Dec 11, 2012

Clinical Technology and Social ROI

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Welcome to another in an emerging series of Difficult Challenges in Healthcare brought to you today by demographic and economic realities – and the political nature of the US Healthcare Delivery System.  According to an annual industry survey conducted by HealthLeaders Magazine, roughly 21% of hospital CEOs surveyed indicated, “their organizations are cutting back on high-level, high-price technology for at least some service lines.”

This from the article, Scrutiny for Clinical Technology, wherein segments from interviews with those CEOs tells a story within a story: not just about the planned reduction in investment – but the means and methods being employed to determine such reductions.  As you might expect, capital investment decisions are being significantly impacted by exogenous considerations, such as the cost of capital (i.e., financing costs), uncertainty regarding future revenue streams and competing investment priorities driven by growing demand.

Free market advocates who believe the healthcare industry would produce greater access, quality and affordability if most of the current regulations could be taken away no doubt cringe at the prospect of investment decisions being made in reaction to conditions directly, or indirectly, caused by such regulations.  Conversely, advocates of a universal/single payer system will object to the prospect of speculative investments with unproven clinical value being made on the collateral of the revenue base they provide the industry through taxation.

Where does the balance lie between investing in new technologies that has the proven potential to save lives, or at least make those lives more productive and less painful – and investing in the infrastructure required to increase delivery capacity in anticipation of higher demand?  Demand that will be driven both by an aging population (natural), as well as implementation of the Affordable Care Act (through regulation).

Who should be making those decisions – and what are the criteria that should be used in weighing investment alternatives? Demand is going to grow substantially, so there must be investment in existing infrastructure.  At the same time, free cash flow is going to be strained to subsidize increased operating deficits caused by continued downward pressure on care reimbursement.  Caught there right in the middle will be thinner balance sheets forcing difficult tradeoffs for capital deployment.

According to the American Hospital Association, in 2010 approximately 56% of all care provided by hospitals was funded by Medicare and Medicaid.  In the post-acute/long-term care world the proportion of Medicare/Medicaid’s share is significantly more because of the higher prevalence of retirement age patients.  But the key takeaway is that a substantial amount of funding for healthcare delivery in the United States comes from public sources (i.e., society).

So shouldn’t society have a greater say in clinical technology investment decision making? If so, what would that look like? What do you think?

Cheers,
  Sparky

Filed Under: Clinical Technology, In the News · Tagged: ,
Dec 5, 2012

Would Lincoln Push Us Over the Cliff?

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Abraham Lincoln was quoted as saying, “character is like a tree and reputation like a shadow: the shadow is what we think of it; the tree is the real thing.”  Now, even in Lincoln’s day the art of politics demanded a steely mental toughness and shrewd negotiating skills.  Lincoln was among, if not the, very best of his day on the national stage in being political.  Daniel Day Lewis gives  yet another phenomenal screen performance in the new movie, Lincoln, in which those skills are brilliantly portrayed.  Go see it.

I do believe, however, our late president would blush with despondency and embarrassment were he to visit Washington today and be witness to the amount of time, energy and resources that are being committed to casting shadows that disappear with each day’s setting sun rather than planting and nurturing trees that will grow and bear fruit for future generations, as his efforts most certainly did.

The art of negotiating has not only been lost, or rather abandoned, in Washington, it has been replaced by the art – if you can call it an art – of manipulating perceptions.  Perceptions (the shadows) are the handiwork of modern media.  And the manifestation of that handiwork now posses the gravest threat yet to our nation’s economy because it is becoming more of a serious threat than I thought possible in being a very real obstacle to finding compromise on how to avoid the Fiscal Cliff.

Real ideas – ones that somebody actually believes in – cannot be brought forth, challenged, discussed and hotly debated when those individuals supposed to be doing the debating are running around chasing shadows like Peter Pan (there is much more you can do with that analogy without a whole lot of imagination).  Over the past few weeks we have watched this play out in the ridiculously lame posturing of elected leaders supposed to be engaged in serious discourse over how to solve this nation’s debt crisis.

