Creating New Opportunities
Providence St. Joseph Health, one of the largest health systems in the United States, is undergoing a massive transformation to prepare for the future of healthcare. In his opening keynote to attendees of Evolution2018, Rod Hochman, MD, the system’s president and CEO, discussed how his organization is transforming to thrive in an industry that is destined for significant change.
It starts with bringing people into Providence St. Joseph who are willing to disrupt healthcare’s status quo, he said. In some cases, that means recruiting talent from outside the industry: “We can teach other people healthcare, but we really need people that are going to change our perspective and the way we look at things,” Hochman said.
One way Providence St. Joseph Health is thinking differently is by expanding beyond patient care to become a “services company,” Hochman said. The health system has invested heavily in its population health division, which includes its health plan, Accountable Care Organizations and a care management company that offers services to other health systems. The recent formation of the care management company reflects a trend among leading health systems that are developing new sources of revenue beyond patient care.
“Our belief is that if you’re a health system the size we are, you are not going to survive on patient care alone, so we also have to become a services company,” Hochman said. He noted that insurance giant UnitedHealth Group similarly formed Optum, a health services and technology company, to ensure stability amid potential changes in the payer industry. Optum now represents a significant portion of UnitedHealth Group’s revenues. Hochman said his team hopes to similarly “optimize” Providence St. Joseph Health.
Transformation at Providence St. Joseph Health has required significant but smart investments in technology, Hochman said. Healthcare leaders can develop or identify innovative solutions to transform outcomes and experience, but if they can’t support it with capital, transformation will never occur, he said.
“If we’re going to change who we are, we’ve got to be able to fund it,” Hochman said. Providence St. Joseph Health has carefully sequestered significant funds in its capital budget to ensure funding for innovation, to the tune of a $150
The system is also developing its own solutions to its biggest problems, Hochman said. While technology vendors are eager to solve America’s major healthcare issues, they come from an industry that is young and flush with capital. Because of that, they don’t always consider obstacles that providers face, such as declining reimbursement, changing regulations and the shift to value-based care, Hochman said. They also don’t necessarily comprehend the core operational issues that providers are trying to solve.
To spur innovation from within, Providence St. Joseph Health has developed an “Entrepreneurs in Residence” program, which embeds technology innovators from Silicon Valley within its hospitals and clinics. These individuals work directly with frontline staff to solve problems they’re experiencing, which ensures that innovation is grounded in the realities of the healthcare industry.
“We embed these technology people inside our clinics, and they work with our clinicians, and guess what? They actually solve problems that are actual problems we have,” Hochman said. “The real beauty is when you take technology people and healthcare people and put them together. That’s when magic happens.”
“If we’re going to change who we are, we’ve got to be able to fund it.”
Rod Hochman, MD, president and CEO, Providence St. Joseph Health