As a finance leader, you probably have a good idea of what fiduciary responsibility means.
Simply stated, it means an obligation to act in the best interests of another party. Sounds straightforward, right? The catch is that no time frame is attached to that definition. And what’s best for provider organizations in the short term—i.e., in a fee-for-service environment—is in direct opposition to what’s best for them in the long term under value-based payment.
This conflict is not “new news.” We at HFMA have been talking about having one foot on the dock and one in the boat for several years now. People get it. But many still can’t bring themselves to leave the safety of the dock. They are holding on to fee for service as long as they can, in an effort to bolster short-term earnings. That’s understandable. It could even be argued that it’s the responsible thing for providers to do—in the short term. But the long-term consequences may be severe. Providers that turn a blind eye to the long-term implications of this “quarterly earnings mentality” risk being caught flat-footed by innovations that are likely to accelerate the widespread adoption of value-based payment. And I would argue that being taken by surprise in an environment where warnings abound is failing to fulfill one’s long-term fiduciary responsibility.
Consider how this concept applies to the management of chronic conditions, which account for the majority of U.S. healthcare expenditures, as I noted in my March column. Significant improvements in the management of chronic conditions will improve value for care purchasers but will also lead to excess capacity in the acute care sector. Reducing capacity traditionally means closing hospitals and/or significantly reducing bed count, which are anathema to most providers.
But there is a third way: Rather than close hospitals, redefine what it means to be a hospital. A hospital without beds can still be a hospital. For example, Mercy Hospital’s Virtual Care Center, launched in October 2015 just outside St. Louis, is a four-story hospital that houses a variety of telemedicine programs and zero beds. Its 300-plus staffers place video calls to patients using specialized two-way cameras and monitor patients’ vital signs using iPad plug-ins.
Or, if not zero beds, a hospital could have fewer beds. Plenty of services can be provided in a downsized inpatient environment. The issue then becomes identifying which services are needed in a community and determining how providers can work together to deliver them effectively and efficiently, without the fragmentation, gaps, duplication, and waste that too often characterize the existing delivery system. That probably means the healthcare system will continue to evolve toward larger and better-run provider organizations with better alignment of incentives between the health plan and provider communities.
This brings us back to the original point: Choosing short-term gain (or even organizational survival, in some instances) over improving value for care purchasers will come back to haunt us. Eventually, such choices are likely to erode the autonomy of physicians, hospitals, and others on the front lines of care who know their patients and communities best.
The choice between a short-term and long-term outlook is yours to make. Choose wisely.
Follow Joe Fifer on Twitter: @HFMAFifer
From the President’s Desk
Joe Fifer expands on his ideas in his May column.