Tim Frischmon
By Tim Frischmon
Principal, Furst Group
A recent op-ed in the New York Times by two former advisers to the Obama administration has caused a stir in healthcare circles with its assertion that health insurers will be “extinct” by 2020 due to the introduction of accountable care organizations (ACOs). Other industry veterans like Vince Kuraitis and Gregg Masters (see post and comments) have weighed in with rebuttals but, as someone who speaks with industry leaders on both the payer and provider side on a daily basis, I think there are a few points that need to be made.
There is a basic truth to the article by Ezekiel J. Emanuel and Jeffrey B. Liebman. The number of people who are enrolled in a fully insured HMO benefit plan has been diminishing and will continue to be squeezed by the development of health exchanges and ACOs. With 60% of the employer market in self-funded/Administrative Service Only products, the health insurance industry has been responsive to the needs of large employers looking for new and more innovative ways to increase quality of care while helping to minimize costs (i.e., Wellness, Disease Management, greater consumer involvement in key health care decisions).
But too many of Emanuel and Liebman’s arguments are knee-jerk attempts to throw dirt at insurance companies, and too much of their praise of ACOs ignore the fact that ACOs aren’t truly functioning yet.
The writers fall back on the cliché that insurers “discourage patients from receiving care they need, as well as impose administrative burdens on doctors and patients.” The reality is this: An insurance company is administering the healthcare benefits that the employer agreed to with the benefit design. If the health plan were truly inappropriately withholding care or doing wrong, the employer would be screaming – not just the individual. Bottom line: The insurance company is there to be the bad guy and say no to some requests on behalf of the employer who didn’t want to pay for it.
There are plenty of opinions about the effects of reform on our healthcare system, but one that most parties can agree with is this: the fee-for-service environment has created perverse incentives, and most hospitals and physicians have been built up around volume regardless of their operational efficiency and quality. But ACOs certainly can’t take credit for this; they are simply one possible solution in retooling a system that’s needed it for a long time.
Emanuel and Liebman may see themselves as provocateurs, but they come off as a bit naïve when they charge that ACOs will certainly deliver on the failed promise of HMOs: “In the 1990s, we lacked the information technology and proven models of integrated care delivery that we have now. These advances will be crucial in developing a foundation that will allow ACOs to simultaneously improve health outcomes and reduce costs.” They speak as if these providers/ACOs are fully prepared and have been doing this for a generation. In reality, most ACO leaders are waiting to see how their new order will perform in its debut, even though some of the ACO concepts are déjà vu to those of us who have been observing managed care for two decades.
There is going to be an enormous learning curve for ACOs, through Primary Care Centered/Clinical Integrated Care, to be able to efficiently manage these populations while maintaining the utmost quality. This shift from an FFS-volume mindset to a capitated population health mindset is going to be a huge cultural change. And as we know, change brings pain, naysayers, and those who will fight to the finish.
The Times article says “a few health insurers see the asteroid coming.” In truth, I think the majority have anticipated some type of significant change coming for a long time, and the wisest ones have been working furiously to transform their business models. The payer side of the healthcare industry has seen rumors of its demise exaggerated at least as much as Mark Twain, but their leaders have been remarkably adept at adaptation.
If you really want to learn about the future of health insurers, take a long look at the leaders, and follow the money. Even as I write this, they are making enormous calculated bets on where the industry will be when the dust settles. No one knows what that will look like, but I expect to see the revamped insurers still standing in eight more years.
A holiday message from Furst Group CEO Bob Clarke:
We are all very busy in the healthcare industry.
We work diligently and frantically all year to ensure that the business operations run smoothly, that our EMR system is implemented and codes are properly entered, that our business development efforts are hitting their targets, that our inventory of supplies is properly managed, that our underwriting and pricing is set appropriately, that our bills are being collected, that the products and services we offer are enough to capture market share.
Those are all important tasks. But let’s remember why we work in healthcare in the first place and the impact we have on others.
The video above is another of our occasional examples.
Martha Irvine of the Associated Press reports on the legacy of Mark Staehely, a young cancer patient at Children’s Memorial Hospital in Chicago, and his concern that no child in the hospital feel forgotten at Christmas. Mark’s toy drive is the largest in Children’s history. In 2005, the hospital honored him with its highest leadership award. His mom and other friends have kept his toy drive going since his 2006 death, and they continue to raise tens of thousands of dollars a year for neuroblastoma research.
Please watch the video. You may also want to visit the website of Mark’s foundation at www.makeyourmark7.org.
Sherrie Barch
By Sherrie Barch
Furst Group President
The hospital’s search for a new executive was down to two finalists. They were leaning toward Mark, but it was clear to me that John was a better fit and a stronger leader. So why was John lagging behind as the final interviews approached?
It was simple. John knew he was initially the underdog, and he became so focused on his competition that he neglected the very qualities that had brought him to the table. I pulled him aside.
