Every health system leader has unprecedented executive management challenges facing their organization in the wake of the pandemic. Managing through the changes can be tough, especially as we collectively have to rethink what used to work and find new ones to fit the current and ever-evolving context. In this episode, hosts Roger Spelman, Dr. Chuck Peck, and Ben Sawyer discuss the changes that have happened since the start of the pandemic. They take a deep dive into the digital front door, consumer-focused healthcare, and the need for innovation. Where are we today? How did we get here? What is the next step? Join Roger, Chuck, and Ben in this conversation as they share their insights.
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Managing Through Change: The Need For Innovation In Healthcare
I am joined by my good friends and colleagues, Dr. Chuck Peck and Ben Sawyer. If you’ve tuned in before, you’re familiar with these gentlemen and know that they have great insights and great questions about what’s going on in healthcare nowadays. We are back without a guest. You’re reading in on our little private therapy session because the three of us have lots of insights and ideas about what’s going on in healthcare. We talk about this often that we would feel more comfortable as guests than hosts of this program. This is our opportunity to be guests where all three of us are guesting each other.
Roger, it’s great to be on. I like the fact that we are now building this into the LeaderDialogue cadence. At least once a quarter, we’re looking back at the topics we’ve discussed, the fascinating guests we’ve had on, and the trends that we’ve seen, and have our opportunity to reflect. Like you said, were guests of each other to be able to discuss that and pull out those insights that could be useful to the audience.
Roger, I was hoping a little bit for Jimmy Fallon, but I guess that you’ll do fine.
I’ll do my best. He’s amazing. He’s something to aspire to. Let’s get at it. We try to have some fun, but this is some serious stuff going on in healthcare. As we read the literature, read the news, and do a broad scan and overview of what’s going on in the environment and in healthcare, it’s pretty sad and pretty serious. We are searching for some hope for you, our loyal audience who are mostly healthcare leaders, people in leadership at the top, and in the senior levels of our organizations.
We’re going to talk about some things about where we are, how we got here, and then most importantly at the end, give you some hope and help in terms of, “Now what? What’s the next step? How do we proceed?” rather than just wallowing in what the problems are. I’d like to first ask my friends here. Let’s start by talking about what was important for healthcare systems in 2019.
There’s this sense that everything was hunky-dory, humming along, doing great in 2019, and then we got smacked in the face with this, hopefully, once-in-a-lifetime pandemic. What was going on in 2019? Both of you were very active in healthcare and in advising others. What were most of your clients talking about? What problems were they trying to solve back then?
There was certainly a lot of discussion about what people tend to refer to as the digital front door. People were struggling back then to figure out how to improve access and to give the patient what the patient wanted at the time they wanted it, when they wanted it, how they wanted it, etc. You’ve already alluded to this, but the pandemic exposed some of the failings of the system.
A lot of that focused on access issues. I know Ben has talked a lot on some of our shows about this. We’ve been asking patients to come to see us for years and decades. All of a sudden, the pandemic hit and we told them to stop coming because our hospitals were full of COVID patients. We didn’t have any capacity, etc.
What’s interesting is, if you think about it, that stimulated some innovations that we weren’t talking that much about in 2019, like telemedicine. We were at the beginning of telemedicine and talking about it relative to the digital front door, but we hadn’t jumped with both feet. We were talking a little bit about hospital at home, but we didn’t jump in with both feet.
During COVID, what happened? Telemedicine skyrocketed, hospital-at-home services emerged, and ambulatory surgery centers and pharmacies greatly expanded what they were doing. I know a lot of people don’t like to use the word consumer. For the audience, when I talk about patients, I talk about an individual that has an acute need right then and there.
You need to access the healthcare system for whatever reason, like the hospital, physician, pharmacy, etc. because you have an acute need as opposed to being a healthcare consumer when you are, for instance, moving to a new city looking for a provider. How do you find a new provider? Also, scheduling what you would consider to be elective surgery, things like that.
Having all of these other new flexible services now where we were forced to jump in with both feet suggested that there were ways of doing things that were a lot less costly than the typical bricks and mortar places where patients tended to go to have their healthcare delivered. It seemed as though that digital front door just blasted open over the last couple of years from where we were talking a little bit about, “How do we do this?” to, “We have to figure out how to do this right now.” Whenever something very disruptive like that happens over a very short period of time, all of the entrenched companies, bricks and mortar people, payers, and everybody else, don’t like that kind of change happening that quickly.
