Accountable Clinical Management - Driving Sucess through Shared Leadership

Integration, alignment and, more importantly, engagement of physicians is a strategy critical imperative for health systems seeking to create high-performing, future-ready, accountable care organizations. Over the past decade or so, many models have been tried – some successfully, others not so much. In the search for the holy grail of physician integration, most hospitals have concluded that a pluralistic approach, pursued in the context of an over-arching framework for clinical care and performance transformation, will be required to address the rapidly evolving world under healthcare reform.

Clinical co-management is an integration structure that has seen renewed interest from both hospitals and physician organizations. Under the co-management arrangement, hospitals contract with an organized group of physicians to provide day to-day management services for the inpatient and outpatient components of a specialty service line such as cardiac, oncology or orthopedics. The first generation of co-management was an outgrowth of gainsharing where physicians benefitted from cost savings arrangements. Most of these early models, however, faded quickly once savings reached a point of diminishing returns. And many failed when financial rewards didn’t materialize because cost improvements weren’t achieved.

The new generation of clinical co-management, however, provides a foundation for creation of "accountable" clinical care models at the service line level.  It offers substantially more value in that the agreement between the hospital and physician organization provides for and rewards physician engagement and leadership in a broad spectrum of activities that improve patient care and outcomes, generate cost efficiencies and make the clinical service more competitive in the market. The model also differs from conventional hospital-physician joint ventures in that the hospital maintains ownership of the clinical service line and resulting revenue stream, while physicians gain much greater participation in and compensation for strategic planning, budgeting, clinical program development, quality oversight and improved patient experience.

With this approach, physicians have more clinical and operational influence than they have had traditionally. The hospital gains from quality, safety, cost efficiency and patient satisfaction improvements, especially where pay for performance and physician quality reporting initiatives are prevalent, since these directly tie financial reimbursement to outcomes. And the strategy-critical structures, processes and relationships are forged to create and build success in the new 'value-based' healthcare economy.

The real winners, however, will be the patients that benefit from aligned hospital-physician incentives that have a positive impact on patient care.

The importance of marketing alignment with brand strategy development and leadership

As more health care organizations begin to adopt BRAND as a business strategy, it is imperative that marketing leadership is aligned with strategy at the leadership level of the organization. For those charged with managing the brand, having a voice and seat at the executive table is critical where brand strategy discussions and decisions are taking place.

Strategic brand management is an increasingly important competency requirement for health systems today. A strong brand is an important asset that drives growth, profitability and long-term competitive advantage.

We have recently seen movements toward executive leadership aligned in a triad with the CEO—the chief strategy officer, the chief operating officer and the chief physician executive. This group is charged not with optimizing performance of a collection of strategic business units as has traditionally been the case in the past, but with delivering on a value proposition for the organization—which is the BRAND promise.

Brand leadership is key to a successful growth strategy. It requires a specific strategy and action plan to position the health system, differentiate services, increase brand equity and evolve the brand with the organization’s overall strategic plan and business initiatives.

The brand provides a strategic advantage in forging new business ventures, negotiating reimbursement contracts, and attracting the best talent. And the brand drives increased customer loyalty, utilization and powerful word-of-mouth endorsements for aligned clinical services and physicians. At a time when profitable growth seems elusive and where competition has never been fiercer, brand leadership has become the new imperative for health care organizations seeking to create and sustain a competitive business advantage.

Don’t relegate your marketing leaders to tactical responsibilities and assignments. Engage them in the conversation about building the business and the brand, and challenge them to focus their energies on driving growth. You might be pleasantly surprised.

Check out our white paper on the topic.

Aligning competitive strategy in the face of major industry change

Health care organizations are rapidly assessing their future in light of recent health care reform legislation. On the table: How will the new laws impact their ability to deliver quality care and in particular, how it will change the basis of competition for the future? What adjustments will need to be made to business strategy to maintain a competitive advantage in the marketplace?

In times of major industry structural change, new positions often arise and new, more nimble competitors emerge. Strategy can be threatened externally by competitive behavior, or internally, by a misguided view of competition, organizational failures or just by the desire to grow. These threats often increase imitation, rather than differentiation.

The requirements of hospitals and health systems to measure and deliver on a host of quality measures and become more operationally efficient, while important, elevate the bar for everyone and provide relative improvement for no one. In essence, all hospitals will look more alike than they currently even do.

This raises the question: How will hospitals compete? Strategy is about being different, about developing a set of activities to deliver a unique mix of value that is distinctive.

When determining changes in strategy, hospitals must now ask themselves:
• Which of our products or services are most distinctive?
• Which are most profitable?
• Which customers are most satisfied?
• Which customers and channels most profitable?
• Which activities are most different and effective?

