Management Update - Lund Byrne Associates

Lund Byrne Associates
Management Update
Spring 2015
Helping Physicians and Hospitals to Collaborate
Contents in a
Nutshell:
 Remaining
Independent
 When is enough IT
spending—Enough
 Building for a
future system of
care
Please direct all questions
and inquiries to:
arbyrne@lundbyrne.com
Global Center for
Health Innovation
Cleveland OH
Change
Management
He who rejects
change is the
architect of
decay.
The only human
institution which
rejects
progress is the
cemetery
Harold Wilson
A British Prime Minister
What Price
Transparency
Remaining independent?
Why not.
There are still a lot of community hospitals and physician practices
whose leaders are in the enviable position of being able to decide
whether it makes business sense to merge into a larger network or
provider group. These independents are probably not under any
financial stress and have the time to view their options in a strategic
way.
To merge or not to merge is often related to the sophistication of the
market, the local payer mix and the local Board of Directors. It
appears that the more sophisticated the providers, payer market and
the consumers are, the more likely a merger will be required.
This includes hospitals:

In urban markets that have very competitive service areas

That are in markets where large systems and alignments are
already developing

With a high degree of loosely affiliated, split medical staffs, and

Whose reputation for quality and efficiency is lacking
Conversely the less sophisticated the market then the more likely the
hospital can maintain its independence. Examples include hospitals:

That are rural /suburban in nature and financially stable

That are sole community providers with a good primary care
physician base

That provide unique services such as Children’s hospitals
serving a defined population
That being said, the new reimbursement environment in which there
is a shifting of risk back to the providers is shedding a new light on
what continues to be manageable for smaller and stand alone entities.
The costs involved with building the infrastructure for managing care
in the new model are enormous and go beyond just buying into a
new EMR system. The leadership decision ultimately breaks down
into whether the hospital or practice decides to be a supplier to a
health system as a network provider or will be a part of a specific
network through merger.
As a vendor to a network or a number of networks means the product
(or brand) meets the needs of the buyer. Today that covers all the
things the larger networks aspire to: “The Triple Aim”.

Improving the patient experience of care (including quality and
satisfaction)
 Improving the health of populations; and
 Reducing the per capita cost of health care.
If going it alone is important, call Lund-Byrne Associates, we
can talk with you about what works.
Cost of Chronic Disease
Diabetes
According to the CDC, the total
estimated cost of diagnosed
diabetes in 2012 was $245
billion, including $176 billion in
direct medical costs and $69
billion in decreased productivity.
Decreased productivity includes
costs associated with people
being absent from work, being
less productive while at work, or
not being able to work at all
because of diabetes.
Diabetes is said to impact 29
million people or about 9% of
the US population. The highest
rates of type 2 diabetes and its
complications exist across
particular groups of the population, such as adults 60 and
older, racial and ethnic minority
groups and with lower socio
economic groups.
Prevention: People with prediabetes have higher-thannormal blood glucose levels but
not high enough yet to be considered type 2 diabetes.
Research shows that 15% to
30% of overweight people with
pre-diabetes will develop type 2
diabetes within five years unless
they lose weight through healthy
eating and increased physical
activity.
Total per-capita health care
expenditures for those with
Diabetes range from $5,930 to
$9,540.
3969 West 227 Street : Suite 100 : Cleveland : Ohio : 44126 : (440) 827-6001 : www.lundbyrne.com
Lund-Byrne Associates
Will I.T. spending slow - and the “Internet of Things”
The speed with which computer systems
and connectivity is changing the world
makes it next to impossible to keep up.
Consumer expectations are racing ahead
of most industries. When responding to
these rapid trends there is always the fear
that there will be some other new
disruptive product that will create more
change and expense.
Management and IT professionals are
forced to make value judgments on how
much is enough. Because of the costs
involved these judgments are made with
the long term in mind but there is no
clear path to follow.
The immediate priorities should be
simple:
 Patient safety
 Cost/Data collection and aggregation
 Data safety/security
 Provider ease of access and use, and
 Consumer accessibility
Easy? No way!
Take for example planning for the
“smaller” issue of WiFi. It is fast
becoming the standard methodology for
equipment and applications to connect
and share information. Products, have in
about 2 years shifted from 802.11N to a
new WiFi standard with the latest being
802.11ac. Using this requires equipment
updates which get expensive but allows
data transfers at gigabyte speeds. Useful
but was it in the budget?
The next idea that will get everyone’s
attention is using WiFi and is known
as the “Internet of Things” (IoT).
This is a developing scenario in which
objects or people can be provided with a
chip with a unique identifier and the
ability to transfer data over a network
without requiring human-to-human or
human-to-computer interaction.
The “Thing”, in the Internet of Things,
can be a person with a heart monitor
implant, a farm animal with a biochip
transponder, an automobile that has built
Buildings for a future system of care
-in sensors to alert the driver when tire
pressure is low -- or any other natural or
man-made object that can be assigned an
IP address and provided with the ability
to transfer data over a network.
So far, the Internet of Things has been
most closely associated with machine-tomachine (M2M) communication in
manufacturing and power, oil and gas
utilities. Products built with M2M
communication capabilities are often
referred to as being smart.
Fast forward to healthcare and the patient
monitoring devices that are being
developed can be linked to the
physicians office or cell phone for active
alerts. ……………... OR to another
machine that will tell the patient to get to
the ED, ASAP.
How will these tools be paid for? May
depend on the “to market” pricing and to
whom the resulting
savings will accrue.
If you do not
change direction,
you may end up
where you are
heading.
Lao Tzu
In a recent conversation with a health system VP for
Campus Improvement the subject was raised of what
should be built into any new facility to ensure relevancy
for the future. It was agreed that one had to keep in
mind the issue of legislated healthcare reform but also the
rapid changes to technology in the form of new
procedures, communications, drugs, locus of care and the
methods by which care is being provided. It is no longer
just building inpatient facilities because many changes are
reducing the beds required.
He was careful to note that brand new campuses with
inpatient facilities would need to be built with a 50 year
use in mind and as such the need to be flexible was
paramount in design.
When reflecting on traditional designs there is now a need
to accommodate and protect expensive technologies and
become a hub for decentralized care. The spread of
handheld devices among staff and patients add to the
confusion for IT system designs.
The new facilities will be more aesthetically pleasing with nice
entrances and upgraded private patient rooms, all expected by
the consumer driven market.
Beyond the architectural style designs there are clear needs for
new facilities to be far more efficient and to make use of new
energy saving equipment and labor saving ergonomic designs.
While the use of “Green” products in construction is of interest,
of greater interest are operational cost savings.
In years gone by hospital have been guzzlers in the use of
community resources and infrastructure items such as power,
sewer and water. More are looking at becoming leaders in
appropriate use and reuse of energy, water and discharges.
Disaster preparedness is also an issue, not only for community
related disasters but the ability of the facility to survive and
continue to provide care. A lesson that has been learned the
hard way by the likes of the Mercy Hospital, Joplin, MO that
took a devastating hit from a tornado and by hospitals on the
east coast after Hurricane Sandy, when back up generators on
lower floors were flooded and out of action.
3969 West 227 Street : Suite 100 : Cleveland : Ohio : 44126 : (440) 827-6001 : www.lundbyrne.com