Provider Organizations

There are isolated pockets of extreme need in rural U.S. communities where conditions are ripe for more-for-less innovation. These communities are facing a health care crisis because economic and regulatory pressures are pushing providers to cluster in urban centers. The consequences are dire. Last year, 13 rural hospitals closed, and a tidal wave of closures is expected over the next few years. These hospitals are caught in a vicious cycle: Rural patients with serious health problems are traveling to cities to seek care from medical specialists, causing revenue declines at rural hospitals and clinics, which respond by downsizing and offering fewer services, causing more patients to seek care in major urban centers. Virtual consultations, supported by sophisticated diagnostic instruments, high-resolution imaging and data security, are at the heart of a reconceptualization of rural hospitals (and, eventually, urban clinics and hospitals as well) because they provide access to higher-quality care at much lower costs. 19

Huge opportunities to improve patient outcomes and lower costs remain to be realized from benchmarking and standardizing clinical practices. Physicians, nurses and other caregivers often do not know the costs associated with their treatment protocols. And administrators rarely collaborate with them to develop outcome and cost measurements that would facilitate benchmarking and opportunities to share best practices. The only sustainable way to reduce costs is to start with an in-depth analysis of the current processes used to treat each medical condition. Clinicians and administrators need to fully understand all the costs incurred over a full cycle of care, and the outcome for each treatment their facility provides. 20

Being champions for healthier communities in and outside the boardroom is an important way participants said boards contribute value through governance. New board work also may require new governance structures, such as adding a community benefit or population health committee. Boards can help to build healthier communities by taking a more active role in the community as well. 21


Quality & Patient Safety

The OpenNotes Collaborative, now being utilized by more than 3 million patients, brings transparency in health care to a new standard by making the physician’s notes available to the patient. The initiative not only brings true partnership to the doctor-patient relationship, it also enhances safety, as patients point out erroneous details, more easily remember to follow up on important information, and have an opportunity to go back and review discussions and information, rather than frantically trying to grasp it all in a 15-minute office visit. At the end of the initial trial, both physicians and patients reported being happier and more satisfied. 22

Most physicians are enthusiastic about limiting access to expensive tests that have little or no benefit as a way to curb excessive health care costs. Nevertheless, nearly three-quarters of doctors believe that the average physician orders unnecessary tests at least once per week, most often stemming from fear of lawsuits and general clinical uncertainty. The Institute of Medicine estimates that unnecessary services represent about 10 percent of all U.S. health care spending — nearly $300 billion a year. 23

States across the country are promoting integrated care delivery as part of their efforts to deliver high-quality, cost-effective care to Medicaid beneficiaries with comorbid physical and behavioral health conditions. State efforts to ensure that Medicaid beneficiaries have access to integrated care, however, are hindered by a fragmented behavioral health system that is administered and regulated by multiple state agencies and levels of government, and by purchasing models that segregate behavioral health services from other Medicaid-covered services. There is a large body of evidence showing that patients fare best when their physical and behavioral health needs are addressed in tandem. 24

The Centers for Disease Control and Prevention reported that approximately half of all antibiotic prescriptions are either unnecessary or used inappropriately. This practice exposes patients to unnecessary side effects and can increase the prevalence of drug-resistant bacteria. 25


Transforming Care Delivery

Walmart, Walgreens, CVS and other retailers are expanding their primary care clinics and planning to move into chronic disease management. These same companies and others are increasingly channeling patients to a select few providers. Walmart, for example, offers its associates the option of heart, spine and transplant surgery at six leading medical centers including the Cleveland Clinic, Geisinger and Virginia Mason, with no out-of-pocket costs. 5

Nontraditional health care clinics are growing because of accessibility and convenience. Urgent care centers have become a $13 billion market and the rise of retail clinics in drugstores and other locations has been dramatic, doubling between 2012 and 2015. 6

Hospitals need to move rapidly to make strategic calculations. With their deep roots in acute care, hospitals face a steep challenge to identify how inpatient facilities will need to change, the appropriate channels for outpatient care, and — least familiar of all — the specific virtual care options they should offer. At the same time, hospitals need to make the even more difficult determination of calibrating all of these channels. Hospitals have to make these decisions in the midst of constantly changing purchaser expectations, technological capabilities and competitive pressures. 26

Technological advances, empowered consumers, disruptive new entrants and rising demand by an aging population are ushering in a new era in health care. While many of those trends have been emerging for some time, never before have they been accompanied by a rapid shift in dollars, triggering major changes in behavior and fundamentally altering the business. Successful organizations will squeeze out administrative waste, improve the health of entire communities, reduce costly errors, better manage chronic conditions, understand consumer preferences or develop targeted therapies with proven advantages for a given patient group. Transparency in cost and quality will fuel these developments. 27

Although hospitals have long sought to achieve patient satisfaction and loyalty, they have minimal experience with the more intense demands of consumers who are spending their own money. 28