Strategy for Change

By Christine Gallery

Wurlitzer, Kodak, Digital Equipment Corporation — the business world is filled with the names of once great and dominant companies that ignored the winds of change. Their stories offer lessons to other industries, including health care, on the importance of recognizing change and adopting a strategy to respond to it.

What are the dynamics of the current health care field, and how do they affect an organization’s future? Futurescan 2015: Trends and Implications, 2015–2020 addresses these questions.

The Society for Healthcare Strategy & Market Development, a personal membership group of the American Hospital Association, and the American College of Healthcare Executives develop Futurescan, an environmental assessment of health care trends and their implications for hospital leaders. The annual publication combines expert insight with original research. This year’s report explores eight important trends: cost-effective delivery systems; price transparency; the decline of reimbursement; value-based competition; ambulatory-hospital integration; private insurance exchanges; advanced care planning; and innovations in individualized medicine.

Below are excerpts from Futurescan 2015, plus data highlights from a survey of health care CEOs across the country on their views of the future.

1. Cost-effective Delivery Systems

Achieving lower costs and higher quality will provide competitive advantages in bundled- and global-payment arrangements, give providers preferred placement in tiered-network health plans, and help them attract consumers under reference pricing arrangements.

Survey highlights:

  • Most (71 percent) of those responding to the survey believe that by 2020 at least 30 percent of the revenue of their hospital will come from non-fee-for-service payments.
  • Again, 71 percent of respondents predict that by 2020 more than 70 percent of their hospital’s total revenue will be payments from the government.

2. Price Transparency

Identify other information sources that will help patients assess the value of the services you provide. Consider, for example, linking price information to relevant and publicly reported quality or patient-safety scores.

Survey highlights:

  • Almost all of those participating in the survey (91 percent) are in agreement that by 2020 hospitals will furnish the prices of the services of health care providers and treatments to consumers in advance of treatment.
  • The majority of respondents predict that by 2020 most clinicians will consider available price information when deciding whether diagnostic tests are needed.

3. The Decline of Reimbursement

A flawless patient experience directly contributes to the likelihood of a return visit. Many hospital leaders fail to connect the patient and family experience to the likelihood of repeat business. Clinical and management routines that waste the patient’s time or inflict harm through avoidable clinical errors damage the market standing of the hospital, particularly when Hospital Consumer Assessment of Healthcare Providers and Systems, or HCAHPS, patient satisfaction scores are freely available online.

Survey highlights:

  • Eighty-eight percent of those responding to the survey believe that by 2020 their hospitals will either offer decentralized care or be part of a system offering a decentralized model of care.
  • Most (80 percent) of survey respondents expect that by 2020 their hospital will be part of an accountable care organization or similar entity focusing on population health.

4. Value-based Competition

All of these strategies beg the larger question of whether you need to merge or affiliate with a larger entity to succeed. Assessing your strategy based on a competitive analysis will help you make that decision.

Survey highlights:

  • A little more than three-quarters (78 percent) of those responding to the survey predict that, over the next five years, offering bundled payment arrangements could increase volume in hospitals service lines.
  • About 75 percent of survey respondents think that by 2020 at least one-fifth of their patients will be covered by a narrow network health plan.

5. Ambulatory-Hospital Integration

Hospitals should lead efforts to promote health information exchange. Many of the most important innovations in primary care — for example, those focused on improving care for high-utilizing patients — require effective information exchange between ambulatory providers and hospitals. Health systems that succeed in establishing easy-to-use electronic health information exchanges will have a leg up on systems that do not.

Survey highlights:

  • Most respondents (87 percent) think that accountable care networks that share risk between hospitals and ambulatory providers will be established in their hospital’s area by 2020.
  • Almost all (93 percent) of those responding to the survey predict that hospitals will be exchanging electronic health information with more than 50 percent of the ambulatory providers in their area within the next five years.

6. Private Insurance Exchanges

Depending on how the private exchange market evolves and how rapidly it expands, it could become an important new sales channel for providers, giving them an opportunity to gain new revenue streams.

Survey highlights:

  • A small majority (about 63 percent) of survey respondents think that by 2020 their hospital or health system will have developed products, such as priority access to particular physicians or private rooms, for purchase on a private insurance exchange.
  • Almost all (89 percent) of those surveyed predict that their hospital will participate in a narrow network by 2020.

7. Advance Care Plans

Partners will spring from among community leaders, political leaders, AARP, nursing homes, home health agencies and patients themselves. In addition, all segments of the faith community can participate in the design, training and implementation of advance care plan systems. Establishing an ACP system presents a significant opportunity to improve not only the health and well-being of our patients and their families but the well-being of our staff members, too.

Survey highlights:

  • About 83 percent of respondents predict that physicians or physician assistants and nurse practitioners will assist patients with advance care planning.
  • Almost all (97 percent) of the survey respondents predict that by 2020 their medical records design will make advance care plans readily available in patient encounters.

8. Innovations in Individualized Medicine

Some health systems, such as Allina in Minnesota, are starting to train their primary care physicians to use comprehensive handheld ultrasound devices as part of the physical exam. This protocol leverages a new, informative and economical way of performing an exam. We have a technology that transcends the stethoscope, but its current use does not reflect its immense potential.

Survey highlights:

  • Almost three-quarters (about 71 percent) of those responding to the survey think that their organization will have a data center for remote monitoring of patients by 2020.
  • Seventy percent of survey respondents believe that their hospital’s staff will use handheld portable ultrasound devices instead of stethoscopes in 2020.

To purchase copies of Futurescan 2015, visit www.shsmd.org/futurescan15.

Christine Gallery(cgallery@emersonhosp.org) is senior vice president of planning and chief strategy officer, Emerson Hospital, Concord, Mass. She is also board president for the Society for Healthcare Strategy and Market Development of the American Hospital Association. Expert commentaries are provided by Stuart H. Altman, P.h.D, and Robert E. Mechanic, Brandeis University; Joseph J. Fifer, HFMA; Jeff Goldsmith, Ph.D., Health Futures Inc.; John M. Harris and Bonnie Frazier, DGA Partners; Michael Hochman, M.D., AltaMed Health Services; Gunjan Khanna, Ph.D., and Shubham Singhal, McKinsey & Company; Jeffrey Thompson, M.D., Gundersen Health System; and Eric J. Topol, M.D., Scripps Health.