The Source talked with American Hospital Association (AHA) Chairman Jonathan Perlin, M.D., Ph.D., MSHA, FACP, FACMI, president of the Clinical Services Group and chief medical officer at HCA, about his ideas for helping hospital executives handle financial and healthcare reform-related challenges. He also spoke about the need for physician/C-suite collaboration and potential for healthcare innovation during turbulent times.
What are your top priorities as AHA chairman?
First, let me say what a privilege it is to represent America’s hospitals and healthcare systems as chair of the AHA.
The AHA’s responsibilities include supporting its member hospitals and healthcare systems in their efforts to improve the delivery of care and engaging in advocacy on their behalf. The AHA envisions a society of healthy communities where all individuals reach their highest potential for health.
As a physician and a health services executive, it is really easy for me to identify with the values in that vision statement. My highest aim as chairman is to support the AHA’s agenda through advocacy toward our shared aspirations.
The foundation for our agenda is the Institute for Healthcare Improvement’s “Triple Aim,” based on ambitious goals for better care, better health and better value. (See box below.)
Hospitals across America are doing great things to improve the quality and safety of healthcare, and therefore its value. But as hospitals and community members, we still have much work to do to improve health.
The Triple Aim
The Triple Aim is a framework developed by the Institute for Healthcare Improvement (IHI) that describes an approach to optimizing health system performance. It is IHI’s belief that new designs must be developed to simultaneously pursue three dimensions:
• Improving the patient experience of care (including quality and satisfaction)
• Improving the health of populations
• Reducing the per-capita cost of healthcare
If we really want to achieve and sustain quality healthcare, we have to get back to first principles, which means improving the overall health of populations. This dovetails with AHA’s advocacy mission of ensuring good access to care, without which you can’t have healthier populations.
Before joining HCA in 2006, you served as under secretary for health at the Veterans Administration (VA). During that time, the VA healthcare system saw enormous improvements in quality, safety and access to care, while the cost of care decreased. Can that experience be replicated outside the VA?
I am proud that during this time the VA system not only became a reference point for high-quality care—setting benchmarks for patient quality, patient function and patient experience—but also the cost of care decreased as veterans’ access to care improved.
This highlights the interrelationship of the elements of the Triple Aim; if we improve the quality and the safety of care, we also improve the cost of care. Finding and treating a disease earlier also helps control costs over the long run.
What are some of the top healthcare reform-related challenges that the AHA is monitoring and advocating for on behalf of its members?
In some ways, HealthTrust and AHA share similar aspirations—to help members improve their clinical performance and use resources as efficiently as possible to deliver the highest value healthcare services. They do this not only because it’s the right thing for healthcare organizations to do, but also because it makes good business sense.
The overriding challenge and opportunity for AHA is supporting members that are transitioning from volume- to value-oriented care. Value expresses the relationship between outcomes and resources. It’s pretty clear that healthcare providers will evolve and operate in an environment where performance is increasingly transparent. With patients as consumers, businesses as purchasers and insurers as payers, all will seek out providers that deliver the highest value.
What about the challenges facing small systems and individual AHA members in smaller communities?
AHA just completed the second edition of its Leadership Toolkit for Redefining the “H”: Engaging Trustees and Communities, where “H” is the symbol for hospital. Communities understand they must make an investment both in health and healthcare services, and providers are increasingly interested not just in care, but in optimal health for the community they serve. Both must be involved in order to improve the health of a community. (See box below.)
Redefining the “H” envisions community health needs assessments in a new way—not only as a mandate for the hospital in terms of care services, but also as a framework for the health system and the community to discuss challenging issues such as health disparities, equity of care, and social determinants of health that affect outcomes and care needs.
The concept helps create a starting point for conversations about health and healthcare between providers and their communities. Ideally, these discussions will help them work together, using their best resources and capabilities to reach shared goals.
