by Nick Jacobs

These blogs are supposed to help us move toward a better health system, a more perfect hospital. Well, a few weeks ago, I ran across a corporation that is as close to perfect as mankind is capable of delivering. It's a corporation that has been formed as a federation of like hospitals to help them survive and thrive.

What's the big deal? Well, this corporation isn't dominated by a large hospital. In fact the budget sizes range from $30 to 120 M a year. There are twelve of them, and their combined gross annual budgets hang well over $1B. They each pay monthly dues until enough money has been generated to operate the corporation, and then they don't take any more money; usually that means no dues in April, May or June.

They work together in the obvious areas like purchasing, health insurance for their employees and liability insurance. What they do that is not normal is provide their docs to each other for peer review of difficult cases. They are positioned to assist each other with virtual, telemedicine pharmacists, data repositories, a blood bank, and dozens of other creative initiatives that will virtually save each participant hundreds of thousands of dollars each year.

The beauty of this virtual organization is that it does not require the individual hospitals to give up their boards, their presidents, their autonomy, their strategic planning, their connectivity to their cities, towns and villages, their pride or their place in history.

Is it possible that all of the small and medium sized hospitals in the United States could find eleven friends to hang out with, to work together, and to help support each other? We've just applied to be hospital number 13 in this gaggle, and it is our hope and prayer that it will enable us to miss not one beat as we move into the next chapter of our history. There is absolutely a place for independent, well run, high touch hospitals, and there is a place for communities to stay plugged in to their hospital.

Find some friends and emulate this federated model of non strategic partners as they pull together to fend off the predators. Not a new idea, but a near perfect alternative model.

by Nick Jacobs

Will the next ten years provide the answers required to make our health system functional into the future? If we give serious attention to the tangible challenges presently at play, it becomes very apparent that our structure will not work without a unified, bipartisan approach to the issues in consideration. For example, the flooding of our emergency rooms with marginated patients, lack of health insurance coverage for 47,000,000 American citizens; the looming failure of Medicare; the outrageous demands of an incident by incident system aimed at intervention at a time of crises rather than a lifetime of well articulated preventative health related personal decisions.

It is well documented that, if we can embrace even a limited exercise regime, discontinue the consumption of saturated and Trans fats, and stop smoking, our country will experience a surge in the length of life.

If we, as a country, could conclude that our priorities should be directed more completely toward our own citizens’ well-being, we could end up far ahead of the game. The United States has just surpassed all other industrialized nations in the separation between rich and poor. We have now reached a ratio of rich to poor that is 500 times more pronounced than in Japan.

When asking these hard questions, it is important to realize that this is not liberal vs. conservative; it is not blue vs. red; or D vs R; it is about human beings caring about other human beings. It is about the irrefutable rights of all Americans. It is about embracing our fellow man and providing a net for those of us who are not as fortunate as others. It is about getting our collective act together as a country to put together a health policy for our country. Finally, it is about prioritizing our values in a mature, caring way.

Sorry if this ended up being a rant. Maybe that’s why I have been in nonprofit management my entire life?

by Tony Chen

It's been a little nutty recently. I thought I would have more time to blog after my CHE exam. Alas, the boards I am on are kicking into high gear. Nonetheless, I wanted to share a few articles that I found that provoked some good thinking:

- There is a whole new generation of Google copycats coming. Imitation is best form of flattery, right? Makes you wonder if someone will try to carve out healthcare out of google. I think Revolution Health has a shot at it. Imagine all the best healthcare content without all the buy-viagra clutter. As always, content will drive eyeballs will drive ads.

- Check out the Top 10 innovations coming in 2007. A bunch are medically related and will have impact on hospitals down the line. Just think, one day we will implant bones made out of cow bones, we'll have lunch-hour lipo, and we'll have to deal with generic-only drug plans.

- Finally, I put this one to use immediately: The Art of the perfect voicemail. We've all received that 180-second voicemail that could have been 30. And honestly, we've all left voicemails before where we hang up and immediately regret how badly we did so. The best tip: scope out & specify your request for them with a time frame - "I just need 15-20 minutes of your time to ..."

By: Craig Allan Ahrens
The Business of Healthcare
A talk show and discussion forum dedicated to the strategic issues impacting the business of healthcare

It is like "Back to the Future" all over again...by the way who said that quote because I have been using that a lot lately. Anyway, physician employment is getting really, really hot again as a strategy for health systems. It is interesting because many of the lemmings that jumped into employment in the 90s jumped back out. However, for the lemmings that I know who didn't leap off the mountain after taking the first plunge, some have gotten very good at managing the employment of physicians. What is even more interesting is that the organizations that I am aware of who have pulled physician employment off well have for the most part solidified their strategic positions in their respective markets. Well, if you employ your distribution channel and run it effectively, then it is pretty hard to crack. Right?

Believe me I am not waving the flag of employment for everyone. More than most, I am intimately aware that each market has its individual quirks. The competitive pressures that led to physician employment by hospitals are different today than in the 90s. Back in the good old 90s, everyone thought managed care was coming and the chickens listened to chicken little and started the massive primary care employment trend. The providers that did a good job of managing those physicians have realized advantages against today's competitive pressures that many did not anticipate years ago.

