Recently, the Huron Consulting Group released its report, “Leading Through Transformation: Top Healthcare CEO’s Perspectives on the Future of Healthcare.” The report included insights from the Huron Healthcare CEO Forum and took a hard look at some of the top industry issues that will be plaguing CEOs in the year to come.
Gordon Mountford, executive vice president at Huron, recognized the challenges many healthcare CEOs are or will soon be up against. “The immense operational and financial challenges healthcare leaders are facing would be daunting for executives in any industry,” he said. “And yet, healthcare leaders across the country are stepping up to the challenge, carefully considering the way forward and developing solutions that will shape the future of healthcare delivery in our country.”
The report identified four industry issues troubling healthcare CEOs the most, and their views on how to solve them.
1. Moving from “volume to value.” According to the report, CEOs are concerned with making the new healthcare business model a reality. “Health reform initiatives are meant to push, pull and shove healthcare organizations toward delivering affordable, value-based care,” the report read. But, exactly how long will it take to transition to value-based reimbursement was a topic many of the CEOs explored further. “Let’s face reality. The government is out of money and will no longer be able to go further into debt funding healthcare,” said Christopher Olivia, SVP for Strategic Planning and New Venture Development at Highmark. “We’re in a rate/volume business model today that will not survive. We’re not going to get to the ‘new normal’ by marginal changes. We need some big ideas.”
2. Changing the care delivery model. According to the report, the industry needs to reimagine the “who, what, when, where and how” of delivering care. The report looked back to moving the industry from “volume to value” and asked CEOs to discuss challenges and visions centered on many of the core aspects needed to accomplish this transition. Many of them agreed the vast majority of hospitals aren’t configured to be providers of “wellness,” and delivering the capabilities to manage population health will require not only time, but also capital investments. “We are asking how we can better address high users of care, managing the healthcare needs that are inevitable and making them less intense and less frequent,” said Marna Borgstrom, president and CEO at Yale-New Haven Hospital. “But in the big picture, we, as a society, need to have a greater understanding of the impact investments in social infrastructure could have on public health.”
3. Aligning physicians. It’s no secret physicians play a vital role in shifting the healthcare delivery system, but, according to the CEOs, they’re still challenged when it comes to developing relationships and partnering together to drive change. According to the report, there was a general agreement that creating healthy, sustainable and mutually beneficial relationships with physicians remains “a complex, complicated and sometimes elusive goal.” “We use the Mayo dyad model to create what I call ‘healthy friction,’” said Bryan Mills, president and CEO, Community Health Network. “We have to emphasize in that pairing, it's not that one physician is solely looking at things operationally, and one looking at things solely clinically. They have to work together.”
4. Cost containment. The new healthcare business model needs to become a reality, the report read, and according to CEO feedback, most agreed on “the need to get 20 to 40 percent of costs out of the system to operate at anticipated future reimbursement levels.” It added the majority of CEOs are taking a “two-pronged” approach to cost containment: getting every non-value-added cost out of the system now, while working on implementing fundamental changes for the future. Dan Wolterman, president and CEO of Memorial Hermann Healthcare System, was quoted as saying the time of living “in two business models,” is coming to an end. “We are definitely moving toward fixed or bundled payment and away from making margin on volume,” he said. “The old strategy is quickly becoming the high cost/low margin strategy. Unfortunately, we get to run these two opposing strategies simultaneously. You can live in two business models for a while, but not forever.”
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