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Transform Care Infographics October 18, 2018

The Hospital of the Future, Part 2: Innovation Examples Driving Impact

Partner, Health & Life Sciences, Oliver Wyman
Principal, Health & Life Sciences, Oliver Wyman
Key Takeaway
#OWHealth: Identifying those industry forces to be reckoned with is merely the first of many small steps.

Editor’s Note: This article is the second in a three-part “Hospital of the Future” series where we explore the challenges and opportunities for the health system of today and tomorrow. In Part 1, we explored the top strategic pursuits the vast majority of health systems are advancing today. Here in Part 2, we highlight examples of innovation driving new services and operating models. And in the final Part 3, we explore how the hospital system of tomorrow can thrive amidst bigger systemic shifts despite macro market disruption.

Hospital-based health systems face a tremendous deal of pressure just to sustain current performance levels. As we outlined earlier in this article series, as these systems navigate challenging market conditions, most continue to lean on the same nine strategies. As a result, driving meaningful growth and differentiation – in the eyes of patients, purchasers, and employees – aligned with a tough economic reality is no easy feat. What will a future system need to look to thrive? Several organizations are innovating to bridge the gap between where the industry sits today and a differentiated health system tomorrow. 

Care model redesign

In general, the industry has normed around a one-size-fits all approach to ‘delivering care.’ Most hospitals are full service, most clinical services orient around body parts and diseases, and the typical interaction model waits for patients to come through the door before greeting them with an undifferentiated approach (especially with primary care). Several hospitals systems are breaking away from this standard to bring a more personalized offering to consumers by de-averaging and expanding the boundaries of ‘healthcare delivery.’ We are seeing this occur in three ways:

Example 1 – Highly tailored models for specific segments: Rather than bolting care management services onto existing physician practices, some systems are creating customized models for sub-populations in the spirit of CareMore, Iora, and ChenMed. For example, Chicago’s Advocate Health Care has built de-novo dedicated centers for high-risk, chronic patients. Here, everything from the physical design, the embedded care team, and their workflows (including extensivists, pharmacists, behavioral health specialists, therapists, and navigators), the proactive outreach, and monitoring mechanisms, have been built from the patient out.

Example 2 – Precision medicine infused into mainstream: Deep personalization, prevention, and proactivity have long been the holy grails of precision medicine. However, the application of genomics to clinical care has been largely contained to rare and complex diseases (though the sandbox is growing). A few health systems are challenging this convention, and are ambitiously bringing genomics into the front lines of care. Earlier this year, Geisinger launched a pilot to sequence (free of charge) the full genome of 1,000 patients and use this information to identify individual preventative care interventions. Geisinger hopes to scale the program to all its patients in the future, expecting payback in the form of better long-term health and short-term gains through provision of preventative care services. Another notable example is Evanston, Illinois-based NorthShore University HealthSystem, which has been integrating genetic information into routine primary care.

Example 3 – Moving from patient to community health: What role should a health system play in the overall health of its community? For a few hospital organizations, the answer to this question has led them down radically different paths compared to their peers. In the case of ProMedica, a Toledo Ohio system, they looked inward at their community and concluded the single greatest determinant of health was nutrition-related. With the support of a growing philanthropic investment pool, ProMedica has screened hundreds of thousands of patients for food insecurity and created a ‘food pharmacy’ to dispense healthy food options. They are now screening patients across ten social determinants that influence health and quality of life, such as employment, education, and a person’s living environment. They have even teamed up with local organizations to create a $45 million loan pool to support housing and business projects in distressed communities.

