What Supreme Court Decision? 4 Hospital Strategies Independent of the Fate of the PPACA

Andy Ziskind, MD, managing director and clinical solutions leader of Huron Healthcare, says regardless of how the Supreme Court rules on the Patient Protection and Affordable Care Act, hospitals must be prepared to adapt quickly and make substantive changes to their operating model.

Here, Dr. Ziskind shares four strategies for hospital leadership to embrace no matter the fate of the healthcare law.

1. Moving from volume to value. Hospitals must move away from the soon-to-be-obsolete volume-based model and transition to value-based care to achieve higher quality care and reduce waste, Dr. Ziskind says.

"Whatever happens with the Supreme Court, the horse is out of the barn — the market is moving, demanding and requiring an increased focus on value with value being defined as higher quality and lower cost care," he says.

Private payors — Aetna, United, Blue Cross Blue Shield, to name a few — are providing most of the momentum in the market to move toward value right now, and that momentum is not going away regardless of what happens in the Supreme Court, according to Dr. Ziskind.

2. Changing the care delivery model. To counteract financial pressure, hospitals should implement changes to make the care delivery model more effective and efficient. This involves re-examining the way hospitals have traditionally done things and taking a deliberate look at how much variation in care there is, Dr. Ziskind says.

Hospitals should focus on evidence-based initiatives to help "narrow the bell curve and ensure patients get the right care at the right time and the right place," he says. This will reduce overutilization and "lead to improved cost, quality and highly reliable healthcare delivery systems."

The biggest challenge is timing — figuring out when to roll out changes in care delivery.

"Virtually every hospital CEO is facing the challenge of knowing when to transform the system," Dr. Ziskind says.

Moving too fast could jeopardize revenue, but moving too slowly puts cost structure in an inappropriate stance, according to Dr. Ziskind.

"Progressive institutions in advanced markets are now looking at how to manage utilization with an eye to population health," he says.

3. Achieving physician alignment. Clinical and financial alignment with physicians is critical to ensuring efficiency across the care delivery system and improving outcomes, Dr. Ziskind says. He notes two trends:

  • Healthcare systems are functioning much more effectively as systems. They are enhancing "systemness," as he puts it, by improving operational efficiency and standardizing business and clinical practices.
  • Hospitals and systems are looking much more strategically at how they align, affiliate and employ physicians. The idea is to have a rational delivery system that is strategically prepared to manage population risk.

"You couple that with a trend toward physician employment, particularly among younger physicians coming out of training who would much rather be employed than in a private practice model, and we are really seeing a sea change in the way physicians are employed, compensated and managed," Dr. Ziskind says.

Hospitals and health systems are emphasizing achieving value with a set of employed physicians. They are considering physicians true partners of the hospital.

4. Containing costs. Due to Medicare and Medicaid cuts, hospitals must drastically reduce costs to operate at anticipated future reimbursement levels.

"If you look at the growth in reimbursement, the curve goes up, but at a pretty shallow rate," Dr. Ziskind says. "If you look at the growth in costs — for example, supplies, pharmaceuticals or labor costs — that curve goes up at a much steeper rate."

Unless hospitals and health systems really look at their cost structure, the majority will not be financially viable. The downward reimbursement pressure from the government and private payors requires a "focused, redoubled, triple-doubled effort to manage costs," he says.

Hospitals need to look at all aspects of their cost structure, including routine things such as supply chain, labor costs, operating efficiency and patient flow. After that, they must consider the new frontier — how to "fundamentally redesign the way care is delivered."

"I don't know of a single hospital or health system that is not trying to work on the cost structure right now," Dr. Ziskind says. 

More Articles Related to Strategic Planning:

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Strategic Doing: Where Hospitals' Strategic Plans Go Wrong

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