Since sometime shortly after the signing of the Affordable Care Act, healthcare delivery organizations have been moving — some slow, some fast — to craft the strategies of a new healthcare era: the volume to value transition. These ideals, broadly outlined in the industry as improving experience, reducing cost, and improving health, have been the strategy de jure of executive teams and boards of directors ever since.
A question circulating since November 9 is now the topic of most interest for the same executives and directors: Will all the transition work that has been strategized and implemented by healthcare delivery organizations end up being a giant waste of resources?
The answer is almost assuredly no.
Recall that a population health approach to delivering healthcare was around long before the ACA. Its essence will endure in a new administration.
That means that the strategies healthcare delivery systems have crafted in response to a changing operating environment are relevant beyond an ACA-fueled transformation. The ACA acted as the catalyst for diffusing a population health approach to healthcare delivery. The industry’s reaction — fueled by private payers and employers, government payers, and consumers — will continue in 2017 and beyond.
Will there be changes? Will there be consequences? Will there be disagreements? Of course — and reduced access for specific populations will be amongst the most difficult to navigate, should they come. But to decry change is to ignore that industry’s long-constant shifting. And the promise of added maneuvering will require organizations to fully embrace agility and urgency as execution principles if they haven’t already.
The promise of added maneuvering will require organizations to fully embrace agility and urgency as execution principles.
So we believe there will be two intense themes for healthcare delivery in 2017: value and execution.
Value will be the motivating force for what to work on.
Execution will be the driving force for how it gets done.
Here, we briefly explore three safe assumptions about healthcare reimbursement this year and the strategy implications of a value-based transformation agenda.
Spoiler: it’s all about executing existing strategies in 2017.
Value and Three Safe Assumptions about Healthcare Reimbursement Trends
Value — health outcomes per dollar spent — is and will continue to be the driving force of healthcare transformation, with or without Obamacare as a pillar of the transition. Attention to dollars and outcomes will not disappear in 2017 — nor likely for the foreseeable future.
Trump and Co. and the Plan to Repeal
Expect value to remain center stage in industry transformation with a new administration.
President-elect Trump’s healthcare mission is “… to create a patient centered healthcare system that promotes choice, quality and affordability.” Choice, quality, and affordability are remarkably similar to the Institute for Healthcare Improvement’s Triple Aim of improving experience, improving health, and reducing cost — a foundation of healthcare reform in 2010.
Paul Keckley’s idea to frame a President Trump’s views on healthcare as a CEO is instructive. That idea should put value at the core of the repeal and replace agenda — Republicans often cite a lack of affordability in ACA marketplace insurance plans which just means healthcare is expensive, not necessarily health insurance. Value as an aligning aim also holds a reason to be hopeful the Center for Medicare and Medicaid Innovation keeps its lights on, albeit likely with a new programmatic agenda.
A CEO as president also provides a historical frame into how the administration is likely to view government regulation: with skepticism. Expect Trump’s nominees for healthcare posts — Tom Price, Seema Verma, and to some extent Mike Pence — to increase private payer and state flexibility when it comes to federal healthcare policy. While mandatory Medicare bundles may be coming to an end, just about everyone expects MACRA to remain as it received bi-partisan support and the legislation’s Alternative Payment Model provisions provide an additional vehicle for value-based payment in a new administration.
It has been estimated that nearly 30 million Americans could lose access to health insurance should the Affordable Care Act be repealed absent any plan to replace it. That’s a chilling number for many reasons. Those affected will continue to consume healthcare services, but are more likely to be uninsured, underinsured, or paying with cash. Value again rises — reduce costs and improve outcomes.
Private Insurance and the Path to Innovation
The crown of “largest value-based payment supporter” will be abdicated to private payers in 2017.
While discussions persist on the pace of value-based payment diffusion, there’s little doubt that the industry is moving away from fee-for-service reimbursement and toward something else, even if that something else is just anything but fee for service.
The American Medical Group Association reported fee-for-service payments decreased by 20 percent in 2016 as reimbursements moved to value-based arrangements. The transition is expected to continue in 2017. An October report from the Health Care Payment Learning & Action Network indicated that one-in-four medical payments is now linked to alternative payment models.
