Whenever a friend who doesn’t work in healthcare asks me how things are at the office, I just smile and say, “Busy.” It seems like a reasonable alternative to a lengthy PowerPoint presentation. We are, after all, in the midst a sweeping transformation in the American healthcare system—one that will have implications as dramatic as the banning of patent medicines, the discovery of antibiotics, or the creation of group medical insurance.

The Affordable Care Act (ACA) was based on the Institute for Healthcare Improvement’s Triple Aim, which challenges the healthcare system to provide:

• Better care of individuals
• Better health for populations
• Lower growth in expenditures

Taken individually the challenges are substantial – added together, they are require a comprehensive strategy and extensive team of healthcare leaders to address.  The ACA puts providers (hospitals and practitioners) solely at risk for managing the health of an entire population. Under this model, the healthcare system shifts from treating disease to maintaining patient health and wellness. The ideal outcome reduces healthcare costs while creating a healthier population. The current “episodes of care” approach becomes obsolete, and coordination of care emerges as the new norm.

Ultimately, providers become responsible for maintaining the health of people who are well and managing the conditions of those who are at risk or chronically ill. It’s a huge responsibility, with a tremendous potential for reward. The first and most obvious step in this transition involves an increased emphasis on disease management, wellness programs, health coaching, and preventive services such as screenings and immunizations.

It’s no exaggeration to say this approach transforms Americans from patients to beneficiaries. As beneficiaries, they enjoy improved health and quality of life as they move along the healthcare continuum—from health maintenance, disease management and episodic care to rehabilitations, long-term care, skilled nursing and hospice.

In order to thrive in this new environment, hospitals will have to broaden their reach beyond employer groups and take a more active role in improving community health. It’s a big step, but a logical one, since hospitals are trusted healthcare leaders.

The Patient Protection and Affordable Care Act (PPACA) aims to achieve lower costs, increased quality and an enhanced patient experience through the introduction of a new model for care delivery and reimbursement: the Accountable Care Organization (ACO). ACOs take the concept of the patient-centered medical-home model to a different level, with more of a contracting emphasis and specific rules and regulations. The PPACA included some of the requirements set by CMS for the Shared Savings Program for Medicare ACOs. Additional requirements were set in early 2011, and the Medicare ACO program opened for business the following January.

By early 2013, 106 new ACOs had entered into agreements with CMS, taking responsibility for the quality of care they provide to people with Medicare in return for the opportunity to share in savings realized through high-quality, well-coordinated care. An additional 32 ACOs began participating in the testing of the Pioneer ACO model by the Center for Medicare and Medicaid Innovation (Innovation Center). Some private payers have also opted to join the movement, including Cigna, which has set a goal of establishing 100 accountable-care initiatives by 2014.

To ensure that savings are achieved, ACOs must hit targets for improving care coordination and meet quality standards while providing services that are appropriate, safe and timely. No small feat in the current environment, where most of the care provided is still reimbursed under the fee-for-service model.

Still, the only constant is change, and the willingness of providers to rise to the challenges before them is truly admirable. There’s little doubt that the future of ACOs and America’s health care system are deeply intertwined, or that the success of the ACO model could result in a viable model for many hospitals and a healthier future for the physical and economic health of many Americans.

Debora Glennon, Director of Marketing                                                                                  Aegis Health Group

As today’s healthcare consumers grapple with high-deductible health insurance plans and face even higher co-pays, they have begun taking on the characteristics of careful, exacting purchasers. When employers and other groups prepare to purchase healthcare, they systematically consider all of the value propositions sellers have to offer, including price, quality, breadth of offering and convenience. High marks are given* to hospitals for a number of factors, including: a staff attitude that contributes to a positive experience; the availability of multiple services within a single location; the ability to access information via online and mobile technology; patient education offerings; and a high quality cafeteria.

Beyond the hospital campus, consumers will be attracted to those providers that can help them meet their personal health goals. These include: achieving healthier lifestyles, avoiding chronic diseases, and taking advantage of programs that help them save on healthcare costs and avoid additional out-of-pocket expenses. Hospitals/providers can deliver greater value by offering wellness programs that encompass screenings, health and wellness education, prevention/early detection initiatives, and healthcare management programs across a variety of chronic diseases.

