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March 22, 2016

How two health systems got 'systemness' right

Daily Briefing

The Daily Briefing's Aly Seidel sat down with Ben Umansky, a practice manager with the Health Care Advisory Board, to discuss how systems can successfully take advantage of their size to deliver consistent, quality care.

Q: We're seeing more and more consolidation in health care—but as health systems grow in size, they aren't necessarily becoming more effective. Why is that?

Ben Umansky: It's nothing new for health systems to use their size to obtain pricing leverage, access to capital, and general financial security.

But that's not the same as using scale to generate greater value for the market or for patients. When it comes to value, it's far too often that I see larger systems making things worse—all the moving pieces don't mesh, overhead costs grow without corresponding benefit, and organizations become slower to react to market stimuli. But there's tremendous potential for scale to yield true value, whether through more efficient operations, more reliable and coordinated care, leaner fixed cost structures, or even more innovative business models. It's not just about being a system—it's about "systemness."

So why doesn't that happen? I hear the same explanations—excuses, really—all the time: "Our physicians won't cooperate; there's opposition from the board; we're too big; it's too complicated; we don't have the right culture."

What we've learned is that those dynamics are symptoms, not the underlying causes.

Q: Then what are the causes?

Umansky: Almost every breakdown in "systemness"—and, on the flip side, every major success—comes down to a combination of three factors.

How to engage your front-line staff and deliver consistent care

First is the allocation of authority and responsibility. If it's not explicitly clear whose job is whose, you'll see gaps in effort or redundancies or even outright conflict. There's no pre-fab organizational chart that will fit every system, so choosing a clear structure that maps to a system's specific ambitions is key.

Second is the free flow of information across the organization. This isn't just about connecting clinical records and choosing a single EHR. The most successful systems bring together a vast array of information: financial performance, market analytics, consumer segmentation, even institutional knowledge like best practices or care protocols.

Third is the alignment of incentives. Let's say a system has five hospitals in the same market, and it has decided, perhaps wisely, that it's only going to do cardiac surgery at one of them instead of all five. That may be a more efficient allocation, but tell that to the individual hospital CEO who's losing the crown jewel of his or her service portfolio. Wounded pride is hard enough to overcome, so imagine how much more challenging things get if that CEO's bonus is based exclusively on facility-level financial performance.

Q: How can corporate leadership balance both what individual stakeholders want and what is best for the system as a whole?

Umansky: The most important thing is that individuals must perceive that the system's success benefits them. That can be made explicit through financial incentives or implicit through reinvestment or access to new markets.

Yale New Haven Health System is a great example. Several years back, Yale acquired the Hospital of St. Raphael, a nearby community hospital, and began the very difficult process of integrating it with its flagship hospital campus. Lots of disruption, lots of uncertainty. It was critical that everyone on both sides see the value of working as one.

So Yale New Haven's leadership did something very important: They made conspicuous, concrete commitments to and investments in the new facility. The goal was not that St. Raphael be part of Yale New Haven, or that it be owned by, or operated by, or integrated with, Yale New Haven. The goal was that St. Raphael be Yale New Haven. In the eyes of patients, physicians, staff, insurers, regulators, and anyone else, the level of quality and service must be identical. The St. Raphael campus couldn't be treated any differently than you'd treat the 3rd and 4th floors of your tower. So it was crucial to put high-end services there to signal that unity—that systemness—to all parties.

Now, the system takes not just legal ownership but moral ownership of bringing that hospital up to that brand's standard. It's when people work together and then realize that everyone's financial performance improved in a measurable way, that's when they say, "Maybe there is something to this whole systemness thing."

Q: That's a story about an acquisition—is systemness really about M&A strategy?

Umansky: Not at all. But there is a lot of opportunity during a new M&A, because people are expecting change. Not to say it's easy—the various parties all have their different ways of going about things, and they've been doing them their way forever. But uprooting the status quo years after becoming a system might be harder than doing so when the iron is still hot.

Q: How can leadership at established systems begin to uproot these entrenched cultures?

Umansky: It starts by building trust. Take Banner Health, a recognized leader in driving down unwarranted care variation. Banner's got an amazing structure for developing, implementing, and tracking clinical standards, but they didn't impose that on all their physicians overnight. Banner started with one service line: cardiovascular (CV) surgery. It was a natural choice because there's tons of evidence-based medicine there already, but just as important, CV surgery is  prominent, it's a big part of the bottom line, and the surgeons are respected. Success there would turn a lot of heads.

More: How Banner Health achieved more than $29 million in savings by improving its system-wide clinical care standards

So when Banner got it right in cardiovascular surgery, they broadcast that success. By showing leaders in other service lines real improvements in quality and cost savings, Banner built momentum that eventually reshaped the entire clinical enterprise.

Q: Is that just to say, 'Start small?'

Umansky: No! This isn't about looking for low-hanging fruit. It's about finding the successes that will give you the most momentum and the most leverage for the future. As a system, you need to decide: What's the one area you're going to throw your backs into? Pick the area where people will recognize the improvements and realize that it's worth working together.

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