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E-Briefings – Volume 12, No. 6, November 2015

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.

The Rise of Hospital Government Relations: How Does Your Organization Stack Up?

The healthcare industry has undergone unprecedented transformation in the last few years, and through that perfect storm of change has emerged a rising role for government relations strategists in healthcare organizations. In this article, Magi Curtis looks at the new role for government relations and current trends.

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By Magi Curtis, Jarrard Phillips Cate & Hancock, Inc.

During the past decade, government relations programs at high-performing healthcare organizations have evolved dramatically. What once was considered by some to be a secondary function is now recognized as fundamentally important to achieving a health system’s strategic business goals.

The healthcare industry has undergone unprecedented transformation in the last few years—and continues changing daily. Through that perfect storm of change has emerged a rising role for government relations strategists in healthcare organizations, and the importance of this role will only continue to grow.

Genesis of the New Role for Government Relations

Not least among the factors driving this change is the Affordable Care Act (ACA). With the ACA, hospitals and health systems are held to new standards of accountability for quality and cost of care—all while dealing with staggering reimbursement cuts and tighter government regulation. The ACA’s sweeping reforms mean it has never been more important for hospital and health system leaders to establish a consistent, effective dialogue with elected officials and regulators.

Healthcare leaders also must recognize that regulators and governing bodies at the local, state, and federal levels determine the rules and regulations through which their organizations operate. In today’s climate, those regulators and governing bodies have an increasing role in how healthcare organizations grow. That means the FTC is taking a closer look at provider consolidation nationwide, state Certificate of Need boards are paying more attention to the construction of new facilities, and states’ legislatures are choosing to expand (or not expand) Medicaid coverage—which is directly tied to a provider’s bottom line and financial viability—while facing political pressures of their own and struggling to rein in their budgets.

Another factor in the increasing importance of government relations is that healthcare providers are becoming more and more dependent on the government—at the federal and state level—as a payer. In fact, between 1990 and 2010, national Medicaid spending increased from $72 billion to more than $400 billion annually, and Medicare is showing the same trend. The Congressional Budget Office projects Medicare costs will total more than $1 trillion by 2020. This will only increase as healthcare reform implementation occurs and the industry continues to evolve.

Trends at High-Performing Systems

Thirty years ago, many hospitals and health systems had government relations staff, but it wasn’t shocking if they didn’t. Twenty years ago, more hospitals and health systems were investing in government relations efforts, but the focus was different; it was centered more exclusively on legislative and regulatory goals. In the last two decades, the industry has evolved and the overall focus of the government relations department is centered on helping a hospital or health system achieve its strategic business goals. It’s a critical component of an organization’s overall success.

Last year, our firm embarked on a benchmark project that provides data on how hospitals and health systems across the nation are structuring and investing in their government relations efforts. A couple of key findings from the report stand out.1

Government relations leaders are seasoned professionals. Nearly 90 percent of all respondents reported having worked in the government relations industry for eight to 15 years and over 60 percent for over 15 years (see Exhibit 1). What this says to me is that individuals leading the government relations efforts at our nation’s hospitals and health systems are true experts in their fields.

Not only do they need to be on top of the latest legislative and regulatory issues that could impact their organization, but they also need to be familiar with and help their organization achieve success in growth strategies, clinically integrated networks and ACO development, payment reform, network- and state-based exchange plan and demonstration project inclusion, labor efforts, and of course, reputation building. Only a government relations strategist can juggle and drive change on all of these issues.

Exhibit 1: How Long Has the Lead Been in the Government Relations Industry?

Source: The Rise of Hospital Government Relations: Benchmark Data from Hospitals and Health Systems Across the Nation, Jarrard Phillips Cate & Hancock, 2014.

Boards and CEOs must recognize the value of government relations, invest in it, and position its leader appropriately. Just like you value your leaders in operations, finance, clinical staff, legal, strategy, and more, the government relations leader should have a seat at the executive table and be a part of overall business strategy development for the entire organization. High-performing organizations recognize this and position their government relations leaders accordingly, many by having them report directly to the CEO. They also invest in the overall department efforts wisely.

