Eroding financial stability of traditional service lines, the arrival of new value-based payment models, a growing scarcity of resources, and the wave of competition trying to exploit these changes—these are the constant features of the landscape for health and human service provider organizations. They make “sustainability” a constant feature of strategy sessions.
But as the saying goes, knowing the path and walking the path are not the same thing. For more on walking the path, we recently sat down with Michael Griffin, president and chief executive officer of Daughters of Charity Services of New Orleans (DCSNO) and Marillac Community Health Centers, DBA Daughters of Charity Health Centers (DCHC). DCSNO is a $30 million operation—serving the greater New Orleans region. The organization is a member of Ascension Health, the largest Catholic non-profit health system in the United States. DCHC is Louisiana’s largest federally qualified health center.
DCSNO serves about 55,000 consumers each year—90% of which are at 200% of the federal poverty level or below. With the expansion of Medicaid in Louisiana, Medicaid became DCSNO’s largest payer with 70% of the DCSNO consumer population. Prior to the Medicaid expansion, about 27% of their consumer population was on Medicaid, while 35% of those served were uninsured. To serve this population, DCSNO operates ten fully-integrated health centers, providing physical, behavioral, dental, and pharmacy services through a patient-centered medical home approach. Prior to Hurricane Katrina in 2005, the organization operated only one health center.
How has Mr. Griffin been able to operate an innovative, sustainable organization that excels at the financial challenges, while fulfilling the mission that drives their work in the community? By balancing his organization’s mission with a focus on sustainability, diversifying service options, focusing on integrated whole-person health care, and building on innovation for the future.
Create Sustainable Programs
Mr. Griffin explained that when his organization considers the development of a new program or service, they think about both the community need and the long-term business model:
One of the things I always say is, we only go where we are asked by the community to work and to participate. We have good buy-in from consumers, the city, neighborhood associations, and other community partners. As we’ve recovered from Katrina, it’s been important for us to think strategically about the partners we work closely with in our rebuilding and recovery efforts.
It’s important to start with a needs assessment. Then, decide if the need correlates with the mission and build a business case around the need if it fits the mission. For example, if it’s a new health center, you first determine the consumer and payer base—and then do a three to five year financial assessment. You have to put pen to paper on the financials and make sure you have a solid business plan to support the focus.
But as Mr. Griffin discussed, sometimes, even when your organization cannot make the numbers add up to logically support the new program or service, your mission might supersede the financial considerations. That is where you need to consider other sources of revenue for long-term sustainability—fundraising, grants, partnerships with local government and neighborhood groups, and supplementing the losses in a program through other service lines with a strong margin.
Promote Program Diversification
Diversification is a strength that many provider organizations don’t leverage, instead building an unhealthy reliance on one payer, one consumer group, or a handful of service lines. Mr. Griffin noted that his organization’s more financially successful services help to support services that are needed, but not self-sustaining. For example, as an FQHC, Daughters of Charity Health Centers is able to utilize 340b drug pricing, making pharmacy a service with a strong margin. Oral health services, on the other hand, have low Medicaid reimbursement rates and therefore operate at a loss. Yet dental services are a vital service for DCHC’s consumer population. Therefore, they look at margins in pharmacy services as a way to balance out the loss in oral health. Mr. Griffin noted that “As a non-profit organization, a major part of fulfilling your mission should be diversification of services and income streams. You really need a balancing act between billable services, philanthropy, and operational efficiencies all in one.”
Build Innovation For The Future
A key to sustainability is having an eye to the future. According to Mr. Griffin, this means stepping back and looking at the big picture—including both your future goals and understanding the consequences of the decisions that you make today.
His view is that the current trajectory of value-based reimbursement is going to make community-based provider organizations an essential player. A big part of this is making his organization data-driven:
As we start thinking about models that really increase value, the way you provide services must change. The bottom line is, it’s about having information at our finger tips, and getting it real time. It’s about being able to communicate with clinicians when the consumer needs care. We are working on systems for our community health workers to have real-time information. Our goal is that when the consumer enters a hospital, we can have a community health worker show up at that emergency room to see what the consumer needs. They may need that ER, or they may really need something else. This is also about empowering the consumer to get the service, whatever it is, that they need when they need it. That’s the future of health care delivery.
The other issue that Mr. Griffin sees in the future is the need for community-based organizations to address the social determinants of health:
The other part is taking a holistic approach to health care delivery…offering health care and assisting consumers in obtaining other social support services. Even though we are a health care provider organization, we need to assist people in getting all the things they need outside of health care as well. We want to be a total resource for those individuals to live a healthier and more productive life.
The challenge is timing. He explained that payment has always lagged behind innovation, but that organizations cannot afford to wait for payers and policymakers to act. This is the balancing act of today’s health and human service organizations – fulfilling the mission, while sustaining the margin.
For more, don’t miss Mr. Griffin’s opening keynote address, “Sustainability In A Competitive Market: The Daughters Of Charity Services of New Orleans Story” on June 5 at The 2018 OPEN MINDS Strategy & Innovation Institute. Institute registration is expected to sell out this week, so reserve your spot by Friday.