Uncertainty and rapid change continue to impact the U.S. health care sector, with questions persisting about the fate of the Affordable Care Act (ACA) and U.S. health reform in the Trump era. This is a period of shifting priorities.
Consider the new partnership involving Amazon, Berkshire Hathaway, and JPMorgan Chase to launch their own health care company, and the pending merger of CVS and Aetna to invent an integrated delivery model. These are just two startling developments pulling health care in new directions.
While details are uncertain, it’s clear that new health care delivery model with new players and new rules are happening now. Organizations poorly positioned to take advantage of new opportunities run the risk of being left behind.
Understanding Market Forces
Today’s health sector leaders must understand current and future market forces to help their organizations survive and thrive in this new environment, according to John E. McDonough, DrPH, MPA, Director of the Center for Executive and Continuing Professional Education at the Harvard T.H. Chan School of Public Health.
McDonough served as a Senior Advisor on National Health Reform to the U.S. Senate Committee on Health, Education, Labor, and Pensions between 2008 and 2010 during the period leading to passage of the ACA, so he understands the challenges and opportunities now facing health care leaders.
One key factor driving health reform in new directions is the trend of corporate players entering the health care space and applying new approaches to common problems.
The ACA’s passage eight years ago catalyzed health system transformation toward more accountable, higher-quality, and cost-effective care. Now the Trump administration is re-evaluating ACA concepts including Accountable Care Organizations (ACOs), bundled payments, and other experimental models. McDonough advises that organizations must find new ways of doing business to replace unsustainable models. Health care executives must prepare to lead their organizations through the change.
Forming New Business Models
“It’s now clear that Accountable Care Organizations in the short and medium term won’t deliver the cost savings people had wanted. It’s better than traditional fee-for-service, but payment reform does not automatically lead to delivery redesign,” says Thomas H. Lee, MSc, MD, BA, Chief Medical Officer of Press Ganey Associates, Inc., who is a Professor in the Department of Health Policy and Management at the Harvard Chan School.
One key factor driving health reform in new directions is the trend of corporate players entering the health care space and applying new approaches to common problems.
“Everyone in health care feels like their current business model feels unsafe and unstable to everyone right now. That’s why we see growing interest in doing different things with other sectors. No one feels it’s viable to defend their current strategy,” Lee explains. “There is real interest in creating vertical mergers that bring together payers and providers [such as the CVS/Aetna deal].”
Identifying Four Levels of Problems
This evolving vertical model comes on the heels of changing priorities in the health care field as a whole.
“Our fundamental health care challenges have evolved from treating patients when they are sick to managing chronic diseases, behavioral change, and prevention,” Lee says. But many health organizations have not figured out how to successfully integrate these long-term goals into their operations.
“Our challenges are complex, so there will not be one magic formula or answer,” Lee stresses.
A new set of rules is appearing in the health care space via the corporate sector. To survive, we need to think, innovate, and make sense of the new health care environment circa 2019 and beyond.
When he uses the term “complex,” he is alluding to a framework in which there are four major types of problems:
- Obvious problems with easy solutions.
- Complicated problems that require a lot of work but are straightforward to solve.
- Complex problems with multiple challenges requiring a multi-faceted response to modify behavior.
- Chaotic problems that require focus just to get through the day.
In health care, many problems enter the complex category, requiring multi-faceted approaches to address, Lee says. “There are no magic bullets,” he says. That’s one reason why vertical mergers bringing partners with varied expertise are well positioned for success.
Learning from the Experts
Lee advises executives and leaders to seek a medley of advice from disparate experts to guide them in considering all the pieces needed to develop effective approaches to lead their organizations. This includes:
- Understanding strategy in the new context
- Appreciating what competition is about now
- Understanding social mores
- Building social capital
- Understanding grit
Lee suggests that these pieces must fit together in a coordinated strategy.
“It is not endless work, and you need to appreciate what these five levels of information are about to execute them effectively across your continuum. You can’t just do one and expect to have a meaningful impact,” Lee says.
Entering the New Health Care Space
For McDonough, this advice resonates. “After eight years of living in the ACA world, we are entering a new space,” he points out. “A new set of rules is appearing in the health care space via the corporate sector. Some align with the ACA, and others are foreign,” he says. “We still don’t know where the ACA structure will go or how it will change. Many parts need adjustment, reconfiguration, and reorientation. To survive, we need to think, innovate, and make sense of the new health care environment circa 2019 and beyond,” McDonough says.
When organizational leaders understand shifting priorities and position themselves strategically, they can navigate the changes and not lose sight of their goals. “This is a stressful and tumultuous time for everyone,” Lee says, adding that times of stress are often times of opportunities. “When organizations compete for consumer dollars, good things happen. I am optimistic that on the other side of these changes, we will have a better health care system.”