Care Systems of the Future, Implications for Governance: Winter 2011-12 Issue of Great Boards

Hospitals and Care Systems of the Future, a report developed by the AHA’s Committee on Performance Improvement, asserts that hospitals and health systems in the U.S. will face “unparalleled pressures to change in the future.” Multiple, intersecting environmental forces will drive the transformation of health care delivery and financing from volume-based to value-based payments over the next decade, the report says. These forces include everything from the aging population to the unsustainable rise in health care spending as a percentage of the overall economy.

The report cites economic futurist Ian Morrison who believes that as the payment incentives shift, health care providers will modify their core models for business and service delivery. He refers to the historic, volume-based payment environment as the “first curve” and the future, value-based market dynamic as the second curve.

Many hospitals already are broadening their traditional focus on fee-for-service and acute care and evolving into “care systems” that integrate a continuum of patient-focused services and can take accountability for managing quality, health improvement and costs across providers. But – and here’s the rub — will the payment system change fast enough to reward providers who join together to deliver value?

As the report states: “Progressing from the first curve to the second curve will be a vital (but challenging) transition for hospitals, analogous to having one foot on the dock and one foot on the boat—at the right point, the management of that shift is essential to future success.”

Using the Report

The winter issue of the Great Boards newsletter provides report highlights (“Leading Through Change: Cultivating the Curves”) and then suggests how boards can use the report as a provocative framework for strategic thinking, organizational assessment and decision-making. In his commentary “Asking the Edgy Questions about the Future” Barry Bader discusses how boards can use the report to:

  • Clarify the organization’s vision and test progress;
  • Reveal untapped or underexploited strategic choices;
  • Frame strategic choices from the community’s perspective;
  • Explore aims not tactics;
  • Test the mission fit of strategies and vision from a stakeholder’s point-of-view;
  • Challenge the organization’s capacity for change;
  • Explore the implications of living between the first and second curves;
  • Challenge key governance and leadership assumptions;
  • Spur innovation; and
  • Challenge the board’s capacity to lead transformative change.

He also suggests questions boards and leaders should avoid in using the report to engage in generative governance, a more visionary and creative mode of board work that moves beyond more traditional fiduciary and strategic approaches to governing.

Read and download the issue now at where you also can download several sample tools to apply ideas discussed in the report and newsletter.

Health Disparities, Board Decisions Featured in Fall 2011 Issue of Great Boards

The fall issue of Great Boards, our first since Great Boards joined the American Hospital Association family – is now available on the Great Boards website The issue features these stories:

National Call to Curb Health Disparities – Health care access and outcomes should not be dependent on an individual’s race or ethnicity, but disparities in care remain, says the lead story.  “There’s ample evidence that indicates that differences persist in the way healthcare is delivered, that certain health needs of racial and ethnic minorities and other subgroups remain unmet, and that the health status of these populations varies from that of other subgroups.  Data show higher rates of infant mortality, hypertension, death from heart disease and stroke, and preventable hospitalizations among blacks compared with other populations. When hospitals look at their patient diagnoses data by race and ethnicity they also can uncover less obvious health needs.”

In July, these findings drove a group of leading health organizations, including the American Hospital Association, American College of Healthcare Executives, the Catholic Health Association of the United States, the National Association of Public Hospitals and Health Systems and the American Association of Medical Colleges, to issue a national “Call to Action” urging hospital and health system leaders to take three steps to help eliminate disparities and improve quality of care for all. These steps include:

  • Increasing the collection and use of race, ethnicity and language preference data;
  • Increasing cultural competency training; and
  • Increasing diversity in governance and leadership.

This article by Great Boards managing editor Mary Totten describes action steps boards can take to provide leadership on reducing health disparities.

Avoiding Bad Big Decisions – Boards and senior management teams often make three mistakes in decision making that lead to flawed, suboptimal decisions.  This commentary by Barry Bader says boards need to pay attention to their process for decision making, and it offers practical ideas for making decisions effectively.

Also look for several sample resources, including a charter for a board Cultural Diversity Committee, a Racial and Ethnic Disparities Dashboard and a Policy on Strategic Planning, on the Great Boards site home page under Related Resources.

Healthcare CEOs Look at Healthcare Transformation

A lot of articles are appearing that assess the likely impact of the Patient Protection and Affordable Patient Care Act. One of the better ones is “Clinical Integration: The Key to Real Reform,” published by the American Hospital Association back in February. It makes good reading for a board strategic planning retreat. (Members of The Governance Institute can get its excellent new DVD series, “Delivery System Reform.“)

An article that caught my eye with a different twist is a conversation with two visionary CEOs, Chris Van Gorder of Scripps Health in San Diego, CA and Jim Hinton of Presbyterian Healthcare Services in Albuquerque, NM, moderated by Jim Gauss, President and CEO of Witt Kieffer, the executive search firm.

Asked what will be the most critical challenges over the next several years, Van Gorder cut to the core: “We will have to become much more integrated and eliminate system fragmentation among doctors, medical groups, outpatient centers and hospitals. And if what we are reading is true, reimbursement will be significantly reduced over the next decade to pay for health reform, so we will need to take cost out of the system.”

Hinton echoed the integration vision: “We anticipate caring for many more people in our systems with essentially the same level of net revenue we have today. That’s put a premium on consistency, reliability and eliminating rework. Our vision is that the only way to succeed in this new world is through a much more tightly integrated model with more coordination of everything that goes on in the system. We are all about integration. We are transforming systems of care through innovation, work redesign and automation. That is what really is driving us today.”

Bundled payments, accountable care organizations, medical homes and so on may turn out to be sustainable or famous flops, but the idea of payments based on value rather than volume is, I believe, here to stay.  A value-based payment environment will require greater focus on integration through alignment with physicians, information technology, and standardization around best practices, administratively and clinically.

Among my clients, the executive suite and corporate board understands the vital importance of integration, but is having a harder time convincing independent physicians (and even employed doctors) and the trustees of subsidiary hospitals that integration — being able to act as one to deliver quality and value to the patient and community — requires changing business as usual. Van Gorder’s and Hinton’s message is one they would be wise to hear — and heed.

About Great Boards

Find out more about health care governance on the Great Boards and Center for Healthcare Governance websites.