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E-Briefings – Volume 17, No. 1, January 2020

Welcome to The Governance Institute’s E-Briefings!


This newsletter is designed to inform you about new research and expert opinions in the area of hospital and health system governance, as well as to update you on services and events at The Governance Institute.


Click here to download the full PDF version.

Healthcare Forecast 2020: 10 Trends (and Implications) Board Members and Senior Leaders Need to Know


As we step into a new decade, it seems fitting to take stock of where we’ve been and where we’re likely headed. In 2020, governing boards and senior leaders of hospitals, health systems, and medical groups will need to think differently, plan differently, deliver care differently, and act with a greater sense of urgency than in the past. This article highlights a list of the top 10 healthcare trends to watch and respond to this year.

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By Steven T. Valentine, M.P.A., President, Valentine Health Advisers, and Guy M. Masters, M.P.A., Principal, Premier Inc.


Key Board Takeaways


This year, board members and senior management will need to become “uncomfortable” and consider new innovations and strategies to respond to environmental changes and shifts in market share. Questions that should be asked include:

  • Is our organization prepared to succeed in an environment of continued turbulence from care model and payment change, increased risk-sharing, and new non-traditional competitors?

  • What potential financial, operational, clinical, and governance impacts should we prepare for as care models continue to de-emphasize inpatient hospital care?

  • What are the strategic implications of increased numbers of Medicare fee-for-service enrollees potentially transitioning to Medicare Advantage and shared savings models in the market?

  • What opportunities and challenges to physician alignment can be anticipated as payers, equity investors, and other disruptor entities potentially offer significant financial incentives to join them? What degree of vulnerability exists in our organization and in the broader market?

  • Does the board understand where the transition to population health currently stands in the market, the pace of change, and the potential financial, clinical, operational, and governance impacts? (Especially consider areas such as revenues and costs, further shifts from inpatient to outpatient care, taking more responsibility for social determinants, further integrating IT/big data into clinical decision support, and traditional physician alignment disruption.)

The Affordable Care Act has now turned 10 years old. As we step into a new decade, it seems fitting to take stock of where we’ve been and where we’re likely headed. While this year’s election does make prognostication difficult, not every policy is polarizing and not every shift ahead is being led by the federal government. Indeed, some of the drivers of change are almost completely out of government control, including demographics, our aging population, and the poor health status of many Americans.


At this point, the private sector is poised and ready to implement many of the sweeping changes, where employers, disrupters, and consumers alike are aligned on the need to fundamentally change the way healthcare is provided and paid for. This includes the continued shift away from inpatient admissions and toward retail, digital, outpatient, and home care settings, particularly as more providers move toward population health and risk-based contracting. Moreover, with a strong economy and stock market, more baby boomers will continue to age into Medicare and retirement, causing a knowledge drain and human resource shortage, which will further cause innovation in healthcare to reduce the need for human labor and automate more tasks to machines. This article provides a list of the top 10 trends to watch and respond to this year.


1. Vertical and Horizontal Integration


Hospitals, health systems, and physician organizations will continue their horizontal expansion into new geographic areas, jettisoning lower-performing business segments in certain markets. Integration will occur through robust ambulatory expansion via new delivery sites and access points (e.g., urgent care, retail clinics, ambulatory surgery centers, and imaging centers). In addition, with health plans and Medicare expanding coverage of telehealth, telehealth expansion will be augmented using mobile and digital outreach services, especially in poorer and rural areas of the country. We expect to see more partnerships or co-branding of services between community hospitals and either single-specialty or academic medical centers. Lastly, we anticipate seeing more work-site access points (e.g., Google, Apple, and other large employers).


In the boardroom:

  • Take a higher-level strategic view of your hospital/health system’s current and future potential competitive position and role in your marketplace. For what geography will you take responsibility? Does your strategic plan address disruptive conditions or events as opportunities? Do you view your organization as a disrupter or being disrupted?

