PHOENIX — Great advice and terrific insights are flowing a mile a minute here at the Center for Healthcare Governance winter symposium. Hospital executives and board members from around the country are exchanging war stories about how the health care environment is evolving in their communities and the lessons they’ve learned so far.
Most are in the early stages of figuring out how and where in their organizations they should embrace change. Is it a comprehensive transformation across the entire organization? Are there one or two areas that need change most — and that might serve as a kind of innovation lab for management, board members and staff? In yesterday’s dispatch, I quoted expert after expert who said that the first order of business for trustees and the C-suite is to ask each other questions — and to keep at it until everyone is certain they’re asking the right questions in the right way for their own situation. Only then should the hunt for solutions begin.
Of course, there are lots of pertinent questions, but two that came up are particularly provocative.
The first is from Jamie Orlikoff, a health care governance expert. “How many of you,” he asked attendees, “can say you have a retail strategy in place?” Sad to report, not many hands went up. Clearly, some hospitals and health systems are, as Orlikoff put it, “going to be blindsided by consumerism.”
We’ve written extensively in Hospitals & Health Networks that health care consumerism is gaining traction fast because employers and other payers are pushing individuals to join health plans with high deductibles. That means those individuals are on the hook for more and more of their health care spending and, in response, are behaving exactly the way they behave when spending their own money on other goods and services.
The first question any consumer asks, Orlikoff noted, is, “How much will this cost me?” The traditional reply from health care providers? “Don’t worry about it. Your insurance will cover it.”
But, Orlikoff pointed out, today’s consumers would say: “Well, no, I have a $5,000 deductible. If you can’t give me that answer, I’ll go to someone who will.”
And once they know how much a procedure is going to cost them, consumers have an immediate follow-up question: How good is the quality of what I’m paying for? If a hospital can’t provide proof of value, Orlikoff said, the individual again will either go elsewhere, or decide he might not need that procedure after all.
The second provocative question that came up at the CHG symposium was posed by Rich Umbdenstock, who recently retired as head of the American Hospital Association and who has deep experience in health care leadership. “If you were forming a narrow network,” Umbdenstock asked, “would you choose your hospital to be in it?”
A narrow network resembles — and, indeed, is part and parcel of — the consumerism movement. Members of a narrow network are chosen because they deliver the highest-quality service at the most reasonable price, and are fully transparent on both counts. Asking the question “focuses us very quickly on the work we need to do,” Umbdenstock said. Among the factors to consider:
• How do we do less … with less … and get better outcomes for the customer/provider/partner’s return on investment?
• Can we fund our strategic plan on the 10 to 30 percent less revenue we will be getting from Medicare and other payers?
• Can we manage payment risk?
• How are we solving the consumer/patient hassle map? In other words, how are hospitals improving customer service and making the health care experience less complex and onerous?
• As a board, how are we adjusting our mission/plan/metrics/agenda/structure/composition/management incentives?
One of Tuesday’s presenters acknowledged that some hospital leaders are in denial that change is coming their way. They’re not worried about competition from CVS or Wal-Mart because they, the hospitals, control all of the physicians in their market. Never mind that most retail clinics are primarily staffed by advanced practice nurses. They’re skeptical that fee-for-service will ever fully give way to value-based payment, at least in their region. Never mind that the Centers for Medicare & Medicaid Services has established an ambitious plan to have a large proportion of Medicare payments tied to quality measures in a very few years. They say that they are the only game in their community. Never mind that payers and consumers are willing to travel far afield for high-quality, lower-cost care.
According to this expert, for hospital executives and trustees, denial could very well destroy their organizations.