Instead, they spend their time and efforts not bringing forth and positioning new ideas – but seeking to deceitfully position the public perception of those with opposing viewpoints (i.e., as in the party opposite).  To hell with ideas.  Who has time for ideas with a 24-hour news cycle and an audience that has a few thousand competing electronic choices for their attention and demanding to be entertained? So we – the audience – have culpability in the charade that plays out every evening on Fox News and MSNBC.

Today we are living in a generation that, on the whole, has benefitted from such largesse that it demands to be entertained – because it has time to be entertained. We seek out and reward through our patronage Soap Opera Journalism.  Controversy and conflict push ratings.  That’s entertaining.  Politicians and elected officials understand the game of visibility – and how costly an advantage that can be to buy.  Want to build visibility in the media without spending more than you can afford? Then you have to be entertaining.

Perhaps the bitterest – if not most distasteful, in my opinion – manifestation of this phenomenon is Reality TV.  Have you ever met anyone in real life who shares with you their most personal thoughts and insights about what is happening in their life while appearing to be talking to the invisible person next to you? That’s not reality.  That’s just content being produced under the guise of reality for the purpose of entertainment.  And, sadly, the same thing can be said about much of today’s news programming.

I wonder what an interview with President Lincoln would like on Fox News or MSNBC.  I wonder if he could possibly fathom what the strategic purpose was of the rhetoric that pours forth every day from what would be considered his antecedent contemporaries in Washington.  I have a feeling he would invoke another of his famous sayings: “I am a firm believer in the people.  If given the truth, they can be depended upon to meet any national crisis.  The great point is to bring them the real facts.”

Well, good luck with that, Mr. President.  The problem isn’t with finding and reporting facts.  It’s with understanding what the term, “real” means today and how that is impacting the way those facts get presented.

Cheers,
  Sparky

Filed Under: Economy, Editorials & Opinions · Tagged: , , ,
Dec 3, 2012

Big Data Assimilation

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In early October, I wrote a post entitled, Big Data and Brand Management.  In observing the Pub’s recent visit tracking activity that post has been getting some attention – particularly from the Netherlands.  I wish I had the time to investigate further to possibly understand why.

I do know that the subject of Big Data and Healthcare is quickly becoming one of the most intriguing – if not controversial, and to many, threatening – side shows of the big show that is Healthcare Reform and the impending implementation of the Affordable Care Act.

In the IT world this growing attention is seen as an anticipated awareness among the less informed masses to a level of consciousness they achieved over a decade ago.  But for all that foresight, there has been precious little headway made in addressing some very critical issues of access and security.  And that is because those issues are not clearly defined, have dramatic implications regarding personal privacy and must be framed within a context of assumptions about the future that are widely debatable and lacking entirely for empirical support.

There is a lot at stake here:  a huge potential for solving some very challenging social problems – yet just as great potential for infringing upon personal liberty.  While I share the justifiable concern over protecting the privacy of individual patient data and information, I believe that concern is clouding an even greater story here; and that is the alluring diagnostic trajectory that Big Data has launched us upon.

In combining Big Data (large static storage requirements) with highly complex  analytical algorithms (large dynamic memory capacity) requiring tremendous computing capacity (processing speed) what we are essentially doing is seeking to replicate and accelerate the thinking ability of the human brain.  The historically great equalizer of human intelligence has been a life’s experience.  To be sure, there are ways to broaden exposure to circumstances and events that contribute to such experience, but there is no way to accelerate the natural course of observable events, which ultimately comprise the sum total of that experience – nor the wisdom of maturity to make good use of it.

In the book, Blink, by Malcolm Gladwell, he explains the concept of rapid cognition: a fascinating treatise on how our minds instantaneously sort through and combine billions of observational data elements from our life’s experience, analyze the meaning of that data and then form a reasoned judgment about what we have just observed through our senses in a matter of a few seconds.  This is often also referred to as intuition, or a gut feel.  It’s something that has saved many lives owing to physicians’ diagnostic capabilities.

