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While much of the work behind reform happens in Washington, D.C., hospitals and health systems are preparing for the future of providing quality care, managing disease, improving community health and being compensated for it. Without complete details of how all the changes will work, organizations are planning for and making fundamental changes in their operations. Their goal not only is to compete effectively, but to optimize payment and, more importantly, to deliver care more effectively and efficiently.

Two organizations highlighted in this article are aggressively preparing for the future and creating solutions while maintaining performance now. Warning: these are not easy tasks.

Integrated Financial Model

The University of Alabama at Birmingham Health System has a long history of success in providing leading research, education and high-end clinical services to the citizens of Alabama and the Southeast. According to CEO Will Ferniany, "the biggest problem we're having with reform is that it's almost impossible to keep up with." To do that, UAB has created a number of task forces, each of which is charged with learning the specifics of reform in its area, imagining future impacts and possibilities, and sharing the findings. "Our job is to make sure we are headed in the right direction," says Ferniany. "It's overwhelming, and we're a sophisticated institution."

UAB developed as an entrepreneurial, department-based organization focused on teaching, research and fee-for-service reimbursement. According to Ferniany, UAB's response to reform will be threefold:

Infrastructure. Ultimately, there will be unified supply chain, human resources and support operations across UAB. "Integration is the underlying glue," Ferniany says. "If you are going to bundle practice units, you need an underlying IT infrastructure to be able to connect all the dots. You'll obviously need good quality, but you won't have quality you want unless you have IT support."

Alignment. UAB will become increasingly aligned as traditional departments and disciplines come together around specific patient- and health-related issues, and become capable of operating in a fully integrated financial environment.

Cost reduction. UAB is evaluating a goal to be profitable under Medicare rates by 2015. "If we can be profitable under that, we will remain a destination for our patients and for medical innovations," Ferniany says.

This represents a significant cultural change for UAB. "We want to be the Southwest Airlines of academic medical centers," he says. "We want engaged physicians and staff, consistently high quality, engaged and happy customers, and to be low cost."

Focus on Prevention

Greenville (S.C.) Hospital System University Medical Center is one of the largest nonprofit health care providers in the Southeast. Long known as a highly successful community and tertiary health system, GHS is rethinking its entire organization and its relationship to its community, region and state. While the impetus is reform, the projected improvements in efficiency and effectiveness have been on its leaders' radar for years.

Mike Riordan, GHS president and CEO, outlined a number of organizational goals to be accomplished over the next three to five years:

Total health. The emphasis is on preventive disease management, and "all the things we need to do to manage and improve the health status of the population we serve," Riordan says.

Integration. This isn't about delivering care from birth to geriatrics, but transforming the system's doctors into physician leaders, linking financial information between physician groups and the hospital, and using this financial information to advance the efficient and effective delivery of care.

"We have to be highly integrated with our doctors, more than just employing them," Riordan says. "This is about building and growing a group of physician leaders" as the organization moves toward total health.

Academics. "We've been training medical students from the University of South Carolina in their third and fourth years since 1991," he says. "Now we're in discussions with USC to expand to a four-year medical campus here in Greenville. We have so much clinical activity here, we can give them the broad range of educational experiences available in a fully integrated delivery system, including the tenets of our total health approach." GHS plans to do this with no state funding, according to Riordan.

"We've worked hard to develop a model that achieves a steady state of funding in about a decade while helping to grow the physicians and other health providers we need," he says. "This represents an investment in our community and state; and we believe it will strengthen our ability to continue as a critical health resource for our region as reform unfolds."

Riordan believes that the financial component needs to be aligned with health maintenance. "Right now we get paid for providing procedures and taking care of sick people," he says. "There is a real volume aspect to it. But we are going down a path to see if there is a way we can look at best practices, evidence-based medicine, how we keep a population healthy [in a way] that doesn't disadvantage us."

Two years ago Riordan charged a small group of executives and physician leaders with reading everything that came out about reform, discussing it and developing a white paper. "It was our best guess about what reform will look like," he says. "That shifted the conversation to what needed to be done to position ourselves, and we set out to do that."

Many of the ideas mentioned above have been around for years, waiting for technological advances and incentives to enable them. Those advances are here now, and leading organizations will be using them to improve how they serve their communities

C.J. Bolster (CJ.Bolster@haygroup.com) is the national director of the health care practice at Hay Group, Atlanta.