Health care is moving at the speed of light, and for many health system CEOs that requires a need for agility to tackle what's now and what's next. Deloitte recently surveyed 20 CEOs from large health systems across the country to uncover what's top of mind and how they are moving forward in an uncertain – and sometimes challenging – market.
While none of the key themes emerging from our interviews around funding, value-based care, talent, and technology have really changed since we last spoke with health system CEOs in 2015, the urgency certainly has. Instead of talking about their 10-year plans like they did two years ago, these CEOs are now concerned with what's happening now, and what might happen with Medicaid tomorrow. Many top concerns are compounded by uncertainty around the new administration, Congress, and the future direction of federal health care policy.
Top concerns among health system CEOs include:
- Preparing for potentially changing Medicaid reimbursement models and other policy issues
- Implementing population health and value-based care
- Maintaining or improving margins
- Recruiting and retaining top talent, including health care leaders
- Keeping up with evolving technology and cybersecurity risks
- Adapting to changing consumer demands and expectations
I'm not surprised health system CEOs are concerned about policy and federal funding. The debate around health care reform has dominated the news cycle since January. However, despite the uncertain outcome and impact of Congress's health care reform efforts, there are, what I call, “no regrets” pursuits that health systems and hospitals can consider. These include:
- Integrating business vertically
- Triaging patients to direct them to the appropriate level of care
- Reducing cost and inefficiencies across the system
As we know, health care is changing. For years, there has been little incentive for hospitals to direct patients to – or coordinate with – step-down or other less expensive settings of care. But now that is changing. Government payment models such as those promoted through the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), along with commercial value-based reimbursement agreements, are helping push many hospitals to reconsider their relationships with other health care stakeholders.
Depending on a hospital's patient population, it might make sense to vertically integrate with other health care partners. This could include payers, post-acute care facilities, and physician practices. If revenues aren't going to increase, hospitals and health systems may need to think about new revenue streams. An integrated care delivery system can help coordinate care across the continuum and track patients more efficiently.
Another strategy health system leaders could consider would be to implement stronger triaging systems that help direct patients to the most appropriate care setting. If a hospital or health system is vertically integrated, and owns or partners with urgent care clinics and/or physician practices, it can refer patients to those settings rather than providing care in the emergency department (ED), which can cost thousands of dollars per hour to operate. If an increasing number of uninsured patients come to the ED – and hospitals anticipate more uncompensated care – there is likely a financial incentive to actively direct some of these patients to a lower-cost and/or more appropriate care settings.
Though many health systems have looked for efficiencies around the margins of providing care, they now likely need to find greater clinical efficiency. They might need to rethink how care is delivered and at what cost. Generally, reimbursement is not increasing in the government or commercial sectors. As many hospitals continue to take on more risk, it will likely be important to deliver care as efficiently and effectively as possible. Though many health system CEOs have found new revenue streams through the acquisition of physician practices and other hospitals, they might not yet understand how to operate as a system. Hospitals within a health system sometimes continue to operate independently of one another rather than tapping into their synergies.
Though the health care debate is ongoing, and the future of the Medicaid program is unclear, there are strategies that health system CEOs can pursue today. Regardless of what happens with Medicaid, government and commercial payers are likely not interested in paying hospitals more than they already do. Looking for ways to vertically integrate, triage patients, and reduce inefficiencies can help prepare hospitals for a value-based reimbursement system. Health system CEOs should consider how to deliver care to patients in the most cost-effective way possible. The organization leaders that figure this out first will be the ones shaping the future of health care, and those health system CEOs will sleep much more soundly.
Read more from Deloitte's 2017 Survey of US Health System CEOs