• Industry: Healthcare
  • Type: Survey report
  • Date: 4/16/2013

Building new approaches on existing models 

Quality improvement at scale: While all organizations aim to improve quality and efficiency, some are using quality improvements to create transformation on a much larger scale.

  • Intermountain Healthcare, a hospital system in Utah and Idaho, uses measurement, data systems, pathways, process improvement and structures to enhance accountability and – as a result – has made major cost and quality improvements. Just one of its new protocols to reduce unplanned caesarean sections and induced labor, for example, saved USD50 million in Utah alone – equivalent to USD3.5 billion across the US.1
  • The Geisinger Health System in Pennsylvania is focused on removing unjustified variation, fragmentation of care and poorly-designed incentives as a way to move patients from passive to active recipients of care. Its ProvenCare products offer advanced primary care (a medical home), care bundles to ensure reliable chronic disease management, improved transitions of care, warranties for some treatments (those in which the system delivers best practice) and evidence-based care. The product also takes responsibility for complications.
  • In Sweden, the Jönköping County Council’s health system has a 25-year history of using quality as their key business strategy. This ‘whole system’ approach is based on a culture of systems thinking, process improvement and the development of a learning system.

The Trillium Health Centre in Ontario, Canada has taken a similar approach.

  • Salford Royal NHS Foundation Trust in the UK has used patient safety as a key driver for improvement in their organization.
  • The Institute for Healthcare Improvement in the US and the Initiative Qualitätsmedizin collaboration in Germany, Austria and Switzerland have also found benefits to being part of a wider network for improvement.

In examining the practices of these organizations, we have found that success in this area relies on the consistent implementation of a wide range of interventions over a long period of time. Moreover, the ability to define and measure value while developing a methodology to help staff and frontline leaders to make improvements is vital. For example, the Virginia Mason Medical Center in Seattle and the Royal North Shore Hospital in Sydney have both successfully deployed lean methodologies to strip out non-value adding activities and streamline pathways. In Canada, the province of Saskatchewan is now rolling out lean processes across the entire health system to support their Patient First Review.

However, it is also worth noting that some initiatives have met with less success, suggesting that the model for scaling up quality improvement is still poorly understood.

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The definition of this varies between systems, but at its heart the strategy aims to offer coordinated care across the whole patient journey. As payers start to move towards purchasing outcomes and value rather than individual interventions, more risk is passed to providers, thereby making a compelling case for ensuring that care is properly integrated. The US offers strong case studies of how changes in payment methods and payer policy can drive organizational strategy and design. We have also noted growing interest in Europe and elsewhere in getting providers to be more accountable for outcomes for populations (see below).

Hospitals into health systems

The question is how to build a better system without losing the advantages that primary care can offer. One answer may be for hospitals and other providers to be encouraged to enter the market. Another option would be for primary care to become more specialized or to focus on particular segments of the population. However, in many countries, the model of primary care is currently not set up to adapt to meet these challenges.

Hospitals and health systems do have the potential to develop new partnerships to support home care providers and residential and nursing homes to deliver a range of services such as: improving care for patients, medicines management, end-of life care, and the prevention and management of acute illness. Closer working relationships with mental health services can also reduce hospital admission and the length of stay, particularly for older people with dementia. Similarly, depression and anxiety are important aspects of chronic disease and, by ensuring high quality mental health support for these patients, providers can help to reduce their use of other services substantially. Clearly, hospitals will need to make a concerted effort to reach out to – and work with – these service areas.


Different definitions of integration

Payer driven integration: The Blue Cross Blue Shield (BCBS) Massachusetts lternative Quality Contract and BCBS Michigan Physician Group Incentive Program have an organized system of care programs that incentivize physician groups and hospitals to collaborate in order to produce improved outcomes. A number of payers in Europe are also promoting vertical disease management and models that improve the primary/secondary/rehabilitation interface.

Government driven integration: Scotland, Catalonia and the Basque regions of Spain are creating integrated health and social care provision. France and Sweden have both been experimenting with various types of provider networks for chronic disease.

Provider-led integration: In the US, our research suggests that many providers will quickly move to integrate with medical groups. There is also increased interest in hospital systems acquiring primary and ambulatory care, home health, skilled nursing facilities, rehabilitation and other parts of the supply chain.

It is worth noting that it is not always necessary to create new organizations or restructure them to provide integrated care. Indeed, the key components of a new system are more focused on creating the right processes, systems and ways of working than they are about governance.

“While the technical aspects of integration are certainly important, it is the cultural component that is perhaps the most critical element.”

Organizations will need to develop effective ways for professionals to work together, taking into account their differing approaches and attitudes to risk.

This may be particularly difficult for hospitals whose costs are locked into buildings and infrastructure. However, change is ongoing: some forward looking hospital boards are starting to recognize their organization’s role in not only running health systems, but also in taking responsibility for the health of the population.