What many clinicians fear in a world of Big Data is an unproven overreliance on information technology to supplant or replace that diagnostic capability (or intuition, if you will).  While, in the aggregate, some of that concern may understandably be driven by a fear of professional obsolescence, I think the much more prevalent concern is challenging whether and when a machine will (ever) be able to truly replace the intuitive capability of the human mind.

And that really is at the heart of the longer-term Big Data dilemma, even if the focus right now is on privacy and protection.  I don’t mean to diminish such concerns, but I do believe we will ultimately be able to address those relevant concerns satisfactorily.

A much more difficult challenge, however, is assessing and understanding whether machines will eventually be able to capture the collective human knowledge and experience that clinicians currently rely upon and be able to analyze and apply that information in a way that achieves better overall patient outcomes than application of human assessment, analysis and reasoning.  And, if so, will patients be able to have access to that computing capability without needing human interface?

Then, what is the role of doctors in the future? Will there be a need for them? Will those who would have otherwise employed their talents in becoming physicians be the future engineers and programmers that work to develop, upgrade and enhance the computing capability of the new electronic caregivers?

A lot to think about.  Big Data offers a lot bigger challenges than just worrying about who owns the data.  The real concern is who is going to control the owner of the data – and how? Star Trek fans, think Borg.  Is that where we’re headed?

What do you think?

Cheers,
  Sparky

Filed Under: Editorials & Opinions, Information Technology · Tagged: , ,
Nov 20, 2012

Be Thankful for Caregivers

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Ah, Thanksgiving.  Time to pause.  Time to reflect.  Time to be thankful.

In the Policy Pub tomorrow guests will be treated to gobs of turkey, heaping piles of potatoes, corn, dressing, relishes, pumpkin pie and a pint or two of Great Lakes Christmas Ale, which never seems to be available very long after Thanksgiving no matter how much they work to increase production every year.

Tomorrow in healthcare facilities across the country caregivers and volunteers will be doing what they do every year: assuming the full responsibility of not only caring for the sick and disabled – but also caring for a fair share of lonely hearts and lost souls.  For many patients and residents of these facilities their caregivers are the most important link they have to a measure of otherwise evasive happiness.  Perhaps that’s an unfair expectation of a group that is already overworked and underpaid – but whoever said there was anything fair about healthcare.

In all of the political wrangling of the past few years that has been Healthcare Reform, it has been easy to neglect – and I have to embarrassingly admit, even sometimes forget – that nothing else really matters in healthcare if these individuals are not successful in carrying out their assigned duties.  Those of us who play a supporting role hope we are employing our talents and efforts to make those duties more productive, less stressful, and more rewarding.  Sometimes the best we can do is to just stay out of the way, which is where having a good sense of humility can be a tremendous asset to someone in a supporting role.

Few are cut out to be successful caregivers.  It takes a rare mix of compassion, mental toughness and fortitude.  And it also requires a personal reconciliation to the reality that the value they create in the lives of others can never be adequately rewarded financially.  Whether or not recognition and praise can make up any portion of that gap – and whether that really matters – I don’t know.  But I thought I would take this opportunity anyway just to be on record as being thankful and appreciative of the work caregivers do everyday in this country.

Cheers,
  Sparky

Filed Under: Editorials & Opinions ·
Nov 16, 2012

Announcing New Discussion Group

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Artower Advisory Services is pleased to make available for free participation a new online discussion group on the subject of US Healthcare Public Policy.  A number of the initial members, including myself, represent a cadre of individuals that have participated together in a similar discussion group for well over a decade.  Registration is open now, and the group will officially kick off on November 24th.

For my own part, I first joined that predecessor group in 1996 (if challenged memory serves).  And over that span I have learned more useful knowledge on a variety of topics related to Healthcare Reform and Healthcare Public Policy than any other resource.  The reasons for this have to do with the diverse backgrounds, experiences and ideological vantages represented by the group participants – as well as the unfettered and forthright manner in which ideas can be shared, challenged and debated.