  • Do your strategies address all access modalities of care delivery, as well as consider partnerships and alliances that could expand and accelerate population health-related financial, clinical, and operational capabilities?

  • Does the organization have a robust ambulatory and post-acute care strategy?


2. Consumer Focus and Experience


Consumers are demanding more from their healthcare experience. Consumers expect their needs to be met quickly, conveniently, and efficiently through Web site searches or apps. They want access to their health records, and the ability to schedule appointments, refill prescriptions, and get test results quickly and easily—increasingly digitally. Consumers want a “good to great” experience from their healthcare provider(s). They expect easy, efficient, and convenient access to care and don’t want to wait (waste their precious time). Word of mouth (text, email, tweet, post, verbal, etc.) still has a significant role to play in the patient referral process and recommendations.


In the boardroom:

  • Ensure that the organization has an engaging, broad, multi-faceted, continuously changing digital and social media presence.

  • Monitor competitor consumer strategies and respond quickly as required.


3. Provider Shortages Will Persist


As baby boomers retire or cut back their work schedules (delayed due to the “great recession” but now accelerating with a strong economy), turnover and vacancies will increase. This will cause hospitals and health systems to focus on employee retention and recruitment actions. This will also cause wages to begin to increase faster than inflation. The shortages may contribute to an increase in use of travelling and contingent workers, which will also cause staffing costs to go up. This will have a bigger impact on physicians as the “old school doctors” retire and are replaced by the younger “manage my lifestyle” doctors who are not, as a group, willing to put in the same number of work hours. Expect private equity to fund start-ups in the area of machines and technology that will reduce the need for and use of humans to perform work. Expect physician, nursing, and allied professional shortages to increase. The largest shortage is expected with home health aides, especially as more care is driven to homes using remote monitoring and virtual communications technology innovations.


In the boardroom:

  • Proactively anticipate potential leadership voids in management as well as board members, and ensure that succession plans are in place and up to date.

  • Monitor labor costs, productivity trends, and unfilled openings and retirement of staff (especially nursing and allied professionals) and ensure that strategies are in place to address them. This will include exploring use and adoption of non-human resources to increase productivity.

  • Ensure that the medical staff needs assessment is current and addresses retirements and potential shortages in primary care and key specialty areas.


4. Information Technology Will Play an Even Larger Role in the Healthcare Field


The adoption of artificial intelligence (AI), blockchain, and machine learning will continue its advance as new applications are discovered. Private equity and innovators will keep pushing these technologies forward and find new and better uses to apply in healthcare. We expect that uses in the back office and revenue cycle will continue to improve and grow, while enhanced use in clinical diagnosis and treatment will come into play. The slow development of 5G will bolster integration of big data analysis and processing with remote use and telehealth and clinical use. Concern over cybersecurity will continue (fewer breaches likely, although bigger data may be affected) and efforts to defeat invasions will increase along with resources in defense. We expect growth in the use of wearables and remote monitoring. As population health and value-based care models increase, these tools will be adopted to assist with the reduction of emergency room use and active intervention with patients suffering from chronic ailments. Expect more innovation and competition from Amazon, Google, Microsoft, Apple, and others in this area as they apply new technology uses into care delivery and respond to patients’ needs and expectations.


In the boardroom:

  • Ensure that a comprehensive plan is in place for a totally integrated IT infrastructure that will optimize data to improve quality, value, patient experience, and lower cost.

  • Have a plan in place that addresses use of AI, machine learning, informatics, and other analytic capabilities to translate data into information to accomplish the goals above.


5. Provider Consolidation and Closures Will Continue, Albeit More Slowly


Despite baby boomers getting older and requiring more healthcare, the per capita inpatient use of hospitals will continue its downward slide from over the past 20 years, mostly as a result of fewer admissions, much less from length of stay reductions. Providers have done a very good job of reducing hospital length of stay using care protocols, hospitalists, caregivers, discharge planners, and the development of post-acute care services. The fight for market share will still be a key focal point for hospitals and health systems. The decline in hospital use directly impacts the increasing use of post-acute, ambulatory, outpatient, and home care. Health systems will evaluate the closing and repurposing of underutilized facilities to new ambulatory or post-acute use, or even housing for the homeless to address social determinants and their role in the use of healthcare resources. The smaller-size mergers may slow down, as many of these targets have already been acquired, while some of the bigger health systems will continue to explore mega-mergers with other large systems in the never-ending quest for greater scale.