Hospitals can now reach out to the employer community with an eye to maintaining wellness rather than simply treating illness. One strategy is to address the health continuum** with a hospital-branded solution that links the hospital, employers and consumers together, helping all to achieve their personal and shared healthcare goals. The Aegis Health Group approach to this new paradigm is called “OneCommunity.” It gives hospitals the ability to connect with individuals before they become patients by engaging with consumers in ways that specifically target their individual healthcare needs.  Many of Aegis’ hospital clients are using this engaging consumer health portal with employer groups they have engaged with through an Employer Relationship programs.

Using an online gateway to customized health management, individuals and employees can actively manage their health via access to a variety of “health trackers,” educational content which is tailored to their own personal health report and its resulting implications.  Employers can now plan, manage and measure the results of a workforce health initiative. Hospitals now can establish close, strategic relationships with employers/consumers and meet market demand for a solution creates better health while controlling health care costs. And that is what the future of healthcare is all about.

*Health Research Institute of PwC US

Jeff Price, Vice President Summa Health

Check out the market goals and expectations Summa Health System has for their new Employer Relationship Program.

While consumers resolve to eat healthier, exercise more and lose weight, hospitals also can benefit from identifying resolutions that promote better health – for both their patients and their bottom line.

Drawing from more than 20 years of experience of working with hospitals, here are the top four New Year’s resolutions we have identified after talking with our numerous, hospital leadership clients:

1. Practice your balancing act. Many healthcare organizations have one foot planted on the dock, representing the fee-for-service system, and the other on the boat, which is headed in the direction of providing care more cost-effectively while improving quality (or the pay-for-performance model). Progressive hospital leaders will go beyond value-based contracts with their payers; additionally they will become health plan sponsors as they adopt direct-to-employer contracting strategies and narrow networks. This balancing act is key to optimizing opportunities with insured populations while preparing the infrastructure necessary to launch and manage patients in an ACO environment.

2. Embrace nerdvana. Today’s technology allows for greater connectedness with consumers than ever before. In addition to vital electronic health records, consider new ways to reach out proactively, such as social media. Other examples include adopting a consumer health portal, in addition to a patient portal, or sending dynamic “e-health” messages – accessible from their computers and smart phones. Add at least one new tool this year that offers two-way communication with the growing number of consumers using technology to accelerate the care continuum in your market.

3. Add carrots to your diet. Hospital employees are often heavy utilizers of healthcare services and don’t always exhibit the epitome of health. Rollout a wellness program for your own workforce that uses incentives to encourage cooperation and health improvement. As a result, you’ll not only have healthier employees, but should see a decrease in health-related expenses, higher productivity and morale, and lower absenteeism and workers’ compensation claims.

4. Step up your health and wellness game. With your own employees on the path to better health, take your wellness program into the community by working with local employers and other targeted populations. Hospitals are logical and trusted partners to which local residents should turn for education and support.

Do these resonate with what you are seeing in your hospitals and been dealing with the past year?

Jan Hess, Vice President
St. Luke’s Hospital, Chesterfield, MO

See how St. Luke’s is increasing their impact in the community with outstanding business results.

By Phil Dalton

 Today there are more hospital-owned physician groups in America than there are physician-owned groups.   Physicians find such arrangements attractive because they know that:

• going it alone doesn’t provide the muscle or infrastructure necessary to negotiate favorable contracts with payers.
• there simply is not enough private pay to make a practice profitable, let alone to help pay off the enormous loans that often accompany medical school graduation. 
• it can be overwhelming just thinking about all that accompanies the start-up of a practice including back-office technology, HIPAA paperwork, etc.
• joining a hospital-owned physician group can provide stability, guaranteed income and a more balanced lifestyle.

