Volume to value
Competing on quality
These terms and others continue to pervade the healthcare landscape as hospitals, physicians, payers and other care providers all grapple with the reality that healthcare reform is here to stay.
But leaders of small to mid-size independent community health systems face an even greater challenge. Attempting to answer the question:
As organizations consider this question, they often find themselves grappling with 5 key issues:
- Desire for independence and autonomous decision making vs. willingness to partner with other organizations
- Determining if there is sufficient leverage to negotiate effectively with commercial payers and vendors
- Willingness to engage physicians in robust alignment models that allow for significant involvement in governance and decision-making
- Honestly evaluating resources and determining whether the issues critical to providing high-quality, low-cost care (capital, time and personnel) are available within the organization
- Reviewing the organization’s size and identifying whether economies of scale can be created to achieve additional cost savings
By strategically evaluating each issue and formulating a go-forward position, the organization can effectively chart its course over the coming years.
Is clinical integration the answer?
The attractiveness of clinical integration (CI) is in its ability to engage stakeholders across the continuum in a legal model designed to coordinate care, improve quality, reduce cost and reward performance. Though not a new concept, CI can deliver benefits for all.
Is CI realistic for small to mid-size health systems?
Though it may be attractive on paper, CI could still be a pipe dream for several small to mid-size health systems. Success of a CI depends on effective development of 8 vital components. Hospital leaders are quick to point out that each component requires significant cost, either time or money, and are not easily implemented. Let’s look closer at crucial barriers to these components.
Without a core group of respected physician leaders, it’s challenging to achieve the level of buy-in needed to launch the network. Physicians face the challenge of balancing their clinical duties with new CI leadership expectations.
Performance objectives and care coordination
An ability to understand, communicate and measure metrics and care coordination efforts is critical to altering practice patterns and competing on value. Clearly understanding what the market and payers are focused on is key.
IT-related costs can be overwhelming for independent organizations. Coupled with the challenge of connecting independent practices, this issue can quickly become insurmountable.
Without having enough covered lives in the local primary and secondary service areas, independent organizations may not have enough leverage to entice payers to enter into performance-based contracts.
Recognizing these challenges, Premier is working with small to mid-size health systems in geographically diverse locations to develop the concept of the “Regional Clinically Integrated Network.”
Typically, Regional Clinically Integrated Networks:
- Include non-competing hospitals and health systems
- Coordinate the effort of each participating hospital
- Leverage the network’s scale across key functions
- Maintain local decision-making authority and autonomy
- Allow for flexibility and expansion as new hospitals or health systems seek to join
- Do not require a merger or acquisition, but can transition to a joint venture or other legal form as needed
Theoretically, the network would look like this:
Why are Regional Clinically Integrated Networks attractive?
Ultimately, the true benefit of a Regional Clinically Integrated Network is the promise of scale and flexibility, coupled with retained independence for each participating health system or PHO.
- They allow for continued independence and retained control at the local level.
- They effectively engage employed and independent physicians in a structure that is greater than the system itself.
- They reduce the overall costs per hospital of developing the network by spreading IT, staff and other centralized costs across each participating member.
- They leverage the collective thinking of physician and administrative leaders from each participating system to develop more robust performance objectives, quality and cost metrics, tracking methodologies, population health management guidelines, physician engagement tools and change management practices.
- They enhance each hospital’s ability to be flexible as new rules and regulations are handed down at the federal and state level.
- They allow for collective discussions with payers that benefit each network participant.
What does success look like?
To achieve its goals, the network must:
- Assess care and efficiency improvement opportunities
- Develop plans, guidelines and protocols for implementing change
- Employ staff, or coordinate current and future staff, to provide care coordination functions
- Purchase new technology that will allow for assessment of population health and define opportunities across an entire population
- Define and monitor criteria that all providers across the continuum will need to follow to be a member of the network
- Determine distribution methodologies for shared savings and pay for performance among participants
- Enter into participation agreements with member PHOs (which will have participation agreements with their providers)
- Provide for purchasing or consolidating shared services (potentially in the future)
- Approach commercial payers to jointly negotiate managed care contracts
- Apply for governmental contracts to care for Medicare and Medicaid beneficiaries
What will it take?
Regional Clinically Integrated Networks, though conceptually new, are being implemented aggressively across the country, with the trend expected to accelerate in 2014. Effective design and implementation of such networks typically requires 12-18 months.
The key to successful implementation is the engagement of hospital and physician leaders from each participating organization. These leaders must have the vision and insight to recognize the benefits of such a partnership, and the ability to convince those in the local market why this is the right thing to do for the community.
In this era of healthcare reform, doing nothing is not an option. Regionally Clinical Integrated Networks may very well be the future for small to mid-sized independent providers committed to retaining their independence and viability while serving their communities.