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The X Questions

Ten existential questions will make the difference between stumbling into the future and thriving

The questions have changed. The key strategy questions that the C-suite must be asking—and getting answers to—are different now than they were in the past, even from what they were last year. Most of today’s health care CEOs and C-suite leaders are missing many of the key questions they need to ask to drive strategy now, this year, this budget, in order to survive the next three to seven years. Which ones are you missing?

A New Mind-set

Today and for the next few years the weather of this industry will be dominated by pervasive, discontinuous change. Structures, revenue streams, relationships of every level: All are shifting in fundamental ways. Specifically, the weather will be driven by:

  • invention and propagation of new business models;
  • shifting risk onto both the provider and the patient, accompanied by building of new risk-based relationships, contracts and alliances;
  • smart primary care coming to the fore as the foundation of health care, driving most business models;
  • digitization and automation going wall to wall and beyond the walls—accompanied by powerful new info-capacities, from “big data” strategic analysis to new ways of reaching and bonding with customers; and
  • a striking new need for efficiency and effectiveness in response to rapidly rising demand as the baby boom ages, the baby boom health care workforce ages and disengages, and the newly insured increase their use of health care facilities.

Most of these factors, except the very last, are not dependent on the health care reform act, and will not change much if the act is altered or set aside.

Here are 10 strategic questions. There are lots of questions you can ask at the strategic level, but these 10 stand out as existential questions, the ones that, unasked or poorly answered, could cripple your organization, narrow your options and threaten your continued viability. So we will call them “the X questions”—X for the Roman numeral 10, for the existential nature of the answers, and for the key “X factor” role they will play in your future. If you are not asking these questions, asking them seriously, not rhetorically, in a venue that searches for answers that result in actions, you and your organization are flying blind into unknown territory.

The X Questions

1. Smart primary care: What would it take to derive the majority of your income and profit from primary care in three to five years? What would that look like? What capacity would you have to buy or build or ally with to do that? What structure would make primary care a profit center instead of just a source of patient flow for the real profit centers? Do you recognize the elements that make a primary care practice “smart,” lean, effective and a true “medical home”?

2. Risk: Are there definable populations in your market whose health costs could be driven down by improving their health status? While there are thousands of examples out there, focus on just this one: In the last 10 years, through basic, conservative preventive measures, Kaiser drove down the incidence of heart attacks in its members by 24 percent; it reduced serious heart attacks requiring hospitalization or surgery by 68 percent. Those are big numbers. Kaiser is financially at risk for the care of its members. You can probably imagine how the return on investment for preventing all that suffering and death looked on Kaiser’s bottom line.

These definable populations could be populations defined by payer (all the Blues members in your area, for instance, or all the members of your own health plan). Or by disease process (all the diabetics), by living situation (everybody in a particular retirement home), by income level (all the lower-income people in a particular part of town), by life stage (all the mothers of young children) or even by occupation (all those dock workers with the bad backs). How could you put your organization at risk—therefore at profit—for those particular health costs? Who might pay you to care for them? In what way might they pay?

3. Hotspotting: Eighty percent of your utilization and costs, typically, come from 20 percent of your patients; half of the utilization and costs come from 5 percent of your patients; and fully 20 percent to 30 percent come from the top 1 percent. Some of those patients just got hit by a bus or contracted a swift-moving cancer. This is their moment to need a lot of attention. But of that highest-spending 1 percent this year, 14 percent will still be in that category next year. Of the top 5 percent, the ones who use half of all the resources, nearly a third will still be in that category next year. Of the top 20 percent, those who use 80 percent of all the resources, more than half will be in that category the next year.

These are typically the long-term chronic patients who are not getting the real care and attention they need to stabilize their condition and keep them out of the ER or the hospital. If you are going to be at risk for some population, do you know who that top 1 percent or top 5 percent of resource spenders are? Do you know how to find out? Do you have a clear idea how you could lower their costs by serving them better?

4. Alliances, customers, partners: Who is going to work with you? Who will share the risk and the benefit of these new risk environments? Are there competitors—such as physician groups, specialty clinics, urgent care clinics or retail clinic chains—that are now potential allies? Are there employers in your area with whom you can work directly, either to be at risk for some aspect of their employees’ care (behavioral health, for instance, or spine care, or all primary care in a workspace clinic)?

