Hospitals and care systems must become organizations that can achieve Triple Aim outcomes — better care, better health and lower costs — while assuming more financial risk and accountability in an industry that is becoming increasingly budgeted and capitated. Making health care more affordable during this time of transformation presents many challenges. Hospital and system leaders must aggressively pursue opportunities to reduce costs while implementing changes that make sense for patients and communities.

To do this, it is important for trustees and senior leaders to heed best practices and lessons learned in the first-curve, volume-based environment and apply them to the second-curve, value-based environment.

Accelerating Transformation

Determining an organization's transformational journey requires difficult decisions. In 2013, the AHA Committee on Research explored different approaches to help hospital leaders navigate the changing health care environment and accelerate organizational transformation. The report "Your Hospital's Path to the Second Curve: Integration and Transformation" outlines four strategies:

• Implement must-do strategies found in the 2011 AHA Committee on Performance Improvement report "Hospitals and Care Systems of the Future."

• Master organizational capabilities that are key to understanding the organization's current level of integration and potential for further change.

• Answer strategic questions that will help to determine an optimal path or series of paths for transformation.

• Identify potential paths: redefine, partner, integrate, experiment and/or specialize.

Five Potential Paths

There is not a single transformational journey, but maintaining the status quo is not a viable strategy. Waiting to transform is imprudent, too, because the environment is changing so rapidly. Fortunately, many hospitals and care systems already have begun to pursue different transformational paths.

St. Andrews Hospital (now LincolnHealth–St. Andrews campus), Boothbay Harbor, Maine, chose to redefine. To remain financially viable, it closed its 24-hour emergency room — which had low patient volume — and replaced it with an urgent care center that is open 12 hours daily.

In New Jersey and Pennsylvania, seven health systems with more than 25 total hospitals chose to partner and formed an interstate alliance, AllSpire Health Partners. With a combined net worth of $10.5 billion, the alliance allows hospitals to pool purchasing power, share expertise and pursue research projects.

Florida Hospital Healthcare System chose to integrate by partnering with Health First of Rockledge to offer insurance products. This relationship allows Florida Hospital to sell health insurance and access data to identify treatment gaps.

Hospital Sisters Health System, Springfield, Ill., chose to experiment with a new delivery model by launching its Care Integration strategy, which focuses on physician alignment. This strategy emphasizes developing competencies that facilitate evolving to more integrated care and population management.

DaVita, a Colorado-based provider of kidney care services, chose to specialize by purchasing HealthCare Partners, a physician practice, and moving toward an integrated delivery network that contracts a full spectrum of care and receives global capitation.

These innovative approaches demonstrate there is no one-size-fits-all model to find success in the second-curve, value-based environment. Provider capability and community needs are different everywhere. Regardless of the path chosen, the time is now for hospitals and care systems to act.

To access "Your Hospital's Path to the Second Curve: Integration and Transformation," go to

James H. Hinton is president and chief executive officer of Presbyterian Healthcare Services, Albuquerque, N.M. He is chairman of the AHA board of trustees and chaired the 2013 AHA Committee on Research. Rhoby Tio, M.P.P.A. (, is a program manager for the Health Research & Educational Trust, Chicago.