Digital reinvention

As discussed in Part 1 of this series, many hospital systems recognize the need to get off campus and create new ways of engaging patients. In many respects, this is still about taking the same services and offering them in new settings and channels (like ambulatory facilities, urgent care, telehealth, and online patient portals). Several organizations are taking this a step further, using emerging digital capabilities to fundamentally change their consumer relationships and using technology to effectively change how care is delivered. Three examples are:

Example 1 – Virtual hospital / command center: A few progressive providers are using digital capabilities to challenge two sacrosanct aspects of the healthcare industry – a hospital serving as a physical space with beds and patients, and the provision of care being something that's local. In late 2015, Mercy Health of St. Louis launched the first of its kind $54 million digital-health only hospital. The four-story bed-less hospital’s telehealth programs include an electronic Intensive Care Unit (ICU) to monitor patients in 30 ICUs across five states, as well as telestroke, virtual hospitalists, and home monitoring. Clinicians use telehealth, electronic medical records, and data analytics to monitor vital signs fed through a virtual care kit which includes biometric sensors, wearables, and iPads. Mercy Virtual focuses on keeping very sick patients from being hospitalized through frequency monitoring. If a patient shows signs that medical intervention is necessary, a physician can send home health nurses to examine him or her.

Example 2 – Digital-first, enabled chronic care: One of the trends we noted in Part 1 was the emphasis of most large hospital systems on creating centers of excellence for major clinical areas (such as a heart institute). Here, organizations are competing on talent and cohesiveness of services under one roof. But they are still mostly about patients receiving ‘care’ in a clinical setting. Organizations like Oschner and Banner Health have taken a digital first approach to managing chronic and complex patients using remote monitoring capabilities and a Silicon Valley-inspired experience design to forge a more continuous view of patient needs. Louisiana-based Ocshner utilizes its O Bar – a spin on Apple’s Genius Bar – where primary care physicians prescribe glucose monitoring devices. Banner launched iCare, an in-home program for chronically ill patients. The program is based on an electronic tablet that connects patients with physicians and other clinical team members around the clock through a two-way communication system.

Example 3 – Navigation platforms: Recognizing that the front door of healthcare is rapidly evolving, some systems are beginning to envision a complete digital interaction and engagement model with their patients. While healthcare has yet to go through the full digital revolution that industries such as retail, consumer banking, and travel have experienced, innovators are beginning to test new ways to interact with their patients beyond traditional patient portals. North Carolina’s Atrium Health (formerly Carolinas) offers, in addition to viewing of wait times in its practices, access to health records and information on wellness events and clinical trials. Novant Health’s online services also include virtual provider visits, a symptom checker questionnaire that generates recommended next steps, personal health tracking, activity tracker data integrated into electronic medical records, and even the ability to ask Amazon Alexa for directions and wait times at the nearest clinic.

Partnership-based value proposition

We know from last year’s Oliver Wyman Consumer Survey most consumer healthcare hassles are tied to issues other than the actual provision of clinical services – namely living a healthy lifestyle, accessing and navigating the system, paying for care, and caring for others. Innovating on these dimensions requires hospital organizations to reframe their propositions and brand promises to consumers and, in many respects, move them outside of their traditional value chain. Several providers have tapped into the power of multi-chain offerings, where the hospital becomes part of a bigger, integrated health ecosystem with non-traditional partners.

Example 1 - Melding the member and patient experience: Across the US, payer and providers negotiate, often bitterly, to agree on unit price terms. As discussed in Part 1, many systems are exploring ways to break this zero-sum game cycle through closer ties with purchasers – with reported 22 partnered products launched in 2018 so far. In most 'generation 1' partnerships, the providers and payers each fulfilled their traditional value chain roles as separate actors. But these early partnerships missed bigger opportunities to change the consumer proposition through deeper integration. Select providers, particularly those that launched joint ventures with payers, are collaborating across several dimensions: integrated population health management (advanced patient engagement and interventions with integrated claims and clinical data, unified care teams and care management); streamlined service (such as single call center, integrated member portal, unified concierge / navigation) and transparency (such as out-of-pocket cost estimates, quality and wait time data, and alternative savings suggestions). Banner and Aetna have made strides across many of these areas in a virtually-integrated manner. The question is: how far can organizations go without full bottom line integration (such as an Allegheny Health Network-Highmark, or taken to the extreme, Kaiser)?

