A group of senior healthcare leaders and I recently discussed the transformation from volume-based care—in which providers are paid based on the number of services they provide and procedures they perform—to value-based care, which rewards us based on the health outcomes of our patients.
This transition represents a huge change in incentives for health systems—encouraging hospitals and physicians to provide high-value, evidenced-based care—determined by comparing clinical results with the cost of care.
Our discussion was held at the Intermountain Healthcare Leadership Institute and I’d like to share some key lessons learned from it, specifically for leaders embarking on the transformation toward value in healthcare.
Value-based organizations have two objectives: Keeping people well and providing high-quality care when they’re sick. Recognizing this, Intermountain recently reorganized into two basic businesses: Our Specialty Care Group includes hospitals, specialists and inpatient services. Our Community-based Care Group focuses on keeping patients well by providing access to care closer to home and through the lens of prevention and wellness.
We’re increasingly focused on moving upstream to prevent and manage disease. We’ve developed a model called Reimagined Primary Care that focuses on preventive care. It’s already generated a 60% decrease in hospital admissions, a 35% decrease in emergency department admissions and a 20% decrease in per-member, per-month costs.
It’s still too easy to make money doing the wrong things. The incentives in a volume-based healthcare system can easily lead to overutilization of services that may not be completely medically necessary. When transitioning to value-based care, there are more incentives for keeping costs down and keeping people healthy.
Change requires time and accountability. When facing major change, there’s wide variation in how long it takes to persuade good people to get on board. Clearly giving people the “why,” and the right tools, helps move them toward transformation. Providing data and requiring accountability are also crucial. Without them, there isn’t engagement.
Play as a team. If you have the right people around the table—both in terms of function and character—and if they bring a continuous-improvement mindset, you can solve any problem.
Encourage smart growth. Smart growth emphasizes population health and value. A major tenet of Intermountain’s growth strategy is to keep people in the least-restrictive, least-expensive environment as close to home as possible, so home-based services are increasingly important. By continuing to grow these services, you add new, dynamic people who bring experience from other organizations and provide opportunities for standout people within your enterprise to transition from hospital-based roles to those focused on ambulatory care, population health management and telehealth.
Evaluate staffing needs and maintain the balance between clinical excellence and affordability. Multiple health systems in the U.S. have made layoffs due to shrinking volumes and changes in payer cost structures. Some reports say 1 in 5 U.S. hospitals is in danger of closing. Staffing decisions must be grounded in safety, quality, experience, access and stewardship, in that order.
Understand that your customers are increasingly worried about cost. If you have insurance with a $5,000 or $10,000 family deductible, there’s a good chance you’ll never go all the way through it—which means many people are pure consumers all year long and very much aware of their out-of-pocket costs. Keeping charges affordable must be a top priority.
Not all leaders are transformational—and that’s OK. There are transformational leaders and leaders who sustain and optimize the status quo. In fact, both are needed. Good leaders have emotional intelligence and self-awareness. They have to make the tough decisions and implement them, and then own them when they mess up.
Having a sense of purpose and doing the right thing can provide healthcare leaders with immense strength and energy on the road to value-based care. The journey is necessary, and the destination is beneficial for healthcare systems, employees and everyone they serve.