Health Forum Buzz: “Reform is Here: Deriving Opportunity from Chaos”

The Health Forum and American Hospital Association Leadership Summit held in San Francisco a couple weeks ago was certainly timely given the recent Supreme Court decision and the debate on health care reform during this election year.   Larry Beasley of Wayne O’Neill & Associates reported that the theme of the program and the buzz in the hallways was all about how health systems must transition through chaos during a period of reform, whether the reform is driven by government or market forces.  Larry attended sessions discussing paths forward following the recent Supreme Court ruling,  the ACO Value Chain, the challenge to innovate or fail when confronting healthcare reform, lessons learned from the most wired hospitals, acquiring and developing talent, and making the new healthcare business model a reality.  And of course there were others in an information packed program.  Here are headlines that emerged across the range of topics:

• There is a new business model coming to healthcare, and it involves driving down the cost of operations and care delivery…just a few reasons why?

*  Other countries deliver comparable or more care for 20% less

*  A growing number of American healthcare executives estimate there is 30% waste in the system

*  The automatic budget cuts loom, plus there is emerging possibility that defense will be cut less than currently mandated with deeper healthcare cuts picking up part of the difference.

• Current people resources appear inadequate to the new model’s challenges…examples

*  One major urban hospital accomplished installation of Epic and People Soft in eighteen months – but experienced 85% turnover in its IT staff in the process.

*  The average age of nurses is now in the mid 50’s, so a huge percentage of front line staff for care delivery will be retiring just as the demand for their presences escalates – and absolute minimum resources are allocated for recruiting and developing replacement talent that’s up to the challenge.

*  Executive leadership must sharpen their eyes to be sure they place the right people in each position.

• Hospitals are acquiring more and more physician practices and putting doctors on the payroll, but many are overpaying and few understand the real challenges involved in recruiting, managing and retaining MD’s.

• Patient safety and quality of care, along with economics and demographics, are critical drivers, especially now that they’re linked to reimbursement score cards.

Regarding the last point, Bill Pully, CEO of the North Carolina Hospital Association, told me recently that several years ago his Board determined that although much in their environment – such as Medicare reimbursement rates – is out of their control, patient safety and quality of care are clearly within their control.  NCHA has made these issues a priority ever since with remarkable results in many hospitals in the state.

Most of our clients and readers engaged in the healthcare market are interested business wise in capital expenditures by hospitals for facilities, equipment, and IT.  There was no session devoted to capital programs directly, which may explain why so few design and construction firms were present.  Yet how health systems address the issues related to their transition to the new business model will drive decisions about capital programs.  As one speaker put it, we’re entering a period of chaos in the healthcare market, but where there is chaos there is opportunity.