I had initially hoped that the Policy Pub would serve as a platform for creating an online environment where clients and colleagues of Artower Advisory Services could participate in an online community and learn from one another’s experiences, thoughts and ideas.  While I have been more than pleased with the attention this blog has received, I have thus far been unable to translate that success into an online community.

So I took advantage of a recent opportunity to germinate a new discussion group with individuals that I know from personal experience are very knowledgeable, very passionate and very eager to tackle fresh meat (perhaps that is stating the case a bit harshly – but please join and decide for yourself).  To join the group, just click on the picture above, and you will be taken directly to the online registration page.  All the information you need to read and share posts can be found there.  Before joining, please read the Discussion Group Guidelines.

As for the Pub, I will continue posting what I hope you will find interesting, useful and maybe occasionally entertaining.  I will also continue to focus my posts on affordable housing, home-and-community-based services and post-acute/long-term care, while the discussion group will encompass topics in healthcare much more broadly.  While there may be future opportunities to cross reference the Policy Pub and the discussion group, they are independent initiatives, and the success of either is not dependent upon the other.

I hope you will consider joining the US Healthcare Policy Discussion Group and benefit from such participation as much as I have during my professional career.

Cheers,
  Sparky

Filed Under: Healthcare Policy Discussion Group · Tagged: , , , ,
Nov 8, 2012

WARNING: Fiscal Cliff Ahead

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The topic of a fiscal cliff may be only indirectly related to Healthcare Reform – but that is sort of like saying Hurricane Sandy only indirectly impacted the entire Northeastern United States because it only directly hit the coast of New Jersey (and I make that observation having lost a 40-foot pine tree to Sandy – and I live in Northeast Ohio).

Metaphorically and practically, the fiscal cliff represents a whole lot more than just a short path to economic collapse of the U.S. economy – as if that prospect would need a heightened sense of awareness and urgency.  Want to up the ante further? How about if the U.S. economy collapses, then very likely so too does the rest of the world’s economies: global recession.  Got your attention now?

What is the Fiscal Cliff?
The fiscal cliff is a term used to describe the anticipated financial/budget situation beginning next month resulting from mandated tax increases and spending cuts.  The Bush tax cuts will expire on December 31st of this year, as will the Social Security payroll tax holiday.  At the same time, several tax policies that have historically reduced individual and business tax burdens are due to expire, while several new tax provisions of the Affordable Care Act will take effect in January 2013.

On the spending side, the Budget Control Act of 2011 requires automatic spending cuts to begin on January 2nd (the sequester cuts that you have probably read about); extended unemployment benefits are due to expire at year’s end; and – somewhat less than indirectly related to Healthcare Reform – rates at which Medicare pays physicians will decrease by nearly 30% on December 31st.

What Does it Mean?
In total, the Congressional Budget Office forecasts the impact of the fiscal cliff to be a net reduction of $607B to the federal deficit in FY 2013.  Reducing the deficit is generally perceived as a good thing, right?  “Not so fast, my friend,” as Lee Corso says on College Gameday.   Most economists share a grave concern that the sudden onset of these austerity measures would send the U.S. economy into a double-dip recession. 

But most economists and financial analysts also agree that simply legislating additional delays to these measures – the proverbial kicking the can down the road again – is not going to be in the best long-term interests of the economy and will only serve to increase the stakes and consequences of an eventual fiscal collapse.  And, as we know, those charged with addressing this conundrum – elected officials, particularly in the House – tend to be long-term thinkers for only a very short period of time following an election.   And thus the stage is set.

The Election Mandate: COMPROMISE
Within a very short span of time we will learn what the next two years are going to look like in Washington. With both political parties claiming an election mandate that was clearly given to neither let’s see how long the rhetorical posturing and positioning in the media will last – and whether both parties have finally come to realize that the only mandate they were given was to stop sparring like children vying for parental attention and accomplish something meaningful!

There have been early signs of a willingness to compromise.  Republican party strategists that want to seize the new leadership void left in the wake Tuesday’s election will look to distance themselves from Grover Norquist and the Tea Party.  They appear to be willing to trade tax increases for spending cuts (as in, compromise – the way things used to get done in Congress).

