By Daniel J. MarinoPresident/CEOHealth Directions
Clinical integration continued to build steam in 2013, yet many hospitals are still holding back.
Past strained relations with their medical staff make some hospital leaders reluctant to form clinically integrated networks (CINs) with physicians. Many hospital administrators do not perceive the risk of inaction. Some view a “follower strategy” as the most prudent course.
In fact, there are four strong reasons why hospitals should act now to begin integrating clinically with physicians:
1. Prepare for Value-Based Payment
New value-based contracts reward clinical value (care quality and cost management) as opposed to volume. But an aligned approach is essential to delivering the necessary outcomes. Without the participation of physicians, a hospital’s ability to manage the cost of care and influence quality is limited.
What many hospital leaders do not realize is the speed with which value-based contracting is arriving. Recent CMS programs are just the tip of the iceberg. Private payers are very interested in developing value-based payment models—and they are likely to experiment more aggressively and adopt successful models more rapidly.
2. Maintain and Expand the Hospital Referral Base
Clinical integration is based on actively managing patient care, tracking patient referral patterns and steering patients back into the network. Hospitals that are slow to integrate with community physicians risk losing referrals to competing hospitals that have a clinical integration strategy.
The problem is that some hospital administrators don’t see CINs rising among local competitors. What they are missing is the real risk of losing patients to strong CINs within the larger region. In the near future, community hospitals without a CI strategy will see referrals increasingly flowing toward regional networks and larger metropolitan areas.
3. Build Trust With the Medical Staff
Under value-based payment, there is no reward for hospitals and physicians to compete against each other. Instead, value is the result of collaboration. Clinical integration is the platform that allows hospitals and physicians to work together to manage patient care better and pursue joint contracting based on quality outcomes and cost containment.
It’s important to understand that these contracts are NOT bundled payments that must be divided by the hospital. Under clinically integrated contracting, the entire provider network receives performance incentives. In most CINs, physicians lead the membership committee that develops the incentive distribution program. This approach creates accountability and strong trust between the hospital and the medical staff.
4. Secure the Health of the Community
Nationwide, CINs are forming rapidly, and value-based contracts with payers and employers are being hammered out as we speak. If a hospital does not take the lead on developing a CIN, all the providers in that community are vulnerable to being “left out” of the new paradigm. Community providers will be unable to compete with more established networks. Physicians will be forced to either accept lower reimbursement or join an outside network or ACO.
Ultimately, the real losers will be the patients within the community who will not have full access to strongly integrated care and care delivery innovations.
The Major Risk is Inaction
It’s still early in the movement toward population health management, so the risks of clinical integration are few. At the same time, the opportunities are significant.
Hospitals that pursue clinical integration in 2014 will lay the foundation for stable revenue, a stronger referral network, better medical staff relations and better community health.
As President/CEO of Health Directions, Daniel J. Marino shapes strategic initiatives for healthcare organizations and senior health care leaders in key areas such as population health management, clinical integration, physician alignment, and Health IT. With a broad background in all aspects of practice management and hospital/physician alignment, Dan is nationally recognized as a strategic leader in Accountable Care Organizations and clinical integration development. He frequently speaks at national conferences and regularly authors articles for the nation’s top healthcare industry publications related to current transformations in healthcare delivery. Dan may be reached via email at [email protected] or by phone at 312-396-5400.