The board and C-suite have a role to play. The relationship cultivation necessary for successful government relations efforts cannot be accomplished by the government relations team alone. Hospitals and health systems with the most effective government relations programs engage board members and C-suite leaders in these efforts as well (see Exhibit 2).

Exhibit 2: Does the Government Relations Lead Provide Regular Legislative Updates to the Board?

Source: The Rise of Hospital Government Relations: Benchmark Data from Hospitals and Health Systems Across the Nation, Jarrard Phillips Cate & Hancock, 2014.

Measuring ROI for the government relations department is essential. Clearly, the role of the government relations leader and his or her team is a job for a small army, but hospital and health systems’ budgets are tight—and only getting tighter. Government relations leaders have a responsibility to figure out how to measure the ROI for their departments. Yes, measuring ROI for government relations may be more challenging than it is for finance or clinical efforts, but there are ways, and government relations leaders must prove the bottom line value of their efforts. It will likely be the lynchpin to the CEO and board approving increased department resources in the future.

The Need Is Clear—But Is It?

Given all of this, it would seem obvious that government relations as a function is critical to achieving a health system’s strategic goals. But for boards and CEOs, knowing that something is important and being willing to invest in it—during financially lean times—can be a different story. It’s important that leaders not just invest in it, but that they give government relations the authority it needs and that they measure the program. Just as a hospital or health system’s operations and growth strategies look very different today than they did in 2000, the government relations programs should also be reshaped to reflect the realities of the time.

Assessing Your Government Relations Efforts

The key to government relations success is having a well-developed program in place long before your organization needs anything.

Below are five questions the board and CEO should discuss when looking at the organization’s government relations efforts:

1. Are we achieving our strategic goals?
2. Does our government relations leader have a seat at our senior leadership table?
3. Are we investing enough into our government relations efforts?
4. Do we know how our government relations efforts stack up against those of our peers and competitors?
5. How will we know if our government relations efforts are successful?

Unless healthcare leaders can confidently answer “yes”—and can articulate how—to each of the above questions, I encourage them to assess how their hospital or health system approaches, invests in, and manages its government relations efforts.

The Governance Institute thanks Magi Curtis, Vice President, Jarrard Phillips Cate & Hancock, Inc., for contributing this article. She can be reached at

1The Rise of Hospital Government Relations: Benchmark Data from Hospitals and Health Systems Across the Nation, Jarrard Phillips Cate & Hancock, 2014.

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The Health System of the Future

Social, technologic, and regulatory forces are in play that will change the nature of healthcare and require health systems to change as well. In this article, W. Roy Smythe explores some of the new realities that will result from upcoming industry changes.

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By W. Roy Smythe, M.D., Valence Health

“Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him.” —Dwight D. Eisenhower

Some health systems are enjoying a financial respite in the moment—reaping the benefits of scale and years of process improvement. However, social, technologic, and regulatory forces that will fundamentally challenge and create new imperatives for these enterprises have boarded and are riding inexorably toward them on Eisenhower’s metaphorical train.

While clinical technologies have constantly evolved, business and care delivery models in organized systems of care have been more or less unchanged for a half-century. If you are a little sick, you see a doctor in a small box for a short period of time and generate some money for the provider organization. If you are a lot sick, you see many of doctors in a larger box for a longer period of time and generate more money for the provider organization.

Many new realities will result from the upcoming industry changes, and this article explores a few worthy of specific mention: the empowerment of the individual by digital technology, the imperative of population health management, the financial reconfiguration of complex specialty care as cost, and blurring of lines of competition for healthcare market share.

Empowerment of the Individual by Digital Technology

The digital revolution has created tools we could not have even conceptualized a short time ago. Examples of the empowerment occurring now or in the near future as a result include the portability of medical records and data, the ability to compare providers and healthcare organizations on the basis of various (increasingly less surrogate and more “real”) outcomes, and the ability for patients to access healthcare in new ways.

These are positive developments, but unfortunately, all of them increase the possibility of an individual moving to a competitor.

Patient retention is paramount in the moment as health systems are still largely fee-for-service, and will be paramount in the future as they are exclusively rewarded for medically and financially managed populations. Systems will collect as much data as possible, and create ongoing analytic insights to drive prevention and individualized treatment outcomes, as well as lower the costs created when these insights are not available.