In maintaining a Republican stronghold of the House, I believe voters have signaled to Democrats that fiscal conservatism is a pervading belief of the electorate.  Most political observers I think agree that entitlement spending has to be at the center of any meaningful discussion on debt reduction.  And not just at the periphery based upon an assessment of how to minimize constituency impact.  Democrats are going to have to agree to spending cuts that won’t guarantee them automatic reelection.

How this plays out over the next month leading into the holiday recess will have tremendous ramifications in setting the tone and demeanor of the 113th Congress.  And that, in turn, will have tremendous ramifications on the implementation of the Affordable Care Act.  See – took me a while, but I brought it back home.

Cheers,
  Sparky

Filed Under: Economy, In the News · Tagged: ,
Nov 7, 2012

Time to Move Forward

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Last night’s reelection victory by President Obama should finally put to rest the long and bitterly partisan rhetoric surrounding the Affordable Care Act (known more popularly and embraced even by the President during the campaign as Obamacare).

It should – but I doubt it will.  While Repeal and Replace was a catchy enough campaign slogan, the “replace” part never really seemed to be manifested in a way that offered any meaningful alternative that could be widely embraced by a majority of the body politic, even in the face of a staggeringly lethargic economy.

I think it is critically important to remember why that is: because the underlying challenges of healthcare delivery in the United States cannot – and will not – be addressed solely through public policy.  I have maintained since 2009 that the Affordable Care Act can provide a workable framework for achieving cost savings by leveraging market-based incentives while improving access and quality through public-private collaboration and care coordination.  But the future success of Healthcare Reform implementation is now squarely in the hands of healthcare providers and the non-clinical supporting cast that must step up and justify its share of the Big Tuna.

Whether before yesterday you were like the ostrich with its head in the sand or the deer frozen in oncoming headlights, today is the day you no longer can justifiably afford to stay in that position without accepting the responsibility and consequences of  your inaction.  I have written and spoken extensively over the past two years about what healthcare providers must do to be strategically positioned for success under the Affordable Care Act.  I won’t take your time again here to beat that dead horse.

With the final significant challenge to ACA repeal behind us, however, I would like to offer some observations of what I think post-acute/long-term care providers should expect over the next two-plus years leading us into the 2014 bi-election.

Latent Political Opposition
As I write above, while the election should end the political opposition to the ACA, it most certainly will not.  What the President certainly did not win last night was a clear mandate of his political agenda, of which quite obviously Healthcare Reform has been the centerpiece.  The country remains deeply divided on issues that are very difficult to reconcile.  Couple this reality with the looming fiscal cliff facing the US and much of Europe, and there is more than enough political fodder available that opposition constituencies can lean on to push back against implementation.

This will be most acutely felt as we move forward with Medicaid expansion and the health insurance exchanges.  States that have been on the fence – whether perceptually or in reality – will now have to come out from under the election’s shadow and determine – very quickly – whether they will participate in the Medicaid expansion and/or develop their own health insurance exchanges (or allow the Federal government to develop them on their behalves).

Medicaid Expansion
The reality is that most states will find it too politically tempting not to take advantage of federal funding in support of Medicaid expansion.  And so, savvy post-acute/long-term care organizations will do well to focus a lot more attention – if they have not been already – on what is happening in individual state houses in 2013 and 2014.  Of particular importance and significance, it is going to require a monumental effort to coordinate service and care delivery to the dual-eligible populations.  States will be looking to both insurers and providers to help develop the systemic infrastructure to support Medicaid expansion.  Organizations that participate in, and contribute toward, those development efforts will be much better positioned to financially benefit from expansion implementation.

Discretionary Funding
Another major political obstacle facing ACA implementation will be discretionary funding.  While major portions of the Act – including the core elements of access and coverage infrastructure – were appropriated within the legislation, there are still significant sections where funding was authorized but still requires congressional appropriation (as in appropriated by the House of Representative: still quite firmly in Republican control).