At the same time, hospital leaders are finding that a multi-pronged physician alignment strategy that includes employment opportunities, joint ventures and other innovative models can be a winning formula to protect existing market share while increasing inpatient and outpatient revenues. But before a hospital embarks on such a path, there are some essential questions they should consider:

1.  What is my physician on-boarding strategy? What compensation model can I offer that is equitable but also incentive-based so as to motivate optimum performance? How do I blend the culture of an existing group with that of the hospital? How do I know that the new physicians will be good team players and not just viewing employment as part of their retirement plan?
2.  How do I address the financial challenges that come with owning physician groups? Some hospitals lose between $50,000 and $100,000 per physician after the acquisition of their practice.  While the value these physicians bring can offset the costs, can these losses be minimized with sound financial stewardship?
3.  What do I say to my current medical staff as they watch salary guarantees go to new physicians who have no previous alignment with the hospital? Do I offer existing physicians the first opportunity to join? How do I get my medical staff to embrace this strategy and the new doctor when he or she arrives?
4.  Do I have the proper infrastructure in place to manage a physician group? Are the same people running our hospital equipped to make decisions ranging from information technology choices to personal growth opportunities for physicians? 
5.  Should the practice and ancillary services be located adjacent to the hospital itself or in a free-standing setting? Hospitals enjoy increased reimbursement for services taking place under its license but this adds cost to the overall healthcare system and may decrease the outpatient revenue streams that have historically allowed medical groups to be profitable. What is the best long-term strategy that will be agreeable to payers (including Medicare), physicians and the hospital itself?

 Hospitals looking to embark on a physician growth strategy quickly discover that being just a little off in any of these areas can add up to big numbers. Make sure you are asking the right questions and have access to the right answers before taking the leap. 

 Phil Dalton is president and chief executive officer of MDS Consulting, a national healthcare consulting firm that helps hospitals, medical groups, health systems and other healthcare organizations achieve their goals for development, growth and profitability. www.mdsconsulting.com

The science of medicine is inherently complex. But does the business of healthcare need to be so complex as well?

For 25 years I have worked in healthcare finance, and for those same 25 years consumers have asked the same question for what seems like 2,500 times:

• “Why is it so hard to get a straight answer when it comes to my hospital bill?”
• That is quickly followed by “Why does the same procedure cost more at one hospital than another?”

The complexity of giving accurate answers to these questions has created a culture of apprehension among hospitals and among many of my fellow CFOs. Yet our communities have the right to know what they are paying for, what they are getting for their dollars, and why charges are what they are. In this season of political rhetoric, it is helpful to remember that a free economy functions best with knowledgeable purchasers. Providing people with the information and tools they need to make intelligent decisions regarding healthcare – and cost is certainly part of that equation – is a greater consumer protection than any government legislation or political intervention.

• It has now been more than six years since the American Hospital Association issued its report on hospital pricing transparency. That report called for hospitals to “share information that will help people make important decisions about their healthcare.”
• It called for hospitals to explain to consumers how and why the price of their care can vary, to make information easy for consumers to access, and to encourage consumers to include price as one of several considerations in making healthcare decisions.
• Yet in many communities across the country, the mystery still exists, the curtain remains shut and the overly intricate labyrinth of healthcare accounting goes on and on.  It is time to speak the truth.

Some states – such as Michigan, Illinois, Washington and Minnesota among others – have taken the lead through either mandated or voluntary posting online of hospital pricing. They and others like them are to be commended. At the same time, many individual hospitals have joined the fray as well. My own hospital, for example, has developed a pricing tool that creates minimum, average and maximum prices for the most commonly used hospital services. Prospective patients can go to the Huntington Memorial Hospital website, enter in their deductible and co-payments, and determine a range of expected prices. Payment options and other services patients may be billed for are also listed.

• While this is far from perfect, it is a good first step in helping consumers find the information they need to make informed choices when it comes to their hospital care and payment planning.
• But where we have failed as an industry, despite a spattering of well-intentions by local hospitals around the country, is to follow two other objectives set forth by AHA:

- to present information in a way that is easy for consumers to understand

- and to create common definitions and language to describe pricing information.

How many consumers understand how a hospital bill accumulates?

-Have we ever explained what’s included in indirect costs or why each patient is responsible for bearing some of these unseen hospital expenses?

-Have we disclosed our own industry’s failure to arrive at a standardized accounting system for allocating such costs, without which there continues to be great disparity from hospital to hospital?

Do consumers understand the mundane realities of how hospitals actually get paid?

-Do they consider the implications of the fact that the user of hospital services is often not the same person directly paying the bill?

-Do consumers understand that the government pays a set rate for its Medicare or Medicaid patients and that that rate is actually below cost?

