NEW YORK — Marna Borgstrom may have captured the sentiment at the 14th Annual Non-Profit Health Care Investor Conference best: "We want to do the right thing," said the president and CEO of Yale New Haven Health, "but going bankrupt while doing the right thing is not a good strategy."
Borgstrom, who was a first-time presenter at this invitation-only gathering of health care leaders and the investment community, was, of course, speaking of the shift to a value-driven delivery model. She noted that all 30 hospitals on display the past two days have similar strategies — they are all trying to deftly manage the transition to assuming more risk, improving population health and doing it all at a lower cost. She called attention to new language in Yale New Haven's mission statement: "Yale New Haven Health enhances the lives of those we serve … in collaboration with others who share our values." It's no longer enough to simply say that your system provides safe, high-quality care, she argued.
"The holy grail is execution," Borgstrom said. And timing. Transition too early and you lose too much revenue. Move too slowly and you're playing catch-up.
One of the striking things about this meeting the past couple of years has been the intense focus on cost-containment. Keep in mind that these are the nation's top performing nonprofit health systems, with pretty enviable operating margins and other financial indicators. Still, all of the executives presenting this year (and last year, for that matter) referenced the need to continue to find cost-savings, and not just because of Medicare cuts. Doing the right thing, Lee Sacks, M.D., executive vice president and CMO at Advocate Health Care, pointed out, comes with a cost. Lower readmissions, fewer tests, shortened lengths of stay equate to less revenue. But how much lemon juice can one squeeze from a lemon?
The health systems here are moving past the supply chain and other areas that are pretty well tapped out and focusing on clinical processes. They're aiming to eliminate bad workflows and reduce variation.
Yale New Haven aims to improve its cost structure by $500 million over the next five years. Sixteen clinician-led teams are honing in on care processes and developing evidence-based protocols and best practices that will be built into an integrated database. Borgstrom is hopeful this effort to remove nonvalue-added processes from the workflow will bolster her efforts to trim budgets.
A couple of other interesting highlights from this year's meeting:
- As inpatient admissions decline, observation units are seeing an uptick. Baptist Health Care projected a 10 percent rise in observation cases for 2013. Other execs referenced similar numbers. A recent AHA report found that between 2006 and 2010, observation units saw a 72 percent spike among Medicare patients.
- Health insurance exchanges have everyone a bit nervous. No one really knows what to expect in terms of enrollment, which makes planning a bit difficult. Executives in states where the exchanges are coming together quickly reported having somewhat tense negotiations with payers, who are largely coming in with rates lower than their current commercial offerings.
For the most part though, the health system executives here seemed fairly optimistic that their institutions are well-positioned — or are moving into position — to be part of the value proposition.