It’s often more about deciding what not to do. Hospitals will need to focus on their unique core of business and realign activities, ensuring fit and sustainability of activities, as well as effective integration, making it more difficult for competitors to imitate or replicate their service offerings.

By choosing to perform a tailored set of activities differently from competitors, hospitals can begin to effectively differentiate themselves in the market. Hospitals should also consider deepening their strategic position rather than broadening – looking for extensions that leverage existing activities – offering features or services that competitors would find impossible or costly to match on a stand-alone basis. An organization can often grow faster and more profitably by better penetrating needs and offerings where it is distinctive rather than duking it out in potentially higher growth arenas in which the company lacks uniqueness.

The hospital systems that will perform best will be those whose strategy allows them to align activities for consistency, reinforcement and optimization of effort. Competitive advantage is sustained out of the coordination of the entire set of activities and how well they perform together to reduce cost or increase differentiation.

President Signs Health Care Reform Act; Now What?

This week, President Obama signed into law the most significant social legislation since the 1960s. The Patient Protection and Affordable Care Act (H.R. 3590) extends health insurance coverage to 32 million uninsured Americans ― at a cost of $940 billion over the next decade.

The legislation ensures that by 2014, nearly all Americans will be required to be insured, and by 2016, the majority of the uninsured (30 million people) will be covered. To do this, the legislation expands Medicaid to cover families making as much as $88K a year. It also creates state-supervised exchanges to expand coverage access to individuals and small businesses. Other goals of the legislation are to improve affordability and accountability, crack down on waste, fraud and abuse, and ensure fiscal sustainability.

What Didn’t Get Passed? There is no government-run insurance plan. People can buy coverage through the state exchanges, but these will be private, nonprofit plans.

How does this impact the major health care players? Some of the key tenets are described below:

• Extending Coverage for all Americans – On one hand, it is believed that the bill will benefit hospitals because more people will have insurance and hospitals will have to provide less charity care, which should result in fewer ‘write offs’ and a reduction in bad debt. However, expanded Medicaid enrollments could be a mixed blessing because Medicaid often pays hospitals less than the actual cost of care.
• Improving the Quality and Efficiency of Care – It provides incentives for doctors, and hospitals that improve quality while providing for better coordination that helps to reduce harmful medical errors and healthcare-acquired infections. The bill will also provide payment reforms so providers are rewarded for the quality of care they provide, rather than just additional tests or treatments. And it rewards innovative practices where doctors and nurse practitioners provide more primary care that is coordinated with every doctor or specialist involved with a patient’s care.
• Focusing on Prevention – This legislation will promote prevention, wellness, and the public health and provides an unprecedented funding commitment to these areas. It directs the creation of a national prevention and health promotion strategy that incorporates the most effective and achievable methods to improve the health status of Americans and reduce the incidence of preventable illness and disability in the United States. It increases prevention and wellness services for Medicare beneficiaries by waiving co-payments for most preventive services and by fully covering an annual wellness visit and personalized prevention plans for American seniors on Medicare.
• Expanding the Healthcare Workforce – The act will fund scholarships and loan repayment programs to increase the number of primary care physicians, nurses, physician assistants, mental health providers, and dentists in underserved areas of the country. With a comprehensive approach focusing on retention and enhanced educational opportunities, the Act combats the critical nursing shortage. And through new incentives and recruitment, the Act increases the supply of public health professionals so that the United States is prepared for health emergencies.
• Transparency and Program Integrity – Doctors with financial interests in imaging services, like MRI services, must inform the patients in writing that they can obtain the recommended imaging service from a person other than the referring physician, and provide a contact list. The Act also requires all drug companies, device, and medical supply manufacturers to fully disclose and report any gifts they make or financial arrangements they have with doctors, a physician practice or group. Providers enrolled in Medicare, Medicaid and CHIP programs will undergo increased scrutiny for new compliance requirements. The bill calls for increased governmental auditing and revenue oversight requiring providers to become more efficient and accountable for utilization, quality and cost of care.
• Funding the Program - Funding for the landmark legislation will come from a variety of initiatives, including increased Medicare taxes for high-income individuals and an excise tax on insurers offering high-premium plans. In addition, hospitals agreed to help pay for the costs of the legislation and will contribute $155 billion over 10 years, primarily through lower Medicare payments. Health systems will also see reduced disproportionate share funding payments and cost-saving provisions resulting from program cuts for high-cost, less efficient hospitals in high cost markets. Moody’s Investors Service speculates that not-for-profit hospitals will struggle with reimbursement and efficiency pressures under health care reform legislation, triggering spending cuts, mergers and changes to revenue streams.

Most of the initiatives won’t take effect until 2014; however, the time for health systems to address both short and long term implications of the legislation is now.