Given the budgetary realities facing the Administration and Congress – and what will likely continue to be the Republicans’ intransigence on income taxes –  it seems logical to expect discretionary funding will be severely threatened.  This will have the greatest impact on workforce educational programs and community-based health and wellness initiatives, but several demonstration/pilot projects, as well as monitoring and technology assistance initiatives could also be negatively affected.

Compromise
What has become the dirtiest word in Washington over the past decade is going to rear its ugly head again – and probably as soon as during this lame duck session of Congress.  The same fiscal concerns that will impact discretionary spending I expect will also be manifested in delays and compromises impacting implementation of both the insurance exchanges and Medicaid expansion – and perhaps even the Individual Mandate.

There will be efforts to tighten up essential health benefits (EHB).  Exchange policy pricing and subsidy values will be challenged.  Medicaid eligibility criteria will be scrutinized.  All this in the name of seeking to limit the Federal government’s actuarial financing risk (and resultant budget impact).  And though it may appear to be counterintuitive in the face of last night’s election, my bet is that Republican resolve to demand spending cuts will be stronger in the next Congress than it has been in the current.  If the Administration wants to raise tax revenues, it will have no choice but to compromise, and not facing the prospect of reelection in four years will be in a better position to do so.

Medicare
And yet we still come back to the singular policy issue that exists beyond the Affordable Care Act: how to control Medicare spending without impacting access in the face of an approaching tsunami increase in demand for care by Medicare recipients.  There is the physician Sustainable Growth Rate (SGR) formula that hangs like a black cloud, imposing a constant threat to any and all implementation efforts.

There is the $716B in Medicare savings upon which the overall economic success of the ACA largely depends.  There are programmatic payment initiatives driving providers toward payment bundling and capitation.  Medicare Reform is a story that has yet to be written, and the ending is no brighter today than it was yesterday – nor would it have been had Mitt Romney and Paul Ryan have won.  The need to produce more, better and faster with less, fewer and cheaper is the stark reality that cannot be taken away by any political party.  Stay tuned for a very rough ride . . .

Final Thought
As I have written before, although the ACA provides a comprehensive framework, much of Healthcare Reform’s ultimate policy development and implementation is still to be created through future legislation and during the regulatory process.  Or another way to look at it is, today is only the end to the beginning of Healthcare Reform.  So let’s get to work!

Cheers,
  Sparky

 

Filed Under: Affordable Care Act, Editorials & Opinions · Tagged: , ,
Accelerate! ~ Or Be Eaten
Nov 1, 2012

Accelerate! ~ Or Be Eaten

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In the November issue of Harvard Business Review, John Kotter makes his latest contribution to an already authoritative body of work on organizational change management in the article, Accelerate!  I found the article to be very insightful and particularly well timed in lieu of my post earlier this week on the Healthcare Value Equation. 

In that post I wrote about the importance of healthcare organizational leadership being able to manage through transformational change as a condition of future survival in an era of Healthcare Reform.  In our practice at Artower we are already witnessing an acceleration of meaningful efforts to explore, understand and promote clinical integration by and between acute and post-acute/long-term care providers.

For me, an analogy of what this process looks like so far is two American Indian tribes from the 18th century, each living peacefully in adjoining valleys – communicating good wishes now and again for decades via smoke signals.  Then one day the leaders from the two tribes decide to meet face-to-face and find they can no longer communicate because of not sharing the same language.

Those familiar with Kotter’s work will recall his seminal article and then book, Leading Change, and the eight steps of an effective organizational change process.  Now, in Accelerate! Kotter introduces eight accelerators that form the backbone of a strategy network, which he suggests should work in parallel with an organization’s existing operations.   The accelerators differ from the eight steps in their being nonlinear, more organizationally encompassing and ideally facilitated independent of the traditional organizational hierarchy.

Kotter argues that for an organization to maintain the highest levels of operational performance and efficiency while concurrently being able to resiliently embrace and adapt to an increasingly complex environment what is required is a, “dual operating system – a management-driven hierarchy working in concert with a strategy network.”  The applicability of this model to healthcare organizations desiring to survive the burgeoning maelstrom seems rather self evident; thinking strategically isn’t sufficient – acting swiftly will also be necessary, and that typically requires a significant change effort.