Example 2 - Collaborative new front door: Most big health systems are investing heavily in new, more convenient access points – be it urgent care or telehealth. There is a clear race to be the preferred destination for consumers with transactional needs of the healthcare system who value time and convenience (while millennials are a clear target, we are seeing consumer preferences tilt in this direction across segments). But a seamless experience isn’t just about rapid access to a clinician, and this proposition is becoming somewhat of a commodity. Providers like Providence St. Joseph Health have taken this up a notch. With large employers like Western Digital, they have established onsite Wellness Corners with comprehensive health and wellness services beyond low acuity care – nutrition counseling, sleep and stress management, fitness programs, and more. The physical space feels more like a VIP hotel than a medical office. Providence has also partnered with Walgreens on an expanded retail clinic collaboration – operating and providing all clinical services in retail stores and providing seamless handoffs between clinical, diagnostic, pharmacy, and retail patient needs. 

Organizing with a different purpose

For many hospital systems, the desire to innovate and be more agile has been constrained by legacy organizational models, economic incentives, and fixed assets. “If only we could start from scratch, but we can’t,” is a common refrain from hospital executives. Several progressive players have taken direct aim at breaking these shackles to build a platform for the future.

Example 1 – Segmented operating models: Most health systems have organized themselves to ensure they optimize the performance of individual parts – meaning separate governance for hospitals and medical groups. Some have transitioned to foster more coordinated, system-level behavior, creating structures, roles, and profits and losses (P&Ls) that orient around either geographies or integrated service lines (such as cancer). These structures work when all (or most) parts of the organization are incentivized 
similarly. However, in a mixed payment model environment, there’s constant tension between fee-for-service productivity and utilization / total cost of care reduction in fee-for-value contracts. Most have opted to walk the tight rope by minimizing their level of performance risk (such as pay-for-performance, upside only, and limited downside). However, a few providers are starting to turn this approach on its head. A notable example is Intermountain Healthcare, who last year announced it is completely re-organizing its geographical structure around two areas – community care and specialty care. The former will focus on keeping people well through preventative services, like health screenings and primary care, including regular outpatient treatments for managing chronic diseases. The specialist group aims to deliver the proper care at the right time through specialist and hospital inpatient settings. Each group will have its own leadership teams and performance goals, enabling them to fully optimize the two canoes.

Example 2 – Tiered, high value clinician networks: Traditionally, hospital systems allow the full complement of their physician enterprises to participate in all payer contracts, including value-based models. This creates vast networks with uneven performance across practitioners. Some systems however, have started to use a scalpel to shape and tier these networks – considering both the individual performance of physicians (both primary care and specialists) and the needs of funding segments and target populations (whether seniors, Medicaid, or narrower Commercial sub-segment). Houston-based Memorial Hermann, for example, embarked on their Medicare Shared Savings Program by only selecting the physicians they knew would embrace value-based care principles. The tent was small to begin with, but grew over time as other clinicians sought to achieve comparable performance levels. This enabled Memorial Hermann to be one of the most successful Medicare Shared Savings Program Accountable Care Organizations in the program’s history based on shared savings payout.

Example 3 – Re-thinking fixed assets: Across the country, systems are facing declining inpatient utilization and are left with excessive, expensive bed capacity. Many have opted to close wards and entire facilities, at times leaving gaps in care coverage for the community. New York City’s Mount Sinai’s took a different approach, responding to the changes in care needs of its community. Instead of shuttering its legacy 650 bed-downtown hospital, the system is transforming a traditional inpatient facility to an integrated ambulatory hub, with a full-service emergency department, 70 short-stay beds, and a half million square feet of multidisciplinary ambulatory services, including physician offices, urgent care centers, retail clinics, and pharmacies. The facility will also serve as the command center for Mount Sinai’s home-based care, including “Hospital / Skilled Nursing Facilities at Home” programs and virtual telemedicine.

These examples are early signs of how hospital systems are rethinking their relationship with patients, role in improving health, the nature of their service portfolio, and key alliances needed to thrive. Not all will be successful, yet these examples provide an early vantage point into the types of healthcare organizations and health systems that may evolve in time. In the meantime, bigger questions are looming about what happens to the big box hospital itself, and about the role of hospital systems in a healthcare environment where boundaries are increasingly blurring. Stay tuned for our third article in this series on Oliver Wyman Health, where we explore their future.

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