The ascendancy of primary care: permanent or temporary?

The conventional wisdom strongly suggests a health care provider food chain for the future: Primary care physicians (PCPs), principally family practitioners, on the top playing the lead role, distantly followed by specialists, with hospitals and other ancillary services even further down the line. Is this a reasonable expectation? Will PCPs dominate the new systems? Or will they be but one of many equally necessary components of these developing integrated health care delivery organizations? Looking at the various models now developing, it would seem that future integrated delivery systems will utilize both PCPs and specialists, but with strong augmentation from a diverse assortment of other health care professionals, including nonphysician providers, educators, and administrators. To separate the illusion of primary care dominance of the coming health care system from the likely reality, we should first determine what is driving the apparent present demand for primary care physicians. Next, we will examine the possible and probable reactions to that demand from an economic standpoint and from the points of view of both health care professionals and the public. Finally, we must try to picture how health care provider organizations of the future are likely to look and how they will integrate their health care professionals.     

What kind of leaders will be successful?

The U.S. health care system is fundamentally changing. The pace of change is swift but will vary, depending on regional market forces and state legislative mandates. This complex change is leading to rapid market consolidation of providers and insurers into organizations called "integrated health care systems." There is, as yet, no proven role model that will guarantee success. The purpose of this article is two-fold: To help individuals who see an expanding role for themselves in integrated health care management decide if they have what it is going to take to be successful. To identify individual management training needs by use of a self-evaluation tool. Some of the needed skills can be enhanced by education and experience. However, some are personality and style characteristics that may not be changeable.     

The role of the coordinator of care

Regardless of the specific outcome of the current health reform debate in Washington, it is likely that major changes to the health care system are in the offering. These changes, many of which are already in place or imminent in some locations, will have a major impact on the evolving relationships between physicians and hospitals. Most expect that these changes will accelerate the development of integrated health care delivery systems that will compete in the marketplace for a mixture of public and private health insurance dollars. In this system of "managed competition," health care dollars will flow to those systems that can ensure the best clinical outcomes while using the least economic resources. In this scenario, competing collaborative health networks that can manage the continuum of care will be central to the health care delivery system. The economic and political ties between physicians and hospitals will become more closely linked as government and private payers of health care services foster the development of these integrated, value-based health care delivery systems.     

Elements and strategies of an effective provider integration strategy

Regardless of the outcome of the debate in our nation's capitol, a health care revolution is sweeping the nation. In fact, if the debate lasts much longer, policy makers will be playing catch-up and responding to policies already in place in the trenches. Everywhere we turn as health care leaders, there is evidence of major change on the horizon. Reimbursement methodologies are undergoing radical alteration, traditionally stable institutions are being challenged, new organizational models are evolving, the types and roles of providers best suited to provide care are being questioned, and consumer expectations are being heightened. One of the basic strategies that is receiving attention throughout the country as a response to all this change relates to the development of integrated delivery organizations (IDO), integrated delivery systems (IDS), or integrated delivery networks (lDN). This article discusses these emerging systems in terms of health care reform, describes the rationale for their creation, and provides some strategies for their successful development.     

The new production theory for health care through clinical reengineering: a study of clinical guidelines--Part I

Drucker writes that the emerging theory of manufacturing includes four principles and practices: statistical quality control, manufacturing accounting, modular organization, and systems approach. SQC is a rigorous, scientific method of identifying variation in the quality and productivity of a given production process, with an emphasis on improvement. The new manufacturing economics intends to integrate the production strategy with the business strategy in order to account for the biggest portions of costs that the old methods did not assess: time and automation. Production operations that are both standardized and flexible will allow the organization to keep up with changes in design, technology, and the market. The return on innovation in this environment is predicated on a modular arrangement of flexible steps in the process. Finally, the systems approach sees the entire process as being integrated in converting goods or services into economic satisfaction. There is now a major restructuring of the U.S. health care industry, and the incorporation of these four theories into health care reform would appear to be essential. This two-part article will address two problems: Will Drucker's theories relate to health care (Part I)? Will the "new manufacturing" in health care (practice guidelines) demonstrate cost, quality, and access changes that reform demands (Part II)?     

The coming alliance revolution in health care

Like it or not, the health care profession is being "shifted" into a revolutionary new world. The question is not will it change but rather how will it change? Who will determine its fate? What form will these changes take? What are the best alternatives for physicians, institutions, health care workers, insurers, employers, and, most importantly, patients? Some of the changes will come from government mandate, others from market forces. To understand what the future might bring, we should look at both the driving forces behind the changes and how other industries have responded to similar forces. An important consideration for health care professionals will be how, if at all, the concepts of collaboration and cooperation that are inherent in networking and alliances will guide their planning.     

The emerging health care landscape. The drivers of health care

Other than hold on tight, how does a health care system successfully weather the turbulent conditions facing the industry? This article focuses on key drivers in the three main segments of the health care market: employer-based, commercial/ERISA, and Medicare and Medicaid. Effectively managing the dynamics within these markets will be vital to a delivery system's success and its ability to withstand the forces of change. Given the market changes that are occurring, how does an academic medical center, emerging hospital-sponsored IDS, or a large physician clinic trying to develop a system determine the necessary components and structure? What kind of system will work best? The considerations are numerous and explored in this article.     

