A lot of health systems are talking about shifting from volume to value and the importance of population health. But many are getting stuck betwixt and between. The transformation carries major financial risk and is an organizationally complex undertaking. That’s why a recent ad in the New York Times Magazine by the Mount Sinai Health System got noticed for its simple declarative vision: “If our beds are filled, it means we’ve failed.” OIiver Wyman’s Health & Life Sciences Managing Partner Terry Stone discussed the impact of the ad with Mount Sinai's new Chief Population Health Officer Niyum Gandhi and shares her take on why the conditions were right to make such a bold statement:
Healthcare systems know they need to create high impact Accountable Care Organizations (ACOs). By our estimates almost 70 percent of the U.S. population now lives in communities that are served by ACOs, and 44 percent live in areas served by two or more.
If setting up an ACO was enough, though, we’d have healthcare cost and trend more under control. The contracts may be in place, but providers have been caught in fee-for-value limbo, faced with upending an entire healthcare system designed around fee-for-service medicine with major fixed costs—and lives in the balance.
The magnitude of the required cultural shift is akin to fundamental changes that have already rocked the airline, music, and automobile industries. Yet, New York’s Mount Sinai Health System is finding a way to move beyond the fear of change and walk the walk toward fully realized population health.
The system launched a new ad campaign this year highlighting their leaders’ commitment to healthcare transformation. A recent installment reads in part: “Mount Sinai’s number one mission is to keep people out of the hospital. We’re focused on population health management, as opposed to the traditional fee-for-service medicine. So instead of receiving care that’s isolated and intermittent, patients receive care that’s continuous and coordinated, much of it outside of the traditional hospital setting….It’s a sweeping change in the way that health care is delivered.”
So what enabled Mount Sinai to be so sure of their new direction, and so public about their ambitions? Here are my theories:
- Leadership alignment. Board members and executives, walking the walk, not just talking the talk. There are major financial risks associated with shifting from fee for service to fee for value. There is also significant disruption to the status quo regarding how you operate and motivate and incentivize the organization. These changes and their impact need to be well understood and the team needs to become comfortable with the level of disruption and the risk. You need to ultimately believe that the risk of not acting exceeds the risk of changing. Too often we see executives who talk the talk and say they want to move to population health, but when they get pushback they start back-pedaling. Mount Sinai took the time to really understand the imperative and impact, and worked to ensure the Board understood the need to move. Too often health system leaders struggle to explain the path and when the financial pressures hit, the Board starts to resist. Says Mount Sinai’s Chief Population Health Officer Niyum Gandhi: “Our board understands the implications. They know it will be hard. It’s a change in the business model that represents a different way of thinking about patients and their communities.”
- A realistic assessment of the risk of not acting. It’s much easier to maintain the status quo than it is to change. As a high-profile academic medical center, Mount Sinai could have continued to use its market leverage to make significant money in the short term practicing fee-for-service medicine. However, they took an honest look at their geography and diverse patient population and realized they had trouble on the horizon. Mount Sinai has historically served a large number of both Medicaid and commercially insured patients through one dominant teaching hospital. With increased reimbursement pressure on the Medicaid side, a viable path forward was to take on risk and manage care for the whole population. To broaden its geographic footprint and range of services, Mount Sinai and Continuum Health Partners combined in September 2013 to form the Mount Sinai Health System. The system now includes the Icahn School of Medicine at Mount Sinai and seven hospital campuses, with a total of 3,535 beds, 169,532 inpatient admissions, over 300 community locations, and some 6,200 physicians.
- Belief that new ideas and capabilities are needed. Earlier this year, Niyum, a former colleague and partner in the Health & Life Sciences practice of Oliver Wyman, joined Mount Sinai as its new Executive Vice President and Chief Population Health Officer. The biggest challenge, says Niyum, who has stood up ACOs across the country, is “the magnitude of how many people need to do something differently. My vision is for Mount Sinai to be a population health manager who happens to own hospitals. I want that floor nurse walking to work down 57th street to not be thinking ‘I work at the top academic medical center in New York’ but instead be saying to herself ‘I work at the leading population health manager in New York.” This is not something that would make most hospital CEOs comfortable. The fact that the environment at Mount Sinai is such that a new executive can push this transformative thinking and his and her colleagues are open to collaborating is a critical cultural dimension.
- Comfortable with being uncomfortable. Mount Sinai has continued to make decisive moves. In the wake of its deal with Continuum, changes were made quickly related to leadership roles, consolidation of various administrative departments, patient experience, real estate holdings, and, perhaps most symbolically, the renaming and restaffing of the department of health policy to focus more on population health and improvement sciences. These are not easy or simple changes. There is a legacy and history that make employees comfortable. However, the changes are necessary to enable the bigger advances required to deliver world-class population health. Based on our work advising clients on how to succeed in the new world order of healthcare, this is one of the biggest challenges healthcare leaders face. Even if the rest of the team understands the strategy and theory of the need for change, not everything that needs to be done will be popular. As Niyum put it: “Consensus-driven decision making makes sense when an industry is stable, but we’re not a stable industry.” Leaders need to act with conviction and decisiveness, and not allow the future vision to be derailed by hundreds of small compromises along the way. These compromises each seem small individually, and keep people happy in the short term. However, too often the cumulative effect is to bring to market incremental changes in patient experience, rather than transformative ones.
Mount Sinai’s ad got employees, vendors, and the competition and peers at other systems talking; health leaders asking if they were being bold enough in steering their own institutions; and members of the public questioning their own assumptions about what good community healthcare really means. During a recent earnings call, Health Care REIT CEO Tom DeRosa made note: “You may have seen Mount Sinai Hospital's ad in last week's New York Times that stated ‘If our beds are filled it means we've failed.’ What does that mean? It means that one of the top hospital systems in the world recognizes that their old business model is not sustainable.”
Other healthcare executives walked into leadership meetings waving the ad and asking if anyone had seen it. Some agreed with the approach, while some feared colleagues would go through the roof if their system made such a public commitment. “It’s great that Mount Sinai is getting out there and saying what needs to be said,” observes Nigel Ohrenstein, Senior Vice President at Lumeris. “Without a doubt, leadership is critical to any organization looking to transform itself. Healthcare has had too many leaders who have just checked the box, thinking it’s better to be political and not break the glass and be disruptive.”
The challenge is before us all: how to make healthcare better by delivering more value—a better experience and higher quality at lower cost. What is not as clear is how quickly the industry will transform, and exactly what sequence of steps needs to be taken to manage the transition from fee for service to fee for value.
We should take some lessons from other industries that have experienced disruptive, transformative change. The road is littered with incumbents who said: “This is just a fad, it’s not going to stick” or “No—that will ruin our business” or “Better to be a fast follower.” Blockbuster, Kodak, Polaroid, countless department store chains, among many others.
What are the risks we in healthcare run of not taking bold steps? In my experience advising clients on business strategy for the past 18 years, one thing is clear: during times of change, leaders need a bold, but clear vision. Companies also need a sound plan for achieving the vision, and the nimbleness to adapt along the journey, as the path can never be fully known upfront.