Choose another business/news/professions sampleAccording to Stephen Shortell, A.C. Buehler Distinguished Professor of Health Services Management of the J.L. Kellogg Graduate School of Management of Northwestern University, "The key is working on restructuring how medical care itself is delivered. The savings and the rationalization of the system and what's going to work under managed care is really a function of what we call clinical integration -- restructuring how care is going to be given, as opposed to economies of scope or scale managerially." Of course, economic management comes into the picture; but, as Shortell says, "That's not where the payoff is. ... The real payoff is whether or not the patient is going to experience your system any differently."
Healthcare providers should welcome the news that, although prompted by
economic necessity, the successful transition to managed care turns out to
be not primarily a function of financial management, but more a consequence
of improved provision of healthcare services. And this raises the
question of who should be responsible for initiating the transition to
capitation. Of course, the original or final decision is a strategic
one that comes from the top: the president, the CEO, the top management
team; and, increasingly, physicians are found within this group. But
such a far-reaching decision cannot be implemented without a plan; if the
successful implementation is not purely an economic function, who should be
responsible for developing the transition plan?
• Gather sufficient market data: Although choosing the planning team is an important step, it is not necessarily the first step. Before the team can even begin to consider formulating a managed-care transition plan, it must first have comprehensive local market information. Who are the large employers? What are their managed-care needs? What are the population demographics? What area is to be served, and what specific challenges does it present? Who are or will be the competition? Only with complete, appropriate market information, can the team begin to devise a care strategy -- how to attract patients, how to win employers over to their system, what resources will be required, where physician practices will need to be located, what the costs will be and can be both for the system and for the consumer.
• Organize your physicians into groups; develop your primary-care networks: Shortell (who is also coauthoring a book on the subject, due out in March 1996 and currently titled The Transformation of American Healthcare) says organizing your physicians into various, appropriate multi-specialty and primary-care groups is a big -- and very important -- step that should begin early in the transition planning. As you develop your primary-care networks, you must get your physicians into group practices, get them using protocols, pathways, case-management systems, outcome measures, functional health status measures, patient satisfaction measures, etc.
This step has both managerial and personnel benefits. It allows you better to evaluate your system's strengths and needs, and it gives physicians a sense of belonging and solidarity. Management can determine where the system may be overstaffed and understaffed (We need more primary-care physicians. Do we need so many heart specialists? Etc.). And physicians have colleagues with whom to compare notes, a coalition to protect their interests as the managed-care bus gathers momentum. It also provides structure for patient referrals.
• Make a substantial investment in your information systems: Investing in information systems is another big and extremely important step. You have to track patient care and outcome and be able to respond to employer/purchaser requests for outcome cost data. Shortell warns that you must be willing and able to make "millions of dollars of investment" in your information systems to successfully perform in the managed care arena.
• Provide your physicians and staff with appropriate information and training: Shortell calls this step "physician leadership development." The successful systems his group has studied have, early on in the planning, developed physician leadership development programs. These physicians are usually hand-picked by the system's leadership. Shortell comments, "We do a lot of it here at Northwestern. Typically, it will be 40 to 50 physicians -- department chiefs, section chiefs, medical staff leaders, people like that." These groups receive two to four days of intensive instruction on managed-care issues, such as: managing change, managing conflict, strategic planning, total quality management, negotiation skills, health policy, epidemiology, and outcome evaluation."
Shortell goes on to explain, "These systems are trying to groom physicians to think more broadly in terms of the changes going on in healthcare. And that's a pretty important building block, because, out of this training come the physician leaders who can help implement many of these new ideas."
• Be prepared to make some changes in the clinical component of your health-care system: Most systems find they need to expand their primary care, out-patient care, home health, and similar services, while radically downsizing their in- patient capacity. Shortell notes, "We have hospitals that are downsizing in-patient capacity by as much as 50%, taking beds out of stock, and reorienting those resources towards primary care, out-patient care, and home health. That's a big retrofit, and a lot of them are grappling with that. You're going to get killed if you have too many beds; it's going to be an albatross around your neck."
Also, your system will probably need to learn to manage more care outside the hospital, to use nurses and social workers differently. Shortell comments, "Multi-skilled people who can do more than one thing are in high demand."
• Proceeding without sufficient initial market data: According to Shortell, one of the biggest stumbling blocks toward developing a viable managed-care plan is beginning with insufficient market information. Do not attempt to begin a transition plan before all available market data is compiled.
• Promising more than can actually be delivered: In the excitement of transition, it is easy to "oversell" the benefits of the anticipated new system -- both in community services and physician/staff incentives. When promises start collapsing, so does faith in the system.
• Lack of leadership: The bus will not drive itself. A successful transition from fee-for-service to capitation requires system, plan, and group leaders committed to the managed-care concept and willing to work toward its successful implementation.
• Lack of capital: As Shortell reminds us, "It costs money to build some of these primary-care networks and to compete in managed care, and some organizations don't have the capital or underestimate the amount of capital required." Don't assume that the transition is simply one of style -- using the same resources to provide the same healthcare in simply a new way. Substantial investment is required in data collection, information systems, planning, personnel and facility realignment, etc.
• Mixed financial incentives: Shortell also points out that "the truth of the matter is, in most markets, it's not 100% capitation, or managed care. There's still some fee-for-service and indemnity-based insurance. And so it becomes 'How do you operate in both worlds?' -- You have inconsistent signals, and that can cause a lot of foot dragging." He goes on to note, "The systems we're working with are making a decision to go ahead and practice as if they're under a managed-care model once the market is about 33% managed care; then they don't worry about losing some money because they're reducing hospital stay and maybe they'd make money if they kept patients in the hospital longer under fee-for-service or per-diem payment.
"They're saying, 'We can't afford to miss out on future contracts, and, for that reason, we're going to act as if we're fully under managed care -- 100% capitation: we're going to move patients out of the hospital sooner; we're going to get our cost down."
• Resistance from physicians who prefer the status quo: No matter how well you sell your plan, no matter how obvious the need for transition, you will always have some physicians who do not want to acknowledge the reality of managed care, who don't want to change their practice patterns, who don't want to get on the bus. Shortell points out that investment in physician leadership development programs is one way to alleviate much of this resistance. Another way, he says, is "making people uncomfortable -- that's the job of leaders. Bring in outside people to talk about what happened in their places when they didn't change, war stories, things of that nature.
"Finally, at some point, you just have to make a decision. You have to tell some physicians, 'Here's the bus; here's where it's headed; a number of people are on it; are you on or off?' You can't please everyone. And the systems that make progress are those that recognize that fact. They don't jam things down people's throats, not change for change sake. But they say, "We have a nucleus here who understand what we need to do. If there are others who aren't lined up, too bad. If you're not on the bus, we wish you well; but the bus is pulling out of the station."
Research your trip beforehand. Carefully map it out. Get everybody on the bus. Wave goodbye to those who choose to stay behind. Take along plenty of cash. Watch out for potholes. Monitor your progress. And keep everyone informed of where you are and where you're going. These are some of the keys to a successful transition to managed care.
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