BURNING PLATFORM FOR CHANGE — There is a revolution going on at Singing River Health System (SRHS) in Mississippi.
SRHS is a not-for-profit healthcare organization based in Jackson County and consists of two hospitals and eight community medical clinics located throughout the Gulf Coast region. With approximately 2,600 employees and more than 300 physicians, SRHS is one of the area’s largest employers.
As an organization, SRHS is well aware of the forces driving massive change in the practice and profession of healthcare. From the politics of the 2010 Affordable Care Act (ACA) and its impact on the way Medicare and Medicaid will reimburse healthcare systems to the emphasis on evidence-based medicine supercharged by technology and Big Data, it has become clear that in the near future healthcare in the United States will be provided in a very different manner from the way it is today. Accordingly, led by its employed and independent physicians, for the past six months, SRHS has been in the process of reshaping itself to get a jump on that future.
In April 2013, 60 physicians, executive administrators and nurses at SRHS came together to discuss what already has been done, what remains to be done and their vision of what the future of SRHS will look like.
In this article, FTI Consulting Senior Managing Director and Chief Medical Executive Phil Polakoff takes us inside SRHS to look at what is going on and to hear its people explain why this $450 million health system is moving more quickly than most to integrate its clinical delivery systems.
Lighting the Match
Phil Polakoff, M.D.: Chris, why implement clinical integration and why now?
Chris Anderson, SRHS CEO: The need for us to embrace a new future became vividly apparent to me about a year ago. A company came to a town and built a leisure facility near us that will employ 3,000 people. Its CEO called us about providing healthcare for its employees. He was very clear about what he wanted: His company self-insures, and he was very unhappy that every year he was paying for every procedure that hospitals and their physicians deemed necessary, driving his costs up year after year. He was displeased with the lack of fiscal transparency and the fact that he had little control over those rapidly rising costs. He wasn’t impolite, but he was angry. He said to me, “I’m just not going to do this anymore!” He offered: “I’ll pay you a set amount of money a year if you take the risk, own the problem and take it off my plate.”
But I couldn’t. Our system, like almost every other in the country, operates today on a fee-for-service basis. Our independent physicians and other suppliers charge for the services they decide the patient needs. As CEO, I have no way to estimate or to manage costs within a fixed budget. So I couldn’t help him. I never want to be in that position again. Next time, I want to be able to say, “We have the answer you’re looking for.”
Cracks in the System
Chris Anderson, SRHS CEO: Phil, you already know that in the United States, healthcare now consumes a bigger proportion of gross domestic product than it does in any other developed country. And measured across the population as a whole, patient outcomes in this country — for example, infant mortality and life expectancy — are not any better. In many instances, they’re not as good.
But although most patients know the system as a whole doesn’t work well or, in fact, think it’s broken, these same patients normally believe their physician does a good job. Physicians generally agree they do a good job and presume there are other physicians who do not.
Of course, there are some physicians (as well as hospitals) that don’t do as good a job as they should. But that’s not the root of the problem. The basic problem is that large parts of the U.S. healthcare system are so fragmented that even if every individual physician and hospital provided the best possible service as efficiently as they could within their particular specialty and geography, patients still would be underserved, and the service would continue to cost more than it should.
To provide better service at a lower cost and to be able to shift the risk of unpredictable costs from employers and insurers and manage it for them, we have to integrate our clinical processes. I’ll let Pete Avara, M.D. and Randy Roth, M.D., Co-Chairs of our Clinical Integration (CI) project, explain.
Mending the Cracks
Randy Roth, M.D.: Clinical integration is the process by which we bring all the parts of the clinical process together to work for the benefit of each and every patient. Every physician today thinks he or she is patient focused. But he or she can’t be, not properly, because a doctor usually doesn’t have full visibility into a patient’s history and conditions. Also, a patient’s well-being often depends on other physicians and treatment programs over which no single physician has influence.
Getting ourselves in a position to have a complete picture of every patient, and being able to address his or her overall well-being, is a huge task, and there are many parts to it. In our first six months on this journey, we have defined some of the basics, at least at a high level. They include:
• A quality-of-care program that will define how we treat patients for different conditions, what we measure and the outcomes we pursue.
• A physician-led organization — the Clinical Integration organization — that will enable all our participating physicians to work toward common goals of lower costs and better outcomes without contravening antitrust legislation.
• An information technology infrastructure that will enable us to get a full picture of every patient at any time and track our performance on multiple measures, individually and as a whole.
• Contractual arrangements that will make it attractive and legal for physicians to participate and will encourage the outcomes we need.
• A change-management program that will help us navigate the many hurdles on the journey.
