Ten existential questions will make the difference between stumbling into the future and thriving
The questions have changed. The key strategy questions that the C-suite must be asking—and getting actionable answers to—are different now than they were in the past, even from what they were last year. Most of today’s health care CEOs and C-suite leaders are missing many of the key questions they need to ask to drive strategy now, this year, this budget, in order to survive the next three to seven years. Which ones are you missing?
A New Mind-set
Today and for the next few years the weather of this industry will be dominated by pervasive, discontinuous change. Structures, revenue streams, relationships of every level: All are shifting in fundamental ways. Specifically, the weather will be driven by:
- invention and propagation of new business models;
- shifting risk onto both the provider and the patient, accompanied by building of new risk-based relationships, contracts and alliances;
- smart primary care coming to the fore as the foundation of health care, driving most business models;
- digitization and automation going wall to wall and beyond the walls—accompanied by powerful new info-capacities, from “big data” strategic analysis to new ways of reaching and bonding with customers; and
- a striking new need for efficiency and effectiveness in response to rapidly rising demand as the baby boom ages, the baby boom health care workforce ages and disengages, and the newly insured increase their use of health care facilities.
Most of these factors, except the very last, are not dependent on the health care reform act, and will not change much if the act is altered or set aside.
Here are 10 strategic questions. There are lots of questions you can ask at the strategic level, but these 10 stand out as existential questions, the ones that, unasked or poorly answered, could cripple your organization, narrow your options and threaten your continued viability. So we will call them “the X questions”—X for the Roman numeral 10, for the existential nature of the answers, and for the key “X factor” role they will play in your future. If you are not asking these questions, asking them seriously, not rhetorically, in a venue that searches for answers that result in actions, you and your organization are flying blind into unknown territory.
The X Questions
1. Smart primary care: What would it take to derive the majority of your income and profit from primary care in three to five years? What would that look like? What capacity would you have to buy or build or ally with to do that? What structure would make primary care a profit center instead of just a source of patient flow for the real profit centers? Do you recognize the elements that make a primary care practice “smart,” lean, effective and a true “medical home”?
2. Risk: Are there definable populations in your market whose health costs could be driven down by improving their health status? While there are thousands of examples out there, focus on just this one: In the last 10 years, through basic, conservative preventive measures, Kaiser drove down the incidence of heart attacks in its members by 24 percent; it reduced serious heart attacks requiring hospitalization or surgery by 68 percent. Those are big numbers. Kaiser is financially at risk for the care of its members. You can probably imagine how the return on investment for preventing all that suffering and death looked on Kaiser’s bottom line.
These definable populations could be populations defined by payer (all the Blues members in your area, for instance, or all the members of your own health plan). Or by disease process (all the diabetics), by living situation (everybody in a particular retirement home), by income level (all the lower-income people in a particular part of town), by life stage (all the mothers of young children) or even by occupation (all those dock workers with the bad backs). How could you put your organization at risk—therefore at profit—for those particular health costs? Who might pay you to care for them? In what way might they pay?
3. Hotspotting: Eighty percent of your utilization and costs, typically, come from 20 percent of your patients; half of the utilization and costs come from 5 percent of your patients; and fully 20 percent to 30 percent come from the top 1 percent. Some of those patients just got hit by a bus or contracted a swift-moving cancer. This is their moment to need a lot of attention. But of that highest-spending 1 percent this year, 14 percent will still be in that category next year. Of the top 5 percent, the ones who use half of all the resources, nearly a third will still be in that category next year. Of the top 20 percent, those who use 80 percent of all the resources, more than half will be in that category the next year.
These are typically the long-term chronic patients who are not getting the real care and attention they need to stabilize their condition and keep them out of the ER or the hospital. If you are going to be at risk for some population, do you know who that top 1 percent or top 5 percent of resource spenders are? Do you know how to find out? Do you have a clear idea how you could lower their costs by serving them better?
4. Alliances, customers, partners: Who is going to work with you? Who will share the risk and the benefit of these new risk environments? Are there competitors—such as physician groups, specialty clinics, urgent care clinics or retail clinic chains—that are now potential allies? Are there employers in your area with whom you can work directly, either to be at risk for some aspect of their employees’ care (behavioral health, for instance, or spine care, or all primary care in a workspace clinic)?
5. Teams: What sort of clinical teams will you need to build to take on this kind of risk? What will make those clinical groups into teams, and not mere collections of clinicians with their own agendas? In what ways can the way you pay those clinicians tie them directly into the organization’s goals for each group of patients? How will the business structure, patient flow and workflow have to be different from what you have now?
6. Definition: How will the definition of “care” expand beyond your traditional inpatient and outpatient “sick care” concerns when you take on such risk? For instance, how can you affect outcomes and costs by putting behavioral health professionals into the care flow early and often? Consider this: The two top predictors of an individual’s health care costs are not physical. They are not body mass index, blood pressure or blood sugar level. They are stress and depression. Are you going to put yourself at risk for those health care costs without trying to do anything about those factors?