In a well-known article, American surgeon and journalist Atul Gawande suggests that there is a growing trend towards creating networks of hospitals with the potential to develop standardized approaches that take advantage of economies of scope and scale, emulating developments in other sectors.2 This goes well beyond sharing back office services and procurement by focusing on the development of networked approaches to laboratories, imaging, shared specialist expertise and the use of large volumes of network information. As a result, these organizations are refining and improving processes as a key source of competitive advantage. In some markets, such as the UK and the Netherlands, networks are also seen as mechanisms for rationalizing capacity and regionalizing specialist work.

Networks may also be made up of individual sovereign organizations that come together to organize particular services in areas where it is necessary to share scarce expertise or have referral pathways for complex patients. Some challenges do exist with this model however, particularly in decision making. Experience suggests the drive to secure the full benefits of networks often requires a single management structure for the network which allows individual operating units a high level of autonomy to respond to their local market. The US, in particular, has been active in this area, led by private equity groups who are purchasing community hospitals to create chains. It is, however, too early to tell whether this strategy will succeed.


Prerequisites for an integrated system

  • A clearly defined population.
  • The ability to stratify risk reliably and develop registries.
  • Accountability for outcomes, supported by aligned contracts and incentives.
  • Systematic clinical care.
  • Staff and systems to support coordination.
  • Shared records.
  • Shared quality governance arrangements between participants.
  • Payment mechanisms that support these arrangements.
  • The development of a workforce with new skills including the ability to manage multiple morbidity including dementia and work in multidisciplinary teams.

A number of attendees of our healthcare summit also noted that they were engaged in developing informal networks, including:

  • International networks that link those institutions undertaking very specialist work in order to achieve efficiencies in research and pool expertise for image reading, interpreting results and advice on complex cases.
  • Networks that provide increased reach for referrals and the opportunity to extend the brand of centers of excellence.
  • Networks for learning and sharing, largely made up of aligned international players.

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Hospitals as healthcare hubs

Following the logic of outsourcing and networks, some small hospitals may find benefits from becoming an outsourced venue for care delivery by granting other providers concessions for hospital space and service delivery. That being said, this route can create some interesting complexities and may be easier to achieve in situations where the hospital is part of an existing network.

Research and academic links

For those providers closely aligned to research universities, opportunities exist to develop academic networks that not only provide competitive advantages in recruiting, but also allow for the differentiation of services on quality. At the same time, fully-fledged academic health networks may also be able to leverage large amounts of additional research funding to create efficiencies in service delivery. There are a number of existing approaches to achieving this.

  • Charité-Universitätsmedizin Berlin, a major university hospital in Europe, has a close collaboration with pharmaceutical giant Bayer to support drug development.
  • King’s Health Partners, an academic health sciences center in London, has brought mental health together with acute hospital services in order to align their research interests with the main burden of ill health in their community.
  • UCLPartners, an academic health sciences partnership in London, is building on areas of clinical excellence and conducting strong translational research through participation in a network that goes beyond the boundaries of the hospital.
  • The Karolinska Institutet in Sweden, the Mayo Clinic in the US, Partners HealthCare in Boston, the University of California, San Francisco Medical Center and Johns Hopkins Medicine have a similarly broad multispecialty approach.
  • The Cleveland Clinic, a not-for-profit organization operating in the US, offers a strong example of a focused strategy capitalizing on their expertise in specialist areas.
  • For-profit organizations – such as the Apollo Group in India, who have research and academic excellence as a key part of their strategy – are also focusing on specialist areas.

Asian hospitals, in particular, seem well positioned to take advantage of their research and academic links, often supported by significant government and commercial backing. Singapore is making progress and forging powerful collaborations with academic centers in other parts of the world, while South Korea has become an increasingly powerful player with big investments at the Yonsei University Health System, the Severance Hospital and the Asian Medical Center. Their experience shows that, in addition to large caseloads, networks and specialist expertise, the ability to mobilize large databases that will allow the study of complex factors in big populations will be a key competitive advantage for providers going forward.

According to Claudio Lottenberg, Chairman of the Albert Einstein Israelite Hospital in Sao Paulo, Brazil, “Things that I thought were happening just in my country, we can see all over the world. One of the most important learnings for me is the importance of adding value for those that are going to take part in the resolution of the problem. Doctors… have to be more and more involved because they are close to the patients and can be the best teachers and explain what quality really is.”

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New models are emerging

While some providers adapt existing models to create new benefits, others are building entirely new models that stand in stark contrast to the traditional hospital.

“The health sector seems to lag far behind other sectors of the economy in their ability (or willingness) to move services to online, telephone and other modes.”


Organizations implementing strategies where providers focus on a process (e.g. ambulatory surgery or imaging), a procedure (e.g. cataracts, heart surgery, hernia repair or joint replacement), or a disease area (e.g. kidney disease) all largely follow the same five-step process, as outlined below.

