It draws together the collective views and learning from 40 practitioners drawn from 22 nations who participated in our Global Healthcare summit, and the practical knowledge drawn from experts from KPMG’s extensive Global Healthcare Advisory practice.
A new phase is underway, as leading organizations and systems are rising to meet their challenges by developing innovative new models of care built on evolving relationships between payers, providers and patients and designed to marry cost-effectiveness with quality.
They did, however, confirm that the world’s various health systems, regardless of design, funding, or level of establishment, all share very similar issues. In coming together as a group, they found that they all had something to teach, and something to learn.
The fact, however, remains, that the majority of health organizations have yet to embark on the highly complex yet vital journey of transformation to cope with pressures made even more acute by the global financial crisis.
Surveys of KPMG member firm clients reveal that while nearly all healthcare leaders accept that the way the industry works will change over the next five years – with 65 percent predicting major change – only a quarter of them are preparing to overhaul their business models. Many argue that they will be able to get by without such a transformation. Put another way: “Yes, major change is undoubtedly coming... but not for me.”
The consequences of such inaction, this report argues, will put the future competitiveness and commercial survival of organizations at serious risk.
As our conference highlighted, no-one can avoid addressing the issues. Now is the time to act. As this report highlights, healthcare payers – be they governments, public sector bodies or insurance companies – are no longer willing to continue along a route that is both unsustainable and also failing to deliver the best possible value for patients.
Payers are becoming ‘activists’, seeing themselves as agents of change where once they were more administrative and passive in their functions. Increasingly, they are demanding that healthcare providers re-think their models, while also incentivizing patients to take a bigger role and to become active partners with clinicians in the management of their own, personally designed care.
Payers are ensuring that the people they are looking after get better value from the system. Approaches range from actively working to re-shape the landscape of provision in order to safeguard quality, influencing providers to come up with more imaginative and innovative care solutions, through to influencing the way patients choose what care they have, thus combating the problems of quality variation and, in some cases, over-diagnosis and overtreatment.
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From volume to value
Healthcare providers also need to change the way they operate. This means they too must make a fundamental shift from volume to value. Where traditional models have focused on increasing volumes, new ones are beginning to focus instead on outcomes, quality and the need for integrated, closely-connected services which directly benefit patients.
Similarly, today’s care is increasingly honing in on prevention and patient self-management at home and in the community, where once it waited for people to become ill enough to require complex, expensive hospital care.
One of the most exciting aspects of the conference – inspiring this report’s title – was the realization that healthcare systems across the world, despite their widely differing approaches and structures, have a great deal to gain from each other in terms of pooling knowledge and experiences over the building of clinical and business models and the development of leadership.
It is no coincidence that many of the most demanding people in healthcare are also the most curious, spending a great deal of their time examining what others are doing. Markets in Asia and in emerging nations, in particular, are experimenting with fresh models and structures that are dynamic, flexible and open to further change rather than merely copying more experienced systems.
Our summit not only identified key issues facing healthcare, such as the rise of the ‘activist payer’, the challenges facing providers and the opportunity to engage patients as partners, but it also built on the discussions of delegates to highlight concrete ways for both payers and providers to meet the challenges ahead.
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Recommendations for payers
Payers must make their organization capable of contracting for outcomes and value for the patient rather than simply the volume of cases treated.
- Much more focus will need to be placed on the management of overall population health.
- Delivery models need to become more integrated, which means current payment systems, many of which actually encourage fragmentation, will need to reform.
- Pushing care upstream has become the clear mission.
- Payers must find new ways to connect to patients to influence their behavior.
- They must develop new skills and organizational abilities In data analytics, outcomes measurement, contracting, and care system design.
- Payers must engage with providers in new ways to shape their behavior, create innovation and, where necessary, stop contracting them to provide care where they fail to comply with quality standards and/or price.
- Providers will need to be incentivized to change in both the medium and longer term. Payers will need to find innovative ways to support them through the transition.
