Manage for Population Health or Volume — Not Both

Article · March 24, 2017

A strong health care center or system requires its leaders to demonstrate financial stewardship and a solid business case. How should that stewardship be conveyed to direct reports, the board, or others in your organization?

“We can’t hide things. We must be completely transparent,” says Akram Boutros, President and CEO of The MetroHealth System. “At my board retreat earlier this year, I said to them, ‘I’m either going to manage this organization for population health and what’s coming, or I’m going to manage it for volume. You get to choose.’” Boutros told them he couldn’t do both because he did not want to send conflicting messages. He also noted that although MetroHealth had been doing well financially, they would likely lose money over the next couple of years. Despite this, the board agreed to focus on reducing MetroHealth’s readmission rate — which dropped by 2,000.

“That’s $18 million that we’re not going to recapture every year from this point on,” says Boutros. “When we talk about our financial stewardship, we ask our executives if they’re doing the right thing. And if they’re doing the right thing, we think there’s a cost that we can bear sometimes in moving through that transition.”

“Our goal is to align our overall strategy with our future financial success,” adds University of Utah Health Care CEO Vivian Lee. “All of us, whether we’re on the clinical side of the enterprise or the academic, are interested in the financial success of our hospitals and clinics.” University of Utah has made an effective case for this, notes Lee. For example, the organization’s patient satisfaction efforts have led to significant growth in referrals, network development, and regional hospital partnerships, and the organization’s annual growth is higher than ever — everyone wants a great patient experience.

“That word of mouth, the reputation that disseminates, is incredibly powerful for driving volume,” says Lee. “At the same time, a lot of times we struggle with the potential downstream impact of cost management.” If you’re monitoring costs and no one orders MRIs, for example, what will happen to your radiologists? “It’s not perfect in every regard,” she acknowledges, “but there can be good alignment between financial benefit and what we’re trying to do to transform health care.”

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From the NEJM Catalyst event Leadership: Translating Challenge to Success at Mayo Clinic, June 2, 2016.

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