Innovation and Disruption

Speeding Up Innovation to Keep Pace With Evolving Demands

May 23, 2018 3:34 pm

In adapting to new payment and care delivery models, healthcare organizations are finding that innovative approaches are more vital than ever. The first step is to identify and address barriers to innovation.

The need to innovate to survive in the healthcare industry has perhaps never been more important and immediate. Risk-based payment, population health management, and accountable care all translate into new ways of doing business that require new skills, new tools, and new attitudes. In an industry that can be slow to change, this level of disruption can be devastating for the unprepared organization.

“When you’ve got organizations where the revenue they’re generating is becoming more and more at risk, that’s creating more of an acceleration to be innovative in how organizations manage the business and how they operate,” says Craig Tolbert, principal with DHG Healthcare, a Charlotte, N.C.-based consulting firm. “We have to find ways to control spend, because that’s how we’re being reimbursed now with these risk-based models.”

Remaining financially viable in new risk-based models means organizations must make changes to their care delivery models to take spend out of the system, Tolbert says. And as organizations seek to become nimbler, they are employing innovative techniques to identify barriers and devise strategies that address the barriers. 

“Health care is just changing so rapidly,” Tolbert says. “There’s a number of things that organizations have to go through to be more innovative.”

Jump-Starting Value

Innovation does not happen by chance. Organizations must assess their readiness to innovate under a set of factors such as amount of revenue that is at risk, how well physicians are aligned with the quality and cost targets of the organization, and the governance structure’s ability to adapt, Tolbert says. 

A key question is: How do market factors influence the strategies that the organization will use to transform its business model?

Leaders at VCU Health, an academic medical center based in Richmond, Va., recognized the need to adapt to the changing environment and create value for the community. VCU Health employed a technique that accelerates an organization’s ability to attain buy-in and to set a game plan for strategic goals by gathering stakeholders from key areas such as governance, finance, operations, and clinical for an intense, abbreviated workshop. Gaining consensus across an organization might be expected to take months, if not longer; this accelerated process takes place over a two-day session.

The approach was used to get VCU Health senior leaders engaged to develop the health system’s new strategic plan, known as Vision by Design, says CFO Melinda Hancock. Comprised of several entities, including an academic medical center, community hospital, a children’s hospital, physician practice, and health plan, VCU Health has dozens of leaders overseeing various components of these business arms. 

The effort to gain consensus on the new strategic plan was complicated even more by an influx of new leaders. Over a period of three years, several key leaders had retired, termed out, or found positions outside the organization, including the CEO and CFO of the health system, dean of the medical school, president of the physician practice, CEO of the health plan, and CEO, COO, and vice president of finance for the hospitals and clinics, says Hancock, a former HFMA National Chair who joined VCU Health in 2016.

New leadership teams sometimes take time to gel, but the implementation of Vision by Design could not wait. “We needed to find a way to quickly get us all on the same page,” Hancock says.

The two-day session was preceded by about six weeks of preparation, including surveying the health system’s hundreds of directors on where they saw challenges and opportunities in the market, Hancock says.

The senior leadership team then gathered off-site to discuss the organization’s strengths, weaknesses, opportunities, and threats. 

Some of the overarching questions, Hancock says, were: “Where are we as an organization? Are we ready for change? We all say we know we’ve been successful to date. But the things that have gotten us to today will not take us to tomorrow.”

Transforming the business model meant thinking outside the “four walls” of the health system. To help guide change operationally, VCU Health set up two new vehicles: a formal capability-building process, which currently is being implemented, and a centralized project management office, in which project managers oversee various strategic imperatives to help ensure accountability on progress, Hancock says.

  • Note:  Hancock and Tolbert will be co-presenting “Driving Organizational Transformation: Accelerating Innovation” at HFMA’s 2018 Annual Conference, which takes place June 24-27 in Las Vegas.

Partnering in Transformation

Strategically, senior leaders were looking for ways to transform the organization into one that maximized its value to the community, building on its tripartite mission of clinical service, education, and research, Hancock says. 

One imperative became clear from the two-day session: the need to better understand the demands of the market and the role that various healthcare organizations could play in VCU’s transformation, Hancock says.

“Maybe we’ll always be competitors with some providers, but maybe there are areas where we need to let down our guard and ask, ‘Should we be partnering?’ Because for us to compete in a particular space means we’re just adding to the cost of health care. At the end of the day, would it not be better for the community if we partnered instead of competing in this area?” Hancock says. “It’s just being open to those conversations.”

This month, VCU Health and Bon Secours Richmond Health System, another major provider of care in the market, announced their co-sponsorship of a public rapid-transit bus line that will run between their two campuses, which are located several miles apart. Lack of transportation to healthcare facilities is often a reason that patients do not seek appropriate care. The bus will make it easier for patients, especially those with lower incomes, to reach the campuses, Hancock says. The two organizations will contribute a total of $425,000 annually to the transportation service.

Also this month, the two health systems along with Virginia Premier, the subsidiary health plan of VCU Health, announced plans to partner to jointly offer individual-insurance plans on the Affordable Care Act’s health insurance exchange for Central Virginia. Pending approvals from the Virginia Bureau of Insurance and the Centers for Medicare & Medicaid Services, four plans are scheduled to be offered on the exchange for 2019 in areas served by providers from the two health systems. The new plans will provide residents with more options. (Of the four insurance plans that had been on the 2017 exchange, three pulled out in 2018, according to a news release from VCU Health. Virginia Premier had not previously offered plans on the exchange.)

The partnerships represents another “out of the box” approach VCU Health has taken to meet the demands of a rapidly changing marketplace. “We do recognize that in this day and age there’s a lot of partnerships that we should be forming,” Hancock says. “We need to think differently about how we’re delivering care.”

Karen Wagner is a freelance healthcare writer based in Forest Lake, Ill.

Interviewed for this article:  Melinda Hancock, CFO, VCU Health, Richmond, Va.; Craig Tolbert, principal, DHG Healthcare, Birmingham, Ala.


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