Health systems will also have much more sophisticated individualized relationship management platforms, similar to the retail and hospitality industries. In addition to a comprehensive healthcare record, individual preferences and habits within and at times peripheral to the acquisition of care will be understood and leveraged. Movement of patients within individual systems will become more seamless and more directed, and systems will provide appropriate redundancy of services and providers, so patients will still have “choice.”

Digital tools and delivery structures that provide a spectrum of access to care opportunities will be deployed—from online completely inanimate diagnostic and treatment algorithms to in-person care, and all things in between. There is a “long tail” of preference when it comes to how individuals want to access care, depending on a number of factors such as age, discretionary time, and medical condition.

Development of “self-care” platforms for individuals will occur as the democratization of information and technology will make this increasingly possible. The use of these tools (not limited to “wellness,” but extending well into diagnosis and treatment) could have a dramatic impact on both the cost of care delivery, as well as the reawakening of the concept that individuals are ultimately responsible for their own health.

If this sounds unlikely, contemplate how often women currently walk into an Ob-Gyn office to make a diagnosis of “pregnant.”

Technical, informational, and moral authority are all eroding in healthcare, and that will be recognized and accepted. Technologies will be increasingly placed in the hands of patients, as well as the information needed, to manage many more aspects of their own health and healthcare. When considering moral authority, while there is a role for paternalism in medicine, partnerships are more desirable and will encourage more active collaboration rather than simple “receipt” of care.

There is a downside to the democratization of medical information; however, as impediments to misinformation will be increasingly few. The health system of the future will be the unquestioned source of medical truth, and a watchdog for medical misinformation.

The Imperative of Population Health Management

Regulation, incentives, and more importantly, public opinion will continue to require health systems to pay much more attention to the overall health of populations, rather than focusing the vast majority of efforts on acute care triage and management.

More sophisticated individual health and wellness engagement platforms will be deployed—perhaps capitalizing on recent findings in network theory and lessons from researchers like Alex Pentland at MIT to make these more effective.2 As noted above, a full spectrum of access options will be available to meet the needs of the care access preference “long tail.” To more effectively manage the costs of the population outside the acute care setting, higher quality and more creatively administered fully integrated post-acute and transitional care facilities (such as home care, rehabilitative, and long-term care) will be essential components.

The catch, of course, is the creation of these structures and programs are largely unfunded mandates, and most of the financial responsibility for acquiring and successfully implementing them will be placed squarely on the shoulders of the systems themselves. Therefore, a fundamental component of the delivery system of the future will be managing risk; the incentives quickly align for investments to be made in the foregoing areas if the fruits of actual “health management” (premium dollars not spent at the end of the year by healthy, or more efficient, care-consuming patients) can be reaped by the manager. Health systems will move from managing risk in only their employee base and perhaps government (Medicaid and Medicare) programs to full-risk commercial type plans. Systems will choose to either fully administer these or work with third-party administrative partners, but the imperative is clear.

Financial Reconfiguration of Complex Specialty Care as Cost

It is no secret that as providers take on risk, specialty and complex care will increasingly be viewed as loss leaders. While efforts to make the population “healthier” will help, behaviors change on generational timelines. In addition, the aging demographic means we will not see a dramatic drop in the incidence of oncologic and cardiovascular disease and further dramatic drops in inpatient beds will be unlikely over the next two decades. Finally, modern clinical outcomes, as well as other quality and individual satisfaction comparisons, will not allow for 1990s-style care rationing to offset these costs, and other ways to control costs will need to be sought.

The overall cost of care in both primary and specialty settings, leveraged across a large system, will be attenuated by using digital technologies that manage patients with fewer providers and “boxes” and will lower fixed costs. A continued focus on supply chain efficiencies and vendor product performance will yield some additional value, and digital technologies will assist with these efforts as well.

