Futurescan
Healthcare Trends and Implications
2012–2017
Futurescan
Co-sponsored by:
• Society for Healthcare Strategy and Market
Development of the American Hospital Association
• American College of Healthcare Executives
• With Support From VHA Inc.
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American College of Healthcare Executives
• Professional society of more than 40,000 healthcare
executives—Leaders Who Care
• Board certification in healthcare management as ACHE
Fellows (FACHE®)
• Foremost continuing educator for the field
• Leading healthcare management publications:
– Health Administration Press books
– Journal of Healthcare Management, Frontiers of Health
Services Management and Healthcare Executive
• Fulfilling our vision to be the premier professional
society for healthcare executives dedicated to improving
healthcare delivery
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Society for Healthcare Strategy and Market
Development
• Personal membership group of the American Hospital
Association
• Serves more than 4,400 healthcare planning, marketing
and public relations/communications professionals
• Committed to helping members meet the future with
more knowledge and opportunity as their organizations
work to improve health status and quality of life in their
communities
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Futurescan 2012–2017
• Healthcare Reform: The Transformation of America’s
Hospitals—Economics Drives a New Business Model
• Healthcare Reform: States Grapple With Health Insurance
Exchanges
• Access to Capital: The Gold Rush Is On
• Demographics: Will the Baby Boom Be a Boon to
Hospitals? Don’t Count on It
• Community Connections: An Expanding Hospital Role
Includes Community Well-Being
• Bending the Cost Curve: Hospitals Challenged to Lead
With Quality to Reduce Costs
• Clinical Integration: Déjà Vu All Over Again
• Physician Strategies: Employing Physicians—The Future
Is Now
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“The hospital—altogether the most
complex human organization ever
devised …”
Peter Drucker
Drucker, Peter F. (2002). Managing in the Next Society. New York, New York: St. Martin’s Griffin.
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Actions We Should
Start, Stop and/or Continue
We should start.....
We should continue.....
We should stop.....
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FutureScanning
Trend
Implications of this Trend?
Implications of this Trend?
Implications of this Trend?
Implications of this Trend?
Implications of this Trend?
At least 1 positive, and 1 negative.
Implications of this Trend?
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Healthcare Reform
The Transformation of America’s
Hospitals: Economics Drives a New
Business Model
Kenneth Kaufman
Mark E. Grube
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Transforming America’s Hospitals:
A New Business Model
The Economics of the 21st century will force
healthcare delivery to be value based.
• Don’t wait for change to come from federal or state
governments.
• Focus on outcomes, quality and access rather than
volume.
• Move from physician-centric to team-based care.
• Emphasize teamwork, discipline and humility as
organizational values.
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Transforming America’s Hospitals:
Downward Trends
Reimbursement and utilization will decline over time
on either a relative or absolute basis.
• Breaking even on Medicare patients will be key.
Aggressively pursue this goal.
• Rethink service offerings and examine care
processes in order to achieve efficiencies.
• Adopt a team-based approach that focuses on
population health rather than just individual patient
care.
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Transforming America’s Hospitals:
Technological Innovation
The rapid emergence of new technologies that
improve health outcomes and reduce costs will
disrupt clinical practice and competitive strategy.
• Invest in disease management systems that monitor
patients in their homes in order to promote health and
reduce readmissions.
• Develop hospital-branded “apps” for smartphones
that provide health information to consumers and
best-practice information to clinicians.
• Make technological innovation and adaptation an
essential part of your management strategy.
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Transforming America’s Hospitals:
Boundaries Blur
The traditional hard lines between various types of
healthcare providers and participants will begin to
break down.
• Carefully monitor the trends in your community
regarding employed physicians, integrated services
and ACO development.
• Consider participating in joint ventures between forprofit and nonprofit providers.
• Look for opportunities for collaboration between
health insurers and provider organizations.
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Transforming America’s Hospitals:
Consolidation
Price and quality competition from large
organizations will be intense, and it will be
increasingly difficult for small independent
organizations to survive.
• Look for ways to achieve economies of scale by
partnering with other community or regional
organizations.
• Use group purchasing alliances to reduce costs.
• Educate the board and medical staff on the realities of
the new healthcare landscape so that they are prepared
for change.
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Healthcare Reform
States Grapple With Health
Insurance Exchanges
William W. Sneed
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Health Insurance Exchanges:
Sooner Rather Than Later
It is very likely that the ACA will be judged
constitutional and that all states will be expected
to implement exchanges by January 2014.
• Monitor the federal regulations closely as they evolve
in response to comments from the field.
• Be thoroughly familiar with your state’s intentions and
progress regarding exchange development.
• Project how an operational exchange will impact your
facility in terms of both patient volume and cash flow.
• Be prepared to act quickly.
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Health Insurance Exchanges:
Expanding Access
Exchanges will enroll individuals without prior
access to employer-sponsored insurance as well
as employees of small companies.