5. Teams: What sort of clinical teams will you need to build to take on this kind of risk? What will make those clinical groups into teams, and not mere collections of clinicians with their own agendas? In what ways can the way you pay those clinicians tie them directly into the organization’s goals for each group of patients? How will the business structure, patient flow and workflow have to be different from what you have now?

6. Definition: How will the definition of “care” expand beyond your traditional inpatient and outpatient “sick care” concerns when you take on such risk? For instance, how can you affect outcomes and costs by putting behavioral health professionals into the care flow early and often? Consider this: The two top predictors of an individual’s health care costs are not physical. They are not body mass index, blood pressure or blood sugar level. They are stress and depression. Are you going to put yourself at risk for those health care costs without trying to do anything about those factors?

7. Setting: Where will such care have to be delivered? Through what kind of channels, and in what kind of environments? If your survival depends on managing the health risk and costs of populations, how do you bring the care to them? How do you snuggle up to your customer? What are the technologies that could put your relationship to your customer in her purse, on her desk, in her house?

How will your physical plant and built environment have to change? As you contemplate building, renovating and repurposing in a new risk-based environment, you will have to focus not only on getting closer to your customers, but on building a safer, more efficient and effective environment where your clinicians can work with them. How conversant are you and your executive team with the principles of evidence-based design championed by the Center for Health Design and encapsulated in its certification program? Are your architect and interior designer certified?

8. Benchmarking: Are there organizations of your size and level of complexity, in markets like yours, that have done something like what you are navigating, that you could benchmark? How could you best find them? How could you best work with them?

9. Digitizing: Everyone is gettin’ digital at once, but there is no mantra that makes it all work. It can be done seriously badly, even when working with market-leading companies. You can cripple your organization’s workflows, cut efficiencies and make your clinicians hate you—at the same time that you pay out checks as much as 10 times larger than you need to.

How much do you and your executive team actually know about the changing horizon of information capacities? How seriously have you studied it? Does that knowledge simply pad out your strategy, or does it drive it? How satisfied are you that the strategy and the company you are choosing to lead your digitization drive are the best for you? Or are you and your CIO simply buying the security of the imprimatur of a major company? How aware are you of the new technological capacities arising and being showcased in the Health 2.0 environment, in the open source movement or, in primary care, in the Ideal Medical Practice movement?

In your enterprise-wide digitization, are you using OpenVista and the Resource and Patient Management System (RPMS), the open-source software suites available for free from the Veteran’s Administration, one of the oldest, most tested and largest digital implementations in health care? If you are not, how good are your reasons?

Consider this: A couple of years ago West Virginia University Hospitals spent about $90 million to install commercial health software from a major brand-name vendor in seven hospitals. About the same time the West Virginia Health and Human Resources Department installed OpenVista in eight hospitals. The installation and customization by a private vendor in all eight hospitals cost $9 million. Are we to assume that the university system got 10 times the value? Why would we assume that?

In taking your smart primary care practices and other physician practices electronic, have you considered the free or cheap software-as-subscription packages such as Practice Fusion or Doctations? How strong are your reasons for spending money you don’t have on systems that cost far more?

Kaiser recently rebuilt its entire electronic system (and by all reports quite successfully), to the tune of $4 billion. Top managers involved 160 physicians from all parts of the system in the re-design, not just once, but repeatedly, as a task force. This really helped not only in building a good system that actually works for the clinicians, but in getting the doctors to really use it to advantage once it was implemented. How much have you involved your doctors in designing your system? Or is it just, “Oh, we have a doc on the committee”?

Ask yourself some functional questions from a doctor’s point of view, such as: Are the accounts and records transaction-based or patient-based? When an ED patient is admitted, does that become a new record? Or is all the clinical information on that patient brought forward as part of a continuing, longitudinal patient record? Can it display, for instance, variations in blood albumin level over time as a single graph? Or does the clinician have to burrow through dozens of transactional records to write down the data, then visualize it in her head? Can the system accept data from other hospitals’ systems, or from legacy data sources within your own system? If not, why not, when translational software is available?

