This issue brief from the American Hospital Association (AHA) describes the need for hospitals to transform from volume-based payments to value-based revenue and business models. Environmental pressures are driving hospitals and care systems toward greater clinical integration, more financial risk and increased accountability. To provide high-quality, efficient and integrated care, hospitals and care systems must explore and pursue transformational paths that align with the organization’s mission and vision and cater to patients and communities. Hospital leaders need to develop strategies that move their organizations from the first curve, or volume-based environment, to the second curve, in which they will be building value-based systems and business models.
This report outlines must-do strategies, organizational capabilities to master and 10 strategic questions that every organization should answer to begin a transformational journey. The report’s “guiding questions” will help hospitals and care systems reflect and gain new perspectives on the benefits and value of integration. A comprehensive assessment, also found in the report, may lead health care organizations toward a customized path or series of paths to successfully transform for the future. Five paths for hospitals and care systems to consider are:
+ Redefine to a different care delivery system (i.e., either more ambulatory or oriented toward long-term care)
+ Partner with a care delivery system or health plan for greater horizontal or vertical reach, efficiency and resources for at-risk contacting (i.e., through a strategic alliance, merger or acquisition)
+ Integrate by developing a health insurance function and/or services across the continuum of care (e.g. behavioral health, home health, post-acute care, long-term care, ambulatory care)
+ Experiment with new payment and care delivery models (e.g., bundled payment, accountable care organization, medical home)
+ Specialize to become a high-performing and essential provider (e.g., children’s hospital, rehabilitation center)
There is no single “right” transformational journey and not all hospitals need to become an integrated entity. However, the time is now for hospitals and care system to accelerate organizational transformation, which requires making strategic, yet swift, progress toward achieving the Triple Aim of health care—improving care quality and patient experience, improving population health and reducing per capita costs.