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Recommendations for providers
- Providers need to fundamentally reshape their approach and they must do it quickly. There are a range of options available, but all will require new skills and ways of working.
- Being operationally excellent remains important but much more must be achieved.
- Many providers think they can grow organically as the demand for healthcare grows. Many of them will be wrong. If their current model is not working, simply making it bigger will not make it work any better nor solve its fundamental problems. Failing to deal with this poses a significant risk to their survival.
- New approaches will include creating integrated health systems where appropriate, building specialist networks, or focusing on areas of special expertise.
- For many, the logic is to take more responsibility for the whole of the patient journey or for the longer term health of populations. There is a need to move away from providing episodes of care to providing or orchestrating the whole package. As with payers, this means less focus on volume and much more on value.
- Investing in leadership will be key, as will the creation of new relationships with clinical staff.
- Building networks, learning from other markets and better use of information to gain strategic advantage will come to the fore.
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Recommendations for both payers and providers
- Payers and providers need to find new ways to work together and need to move away from traditional adversarial and transactional approaches to one which focuses on population health and outcomes.
- To fully understand the strategic options and models available, many organizations will have to think deeply about what they do, how they work, who they work with and the fundamental nature of their business.
- Leadership at all levels will be an essential investment in driving through change. The best leaders are already finding ways to manage the ever-increasing complexity of healthcare by creating the space for staff to innovate, experiment and continuously improve.
- For many, significant structural change will be required, yet the payback for such investment will not be immediate and will take time to be realized.
- Payers and providers must ensure there is a deep understanding of what constitutes value for patients and build this into every process – including the development of shared decision-making.
- They must use new channels to talk to patients and to connect them to each other. Shared decision-making, patient self-management and the use of technology to put patients in control of their conditions will be a significant trend.
- The best-prepared organizations are investing a significant amount in both teaching and learning as they work towards new ways of operating.
Payers and providers will also need to develop their information systems and analytics as they seek to make transformational changes to both their own organizations and to those around them. Information systems, which will have to be increasingly shared and more accessible in future, must underpin attempts to integrate care as well as support new ways of interacting with patients.
Finally, high-quality leadership and the engagement of doctors and front-line staff will be vital to help individual organizations to adapt.
Transformational change is, by definition, never easy – more experiments are required and with this there are greater risks. Similarly, changes will not bring overnight benefits – redesigning care pathways and provision, developing new contracting and payment methods and introducing new IT will all take time and can all have relatively long pay-back periods. This means that for many there will be difficult transitions and things may get worse before they get better.
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Doing nothing is not an option
It is difficult to establish a timeline for action. Each organization will have its own market and regulatory environment to consider. Some will already have taken action, others will not, so that their next decisions will be heavily conditioned by their current situation.
That should not be an excuse for a lack of urgency. Doing nothing is the one option that is not on the table. The case studies included in this report offer graphic illustrations of how different bodies and market sectors are already grasping the opportunities for driving through transformational change.
Time is of the essence. Just as each organization needs to follow its own path of transformation, so each will face its own deadlines if it is to remain competitive over the coming years. Health leaders believe the next five years will be crucial.
Simply by joining the discussion, many of those leaders are already taking steps to reflect on their approaches, both from a domestic and international perspective, and monitor how organizations similar to their own are starting to re-evaluate their futures. For everyone has something to teach, and something to learn.
Something to teach, Something to learn does not end at the conclusion of this report. Indeed, harnessing the many experiences and ideas that have informed this document is just the start.
Our intention now is to use the important lessons from the global summit to begin a dialogue with healthcare leaders, practitioners and influencers across the world.
We will use our networks, the unrivalled expertise of our Center of Excellence team and our international reach to take the debate around the world and help facilitate the spread of innovation and good practices.
At the same time, KPMG’s healthcare professionals will work hard to explore and develop the tools that will help enable health systems to prepare themselves for the challenges ahead.