Business Consult | The economic foundation of healthcare is shifting. We are migrating toward a value-centric payment system in which organizations must acclimate to economic rewards that rise and fall with care quality, cost, and access—not just volume. Determining how to successfully navigate this transition is one of the greatest challenges that health systems and providers currently face. To thrive in this value-based world, hospitals and physician groups need to work together to become optimally (1) integrated, (2) scaled, (3) rationalized, (4) informed, and (5) responsive. This column introduces the key attributes of successful value-based enterprises, and subsequent columns will dive deeper into the implications of these five attributes for CV service lines and cardiology practices.

Integrated

While care delivery has historically been segmented, truly integrated systems break down silos to promote clinical, financial, operational, technological, and cultural alignment. The transition to value-based care hinges on an organization's ability to shift its focus from acute care delivery to population health management. While much of this focus is on primary care, specialty care plays a key role, particularly for CV services that 1) are significant revenue/expense drivers for hospitals, and 2) have begun driving innovative reimbursement methodologies among payor and employer networks. When effectively achieved, clinical and financial integration produces strong physician-hospital links and coordinated systems of care, resulting in improved patient outcomes and greater organizational performance. Integration requires an organization-wide commitment to improving care quality and financial performance by aligning governance, infrastructure, and incentives across key service lines and care settings. Although the recent trend in cardiology employment has done much to align hospitals and cardiologists, the CV care continuum spans a number of non-cardiology-related services (e.g., skilled nursing) that necessitate highly coordinated care pathways.

Scaled

Scaled systems are able to support clinical and financial imperatives in ways that individual organizations or provider groups cannot. Cardiology groups need to achieve minimum economies of scale to support the various subspecialties that are part of a modern CV care continuum. For instance, new and innovative technologies (e.g., TAVR) are often made available first to centers with the highest volumes, giving these systems first crack at new value-driving capabilities. Systems that are able to attain and leverage minimum economies of scale have a greater capacity to improve quality and efficiency while driving down costs through the volume of care provided. Scale can be achieved through a variety of vehicles, including mergers, acquisitions, partnerships, affiliations, joint ventures, comanagement agreements, network formation, and participation in accountable care organizations, to name a few. Of course, size and scale do not ensure efficiency. Physician stakeholder involvement in exploring and executing alignment strategies is crucial for the success of these arrangements.

Rationalized

Consolidation is creating systems with overlapping markets and services. To mitigate redundancies and better coordinate services, systems are taking a more critical look at the distribution and utilization of their health services across given markets and, when warranted, reconfiguring and/or closing services. Rationalization takes many forms, but the ultimate intent is to optimize resources while providing high-quality care in the most efficient manner possible. Yet, discussions around rationalizing services, while increasingly necessary, can arouse various financial, operational, strategic, and political issues that organizations prefer to avoid. The complexity of these conversations, however, should not deter them from happening. In fact, discussions around rationalization strategies are of even greater importance in the face of declining patient volumes in some services (e.g., CABGs) and mounting pressures around quality and cost-containment.

Informed

Now that data is more ubiquitous than ever before, healthcare organizations run the risk of D.R.I.P., meaning data rich, information poor. Informed health systems and provider groups not only possess the infrastructure to manage a continuous flow of data, but they also convert this data into actionable information to drive critical organizational decisions. Hospitals and provider groups are under intensifying pressure to devise and execute innovative care delivery strategies, develop high-performing provider organizations, integrate clinical services across the care continuum, and manage risk effectively. Attempting to meet these demands without possessing the requisite information and a clearly defined strategy for using this information will be a futile exercise. Conversely, organizations that invested in business intelligence and other analytics a few years ago are enjoying more confident decision making and reduced frustration.

Responsive

Uncertainty makes it difficult for organizations to be responsive. However, taking a "wait and see" approach to change is not a strategy. In the value-based healthcare environment, leading systems and cardiology groups will anticipate and be responsive to change, as well as be willing to accept risk. Further, they will demonstrate an understanding of dominant trends and market dynamics, empirical data, and qualitative insights from internal and external stakeholders. This enables executive and physician leadership to confidently make timely and confident decisions regarding CV services despite lingering uncertainties. Systems and providers that are focused on value don't simply brace for change; they harness change and use it to drive their organizations toward the fulfillment of immediate and long-term goals.

The shift to value-based care is an attempt to better align healthcare costs and quality across all systems and services. How well organizations and providers make this transition will be highly variable. However, in order to thrive in a value-based world, health systems and physician groups need to work together to design and execute strategies to become optimally integrated, scaled, rationalized, informed, and responsive.

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Article written by Katy Reed and Jason Peterson. Reed is senior manager and Peterson is a manager for ECG Management Consultants, Inc. For more information, Katy can be reached at kreed@ecgmc.com, and Jason can be reached at jpeterson@ecgmc.com.

Keywords: CardioSource WorldNews, ACC Publications

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