2018 is an important year for many private payers to meet their public pronouncements about their shift to value-based payment:
- Cigna has committed to 50 percent of payments in alternative payment models and 90 percent of payments in value-based arrangements
- Aetna is anticipating more than 50 percent of their annual spend will be in value-based contracts and a further commitment to reach 75% by 2020
- United Healthcare committed to a goal of tying $65 billion in payments to value-based arrangements, about 25 percent of the value of the payer’s contracts with providers; in November the company announced it had reached over $52 billion in value-based payments
Further, Humana recently announced that its Medicare Advantage members enrolled in value-based arrangements experience better quality, better outcomes, and reduced costs. Currently, the company serves 63 percent of its enrollees in value-based models. United Health is expanding a bundled payment pilot program for spinal surgeries and knee and hip replacements to more than 40 markets by the end of next year (even as a CMS under Tom Price does the exact opposite).
Consumers and their (Relatively) Quiet Influence
The patient experience conversation is going to shift to consumer experience — not that either frame is explanatory or complete.
Often missing from the value-based payment conversation is that the consumer retains choice for where to seek healthcare services, regardless of program enrollment. A recent report from Kaufman Hall and Cadent Consulting Group sums it up concisely, “… the emergence of value-based payment links health system revenue to the ability to maintain consumer loyalty and to engage patients in health improvement.”
High-deductible health plans continue to actively encourage choice. Being part of an accountable care organization, currently, rarely means anything to the person actually receiving care. A patient receiving care as part of a bundle still gets to choose where to receive care for the bundle’s component parts. Even narrow networks still offer choice.
The consumer’s view of value expands beyond the wholly institutional definition of health outcomes per dollar spent. A consumeristic definition grows to include experience: accessibility, service, effectiveness, and cost.
Adoption of convenient care options — retail clinics, standalone emergency departments, virtual visits, etc. — is instructive for how to proceed: make all interactions, from the first call into the contact center to ongoing care coordination, a convenient and connected experience.
Transparent pricing, online reviews, and quality ratings are important to some patient groups. A satisfactory experience — which is often the height of the bar at the moment — is important to all. Respondents to McKinsey’s 2015 Consumer Health Insights Survey indicated they hold healthcare companies to the same standard as non-healthcare companies (e.g., Apple, Amazon) on a range of experience dimensions. More than half of survey takers said providing great customer service was just as important to them for healthcare companies as non-healthcare companies. Additionally, delivering on expectations, making life easier, and offering great value were all important for both sets of companies.
One important key to providing a great experience is understanding customers. Healthcare providers know a lot about a patient’s medical history. They don’t know much in the way of consumer insights. For example, Deloitte Consulting predicts that by 2020, 20 percent of all payments to providers will come directly from patients. Yet most providers know very little information about a patient’s financial profile.
According to a survey of more than 100 healthcare executives in the 2016 State of Healthcare Consumerism report, 66 percent of respondents say consumerism is an above-average priority while 23 percent report their organization has the capability to develop consumer insight. Only 16 percent have the ability to activate strategies based on those insights. Finding consumer insights once was an activity that was turned over to a consultant every year or two. Now administrators are relying on consumer insights in daily strategy execution decision making.
A new administration, private payers and employers, and consumers will continue to reward improving value in the healthcare delivery system. The strategic reorientation healthcare providers set post-ACA remains relevant and it is likely specific strategies will require few, if any, updates.
That means provider organizations must focus on executing those strategies in 2017.
It’s the application of Jack Welch’s strategy admonition in his 2005 bestselling book Winning, “In real life, strategy is actually very straightforward. You pick a general direction and implement like hell.”
It’s time to implement like hell.
Healthcare Delivery Organizations Must Adopt Agility and Urgency as Execution Principles
It’s no secret that healthcare delivery is changing rapidly.
It’s no secret that getting things done in today’s organizations is difficult. The inertia of silos, complexity, and bureaucracy promotes the status quo.