  1. They gain deep skills in a limited range of activities and create single processes that do not interact or overlap.
  2. T hey standardize as many activities, consumables, implants and operating procedures as possible.
  3. They develop approaches to continuously improve their specialty areas.
  4. They redesign work processes and shift work to the most appropriate level.
  5. Finally, they move to high utilization models that ensure that only the equipment needed for the range of activities is purchased.

However, for a focused strategy to work, providers must have access to high volume markets where consumers are willing to travel for reduced price and improved quality.

Well known examples of this approach can be found at the Shouldice Hospital in Canada (hernia repair), India’s Aravind Eye Care System and Narayana Hrudayalaya (cardiac), Finland’s Coxa Hospital for Joint Replacement (orthopedics) and Singapore’s Fortis Healthcare, which has recently opened a hospital purely focused on colorectal conditions. Others are focused on specific patient sectors such as Vaatsalya in India which has developed a low-cost model focused on delivering care to middle-income patients based on high utilization and streamlined processes.

LifeSpring Hospitals Private Ltd. in India offers a strong example of this strategy at work. The organization offers low-cost maternity care using high throughput units where non-clinical tasks have been removed from clinicians, cases that need high-cost interventions are transferred to a specialist unit, hospitals are leased rather than bought or built, and outsourcing is extensively used.

Channel shifting

Kaiser Permanente, a US-based healthcare consortium, is aiming to shift many of its patient contacts to online or telephone channels. To achieve this, they have created a graduated approach that spans a range of different interventions designed to improve care coordination (see figure 4). Kaiser already uses video conferencing to provide specialist input to consultations with family doctors, internists and other front-line clinicians. Similarly, the Veterans Health Administration in the US enjoys very high rates of virtual contacts.

However, in our experience, the health sector seems to lag far behind other sectors of the economy in their ability (or willingness) to move services to online, telephone and other modes. And while the use of applications running on smart phones and tablets is starting to make some inroads, evidence shows that few organizations have embedded these technologies into their strategy.

Figure 4

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In other industry areas, organizations are reducing costs and increasing value by taking steps out of the supply chain. But this approach seems – to date – to be less prevalent in the healthcare sector. However, the growth of retail based clinics with a narrow repertoire of diagnosis and treatment services for primary care conditions, remote pharmacy with postal fulfillment and other potentially disruptive models will increase over the coming years, bringing both threats and opportunities to sector participants.

Strong examples of success do exist, however. MedLion Direct Primary Care, a health insurance company in California, has contracts directly with employers. WhiteGlove Health, a medical care provider based in Texas, offers a similar model but with a telephone front-end and the offer to come to the patient’s home or workplace. In both examples, the provider has essentially removed the need for insurance claims to be made for the use of primary care and eliminated the retail pharmacy from the value chain by using postal fulfillment.

Particularly in regions where primary care is poorly developed, we have also seen the rise of approaches that take primary care out of the value chain by offering vertical disease management programs, direct access to specialists, and vendors who can provide screening services directly to the public. Similar examples arise in cases where the primary care service values are not a key part of the service, such as in the example.

Patients and their networks as a source of value

As other service industries move to involve the consumer into the production and design of products, we have seen growing interest from providers in working with patients to redesign care pathways. Other ideas are also starting to trickle into the health sector, such as self-serve models in which the customer does much of the work, supported by technology and online tools.

“We have seen growing interest from providers in working with patients to redesign care pathways.”

For the health field, this approach represents a huge shift in the way providers operate and requires both a mind-set and an organizational culture transformation to succeed (more on the implications of this approach can be found on the opposite page). Like all transformational strategies, this approach will take time and significant experimentation to succeed.

Leveraging Big Data to deliver better, more targeted services

While a few payers and providers have toyed with healthcare CRM technologies in the past, the evolution of data analytics now offers health systems new and powerful tools for increasing efficiency, enhancing safety and reducing costs. Predictive patient behavior models, highly-accurate demand forecasts or even guidelines tailored to individual risk factors would undoubtedly catalyze significant change.

It is likely that the greatest technological catalyst for driving more coordinated and effective care, however, will be the adoption of cloud technologies. The power of the cloud to assemble, analyze and share data in real time will be critical in building successful partnerships and affiliations between payers, providers and patients; will transform the way patients move through the care pathway; and will deliver tremendous insight to payers on the performance of their contracts.

And while the cloud will require health systems to understand and manage big issues like enterprise security, identity management and network management, it is clear that Big Data and cloud will be key to health systems unleashing the power of coordinated care.

1 Brent C James & Lucy Savitz – How Intermountain trimmed healthcare costs through robust quality; Health Affairs May 2011, doi: 10.1377/hlthaff.2011.0358.


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