One of the things that are also happening is that a lot of them are, as they’re prone to do, attempting to ensure that a lot of the temporary measures that allowed us to do some of these things, flexible payment models, emergency authorizations, different funding mechanisms, and all of that. All of a sudden, there’s a lot of pressure now to push back and get rid of those and go back to the way things were before.
We were thinking about some innovations, but we’ve been forced to jump with both feet into the pool. It’s been very difficult because we haven’t been reimbursed to do those things. People now are pushing back on reimbursements, which we were able to achieve because of the pandemic. Figuring out how to transition from that very high-cost bricks and mortar model into this lower-cost, easier access, multi-lobed access is challenging a lot of systems. Figuring out how to lower the cost to get there is also something that is a huge challenge.
Let’s be honest, it’s just healthcare people mostly who are reading, and it’s just us. When we talk about being patient-focused or consumer-focused, we in healthcare have not done a good job. We pay lip service to customer focus. It’s our convenience. We did these things. We became innovative, creative, and got into telemedicine because of us. We had to. We didn’t have the options.
We have not done a good job of being consumer-focused or customer-focused. It’s us. A corollary is back in 2019, when you think of restaurants, it’s not dissimilar. How can we get more people and seat more people in the hours that they want to be served, treat them well, get them out, and turn those tables? When 2019 hit, they were all closed, but people want to maintain their customer base.
What did they do? They turned things upside down and pushed food out to the customers. Every restaurant got into the catering or delivery business. All of us have had the experience now where you go into a restaurant that looks like they have plenty of space inside, but they don’t have enough cooks and servers. They’re only operating at a fraction of their bricks and mortar capacity. Isn’t that like healthcare?
That’s an interesting analogy and example that is very relevant. The essence of it is that, when you’re going through rapid cycle change, organizations that require a lot of structure are typically at a disadvantage because they can’t respond as quickly. Which is what Chuck was alluding to before. Health systems, if you think about it right up until the time of the pandemic, it controlled the healthcare discussion and equation.When you're going through rapid cycle change, organizations that require a lot of structure are typically at a disadvantage because they just can't respond as quickly. Click To Tweet
There were a lot of other issues that were percolating under the surface, like social determinants of health, inequity, and populations that weren’t getting the kind of access to care that they needed. The health systems, because of their size and the alliance with their network structures, their clinically integrated networks and their ACOs, etc., were able to largely dictate how people access care.
With COVID, we remember that time. We talked about it on the show when health systems said, “We’re only seeing COVID patients right now. Don’t come in for your elective stuff, by and large.” Consumers listen to that, but their healthcare needs didn’t go away, so they figured out how to get healthcare other ways.
Ben, excuse me for interrupting, but who became more innovative, the health system or the patient?
The patient did. It also opened the door for all these non-traditional healthcare providers who have lived and thrived in consumer-based transactions. Whether it’s Amazon, Walmart, or CVS. They are really good at direct-to-consumer type care. That’s not something they have to learn. They’ve already been there. They saw that as an emerging market because this need was not getting met by the large infrastructure players. That just rushed in during the pandemic. Now, when the health systems are wanting to get their legs back underneath them, they’re finding a number of things that are challenging.
One, the physicians have been more empowered. It used to be the balance of power was largely on the health system because they had everything the physicians needed. During the pandemic and all this consumerism, that has changed to a large extent. The providers have more control, so network integrity becomes a challenge. The number of options for care has exploded.
You can go to all of those entities I just described. You can go to Walmart or CVS and get a full care experience. Now we know Walgreens is starting to ramp up on that. Amazon has created that digital application to be able to access providers from wherever you need to. You now have very low-cost competitors that scratch the itch of consumerism, which is ready access at low cost.
You’re in an unable position of having the highest infrastructure cost, so now you’re playing catch up. How do you retain your network integrity with your position providers if the balance of power is shifting? How do you stem the tide of these innovators that are rushing into the space? How do you essentially make your case to the consumer of, “We are better, we have higher quality?”
Is that resonating anymore with the average consumer? Are they saying, “I like the fact that I can get hospital at home and I can do telemedicine now, I can go to anybody and get the kind of care I need?” Are consumerism and the economic forces behind it going to be receptive to the message of a high-structured health system? That is the question.
It’s a perfect question, but we also have to put a bookmark in that discussion and say, “Are people getting the same quality care?” Does the average consumer know, “On a scale of 1 to 10, all things considered, the knowledge of the providers, the interaction of comorbidities, and all that stuff that my physician was trained to help me navigate in my personal health journey, am I getting all that at Walmart for a lower price at my convenience?” I don’t think we’re talking about apples and apples here.
