1. What business are you in?
For many health care organizations, more than half of all revenues already come from outpatient treatments, medical clinics, imaging and other ambulatory services. Many still think of themselves primarily as hospitals, but now they encompass far more than inpatient beds and an emergency department. "When more than 50 percent of your revenue is outpatient, you're now in the ambulatory retail medicine business," says health care strategist Michael Sachs, chairman of Sg2, a health analytics firm. As an example, Sachs points to an organization with 18,000 hospital admissions a year and 225,000 ambulatory visits. "Are you primarily in the business of the 18,000 or are you in the business of taking care of the 225,000?" he asks.
2. How is success measured today?
Hospitals traditionally have been measured by the number of inpatient beds, inpatient census and year-to-year revenue increases. Those metrics do not square with population health management, says John Bluford, president and CEO of Truman Medical Centers in Kansas City, Mo. "When I look at how we are beginning to define ourselves, we are thinking more in terms of the number of mammograms, immunizations and flu shots administered, percentage of new mothers who are breast-feeding and the prevention of hospital-based infections and readmissions."
3. Where will health care mergers and acquisitions lead?
The parallels between other capital-intensive, highly regulated industries — particularly the airline industry and the banking industry — and the health care industry tell Sachs that the consolidation trend is not going to slow down. "Some 15 or 16 large megabanks control something like 80 percent of the deposits in the country, and we are down to basically four major airlines in the United States now," he says. "So we're going to continue to see consolidation on the insurance side and consolidation on the provider side, as a natural phenomenon."
4. Who leads the hospital of the future?
Just as physicians and other clinicians are being asked to develop administrative and leadership skills to help design a high-value care delivery system, administrators must know more about clinical excellence than ever before. "I've been in health care for 39 years, and I never understood all the aspects of care delivery to the extent that I do now," says Barry Ronan, president and CEO of Western Maryland Health System. He chairs the system's Triple Aim Coordinating Council — consisting of physicians, nurse practitioners and administrators — to track progress on change initiatives in pre-acute, acute and post-acute care delivery. "Early on, we saw that if a new initiative was not reinforced, momentum would start to fall off and eventually go away, and when we checked on it a year later, we heard 'Oh, we don't do that anymore,' " he says. "This Triple Aim Coordinating Council makes sure we have an understanding of how well all initiatives are working and, if they're not working, what needs to be done to adjust them or, in some cases, eliminate them."
5. Are you in protection mode or in preparation mode?
New Hampshire's Cheshire Medical Center/Dartmouth-Hitchcock Keene, a hospital and physician practice that are tightly aligned through a joint operating agreement, have been working in an accountable care-type of arrangement for Medicare patients for nearly a decade. Inpatient hospital revenues now account for less than 25 percent of the system's total revenue, and outpatient diagnostic revenues are falling. "When you are able to stop doing something that's not clinically indicated, whether that is avoiding an admission, a medication or a CT scan, then you are providing a better experience for the patient," says Art Nichols, Cheshire's president and CEO. "All of these diagnostics that are the bread and butter of hospitals — the CT's and MRI's — are all down." He is not complaining. "Have we had to cut costs? Absolutely," he says. "But we shouldn't be managing our hospitals to protect the status quo. I feel strongly about that. We should be here to save, heal, keep our patients healthy and anticipate the next change that's coming."
For more about redefining the hospital role, read "More than a Building."
Lola Butcher is a freelance writer in Springfield, Mo.