• Get involved in your state’s exchange development.
Have a voice in determining its policies and
implementation.
• Monitor the local workforce environment so you can
anticipate the exchange’s clients and their health status.
• Serve as a resource to local small businesses as they
consider dropping their health coverage in favor of an
exchange.
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Health Insurance Exchanges:
Provider Risks
Operating exchanges will create financial risks
for provider organizations.
• Run projections to determine the individuals most
likely to join exchanges in your area, and their likely
health status and health needs.
• Be prepared for the competition that exchanges will
create based on cost.
• Be vigilant about pricing services below cost in an
effort to maintain market share.
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Health Insurance Exchanges:
The Benefit Package
The federal government will allow individual
states to define essential benefits for its
exchange.
• Monitor the federal and state policy and legislation
closely.
• Closely monitor state agency-vendor relationships.
• Actively advocate for a benefit package that
maximizes quality at a reasonable cost.
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Health Insurance Exchanges:
Transparency
Health insurance exchanges will promote
transparency in an attempt to lower costs.
• Begin making cost and quality information available
now.
• Use social media (website, Facebook and more) as a
means to promote transparency of services and quality.
• Devise strategies to help consumers understand what
an exchange is and the various products that will be
offered by the exchange.
• Be an active participant in the design of the exchange.
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Access to Capital
The Gold Rush Is On
Marian C. Jennings
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Access to Capital:
Unstable Markets
Volatility in the credit market will likely continue,
making access to timely, affordable debt
challenging and uncertain.
• Attend to key balance sheet and liquidity ratios NOW.
Don’t wait until you need access to capital.
• Cultivate relationships with local and traditional
lenders.
• Monitor competitors’ situations regularly. Don’t
assume weak organizations will always be strapped
for capital.
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Access to Capital:
A Widening Resource Gap
The gap between the haves and the have-nots in
terms of access to capital will increase.
• Develop a five-year strategic financial plan that
incorporates capital needs and links them to
continued competitiveness.
• Consider a variety of “what if” scenarios to best
position your organization for the inevitable changes
that will occur over the next five years.
• Smaller facilities should consider partnerships with
larger or regional systems.
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Access to Capital:
Competitive Advantage
For-profit systems will use their ability to access
capital as a competitive advantage and continue
their aggressive acquisition mode.
• When appropriate, look for a for-profit partner for new
or existing projects.
• All facilities—for-profit or nonprofit—should make
planning for capital needs under various scenarios a
key part of management.
• In order to maintain your competitiveness, find ways
to break even on Medicare reimbursement.
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Access to Capital:
More Demand Than Capacity
Capital demand will outstrip capacity, even in the
strongest and largest nonprofit systems.
• Carefully examine criteria for capital projects or
improvements.
• Consider divesting underperforming assets sooner
rather than later.
• Be cognizant that bond holders expect a return on
their investment.
• Be sure to demonstrate your organization’s continued
value to the community.
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Access to Capital:
An Urge to Merge
The need for access to capital will result in more
hospitals and regional systems merging with
larger organizations.
• While access to capital may drive a merger, other
benefits of affiliation can be obtained without ceding
control.
• Be aware that merging with a smaller, struggling
hospital could result in a credit downgrade or divert
limited system resources.
• Carefully monitor proposed federal legislation that
would make newly issued municipal bonds taxable.
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Demographics
Will the Baby Boom Be a Boon to
Hospitals? Don’t Count on It
Jeff Goldsmith
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Demographics:
The 21st Century Retiree
Many baby boomers will postpone retirement or look for
new ways to make a meaningful contribution postretirement. They will expect to maintain healthy and
active lifestyles.
• Offer programs that will help seniors remain healthy and
active well past the traditional retirement age.
• Develop expertise in orthopedic services, particularly
joint replacement.
• Provide volunteer or part-time consulting opportunities
for talented seniors in your community.
• Focus on patient satisfaction, as boomers will demand
high-quality services.
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Demographics:
Cost-Sensitive Seniors
Because of the economic downturn, Medicareeligible boomers are more likely to opt for the
cost-savings offered by Advantage programs.
• Anticipate reductions in the use of hospital services
by future—as compared to past—Medicare recipients.
• Develop programs that help patients and their families
manage and coordinate post-hospital care.
• Engage Medicare Advantage programs in
experimenting with new care models.
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Demographics:
Anticipate Needs
The greatest needs of the boomer generation will
be joint replacement surgery, diabetes-related
care and cancer services.
• Develop ambulatory centers for cancer treatment and
imaging.
• Develop specialized services for diabetes treatment and
management.
• Develop expertise in joint replacement and rehabilitation
following surgery.
• Carefully monitor the health and social needs of seniors in
your community to identify opportunities for additional
services.
