Why Every Hospital Can't Manage Population Health, and Why That's OK

Improving population health is one of the triple aims of healthcare reform, along with increasing healthcare quality and lowering cost. However, every hospital does not currently have the capabilities to manage population health, according to Richard Afable, MD, president and CEO of the affiliated network of Orange, Calif.-based St. Joseph Health and Newport Beach, Calif.-based Hoag. While the healthcare industry is changing from a provider-focused model to a patient-centered model, from hospital-based to outpatient-based, some hospitals simply do not have the geographic scale or financial capital to change business models.


Dr. Richard AfableDiversity in hospital business models
This lack of population health resources does not necessarily spell the end for all small hospitals. Innovation is greatly valued in healthcare, and for good reason: The status quo of high healthcare costs, unreliable quality and fragmented care is unsustainable. Hospitals that break the traditional mold, therefore, should be rewarded. But smaller, independent hospitals that continue to serve as only healers of the sick should not be forgotten or dismissed. While healthcare reform aims for patient populations to get healthier, regular hospitals with inpatient beds will likely always have a place in the healthcare system, according to Dr. Afable.


"We'll always need hospitals, emergency rooms, operating rooms and [intensive care units]. However, they will be used in the future most appropriately for those who actually need that level of care. And, if we're doing our job well as population health managers, the number of people who need that level of care will likely diminish over time," he says.


Dr. Afable sees a future of healthcare with a blend of traditional hospitals and innovative systems that act as both caregivers for the sick and managers of populations. "You can continue to be a hospital waiting for sick people to come in, and that's fine; for some places, that's all they want to be, or can be. On the other hand, those organizations that want to begin to get into population health, which is a lot more rewarding than being a hospital, impact health rather than [just] treating sickness and illness," Dr. Afable says.


St. Joseph and Hoag affiliated in February to coordinate care more effectively for their communities. They are leveraging their scale and resources to provide preventive and wellness services in addition to treatment for patients. "Hoag and St. Joseph are doing both — we're being a hospital for those people who need it, and a population health manager," Dr. Afable says. "We will create and provide innovative, valuable services we believe are going to be the centerpiece of the business model of healthcare delivery in the future."


Scale needed for population health management
One of the barriers to small hospitals' involvement in population health management is they lack the scale necessary to provide resources to large groups of people. In contrast, the affiliation between Hoag and St. Joseph — the two largest healthcare providers in Orange County — created a network with seven hospitals, nearly 5,000 physicians and innumerable outpatient sites. "If you want to care for a population, you need services in a geographic footprint and a scale economically and operationally efficient for that to work," Dr. Afable says. "You need to be a member of a network — whether an owner or participant — to engage in and be part of population health."


In fact, the American Hospital Association's Health Research & Educational Trust and Hospitals in Pursuit of Excellence recently issued a report, "The Role of Small and Rural Hospitals and Care Systems in Effective Population Health Partnerships," which explains that small and rural hospitals can participate in population health management most effectively if they form strong partnerships with other organizations.


Moving forward: Traditional or innovative — or both?
By assessing their goals, capabilities and partnership opportunities, organizations can find the combination of traditional healthcare and innovative population health that is right for them. Hospitals that remain traditional inpatient care centers need to realize they will likely not receive the revenue they traditionally have, because population health managers will help control patients' chronic conditions and prevent disease, decreasing the need for acute-care services. For health systems transitioning to population health managers, they need to realize the investment and partnerships needed to effectively coordinate care for large groups. Both business models face challenges, and both can exist in the new era of healthcare.


More Articles on Population Health Management:

Reaching Out to Improve Population Health: Q&A With Cottage Hospital CEO Dr. Maria Ryan
Mayo Clinic Develops Population Health Tool
CEO Dr. Richard Afable: Population Health Management Isn't Managed Care

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