Hospital trustees, as leading members of their community, can play a particularly significant role in this process. They are also an extraordinary asset because they are “bilingual” in the sense that they “speak hospital” and they “speak community.”
Trustees know their community’s needs and resources, and they also know the hospital’s capabilities and resources. So they can facilitate effective dialogue between healthcare providers and the community.
How can physicians and C-suite/supply chain executives better collaborate to address financial challenges?
The challenges facing healthcare providers and society demand the highest level of collaboration among healthcare executives, physicians and other clinicians, and supply chain experts.
Clinical leadership needs to better understand the business side of healthcare, while the executive management team needs to develop the clinical sensitivity to effectively support care.
Improving the way care is delivered fundamentally improves its value. To provide the highest quality care in the most efficient manner requires that it be informed by physicians and other clinicians armed with the best scientific evidence regarding outcomes and use of resources.
Management teams within hospitals and health systems need to help clinicians create the conditions where high-quality care can be efficiently delivered. Supply chain experts are essential to that process, as they can facilitate discourse about care improvement, especially in terms of using empirical and scientific evidence to guide resource choices.
What are your thoughts on nontraditional care delivery models—advantages and disadvantages?
It’s increasingly unclear which care delivery models would be considered nontraditional. What is certain is the movement from volume- to value-based healthcare. Providers are increasingly responsible not only for managing the clinical risk associated with the delivery of healthcare services, but also the financial risk.
Leadership Toolkit for Redefining the “H” serves as a playbook for hospitals and communities to discuss the role of hospitals and health systems and their joint aspirations for higher quality care and better health. Redefining the “H” will help healthcare providers and communities focus on quality and population health management, and on delivering more integrated, better coordinated care. The goal is to improve community health through increased access to primary care, appropriate admissions and reduced inappropriate readmissions, and making measurable gains in improving outcomes of care and reducing harm.
The key steps toward achieving this goal are to:
• Appropriately allocate resources and define a shared responsibility for improving community health
• Bring insight, perspective and support from the community into the hospital board room as hospital leaders consider paths for transformation
• Enter into strategic partnerships for improving community health and health outcomes
The evolution toward financial risk can be seen on multiple fronts, including pay-for-performance, non-pay for non-performance (as in the case of hospital-acquired conditions), value-based purchasing, the exclusion of providers from restricted networks for inadequate performance, and insurers taking on responsibility for episodes of care or bundles of services.
In each of these scenarios, the traditional care team is progressively becoming accountable for financial as well as clinical outcomes. The care team, executives and supply chain all need to be working collaboratively to deliver the best possible outcomes while using resources most efficiently.
That’s the approach to managing margin risk in a fee-for-service environment and absolutely fundamental to managing financial risk in more sophisticated value-based payment models. In my estimation, the magic is that the necessary skills are largely the same in both cases.
As clinicians and healthcare providers, our performance is increasingly measured and transparent. Those who purchase and pay for healthcare—be they consumers with first-dollar responsibility and high co-pays, businesses or commercial insurers—will increasingly base their selection of healthcare providers on transparent, publicly accountable performance measurements. While the future of accountable care organizations isn’t precisely known, it is absolutely clear that care accountability will be a feature of any system of health services delivery hereafter.
You’ve mentioned risk often in this conversation. Does risk inspire or suppress innovation?
During periods when external events are stable, there is little incentive to experiment. However, in periods of accelerated transformation such as now, success—if not survival—depends on experimentation and innovation.
While challenging and sometimes painful, turbulence can inspire executive leadership and care professionals to realign in novel and often productive ways. That was certainly the case at HCA. The traditional aspirations for high-quality care among medical professionals and the management skills of executive leaders converged, accelerating both operational and clinical improvements.
Clinical enhancements have the support of sophisticated executives whose well-honed operational skills allow them to implement, replicate and scale the enabling programs. At the same time, clinical care teams are enthusiastic and appreciative of the new opportunity for productive dialogue and our singular aim of providing the highest possible quality of care.