Part 2-The Biggest Issues For The Future Of Healthcare In America And What We Can Learn From Them

11/03/2016 06:00AM

As healthcare in America moves from a cottage industry to big business and gets progressively consolidated, regulated, and systematized, the industry has found itself at a crossroads with its customers (i.e., patients). A patient-centric and patient-focused model requires healthcare providers to change their businesses to a relationship-based model in which they provide value and grow together with their patients and customers from birth to end of life.

I spoke to four healthcare executives to get a sense of what the biggest issues are facing their organizations as a result of these changes and how they are influencing the evolution of the industry (see part 1):

  • George S. Barrett, CEO of Cardinal Health based in Dublin Ohio
  • Robert W. Stone, President and CEO of City of Hope based in Duarte, California
  • Thomas F. Zenty, CEO of University Hospitals based in Cleveland, Ohio
  • Victor Crawford, COO of Aramark based in Philadelphia, Pennsylvania


This is the second part of our discussion.

My father was my hero, and while he lived to 97, our last years with him were hard. He had suffered from Alzheimer's from the time he was 90. How this impacted my family from the level of care and spending required to the emotional toll it took was profound. The decline my father faced reflects one of the biggest complexities the healthcare industry faces in creating patient-centric and centered models in the future as Americans are living longer than ever.

“There are 11 million people over the age of 80 in America,” Barrett told me. “That number will double in the next seven or eight years. The implications of that are really enormous, because a 65-year-old can actually be quite healthy today. But as people reach their seventies or eighties we tend to see much more complex health issues like chronic illnesses. Our healthcare system wasn't really designed to deal with this. Our system was designed primarily to deal with acute illness. So the idea that will have over 20 million people over the age of 80 has really broad implications. These are super users in the system. There are some very big economic implications.”

Zenty would agree. He talked about “dual eligibles” – people who are alternately eligible for Medicare and Medicaid: “Included in that category would be chronic care cases when they get admitted from a nursing home to a hospital they become Medicaid patients and then become Medicare patients. These are very sick people and very complicated cases that require a tremendous amount of resources for which no one really gets paid or recognized for financially for that care that's taking place.”

This also requires bridging tremendous gaps in understanding that are just starting to be filled in by the healthcare system and industry, families, and employers. “We have thought about childcare,” says Barrett. “But now we are going to have a generation of people who are really the sandwich generation: they have to help with their children but now they are under tremendous pressure to help with their parents.”

What this comes down to is quality of life for everyone and that is requiring healthcare to reinvent the way it works and leads to evolve its relationships with all of us – male or female; rich or poor; young and old; Hispanic, African-American, white, or any race and ethnicity. You need to have people intelligence to have these relationships in the marketplace now – something that requires much more than the fee-for-service models of the past. Because what influences the marketplace? The individual—much more than ever before. Because we have shifted to individuality in the marketplace, customers are looking for more than just business as usual.

This creates complexity that leadership must evolve to deal with – something it has never been asked to do before, according to Barrett: “How do you align around the right measurements for outcomes? There has been pushback from some of the hospitals and providers saying they have unique patient populations so that has to be done carefully or you will create unintended consequences. We understand that this is complex. But I think the direction makes sense. If we can make a more patient-centered system focused on the outcomes we are looking for and paying for those outcomes, then we will probably be going in the right direction. This is a very big change we are just in the middle of.

It requires a high level of comfort with ambiguity in leadership. Agile, imaginative, able leadership capable of collaborating with institutions that we might have once seen as competitors or unrelated partners. Reimagining leadership is part of reimagining healthcare. Not everybody has the tools to do everything.”

That means reimaging for all demographics, including the populations of the Cultural Demographic Shift, which represent the fastest growing youth population. Just consider the Hispanic population, the largest shift population segment of the healthcare market. Historically, Hispanics have not managed their health well. They are often not proactive with their preventive care and thus disproportionately experience major health problems later in their lives. For example, according to the American Diabetes Association, compared to Non-Hispanic whites, Hispanics have a 66 percent higher risk of being diagnosed with diabetes and 43 percent more are obese.

Stone knows this problem intimately: 46% of City of Hope’s catchment area is Hispanic, so City of Hope needs to understand and be able to communicate with that community as they seek medical care sooner and more often and the demand escalates for preventive care education. City of Hope wants to deliver on the promise to its Hispanic community and all shift populations in its catchment area to detect and treat diseases and conditions that are disproportionately higher among Hispanics than other populations earlier than has been available in the past (which not only raises the bar for their overall health but also reduces costs for treatment). Ideally, City of Hope wants its work force to mirror the marketplace it is trying to serve. That’s difficult in an industry where Hispanics are severely underrepresented among U.S. doctors, nurses, and pharmacists.

