In a world of 2 to 4 percent operating margins and fee-for-service rate cuts, hospitals and healthcare systems are increasingly seeking out innovative approaches to solve the most urgent challenges facing the industry.
Whether it’s the process-improvement opportunities presented by Big Data or the myriad operational and clinical difficulties imposed by the widespread opioid crisis, these are the topics on the minds of healthcare executives in 2018.
Rising costs are a top concern for any healthcare organization—but having access to actionable data now makes it possible to identify and address disparities in the cost of specific healthcare procedures.
One healthcare system based in the Western US reviewed their systemwide cost data for all elements of total knee replacement surgeries to determine the average cost per case per physician. The analysis revealed tremendous variation in the expense of each aspect of the procedure, even for physicians who were below average on total cost—showing that almost all physicians can work to minimize waste in their practice.
In another Big Data investigation, the same healthcare system compared two hospitals’ procedural costs to determine why one had especially high lab costs for coronary artery bypass grafts. Their analysis revealed the largest disparity per case was in general chemistry lab costs—specifically, in the test for blood gases. Data analysis can allow organizations to drill down to see small factors contributing to larger costs.
Because many cost disparities can be traced to physician practice, part of the Big Data challenge is convincing physicians to review and, if necessary, alter their practice protocols. To that end, organizations should:
No matter how sophisticated its algorithms, Big Data’s ultimate effectiveness may depend on how well it’s able to influence behavior.
The nationwide opioid crisis is putting a financial strain on healthcare systems all over the country. Repeated overdoses, serious comorbidities and reliance on Medicaid among many opioid users can have a significant financial impact unless providers find a way to treat this population effectively.
In the short term, some providers are changing pain management protocols to reduce opioid prescriptions, or treating patients with anti-craving drugs like buprenorphine to lower re-admissions and reduce the total cost of care. Others are working with community partners like law enforcement and first responders to distribute overdose-reversing naloxone kits, participate in needle exchange programs and collaborate in gathering data.
The crisis also requires long-term solutions. Sustained medication-assisted treatment and behavioral therapy can support recovery, but current healthcare payment mechanisms tend to reimburse a treat-and-release model. Compounding the issue, the Medicaid reimbursement for treating opioid overdose patients is generally inadequate.
Working with an organization that specializes in treating substance use disorders can address the need for long-term care. Healthcare systems may want to consider private funding sources, such as for-profit entities and private equity funds, to create extended treatment options. Grant-making foundations are more focused on the crisis and receptive to applications from providers for opioid use data collection, naloxone kits and partnership development with other community and healthcare resources.
A JPMorgan Chase Institute analysis of out-of-pocket healthcare spending provides a snapshot of the consumer experience between 2013 and 2016 for 2.3 million de-identified core Chase customers aged 18 to 64:
Patients increasingly expect digitally enhanced and mobile service, and healthcare systems are adapting by providing a more retail-based patient experience.
Under this new model, it’s critical for healthcare systems to live up to their brand promises. The emphasis shifts from creating a relationship once a patient is actively receiving care to building a strong brand connection before a patient even needs care.
Patients want real-time responses, immediate scheduling availability, a simple process, price transparency and a variety of bill-pay options. Some systems have responded by instituting policies that return copayments or forgive deductibles for patients who report a poor healthcare experience, while others have introduced processes to book same-day appointments for procedures like mammograms as an added convenience for patients.
Along with more transparent access to quality assessments and cost estimates, the future of healthcare for consumers may include telehealth services or educational campaigns to encourage healthier patients to bypass the emergency department in favor of lower-cost primary or urgent care clinics—particularly as insurers push back on reimbursing unnecessary emergency treatment.
Major hospitals and healthcare systems have found that a strategic advantage may lie in investing in startups that develop cutting-edge healthcare solutions or in strategic funds that offer access to a broad portfolio of innovative companies.
While some healthcare systems may seek out these alternative investments as a way to diversify their portfolio and improve operating margins, the potential financial gains are often secondary motivators. Rather, the primary purpose for investing is to build a pipeline of emerging companies whose services can resolve specific operational issues or even transform the delivery of care across the continuum.
Investing in healthcare innovation can also enhance a system’s reputation and help recruit creative and entrepreneurial-minded leaders. A leader with a personal passion for innovation can help to nurture the investment and its resulting technological and operational advances.
Healthcare organizations can consider four degrees of participation in alternative investments, depending on how involved they’d like to be:
Curiously, the move toward alternative investment instruments by hospitals and healthcare systems has slowed recently. If this means that systems aren’t finding value in their investments, in the future they may instead collaborate with other systems that are investing well rather than going it alone. They may also become better partners to young, innovative companies to help them plug in more easily and scale faster.
As new treatment challenges emerge and consumer expectations rise, healthcare organizations need to re-examine their processes to better serve patients and adapt to industry changes. Organizations can look to emerging resources like Big Data, technology investments and strategic partnerships to help improve patient outcomes, build loyalty to their brands and prepare for the future of healthcare.
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