Community Benefit vs. Organizational Benefit

STRATEGY CHALLENGE

Alan M. Zuckerman

What Would You Do?

does the strategic plan require updating because of healthcare reform?

Metro Health System (MHS) is a successfiil integrated

delivery system (IDS) and the second largest health-

care organization operating in its metropolitan area.

With the passage of healthcare reform into law, how-

ever, MHS s leaders see a need to review and possibly

revise the organization's strategic plan. Although

MHS's relatively recent full plan update still should

be valid, over the past nine months, board members

and executives have raised important questions about

the strategy. The question is, does MHS need to fine-

tune its plan or is a more significant change in strate-

gic direction required?

The Situation

MHS is a $1.3 billion (annual operating revenue), multifaceted IDS in a medium to large city. Its performance has been consistently strong for the past seven years as measured by margin, share, and other indicators. The organization comprises two large hospitals, about 300 employed physi- cians, a number of significant ambulatory care centers, a major occupational health program, an extremely large and comprehensive home health agency, a hospice, fitness centers, and other serv- ices. It is the broadest and, in most aspects, the deepest system in the region. The IDS is a highly regarded employer, having won recognition from multiple sources and with very high employee satisfaction. It recently upgraded its two-hospital campus with nearly $350 million in capital investments.

Early in 2009, having just completed a successful five-year strategic planning cycle (2004 through 2008), MHS updated its strategic plan completely. Its new plan has five major goals for 2010 to 2015: > Become the market leader in quality, service

excellence, and patient safety

> Strengthen tertiary services and academics at the two system hospitals

> Develop a broader, coordinated network of

access points > Increase the number of affiliated physicians

with emphasis on focused program develop- ment and the primary care base

> Maintain MHS's position of employer of choice in the region

Each goal encompasses two or three major initia- tives and a wide range of tactics. The plan was well received by all key MHS constituencies—board, medical staff, managers, and other employees. Implementation began in fall 2009 and continues through the present, with good progress occur- ring on all fronts.

Nonetheless, with the enactment of federal healthcare reform in March 2010, the continued relevance of the strategic plan began to be ques- tioned. Some leaders believed the plan would require only fine-tuning, but others suggested it might require a more significant revision. Then, in the latter part of 2016, ideas and potential ini- tiatives were proposed in response to healthcare reform that were at variance with the established plan, with the result that all agreed a thorough review was called for. As a result, MHS began an intensive three-month review and update process of its strategic plan in October 2010.

Alternatives Considered

Within the first few weeks of this process, it became clear that the system's plan was largely on track, but some of the initiatives would need to be modified—for example, MHS would need to accelerate the primary care initiative and consider

102 FEBRUARY 2011 healthcare financial management

STRATEGY CHALLENGE

developing an accountable care organization. Ultimately, three large questions emerged as para- mount considerations in light of healthcare reform:

> Is MHS large enough? > Is MHS sufficiently integrated? > Does MHS have sufficient geographic coverage?

The question of integration proved to be the most complex and difficult to answer. Although MHS is clearly ahead of the pack in the degree of integra- tion in its market, the abilify to maintain this position is a moving target, and MHS may find that its current strategy is insufficient to retain

Principal Characteristics of an IDS

1. A geographically distributed primary care network, properly and suffi-

ciently sized to meet the organization's clinical care model and strategic

needs

2 . A specialty services portfolio balanced for specialty demand, econom-

ics, mission requirements, clinical care model requirements, and the

organization's strategic needs

3 . A medical practice model that ensures commonality of mission, vision,

and values; effective clinical care collaboration among specialties; and

compensation and incentives aligned to the "greater good"

4 . Physicians as co-managers, co-leaders, and co-governors of the

organization

5. Dyadic leadership teams (physician and administrator linked as a pair)

overseeing key clinical service lines for quality, efficiency, and value

6. A willingness and ability to pursue payer contracting in a range of

methods, including risk assumption

7. Well-managed key points of patient customer access: emergency

department, diagnostic centers, and primary care as the key point of spe-

cialty referral

8 . Leveraged provider models for both primary and specialty care, where

providers are able to work in teams, with each team member working to

the top of his or her license while delegating appropriately to lower-level

providers

9 . A deliberate focus on superior acute and longitudinal care, especially

disease management

10. Reductions/management of unnecessary clinical pathway variation

11. A n effective electronic network, including portals for patient access

and education

12. Quality, safety, value transparency, and a customer-focused culture

(not a "physician as customer" focus)

13. Disciplined financial management, a cultural connection to the need

for performance that fuels aggressive reinvestment, and a focus and

emphasis on the balance sheet

Source. Daniel K. Zismer, PhD, Associate Professor, Division of Health Policy and Management, School of Public Health, University of Minnesota, 2010.

market leadership in the future. So what should MHS do? What should its priorities be, and how should it revise its plan?

MHS employed a i3-point framework to assess the characteristics of an IDS and conducted a gap analysis using the input of its senior management team. The gap analysis revealed areas of high competence (e.g.. No. i3, financial management) and areas of relative weakness (e.g.. No. 3, medical practice model). The senior team then engaged in a healthy but complicated debate about whether the priorities should be to build on established strengths, to address the greatest deficits, orto combine these efforts in some way. The dialogue was further complicated hy differing perceptions of the importance and timing of each of the i3 factors in the reform era.

Due to these complications, as the end of 3010 and the target date for completing the strategic plan update drew close, the team could not reach a consensus about the approach to the i3 factors. As the clock ran down, it became increasingly critical to somehow forge a consensus approach. But what would be the best way to reach this con- sensus, and—ultimately—what should the plan's update priorities be?

The Decision

In the end, MHS settled upon an approach to achieve

consensus that differed somewhat from that used for

the gap analysis. The senior team was asked to weigh

the importance of each of the i3 factors individually-

over the next few years and, based on the weighting

and group's gap analysis results, to suggest the top

three priorities (also weighted) for sou to soi3. This

approach allowed the priorities to emerge clearly. Not

surprisingly, nearly all of the members of the senior

team accorded high priority to three factors: No. 3

(a more eollaborative and aligned medical practice

model). No. 8 (leveraged provider models for primary

and specialty care), and No. 12 (quality, safety, and

value transparency). The plan's update for sou is

focused on these priorities, m

Alan M. Zuckerman, FACHE, FAAHC, is president. Health Strategies & Solutions, Inc., Philadelphia ([email protected]).

104 FEBRUARY 2011 healthcare (inancial management

Copyright of hfm (Healthcare Financial Management) is the property of Healthcare Financial Management

Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the

copyright holder's express written permission. However, users may print, download, or email articles for

individual use.