“This job is yours to lose,” I told him. “You’re managing to your competition instead of touting your strengths. You’re the best candidate. The board likes you. They want to hire you. But you have to forget about the other guy and focus on who you are and what you can do for this organization.”
It worked. John took the hint, got the job, and has been thriving ever since.
I was reminded of this recently as I read an article by Joan Magretta in Harvard Business Review, “Stop Competing to Be The Best.” Read more…
Bob Clarke: Leadership “is about the individuals and families who rely on you to act in their best interest.”
At least two more leaders appear to have had their legacy tarnished in the current 24/7 news cycle – one a presidential candidate and one a legendary football coach. One is in trouble for what he is alleged to have done, the other for actions he failed to take. But there’s a key lesson about leadership in these events, and the nature of the behavior is merely the symptom of a root issue: selfish leadership.
The best leaders, says Bob Clarke, CEO of Furst Group, are selfless, putting others first.
“I’ve had the opportunity to recruit and develop leaders since the early ‘80s,” Clarke said, “and have witnessed some outstanding executives. Leadership is all about having those you lead achieve things they themselves didn’t think possible.”
Leaders, said Clarke, need to remember that their actions don’t occur in a vacuum and can have a long-term and widespread impact. Read more…
Robert L. Johnson
Robert L. Johnson, the African-American billionaire who founded the BET television network, is calling on U.S. companies to follow in the footsteps of pro football’s so-called Rooney Rule, which requires NFL teams to interview African-Americans for head coaching openings.
Johnson wants companies to interview two African-Americans for executive openings at the VP level and higher. Read more…
Derek Sivers’ presentation at last year’s TED Conference earned a standing ovation and then caused a long stir in cyberspace with his musings on the role of the “first follower.” We saw the video again recently and it got us thinking about all the uncertainty that still remains in healthcare as political and legal battles over reform continue.
Wherever we end up, it seems to us that there are some definite dance lessons here about good leadership and good followership in the world of healthcare.
So take a look at the video above and then see what you think about the steps we’ve broken down below. Read more…
Maureen Bisognano: “In every country that we work in, there are insufficient numbers of skilled people to do the kind of work we need.”
One in a series of profiles of Modern Healthcare’s Top 25 Women in Healthcare (sponsored by Furst Group)
In her travels around the world as the president and CEO of the Institute for Healthcare Improvement, Maureen Bisognano has discovered something: healthcare reform isn’t an exclusively American issue. Many countries, she says, are realizing they need to make some fundamental changes in their healthcare systems.
“There are so many similarities that it’s uncanny,” she says. “You need to use different languages in different countries, but the fundamental problems are very, very similar.”
Bisognano sees several universal issues, including finances, labor and patient-centered care. Read more…
Proctor: “You keep measuring the outcome and you adapt the strategies if they’re not getting you to the outcome.”
One in a series of profiles of Modern Healthcare’s Top 25 Women in Healthcare (sponsored by Furst Group)
Outcome vs. strategy: which takes the lead?
Deborah Proctor, president and CEO of St. Joseph Health System in Orange, Calif., makes it clear where she stands on that age-old business dilemma.
“One of the things that I learned in my career is that most people will develop a strategy and then measure how well they’re accomplishing that strategy. To me, that’s an insufficient process,” she says. “I think you have to first determine what outcomes you’re trying to achieve and then develop strategies to get to those outcomes.
“But you keep measuring the outcome and you adapt the strategies if they’re not getting you to the outcome.” Read more…
Sally Jeffcoat: “A focus on prevention and wellness is where we need to reform the system.”
One in a series of profiles of Modern Healthcare’s Top 25 Women in Healthcare (sponsored by Furst Group)
A lot of the dialogue about healthcare reform is focused on cost, but Sally Jeffcoat, president and CEO of Saint Alphonsus Health System in Boise, Idaho, says she thinks there’s an equally important element that is being overshadowed.
“Health reform has really taken shape in the form of financing reform, but what we haven’t done yet is the care-delivery reform that’s required,” she says. “This gets to the heart of operational effectiveness: how are we going to reorganize care delivery that shifts patients to lower cost environments so that we can still deliver better quality than what we have today?”
To do that, she says, some of the responsibility needs to shift to the patients. Read more…
Donovan: “Hospitals are like running 40 different businesses.”
One in a series of profiles of Modern Healthcare’s Top 25 Women in Healthcare (sponsored by Furst Group)
As the daughter of a surgeon and an operating room nurse and now as one of the leading healthcare executives in the nation, Gail Donovan has been around hospitals all her life. So when she says she’s a bit worried about healthcare reform, one tends to listen more intently.
“Hospitals are like running 40 different businesses,” says Donovan, Executive Vice President and Chief Operating Officer of Continuum Health Partners, Inc. “As a large provider system, our hospital emergency rooms care for 250,000 visits a year in our system and we have very large ambulatory services handling more than 3 million visits a year. I love being able to provide access and to make sure that, as much as possible, we’re able to meet the needs of the very large and diverse communities we serve.” Read more…
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