-Do they understand that because of the rise of employer-based coverage and the collective muscle of health plans there is virtually no “retail” left in healthcare?

-Would they be surprised to know that the hospital industry averages an annual profit margin of only 2 percent, a rate that few businesses in America can survive year after year?

Questions for hospital leaders:

-How many of us are willing and comfortable taking up that challenge?

-How many hospitals commit some of its community education activities to explaining these realities?

-How many of us want to?

Hospitals and those of us in a position to make a difference; have a moral duty to provide this information, to answer questions regarding cost, to engage in frank discussion on these issues, and to be candid in our pricing structure. None of this will be comfortable to do nor simple to explain to a public raised on sound bites, bumper stickers and 140 characters. But without the oil of transparency, the gears of trust between consumers and healthcare will remain forever locked.

Thoreau told us to “simplify, simplify.” If it were only that simple.

As the tenets of the Affordable Care Act take hold, it’s clearer than ever that hospitals and physicians need to work well together to succeed in the new healthcare dynamic. One very important contributor is trust, which is at the core of strong hospital-physician relationships.

In the years ahead hospitals that hope to compete and thrive must find ways to encourage physician loyalty and inspire a motivated medical workforce that will support the hospital’s service lines, generating a viable revenue stream. To help healthcare providers enhance trust with their physicians, below are seven tips for creating confident, trustworthy relationships that serve the interests of both hospitals and physicians:

1. Listen to physicians and understand their frustrations. Honestly respond to their concerns – even if it’s not possible to immediately resolve the issue.
2. Determine what each physician values, then show them what the hospital offers that coincides with their values.
3. Communicate openly and provide support when appropriate.
4. Provide opportunities for leadership and professional development.
5. Give physicians an opportunity to  contribute ideas. Involve them in decision-making and clinical service planning. Let them know they’re being heard; and whenever possible, implement those ideas.
6. Don’t waste time with unproductive meetings or activities, and avoid physician-only committees. Establish combined physician and administration workgroups.
7. Maintain integrity and keep promises.

Hospitals recognize that physicians have a choice in where to send their patients. High-performing hospitals understand that loyal physicians are a competitive advantage. Let us know if your hospital is embracing the tips above and which ONE you think is most important!

Also check out our Thought Paper – “The Four Keys to a Successful Physician Relationship Management Program,” that offers additional insight into building lasting relationships with physicians. It is available at no charge by registering for an Aegis Passport.

In an era of relatively unconstrained growth in health care costs, Mainstream Living hasn’t seen an insurance premium increase for four consecutive years.

Why?

Reno Berg, president and CEO of the Ames, Iowa, service agency for people with disabilities, credits a five-year partnership with Des Moines-based mercy medical Center with improved employee health and wellness.  “Prior to the Mercy affiliation, our health insurance increases were in the double digits.  It became difficult to provide health insurance without increasing deductibles and out-of-pocket costs,” he explains.

Mainstream is one of a growing number of employers that are partnering with hospitals in an effort to promote wellness and drive down overall health care costs.

Baptist health System, Birmingham, Ala., which instituted a success wellness program for its 4,000-plus employees, has partnered with 60 local employers to establish similar programs.  These partnerships, in turn, have led to patients’ selecting Baptist providers as their primary care physicians, says Laura Catherine Mason, employer relations specialist at the health system.

“Instead of having employees schedule physician visits, we take physicians to them for on-site appointments,” she says.  “We’re retained these employees as clinic patients, making it easier for them to receive treatments, and worked with this same employer for noncritical occupational issues, such as drug treatment, head lacerations or knee strain.”

Yale Miller, executive vice president of operations at Aegis Health Group Inc., a business development firm in Brentwood, TN., teams with Baptist Health to develop Workforce Wellness programs.  He says hospitals generally end up investing $150,000 to $250,000 annually in partnership programs and can expect a return on investment of 2-to-1 the first year and 3- or 5-to-1 the second.

Investment includes a dedicated sales person, screeners to perform on-site health risk assessments, and resources for educational materials and activities.

Discover how Sutter Health improves regional employer’s health care costs and employee health while improving the hospital’s bottom line.

Monica Majors
Director, Employer Products and Sales
Sutter Health, Sacramento, CA