I hate to tell you, but I have a history with what are now the clinics in Walgreens. I helped start the company that became the clinic at Walgreens. This was many years ago, but we had NCQA do a study of the clinics and compare the quality of the care that was being delivered there. Grant you, it’s a much low-intensity care, much lower acuity care, but comparing apples to apples of that care.
It turns out that the NCQA scores were higher than they were for traditional healthcare. What you’re alluding to is, are the appropriate things being taken care of in those types of settings? The answer is, when the appropriate things are being taken care of, probably the quality, satisfaction, and cost all work in favor of those clinics.When the appropriate things are being taken care of, the quality, the satisfaction, and the cost all work in favor of those clinics. Click To Tweet
As you were talking, Ben, I was thinking about an even simpler analogy. Being a consultant for the last many years, I flew into LaGuardia a lot. I used to get off the plane and go down to where the cab stand was. Each one of those medallion cabs cost those cab drivers $1 million in New York City. There used to be a line that you’d have to stand in for 15, 20, or 30 minutes in the pouring rain, in the snow, in the freeze, or whatever to get into one of those cabs. It wasn’t a pleasant journey for anybody who’s done that before.
All of a sudden, Uber came around. Not only did it make it convenient, but it put control of the whole experience in your hand. You could see the car coming to pick you up. You could see if the route that they were taking was the most direct route, which you could never do with a cab. God knows how many times I got taken over the long way as opposed to the short way.
Without trying to be cruel, the situation that large bricks and mortar hospitals and health systems are in is that they’re now the medallion taxi. Walgreens, Walmart, CVS, and Amazon, they’re the Uber. I grew up in an academic medical center and spent twenty years of my life there. Whether hospitals and health systems may not like it, people, patients, and consumers choose with their feet. They’re choosing Uber. They’re not choosing the medallion taxi.
The real question we need to help our viewers with is, “How do you continue to provide all the very high-end critical tertiary, quaternary care in this environment when you can’t turn yourself into an Uber to do that?” You still have to have some medallion taxi and the cost associated with that. Who’s going to pay for that?
Consumers and patients need to understand that we all have to support the appropriate care in tertiary, quaternary health systems bricks and mortar. Bricks and mortar have to understand that the things that no longer belong in the high-cost bricks and mortar setting have to go to lower-cost settings.
Do they want to play in those lower-cost settings, or do they want to seed all of that business to ambulatory surgery, to Walmart, to Oak Street? What’s the strategy in the innovation that they’re going to figure out that’s going to allow them to play in both spaces? Should they even be playing in both spaces? If they’re not going to, how are they going to survive? To me, that’s the big question.
Also, will they have a choice? I’m going to give you two examples of acquaintances that I’ve had that are relevant to this conversation. One of them is a woman that has a couple of children. She was trying to gain access to a primary care provider at a health system, and it was very difficult to get in. She was trying to get into a pediatrician, but couldn’t get appointments, etc.
She came across a concierge physician who has a concierge practice, and they were looking for new patients. They welcomed her in. Now, she’s attached. That physician is not affiliated with any health system, and that physician is going to decide which health system that she goes to now. Her loyalty switched because of access and the ability to get the care she needed for her kids.
Another colleague of mine who has a doctorate in Healthcare Administration had a child who had cold-like symptoms. Again, it’s so convenient to go to Walmart. They went there and were there for 90 minutes, saw a physician and an NP, got the radiology chest X-ray, etc. The entire experience was $90 for being there, and they talked with providers, versus trying to get into a provider in a health system.
The cost is 4 or 5 times that, and they don’t necessarily talk with you. They’re asking you questions and documenting the EMR while they’re meeting with you. As a consumer experience, you’re like, “At least I had a chance to talk to my provider. I got what I needed. It was 1/5 the cost, so that’s what I’m going to do.” To your point, Chuck, everybody has to have access to complicated care. The ready-access consumer-based sources of healthcare can’t do most of the procedures and so forth that health systems can do. The question is, what then happens as consumerism, which is ruthless to the market, decides how care is going to be provided?
Does that mean that health systems that are complicated get retrenched back to covering larger geographies? They’re needed, but there are a lot of different referral entities that are consumer-centric. They’re going to determine when and how they’re needed, and therefore there’s less volume. To your point, Chuck, do they just give up on that front-facing consumer, or do they innovate in a different way because they still have a lot of the assets and figure out how to compete in this new space in a completely new way that meets consumer needs?
We’ve got to turn the corner here and give our audience some hope and some encouragement. You teed that up very nicely, Ben. It’s innovation. We talk a lot about innovation and the need for it. We have the luxury of doing it because we don’t control those huge assets that need to be reimagined to be consumer-facing. Here’s one thing that’s so simple. It’s not easy necessarily, but it is simple.