If you don’t know the answers to these questions to a close approximation of on-the-ground clinical reality, you need to find them. They could be killing you.

10. Healthy communities: If you are at risk for the health of a population, what could you be doing to help members of that population be healthier? The least expensive way to deal with disease is to prevent it. Many prevention methods range far beyond the medical environment. They have involved everything from a bicycle helmet campaign to better day care centers to traffic lights, community gardens, yoga classes and healthy cooking clubs. Do you know what the key leverage points are in the community you are at risk for? Have you asked them? Have you done the community health risk assessment mandated in the reform law?

The amount of actual funding involved in partnering to build a healthier community can be so low that one CFO described it to me as “lost in the noise” of the budget. In a risk environment, the return on investment can be very high. The experience, the data, the expertise in improving the health of populations is now deep, wide and accessible, not least in the AHA’s Healthy Communities Fellows and its Association for Community Health Improvement with its risk assessment toolkit; and in the comprehensive turnkey software and databases available from the Healthy Communities Institute of Mill Valley, Calif.

Confronting Your Risk

In the environment that is developing right now, with the shift in underlying economics, demographics, technologies and business assumptions, every organization in health care is at risk of slowing its development, crippling itself or even falling by the wayside. At the same time, tremendous new opportunities are opening up, often in directions we have never had the possibility of even thinking about.

This is the time to ask and answer the fundamental strategic and tactical questions, the X questions.

With nearly 30 years’ experience, Joe Flower has emerged as a premier observer on the deep forces changing healthcare in the United States and around the world. As a healthcare speaker, writer, and consultant, he has explored the future of healthcare with clients ranging from the World Health Organization, the Global Business Network, and the U.K. National Health Service, to the majority of state hospital associations in the U.S. You can find more of Joe’s work at his website, imaginewhatif. This post was originally published in Hospitals and Health Networks Daily.

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Doctor HartVikram CWalkerJohnsouthern doc Recent comment authors
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Doctor Hart
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Doctor Hart

Joe, Very interesting to read all the points you have made about Kaiser. As a solo primary care physician with 15 years experience and 15 more to practice, I have been thinking along the same lines for the last 3 years. And at the end of the month, I leave my practice and start at Kaiser. It seems many of my colleagues here in Northern California want to do the same but at this time Kaiser is already fully staffed. I have been explaining to the patients I leave behind about the benefits of Kaiser, most importantly that Kaiser does… Read more »

Joe Flower
Guest

Thanks for the point of view, Doctor Hart. I understand the point of view that nothing should influence the doctor’s judgment, and nothing should interfere with the doctor/patient relationship. But in reality, some things should influence the doctor’s judgment and “interfere with” the doctor/patient relationship, such as the standards of the profession or the specialty, the collegial judgement of other doctors, the advancing science of what actually works clinically versus the latest fad — and, yes, the cost. If two courses of action are equally beneficial, and one costs ten times as much as the other (as is often the… Read more »

MD as HELL
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MD as HELL

“We” as a society do not pay for healthcare. “We” as a society steal healthcare with “allowables”, “contractual adjustments”, EMTALA, etc.

Don’t tell me what you want the doctor to do. It is the patient who should tell the doctor what they want, not the payor. Then the doctor will evaluate and manage the case.

Start there with your system.

Vikram C
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Vikram C

Joe, you have spoken about outcome based practice. What is your viewpoint on evidence based medicine? What is your timeframe to consider outcomes? Like statins do seem to work for period time when your cholestrol lowers or spinal surgeries do seem to give relief for a while. The reason I bring this question here is that alternative medicine follower consider evidence based medicine (allopathic) as good for symptom and pain control but failing to address root cause issues. Going to Kaiser’s reduction in heart attack, I looked at the study. Obesity and physicial activity didn’t improve for their population. However,strokes… Read more »