The largest opportunity for cost reduction for many growing systems; however, will be thoughtfully regionalizing specialty care. While a heart surgery program may break even at a volume of 50–60 cases, it will make no sense to manage the overhead costs of that program with a 2,000 case unit within driving distance for patients. This exercise will be repeated for all complex care across large systems. Those most effective will understand succinctly what is acceptable both socially and medically in the populations they serve, and work diligently to re-educate populations regarding the critical difference between convenience, experience, and outcomes. There is an undeniable positive relationship between quality, cost, and volume in specialty care, but in the interest of protecting market share, this has not been made clear to the general public.

Hospitals themselves will increasingly be structured in a multi-modular fashion around disease-oriented “focused-factory” concepts to improve clinical outcomes and increase efficiency, but will be designed to feel more like “home,” and less like the term “factory” implies.

Blurring of Lines of Competition

The healthcare delivery system structure is not likely to be “disrupted” any time soon by technology, but technology will allow competitors to eat away at the edges of delivery systems, and eventually into vital areas, unless they execute on the foregoing. It does not take much of an imagination to conceptualize national self, virtual, and convenient care platforms that could leverage the segments of the population with no need to interface with “boxes and doctors.” In an unlikely worst-case scenario, this could eventually force delivery systems, trapped by sunk costs in infrastructure, into contracted complex care arrangements where they compete with one another to provide commoditized inpatient care.

Some General Comments

The go-to-market strategies of health systems will obviously change, and over time will take on more of a “solutions company” approach—segmenting not only their populations by medical diagnosis and severity of illness, but also on the basis of age, overall health, how they choose to access care, and risk coverage preferences. This will allow the provision of products and bundled services attractive to everyone in the population.

Complexity theory teaches us as endeavors become more complex and less predictable, they should become less hierarchical and more heterarchical (self-organizing). The future of healthcare includes more perfect real-time data sharing and insight generation between individuals themselves, individuals and systems, and finally, between healthcare organizations. In time, this will take place on a global scale for the foreseeable future; the health system will be the most reliable, appropriately incentivized coordinator of these efforts.

Social, technologic, and regulatory forces are in play that will change the nature of healthcare and require health systems to change as well. Experience suggests tempting fate is folly—that lying down on the tracks to see if the train of the future is coming or trying to beat that locomotive across the tracks (waiting until the last moment to move out of the way) are both bad ideas. The train has objectively left the station, and those that recognize, embrace, and leverage these forces of change will be the leaders of the future.

The Governance Institute thanks W. Roy Smythe, M.D., Chief Medical Officer at Valence Health, for contributing this article. He can be reached at

2See Alex Pentland, Social Physics: How Good Ideas Spread—Lessons from New Science, Penguin Press, January 2014.

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Through the Patient’s Eyes: The Picker Institute Site Visits and Case Studies

Patient-centered care has moved from being something desirable to do while providing healthcare, to an inherent part of healthcare quality itself. In this article, Richard L. Buck, Tam Mahaffey, and Jennifer Volland discuss the Picker Institute’s current efforts to determine high performers in patient-centered care and share examples of best practices.

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By Richard L. Buck, M.D., M.P.H., FACPM, Tam Mahaffey RN, B.S.N., M.S.N., FNP-BC, and Jennifer Volland, RN, D.H.A., CPHQ, NEA-BC, FACHE

Harvey Picker (of Picker X-Ray) created the Picker Institute over 25 years ago. When his wife Jean had a serious illness, she had access to and received some of the best technical medical care that was available. But both Harvey and Jean were struck by the insensitivity of the care to her needs and the needs of her family. They felt that care was becoming more disease oriented and less patient oriented.

For those of us who had the privilege of meeting Harvey Picker, we know that simply stopping at being dissatisfied at the lack of patient-oriented care was not an option. So Harvey created the Picker institute and funded research with Harvard University using an approach, revolutionary for its time, in which researchers conducted interviews directly with patients and their families to determine what elements they were looking for in their care.

That research led to the now well-known eight dimensions of patient-centered care:

  • Respect for patients’ values, preferences, and expressed needs
  • Coordination and integration of care
  • Information, communication, and education
  • Physical comfort
  • Emotional support and alleviation of fear and anxiety
  • Involvement of family and friends
  • Continuity and transition
  • Access to care

In 1993, those findings were highlighted in the book Through the Patient’s Eyes, which further helped to bring the term and the dimensions of patient-centered care to the discussion of the quality of healthcare.3 That research also led to the Picker survey questions that healthcare organizations could use to determine their success in providing patient-centered care.