Making the journey into the networked enterprise, Part 2

In the May issue of Physician Executive, the authors described the difficulties other industries have had with vertical integration and why so many corporations have abandoned it for other organizational structures. In this second part of the series, they explore the ways health care organizations can make the shift into integrated delivery systems, avoiding the trap of the hierarchical, vertically integrated monolithic structures that will become the dinosaurs of the future.     

Can doctors and administrators work together?

The working relationship between physicians and health care organizations has dramatically changed since the introduction of competitive factors. Fifer suggests that future doctors may have as many as five or six economic relationships with their associated health care system, in contrast to the singular role as admitting physician of the past. The physician will continue to admit patients, but may also belong to an HMO or some other joint venture (freestanding ambulatory care center, outpatient laboratory, etc.), be salaried part time for leadership roles, be a leader in some other parallel economic venture, etc. Physicians are already assuming multiple roles as health care providers, private entrepreneurs, and joint venture partners with hospitals. Hospitals and health care systems also continue to change through vertical and horizontal integration. Traditional clinical departments are becoming blended into product line entities, and a sophisticated executive team of market-oriented specialists now augments the traditional administrative leadership. So, from a tradition of predictable roles, relationships, and authority structures, we are now attempting to thrive and prosper with many new partners in an integrated, complex, and conflict-ridden set of interrelationships.     

The European Commission''s White Paper "Strategy for a Future Chemicals Policy": A Review

The European Commission has proposed a radical new policy for the regulation of chemicals in the EU in the form of a White Paper. The current system has separate regulatory provisions for "new" chemicals (introduced to the market since September 18, 1981) and "existing" chemicals (on the market before September 18,1981). The proposed future policy will have a single unified regulatory system for all chemicals, which should result in better regulation of chemicals in the EU single market. It will be better because risk assessments will be targeted at the chemicals of greatest concern. Furthermore, the system will be streamlined, making regulatory decisions faster, and thus reducing the so-called burden of the past (the large number of chemicals that have never been assessed for their risks to human health or the environment). The new system incorporates the precautionary principle, which will be applied where there is an early indication of unacceptable risk or where there is undue delay in the regulatory process. Moreover, the new strategy is intended to promote greater transparency for all stakeholders.     

Get real: what will draw physicians to the Web?

What are physicians waiting for? What will it take to stimulate widespread adoption of Internet medical systems? How can health care leaders and physicians help the technology innovators and the executives of technology firms understand the components necessary to assure physician acceptance and utilization of new tools? (1) Don't underestimate the personal nature of a physician's practice. It really isn't a "business." (2) Most physicians are not Luddites; they are just extremely pragmatic and practical. (3) For the majority of physicians to adopt a new technology in their private office practice, it must address three major issues: money, hassle, and patient care. There are many obstacles to adopting the new technologies that are the result of physician training and expectations and the current models of payment and revenue generation. Some technological innovations are presented to physicians without sufficient respect for their knowledge of how medical practices really work. The benefits promised often don't match with the needs structure of the physicians. As a consequence, the cycle of diffusion of these new systems is extended and delayed.     

The digital transformation of health care

The arrival of the Internet offers the opportunity to fundamentally reinvent medicine and health care delivery. The "e-health" era is nothing less than the digital transformation of the practice of medicine, as well as the business side of the health industry. Health care is only now arriving in the "Information Economy." The Internet is the next frontier of health care. Health care consumers are flooding into cyberspace, and an Internet-based industry of health information providers is springing up to serve them. Internet technology may rank with antibiotics, genetics, and computers as among the most important changes for medical care delivery. Utilizing e-health strategies will expand exponentially in the next five years, as America's health care executives shift to applying IS/IT (information systems/information technology) to the fundamental business and clinical processes of the health care enterprise. Internet-savvy physician executives will provide a bridge between medicine and management in the adoption of e-health technology.     

The hidden competitive weapon supporting innovation in health care

It is trite to say health care is experiencing an era of unprecedented change. However, with the preoccupation with reimbursement and economic reform, it is easy to focus on this single dimension and lose sight of the pervasiveness of the need for continuous change throughout the entire health care organization. Health care organizations that will emerge as leaders within the industry will have incorporated not only radical changes to deal with new patterns of reimbursement, but also simultaneous changes in core medical services--changes that not only incorporate new technology, but also push down costs. They will also have to cope with radical changes in information and quality systems. Physical facilities will look less like citadels, and new flexible architectures will emerge. Coping with transportation logistics and remote site service provision will be part of the new industry. Patients will become full partners in ?health,? requiring very different approaches to patient education and involvement in prevention, not simply treatment. Indeed, without belaboring the almost endless list, it is impossible to think of a single dimension of health care that will be untouched.     

The Informatics Institute: why do we need it?