In the boardroom:

  • What is your organization’s vision regarding size, scale, and independence/alliance?

  • Continue to monitor, assess, and address the key drivers of mergers, including insufficient access to capital, poor payer mix, service area population decline, inability to attract physicians, and lack of resources needed to compete in the market.


6. Value-Based Payment Models Continue to Grow


Medicare, along with health plans and employers, will continue to introduce payment incentives that will encourage new care models focused on improving the patient’s experience and engagement, while improving value through better outcomes at a reasonable cost. Health systems and hospitals will innovate and adopt new ways of delivering care, monitor the patient’s experience, and seek to continuously improve. We expect more “two-sided risk payment models” for non-capitated populations through clinically integrated networks (CINs), ACOs, bundled payments, and creation of high-value networks developed separately by both providers and payers. For health systems and hospitals that have experience in these new care models, there will be an attempt to focus on improving performance and shoring up weak spots. The move into value-based care will push right into population health initiatives and require exploring new strategies to address social determinants, including housing, transportation, and food security. This push will surface the gaps and needs in the mental health arena and require investment and partnerships to address.


In the boardroom:

  • Continue to focus on improving performance in new payment models to lower costs and improve outcomes (strive for top quartile or decile), patient experience, and satisfaction. (This will be more difficult in 2020 as consumer expectations will increase and patients will have higher demands for faster response to their needs, convenience, use of digital tools, and communication.)

  • Focus on delivering a value proposition that is superior to your competitors.


7. Continued Execution on Building Brand


Many organizations have realized that they need to improve their brand in the market. In other words, how does the public think of them? High quality? Expensive? The best? Fast and easy to use? Consistent care with minimal variation? State-of-the-art? Where you go if you are really sick? Boards and senior management will need to address their brand honestly as they survey the market and take realistic stock of how they stack up to competitors. For many organizations, it will take too long to improve their brand, and they will seek to co-brand with a single-specialty/disease provider or an academic medical center. The hope is to get some positive recognition that the level of care just improved at the community facility through the co-branding (which includes certain performance expectations: use of care protocols, medical directors, policies and procedures, telehealth, AI tools, etc.). The focus here is “what is the value add/proposition that we, as a community provider, get as a result of the branding strategy and partnership?”


In the boardroom:

  • How does your brand awareness measure up to that of your competitors?

  • Explore the potential benefits of co-branding and affiliation with partners that can accelerate and elevate your brand identity and awareness to drive preference for your services.

  • If you have a strong brand, explore the potential benefits of reaching out to other organizations that could use brand-improvement assistance and that will strengthen your brand by virtue of your alignment.


8. Hospitals and Health Systems Will Remain Focused on Cost Reduction


Hospitals are facing greater price transparency pressure from the government and the public. People paying the bills want to know what their healthcare choices cost them. Price transparency is a cornerstone to the Trump administration’s efforts to reduce the total cost of care. As the public’s percentage of healthcare costs go up, they become more price sensitive and tend to become more educated and ask “what am I getting for my money?” Hospitals and health systems will be more vigilant on the accuracy and fairness of their prices.


In the boardroom:

  • Accelerate efforts to reduce the total cost of care through using fewer resources, using less expensive resources (sites of care: home health, ambulatory, post-acute, telehealth), and buying supplies, equipment, etc. at a lower cost.