Today, the competitive pressure are not a "coming soon" fear like in the 90s; rather they are a reality forcing systems to strongly pursue employment. Some examples include:

1. Declining physician reimbursement by the government.
2. Increased outpatient competition by physicians.
3. High cost of malpractice insurance.
4. Physicians' desire to "have a life".
5. Severe shortages in key specialties.

I'm sure there are a multitude of other reasons and I look forward to your thoughts. Maybe hospitals should start putting a line item in their financials called physician capital expense?

By the way, look for the next podcast on the "The Business of Healthcare" website or on the Itunes store under the Business of Healthcare. Our guest will be Parveen Chand, who is a facilities and business development planning executive for BJC Health System's Barnes Jewish St. Peter's hospital in St. Louis, Missouri. We will be discussing their innovative approach to facilities planning and budgeting. It should be uploaded by Wednesday October 11th, 2006.

If any of you have any ideas, people, or topics that you think that would be interesting for the "The Business of Healthcare" podcast, please email me at info@thebusinessofhealthcare.com.

Thank you.

If you have Itunes on your computer, click here
If you don't have Itunes, go straight to "The Business of Healthcare" blog

Most recent podcasts:

Show 7: Roundtable Discussion with Three Healthcare Leaders: Strategic Issues - A Midwest, East Coast and West Coast Perspective
Show 6: Service Line Success and the Strategic Impact of the Rebasing of DRGs
Show 5: Orthopedic Service Line Planning
Show 4: Neurosciences Planning for Healthcare Institutions
Show 3: Human Resources as the Critical Hospital Strategic Partner?
Show 2:Patient Satisfaction and Customer Service as a Hospital's Strategic Priority
Show 1: Surviving and Thriving as an Independent Hospital in a Competitive Market

Mr. Ahrens is a healthcare strategy consultant at ECG Healthcare's Midwest office with expertise in general hospital strategic planning, operational turn-arounds, physician business development, and service line planning. You can reach him at info@thebusinessofhealthcare.com.

By: Craig Allan Ahrens
The Business of Healthcare
A talk show and discussion forum dedicated to the strategic issues impacting the business of healthcare

Yesterday, I was talking with a friend of mine who is a Director of Strategy for a large health system in the Midwest. He made a statement that I hear from a number of healthcare leaders when I do service line projects that encompass the outpatient surgical or procedural based areas -For example, "Well, our gastroenterologists have opened up an endoscopy center. We aren't going to invest in one to compete. We feel that it is an area we can no longer compete and we should invest in other areas."

What bothers me concerning comments like this is the lack of motivation or will to compete against physicians that are competing directly with the hospital in areas that are vital to support margin for the mission. I am a true believer in competition (as long as the system is set up to allow for true competition...but that is a healthcare economics debate for a later discussion). I responded by stating, "So, you are just going to give up the business to them and not look at ways to compete?". He said, "Yes." Why?...I didn't get a good answer. The sad thing is that we were talking about the threat of outpatient volume carveout for months. Actually, we were talking about it for years and even outlined which doctors will probably be the first to do it.

There are so many things that the hospital system could have done and that some do that are appropriately aggressive in maintaining their business:

1. Proactively approach physicians for a joint venture model or other methods of alignment (e.g. formation of institutes, etc.).

2. Consider employment of the physician specialists or heavily align the primary care platforms.

3. Create facilities that create a "wow" experience for patients and physicians that other outpatient centers cannot duplicate.

4. Negotiate payor contracts that create a cost or quality differentiator for outpatient services.

5. Always maintain a highly cost efficient/productive operations and ACCESSIBLE schedule. And yes....this means that sometimes you will overbuild facility capacity to allow for physicians schedules and their preference for certain times of the week for their lifestyle.

6. Purchase the latest technology that either increases efficiency, improves quality, or drives volume in a SIGNIFICANT manner.

There are many other things that a system or hospital can do. Just please.... don't give up and have a defeatist attitude because you only give up the business if you let it go willingly. I am tired of seeing hospitals give up so easily.

What have your organizations been doing? Have they been aggressively and proactively competing? Or is it the same thing that I am seeing at many places?

If you have Itunes on your computer, click here
If you don't have Itunes, go straight to "The Business of Healthcare" blog

Most recent podcasts:

Show 7: Roundtable Discussion with Three Healthcare Leaders: Strategic Issues - A Midwest, East Coast and West Coast Perspective
Show 6: Service Line Success and the Strategic Impact of the Rebasing of DRGs
Show 5: Orthopedic Service Line Planning
Show 4: Neurosciences Planning for Healthcare Institutions
Show 3: Human Resources as the Critical Hospital Strategic Partner?
Show 2: Patient Satisfaction and Customer Service as a Hospital's Strategic Priority
Show 1: Surviving and Thriving as an Independent Hospital in a Competitive Market

Mr. Ahrens is a healthcare strategy consultant at ECG Healthcare's Midwest office with expertise in general hospital strategic planning, operational turn-arounds, physician business development, and service line planning. You can reach him at info@thebusinessofhealthcare.com.