Joe Flower
Guest

Good points, Vikram. There are two frames with which to look at this: “evidence-based medicine” and “evidence-based health.” “Evidence-based medicine” is strictly about how we achieve the best result using the tools at hand. It is necessarily, because of the difficulties of measurement, a relatively short-term and narrow focus. And it is manifestly a good thing, since it is way better to do the short-term obvious things well than to do them poorly and randomly. Only when they are done well and consistently can their real results be measured and compared to other possible regimens. Strictly and scientifically practiced, EBM… Read more »

MD as HELL
Guest
MD as HELL

Sorry, but that is not what I said. I am not interested in being a corporate employee. I assume you are using the royal “we” in your comment. Well, that is not how it works. Doctors are forever told they must use a particular script to get paid for a particular wervice. Done incorrectly a record will be “downcoded”. Say the secret word and get an extra $47. All of the parasites are getting paid because they have infested the care process. Get out of the way. You are a consultant for a reason.

Joe Flower
Guest

> I am not interested in being a corporate employee. Not all of these models are about being a corporate employee. Most of the four models I talked about way up in this thread are not about being a corporate employee. > I assume you are using the royal “we” in your comment. I mean “we” as a society. We as a society pay for healthcare. If we give better attention to what we are paying for and how, we will get better results for less money — and one important part of that is to re-design the way we… Read more »

MD as HELL
Guest
MD as HELL

There are an entire flock of people in the exam room with the patient and me. Get the IT folks, the compliance folks, the utilization review folks, the CMS folks, the Press-Gainey folks, the administration, etc. out of the room, and I can save real money and take great care of the patient. And get the nurse away from the computer and back in the room. In other words, get the flock out of here. Get out of the way. I have been trained, credentialed, certified, recertified, appointed and reappointed. What are you all doing in my way?

Joe Flower
Guest

That’s actually what a lot of these models, in various ways, are about — letting the doctor spend his/her time being a doctor, and paying the doctor directly to do the things we want doctors to do.

Margalit Gur-Arie
Guest

Well, Joe, I envy your optimism, so I preordered your book on Amazon just in case it is contagious. I will also have to read up on the MA plan a bit more. When I look at the health care arrangements in my neck of the woods, I can’t figure out how this is going to work. If I was running a large all powerful ACO, I would not agree to a contract where the insurer lists me as a “large copay required” facility, and since without me you don’t have a prayer at getting anyone to buy your plan,… Read more »

Joe Flower
Guest

I hope it can change your understanding as well. That’s my purpose in getting it out there: I believe there is a serious possibility of turning this thing around. True, it will not be simple and clean. It will undoubtedly be messy. But your examples do not convince me of their outcomes, because I have seen other outcomes of just such situations. In the case of a health system given a low rating, the alternative is that the health system goes to the payer and says, “Whoah, why are we rated that way? Give us a chance to change the… Read more »

MD as HELL
Guest
MD as HELL

I am the unnecessary and expensive ER visit. It will still be mostly unnecessary and expensive. I can’t quite figure out who pays for it. The gatekeeper model from the nineties did not keep it from happening. My old hospital CEO still owes me a quarter. He bet ER visits would go down under managed care. They have doubled since tht time. Everything works well on day one, even managed care. Let’s see what day 1000 or 3650 looks like. No previous model has ever worked in the long run. Why should this? The patient is still a passenger, not… Read more »

Joe Flower
Guest

> No previous model has ever worked in the long run. Well, then I guess we should never try anything. “Managed care” was a theory. It was not really field-tested in the form that became prominent before it was rolled out massively across big parts of healthcare. It was supposedly a version of Kaiser-like HMOs, a way of unifying healthcare and so promoting proper care coordination. In practice, it was nothing like that. The model actually rolled out had little in common with true HMOs, and was just a gatekeeper model that had obvious systemic failure written all over it… Read more »

MD as HELL
Guest
MD as HELL

No models from government.

