Five Action Items for Health Care Executives and Board Members, Part Two

Putting aside hotly contested issues such as the proper scope of federal authority and the cost of expanded coverage, the new law has pragmatic implications for health care providers in five broad areas that will affect provider activity in a number of different ways.  Today is Part Two of covering the Five Action Items for Health Care Executives and Board Members.

Five Action Items for Health Care Executives and Board Members, Part Two

Although some provisions of PPACA are implemented in phases, the law does specify a timeline and road map for short and long term provider activity. Major action items should build on core themes underlying the legislation itself, and can be expressed in finite and tangible terms.

3. Define and Implement a Strategy
Rome wasn’t built in a day, and the nation’s health care system most certainly won’t be transformed overnight. Nonetheless, it seems likely that some early adopters will be best-positioned to thrive over the long term in a reconfigured payment system emphasizing different quality-driven incentives. Given the breadth of potential change, incremental actions by organized provider communities may be the most pragmatic course. Those sequential activities can potentially take a number of forms, such as:

Engaging in “silent pilot” or “war gaming” exercises inside the organization through which quality, cost and related metrics are assessed in relation to internal or externally defined benchmarks;

Creating “live” relationships with a friendly payer (e.g., a hospital or health system as a self-insured organization or, if available, a compatible local health plan), to develop and test clinical integration and related strategies emphasizing quality and cost that involve selected disease states or conditions; or

Exploring and implementing more traditional payer-driven programs focusing on quality and cost. Of course, such arrangements will render provider communities relatively more beholden to the demands of existing payer arrangements, rather than emphasizing the lessons of their own experiences.

4. Begin the Organizational and Cultural Transformation Process
Information technology, data systems, practice protocols and other tools and structures supporting the new “quality and value” construct will only go so far to achieve new performance goals. Even more central to future success is the process of reshaping the organization and culture existing throughout much of the nation’s existing delivery system. Legacy organizations such as the Cleveland Clinic, Mayo Clinic, and others have developed over many decades, and the vast majority of provider communities cannot quickly, if ever, replicate the culture and values implicit in these organizations today. Even modest behavioral changes can sometimes take years to implement.

Given the timeline contemplated by the new law (with dramatic payment and delivery system changes becoming widespread within a handful of years), scarce time exists to move from point A to point B. Given this reality, near term attention to organizational structure, governance, management, financial incentives and other variables is both prudent and necessary. Such actions might begin, for example, by establishing “medical groups” (if non-traditional) including physicians from one or more separate legal organizations, which may start to consider themselves as a single group or network for patient care purposes in the newly-reformed environment.

These newly established medical groups will require formal governance and committee systems to address financial, clinical and other needs. Such bodies will commonly focus on clinical services, working relationships and practices, and also involve data and feedback mechanisms to begin to assess non-traditional measures of physician production and productivity, e.g., quality, resource utilization, protocol compliance and related measures, many of which are encompassed within the rubric of “clinical integration” articulated through recent pronouncements of the Federal Trade Commission as an important antitrust law compliance strategy.

In many physician groups—typically those involving a single tax ID and/or hospital/health system affiliated integrated systems—cultural change from a fee-for-service to a quality based mind-set can begin by revising provider compensation and incentive structures. In many settings, this will be an evolutionary process which migrates from compensation plans based almost entirely on production-based measures, (e.g., dollars per RVU), to other plans considering quality and related metrics initially, followed by eventual movement to more stable base plus incentive systems over time. The cultural transformation process will also likely result in some weeding out (by self-selection and otherwise) of the medical group’s provider cadre, as those unable or unwilling to adjust to an evolving environment will likely move on to other opportunities.

In this week-long series, we will post five articles that will help you understand the primary areas targeted by new health care legislation so you can focus your efforts accordingly and position your organizations for the transformative changes that lie ahead.

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