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Demographics:
Break Even on Medicare
In the long term, successful providers will need
to break even on Medicare’s current DRG and
APG systems.
• Work with physicians, particularly intensivists and
hospitalists, to reduce costs.
• Implement aggressive infection control processes.
• Develop systems that coordinate care.
• Work with families to reduce post-care complications
and readmissions.
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Demographics: Innovations in
Healthcare Delivery
The CMS Innovation Center created by the ACA
will promote innovations in healthcare delivery
designed to control costs and ensure quality.
• Be active participants in any field tests or experiments
in order to learn to improve care and influence
emerging models.
• Actively involve physician leaders in any new models.
• Look for new ways to deliver primary care, care
transitions and follow-up care.
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Community Connections
An Expanding Hospital Role
Includes Community Well-Being
Connie J. Evashwick, ScD, FACHE
Eileen L. Barsi
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Community Connections:
Demonstrating Community Benefit
There will be increasing pressure on hospitals to
demonstrate their value to the community.
• Nonprofit hospitals should ensure they are in
compliance with the new community benefit
requirements under the ACA.
• Nonprofits should be prepared to respond to
challenges regarding their tax exempt status.
• Promote the importance of your organization’s
economic impact on the community.
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Community Connections:
Population Health
Hospitals will be expected to make good on their
mission to improve the health of the community.
• Assess your organization’s current engagement with
the community now.
• Have metrics in place that track your organization’s
impact on the community’s health and well-being.
• Work with churches and other community
organizations to enroll qualified individuals in state
Medicaid programs.
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Community Connections:
Wellness and Prevention
Wellness and preventive programs will
proliferate as employers and insurers look for
ways to reduce healthcare costs.
• Partner with insurers and employers to offer wellness
programs and expertise.
• Work with community-based clinics to expand access
to preventive services.
• Develop expertise in disease management that can
benefit community providers and reduce healthcare
costs.
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Community Connections:
Engagement
As part of their community benefit, hospitals will
need to be actively engaged with the community.
• Incorporate community outreach as a key function of
the organization.
• Involve senior leaders in activities and strategies that
benefit the community.
• Choose governing or advisory board members who
reflect and are sensitive to the needs of the broader
community.
• Communicate regularly with internal and external
stakeholders.
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Community Connections:
Collaboration
Collaboration with other community organizations
will be a critical strategy for providing coordinated
care.
• Make sure that key leadership understands how your
organization interfaces with other community agencies
or providers.
• Provide incentives for employees to volunteer with or
provide expertise to other community agencies or
providers.
• Offer expertise to local health departments that may be
seeking accreditation by the Public Health Accreditation
Board.
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Bending the Cost Curve
Hospitals Challenged to Lead With
Quality to Reduce Costs
Nancy M. Schlichting, FACHE
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Bending the Cost Curve:
Deficit Reduction Challenges
Pressures to reduce budget deficits—at both the
federal and state levels—will target entitlement
programs including Medicare and Medicaid.
• Use proven strategies like Lean and Six Sigma to
reduce costs associated with Medicare and Medicaid
admissions.
• Work with clinical staff to coordinate care in attempts
to reduce costs.
• Set a goal to “break even” on Medicare patients by
2014.
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Bending the Cost Curve:
A Demographic Tsunami
The aging of the baby boom generation will
create a tsunami of increased demand and high
expectations for services.
• Since seniors will likely be paying more out of pocket
for healthcare services, emphasize the value of your
care.
• Pursue clinical integration with physicians to provide
high-quality, efficient and coordinated care.
• Design intake and discharge processes that are
efficient and sensitive to the needs of seniors.
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Bending the Cost Curve:
Value-Driven Healthcare
The expectations for quality and value in the delivery of
healthcare services will increase. The bar will be set
higher.
• Use quality improvement techniques like Lean and Six
Sigma to improve processes.
• Investigate new models of care that will reduce
complication and infection rates and improve
efficiencies.
• Make sure that information systems are flexible enough
to capture meaningful performance indicators.
• Focus on patient satisfaction.
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Bending the Cost Curve:
Readmissions
Public and private payors will continue to
penalize hospitals for high readmission rates.
• Be aware that some patients may not have the
financial resources for post-discharge care (e.g.,
home health, medications, etc.).
• Use a transition coach who will help patients
transition from the hospital to their homes.
• Provide post-discharge clinics for patients at risk of
readmission.
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Bending the Cost Curve:
Focus on the Intersections
Successful providers will coordinate care across
settings with payors and community
organizations.
• Work with community organizations to develop
wellness and chronic disease management services.
• Develop preferred relationships with organizations to
provide home care and other post-discharge services.
• Work with nontraditional caregivers like homeless
shelters and free clinics.
• Explore new models for providing primary care.
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Clinical Integration
Déjà Vu All Over Again
Nathan S. Kaufman
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Clinical Integration:
Back to the Future
Despite the failures of the 1990s, providers will look
for ways to achieve clinical integration as the ACA is
phased in.