As I listen to and read about what’s going on, there’s an underlying issue, a thread, and that is dissatisfaction. Can you think of anybody in the health system who goes, “This is better than it’s ever been, I’m so satisfied?” There’s nobody that I know of saying that. We go to the fringes, to the outside, and your friend, Ben, was happy with their 90-minute, $90 encounter.
That’s pretty good, but is that inside the health system? Do we find it inside the health system anywhere? I don’t think so. This level of dissatisfaction starts with physicians. Physicians feel less respected than ever before. There’s a corollary here. Under 90% of all primary care physicians in this country, 1.1 million physicians are employed, not independent. That lack of independence or loss of independence is something that leads to dissatisfaction.
They don’t want to have employees, they don’t want to do payroll or have all the overhead, but they don’t have the level of independence that they thought they’d have when they first decided they wanted to become a doctor. About 60% of all specialists are employed. That’s something that I never thought we’d see, but it’s growing.
This is a recommendation that I would make based off of the last episode that I did with Dr. David Sailors. I believe this my entire career. You’re a health system and you have all of these physicians now attached to you. Whether employment or independence, you have them attached to you. They’re affiliated with you. Use their expertise to help you figure out the dilemma you’re in. Physicians are incredibly creative people. They know a cost-effective, more efficient way to take care of these patients that you’re struggling over. Listen to what they’re telling you. Give them a chance to give you some of their ideas.Physicians are incredibly creative people. They actually know a cost-effective, more efficient way to take care of patients that you're struggling over. Just listen to what they're telling you, give them a chance to give you some of their ideas. Click To Tweet
You can continue to do outpatient surgery in your inpatient ORs and charge HOPD rates, but maybe what you ought to do is look at who else is doing those things in an ambulatory surgery center at non-HOPD rates in your community, including some of the physicians that are employed by you that also go to some of these centers and see whether or not you can provide those same services as part of your organization at a lower cost.
Maybe make up for it by having a great consumer experience, better access, and seeing more patients in a lower-cost setting. Those are the kinds of things that we’re not taking advantage of. I had somebody who said to me that a lot of people, when they’re in a foxhole, instead of not digging any further, they’d keep digging deeper so that the cruise missiles go over their head.
We got to stop digging the hole deeper. We have to stop for a minute and have a plan. Not this haphazard, “What’s the latest fad thing that we can do to get a couple of extra dollars to our bottom line?” We have to have an overall plan. Using the smart people in our organization all of them to help us is probably one thing we can do.
This comes under the umbrella of innovation, but it requires hard questions. That’s the challenge. Under what circumstances could we be consumer responsive? What would that look like? Be willing to make those changes. To Chuck’s point, talk to the people that are on the frontline, like the physicians, ask them what they think, and then be willing to make those changes. There are going to be some things that are very difficult structurally that we hold on very dearly. Is this going to be a value differentiator for consumers such that it’s going to allow us to margin enough to be able to maintain our mission? If not, then you have to make very tough choices.
We don’t need letters or emails and stuff, but we realize how important this is to reduce costs. There’s extreme financial pressure. The best parts of healthcare came from team-based care. Let’s learn from that. To your suggestion, Chuck, let’s learn and let’s solve these problems as a team. That probably is really where we need to go. That’s our nugget for the day. Talk to your physicians and talk to all of your providers, and say, “How can we do both? How can we reduce our costs? How can we satisfy our customers? How can we get rid of this level of dissatisfaction and frustration inside the hospital?”
That’s contagious. Our patients pick up on that and we’re going to send them to the exits. They’ll say, “I don’t want to go there if I don’t have to.” We need to save healthcare. That’s one simple way to do it. We don’t mean to simplify things too much, but that’s where we’re at. Before we wrap this, any last comments or thoughts for our audience?
I’m good, Roger.
I am, too. I think that the most productive is to look at the operation differently than you have before. Be willing to look at it through the lens of the consumer and go wherever that takes you.
Use the people that got you where you are now, the people that help make you successful. Your medical staff and your teams. Talk to them and give them the respect that they deserve. That’s it for this episode. Thank you. I always enjoy these stimulating discussions. It’s fun being a guest rather than a host sometimes. Hopefully, our audience enjoys it as well.
Please let us know what you think about these. Give us your thoughts about questions that you would like us to address both in these quarterly sessions or also with our guests. Thank you so much for your loyalty and for spending time with us. We thank the Baldrige Foundation for making LeaderDialogue possible. Have a great day, and we’ll see you next time.
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