2018 CEO FORUM
Improving the Health of Communities Amid a Volatile Landscape
In October 2018, hospital and health systems CEOs and experts gathered at Texas Health Resources in Arlington, Texas, for Navigant’s 2018 CEO Forum. The group discussed the pressing issues facing providers, payers, and patients nationwide. Following is a summary of their insights, lessons learned, and best practices on overcoming current and future healthcare pressures.
For Forum video interviews and to access the full white paper, visit nav.gt/CEOForum.
PAYER-PROVIDER PARTNERSHIPS AT RISK?
For close to a decade, healthcare leaders have expected fee-for-service payment to be replaced by a value-based movement centered on sharing risk with private and public insurers. While it’s clear that a value-based care approach has gained in popularity, whether a broad-based transition to value-based reimbursement models is occurring depends on whether you ask providers or payers.
CEO Forum attendees discussed this divide in the context of the imbalance between the supply of and the demand for risk arrangements in local markets nationwide.
Multiple provider CEOs noted that the acceleration of public payers moving to value models has not been matched by private payers, leaving them unable to find private payers to partner with on value-based models. As one executive suggested, “commercial participation is almost at a standstill in some markets, leaving organizations stuck between volume and value.”
Likewise, attendees understood that payers have been met with varying levels of engagement on risk arrangements from the provider community.
Executives agreed that deciding on the right pace and trajectory to move from volume to value lies much more in local market trends than national ones.
“Payer-provider collaboration is very geographic and organization-dependent,” said Jack Lynch, FACHE, president and CEO of Main Line Health. “Some payers are more prepared and interested in sharing risk with providers than others, and vice versa.”
Ultimately, closing the payer-provider divide requires a better understanding of why it is occurring, Navigant Managing Director and former health system CEO Rulon Stacey, PhD, FACHE, believes.
“I don’t think hospitals understand how hard it is to be a payer, and I don’t think payers understand how hard it is for providers to partner with them,” he said. “We need to identify those areas where payers and providers can walk across that bridge and make collaboration happen, because opportunities clearly exist.”
Sharing risk must be a collaborative pursuit, where payers and providers are properly equipped to take upside and downside risk together, suggested Joseph Swedish, former chairman, president, and CEO of Anthem, Inc. Having the proper technology underpinning is essential, he said.
“Payers and providers need to develop a support system that builds both confidence and trust,” said Swedish. “Accelerating and scaling the sharing of data is going to be critical to that and overall success for all involved, most importantly the patient.”
EHRS, PRESENT AND FUTURE
Whether it’s an implementation, conversion, or upgrade, health systems nationwide are enduring clinical and operational frustrations with electronic health records (EHRs). Those frustrations — along with the massive financial investments providers have already made — are likely to mount as the technology continues to evolve to better meet the needs of providers and patients.
“The EHRs that we have today aren’t the ones that we’ll have in 10 to 15 years,” said Brent James, MD, a clinical professor at Stanford University School of Medicine. “They aren’t properly constructed for the core task of actually managing the delivery of clinical care.”
Main Line Health recently undertook a “big-bang” EHR system conversion, one that Lynch said posed some unexpected challenges. “I don’t know that we really understood the amount of training that would be required, the amount of change management it would take to get us through the process,” said Lynch.
As Main Line looks to upgrade its EHR, Lynch worries the process is going to be another big-bang launch. “Maybe this is something we’re just going to have to get used to over time with these new releases,” he said.
But Lynch was quick to suggest there’s no plan to go backward. “We believe we’ve got a better tool that will help us be safer, help us increase quality, help us identify and eliminate disparities, and help us make care more affordable,” he said.
Barclay Berdan, FACHE, CEO at Texas Health Resources, also highlighted EHR benefits from the physician side. “Our physicians tell me they couldn’t live without the EHR, that they concentrate on what it does to help them and their patients as opposed to some of the burdensome parts,” he said.
Lynch also pointed out that providers shoulder some blame for not leveraging EHR benefits. “If we all use our smartphones the way we used a flip phone, we wasted a lot of money,” he said. “I think the real challenge for us is to take the EHR and optimize it to its fullest capabilities.”
Lynch believes collaboration among providers and EHR vendors is required to improve the situation. “How do you take this very strong tool and utilize it to increase quality, identify and eliminate disparities of care, and make care more affordable?” said Lynch. “That’s the challenge that we’ve got in front of us, and I think we should look to the vendors that are putting these products out on the street to help us do that.”
WEIGHING IN ON SCALE
Healthcare continues to see record-high hospital mergers and acquisitions intended to achieve such benefits as gaining economies of scale. Yet, multiple studies question whether economies of scale truly exist in hospital operations. Even credit rating groups have begun to openly state that they’re deemphasizing size and scale in their analyses of who’s healthy and who’s not.
The benefits of scale were on the minds of CEO Forum executives as well.
“Hearing from individuals that have been there and done that and reflecting back after reviewing the data, questions remain about whether scale really matters for most hospitals and health systems,” said Carrie
Owen Plietz, executive vice president and chief operating officer at WellStar Health System. “Does scale truly improve quality of care and reduce the cost of care?”
Still, conversations about generating scale through consolidation continue in every market. And there are organizations with immense scale equipped for short- and long-term sustainability, Navigant Managing Director David Burik pointed out.
Burik referred to Kaiser Permanente, HCA Healthcare, and UnitedHealthcare, three distinct operating models that clearly leverage their vast scale in their success. But these organizations benefit from another essential factor beyond size: discipline.
“The benefits of scale won’t simply be there unless you’re organized and have the discipline to take advantage of it,” Burik said. “It all starts with discipline.”
Glancing inside these companies offers a view of how disciplined they are in using information to standardize, automate, and optimize operations and care delivery, Burik suggested.
Areas providers should target include executive compensation, unnecessary layers of management, and information technology outlays leading to higher, rather than lower, operating expense.
Plietz summarized the situation well, stating, “We need to be more thoughtful when considering scale and M&A activity, and ensure that it’s truly being done to benefit the patients and communities that our health systems serve.”
TARGETING WASTE, UNNECESSARY VARIATION
EHRs, payer-provider partnerships, and greater scale were all supposed to address one of healthcare’s longstanding challenges — reducing unnecessary variation and waste.
“Our ability to stay focused and disciplined around waste and clinical variation is something we can control, regardless of policy changes,” said Gail Donovan, president of Health Services and chief operating officer at TriHealth. “Hospitals still have a long way to go, but we need to own it.”
Stanford’s James emphasized the significantly higher financial leverage from waste elimination compared to revenue growth.
“The operating margin impact from reducing waste is much greater than the impact of increasing revenues,” James said. “From the standpoint of pure value, both the quality and financial upside is stunningly massive.”
According to Texas Health’s Berdan, “Reducing variation is not a program but an ongoing part of an organization’s overall culture and processes. We have to relentlessly pursue taking variation out of healthcare for financial reasons, and more importantly to provide a safer environment for our patients and our employees.”
Collaboration is an essential ingredient to reducing waste, said WellStar’s Plietz. “We need close partnerships across clinical enterprises which can help take costs out of the system while moving the entire organization forward in their quality platform.”
Navigant National Advisor and CEO Forum speaker Jeff Goldsmith, PhD, points to the need for greater focus, saying hospitals need a “Serenity Prayer” moment. “I think what’s really hurt this industry is a loss of focus. Instead of trying to imitate others and do 12 things poorly, let’s focus on two things that are specific to your market and do them really, really well.”
Carrie Owen Plietz