• Make sure that any strategies are compliant with FTC
guidelines.
• Early on, determine whether your organization possesses
the infrastructure for clinical integration.
• Exercise caution and carefully evaluate the organization’s
readiness to form an ACO or vertically integrated system.
• Pilot test any new network with health system employees
and their beneficiaries before expanding to a larger patient
base.
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Clinical Integration:
Rewards and Consequences
In clinically integrated systems, performancebased rewards will be used to improve quality
and efficiency.
• Engage physician partners in determining which metrics
will be monitored and used to reward performance.
• Regularly review these indicators to determine their
usefulness and validity.
• Be sure information systems can track these indicators
reliably and in real time.
• Be prepared to deal with poor performers.
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Clinical Integration:
Core Competencies
ACOs and other integrated organizations will
only be successful if they master “2nd generation
competencies.”
• Adopt a common EHR that incorporates point-of-care
protocols.
• Create sufficient primary care capacity.
• Implement evidence-based inpatient and outpatient
care plans.
• Incorporate proactive disease management programs.
• Develop physician leadership and engagement.
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Clinical Integration:
More Than Physicians
Clinical integration under a reformed health
system will extend to all types and levels of
healthcare providers.
• Work with local health departments and community
clinics for follow-up care and wellness services.
• Develop relationships with organizations providing
specialized post-acute care.
• Partner with social services organizations that provide
services that maintain individuals’ health and well-being.
• Include behavioral health services in the network.
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Clinical Integration:
Failures Are Inevitable
Many organizations will assume risk for
integrated care without possessing 2nd
generation competencies. They will likely fail.
• Carefully evaluate your organization’s readiness
before assuming risk associated with an ACO or
integrated network.
• Cultivate physician leadership and buy-in for reducing
cost and improving quality.
• Recognize that watchful waiting and learning from
others’ experiences may be the best strategy for
many organizations.
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Physician Strategies
Employing Physicians:
The Future Is Now
Nick A. Fabrizio, PhD, FACHE
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Physician Strategies:
The New Employees
Individual physicians and group practices will
continue to look to hospitals for employment and
the economic security it offers.
• Be judicious and strategic in offering employment
opportunities to physicians and physician groups.
• Anticipate cultural clashes between physicians and
hospitals and plan for a transition period.
• Be sensitive to the varying needs of different
generations of physicians.
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Physician Strategies:
Learning From the Past
Hospitals will benefit from the mistakes of the 1990s
and achieve strategic advantages by employing
physicians.
• Emphasize the economic security of affiliating with a large
and stable organization.
• Make sure that your organization has sufficient human
resources to manage physicians and physician practices.
• Link incentives to productivity and make sure that your IT
system reliably measures key indicators.
• Allow physician leaders to participate in decision-making
and governance activities.
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Physician Strategies:
Larger and Larger Groups
The number of physicians in group practices and
the size of physician groups will continue to
increase.
• Develop affiliations with large independent groups of
physicians.
• Monitor the growth and vitality of physician groups in
your community.
• Monitor the competitive environment in order to
identify opportune times to offer employment to select
physician groups.
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Physician Strategies:
Shared Governance
Physician-manager leadership dyads will be
necessary for success with employed
physicians.
• Make sure your organization will accept physician
leaders as an integral part of the management team.
• Spread physician-administrator dyads throughout the
organization.
• Engage physicians in the selection of the physician
leadership.
• Ensure that employed physicians have easy access
to the CEO.
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Physician Strategies:
Practice Management Skills
Hospitals and systems will need management
personnel and infrastructure to integrate physician
practices.
• Hire individuals with experience and expertise in
physician practice management.
• Make sure that the IT system can integrate practice
management with the EHR and billing systems.
• Work with physician leadership to develop incentive
plans that promote efficiency and quality as well as
physician satisfaction.
• Expand physician leadership and training opportunities.
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“‘We will do everything for everybody’ has
never been a viable value proposition for
any successful business model that we
know of—and yet that’s the value
proposition … of general hospitals.”
Clayton M. Christensen,
Jerome H. Grossman, MD,
and Jason Hwang, MD
The Innovator’s Prescription: A Disruptive Solution for Health Care (2009)
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Futurescan
This presentation was adapted by Mary Stefl, PhD,
Chair, Health Care Administration, Trinity University,
from Futurescan: Healthcare Trends and Implications
2012–2017.
Futurescan 2012 is available for purchase from Health
Administration Press. Single copies (order code 2206)
are $45. Packages of 15 copies (order code 2208) are
available for a discounted price of $395. Order online at
ache.org/HAP or call the ACHE/HAP Order Fulfillment
Center at (301) 362-6905.
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Futurescan
Healthcare Trends and Implications
2012–2017