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STRATEGIC TRANSFORMATION:

Ready. Fire. Aim.


The world of healthcare is transforming. We are living in two worlds fee-for-service and value-based revenue streams. Unacceptable quality and unsustainable costs are changing the game creating a greater urgency to react. The status quo is no longer acceptable and is the industrys biggest threat. Change will occur and the challenge is navigating the change through multiple market forces. Healthcare professionals need to know when to fire and where to aim their efforts in order to survive in this new world. The health care system is transforming from an environment that pays for volume of services, to a patientcentric system with a focus on quality, outcomes and patient satisfaction. As the game changes, the rules are being redefined with innovations and pilot programs testing new delivery and financial models. Significant investments are required in process redesign, performance improvement and enabling infrastructure including information technology and data for business intelligence. These investments are supporting coordination of care across the continuum to achieve the right care and service at the right time and place with the right experience at an affordable cost. Living in two worlds of Fee for Service and Value Based Reimbursement. Knowing when to prioritize and time investments, operational change and quality improvements to optimize revenue for capital funding in support of transformation. Optimize information technology investments. Utilize and expand EMR capabilities, exchange health information enhancing point of care decision making, and use of predictive analytics to target high-cost patients. Develop collaborative relationships and affiliations. Care coordination across the continuum is supporting new relationships with post acute care providers, social- based organizations and home care companies. Invest in process and people to fully optimize information technology investments. Clinical and operational excellence will require investment in people and redesign of processes. Reimbursement models and payment incentives need to be aligned. Performance measures and payment models need to be defined, aligned to process, measured, monitored and communicated.

Implications for providers

Today we are faced with uncertainty of where to aim, yet the need to fire is acute. Strategic and tactical investments are needed in people, processes, technology and data to best position the health system to meet the health needs of the community. All of this must be accomplished while achieving financial sustainability. The key is being in the game helping to shape the change rather than watching on the sidelines and letting the change happen. Leading the transformation requires a new way of doing business the status quo is the competition. New affiliations and collaborations are beginning to occur amongst and between health care providers, payers and community stakeholders. Until now, these stakeholders either have not been at the same table or have been on opposite sides of the table. Physicians, hospitals, healthcare providers and community leaders are beginning to collaborate on health issues that seek to improve health and health care while reducing the medical spend. While competition is important and will continue to occur, coopetition, learning where to compete and where to collaborate for the health of the community, is part of the new game. Thus, it is important to be part of the solution by shaping health policy, developing new health care delivery models, health benefit designs, and partnering with the community to address the social determinants to health. It is important to define and monitor key market drivers and triggers relative to your health systems strategic decisions. Ultimately, the leaders of health systems must decide how to proceed by leading, fast following or taking a wait and see approach. Put plainly, knowing where to aim and when to fire.

Transformation of our Health System


Complex Cultural change impacting all New collaborative relationships breaking down silos transforming from a fragmented to integrated system Trust is paramount Leadership is required Transformation costs money / Funding is required Data dependent Takes time Reimbursement is the catalyst and requires living in two worlds fee for service and value based balancing the timing of change Government does not have the budgets for bail out Cost shifting continues: Government to Commercial Payer to Individuals There will be winners and loser

A new way of doing business status quo is the competition

The goal is transformation towards a health system that establishes measurable aims of better health for the population, better health care for individuals and lower costs. Quality, cost, experience, and operating and financial performance measures are being redefined from which new delivery models of care and health promotion programs are being developed. This is supported by newly aligned value-based reimbursement models and health benefit designs. Supporting the change is data transformed into information and knowledge, impacting where, how, and when health care services are provided. Data is the new asset needed to understand current systems and outcomes that matter. Without data one does not know if changes in delivery and process improvements are making a difference. Historically, health entities were discouraged from taking financial risk, due in large part to a lack of transparency into data at a level of detail that reflects the risk.