Then in 2001, the Institute of Medicine published its landmark report, Crossing the Quality Chasm: A New Health System for the 21st Century, and patient-centered care was formally included as a dimension of healthcare quality.4,5 Patient-centered care had moved from being something desirable to do while providing healthcare, to an inherent part of healthcare quality itself. That same year, National Research Corporation acquired the Picker Institute.

Patient-centered care in Crossing the Quality Chasm was defined as “care that is respectful of and responsive to individual patient preferences, needs, and values, and ensuring that patient values guide all clinical decisions.’’ There was a direct link between this definition and the result of the research of the Picker Institute.

This focus on patient-centered care continued to grow and, since 2008, public reporting of patient-centered care results has been required through the CAHPS (Consumer Assessment of Healthcare Providers and Systems) surveys. The CAHPS questions and the rating scale are based on the survey questions originally developed by the Picker Institute.

As part of its effort to remain at the forefront of patient-centered care, the Picker Institute is using the HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) results and CG-CAHPS (Clinician and Group Consumer Assessment of Healthcare Providers and Systems) results to determine high performers in the United States. Additionally, Canadian hospitals are being included for lessons learned and identification of any additional practices that may be unique. To date, 14 high-performing organizations in patient-centered care have been identified, with 12 site visits already completed or in the process of being scheduled. The site visits result in the development of case studies profiling best practices from these high-performing organizations in various dimensions of patient-centered care.

The areas of performance that hospitals can excel at include: communication about medicines; discharge information; communication with doctors; communication with nurses; staff responsiveness; cleanliness and quietness of the hospital environment; pain management; care transitions; and the two more global measures, which include the overall hospital rating and the willingness to recommend a hospital. Areas of performance where clinics can excel include: getting timely appointments, care, and information; provider communication; helpfulness and courteousness of the office staff; follow-up on test results; care coordination; and the more global measure of patient’s rating of their provider.

A presentation of best practices in two areas—discharge information and nurse communication—was one of the general sessions at the 21st Annual NRC Picker Patient-Centered Care Symposium in September 2015. In addition to best practices from these high-performing healthcare organizations, the presentation also focused on approaches that organizations are using to identify and enhance their own best practices.

Two additional Picker Institute concurrent presentations were provided during the conference. Bryan Health, located in Nebraska, discussed strategies and initiatives that led to being a high performer on the discharge information HCAHPS composite. Eleven identified best practices and initiatives were reviewed. Core Physicians, an affiliate of Exeter Health Resources in New Hampshire, discussed strategies and initiatives that led to being a top performer on provider communication; getting timely appointments, care, and information; patient rating of their provider; and willingness to recommend a provider CG-CAHPS composites. Ten identified best practices and initiatives were presented.

Learning the best practices of other healthcare organizations as well as learning about approaches to identify and enhance intrinsic best practices at one’s own healthcare organization will be of value to healthcare board members, executives, and clinicians as they seek to provide patient-centered care at the highest levels. It is with the knowledge that the patient experience is now at the core of healthcare quality that we all work toward the common goal of providing care that is truly patient-centered “through the patient’s eyes.”

The Governance Institute thanks Richard L. Buck, M.D., M.P.H., FACPM, Tam Mahaffey RN, B.S.N., M.S.N., FNP-BC, and Jennifer Volland, RN, D.H.A., CPHQ, NEA-BC, FACHE, for contributing this article. The authors are all part of National Research Corporation’s Picker Institute team conducting site visits at hospitals and health systems that are achieving outstanding results in patient-centered care. Governance Institute members can obtain Picker Institute case studies by contacting their account manager.

3Margaret Gerteis, Susan Edgman-Levitan, Jennifer Daley, and Thomas L. Delbanco, Through the Patient’s Eyes: Understanding and Promoting Patient-Centered Care, Jossey-Bass, 1993.
4Institute of Medicine, Crossing the Quality Chasm: A New Health System for the 21st Century, National Academies Press, 2001.
5The six dimensions of quality are healthcare that is: safe, effective, patient-centered, timely, efficient, and equitable.

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