What a day! We opened The 2016 OPEN MINDS Strategy & Innovation Institute in New Orleans today – and my head is spinning from my discussions with the 400+ innovative executive thoughtleaders who gathered here. The day kicked off with a thought-provoking keynote address, The Strategic Path To Health System Sustainability: Lessons From Northwell Health, by Kristofer L. Smith, M.D., MPP, the Senior Vice President and Medical Director of Northwell Health Solutions. You may know Northwell from its previous name – North Shore-LIJ Health System (see An $8 billion Health Care Giant Outgrows Its Name – And Loses Its Long Island Accent), an $8 billion health system with 61,000 employees.
Dr. Smith’s comments made me think about the strategic realities of the new integrated and consolidated health care marketplace. There is the shift of risk from health plans to provider organizations through alternative payment models. There is the need for scale for sustainability. And, there is the consolidation of both health plans and health systems to gain bargaining power in an increasingly competitive market.
He started his remarks with an expression from his internship days – “Winning The Game” – when hospital-based interns worked to have no patients in the hospital. He talked about what interns would do (in a positive way) to get consumers home as soon as possible – because they had an incentive (extra sleep). He compared that “misalignment” of incentives with the fast developing “alignment” of incentives in the current market. And, he was quick to talk about alternate payment models – and how the shift to value-based reimbursement was an “assault” on the business model of the 21 hospitals in the Northwell system, leading to the system’s strategic response.
Key to that response, Dr. Smith focused on the need for Northwell to develop new partnerships with community-based organizations – the organizations that are going to assure the peak performance of Northwell’s new insurance organization by keeping consumers at home and not in the hospital. His perspective is that partnering with community-based organizations has been difficult. In response, he offered a five-part approach to working with health plans, accountable care organizations (ACO), and large health systems. In his role, he wants community-based organizations to answer five key questions:
- What is your product? – Start by defining your services – What are you providing? What problems are you solving? What populations are you serving? And more importantly, be able to demonstrate the quality of your services – think about what can you measure and how are you measuring your performance? You should be able to report patient outcomes for specific populations, quality data, and patient satisfaction.
- What does your product cost? You should know how much it costs to deliver your services. This means understanding the breakdown of the total cost of quality and care, fixed costs, variable costs, and step variable costs. You should also be able to break down the per-member-per-month cost of your programs. Understanding your costs is critical in negotiating a contractual price for your services.
- Prepare for your audience – This means understanding what is important to the payer and what is important to your organization. You will often have multiple audiences, including your own organization and leadership, as well as insurance companies and health systems. Different audiences have different priorities that you can consider. For example, for an insurance company, how can you help reduce their medical loss or increase revenue? For a relationship with a health system, what is the fee-for-service (FFS) benefit for today vs. the financial imperative for tomorrow? Based on what you learn about payer and organizational needs, figure out the target population that solves a quality and total cost of care opportunity.
- Identify your allies – It’s important to ask whether the payer or health system you are approaching has attempted this kind of partnership before with third-party vendors, other clinical groups, or other health systems. And it’s important to assess whether that partnership succeeded or failed. Your likelihood of success is greater if you have others who understand your program and its value.
- Make your pitch – Now is the time to start building your relationship with the payer. When you sell your program, make sure to speak to the priorities, challenges, and opportunities that are important to your possible partner, while proactively suggesting process and outcome measures. An important tip: Be flexible where you can be, but remember what it is that is central and core to your product, and that can’t change. Don’t bend where it will affect the quality you are promising to deliver.
When asked for advice for provider organizations that want a more substantial relationship with health plans, ACOs, and health systems, one of Dr. Smith’s comments caught my attention – he doesn’t meet with organizations that don’t have data on quality and costs. But what I found most interesting is that Dr. Smith’s model is “marketing 101” – and just points to the need for provider organizations to invest more in marketing. For more check out these resources from the OPEN MINDS Industry Library:
- The Health Plan Marketing Roadmap
- Navigating The New Marketing Paradigm – Web & Social Media Presence Are The New Essentials
- Running A Best Practice Digital Marketing Program: Using Online Marketing & Social Media To Your Advantage
- Crowdfunding As Part Of Your Marketing Plan – Where It Fits & How
- Take Your Marketing Online – Making The Jump
- Five Key Steps To Payer Marketing In A Value-Based Market
- The New Marketing Imperative – Why Marketing Matters To Sustainability
- Finding The Path To Marketing Success: How Much To Spend & Who To Hire
- Moving Beyond FFS – A Provider Organization Guide For Marketing To Payers & Consumers
- Marketing To Employer Groups: A New Approach For Provider Organizations
For more on issues of strategy, don’t miss all of our live coverage on Twitter @openmindscircle – #OMInnovation from The 2016 OPEN MINDS Strategy & Innovation Institute this week.