Blog Post September 30, 2015 Value-Based Enterprise Conversation Series – Integrated Authors Steve Messinger The transformation to value-based care requires an organization to shift its focus from traditional care delivery – characterized by silos of hospital departments, autonomous physician services, and other pre- and post-acute components – to care management and coordination across all of these disparate services. As part of our ongoing series of conversations about the value-based enterprise, Steve Messinger, President of ECG, shares his thoughts on what it means to be an integrated organization in the era of reform. Quite simply, what does it mean for an organization to be “integrated”?There are so many different elements of integration. As it relates to the value-based enterprise (VBE), we’re thinking about how physicians, hospitals, and other care providers are working together for a common purpose that is rooted in patient-centered care and driving toward value. So to me, the whole concept of integration is that we have to get together and become more efficient so that we can eliminate unnecessary units of service. And not necessarily just be focused on cost per encounter but really on how we can use an encounter to maximize the efficiency of the entire patient experience. What does that look like in tangible terms?There are a few well-known examples like the Mayo Clinic or Cleveland Clinic, where the interest is to look at the patient holistically instead of being responsible for a particular organ system or focusing solely on one specific need. The patients who consume the most resources have many clinical issues, and providers in an integrated organization think in terms of the whole and not the parts. How does the patient experience differ in an integrated organization as opposed to one that’s more siloed?In health systems that are doing this well, the inpatient and outpatient experience is typically the same. The physicians, clinical workforce, administration, and management of the entire organization don’t create barriers to a patient flowing through the system. In many non-integrated organizations, what typically happens is this: if I’m having a knee replacement, I have to register in the radiology department to get an image done. I have to register with the physician’s office. If I have my procedure, I have to register with the hospital. I have to talk with the anesthesiologist. And then if I have to see a physical therapist, I have to go register with the rehabilitation center and create appointments with them. As the patient, it’s my responsibility to find my way through the system. Every little thing I do is a different experience, a different relationship, a different transaction, and it’s up to me, the patient, to figure out how to coordinate and navigate all of that. In a more integrated scenario, it’s like a package or suite of services where I have basically one administrative encounter and the whole care process is mapped out for me. I think about it like an all-inclusive resort, where everything is paid for – it doesn’t matter if you use the gym or the spa or eat three or four meals a day. The integrated experience is one where the system takes the responsibility of coordinating and ensuring that the patient’s needs, from the inpatient to the outpatient setting, are taken care of. Based on what your observations and experience, how integrated are healthcare organizations and systems across the country?There’s wide variation. I think you can look at it from two perspectives. In many organizations, you see an integrated approach to care management that’s very program-specific. When a patient comes in with a heart problem, the patient isn’t drawing a distinction between needing surgery, needing to see a cardiologist, or needing to see an electrophysiologist. He just wants his heart taken care of. And some organizations are pretty good at helping individuals wayfind, helping them in an interdisciplinary way, and helping them make care treatment decisions as a team instead of in a siloed approach. When we look at clinical programs in top-performing organizations, we see many that are integrated along those clinical service lines, from inpatient to outpatient. But again, typically it’s very program-specific. The other perspective is a care management approach that coordinates care for the patient with multiple healthcare needs. The whole promise of population health management is one in which an organization, instead of focusing solely on a patient’s heart condition, wants to understand the totality of that patient’s needs. A patient with a heart condition might also have high blood pressure, diabetes, and might be obese. And he or she might have dental problems, or might be depressed. The patient may have come in for heart care, but an integrated organization thinks about the patient holistically and designs a care management plan to address all of the existing issues. In a value-based environment, this makes sense because we know that the patients with multiple conditions are those who consume the most resources. What does this integrated care management approach mean for health system finances?The dilemma providers have in trying to exercise the benefit of integration is that the payment systems don’t really line up yet with how they want to organize care delivery. So it’s a question of how to align incentives and become integrated so that physicians can feel good about doing the right thing for the patient without worrying about hurting the organization financially. Providers are preparing for a future in which they’ll be able to harvest the benefit of all the investments being made in integration. And we see providers pushing insurers to come up with a reward system that allows them to take advantage of value-based practices instead of being penalized. When we talk about integration, we’re often talking about it in reference to a health system. Does this have application for a smaller enterprise?Absolutely, because with the government pushing the value-based agenda, all providers have intersecting incentives. Actually, what we are seeing is that the smaller hospitals and medical groups, whether they are part of a hospital system or are independent, have the ability to be nimble. And they’re prevailing because they can make decisions and implement initiatives more quickly. To put it in simple terms, a speedboat can navigate and change directions pretty easily; a tanker fleet cannot. With a large health system, there’s a lot of inertia, a lot of change management, a lot of stakeholders to deal with. So despite conventional wisdom that bigger is better and incredible scale is required to accomplish these things, we’re seeing that smaller, nimble organizations are doing incredibly well and in some cases leading their markets. Are those smaller organizations embracing the idea of integration and the other tenets of value-based care delivery?What I find really fascinating is that when you look at organizations that aren’t in the best financial position and are often struggling to be competitive, some of them are taking chances. They’re the disruptors in their market, the wild cards. And they’re the ones that are doing some pretty incredible things. The fee-for-service (FFS) world hasn’t been great for them, so they’re willing to do something else and see if that offers a better future for them. Conversely, we’re seeing organizations that historically have done incredibly well in an FFS world having a harder time pivoting. Traditional market wisdom has taught them that they do well as a siloed, non-integrated organization that’s focused on FFS. They look at key performance indicators like strength of revenue, number of units of service, and days of cash on hand, and they’re reluctant to change. So this is a challenge for everybody. But the small rural hospitals, the single hospitals, the medical groups – we don’t see them being disadvantaged simply due to their size. Moving toward integration affects patients, providers, payers, seemingly everyone in the healthcare continuum. How are hospital leaders responding to these changes?Developing this level of integration is difficult because the integrator is usually the hospital, and hospital leaders and boards have been trained to manage just one element of a multidimensional delivery system. One very successful CEO recently told me that he really knows hospital management, and he can finish his administrative rounds and have a good feel of how his organization is performing. But he has an affiliated medical group that he’s grown, and he is perplexed because that business is so different. The key performance indicators that he looks at for the hospital are totally irrelevant in the medical group space. How does a healthcare organization start moving toward greater integration, if it hasn’t yet started down that path?Health leaders need to look critically at their organizations and have an honest dialogue about where they want to go and what their vision is. Leadership needs to take a brutally honest look at the organization’s competencies and determine how to pace the change in a way that is digestible. Value-based care is a major paradigm shift, and organizations taking on this gigantic challenge have to do it in a way that is measured and responsible. Steve Messinger is a recognized leader in the healthcare consulting industry. He is dedicated to helping healthcare organizations grow, adapt, and thrive in a value-based environment. Steve is a strategic thinker and an effective adviser to boards and executives who are managing the challenges and implications of transformational change.