Stephen Shortell, Ph.D., is the Blue Cross of California Distinguished Professor of Health Policy and Management, School of Public Health, and a professor of organizational behavior, Haas School of Business, at the University of California, Berkeley. In addition, he is the director of the Center for Healthcare Organizational and Innovation Research at the university. He also is the 2015 recipient of the TRUST Award from the Health Research & Educational Trust, an AHA affiliate. The award will be presented July 23 during the Health Forum/AHA Leadership Summit in San Francisco.

HRET President Maulik Joshi interviewed Shortell about health care system integration, hospital-physician alignment, accountable care organizations and what may await health care leaders.

Health Care System Integration

Joshi: You've studied integrated delivery systems for a long time. Now the Affordable Care Act is moving the health care field much more toward value-based payments. From your perspective, what has been achieved so far? What challenges are still ahead?

Shortell: We have made progress. There are many more health systems in the United States providing clinically integrated care for patients now than 10 or 15 years ago. The economic and functional integration that has occurred through mergers and acquisitions often gets more attention. However, what really matters is whether it's resulting in better value of care for patients. Clinical integration is the most important and greatest challenge.

Ten or 15 years ago, systems like Henry Ford and Intermountain were trying to do this work, but the economic incentives weren't there. Now, for the first time, payment is moving in the direction of aligning with keeping people well, providing value, making money by keeping people out of the hospital bed.

Integrated care across the United States is directionally correct, but it's going to be uneven in how it spreads. It will occur quickly in markets where there's competition and occur much more slowly in other markets. I see three main challenges.

First is the need to accelerate paying for value reforms. Until you start paying for making investments in integrated care, it's very difficult to get people's attention. Once you're able to do that, we have to recognize that integration has a cost. A major cost is the investment needed in electronic health record functionality. Most hospitals and physician practices have EHRs now. But they are highly variable in their interoperability, and require continued support and attention.

Another challenge is making the transition to team-based care, including getting primary care physicians to delegate more functions to nurse practitioners, medical assistants, pharmacists, dietitians and others. Figuring out those role relationships and how to manage as a team is going to take time. Large multispecialty practices have learned to do that, but some of the smaller practices also will need to learn to do it.

Another challenge to developing integrated systems of care is increasing engagement with patients and their families. Really engaging patients and their families, particularly those with multiple chronic illnesses, requires care redesign, training, motivational interviewing, shared decision-making and goal-setting, and involving patients in the overall design of the system — the office visit, quality improvement and related initiatives. Patient engagement also will be facilitated by the increasing use of new technologies such as patient portals, telemedicine and health apps.

Hospital-Physician Alignment and ACOs

Joshi: Building on that, what about hospital-physician alignment in these integrated systems, whether accountable care organizations or alternative models? What more needs to be done to further that alliance for the future?

Shortell: As always, it's a matter of arriving at shared goals, shared knowledge, and the trust and mutual respect that need to come from those kinds of relationships. In the 1990s, when hospitals acquired a number of physician practices (and a lot of those didn't work out), the motive, if I can be stark, was to fill hospital beds — to cement the relationship to get physicians' loyalty and make sure they admitted to "my" hospital. Now the motive has been switched on its head. The incentive is to work together to keep people out of hospital beds. Some hospitals are not going to benefit financially from this transition for a while because it's not moving fast enough in changing how they're getting paid. But hospitals are trying to work with their physicians to manage population health for at least those covered by risk-based insurance contracts.

Although the motive for hospital-physician relationships is different, some of the dynamics of developing an effective relationship are similar, including open communication, being willing to share data and information, and aligning economic interests. Ultimately, the goal is keeping patients healthy and functioning in their communities. This is going to be greatly facilitated by the continued emergence of clinical leaders.

Effective relationships between hospitals and physicians will be essential to achieving the Triple Aim goals. Under the various value-based payment models, it is going to be difficult for hospitals to engage with the post-acute continuum of care facilities such as home health, rehabilitation agencies and skilled nursing facilities without a strong, hospital-physician relationship as a foundation.

Joshi: You're the "godfather" of integrated health care. Where are accountable care organizations today? Where are they headed in the future?

Shortell: There are now more than 750 ACOs around the country, including the commercial and public sectors involving coverage for more than 20 million Americans. The early evidence that is emerging is mixed but, in my assessment, encouraging. They are making some progress. We have the Massachusetts experience in which, after four years now, they are still controlling costs and hitting quality targets. In California, we have 67 ACOs — it may be as high as 81 — and the Blues are having some success.