Aligning Health Delivery, Payment and Benefit Program


MEASURABLE AIMS DELIVERY MODEL REIMBURSEMENT MODEL
Fee for service Care management Pay for performance, quality of care Bundled payment / episode of care Global budget Shared savings

HEALTH BENEFIT DESIGN


Narrow networks Copays / deductibles Incentive programs Subsidized health insurance exchange programs Benefits

Decrease IP readmissions Decrease avoidable IP admissions Decrease ER visits Increase quality (SCIP , Meaningful use, value-based) Decrease duplicate testing Reduce variation in care Improve health status

Patient Centered Medical Home Medicaid Health Home Care coordination model Patient engagement Health Coach, navigator, educator Information technology (EMR, HIE) Clinical best practice New provider and payer collaborations and alignments

Enabled by data as the new asset transformed into information

Deciding when to transform balancing improvement in quality with revenue streams and access to capital for investment requires a roadmap with prioritization of strategic initiatives that balance investment in finance, quality, processes and enabling infrastructure. Every health systems strategic roadmap will be different given the specific market drivers, financial strength, quality position, operational performance, and strength of the core infrastructure. The key is to focus and prioritize strategic initiatives. Thus it becomes imperative to make decisions on services such as buying, outsourcing, partnering with another community initiative, or not providing service. Does your organization have a strategic transformation roadmap that connects strategy with execution to deliver superior results? Strategic roadmaps are comprehensive and integrated. These tools prioritize the interventions and metrics required to achieve the desired results. The strategic roadmap: Provides a framework for management and communication. Identifies prioritized initiatives (what a health system wants to achieve), deliverables (what actions a health system is going to take) and performance measures (how a health system will know it is successful). Recognizes performance measurement as integral to balancing and prioritizing improvements in infrastructure to achieve the highest level of customer value that is financially feasible.

Strategic Transformation Roadmap


Who is driving your market? Government Payer Providers Competitors What are the financial drivers? Where will you increase customer value? FINANCIAL Know your current position Know the drivers

Market

Know your market

VALUE

QUALITY Know the metrics aligned to financial results today and tomorrow

Financial & Quality

Define strategic business initiatives Define measures of performance Deliver value (financial and quality)

How will we deliver clinical and operational excellence?

Process

OPERATIONAL & CLINICAL


Improve performance to achieve quality and financial measures

Infrastructure

What are the foundational building blocks to achieve value?

Invest in infrastructure to enable the organization

Where are leaders firing in positioning their health system for accountable health and health care? Summarized in the figure to the right are key initiatives health leaders are prioritizing. In addition, innovation will occur through workforce redesign and innovative technologies along the continuum of care. Health care and the promotion of health is shifting back to the home-based setting enabled by new disruptive information technologies. Where are health systems positioning themselves in this aspect of transformation? Are they part of the change partnering, investing and / or building new technology? Or, are the current health care systems lamenting the change and the impact it is having on their health organization? The challenge, and more importantly the opportunity, is ours to lead. Transformation with purpose, focus, transparency, communication and accountability will drive success. The ability to affect measurable improvements in the health of populations and individuals is our greatest asset. Change will occur supported by better health and health care delivery models, investment in enabling infrastructure of people, processes, technology, coupled with aligned reimbursement systems, transparency and leadership supported by a culture of accountability and trust.

Key initiatives in positioning for the future


Physician / Hospital / Post Acute / Payer / Community relationships - Market share - Quality - Population health management Payer relationships aligned with new revenue models and health benefit designs Provider relationships and community relationships along the continuum of care - Managing transition of care - Coordination of care - Sharing data Investment in outpatient services - Increase access - Align with core services Investment in information technology, business intelligence, process and people Performance improvement Collaborative relationships with other hospitals, healthcare systems, providers and community stakeholders

About us
Freed Maxicks Healthcare Practice is the leader in Upstate New York in providing comprehensive assurance and advisory related services to the healthcare provider industry. We assist a broad spectrum of clients including large multi-state integrated healthcare delivery systems, free-standing acute care hospitals, skilled nursing facilities, long-term care facilities, home healthcare agencies, physician practices, senior housing facilities, mental health clinics, hospice and more. Our services include traditional assurance services (financial statement, cost report and A-133 compliance audits) as well as a wide range of innovative advisory services that range from regulatory compliance matters to strategic planning and operations improvement. Our Upstate New York Healthcare practice of over 40 full-time professionals is augmented by our national resource capabilities.

For more information:


CAROL CASSELL Principal 716.332.2752 carol.cassell@freedmaxick.com

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