AHA Conference Highlights

Annette Racond and I attended a number of sessions of the annual American Hospital Association Conference at the Washington Hilton in Washington, D.C. from April 10-12.

The one session that stood out above all the others was hosted by Robert Reece, who is the President of the Cambridge Research Institute.  He talked about trends in the hospital industry, and for those who seek a return to the good old days of health care in the United States, I wouldn't hold my breath.  Dramatic changes loom on the horizon.  Among the things to watch for (and that we will be adding to the tPF hot button list as far as what we will be talking to prospects and clients about):
- Acute care -- money for this will shrink every year going forward
- ACOs are in everyone's future -- lower prices, better connectivity and higher quality
- New forms of clinical integration and economic integration are emerging -- each scenario will require resetting the physician/hospital relationship (traditional hospital and private practice physician business models are on life support)
- Scale will become increasingly essential as far as meeting quality and financial targets; don't try to be something you can't be if you don't have the scale to do it
- New business models are needed to establish the businesses of acute care, chronic care and accountable care
- The lines for commercial payors, Medicare and Medicaid are all going down, while the lines for uninsured and rising expenses are going up on a line chart
- Hospitals need to figure out how ready they are for change under current ground rules and future ground rules
- Hospital leadership needs to get on the same page with key stakeholders -- direction and pace of change and key priorities (get the Board involved in the strategy [future state] and out of the tactics [current state  -- annual business plan])
- Chronic care is not primary care
- Playing by the old rules -- you've got to get volume up and expenses down (very difficult decisions will need to be made as far as what gets cut)
- How does a hospital measure success?  You have to align leadership and other key stakeholders around metrics for success
- Change isn't about tweaking the acute care model; we can't practice the way we used to -- they want to pay you less; they want you to do less
- Accountable care -- need massive scale to viably take on risk; in asking yourself if you should be in the ACO business; ask yourself: "Where are you on the provider chain?" "How do you line up your docs?"
-  What kind of things characterize an ACO?  patient-centric culture; strong physician leadership; aligned economics among all stakeholders; vibrant acute care enterprise; robust medical staff; new care delivery models which leverage extenders and telemedicine; clinical integration
- Why you must change? Current hospital business model is under attack: hub of the health care system; volume key to success; pricing not critical; quality not critical; procedures very profitable; diagnostic/ambulatory services very profitable; service mix and cross subsidization; commercial payor subsidization of Medicare; pre- and post-care integration not important
- Maybe a hospital should get out of being the hub and become a vendor
- You have to figure this out or your community will be badly served
- Key marketplace changes -- medical and technological innovation; transparency
- Physician marketplace changes -- growing shortages; primary care providers disappearing; solo/small medical groups in serious jeopardy; mid- and late-career physicians are angry; physician utilization of hospitals changing; traditional physician/hospital decision-making processes overwhelmed; hospital economic support of physicians is exploding
- Each hospital needs its own telemedicine strategy; the rules are loosening every day
- New trends: mini-clinics, medical homes, hospitalists, nocturnalists, econsultants, robots, intensivists, eICUs, PAs, econsults; nurse practitioners taking over primary care
- Hospitals need to ask themselves what their long-term strategy is with: acute, chronic, at risk/bundled contract arrangements; operational rightsizing, strategic rightsizing, strategic realignment
- Multiple physician-relationship strategies (e.g., new docs vs. veteran docs) needed -- get on the same page with your physicians and let them know what is happening (i.e., hospital issues; physician-by-specialty issues; prioritize physician wish list)
- Strategic drivers -- what should we do alone; what should we do in collaboration and when it comes to collaboration, from whose perspective -- government?  community? current physicians?  next generation of physicians and other health care providers?
- Fundamental restructuring of the health care system is underway, irrespective of Health Care Reform
- Restructuring will take 10-15 years; tipping point is 5-10 years out
- Boards need to stop focusing on current issues (e.g., annual business plan; rolling operations plan) and should instead be focusing on strategic change (options for large vs. small systems are very different; the impediments to change are enormous) otherwise they are just rearranging the deck chairs on the titanic

The consulting opportunities are enormous; if the above list doesn't speak to you on this subject, let me help you out -- hospitals need to manage and communicate to their boards in an intelligent and systematic way; hospitals need to get their boards out of the day-to-day oversight and into strategic planning; hospitals need to figure out how to get physicians on board with impending changes (this will require a multi-audience strategy since young doctors and old doctors have different factual and emotional needs); uniform metrics need to be established, communicated ad nauseam and then deployed with integrity to ensure transparency; scale will guide the range of change choices; hospitals will have to make enormous investments in technology in order to compete; change management will come back into fashion but under a different name.

This session was held on Sunday; on Monday, I attended a session on culture change; the CEOs of three hospitals talked about how they manage and sustain changing cultures.  Believe it or not, they are using the Baldrige criteria as the underpinning for sustained, improved performance.  One of my ideas is to update the Baldrige program and repackage it for use by the hospital executives out there who haven't gravitated yet to any structure for operational excellence and continuous improvement.  And maybe the only reason they haven't is because they don't want to be thought of as some old fuddy duddy for trotting out that old Baldrige Program which first saw the light of day when Ronald Reagan was in the Executive Office.  I guess there's only one way to find out.


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