Health Care 2.0 and Beyond

Reprinted with permission from the July/August issue of Trustee magazine, vol. 68, no. 7. © 2015 by Health Forum Inc. Permission granted for digital use only.

By Pam Arlotto

While the fee-for-service payment system remains profitable for many hospitals and systems, most agree that high-performing organizations in the future will be part of accountable, connected systems that promote health and provide population-based care. Rather than rewarding volume, new reimbursement incentives will focus on cost, quality and outcomes.

The evolution to value-based care will be accelerated by weaving digital capabilities into the fabric of new business, care delivery and reimbursement models. Most health systems already have made substantial investments in information technology, but the health care field has yet to experience a fundamental business model transformation like those that have taken place in the banking, music, transportation and retail industries. Legacy information systems designed around the historic silos of hospitals, physician practices and post-acute services create complexity and barriers to agile decision-making.

But forward-looking boards will recognize IT’s potential and assume a leading role in aligning new business strategies with emerging digital capabilities, balancing innovation with risk management and overseeing longterm returns on investments. A three-stage transformational framework can guide boards as they seek to understand how IT-enabled health care is evolving and help them to assess their organization’s progress [see Transformational Framework, Page 35].

For most, the shift from feefor-service health care began during a period we will refer to as Health Care 1.0. With incentives from the HITECH Act and meaningful use, health systems and physicians adopted and deployed electronic health records. Now, most organizations are in the second stage, Health Care 2.0. Clinical integration, patient engagement and population health management strategies are crucial. Data-driven, cloud and smartphone-enabled technologies will drive fundamental change in the health care business model. Opportunities abound for faster and continuous access to care, greater transparency in costs and outcomes, and connectivity across the care team and with the patient.

Organizations must build new competencies in informatics, analytics, transformation and innovation while rethinking their IT and quality operating models. Some organizations already have begun to make the move to Health Care 3.0. In certain aggressive markets, it will be months, not years, when the transition to full value-based payment is complete. Clinically integrated provider groups will accept more risk and become accountable for the outcomes and total cost of the care they provide to their patients. IT will eliminate geographic distances between provider and consumer and change the way they interact. Data will provide insight into real-time care decisions and guidance on standardized clinical protocol design as well as precision medicine. Hospitals must make investments with longer-term payoffs to support this transition.

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