Coming next: What to Expect from Industry-Leading Health Systems

Karen Corrigan

St. John's Mercy Physician Clinical Council

A Shared Governance Model for Physician Engagement

Denny DeNarvez, president and CEO of St. John’s Mercy Health Care in St. Louis, Missouri, is a fan of the Physician Clinical Council (PCC). Which is no surprise when you learn that she first developed a similar shared governance model in 1999 while serving as CEO of the Minneapolis Heart Institute; and again, a few years later, as CEO of Abbott Northwestern Hospital. Now she’s imported the Physician Clinical Council to St. John’s Mercy with significant and positive results.

The PCC concept is based on a simple set of truths, says DeNarvez. “The business decisions of the hospital affect physicians, just as their business decisions impact the hospital. The reality is that patient care is largely directed by physicians who are practicing independently. Doctors and hospitals must work together to ensure quality and efficiency in patient care.”

At St. John’s Mercy, the Physician Clinical Council is a shared leadership model that engages physician leaders in the business side of running a hospital. Ten physicians sit on the council – chosen for their leadership abilities vs. longevity or representational position – and meet every two weeks to discuss and weigh in on issues such as new clinical services, technology acquisitions, business strategies, market dynamics, physician recruitment. Physicians are paired with an executive counterpart and receive coaching on aspects of leadership, conflict management and finance, among other topics.

“Establishing the Clinical Council has been a positive development for the medical staff,” said Dr. Charles Rehm, president of the St. John’s Mercy medical staff. “It created another level of much-needed dialogue and signaled that the CEO really wanted to engage physicians in two-way communications.”

Download our white paper to learn more about how the Physician Clinical Council works, as well as steps to take when considering a shared governance structure.

Karen Corrigan

5 Key Areas of Focus when Assessing Physician Need and Alignment

What health system doesn’t have physician recruitment, integration and alignment at the top of their strategic priorities? Market competition, pipeline shortages, failing practice economics and a growing recognition that they can’t achieve quality and financial goals without physicians at the table, have organizations jockeying to win the race for physician integration and commitment.

A well-planned approach requires superb strategic thinking about possible, probable and preferred futures, and a well-crafted plan to bring vision into reality. The process will be better informed through an analysis about the current state of physicians in the marketplace and how that is likely to change in the future.

However, data is just data unless you use it strategically. Navvis & Company's 5Rs™ provides a framework and methodology in which to discover and calculate opportunities:

• Recruitment — Recruitment strategies address physician shortages when both strategic and community assessments indicate a need for physicians in a particular specialty.
• Retention — Top producing physicians are candidates for retention strategies based upon historic commitment of activity to the hospital for inpatient and outpatient service volumes.
• Redirection — Physician candidates for redirection strategies are typically those aligned with competitor hospitals.
• Redeployment — The goal is to increase practice volumes through better geographic location of the practice or through the presence of multiple practice sites.
• Retirement — Transition planning should be considered for top producing physicians over the age of 55.

Insights from this analysis will launch health systems out of the starting gate and into the field by producing a focused set of tactics to support the overall physician engagement strategy.

Don't Wait for Congress!

While Congress is wrestling with health care reform, many hospitals and their marketing executives are wondering how to prepare for something that may -- or may not -- happen. Rather than remain paralyzed by congressional uncertainty, there are many ways the marketing team can position its health system to be ready for changing times ahead.

But wait! Why do anything now if we don’t know what form “reform” will take? Because regardless of the legislative outcome of national health reform, public payers reimburse about half of all health care today, and federal and state governments are operating at huge deficits. Cost cutting measures in the form of reimbursement reductions and policy changes are a necessity. In fact, Blue Cross Blue Shield of Massachusetts just announced that it is changing the way it pays hospitals and physicians through a capitation system (BCBS is paying for the care of 60,000 enrollees within the Caritas hospital system regardless of whether they get sick).

The good news is that many hospitals and health systems are working toward many of the elements that must be in place to deliver the best health care at the best cost. Physician alignment, system integration, and outcomes measurement are important as reimbursement policy shifts from procedure-based to bundled payments. A physician alignment strategy means that both the hospital and the doctor are working together for the patient. System integration, which translates into operating efficiencies, means streamlined care delivered synergistically. And measureable health outcomes mean providers delivering care that works (not just “gets paid”). All of this translates into better value for the consumers’ health care dollar.

In other words, the right time is now to market system changes that restructure the delivery of care around value for patients, and by telling them what hospitals do to keep people healthy and how they treat those who are sick. No need to wait for Congress after all!