9. Inpatient Decline and Growth in Outpatient and Home Health


Two-sided risk and value-based payment methods will force the continuation of the per capita decline in inpatient admissions and readmissions. The length of stay (LOS), which has been reduced through the efforts of nurses and physicians for years, has hit a saturation point where there is little room to improve. Physicians, through incentives, have become more engaged in the cost of care and seek to maximize their value to patients. Look to new entrants such as CVS and Amazon, Google and Ascension, Haven, Apple, and others to enter the market with a focus on reducing costs and improving value.


The decline in use of hospitals will push trend #5 above, and could force mergers, closures, and the repurposing of facilities to alternate use.


In the boardroom:

  • Assess the potential of disrupters in your service area to siphon off patient revenue and volume.

  • Assess new care models and potential expansion of value-based care initiatives as a new source of revenue.

  • Do you have a robust ambulatory strategy that addresses niche markets and micro-consumer segments?


10. Healthcare Costs Will Climb


Healthcare costs are expected to rise about 6 percent (versus about 2 percent for inflation and 3 percent in wage growth) in 2020, about the same as 2018 and 2019. This increase is occurring despite the hard-fought efforts to reduce costs by health plans, consumers, providers, and clinicians. The increase in healthcare costs is attributed to costs of new technology, new treatments, new drugs, new procedures, the public wanting immediate access to diagnosis and/or treatment (many nations with lower costs limit/delay access to care), and unhealthy lifestyles and health status. Continued diligence by all parties is needed to reign in the spiraling cost of care.


In the boardroom:

  • Does your strategic plan assertively embrace population health strategies as well as responsibilities for social determinants of health?

  • Are you partnering with other organizations to coordinate activities around social determinants?


Conclusion


In 2020, governing boards and senior leaders of hospitals, health systems, and medical groups will need to think differently, plan differently, deliver care differently, and act with a greater sense of urgency than in the past. The outcome of the 2020 election will have little impact on healthcare in 2020 through 2021. Nevertheless, change is happening, and further change is inevitable. The organizations that are willing to depart from the status quo, take prudent risks, and embrace new technologies and methods of care financing and delivery will be those that survive and thrive into the future.


The Governance Institute thanks Steven T. Valentine, M.P.A., President of Valentine Health Advisers, and Guy M. Masters, M.P.A., Principal at Premier Inc. and Governance Institute Advisor, for contributing this article. They provide keynote presentations on trends, strategies, and governance issues at board retreats and conferences, and facilitate impactful strategic planning processes. They can be reached at stv189.sv@gmail.com or (818) 512-0349 and guy_masters@premierinc.com or (818) 416-2166.



Governance and Quality: Ideas for 2020


Over the past 15 years, most hospital boards have adopted a variety of good governance practices to improve the oversight of quality and safety in their organizations. This article provides tips and governance questions to help boards and their quality committees broaden their thinking and oversight with respect to quality and safety.

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By Michael Pugh, President, MdP Associates, LLC


Key Board Takeaways


Asking good questions is key to effective governance. But when it comes to quality, many board members are unsure of the kinds of questions that they should be asking. Asking good governance questions does not require deep content or subject matter knowledge. Instead, good governance questions are about aims, direction, and efforts. Here are five governance questions that any board member should be comfortable asking about quality and safety efforts in their hospital or healthcare delivery organization:


What are the important quality and safety results we should be monitoring?
Where is our performance now?
How good do we want or need to be and how does that compare to the “best”?
What is our strategy for improvement or “getting there”?
What resources are we committing to these efforts and are we doing enough?

Note that these questions do not require technical or subject matter knowledge but are directional and oversight questions. Setting direction, ensuring that a strategy is in place, and making sure that adequate resources are in place to achieve the desired results are all fundamental to good governance and board performance.


Over the past 15 years, most hospital boards have adopted a variety of good governance practices to improve the oversight of quality and safety in their organizations. Some of these practices include board quality committees, standard inclusion of a quality report on board meeting agendas, and increased transparency around safety events and root cause investigations. Over the same time period, there has been an explosion of quality measures and metrics that hospitals and providers are required to collect and submit to various agencies like CMS, payers, and other third parties.


