Strong leaders are needed to transform healthcare systems into clinical quality organizations
Repairing or redesigning a car is challenging under any circumstances. Doing so when that car is moving at 90 mph is, well, you get the point. But that analogy characterizes the challenge that policymakers and others in the healthcare industry face today, said Peter Fine, president and CEO of Banner Health, Phoenix, Ariz.
“We’re in a time of unprecedented upheaval,” said Fine, speaking at the Market Insights conference, sponsored by The Journal of Healthcare Contracting. “But make no mistake — in a time of change like the one we’re experiencing, the key success factor is leadership.”
Banner is an integrated delivery system spanning seven states. With more than $5 billion in net revenue, Banner recently acquired its 25th hospital. In addition, the IDN has a medical group with 1,000 physicians, and it’s growing rapidly. “Though most of our physicians are still independent, I see that changing over the rest of the decade,” he said.
The times call for it
Why transformation? Statistics tell the story. Healthcare expenditures are rising. That’s particularly true for people over the age of 58. Comparing the United States with other countries, the statistics show that people in Germany, the United Kingdom, Sweden and Spain live longer at much less healthcare cost. “You have to wonder, ‘What are we getting for the billions of dollars we’re spending?’” said Fine. The U.S. healthcare system’s challenge is to provide lower-cost services with better outcomes, and with a better patient experience. Doing so calls for a reinvention of the system, he said.
Fine became aware of the need for strong leadership as soon as he came to Banner 13 years ago, when some of his board members stated to him “Don’t ever forget leadership matters.” That eventually lead to hiring someone with experience outside healthcare from Motorola’s Leadership Academy. “We began to refocus our future on leadership and asked, ‘How do we find, develop and grow talent?’ It is the critical factor for our success. You are not able to manage through significant upheaval and change without outstanding leaders.”
About five years ago, in the midst of healthcare reform, Fine and Banner began the process of reinvention. “I stood before the organization and stated that we were going to transform ourselves into a clinical quality company, and I began to express what that was. My point was, long-term success depended on differentiating ourselves by reducing variability and increasing care reliability, resulting in consistently improved clinical outcomes.”
An about-face
Fine is convinced that variability in care is a key problem of healthcare delivery in the United States. “Until we make the product [healthcare] more reliable, we won’t be successful in reducing cost,” he said. “Our future as a clinical quality organization at a national leadership level requires our ongoing, relentless focus on reducing care variability and increasing care reliability.”
That kind of approach calls for a sharp, continual focus on the consumer. “We are convinced that healthcare in the future will be a consumer business,” said Fine. Recently, Banner hired a chief strategy and marketing officer from outside healthcare to help reorient the system’s approach to patient care. “With individuals facing huge co-pays, deductibles and costs, their decision process will be entirely different than it used to be,” he said. “If we don’t reinvent our own thinking, we won’t be among the survivors.”
Results
In 2013, Banner was rated among the 15 Top Health Systems by Truven Health Analytics, an organization that considers clinical quality to be a major factor in its selection process. The organization has also been recognized as a leader in electronic medical records, having had 21 of its hospitals listed at a level 7 (the highest of a 7 level pyramid) by HIMSS, indicating that organization’s belief that Banner has learned how to use the electronic environment to affect outcomes. Everyone at Banner, including physicians, is expected to use the EMR.
“In a few short years, we have rapidly evolved from a health system defined by hospital care, to an integrated system,” said Fine. “We have moved further down the path and are aggressively expanding our clinic environment into the first site of care for our patients. We used to be the downstream recipient of the patient; now, we are building 22 clinics around our market, each with anywhere from five to seven doctors, and potentially as many as 75 doctors in one regional center. And we’re moving closer to the patient.”
Most of those doctors are currently independent, but Fine believes that will change. Owning physician practices gives the IDN more influence over improvement of quality of care. “It goes back to the idea that variability does not enhance reliability,” he said. “Somehow, you have to make those two concepts come together in order to reduce the cost of care.”
Value-based care
Banner’s strategy rests in part on the changes to reimbursement taking hold for healthcare services.
The fee-for-service model is headed for collapse, said Fine. It perpetuates fragmented services, a focus on the latest technology instead of the most appropriate technology, and rising costs. Add to that the rapidly aging population and the large number of uninsured in this country, and you have a highly stressed healthcare system. “It is becoming increasingly unsustainable,” he said.
Enter value-based care. “Call it population management, risk-sharing – pick your favorite term.” The future rests with shared-savings systems with payers, and reimbursement based on wellness management of the patient, not fee-for-service. Though value-based care accounts for less than 10 percent of providers’ revenues today, it will be 50 percent of revenue streams by the end of the decade, Fine predicted.
Value-based purchasing won’t entirely supplant fee-for-service, nor should it, he continued. “Health systems such as Banner will see value-based plans emerge alongside fee-for-service plans. Further, at Banner, as we become more efficient at operating within the value-based model, we will experience market share gains in the fee-for-service environment as well.”