This article appears in the July/August 2014 issue of HealthLeaders magazine.
Delivering value is paramount to any healthcare executive who is fighting for his or her organization's place in the industry going forward. But the devil is in the details, and how you get there is dependent on a wide variety of factors. Two organizations—one that has already made the transition and one in the early stages of it—show that any executive who is hanging on to what currently works in healthcare (still largely volume-based fee-for-service reimbursement) is in a very dangerous situation.
So says Robert Mecklenburg, MD, medical director for the Center for Health Care Solutions at Virginia Mason, a Seattle-based system that includes a 336-licensed-bed hospital, a 460-plus multispecialty physician group practice, and a network of regional clinics. He knows of what he speaks; years ago, he and his colleagues at Virginia Mason found themselves in the kind of crisis that many of their peers are now facing. In fact, the Center for Health Care Solutions owes its very existence to a frank meeting between the health system's executives and local large employers that dates to 2004.
"They appreciated our innovations on adapting the Toyota production system to healthcare, but they said our healthcare was not affordable. They said, 'We're going to consider a variety of choices, including taking you off our network of providers,' " Mecklenburg says.
Quite a threat.
And quite an opportunity.
For all healthcare consumers, whether that consumer is a patient, a health plan, or an employer, one thing is clear: Seeking closer cooperation from employers and treating them as a partner to help reduce their cost of healthcare is a winning strategy.
A sense of urgency
"There was an immediate sense of urgency, and you could call it even a crisis," says Mecklenburg of that initial meeting. "Not only would we not want to lose the business from these iconic multinational employers that are so important to our economy, but people say don't waste a good crisis. My job [at the time] as chief of medicine was to lead the change to a systems-based practice."
Mecklenburg first met with employer representatives and those of their third-party administrators in August 2004. In November 2004, representatives of those employers met with Virginia Mason's physicians and showed the physicians the cold market forces that were driving employers to consider other options.