Making bigger measurably better: achieving value through systemness

Mergers and acquisitions have happened at an unprecedented pace the past several years, and health systems are bigger than ever. But many of these organizations are struggling to generate true value from scale with their current operating approaches. In fact, recent studies have shown that improved quality¹ and better operating margins² do not necessarily correlate with increased scale.

Why are so many systems having such difficulty making headway? Many are what you could call a “SINO”— a system in name only. They may have merged multiple facilities (some combination of acute, ambulatory and ancillary) into one organization. However, they aren’t effectively making decisions in the best interests of the whole organization, which can compromise their ability to improve quality, enhance experiences, decrease costs and generate growth.³

There is good news: Complex health delivery systems are finding meaningful economies of scale and other significant advantages by committing to an ambitious yet viable systemness strategy. What constitutes full commitment? It starts by understanding the “table stakes” of integration:

• Effective system governance and decision rights
• Centralization of corporate functions
• System negotiations with payers
• System supply chain and purchased services
• System rebranding

While these tactics certainly have benefit, they are really just the beginning. In a full commitment to systemness, you have to be willing (and able) to take on the more difficult work of integration:

• Service line and asset rationalization
• Clinical program consolidation
• Medical group integration
• Independent physician alignment
• Organizational redesign and incentive alignment
• Technology integration

It’s important to remember that being an effective system does not necessarily equate to “centralization.” Organizations that are able to capitalize on their system structure find appropriate balance in how they organize, structure and manage various aspects of the business at every stage of maturity. 

Leaders also need to recognize that achieving systemness is a journey that requires a purposeful strategy that evolves as the system matures. Early in the journey, organizations naturally focus on the operational aspects of systemness. As they advance, they strive to come together as an organization to deliver better clinical care and customer experience. More progressive institutions look to optimize care delivery and distribution across their population. Ultimately, leading systems aim for truly transformational change to deliver a different type of whole person care.

In a way, health system maturity is a moving target. You might just be starting out and primarily focused on consolidating revenue cycle operations across acute facilities. Or maybe you have already made meaningful progress establishing consistent productivity standards across your system. Now the task may be to engage your clinical workforce from multiple facilities to work together to reduce care variation. Or perhaps your telehealth capabilities are now advanced enough that you can reach into new geographies — and rationalize your footprint in others.  

Becoming a mature system is a difficult organizational undertaking that can only succeed if all stakeholders understand the value you are creating. How do you appeal to their needs and expectations? Put yourself in their shoes. As you develop your systemness strategy, consider the type of value it will generate for each of these stakeholders at every stage. So for example, an organization early in their journey might target delivering value to physicians by reducing the bureaucracy of delivery care. A more progressive system would do well to focus on how to deliver better care and outcomes as part of an integrated team with physicians.  

Health systems may fail to capitalize on the potential associated with system scale if they have not taken an outside-in view to factor in the value each stakeholder seeks. Absent this, system leaders may be unable to create a compelling vision of systemness for their internal constituents who are ultimately the ones who have to effect the change. Or, just as detrimental, they may focus effort and resources on factors that are not valuable to their stakeholders.

Understanding systemness’ key milestones—and the value they bring to stakeholders—can help you evaluate where you are today, and where you could be tomorrow. This insight is a critical starting point for developing a meaningful system-wide strategy to deliver patient-centric, high-quality care across the system in a way that maximizes value for all. 

Read this perspective to learn what you must do to advance systemness within your organization.
 

Optum is a leading information and technology-enabled health services business dedicated to helping make the health system work better for everyone. We deliver integrated solutions infused with OptumIQ^TM, our unique combination of data, analytics and health care expertise, to help modernize the health system and improve overall population health. Explore more at Optum.com/AdvisoryServices