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