So what Kotter has done in this article is tie together two concepts that I have argued for the past decade must be more effectively merged within and by organizational leadership if planning efforts are to result in tangible results: that is, the critical connection between strategy and organizational change management.  Specifically, he notes that, “strategy should be viewed as a dynamic force that constantly seeks opportunities, identifies initiatives that will capitalize on [those opportunities] and completes those initiatives swiftly and efficiently.”  I tried to make this point in my white paper earlier this year and have sought to reinforce it in presentations on strategic planning and positioning for Healthcare Reform.

The key takeaway here for healthcare providers – and particularly for providers of post-acute and long-term care – is that organizational leadership must sponsor and promote both operational efficiency AND strategic flexibility.  Achieving both requires being able to look at the same organization from unique perspectives.  One is a structural framework that aligns individual performance incentives with the organization’s top line goals of improving outcomes while reducing costs (remember: VALUE), while the other is a network framework that is able to leverage the organization’s group genius in ways that facilitate rapid strategy deployment.

The same people in your organization can be high level performers under both frameworks – and can do so concurrently, with the right leadership.  I have seen it accomplished in the organizations we have worked with – and I have observed the tangible results those leadership teams have achieved.

Cheers,
  Sparky

Filed Under: Good to Know · Tagged: , , ,
Oct 28, 2012

The Healthcare Value Equation

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Prior to leaving for Denver and the LeadingAge Annual Meeting & Exhibition last week I posted here in the Pub several questions I was anxious to have answered by LeadingAge members.  I was not disappointed by the vibrant and impactful discussions and sharing of ideas that has come to epitomize that event.  Indeed, I learned a great deal of incredibly valuable insights, as usual.  But it was what I did not observe that – while not terribly surprising – has me nonetheless concerned about many member organizations’ futures.

Overall, I would characterize the leadership view at most organizations toward Healthcare Reform and its attendant ramifications as being acutely aware, justifiably concerned and yet still very uncertain about what types of organizational changes will be required to survive.  And where there is a greater level of certainty, the perceived changes needed tend to be of a more tactical and pragmatic nature, rather than transformational.

I realize this is to be expected because change is anathema to our human psyche.  Even changes that bring about sought after and desired results in our lives are usually disruptive, requiring adaptation, resiliency and an unplanned exertion of focus and energy.

The dynamics of organizational change are such that if you take the individual energy required to adapt to change and then multiply that by the number of individuals comprising an organization, the product will be exponentially higher.  This is primarily owing to differences in the means and speed at which individuals accept and adopt to change.  And the process by which an organization reconciles these differences is a function of effective organizational change management.

Whenever I give a presentation on Healthcare Reform I share what I have learned as a student of Michael Porter’s work on Value-Based Healthcare.  I seek to convey the singular concept that will serve as the platform upon which all future performance improvement efforts must be based.  I refer to this concept as the E = mc2 of future healthcare delivery: Value = Outcomes/Cost.   This is also the formulaic basis upon which leadership teams at organizations that provide healthcare must base their organizational change efforts.

This may seem like a simple enough concept, particularly when we compare its application in almost any other industry in which a product or service is exchanged for currency (or another product or service).  In healthcare, as we know, our delivery system has largely obfuscated the applicability and worth of this formula – first through employer-provided insurance beginning during World War II and then several decades later and subsequently through complex provider payment designs developed by Medicare, Medicaid and commercial insurers.

As Porter asserts, today healthcare providers compete on bargaining power, volume and control of the patient, rather than value.  The demographic and economic realities of this 21st century require a paradigm shift in the competitive model of healthcare delivery, where market advantages will be achieved through actual and perceptual positions of value created for the patient.  Such a shift cannot be achieved through incremental improvements in cost reduction and process improvement – however grandiose the means of pursuing such goals may be.  It requires a transformational shift in how the healthcare organization views itself.