One unintended consequence of the collection and reporting of so many measures is how it has impacted the role and function of many board quality committees. In some hospitals, the board quality committee meetings now largely consist of reviewing many process measures without a clear understanding of which measures are strategically important, which are fundamental to current improvement efforts, and which are being reported simply because they are collected and reported externally. That is a mistake but follows a familiar pattern. As a parallel, some board finance committees still spend too much time receiving detailed reports on last month’s accounting and budget details instead of focusing on the bigger picture of overall financial performance and strategy. At least when the financial staff dive into the minutia, most board finance committee members bring enough external experience to the table to understand how the detail relates to overall financial performance. Not so much for most board quality committee members.


Boards and their quality committees need to broaden their thinking and oversight with respect to quality and safety. Sixty years ago, Avis Donabedian, a researcher at the University of Michigan, wrote a series of papers and articles about how we should think about and evaluate healthcare quality. He hypothesized that to understand quality, you had to look at the structure, the process of care, and the outcomes of care. Structure includes quality of facilities, professional training, accreditation, licensure, management, technology, and policy. Structure supports the diagnostic and treatment processes delivered in the organization, which then produces outcomes for patients. Historically, when board members were asked about quality in their hospitals, they would often give a structure-based response by describing the new facilities, quality of the medical staff, having good employees, having the latest technology, or being well run. That view was not wrong, but just incomplete. It is also an incomplete view to focus the majority of governance attention on process of care measures as a proxy for quality.


A broader view is for board quality committees to focus on high-level outcome measures as well as the strategies being deployed to improve outcomes in patient experience, clinical care, access, efficiency, equity, and safety. This does not mean quality committees should ignore process measures and structure issues. Instead, those items should be reported and reviewed in such a way that they provide support and are connected to outcomes.


Improving Quality Oversight


There are a number of ways that boards and their quality committees can sharpen the focus on outcomes and the strategies to achieve desired levels of quality and safety performance. Here are four ideas to think about trying in 2020.


Set aggressive, board-level multi-year aims for quality and safety performance. If you are the patient, what is the right target for patient harm events like falls, medication errors, wrong-site surgeries? From a personal perspective, the answer is always zero. Yet most organizations tend to set less-than-aggressive goals for key quality and safety measures largely because of the fear of not achieving the goal. It is the board’s duty to set clear expectations about “how good we want to be” from the perspective of the community served, not just the internal organizational perspective.


Ensure that management have clear strategies to achieve your stated organizational aims for quality and safety. More than simply reviewing the numbers, boards and quality committees should be asking management about the strategies being pursued to actually improve the desired outcomes. Most hospital strategic plans have a placeholder for strategic quality and safety goals. What is really important is how the organization is planning to achieve those aims. Boards need to ensure that plans are in place and tactics and initiatives are appropriately resourced.


Simplify data and dashboard displays—what story are you trying to tell? Quality and safety measures should be organized in a way to tell stories. Any board member looking at the dashboard or display should be able to understand why the measures being displayed are important and how they relate to the overall organizational quality goals. One simple way is to organize dashboards by context. You might have a patient safety dashboard that displays an overall safety measure with sub-measures for things like falls, infections, and harm events. A second dashboard or scorecard could display the high-level board quality aims and the key measures that are being worked on to drive improvement. And, if there are measures that are simply being reported for quality control purposes, they should be organized separately from active improvement efforts. Run charts are helpful for telling the story of improvement over time. Every dashboard should tell a story.


Understand how your organization compares on publicly available quality and safety rating and ranking systems. While all of the public and government rating and ranking systems are imperfect, boards should be aware of how their organization is being viewed externally. Good ratings and rankings find their way to the hospital Web site. But if your organization is consistently being rated low or average across multiple rating systems, it is a signal that should be visible to the board and not be ignored. Payers, regulators, competitors, and even some patients look at and draw conclusions about your hospital from these online systems. While many of us would like raters and rankers to go away and find fault with their methodologies, the pressure for increased transparency about performance is only growing stronger.