MD as HELL
Guest
MD as HELL

There is no way for a practice, practitionaer, hospital or ACO to estimate the risk they take when a particular patient walks in or enrolled. Population statistics do not apply to a small group or to an individual, and none of the above entities presently buy reinsurance. Furthermore, the only risk premium built in to medical fees is the liability insurance premium. If a doctor assume additional risk, there need to be something in it for the doctor. Since there is nothing in it for the doctor under ObamaCare, the only winning move is: Not to play. How about a… Read more »

Joe Flower
Guest

> none of the above entities presently buy reinsurance The AQC model includes reinsurance, for exactly this reason. > Since there is nothing in it for the doctor under ObamaCare I am not talking about ObamaCare. I am talking about the fact that the assumption of business risk is changing in healthcare, bringing new structures and relationships. The PPACA and subsequent CMS regulation set out some rules and definitions of Accountable Care Organizations, which is one type of shared-risk structure, actually a fairly limited type, not as comprehensive a model as the AQC model, which BCBS of MA has been… Read more »

Margalit Gur-Arie
Guest

Joe, love Dr. Emanuel, but his attention to detail in that blog is a bit sloppy. I do agree that if ACOs proliferate, insurers have no significant role to play, but I am starting to think that this new reality is a transition from the fire to the frying pan. Unlike Dr. Emanuel’s rosy vision of people picking their own ACOs, it is more likely that employers and CMS will be picking your ACO. And employers’ interests are not exactly aligned with employees’ interests. Also if insurers are not there, who is going to oversee that quality metrics are achieved?… Read more »

Joe Flower
Guest

Margalit, your post sports a series of assumptions that I am not sure are supported — and that effectively display the difference between my optimism and your pessimism. > it is more likely that employers and CMS will be picking your ACO. I’m not sure why that necessarily would be. That’s not true of the AQCs. I think it likely that an employer might make deals with one or more ACOs, and structure the deal to encourage employees to use the ACOs by charging them a higher co-pay if they go outside it — and the ACO would pay for… Read more »

Walker
Guest
Walker

Joe, I wonder if one reason Kaiser is not significantly cheaper than other health insurance is that they can’t afford to be. I think the problem would go like this: One open enrollment seasons Kaiser doesn’t raise rates as much as everyone else, by a noticeable amount Open enrollment comes, and people flock to Kaiser Kaiser does not have the internal capacity to handle so much growth, and since it works as an integrated delivery system, that’s a big deal Kaiser is forced to contract outside its own operation for care, and do that contracting under duress With the contract… Read more »

Joe Flower
Guest

Makes sense, Walker, but I think that dynamic is not really happening. Health insurers found long ago that “price wars” don’t work. You cut your price to get more members, everybody flocks to you, you have difficulty servicing them all and can’t sustain the low rates — and then, of course, it turns out that those who came to you on price alone go away for the same reason. Insurers watch each other like hawks in each market, of course. They aim for premiums that are 1) competitive and 2) sustainable for them, as well as high enough that they… Read more »

Joe Flower
Guest

> What makes us think that this time around patients will be enthusiastic about the fact that their doctors make money by denying care?

Kindly address this question to someone you think is advocating denying care, and identify where they said anything about denying care.

John
Guest
John

An important topic this discussion touches on is the growing need for new techonology development and innovation that specifically targets number 9 on the list. In terms of technological development, the digitization of EHR have raised serious cost benefit concerns, as well as, data security issues. In the debate of Electronic Health Records, opponents often highlight the potential data breach as a rallying cry against the adoption of EHR. However, the introduction of new data breach products have silenced some of the critics of EHR adoption. For a discussion of one of the most recent data breach technologies be sure… Read more »

Joe Flower
Guest

> Sensei.

Psst! Bobby! You lift the veil on the Sekrit Cabal of Healthcare Futurists!

Joe Flower
Guest

> So why will we need insurers? To package derivatives? Hey, Margalit! I am not quite sure what you mean here. We need some kind of financing mechanisms to lay off risk across populations and across time. The risk of needing healthcare services is so wide (everyone has a body, but only one each) but so highly varied, over time (old people need way more), by lifestyle (kite-surfing, salmon fishing) and randomly (cancer, virus), and people are notably poor both at estimating their own real risk, and providing for it over their lifetimes and across their families. That’s why many… Read more »