Pete Avara, M.D.: We started this project in earnest six months ago. We assembled a team of 26 physicians — independent as well as health system employed — to thrash out the details of the future organization. We divided ourselves into work streams: one each for infrastructure, quality of care and change management, and we’ve had 17 design sessions so far. The entire design process will take 12 months. Now, halfway there, the work streams have constructed the basics for their respective solutions, and, on April 16, we came together to share our recommendations with one another. Of course, the recommendations themselves are acutely interesting to all of us: What we would agree to would determine our future. But almost equally as fascinating to us was the passion in the room about why we’re doing this and how we’ll overcome the many obstacles on the way. I’ll let Chris Morgan, our Vice President of Clinical Integration, talk about some of what went on that day.
Chris Morgan, FACHE: In the future, the core of SRHS’ clinical services will be a physician-led clinical integration organization. Physicians will be required to use evidence-based protocols endorsed by the CI organization in order to participate in the SRHS system. Physicians always have had great professional independence in their decision making, even those who are employed by the health system, as well as those who contract independently. Some physicians worry about how this will affect their professional discretion.
Randy Roth, M.D.: For example, I’ll tell you a story about an incident that happened in this hospital. Last month, we had a patient arrive in the emergency room for whom we could have given a simple and effective treatment. But the attending physician ordered and administered a complicated and expensive one. It wasn’t the wrong treatment, but it was neither efficient nor necessary — not for the patient nor for the party paying for it. The pharmacist called me in a state of agitation, and I confronted the physician. He (or she) said, “But I didn’t want to take any chances — I wanted to throw the book at this patient.” Well, if we’re going to be throwing books, we should be throwing the Standards of Care book. By adhering to evidence-based protocols, we will avoid these incidents where a physician’s intuition occasionally leads him or her astray.
Chris Morgan, FACHE: Under the new system, physicians will have comprehensive information at their fingertips about their performance both as a group and as individuals. They will use the data to identify underperformance. Some physicians expressed concern about that. Here’s what some of our doctors said in response.
Brian Persing, M.D.: We need data on the individual physician’s performance. Most physicians in this system do a great job. But not all of us do a great job all the time. Intuitively, we know that. We know there probably is underperformance that we’ve tolerated for too long. But absent a serious incident, we haven’t had data to support taking action. Under the new system, we will have the data, and we’ll also have more options. Until now, if we ever needed to call something to a physician’s attention, it was in a peer review of a sentinel event. Under the new system, we’ll be able to detect patterns of behavior earlier. We’ll be able to choose how to respond. It could be education, remediation or, ultimately, exclusion, in that order. No physician who cares about improving quality has anything to fear from being measured.
Eric Washington, M.D.: Why shouldn’t we use the data we already have? Surely we have enough data in the system to identify any underperformers and, thereby, allow them an opportunity to improve their outcomes. We owe it to them to share this information and let them react to it before we would consider excluding them from the new organization.
John Marren: Typically, we recommend an educational track to improve performance and invite all our physicians to participate. This recognizes both the impact of the perverse incentives in current governmental and private payers’ reimbursement programs (where the more you do, the more you’re paid, regardless of the outcomes), as well as the fact that physicians who currently may be categorized as underperformers may improve in a quality-oriented program supported by data.
Brian Persing, M.D.: It will take some months before we have complete and reliable data — perhaps a year or two. But in view of the fact that we have worked for decades without the data, that’s a relatively short time to wait.
Randy Roth, M.D.: Under federal law, all physicians will have to report patient satisfaction within 24 months. More measurement and greater visibility of procedures and outcomes are going to happen. It’s inevitable.
John Weldon, M.D.: Universal measures will be a critical part of helping us work better together as a whole. As professionals, we’ll still have the responsibility and freedom to make the best decisions we can on behalf of our patients. But instead of those decisions affecting just our particular practice, they’ll impact the whole tribe — SRHS and everyone who works for it. We’ll have a wider responsibility to our colleagues, and that will help all of us do a better job for our patients.
MANAGING THE PACE OF CHANGE
Chris Morgan, FACHE: For most physicians, this seems to be happening very fast. Nearly everyone always has worked on a fee-for-service basis and enjoyed considerable professional independence. Six months ago, few of us had ever heard of clinical integration or, if we had, we really didn’t know what it meant. And now we’re plunging headlong into a different world.
Randy Roth, M.D.: I have a friend who works for a system in Knoxville, Tenn. One of its customers already has changed suppliers based on outcome data — how well services are delivered and patients are served — as opposed to costs.
Chris Anderson, SRHS CEO: We might be ahead of other health systems. In most cases, I think we are. But we aren’t the front runner when it comes to payers or patients. They already can see how well we are doing. For instance, if I search Google for a particular emergency room physician, I can find 43 sites with patient reviews of his [or her] work covering 15 clinical categories. In some respects, patients know more about us than we do. Do you realize there are 10,000 healthcare apps in the Apple Store? If we don’t get smarter about our own business, customers and patients will leave us behind.
