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Systems need ‘contextual evidence’ before going with an innovation

Thomas Edison in his lab (1890), by Abraham Archibald Anderson.

In a Health Affairs piece, Cindy Brach writes about how hospital systems need “contextual evidence” before adopting innovations.

Among the issues to be faced, she writes:

“First, health system leaders need to learn how the innovation worked in the past. Where has it been used, and what’s the evidence that it worked? When evaluating the evidence, understanding the context in which the innovation operated and how it is similar or different from their own environment is critical.”

“Second, health system leaders need to determine whether the innovation will solve any of their system’s problems or contribute to achieving their system’s goals. If there’s a problem that needs fixing, carefully define the problem and honestly assess whether the innovation will address the root cause.”

“Third, think about whether the innovation is compatible with the mission, values, and culture of the organization. A clash with a system’s mission and values is likely to be a fatal flaw. The occurrence of a cultural clash is less cut and dry. Organizational culture, that is, the norms that guide behavior in the organization, is not monolithic. Several organizational cultures—such as patient-care and patient-safety cultures, business and management cultures, and professional and interpersonal cultures—come into play.”

“It’s not only about dollars and cents. Hard-to-quantify aspects of a business case for adoption include the benefits to patient and families, staff, and other stakeholders. These might include increased patient involvement in health care decisions, better health outcomes, reduced stress on the workforce, or enhanced reputation. An innovation may be responsive to requirements of insurers, regulators, or accreditation organizations. Non-financial factors, such as a mission-driven system’s imperative to satisfy its charge, have to be weighed along with financial matters.”

To read the Health Affairs piece, please hit this link.

CHI getting out of scary insurance business


Englewood, Colo.-based Catholic Health Initiatives has decided to get out of the health-insurance business.

CHI’s insurance subsidiary, QualChoice Health, formerly known as Prominence Health,  has been offering Medicare Advantage and commercial insurance products to members in six states. But, Becker’s Hospital Review reports, the insurance business had a operating loss of almost $97 million in the first nine months of fiscal  2016, which ended March 31. In the like year-earlier period, QualChoice had a nearly $19 million operating loss.

CHI is one of many systems that have launched health plans in recent years, especially since the Affordable Care Act went into effect, but with often disheartening results.

McKinsey & Co.  found that of the 89 hospital-system insurance plans, more than 40 had negative margins in some or all of the past three years. To read the Becker’s story on this, please hit this link.


Some systems sometimes cutting out medication middlemen


Modern Healthcare reports on how some hospital systems, now often facing   drug shortages, are developing  direct relationships with manufacturers and buying directly from them when the distributors’ usual channels dry up.

“There were 185 drugs in shortage as of the fourth quarter of 2015, and the figure has averaged about 257 since the start of 2011, according to the University of Utah Drug Information Service. Some of the products in short supply are vital, such as the epinephrine administered with CPR to reverse cardiac arrest and the antibiotic meropenem,” the publication reported.

Still, there are problems associated with depending on direct ordering: “But direct ordering could undermine the value proposition of the distributors and threaten the administrative fees that GPOs {Group Purchasing Organizations} collect from manufacturers and distributors, said Jamie Kowalski, a Milwaukee-based healthcare supply-chain consultant,” Modern Healthcare reported.

“This disrupts this historic relationship between GPO, distributor and manufacturer. It’s not only a relationship issue, it can be and generally is a financial impact.”

“Engaging in what is sometimes called ‘limited distribution’ of pharmaceuticals can be an arduous task and may not be suitable for smaller systems. Larger, complex integrated delivery networks such as 17-hospital Centura have the scale and resources that enable them to manage the logistics.”

“Manufacturers have increased their use of direct accounts amid persistent shortages, veering from a distribution model long dominated by companies such as AmerisourceBergen, Cardinal Health and McKesson Corp. Some drugmakers will intermittently pull their products from distributors when manufacturing issues strain their supply, ” the publication wrote.


Growing hospital systems face new supply-chain challenges


Hospital systems that have grown fast by buying physician practices and outpatient-treatment centers have had their hands full trying to integrate them into their existing supply-chain distribution systems as they seek  to apply the low prices  from  bulk purchasing to geographically dispersed facilities.

Modern Healthcare reports that the challenge has led some “supply-chain officials to serve their expanded network’s need for drugs, vaccines, tests and other supplies from their own warehouses. They are saving money by buying in bulk and creating, in effect, a van-based distribution system to replace the services offered by distributors such as Henry Schein Inc. or McKesson Corp., which specialize in shipping to physician offices and other non-acute locations.”

“But others have chosen to outsource distribution. That often means their newly acquired facilities continue their long-standing relationships with existing distributors, who for years have specialized in serving the geographically dispersed physician and ambulatory surgical center market. But sometimes they forge new relationships to capitalize on growing competition in distribution, which can even come from combined manufacturer-distributors such as Medline Industries or Cardinal Health,” the publication reports.

Huge pay raises for nonprofit-hospital execs

Executives  at some big not-for-profit hospital systems got huge pay raises in 2013, a review of the most recently available Internal Revenue Service filings shows.

Will there be a nationwide pushback from regulators and the public against  such massive pay for people who are technically working for charities?

Some nonprofit-hospital execs nearing retirement get particularly huge bonanzas.

A fresh look at physician employment by hospitals



“The Doctor,” by Luke Fildes 

With health-insurance companies and hospital systems getting fewer and bigger, more physicians are seeking to work in hospitals, which have more price-power than  do  physician groups.

Paul Keckley, of Navigant Healthcare, takes a fresh look at physician employment by hospitals. He poses some big questions and at least implies some answers.

“Here’s the challenge for hospitals: employing physicians is not a slam dunk, even if the market is benign about shared risk arrangements with payers. Physicians want clinical autonomy whether employed or not. Physicians want the technologies and tools that are required to ply their trade and they expect them to help, not hinder their work. Physicians want to be heard on matters of consequence to the entire organization, not just clinical issues de jour. Physicians want to be  ‘in the room,’not outside looking in. Physicians want to be compensated for their experience and aptitude, not just their production. And they want to be aligned with a winning organization that’s recognized for quality and well-positioned long term.”

“In tandem with the Healthcare Financial Management Association, we gathered impressions from the administrators of 44 hospital-sponsored group practices to see how their marriage with the hospital is working. They’re losing sleep over three concerns:

Operations: “We worry about how to operate the group efficiently as payments shift from volume to value, margins shrink, and costs for information technology and labor increase. It’s a tough job, and it’s a different job than running the hospital.”

Compensation: “We worry about how to compensate doctors as the change from production to performance accelerates. Doctors like to ‘eat what they kill’ and they expect to get paid well. Something’s gotta give.”

Recruitment: “We worry about how we will recruit new physicians to join the group and sustain its growth.”    




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