I see continued growth in ACOs. The Centers for Medicare & Medicaid Services is now doing the next generation Pioneer with greater risk, but also greater reward. They are also trying to move smaller practices onto the ACO "escalator" by developing the ACO Investment Model. In this approach, CMS will help to capitalize smaller practices early on to invest in EHRs and other infrastructure. CMS is also proposing changes in patient attribution and in setting baseline expenditure targets, which are likely to stimulate further interest.

Based on our work and that of our colleagues, there are six key areas that are likely to be associated with the relative degree of success for ACOs and how fast they're going to spread.

Size and scale. Both really matter. It's not just getting the economies of scale that come with increased size, but size also serves as a motivator to make the investment in the cost of integration. It helps if you do it for 25,000 or 50,000 or 150,000 enrollees, than for just 5,000 or 10,000 enrollees.

Care management. This is the essential core. It means total care redesign and thinking differently about how best to add value for every patient, every time. This includes eliminating office visits that are not really needed. It also includes developing care management programs for high-cost, complex patients; care transition programs; and new team-based care models.

EHR functionality. Without feedback, it's very hard to know what progress is being made.

Effective partnerships. ACOs are being challenged to develop partnerships with skilled nursing facilities, home health, behavioral health providers, public health agencies, and community and social service agencies involved in the continuum of care. In many cases, these are organizations with which hospitals and medical groups have relatively little experience.

Patient and family engagement. To achieve the cost and quality goals associated with the ACO payment models will require increased patient engagement in their own care — particularly for the growing number of patients with chronic illness. Results from a recent national survey we did about ACO involvement in patient activation and engagement revealed that some important steps are being taken, but much more needs to be done, particularly in developing the team-based care models needed for successful ongoing engagement of patients about what really matters to them.

Measurement standardization and transparency. There is great need for a core set of cost and quality measures across all payers that ACOs can address, compare themselves against, and use as a basis for continuous improvement.

In addition, if you don't have physicians engaged in the importance of doing this, then you're not even at the starting line. Once you get to that starting line, these six areas are going to drive the race.

Preparing Leaders for the Future Health Care System

Joshi: What do we continue to do and do more of to prepare our leaders for the future delivery system?

Shortell: One of the things we need is what I'll call the development of cross-sector, or cross-boundary, leaders. Once we understand the determinants of health, the health care system has relatively little to do with the actual production function of health — though we know, of course, that medical care at various times in our lives is very important.

We need to train more leaders in health administration, business school programs and schools of public health to manage relationships with other sectors — for example, education, transportation, public health, public safety and housing, to name some. Much of our current training is siloed — how to run a hospital or clinic, but not how to think strategically across sectors.

At Berkeley, we've created the Center for Health Leadership in the School of Public Health. Our motto is "lead from where you are." We tell our students not to wait until they're in a formal position of authority. Wherever they are entering the field, they need to look for opportunities to exert their influence and leadership. It's important for young people to think of themselves in terms of their own roles and, using their strengths, to nudge things in the directions they think are important.

We also emphasize teamwork, team-based assignments and experiential learning. My students have to develop a real strategic plan for an organization. In the Bay Area, these organizations range from Genentech and Kaiser Permanente to community clinics and everything in between. There's also a lot of emphasis on using media and the new social influence tools. We also have a lot of joint and concurrent degree programs with our schools of business, public policy, social work, urban planning and design, and journalism.

It's important to turn out health care leaders who can think broadly about the determinants of health, and position their hospital or multispecialty clinic within that ecosystem. Then they can play an important role in advancing health in their communities.

Joshi: What's on the horizon for the health care field in the next 10 years?

Shortell: We're going to see a continued focus on population health, on developing accountable communities for health on one hand, and on the other, exciting developments in personalized medicine based on continued advances in the application of genomic medicine. These will be linked by advances in big data and new analytic tools. Interaction between the advances in genomic science and personalized medicine with the social determinants of health will provide exciting new opportunities to improve individual and population health. But we have to remind ourselves that these developments will occur within the context of organizations and organizational networks that will require considerable clinical and managerial leadership.

The challenge for hospitals and health systems is to position themselves as major players to advance all the determinants of health and thereby contribute to individual and communal well-being and economic growth.

Maulik Joshi, Dr.P.H.,is the president of HRET and associate executive vice president at the American Hospital Association. He is also a member of Speakers Express.

For more information on the HRET TRUST Award, visit www.hret.org/trust.