At the Helm

The top four 'systemness' priorities for 2016 and beyond

by Yulan Egan and Lisa Perlmutter

As discerning purchasers challenge hospitals and health systems to prove their value in an increasingly competitive marketplace, integration has risen on many executives’ priority lists. Whether that’s because integration promises strategic nimbleness; a more unified and recognizable external brand; or tangible improvements in cost, quality, and patient experience, hospital and health system executives are telling us that acting cohesively and addressing breakdowns in “systemness” are top concerns.

Survey reveals four most critical and challenging integration goals

Even with this widespread focus on systemness, pursuing integration can mean different things for different organizations.

To better understand which elements of systemness are keeping providers up at night, we surveyed more than 150 of our members. We asked them to rank a list of 18 integration initiatives by level of difficulty and importance to the future success of their organizations.

Four distinct initiatives rose to the top, with more than a quarter of survey respondents selecting those initiatives as one of their top three picks against both vectors.

 

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1. Driving clinical standardization

Reducing clinical variation was the single most popular selection by both measures. This isn’t surprising; in a marketplace where payment is increasingly tied to value rather than volume, providers are looking to improve quality across their entire enterprise.

And as systems double down on margin improvement, they see a significant opportunity to reduce cost through improved and consistent care processes. For systems that have already targeted obvious cost saving opportunities such as reducing staff, controlling supply costs, and centralizing of back-office functions, clinical standardization represents the next frontier of potential cost savings.

Clinical standardization’s high difficulty rating among survey respondents, meanwhile, is almost certainly linked to the second most widely selected initiative along both vectors: creating system-wide physician alignment.

2. Creating system-wide physician alignment

Physician alignment has been a perennial issue for hospitals and health systems, especially efforts to optimize referral streams. But today’s physician alignment aspirations extend far beyond that: hospitals and health systems view engagement with and leadership from physicians as a crucial lynchpin to success on a wide range of cost, quality, and experience initiatives.

When it comes to driving clinical standardization, for example, best-in-class organizations put significant time and energy into building clinical governance structures that empower physicians to lead the charge on creating and deploying care standards. Physician alignment is similarly crucial for many cost improvement initiatives (e.g., rightsizing service portfolios/rationalizing assets, centralizing purchasing of physician preference items) and patient experience initiatives (e.g., improving care transitions, creating a unified patient experience).

3. Increasing IT interoperability

Much like improvements in physician alignment, the third most common selection—increasing IT interoperability—can significantly affect success across a wide range of system goals. In our conversations with provider executives, they often cite breakdowns in communication and the exchange of meaningful information as key barriers to achieving system goals.

Furthermore, IT interoperability is crucial not only for sharing information but also for enabling internal benchmarking and allowing organizations to identify strengths and improvement opportunities.

4. Integrating assets post-M&A

Finally, survey respondents identified post-merger integration as a pressing and challenging issue. Although for most organizations, this aspect of integration tends to be more sporadic than others, its appearance near the top of the list in both vectors suggests that it’s likely to become a perennial—rather than temporary—priority.

As long as health systems continue to grow through consolidation, the path toward systemness will be an ongoing challenge, and in many cases, hospitals and health systems will need to repeat processes and integration initiatives time and time again.

At times, organizations anticipating future consolidation have used that as a reason to table integration initiatives in the near-term. But rather than putting off integration indefinitely, top performers recognize the need to continually evolve and modify processes and structures to account for growth and integrate new assets into the organization.

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