According to a 2015 study by UCLA, in 1980, there were 135 Hispanic physicians for every 100,000 Hispanics. By 2010, that number was 105 for every 100,000, a 22% decline. The national percentage of doctors who are Hispanic is at 5% and declining, and for nurses it is 7.5% and only slightly growing. Exact national figures for Hispanic patients are not available, but you don’t need to be a statistician to realize that if the Hispanic population increased by 243 percent between the 1980 and 2010 censuses, the number of Hispanic patients nationwide has only grown. This leaves a huge cultural deficit between workplace and marketplace, because when Hispanics come in, they want to talk as well as get the healthcare they need. This is why the National Institutes of Health “recognizes a unique and compelling need to promote diversity in the biomedical, behavioral, clinical, and social sciences research workforce.”

Zenty agrees: “Study after study shows that underrepresented minorities will be more interested in and more likely to seek care when someone who looks like them is be able to care for them. But we are all fighting over a small and frankly smaller pool than we need to make this happen.”

To start to solve for this, University Hospitals is creating “a relationship with a local university that bring on underrepresented minorities who will go through a bachelor's level program that will lead them to Northeast Ohio Medical College.” City of Hope is also addressing not just how care is being offered but the pipeline: For example, it does a T.E.A.C.H. (Train, Educate and Accelerate Careers in Healthcare) partnership, which provides students with the opportunity to gain college credit while still in high school by taking college-level classes at no cost. As Stone says, “We believe we are not just a scientific organization or healthcare provider but a member of our local community in which we reside and want to give back. That builds a foundation of trust within the community, especially that kid who comes in with his parent for care.”

All of this takes time of course. Meanwhile the healthcare industry is facing cost constraints like never before. Hospitals cost money to maintain from the infrastructure through staff. At the same time, doctors and organizations are being paid less and less for the services they provide. Zenty said the average operating margin is about 3.5% and estimates are that about 30% of all hospitals lose money from operations. As a result, expense reduction is a big part of what hospitals are facing. The reality of the economic situation has driven hospitals to stand up and pay attention to reduction even more today.

This seemingly runs contrary to the change in the business model from patient-centric to patient-centered and the evolution from a volume to value model, something all the leaders were acutely sensitive to.

“It’s an obligation for each provider to focus on value,” Stone said to me. “We are obligated to our patients to provide value, which is not simply defined as being the lowest cost provider. The clinical research and accompanying patient care that we provide leads to better outcomes and patient experience, and those outcomes and experience must be value-focused, and cost is only one variable.”

What must be done then is to translate that value and lead healthcare at scale. That’s where technology and big data will have the biggest impact in the healthcare future.

“Technology has to enable care and research, says Stone. “Technology is important to measure and report what value is, to identify areas from which to take out waste from the system, to point your resources to the place where they have the greatest impact. We’re excited about the ability to use big data and point it towards individualized treatments – to take a series of individual encounters or individual illnesses and look for patterns so you can draw conclusions about how a specific disease operates. This will only increase in importance as we gain more information about the human genome and big data allows us to see patterns that the human eye cannot detect. What big data will allow is now gather the big picture across multiple institutions at such a magnitude that we are going to be able to look at the whole -- the biggest impact we can have is to have cross-institution collaboration.”

They need to, because consolidated groups, insurance companies, and intermediaries are fixated on cheapest cost and managing those costs through narrow networks. The real risk is insurance carriers and payers and employers and intermediaries will narrow networks so far that people will not have access to places like City of Hope. That will result in a two-tiered system: those who can afford healthcare and those who cannot.

For Zenty, nothing is off the table to create efficiencies and balance cost and value, including finding ways to consolidate care without restricting patient access. “We are going to be looking to rationalize all the resources that we have all across our health system. Because of meaningful use requirements and the patient protections of the Affordable Care Act, we have ramped up our information technology investments over the past five or six years. We have also set up centers of excellence at two companies in our health system. For them, we are taking care of the needs of individual employees and they come from all around the nation now to receive care in our organization.”

Crawford sees partners like Aramark helping too, especially as hospital networks merge, consolidate care, and take on external partners: “In mergers and acquisitions and restructuring you’re seeing all kinds of different partnerships like physician groups. They are seeking more synergies. For us, that means we need to have standards that help us drive predictable outcomes across food and nutrition, as well as facility management and our healthcare technology management. They want more standardized processes and procedures so they can understand and measure their hospitals' performance against one another. More importantly they want to be able to deliver against the patient outcomes and satisfaction consistently across their systems. We offer these larger systems greater economies of scale as well as improved patient satisfaction outcomes and data driven maximization across their assets through equipment distribution.”

But in the end, every leader agreed that the most important competencies in healthcare leadership today are compassion and empathy. To reinvent the way we work, lead, and live our lives, our relationships with the patients must evolve. And that requires more intimacy.

When I told Barrett about my father, he told me he lost both his parents this past year. He also told me he shared that news on an earnings call, because it gave him as a leader a little bit of perspective of what the industry is facing. “It showed me how personal the issue of healthcare is,” says Barrett. “We are all brothers and sisters and sons and daughters. When we personalize healthcare, we ground ourselves about where we are going. When we do that it allows us to challenge the way we are doing business and the way we have done business.”

Navigating Uncertainty Summit October 14 | Clemson University