Margalit Gur-Arie
Guest

Yes, Joe, but insurers usually take a profit because they take risk. If all they do is sell the risk downstream to providers, I am not sure what exactly their function is any longer. People could go buy insurance directly from the ACO, which is essentially what Kaiser is. Maybe smaller ACOs will need to reinsure somehow…. I don’t believe provider in Switzerland and the Netherlands take risk, or anywhere else for that matter. From your response above to Dr. Mike, it seems that the average person seeking average care will not be finding that at the average private practice… Read more »

Joe Flower
Guest

Great question. Certainly all these new arrangements blur the line and beg the question: What is an insurance company? Certainly an ACO that takes on risk directly from the customer is acting as one. Kaiser, of course, is a set of interlocking companies, one of which is a health plan. It’s a little difficult to talk about ACOs with precision, since there are a number of ways to be an ACO. But if we look at BCBS of Massachusetts’ Alternative Quality Contracts, we can see that there is a lot more to it than “selling the risk downstream.” What they… Read more »

Joe Flower
Guest

> I don’t know if the care is better at Kaiser, but I do know that it is not cheaper for the patient Like any large system, Kaiser has its problems, so I am sure someone will pop up with some anecdote of Kaiser horribleness. But when people do that, I also like to ask when the incident happened, since Kaiser went through some real quality problems in the past, but has improved enormously since the late ’90s. Kaiser has been winning major quality awards lately. The reduction in AMIs I mentioned is one of a series of such quality… Read more »

Margalit Gur-Arie
Guest

This is very intriguing, Joe. We usually look at successful markets and identify competition as the factor most responsible for success, and by success I mean better quality and lower consumer prices. Here, you seem to pinpoint risk at the operational level as the major driver for providing both quality and affordability of products. My concern is that taking risk and competition are two very different things, triggering very different behavior. We know that when two businesses are competing, they must find ways to make the customer happy, or at least willing to open his wallet. This effort can be… Read more »

southern doc
Guest
southern doc

What makes us think that this time around patients will be enthusiastic about the fact that their doctors make money by denying care?

Joe Flower
Guest

Competition and risk mitigation are not completely different things. Risk mitigation, for provider in AQCs, is a method of competition. That is, they are competing to keep their customers by doing healthcare better, and to make a profit at it by doing it cheaper. The payer acts as proxy for the patient as customer, and here’s how: If the quality measures are well chosen, they not only are measures of key outcomes that would benefit a lot of the customers. They also measure systemic things that cannot be done to benefit only some customers. Disease registries, for instance, and someone… Read more »

Joe Flower
Guest

> single payer could sell risk down to the operational level of providers as easily as private payers, and probably more efficiently as well

Probably. Whole different discussion. Almost the entire public discussion has been about who pays. I believe the answer lies in the other direction: who gets paid, and for what, and how.

Joe Flower
Guest

By the way, yesterday’s NY Times has a blog by Zeke Emanuel and Joe Epstein essentially saying the same thing, that as ACOs take on risk, the market need for health plans wither away, and they need to find a new job in the market or go out of business.

Joe Flower
Guest

> the small guys will never survive in the environment described Actually, if we begin to mix up the almost monolithic fee-for-service environment with a variety of risk-bearing structures, I see the healthcare marketplace becoming more highly varied. There is room in a risk-based environment even for “small guys.” The key is matching the risk you are biting off to your capacity to control your cost and your risk exposure. You can do that in a number of ways, such as: o Urgent care: Provide care outside the usual risk structures for people who for whatever reason feel better served… Read more »

Dr. Mike
Guest
Dr. Mike

We agree then. The small guys will not share in the risk because it will not be profitible for them. Instead they will avoid it through one of the mechanisms you describe. I am pleased also that you appear not to hold a negative view of these alternatives. It is putting it mildly when we say it will not be an easy transition for American society as so much of our current health care is actually delivered by the small guys.

Joe Flower
Guest

Or they will share in the risk through contractual relationship with some larger, risk-bearing entity, such as a health system, an ACO, or an HMO. I actually believe that such relationships could be more profitable and more sustaining than traditional small practice, if done right (and there are lots of ways to do them poorly). I think the lower bound on sustaining a small practice will be set not by the need to take on risk, but by the need to sustain the minimal infrastructure of a team-built medical home, which includes a data nurse maintaining patient registries, outreach capabilities,… Read more »