Many people point to the Affordable Care Act as the cause of this change. But it really isn’t. The ACA isn’t leading the market, it’s following it. Payers — insurance companies and large employers — already were putting enormous pressure on us and on other health systems to change from fee-for-service toward fee-for-outcomes. Payers have been doing so because the cost of operating the way we do today is bad for employers, and, frankly, it’s a drag on our competitiveness in the global economy. We can’t fix this soon enough.
Pete Avara, M.D.: This does sometimes feel a little too early and a little too fast, but I don’t believe it’s either, even for those of us who are independent and who might have a little more to lose. The world of healthcare provision is changing, and we have to change with it. It’s not easy, and it is going to take time. But if we don’t do it now, I’m sure we’ll be playing catch-up later.
COSTS AND BENEFITS
Chris Morgan, FACHE: One of the things we’re concerned about as a health system is how quickly this will become financially viable. We’ll certainly have to invest — in the new CI organization and in information technology, among other areas — before we’ll see a return.
Chris Anderson, SRHS CEO: We believe we’re ahead of the curve in doing this. For instance, although we’re penalized if our readmission rate is above the national rate — a 1 percent reimbursement cut by Medicare for 2013 — readmissions still are more profitable for SRHS than nonreadmissions. But does that mean we shouldn’t want to reduce readmissions? No, of course not. So my message to our physicians is: “You figure out how to raise the consistency and quality of our care, and we, the health system management team, will figure out how to make the financials work.” Even if it’s tricky in the short run, in the long run, it’s the only right thing to do.
PHYSICIANS AND PATIENTS IN IT TOGETHER
Chris Morgan, FACHE: One of the biggest issues for everyone is how much they will contribute vs. how much they will benefit — sometimes expressed as What’s in it for me? The new CI organization has an opportunity to engage physicians in key leadership roles even as SRHS funds it. But the organization also has to balance the needs of independent physicians with those employed by the health system. How that will work is a matter of concern to many.
Dawn Hansen, M.D.: We already have a proposed board for the CI organization that is predominantly composed of physicians. So while SRHS will fund the financial equity, physicians are contributing the intellectual equity that will drive decision making. Also, the makeup of that physician group will reflect the 70/30 independent/employed physician population SRHS has today.
Brian Persing, M.D.: The main benefit of the CI organization will be its focus on the patient. I believe once we have that, physician/health system politics will become insignificant. I’m a health system-employed physician today after years as an independent physician so I can see both sides of the issue. But I don’t think my status in that regard would have any significant bearing on how I would think about my role if I were on the CI organization board. The structure of the board, with a predominance of physicians over administrators, is very appealing and speaks to the need for physicians to take leadership for quality care.
Randy Roth, M.D.: Brian’s right. Whatever the details of the new system, it’s going to move the focus from what’s in it for me to what’s in it for us. I think that ultimately will overshadow those other details that we sometimes worry about today.
What Lies Ahead
Phil Polakoff, M.D.: Chris, SRHS has set off down this road, and it’s already traveled a long way. What are some of the challenges that lie ahead?
Chris Anderson, SRHS CEO: There are a lot of issues we’ve yet to deal with; for instance, how we will fund everything in the face of declining system revenues, especially here in Mississippi, given the state’s reluctance to take federal money to fund changes in Medicaid. Also, how much and how soon do we involve our payers — the insurance companies and large employers? Should we involve them now, at an early stage of design when they can see all the imperfections and, at the same time, can contribute to fundamental decisions? Or do we wait till later, when we’re more presentable but at a point when some things already will have been set in stone? As you know, there are many other issues we’ve yet to resolve, but there’s no turning back now.
Phil Polakoff, M.D.: Yes, in the next phase of the process, the physicians will refine and finalize the business model; decide which performance measures to monitor; help choose the technology platform; create a detailed plan to communicate with physicians, staff and the community; and identify teams and leaders for the implementation. There’s lots of work to be done, but the overall direction is clear.
Pete Avara, M.D.: I have no doubt we’ll get this done. For me, personally, and for many of my colleagues, it has to do with helping patients. We went through med school because we wanted to help people. Three years out of school, it’s easy to find yourself narrowly absorbed in your corner of the system, whether that’s optimizing its financials or the patient experience. But if we each expand our horizon to focus more on the whole, I’m sure we’ll end up improving both, especially the patient experience, which is the essential purpose of everything we do.
Randy Roth, M.D.: That’s right. And we want to get to that place faster and better than our competitors so we can show people we’re a preferred choice as a healthcare provider — that our performance is higher, for instance, than our control group or the national averages. By starting this process six months ago, we’re already ahead. We plan to stay there.