Brand Management Requires a Comprehensive, Robust Framework

Brand management is an essential core competency for healthcare organizations seeking growth, market differentiation and competitive sustainability. And the creation, building and management of brands requires a comprehensive, robust framework to guide brand strategy, brand alignment and brand performance. At this past week’s Chief Marketing Officers’ Innovator’s Studio work session, Mike Eaton, vice president for Navvis & Company, and Rob Klein, President of Klein & Partners, presented a 6-stage structure for brand management, and led the group on a discussion regarding the complexities and opportunities for building a powerful brand portfolio. Here’s a glimpse into their workshop session.

CMO Innovator's Studio Brand Mastery Framework

View more presentations from Karen Corrigan.

Chief Marketing Officers' Innovator's Studio Explores Brand Mastery

The Chief Marketing Officers’ Innovator’s Studio convenes this week (November 9 & 10) in Chicago. This session’s deep dive topic – The New Brand Mastery – is significant and timely given the changing nature of the health industry. Increasing consolidation among providers, physician alignment and integration activities, emerging retail models, growing consumer expectations, new media channels, the new economics of health care reform – all play part in the complex dynamics shaping competition. And all have implications for health system brand strategies. On the agenda:

• A brand excursion to Whole Foods Market in Lincoln Park, led by Maggie Bahler, Regional Marketing Director and Executive Marketing Coordinator for Whole Foods. There we’ll learn how the retailer achieves company-wide alignment to its brand strategy while emphasizing local market connections (sound like a familiar challenge?).
• Jen Wagner-Mauk, Executive Director of Brand and Marketing for Affinity Health (Menasha, WI) and Megan Manahan, Vice President for Marketing and Communications with Mercy Health Partners (Toledo, OH) will share their journeys in repositioning their health system brands, including methods for creating brand alignment and commitment across their organizations.
• Mike Eaton, vice president of the brand and marketing consultancy for Navvis & Company (St. Louis, MO), and Rob Klein, president of Klein & Partners (Hinsdale, IL), will facilitate a Brand Mastery Workshop, where they will frame out an approach to creating a comprehensive, robust brand leadership method – and put everyone to work brainstorming, prioritizing and designing innovative approaches to meet the brand challenges of the changing competitive landscape in healthcare.
• Rob Klein will also share research results from a recent Omnibus survey. This consumer ‘kitchen sink’ study focused primarily on healthcare reform with selected other topics of interest.

You can follow session highlights on Twitter at #iscmo.

Health System Performance Varies Significantly State to State

The cost and quality of health care, as well as access to care and health outcomes, continue to vary widely among states, according to the 2009 state scorecard report of Commonwealth Fund Commission on High Performance Health Systems.

The report, Aiming Higher: Results from the 2009 State Scorecard on Health System Performance, is a follow-up to the Commission's 2007 State Scorecard report; it ranks states on 38 indicators in the areas of access, prevention/treatment quality, avoidable hospital use and costs, healthy lives, and equity.

In 2009, Vermont, Hawaii, Iowa, Minnesota, Maine, and New Hampshire lead the nation as top performers on a majority of scorecard indicators. Leading states set new, higher benchmarks on a majority of indicators. Conversely, states in the lowest quartile often lag the leaders on multiple areas and the gaps have grown wider in multiple areas.

"Leading states have raised the bar for better access, quality of care, and reducing disparities," said Commonwealth Fund Senior Vice President and study co-author Cathy Schoen. "Where you live in the U.S. matters in terms of your health care, and it shouldn't.”

The sharp variation across states spans access, quality of care, costs, and lives. For example, rates of hospital readmissions (within 30 days of a previous hospital stay) among Medicare beneficiaries ranged from a high of 23 percent of hospital admissions in Nevada to a low of 13 percent in Oregon. The percent of adult diabetics getting recommended preventive care ranged from a low of 33 percent in Mississippi to a high of 67 percent in Minnesota as of 2006–07, a new high. On these and other measures, the lowest ranked states would have to improve 40 percent to 100 percent on average to achieve the performance of top ranking states.

The scorecard points to substantial opportunities to improve. If all states could reach the level achieved by the top performing states:

• Twenty-nine million more people would have health insurance—cutting the number of uninsured by more than half;
• Nearly 78,000 fewer adults and children would die prematurely every year from conditions that could have been prevented with timely and effective health care;
• Nine million more adults age 50 and older would receive recommended preventive care, and almost 800,000 more children would receive key vaccinations;
• Five billion dollars could be saved annually by avoiding preventable hospital admissions and readmissions for vulnerable elderly and disabled residents.

You can download the report Aiming Higher by clicking here. An interactive map that allows users to look at and download individual state information and compare states on various measures is available at www.commonwealthfund.org/Charts-and-Maps/State-Scorecard-2009.aspx.

Karen Corrigan