Conclusion


In 2020, boards and board quality committees should strive to begin seeing and thinking about the forest, not just the trees. The triad of structure, process, and outcomes is a useful construct for broadening thinking and organizing governance.


The Governance Institute thanks Michael Pugh, President, MdP Associates, LLC, for contributing this article. He can be reached at michael@mdpassociates.com.



The Convergence of Digital Strategies, the Healthcare Consumer, and Employee Engagement


Consumer demands for a more connected experience are turning traditional care models upside down. Healthcare executives and experts from across the country convened in Chicago in late 2019 to discuss these and other key issues at Navigant’s third annual CEO Forum. This article discusses their collective insights, lessons learned, and best practices on overcoming current and future healthcare pressures.

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By Rulon F. Stacey, Ph.D., FACHE, Partner, Navigant, a Guidehouse company


Key Board Takeaways


Boards should consider the following approaches to enhance their digital strategies to improve consumer and employee engagement:

  • Do we have unrealistic expectations about our EHR as a one-stop solution for our digital capabilities?

  • What advanced technologies should we wrap around our EHR to improve consumer and employee engagement?

  • What can we learn from other industries with regard to providing an optimal consumer experience?

  • How can we use the data we have to generate knowledge about our patients’ habits, as well as educate and inform clinicians to improve performance?

  • How can we leverage the movement toward price transparency to get a deeper view of our revenue and better understand current performance while accurately projecting future scenarios?

Consumer demands for a more connected experience are turning traditional care models upside down. This is happening at a time when growth and margin compression is being exacerbated by persistent reimbursement changes. As a result, care delivery must evolve in real time. This is requiring providers to operate at the nexus of performance improvement, strategic growth, and digital health—all while building care around the consumer.


Healthcare executives and experts from across the country convened in Chicago in late 2019 to discuss these and other key issues at Navigant’s third annual CEO Forum. Following are their collective insights, lessons learned, and best practices on overcoming current and future healthcare pressures.


Healthcare’s Big Business Transformation


Make no mistake, the healthcare provider industry is big business, and hospitals and health systems must operate like other large corporations to enhance performance and drive value. Nowhere is this more apparent than the need to leverage digital capabilities to improve operations and consumer and employee engagement.


For providers, enhancing consumer engagement means offering people the same sort of experience they’re getting in retail, travel, banking, and other aspects of their lives. In other words, providers need to do the things that large businesses do, something that will move us beyond many of the traditional platforms that we’ve relied upon in healthcare.


As 2018 CEO Forum attendees discussed,1 while it was anticipated that electronic health records (EHRs) would be the main driver of broad provider performance improvement, that has not been the case for many care providers. The significant capital and resource investments providers have made in their EHRs have many organizations working to overcome unrealistic expectations that have led to an overreliance on these systems as a one-stop solution.


But as one CEO Forum executive suggested, there’s a lot more out there that we need to be thinking about to wrap around the EHR. Providers that have their EHR foundation in place are now looking to optimize their digital capabilities, including leveraging advanced technologies that have improved consumer and employee engagement in other industries.


For example, AdventHealth, based in Altamonte Springs, Florida, took a page directly from NASA’s playbook with the development of its “Mission Control” command center, designed to make the health system’s clinical operations as streamlined and efficient as possible to the benefit of both consumers and employees.2 Mission Control features 60 monitors that continually display near-time information, such as patient bed and helicopter and ambulance status. The 12,000-square-foot high-tech center is staffed around the clock by a team of clinicians and other specialists who use artificial intelligence (AI) to inform and guide decision making in areas including patient transfers and prioritization of placement and treatment. Mission Control is currently deployed across eight of AdventHealth’s central Florida campuses with plans to eventually roll it out across the entire organization, which includes nearly 50 hospital campuses and hundreds of care sites in diverse markets throughout almost a dozen states.


Building Care Around the Consumer


Healthcare as we know it has been built around the provider. An impactful digital structure must be developed around the consumers, CEO Forum attendees suggested.