And it’s no secret that “culture eats strategy for lunch” has been the most oft-quoted, folk-Drucker truism in healthcare boardrooms since 2010 and that an updated “culture beats strategy” idea is ready for primetime: if culture eats strategy for breakfast, then infrastructure eats them both for lunch. The culture could be great, the strategy could be superb, but if organizations don’t have the tools (processes, technologies, expertise) the effort is likely to be a waste of resources.
If culture eats strategy for breakfast, then infrastructure eats them both for lunch.
Take it all together and it is absolutely no secret that healthcare provider organizations are ready for a new execution model with agility and urgency — the response to constant and continuous change — as the central tenets.
Executing in 2017 will require a refreshed orientation around the idea of execution. Here are the three critical requirements to make it happen.
Identifying (and prioritizing) the multitude of projects that make up a single strategy. For example care coordination, management, and navigation isn’t just about creating a new department. It requires a technology platform, data feeds, formalized communication protocols and systems with partners, process integrations with hospitals and clinics, a contact center, and many more. All separate projects and all required to be implemented for a fully-executed strategy to come to life.
Getting started and continuing. Pick a project and go. The answer may be unobvious. The next best step may be unknown. The whole solution may be uncertain. But a do-first model can turn those questions into pivot points rather than the stop signs they have become. Progress. Advancement. Movement.
Giving middle managers — those actually doing the executing — the tools to bring strategy into the real world.
- A flexible, complementary technology platform to create software solutions for every need. The prevailing enterprise healthcare technology trifecta paradigm of the electronic health record as swiss-army knife, the IT department as technology gatekeeper, and a point solution when all else fails is outdated. Increasingly solutions to any healthcare business problem are dependent upon technology — technology that provides diverse functionality, inexpensive implementation costs, and allows for a test-and-refine approach to service line-specific personalization.
- A project management approach built on the idea of getting started, finishing, and moving onto the next project. An approach that embraces organizational reality: most middle managers haven’t previously led technology projects and the enterprise project management office has higher priorities. An approach that shortens the idea-to-project timeline with manageable project schedules. An approach that creates functionality in real-time to allow teams to review, react, and reconfigure as a feature of progress, not a barrier.
- A partner that values shared expertise as a required component of successful project implementation. A partner that combines industry and project experience with your team’s knowledge and ability to find the right answer, not just an answer. A partner that understands and embraces execution as part of a project engagement. A partner that insists on helping the team move on to the next project, because there is always the next project.
We’re Here to Help
Status:Go has helped healthcare providers around the country use a project-based model to execute strategies with agility and urgency.
Our ideas are resonating with healthcare providers of all sizes: the EHR being a necessary, but incomplete technology solution; replacing spreadsheets, documents, and emails as a necessary precursor to relationship-based care; doing as discovery rather than discovery as understanding; personalized solutions on a cloud-based platform that can be cost-effective, supportable, and available to all departments; among others.
In 2016 we helped organizations navigate silos, bureaucracy, and complexity to execute on their strategies. For example:
- We implemented projects for integrated healthcare delivery providers across care coordination and navigation, population health management, community health improvement, direct-to-employer services, occupational medicine, business development, network integrity, physician referral management and coordination, and oncology navigation.
- We helped oncology providers prepare for Oncology Care Model participation, orthopedics groups implement Comprehensive Care for Joint Replacement workflows, and GI clinics around the country dramatically improve return visits and patient engagement.
- We upgraded (and integrated) contact center technology for healthcare delivery systems, behavioral health and substance abuse organizations, and large multi-speciality physician groups.
And that is just a sampling from our year of helping healthcare delivery providers execute. Find out about these projects and more at our Central Management website.
Healthcare delivery organizations have equipped their teams for industry change with strategy. Now, those organizations are giving their teams the tools to execute.
Contact Matt Vestal to explore working together in 2017 to make it a supremely successful year for your teams and your organization.
Status:Go helps healthcare delivery organizations execute their strategic priorities using a project-based model that includes:
- A “Start Now. Go Fast.” project management approach to get projects started and finished while navigating healthcare’s silos, bureaucracy, and complexity;
- Shared expertise to deliver project solutions with urgency and agility by combining a team’s knowledge and proficiency with our industry experience; and
- A flexible, complementary technology platform to augment the EHR and make personalized technology accessible to every need in the organization.
Visit our website to learn more.