Health care reform is upon us, and it promises to transform the system. The cultural change alone will be huge; organizations will need to refocus how they do what they do within their own four walls and, even beyond that, to the community at large.

But reform offers opportunities as well, and there are practical steps leaders can take to position their organizations to take advantage of them.

To address the scope of the looming changes, organizations may need to bring new skill sets into the executive suite while sharpening existing ones. Hospitals' longtime focus on physician relations, for instance, must intensify under reform. "The physician-hospital relationship is at the heart of all of this," says Rick de Filippi, immediate past chair of the American Hospital Association board and a member of the Cambridge (Mass.) Health Alliance's hospital board. "There is work to be done to bring physician leadership and hospital leadership closer together. They have to become unified."

The board, too, may need to adopt new competencies to navigate the organization successfully into the future, de Filippi says. He suggests that hospital boards consider developing a community relations committee to focus on relationships with other major institutions in the community that influence health.

Health care reform is a journey to top performance, says Susan DeVore, president and CEO of Premier. Organizations can use this process to improve efficiencies and the health of the community. "My sense is that those things would make hospitals commercially successful and help them meet their mission," she says.

Essential Skill Sets for Health Reform

Hospitals must take a multifaceted approach to reform. Reimbursement cuts and payment changes will compel organizations to shore up operations. Hospitals also will have to develop closer ties with payers, physicians and other community providers. These changes demand new skill sets in the executive suite.

Physician Relations
Payment measures that emphasize care coordination, quality and value encourage greater alignment between hospitals and physicians. "The motivator is to build a health care delivery network," says Clayton Harbeck, executive vice president of business development, marketing and consulting for MedSynergies, Irving, Texas. "Hospitals and physicians have to work together. The economics will require that."

Hospitals also will need to enhance their relations with community physicians. "It's not practical or possible for hospitals to employ all community physicians," says Michael Regier, VHA's general counsel and senior vice president, legal and corporate affairs. "But there needs to be a greater emphasis on clinical integration."

Skill set: Nurturing physician leaders from within or bringing in individuals with practice management skills is key, says Regier.

Community Health
Reform requires a dramatic shift in the way care is delivered. Quality and value-based purchasing measures support delivering care to patients in the most appropriate setting. Hospitals must develop strong ties with all types of payers and providers in the community. Whether hospitals participate in an accountable care organization or not, they must own the health of the community outside of the acute care space, notes Premier's Susan DeVore.

Skill set: Community relations and networking are essential. Health care leaders must build strong relationships with community providers to align goals and incentives throughout the care continuum.

Finance-Quality Integration
The chief financial officer and finance staff must become well-versed in quality measures, programs and initiatives, and the quality team must become comfortable with finance. "Quality will explicitly determine how you get paid," Regier says.

Skill set: Cross-training will be required for some disciplines. CFOs, for example, must become intimately involved in clinical quality and efficiency efforts. Clinical staff will need to understand the link between quality and payment.

Risk Assumption
Shared payment means shared risk. Hospitals will play a larger role in coordinating care in their communities and will assume greater financial risk as a result. They will have to rely on clinicians to provide the right level of care.

Skill set: Bundled payment will rely in part on robust IT systems. Hospitals need to shore up their IT and risk assumption skills, DeVore says.


Key Elements of Health Reform

Expanding Coverage: Provides coverage to 32 million uninsured by 2019

Building the Workforce: Modifies the student loan program to make primary care training more attractive; provides $320 million in grants to expand the primary care workforce

Reforming the Delivery System: Ties payment to quality improvements through bundled payments, value-based purchasing, accountable care organizations and medical homes; establishes the Centers for Medicare & Medicaid Innovation to test new payment models and explore other system reforms

Financing Reform: Cuts hospital payments by $155 billion over 10 years; insurers and other parts of the health care sector also to see payments cut

Quality and Safety: Establishes the Patient-Centered Outcomes Research Institute to identify research priorities and conduct research that compares the clinical effectiveness of medical treatments; increases penalties for certain health care-acquired conditions and preventable readmissions

Protecting Medicare and Medicaid: Establishes a number of provisions to reduce waste, fraud and abuse

Wellness and Prevention: Provides $12.9 billion to establish a Prevention and Public Health Fund over 10 years and increases access to preventive services

Regulatory Oversight: Adds new reporting requirements for tax-exempt hospitals; extends the Recovery Audit Contractor program to Medicaid and Medicare Parts C and D

Source: American Hospital Association, The Centers for Medicare & Medicaid Services, and the Kaiser Family Foundation, 2010

10 Tactics for Hospitals

Hospitals and health systems have much to do as they prepare for the changes under reform. The AHA has developed a set of key actions that hospitals should undertake to help organize those efforts.

  1. Enhance efforts to improve quality and patient safety and reduce variation in care within your organization.
  2. Increase clinical and operational efficiencies.
  3. Increase efforts to improve patient satisfaction.
  4. Reduce avoidable readmissions.
  5. For tax-exempt hospitals, identify community partners and conduct community needs assessments as now required.
  6. Assess and strengthen your plan for health information technology and electronic health records.
  7. Collect standardized race and ethnicity data to reduce health disparities in your organization.
  8. Examine readiness for episodic payment and care redesign, and explore organizational capacity to manage care across the continuum.
  9. Develop new organizational competencies for clinical integration and foster better alignment with physicians.
  10. Assess the insurance benefits your hospital offers employees in light of health reform.

Source: American Hospital Association, 2010

Preparing the Board

Reform will require hospital board members to develop new skills and hone existing ones to strengthen and improve governance. The blue ribbon panel convened by AHA's Center for Healthcare Governance and the Health Research & Educational Trust identified the following competencies as integral to top performance.

Knowledge and Skills

  • Health care delivery and performance
  • Business and finance
  • Human resources

Personal Capabilities

  • Accountability
  • Achievement orientation
  • Change leadership
  • Collaboration
  • Community orientation
  • Information seeking
  • Innovative thinking
  • Complexity management
  • Organizational awareness
  • Professionalism
  • Relationship building
  • Strategic orientation
  • Talent development
  • Team leadership

Source: 2009 Blue Ribbon Panel Report: Competency-based Governance: A Foundation for Board and Organizational Effectiveness, The AHA's Center for Healthcare Governance and the Health Research & Educational Trust