting structure to the service line leader. While this may seem daunting, success lies in communicating a clear strategy that aligns vision and purpose for the team at all levels and across various care settings. Every team member must understand the "big picture" and rationale for what is being asked of them as well as their unique role in contributing to the overall strategy. They must feel safe to make decisions, raise concerns and elevate ideas no matter the reporting structure. A key component is also developing goals that are cascaded across the entire service line to assure all incentives are aligned.

9. Partnering with and developing physician leaders to effectively manage strategic planning, clinical care and operations. Having a physician voice at the planning stage increases the probability that the plan makes strategic, clinical and operational sense to all stakeholders so buy-in does not become a barrier to implementation. However, if you talk to a physician who transitioned from provider to executive, they will tell you about the learning curve required to feel competent in their new role. Physicians are expert providers of care but strategic and operational service line responsibilities must be learned. Therefore, investing in physician leadership development is another imperative to success.

8. Aligning employed and independent physician incentives across the system. If we have learned anything over the last decade, it is employment does not in itself align incentives. In fact, if agreements are not structured correctly, it may be a barrier to partnership and meeting financial challenges. Progressive organizations are transitioning from 100 percent relative value unit employment contracts to those that build in incentives for partnering on improving quality, efficiency and lowering cost. To successfully engage independent practitioners, service line leaders must take the time to understand what is important to them and work toward mutually beneficial goals. For the independent practitioner, it's not all about the money. They want to work in an organization that does its part in delivering high-quality care and creating an environment where they can practice efficiently.

7. Optimizing care across multiple hospitals and reducing the variation. Even within hospital systems, there is significant clinical and operational variation that must be considered as improvement plans are developed and implemented. A great starting point to tackling practice of care variations is to identify a leading practice provider within the system who is respected by their peers and willing to "champion" the improvement initiative. Identifying a respected internal provider who is optimizing care is a good way to start the conversation with peer providers.

Additionally, what makes sense at one facility may be completely impossible at another for various reasons. Remember to factor in:

  • Unique cultures and markets
  • Different degrees and models of physician alignment
  • Practice of care preferences
  • Opposing data platforms
  • Competing and duplication of services

6. Securing a data platform (the one source of trusted information) to provide meaningful clinical, operational and financial comparisons so leading practices and variances can be agreed upon. When each hospital brings their own unique data set to the table with their own indicators, definitions and methodologies, it is impossible to create meaningful comparisons. That can in turn inhibit an organization's ability to establish agreed upon leading practices and identify variances and opportunities for improvement. Service line leaders need a platform that serves each hospital and all physicians so everyone is measured the same and meaningful comparisons are driving the discussion forward and providers are learning from each other and improving together.

5. Decreasing cost-per-case by effectively managing supply price and "utilization." Competitive pricing will always be required, but price alone is not enough to assure low-cost care. After price, the more difficult area to impact is utilization. Consistently ask the following questions to understand supply utilization opportunities and potential barriers:

  • Are you using more than anyone else per case?
  • Are you using supplies outside of clinical evidence?
  • Are you matching supplies to the needs of a patient?
  • How does a change impact quality?
  • What is the learning curve and time requirement for a physician to change practice patterns?
  • What is the clinical evidence that supports a practice of care change? 

Service line leaders must approach supply pricing and utilization through a methodical process, accurate clinical and financial practice data, clinical evidence and physician leadership and alignment. This means:

  • Participating in a value analysis process that:
    • Focuses on the total cost of care by integrating clinical and supply analytics to gain the critical insights required to identify new opportunities
    • Embeds physicians in the process to lead discussions with peers
    • Contracts at the system level to capitalize on total case volume and market share
    • Bases decisions on data and evidence
  • Implementing appropriateness criteria
  • Appreciating the impact to providers

4. Delivering care in the lowest cost setting and managing the associated impact to acute-care when care settings shift.  As more financial risk is assumed, it is imperative to deliver care in the lowest-cost setting. While there are shifts to outpatient settings, many times the outpatient care is still delivered at the hospital, though that may not be the lowest-cost option. Preparing for further inpatient volume shifts to outpatient, and to settings other than the hospital, should be anticipated. To prepare, service line leaders should ask the following questions: 

  • What is the inpatient volume projections based on my market, and how should my resource model change to accommodate?
  • Should care for a patient be provided in a less costly environment?
  • Can the service line meet the market needs for low cost options? If not, what is the strategy to meet this need?
  • What are our competitors offering?

3. Growing a health system through an aggregation strategy is forcing service line discussions about the duplication of services and therefore opportunities to consolidate.  These are difficult, strategic decisions that cannot be solely driven from a financial perspective. The needs and impact to each community the hospital serves must be considered.
Prior to making any consolidation of services decision, service line leaders must understand:

  • The areas of duplication and opportunities to consolidate services to achieve economies of scale
  • The opportunities to create  service line "centers of excellence" by consolidating volume
  • The impact to established referral patterns and patient preferences with consolidation

2. Extending and managing the service line into post-acute settings to decrease financial risk. Care delivered after a patient leaves an acute-care setting impacts the service line's financial performance due to new risk-based payment models and value based purchasing programs. Therefore, service line leaders must align themselves with post-acute providers to coordinate care, continue the delivery of high-quality care and manage resources effectively. When establishing these relationships, service line leaders must assure there is strong alignment on quality and cost expectations. Ongoing, they must monitor post-acute care and reassess partnerships that are not meeting agreed upon expectations in order to manage financial risk and deliver high-quality, low-cost care across the entire continuum.

1. Delivering high-quality, low-cost acute care that supports and is a part of a population health strategy. Traditionally, the healthcare payment model had financial incentives for hospital admissions and resource utilization, with more being better. The goal of a population health strategy is to longitudinally manage wellness and care as efficiently and effectively as possible through prevention and delivering care in the most appropriate setting therefore reducing acute care admissions is anticipated. However, there will always be acute admissions that account for the largest financial risk so delivering the highest-quality, lowest-cost care in the acute setting is an important population health strategy. Because of this, service line leaders play a very important role in managing this risk and their participation in developing and implementing population health strategies is required.

The role of service line leaders has become significantly more important and complex as acute providers transition to new models of care. They are integral to the delivery of high-quality, low-cost care across the entire care continuum and managing financial risk. There is no simple solution and there are other challenges to consider, but each of these strategies is an important place to start as you build your service line's roadmap for a successful future.  

Gena Futral, BSN, RN, MHA, is vice president of solution design and delivery for VHA IMPERATIV. She works with healthcare systems across the country, developing and implementing strategies to optimize clinical, operational and financial performance.

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