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Health Care Reform from the C-Suite


outpatientAs the health care industry continues to evolve, health care providers may find themselves unsure of how to position themselves appropriately. Brown Smith Wallace Health Care Services Practice Leader Ron Present addresses the latest in health care reform and how providers can evolve with the industry.

This article originally appeared in the June 2012 issue of St. Louis Medical News, a publication focused on providing the latest industry insights and news to medical professionals in the St. Louis region. Ron's column, The Practice Specialist, is a monthly feature in this publication.

Within a few short weeks, the U.S. Supreme Court is anticipated to rule on the constitutionality of the Patient Protection Affordable Care Act (PPACA). Although the ruling will help clarify the regulatory language surrounding insurance coverage, service delivery and payment mechanisms, the industry has evolved so much over the past 15 months that the operational delivery of person-centered care will continue on its evolutionary path, even if the PPACA is repealed in its entirety. Therefore, regardless of the Supreme Court decision, health care providers must continue to evolve with the industry or potentially find themselves in a compromised position.

With so many mixed signals coming from Washington regarding the judicial ruling for health care reform legislation and its potential implications, providers might be wondering how to prioritize their time. The Health Leaders Media Industry Survey 2012 results were recently published in their CEO report with related answers to that question. The survey data is based on four concurrent surveys: Senior Leaders, Finance Leaders, Physician Leaders, and Nurse Leaders with results based upon 1,070 completed surveys.

One question from the survey asked the respondents to rank their organization’s top priorities for the next three years. From a variety of options, the top three priorities were identified as:

  1. payment reform/reimbursement,
  2. patient experience and satisfaction, and
  3. cost reduction/process improvement.

Lynn Britton, President and CEO of Mercy Health based in St. Louis, Missouri, has a slightly different perspective. Mercy is an integrated health system with over 100 communities in seven states with annual revenues of nearly five billion dollars. Based upon an interview with Mr. Britton for this publication, his priorities are:

  1. patient experience and satisfaction,
  2. leadership and organizational development, and
  3. planning for and access to capital.

He identified those priorities because of the changes occurring within the industry. “I have no belief what so ever that the Supreme Court ruling is going to slow down any of the changes happening in the health care industry today. The regulations certainly shape things, but they don’t cause it all to happen,” Britton commented.

Robert Gibbs, former press secretary for President Obama, in a separate interview, echoed a similar sentiment. “The PPACA is facing an unpredictable future with the impending ruling from the Supreme Court. However, providers throughout the health care industry have been moving away from a traditional delivery mentality to a more integrated, efficient delivery system focused on outcome based, patient-centered care.”

One of the care delivery structures identified by the PPACA is the development and potential implementation of Accountable Care Organizations (ACOs). Although several Pioneer and Commercial ACOs are operational and/or approved to become operational, many hospitals and health systems are taking the first step toward developing what could potentially become an ACO with intense consolidation and integration of physician practices. According to Mr. Britton, Mercy prides itself on their Mercy Clinic which is a “physician-led, professionally managed organization where the physicians and the hospitals are absolute equals in the organizational structure, and physicians want to be part of that today.” According to Mr. Britton, Mercy has around 500 physicians that are in some stage of joining Mercy Clinic across four states. Today, there are nearly 1,600 members of Mercy Clinic with a prediction that Mercy will have 2,500 integrated physicians over the next three to four years.

Mr. Britton agreed that in an effort to offer or facilitate all the components of service delivery necessary in an ACO or Value NetworkSM the industry will further consolidate. The House Ways and Means health subcommittee held a hearing in September 2011 to gather testimony on the impact of hospitals acquiring physician practices and insurers dominating community health care market shares.

Like many other provider organizations, Britton admits that Mercy has work to do on some parts of an effective ACO or Value NetworkSM delivery model including post-acute services. “Our post-acute is the least developed thing that we have today and it isn’t one that we’re likely to vertically integrate. We’ll partner. We have a team of people working on that today to determine the criteria of that partnership including who will be a good partner in that relationship and how we hold our partners accountable. If we connect in that way it is still the Mercy brand exposed. It is still the Mercy experience and we want it to seem seamless to that customer.”

There are also several smaller and specialized non-aligned health care providers such as specialty physician and doctor practices, outpatient therapy providers, DME providers and home health agencies that must position themselves appropriately in the new health care landscape. “Consolidation, and not just hospital/physician relationships, is going to continue because the driver for that is not just market forces, but customer demand for a simpler navigation of all this complexity,” commented Mr. Britton. He added that, “if you can create the majority of the continuum, in a consistent brand experience, with an ease of access in a vibrant sense of responsiveness to the patient, there will be winners and there will be losers as a result. Those who cannot, or don’t think about it like that, may not survive this wave of change.”

The providers that are waiting for the ACO or Value NetworkSM to reach out and initiate contact are at major risk for not being at the table when the final place settings are set. “I’d never advise anyone to just sit around and wait. I think they have to make a choice of who they relate to the best, and who they align with from a culture and a value perspective. Similar to the ABCs of Value NetworksSM described previously,” said Britton in reference to the March 2012 St. Louis Medical News article “The ABC’s of Value Networks: Where Do You Fit In?”

He further indicated, “there’s no magic answer to it, but if you can not substantiate a hard to repeat competitive advantage built over years through investment of capital and intellectual property, I think you should be stepping back and saying ‘what’s your strategy?’ I don’t think it’s to keep doing the same thing.”

As mentioned, there is a lot of uncertainty in the marketplace especially around the outcome of the PPACA. If there is concern over what to do next, reach out to an appropriate resource, including trade associations, other engaged providers and the right professional advisors for guidance. However, there is a great opportunity to develop a new service delivery model. As Britton concluded, “there are people that are frightened by all this, but I wish they would flip this on its head and see what an amazing opportunity this is. The American health care system has many things to be proud of, and some that we shouldn’t be very proud of, but this is a chance to really fix that. If you stick your head in the sand and wait to see what everybody else does, you will be left behind.”

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