The healthcare delivery system of the future will require efficient networks of care focused on promoting prevention and offering treatment in the most cost-effective venues. But some recent data suggest executives may be hearing only the part of the message that pertains to creating networks.
McFaul & Lyons, an operational consulting firm, recently looked at efforts by integrated delivery networks to consolidate clinical services. Most of the networks in the survey date their birth to 1993 and have quickly moved to consolidate centralized accounting and materials management activities. But most are failing to consolidate clinical services, except for laboratory.
Eliminating redundant services is one of the key ways to wring cost out of the system. (The other is changing physician practice patterns, which ranks as one of the most difficult challenges known to civilization.) Yet, the sixth annual Linc Anthem Hospital Capital Survey shows that while 56% of the 644 surveyed hospitals cut staffing levels in 1994 and 71% cut operating expenses, 23% added services-no doubt in an effort to attract managed-care contracts.
Finally, the consulting firm Ernst & Young surveyed 189 physician-hospital organizations set up jointly by providers to help direct patients in a managed-care environment. As reported in our March 20 issue, the PHOs are primarily focused on gaining access to covered lives and protecting market share. But they have few resources to manage financial information, track utilization, conduct marketing or manage relationships with providers-components that are key to becoming an integrated delivery system.
Savvy executives may fear mega-HMO consolidations. For example, the WellPoint Health Networks/Health Systems International combination has the potential to dominate the California marketplace, swallow other plans and expand ties with other Blues plans farther east. But establishing a PHO as the fad du jour is not the solution. Provider organizations that want to succeed in managed care must prepare to eliminate the middleman and offer direct contracts with employers under which they accept more risk-and win more cash and control.