7. Setting: Where will such care have to be delivered? Through what kind of channels, and in what kind of environments? If your survival depends on managing the health risk and costs of populations, how do you bring the care to them? How do you snuggle up to your customer? What are the technologies that could put your relationship to your customer in her purse, on her desk, in her house?
How will your physical plant and built environment have to change? As you contemplate building, renovating and repurposing in a new risk-based environment, you will have to focus not only on getting closer to your customers, but on building a safer, more efficient and effective environment where your clinicians can work with them. How conversant are you and your executive team with the principles of evidence-based design championed by the Center for Health Design and encapsulated in its certification program? Are your architect and interior designer certified?
8. Benchmarking: Are there organizations of your size and level of complexity, in markets like yours, that have done something like what you are navigating, that you could benchmark? How could you best find them? How could you best work with them?
9. Digitizing: Everyone is gettin’ digital at once, but there is no mantra that makes it all work. It can be done seriously badly, even when working with market-leading companies. You can cripple your organization’s workflows, cut efficiencies and make your clinicians hate you—at the same time that you pay out checks as much as 10 times larger than you need to.
How much do you and your executive team actually know about the changing horizon of information capacities? How seriously have you studied it? Does that knowledge simply pad out your strategy, or does it drive it? How satisfied are you that the strategy and the company you are choosing to lead your digitization drive are the best for you? Or are you and your CIO simply buying the security of the imprimatur of a major company? How aware are you of the new technological capacities arising and being showcased in the Health 2.0 environment, in the open source movement or, in primary care, in the Ideal Medical Practice movement?
In your enterprise-wide digitization, are you using OpenVista and the Resource and Patient Management System (RPMS), the open-source software suites available for free from the Veteran’s Administration, one of the oldest, most tested and largest digital implementations in health care? If you are not, how good are your reasons?
Consider this: A couple of years ago West Virginia University Hospitals spent about $90 million to install commercial health software from a major brand-name vendor in seven hospitals. About the same time the West Virginia Health and Human Resources Department installed OpenVista in eight hospitals. The installation and customization by a private vendor in all eight hospitals cost $9 million. Are we to assume that the university system got 10 times the value? Why would we assume that?
In taking your smart primary care practices and other physician practices electronic, have you considered the free or cheap software-as-subscription packages such as Practice Fusion or Doctations? How strong are your reasons for spending money you don’t have on systems that cost far more?
Kaiser recently rebuilt its entire electronic system (and by all reports quite successfully), to the tune of $4 billion. Top managers involved 160 physicians from all parts of the system in the re-design, not just once, but repeatedly, as a task force. This really helped not only in building a good system that actually works for the clinicians, but in getting the doctors to really use it to advantage once it was implemented. How much have you involved your doctors in designing your system? Or is it just, “Oh, we have a doc on the committee”?
Ask yourself some functional questions from a doctor’s point of view, such as: Are the accounts and records transaction-based or patient-based? When an ED patient is admitted, does that become a new record? Or is all the clinical information on that patient brought forward as part of a continuing, longitudinal patient record? Can it display, for instance, variations in blood albumin level over time as a single graph? Or does the clinician have to burrow through dozens of transactional records to write down the data, then visualize it in her head? Can the system accept data from other hospitals’ systems, or from legacy data sources within your own system? If not, why not, when translational software is available?
If you don’t know the answers to these questions to a close approximation of on-the-ground clinical reality, you need to find them. They could be killing you.
10. Healthy communities: If you are at risk for the health of a population, what could you be doing to help members of that population be healthier? The least expensive way to deal with disease is to prevent it. Many prevention methods range far beyond the medical environment. They have involved everything from a bicycle helmet campaign to better day care centers to traffic lights, community gardens, yoga classes and healthy cooking clubs. Do you know what the key leverage points are in the community you are at risk for? Have you asked them? Have you done the community health risk assessment mandated in the reform law?
The amount of actual funding involved in partnering to build a healthier community can be so low that one CFO described it to me as “lost in the noise” of the budget. In a risk environment, the return on investment can be very high. The experience, the data, the expertise in improving the health of populations is now deep, wide and accessible, not least in the AHA’s Healthy Communities Fellows and its Association for Community Health Improvement with its risk assessment toolkit; and in the comprehensive turnkey software and databases available from the Healthy Communities Institute of Mill Valley, Calif.
Confronting Your Risk
In the environment that is developing right now, with the shift in underlying economics, demographics, technologies and business assumptions, every organization in health care is at risk of slowing its development, crippling itself or even falling by the wayside. At the same time, tremendous new opportunities are opening up, often in directions we have never had the possibility of even thinking about.
This is the time to ask and answer the fundamental strategic and tactical questions, the X questions.
[Originally published in H&HN (Hospitals and Health Networks) Daily]
By Joe Flower