Healthcare Business Today

By Eliot Wall

Need For Alignment

In the US, the term “value-based care” describes a collection of reimbursement models intended to facilitate the correction of an underlying misalignment in stakeholder incentives.  This misalignment—a byproduct of well-reasoned and well-intentioned decisions made a century ago (primarily by physicians)—has led payer and provider organizations to race to the bottom.  If this trend continues, these organizations, who generate revenue from the interaction between patient and provider, will employ increasingly perverse methods to extract money from its customers and—ironically—sacrifice the very interaction upon which they rely. 

While the system has not collapsed (it’s too big to fail), this misalignment exacts a heavy toll on its participants.  From the healthcare professional’s standpoint, delivering care to patients has become increasingly transactional and less rewarding as they are continually pressured to do more with less.  From the consumer’s perspective, the average American has less medical services covered by their payer (or charged more if paying out-of-pocket) and less of a personal relationship with their primary physician while paying more for this level of service than in past.  By definition this is “low value” care—pay more, get less. 

Furthermore, the rate at which healthcare costs are increasing outstrips wage inflation and there is no indication of this rate of increase slowing as more Americans turn 65 everyday—the most expensive demographic.  This means a relatively higher proportion of Americans’ income will need to go towards paying for healthcare resulting in reduced spending in other of the US economy. [Read more…]

By Dr. Ninfa M. Saunders and Geoffrey G. Martin

The rise of regionalized healthcare using the hub-and-spoke model of care delivery has the potential to help hospitals address critical challenges, from expanding access to care to achieving both economies and opportunities of scale. We must transition from thinking about healthcare to thinking about equitable health for our communities.

Navicent Health, based in Macon, Georgia, has been on a multi-year trajectory to build a high-performing organization that is culturally and operationally capable of serving as the hub for a clinically integrated network serving central and south Georgia. Step by step, this journey has led senior leadership at Navicent Health to confront a number of issues, and our experience may help others just starting their transformation.

From a business model perspective, the changing landscape of reimbursement is top-of-mind at Navicent Health as it is for healthcare organizations across the country. With instability disrupting insurance exchanges in Georgia, we’ve seen reimbursement decline, affecting our ability to push a strong operating margin. The problem was worse five years ago when the hospital ran at less than half capacity. Today, we are full or over capacity on most days but must become more agile, efficient, and think beyond the walls of the hospital. Other metrics—days cash on hand and debt capacity—have been healthy. To remain competitive, access at scale has become our primary focus as we look outward and consider approaches to systems integration and magnification. [Read more…]