Minnesota-based HealthPartners, the largest, consumer-governed, non-profit healthcare organization in the nation, polled consumers in their markets about their wants and needs. HealthPartners, which operates both a care delivery system and a health plan, found affordability and a lack of associated surprises to be at the top of consumers’ lists as well, and they want providers to show them that they truly understand their wants and needs.


Data analytics can play a pivotal role generating knowledge about consumers that even they may not be aware of. For instance, HealthPartners conducted a pilot around preventive screening. While the organization had strong mammogram screening results, there was still a subset of women they could not get in for a mammogram despite personalized outreach. By placing the women into categories based on consumer styles and preferences, HealthPartners was able to increase screening rates by 20 percent.


Empowering Clinician Engagement


The technology and data hospitals and health systems utilize should also focus on educating and informing clinicians about their performance, CEO Forum attendees agreed.


Sharing quality, patient experience, and cost of care data can be a major eye-opener for clinicians who believe they’re doing an optimal job practicing according to evidence-based standards but may not be performing as well as they think. “We’ve found that clinicians will improve their performance when information is shared and they can see how they’re really doing,” one CEO noted.


Healthcare organizations are also leveraging leaders from other industries to engage care teams on delivering more reliable care. AdventHealth hired a Navy admiral who previously ran a nuclear submarine base to help the health system with safety and security. The system found that having their care teams hear from people they both respect and admire is key to the process.


HealthPartners has worked with NASA astronaut Nancy J. Currie-Gregg, who led the Space Shuttle Program’s Safety and Mission Assurance Office assisting with NASA’s Return to Flight efforts following the 2003 Columbia tragedy. A key lesson learned for HealthPartners is the power of storytelling, which can be as effective in healthcare as it is in consumer experience work.


Price Transparency’s Clear Revenue Opportunity


The potential for healthcare price transparency became more of a reality with the introduction of long-anticipated HHS legislation. The proposed rules would require hospitals to clearly publish standard charges online for at least 300 common services in a consumer-friendly manner. While anticipated legal challenges may impact the final rule in 2021, it is clear that meaningful price transparency is a policy priority and a trend hospitals cannot ignore.


CEO Forum attendees discussed how living in a more transparent world will force provider leadership to ask some uncomfortable questions. Are we concerned about our patients’ response to our prices, and do we have a defensible pricing strategy? And how can we target services for pricing in both fee-for-service and value-based arrangements while weighing competitors’ presence, market payer mix, and clinical operating model readiness?


But with change comes opportunity for providers to attain a deeper view of whether they’re charging too much or too little for services, to include commoditized consumer service pricing, service line margins, and balancing pricing for higher-acuity services. Such pricing evaluation will be even more essential for academic health systems and large, regional providers.


As a result, health system leaders can no longer rely on historical revenue projection methodologies and anecdotal explanations when they miss revenue projections or embark on new strategic initiatives. Instead, they need to:

  • Proactively manage their revenue like a portfolio to be periodically examined, compare it to existing strategic and clinical initiatives, and rebalance it according to performance.

  • Know their data as well as payers do and develop a customized revenue portfolio strategy for the future. Data analytics can help identify the root causes of a health system’s revenue changes across such areas as collections, volume, and unit reimbursement.

Such a portfolio approach can create a single source of truth and allow leaders to fully understand current performance while accurately projecting future scenarios, including primary drivers of revenue risk and their potential unfavorable financial impacts.


The Governance Institute thanks Rulon F. Stacey, Ph.D., FACHE, Partner at Navigant, a Guidehouse company, and Director of Health Administration Guidance Programs at the University of Colorado Denver, for contributing this article. He can be reached at rulon.stacey@guidehouse.com.



12018 CEO Forum: Improving the Health of Communities Amid a Volatile Landscape, Navigant, February 2019.

2“AdventHealth, GE Healthcare Open Nation’s Largest Medical ‘Mission Control,’” Central Florida Division Corporate Communications, August 29, 2019.


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