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Article: Value-Based Care Demands Change Management Solutions

New value-based strategies are a must. Just hiring more people and layering on new programs to meet the demands of value-based care is not going to work moving forward. There needs to be a renewed focus on change management within the hospital to achieve its goals. The old model of command-and-control is not going to create a culture for high performance, and without it, your organization will not be able to thrive in the new healthcare economy.

A half dozen health system CEOs recently gathered in a thought-sharing forum. The topics of discussion included a new type of software called Value-Based Performance Management, the advent of value-based payments, and predictions about the impacts of value-based changes. The conversation was a fascinating one.

One CEO noted that “CMS penalties for readmissions and such are not that bad. The fines are far less than it would cost me to implement a program and the changes needed to address the situation. So my organization is just going to go forward as normal.”

Other CEOs disagreed, citing that CMS is in the early stages of value-based care, and that the penalties and reimbursement hits are going to get much, much sharper teeth in the near future. One CEO said, “If you wait until October every year to see the magnitude of this change, you are driving by looking in a rear view mirror. In the past, when CMS payments have come up short, we just adjusted prices upward to cover the gap. That is not going to work anymore, as the CMS gap will continue to grow and we can no longer just raise prices and amp up volumes to cover.”
The consensus—the earlier nay-sayer notwithstanding—emerged very clearly: New strategies are a must. Just hiring more people and layering on new programs is not going to work moving forward.

Strategies around value-based performance are becoming clear. Sure, tactics vary by local market dynamics, but the core of each needs to center around continuous improvement in patient outcomes, and maintaining control over total-cost-of-care. These strategies are not going to be simple, as nothing in healthcare is simple. Putting a strategy in place is achievable, but it is not the true test. The real challenge ahead is execution of your strategy.

As outlined in the Wall Street Journal Business Bestseller, The 4 Disciplines of Execution, there are two types of strategy: 1) stroke-of-the-pen, and 2) behavioral change. The first is relatively easy. They usually require signing a contract or a check (thus the stroke-of-the-pen label). Examples would be acquisitions, setting up new departments or programs, or anything that adds to the existing organization with new resources and responsibilities. These are relatively easy in that they don’t typically require existing teams to materially change their behavior.

A second type of strategy—one requiring behavioral change—is difficult because it requires your existing organization and people to CHANGE their behavior, regardless of how long they’ve been in place or how comfortable they are. That means execution of the strategy is really a change-management issue. But change management has historically been especially difficult in healthcare due to the inherent complexity, silos, misaligned incentives and egos, among other factors.

Making matters even more challenging is that the change is not simply with administrative people or nurses, it also requires deep engagement, alignment and cooperation of highly independent physicians. If the change is not aligned across teams and networks, it won’t lead to success in a value-based care world.

Wouldn’t it be nice if it was as easy as telling people to “work differently” in some sort of a top-down, command-and-control fashion? We all understand that physicians are not trained that way, and honestly, we don’t want them to behave that way. Our care providers, at all levels, are our best and brightest people. We need to enlist and engage them in this transformational journey, making them our strongest asset. That does not happen by telling them how to do their jobs or micro-managing.

While it might seem easier to just slide into command-and-control, it is a delusion to think that it will work in most situations or that it is the most effective culture for high performance. The path is clear, but not easy. Clear and measurable outcomes need to be established. Teams need to be challenged to reinvent workflows and process in a value-oriented manner. We need physicians engaged with the entire team, and we need them on point to guide and steer the behavior changes needed to perform well in this value-based transformation.