Why should physician executives care about medical informatics? For that matter, what is medical informatics anyway? Broadly defined, medical informatics is the study of the collection, storage, retrieval, and analysis of data and information in health care to support clinical and administrative decision making. Informatics is important because, in the past 10 years, powerful computer, software, and information technologies have been developed to enable health care organizations to automate some of the work of decision making, for improved quality of care and cost control, and for successful managed care contracting. This new emphasis on informatics in health care was the impetus for the founding by ACPE earlier this year of The Informatics Institute, which will be involved in educational and research activities in the growing area of medical informatics. In this new column in Physician Executive, Dr. Marshall Ruffin, President and CEO of the Institute, will discuss the role of medical informatics in health care delivery and financing and its relation to physician executives.     

The consumer choice model: a humane reconstruction of the U.S. health care system

"Consumer choice," "defined contribution health programs," "voucher systems," and "health marts" are variations on a theme: employees buying their own health care. This new approach to health care purchasing, which is designed to minimize the role of employers, is being proposed by an array of economists and by both Republican and Democratic legislators as the best way to address the nation's health care ills. Although enabling national legislation is unlikely to pass soon, the debate will nevertheless change the face of health care in America. The prospect is reminiscent of the debate over "Clinton Care" in 1993--although legislation was never passed, managed care rapidly came to dominate the U.S. health care system. As this reform takes hold, beneficiaries will make their own health plan selections but will have more responsibility and may bear more cost. Providers will have to adapt to new, customer-driven requirements for performance, accountability, and communications but will also find opportunities in a marketplace that they will have a major role in shaping. Physicians, health plans, and insurers should understand how these proposals will transform their role in health care.     

Leading health care into the 21st century.

If there is a consistency in the professional lives of those who manage in the health care field, surely it is characterized by inconsistency. Change. For more nearly two decades now, since the full impact of the Medicare/Medicaid legislation hit, the health care industry has undergone profound, continual, and lasting change. Success can be measured largely in terms of how well a professional or an organization accommodates and manages these changes, making sure that they work for the organization and the career and not against them. The 1990s can be expected to be just as full of change and turmoil as have the past two decades. "What's past is prologue," Shakespeare wrote. The health care field is not apt to see the murderous machinations of The Tempest, but clearly exciting and challenging times lie ahead, and perhaps the outcome will be as positive as Shakespeare's. The scenario that follows provides a glimpse at the issues of change that will occupy the time and energy of physician executives for the coming decade.     

Transition to capitation. Aligning incentives for success

Horror stories abound about providers that have failed to modify their incentive systems and have exhausted their annual capitation budget in the first six months of the plan year. Aligning the business strategy and financial incentives in advance is the best way to ensure that your integrated delivery system's transition to capitation is a success story. Rarely are physicians or hospitals with experience limited to the fee-for-service arena prepared to jump into a managed care or capitated compensation system. The transition can be eased by implementing a "shadow" capitation or similar arrangement that will test physician performance under a risk arrangement in advance. The information can be used to restructure the compensation system to ensure that the behaviors being encouraged will promote successful care and fiscal management.     

Strategic positioning. Part 1: The sources of value under managed care

Part 1 of this series organizes and discusses the sources of value against a background of an evolving managed care market. Part 2 will present, in more detail, the marketing and financial challenges to organizational positioning and performance across the four stages of managed care. What are the basic principles or tenets of value and how do they apply to the health care industry? Why is strategic positioning so important to health care organizations struggling in a managed care environment and what are the sources of value? Service motivated employees and the systems that educate them represent a stronger competitive advantage than having assets and technology that are available to anyone. As the health care marketplace evolves, organizations must develop a strategic position that will provide such value and for which the customer will be willing to pay.     

New governance for a new era: issues and challenges for integrating systems

In this second part of a two-part column, Dr. Ruffin provides greater detail on seven key factors that he believes will govern the operations of integrated systems. Successful systems, he says, will be those that attract and retain physicians, have disciplined governance, integrate care through sharing of information among system elements, conserve capital, ensure strategic growth, control costs, and are proficient at processing information. It is important to understand, he says, that, in the movement from a fee-for-service payment mechanism, in which the various elements of the health care field bill for their services independently and according to rules designed for their benefit, to an integrated system, in which such independence can only lead to chaos, very substantial changes will be required in the governance of our health care institutions and organizations.     

The consumer and provider: pillars of the new health care system

Managed care has suffered a public backlash, with complaints increasing across the nation from unhappy patients. The physician community despises the current system and is wrestling for control of clinical decision-making. A health care system that is disliked by the public and is despised by the physician community can never succeed. No health care system or reform is possible without willing or even enthusiastic physician participation because only they can control costs, quality of care, and consumer satisfaction. A successful health care system recognizes that only providers can control quality of care and costs--and will create appropriate incentives that allow physicians to do so without losing the public's trust. The author advocates a new system, where consumers choose provider organizations based on disease expertise and purchase insurance through Internet accessible brokers. Provider organizations assume economic risk and have the detailed know-how to treat a specific disease spectrum better and cheaper. Consumers purchase this new "product" in a competitive market and are the principal benefactors of this market-driven, unmanaged care system.