It also requires a new way of thinking about how we understand and define Outcomes; and how we track, analyze and report on Costs.  I will write more on these topics in the future.  But for now, my message is that those senior housing and care organizations that embrace this way of thinking – and determine how to manifest an organizational strategic positioning based on value – will be much more likely to survive and even thrive in the future. 

Cheers,
  Sparky

Filed Under: Editorials & Opinions, Organizational Change Management · Tagged: , , , , ,
Oct 20, 2012

Questions I Have for LeadingAge Members

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This week I will be joining my Artower colleagues in Denver at the LeadingAge Annual Meeting & Exhibition.    We will be hanging out at Booth # 1915 during Exhibit hours.  If you are going to be out in Denver, please stop by and say hello.

My first LeadingAge (AAHSA) conference was in 1991 (San Francisco) when I was working at Ernst & Young.  A lot has changed in the senior housing & care industry over that span, and LeadingAge has been at the heart of much of that change: they are to be commended for their tireless efforts of advocacy, education and applied research on behalf of their nonprofit membership. 

And I have truly enjoyed being a sponsor, supporter and contributing author/speaker to AAHSA/LeadingAge events during that time.  The accepted quid pro quo of that business relationship has been making such contributions to LeadingAge membership in return for access to that membership (though I think the form of those contributions has been decidedly trending more heavily toward financial over in-kind, which I guess reflects the economic realities we live in today).

I have always felt, however, that the AAHSA/LeadingAge quid pro quo relationship – if approached from the proper perspective (i.e., having the ability to listen and learn) – offered a great deal more than just marketing opportunities.  And so as I do every year, in getting ready for this year’s Meeting, I have some specific areas of interest that I am hoping to learn more about.

Industry Consolidation
Industry consolidation in healthcare is in motion, and the trajectory is one of acceleration.  Economic realities mandate the achievement of increased efficiency and productivity as a condition of survival.  The importance of mission notwithstanding, nonprofit organizations providing healthcare will not avoid being affected by consolidation in one fashion or another.  I am curious to learn whether the leadership of LeadingAge members agree with me – and if so, what they are doing to prepare their organizations for the impact of industry consolidation.

Care Transitioning
How are members organizations reacting to the intense regulatory pressure to lower Medicare/Medicaid expenditures through what is believed (hoped?) will be efficiencies and better alignment of care needs with care settings? Hospitals are – finally – beginning to reach out to post-acute/long-term care providers to engage in conversations on this topic.  What are members doing to be prepared for those conversations?

Hospital Readmissions
A similar but more clinically-focused discussion has to do with Section 3025 of the Affordable Care Act, the Hospital Readmissions Reduction Program.  Care Transitioning is a critical element of that discussion, but I really want to understand what members are doing to embrace – or not – the ability to handle increasingly higher levels of patient acuity.

Defining the Boomer
For the past decade or so we have been discussing how the Boomer Generation is going to be a uniquely different market constituency: more demanding, more educated and informed, more willing (and able) to pay for personalized services and care.  We’re another decade-plus away from Boomers starting to have a really significant impact on provider demand, but with the leading edge of that demographic now entering retirement, what are we learning about the reality of the expectations we’ve formed about Boomers?

Information Technology
The silver bullet that’s supposed to pierce the rising bubble of healthcare costs, Information Technology holds great promise – and great peril for nonprofit organizations providing housing, aging services and post-acute/long-term care.  I would like to better understand how LeadingAge members are viewing IT investments and what risk management strategies they are employing to help guide such investment decisions.

Home & Community-Based Services
This is the area that I am most excited about, having been privy to the strategic initiatives of several member organizations that are currently planning, developing and providing service and care programs that will help seniors remain in their homes and communities.  And in each case those efforts are being developed in concert with market and regulatory-driven realities of Healthcare Reform.  I believe that – at least in the short run – innovation in home and community-based services offers a shorter path to achieving organizational financial sustainability than information technology.

Of course I have a lot more questions and areas of interest where I am hoping to learn as much as I usually do from attending the LeadingAge conference.  Please watch this space for after the conference.  I will share what I learned.  Until then, hope to see you in Denver,

Cheers,
  Sparky

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