Responding to a Changing Healthcare Environment

April 25, 2018 3:18 pm

Health care’s evolving landscape has introduced new challenges, priorities, and opportunities for hospitals and health systems.

Under the Hospital Readmission Reduction Program (HRRP), for example, the Centers for Medicare & Medicaid Services is reducing payments to hospitals with excess readmissions. And with the rise of accountable care organizations (ACOs) and other value-based payment models, are rewarded for delivering high-quality care at lower cost, which often means pursuing strategies that help patients better manage their conditions and avoid hospitalizations. Changes in health IT are raising consumers’ expectations of hospitals and health systems for benefits such as greater price transparency, access to consumer-friendly digital tools, and choice over where they receive care.

Meanwhile, there are fewer hospitals today than in decades prior. In 2014, there were 5,627 hospitals, a 21 percent decrease from 7,156 in 1975. a In 2018, Kaiser Health News published an obituary-like article that highlighted the closure of several prominent hospitals by detailing the “second life” that some shuttered hospitals have received, including on the East Coast, where high-end condos that have replaced both New York’s St. Vincent’s Hospital and Washington’s Columbia Women’s Hospital. b

In a recent New York Times op-ed, Ezekiel Emanuel, MD, PhD, argues that the decrease in number of hospitals is a positive trend. c Emanuel describes how cancer care, hip and knee replacements, births, and other clinical services increasingly are delivered in outpatient settings and how that has lowered costs and reduced the rate of hospital-acquired infections.

In a response letter, Rick Pollack, CEO of the American Hospital Association, contends that hospitals provide vital services, especially in times of disease outbreaks, community violence, and natural disasters. d Pollack acknowledges, however, the changing healthcare landscape in which all providers now operate, and he argues that the “real issue is the redefinition of the hospital.”

In many ways, both Emanuel and Pollack are correct. Many hospitals are vital to their communities, yet care sites are shifting, and hospitals and health systems must redefine themselves to thrive in this new healthcare context.

“More care will be pushed to lower cost settings,” remarks Carl Sirio, MD, a member of the Board of Trustees of the American Medical Association and a senior advisor at Leavitt Partners. “What is needed is a mechanism to keep the appropriate number and location of hospitals viable to deal with the issues that require that level of intense care.” Hospitals also often are among the largest employers in their communities and support a variety of other industries. The challenges with which hospitals are grappling may have downstream effects for the rest of the community.

Meanwhile, hospitals and health systems are pursuing innovative strategies that have proven effective as responses to meet the new market pressures. Here’s closer look at two of these strategies.

Aligning Incentives

Even when hospitals and health systems want to help their communities stay as healthy as possible, the misaligned incentives of the fee-for-service paradigm often have served as a barrier to that goal. ACOs, bundled payments, and programs like the HRRP all designed to reward hospitals for delivering care that keeps patients healthy and out of the hospital.

One example of how participation in an ACO can realign incentives between the provider and payer is MyHealth First Network (MyHFN), a clinically integrated network (CIN) in South Carolina. MyHFN participates in an MSSP ACO. and to accomplish the program’s goals of improving care and lowering costs, the CIN has invested in care coordination and care transition best practices to reduce unnecessary emergency department (ED) visits and hospital admissions. MyHFN uses data from its health information exchange to identify patients at risk of high utilization and high costs. Once patients are identified, the care team—typically a nurse care manager, a health coach, and a social worker—engages patients and helps guide their transitions between sites of care, or between the care setting and home. These care coordination efforts have improved patient care and helped MyHFN generate $17.3 million in savings during its first year in Track 1 of the MSSP. e

Innovations in Telehealth

Hospitals are likely to continue to increase their use of telehealth and remote patient monitoring. A recent survey found that eight in 10 hospital executives regard it as very or somewhat likely that by 2023 their organizations will have implemented telemedicine as a means of following up with patients after their visits. f This projected outcome is not surprising, given the great variety of possible approaches available.

For example, Mount Sinai Hospital in Manhattan employs stroke specialists to remotely lend their expertise to physicians in the Mount Sinai Queens ED via a state-of-the-art video telecommunications system. Stanley Tuhrim, MD, the stroke center’s director, reports that, with these experts’ help, the ED’s “door-to-needle time has decreased dramatically.” And Bryan Health in Nebraska offers patients requiring urgent care a virtual option. Patients who may otherwise go in-person to an urgent care clinic can fill out an online adaptive questionnaire that is then reviewed within an hour by a physician who decides whether the patient needs to be seen in person or whether a prescription, or other form of treatment, is appropriate.

These are just two of the many ways hospitals and health systems are developing telehealth solutions to enhance quality and consumers’ experience of care. g  

Continuing Efforts

The changes occurring in health care and the challenges facing hospitals and health systems are numerous. The responses discussed here—redesigning care to align with new payment arrangements and leveraging telehealth—are just two of the many ways hospitals and health systems are responding to these challenges.


a. Centers for Disease Control and Prevention, “Hospitals, Beds, and Occupancy Rates, by Type of Ownership and Size of Hospital, 1975-2014,” Trend Table, 2016.
b. Galewitz, P., and Gorman A., “Hospitals With History Get a Second Life,” Kaiser Health News, Nov. 30, 2017.
c. Emanuel, E., “Are Hospitals Becoming Obsolete?” New York Times, February. 25, 2018. 
d. Pollack, R., “The Hospitals Place in the New Health Landscape,” New York Times, March 4, 2018.
e. “Utilizing Team to Improve Transitions of Care,” ACLC Case Study Brief, February 2017.
f. Augustine, J.J., “The Transformation of Emergency are in the United States,” Futurescan: Healthcare Trends and Implications, 2018-2023, Society for Healthcare Strategy and Market Development of the American Hospital Association, 2018.
g. “Telestroke Program – Mount Sinai Health System,” American Hospital Association Case Studies, February 14, 2018; “Virtual Urgent Care – Bryan Health,” American Hospital Association Case Studies, February 14, 2018.


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