2018 Trends in Healthcare & Governance

The American Hospital Association’s November 2018 Insights discussed the disruption occurring in healthcare, such as retail pharmacy’s entrance into the field. It said governing boards need to understand the threats posed by these market disruptors and craft specific strategies to ensure continued fulfillment of their organizations’ mission.

A simulation strategy could be used during a board retreat to help trustees understand the market dynamics of what it is like to compete and negotiate with players from outside the healthcare field.

You can use this checklist to help assess your board's readiness for a simulation strategy:

• Board members have little knowledge of disruptive competitors in healthcare and would benefit from an environmental scan and robust discussion about new competitive threats.
• Elements of mega-merger entities are already in the market (or are anticipated to enter the market) and pose a credible threat.
• Senior leadership team has not already planned for or addressed the entry of mega-merger entities.
• The organization has not yet collectively determined its risk tolerance in a disruptor-focused environment.
• Board composition is diverse from a competency perspective (finance, healthcare, strategy, business development and so forth).
• Board composition includes representation from industries that have experienced disruption and who may serve as facilitators or challengers.
• Board has prior experience in role playing and simulation or has been sufficiently prepped to participate.

• Demographics Driving Disruption: According to governance consultant Maureen Swan, during the years 2020-2025, hospitals and healthcare systems will need to change their business models because the aging population will drive high demand for medical care, technology, pharmaceuticals, and genomics. With continued consolidation, healthcare systems will need to provide value as defined by the market and look at building a local-regional model that puts the right services in the right location to drive value.
• Key Questions to Ask About Healthcare Payment and Reform: During HTNYS’ 2018 Annual Conference, governance consultant Maureen Swan highlighted questions that hospitals and healthcare systems should consider as they look at the future of payment and reform: What is your cost-reduction strategy? How are you doing on reducing clinical variation? How will you engage care providers? Do you need to consolidate or eliminate programs? Have you designed the optimal provider network? Do you need to develop capacity in direct contract with employers? Do you have the competencies and balance sheet to take on risk? Do you need to partner?
• Walmart Launches Telehealth Initiative with Doctor on Demand: In a new telehealth initiative, Walmart and Reckitt Benckiser Group (RB) (a global consumer health and hygiene company) have partnered with Doctor on Demand to offer telemedicine consultations with the purchase of certain RB products.

• Changing Governance Structure: Given the changing healthcare environment, your governance structure may need to change. HTNYS’ new report, Changes in Governance: Interviews with New York State Healthcare Leaders highlights insights and perspectives from 11 healthcare leaders who discuss modifications made to their organizations’ governance structure. These leaders also discuss some of their challenges such as recruitment, diversity, becoming first in class, and how to function given the unpredictability of healthcare.
• Asking the Right Questions: Governance consultant and expert Maureen Swan, MedTrend, Inc. says a board’s core function is to guide the organization into the future. Boards should be asking questions such as “Do we have the right business model? Are we providing value as defined by the market?” Governing boards also need to examine their composition and ask: Do we have the right players at the table? Do we have the right number/type of physicians on the board? Do we need more skills in risk/change management, consumer innovation, or marketing?
• Physician Board Members: Issues to Consider. When you have board members who are physicians, you should ensure there is an understanding about their fiduciary role and careful discernment about any conflict of interest. When recruiting physicians, consider physicians who do not have an economic link to your community. (Source: McNally & Associates, 2018)

• The Effect of Leave Management: Leave management has become a complex administrative burden for employers. While Family and Medical Leave Act (FMLA) and state leaves may run concurrently and overlap in New York State, separate tracking for FMLA and state leave is required. Additionally, the integration of leave with short-term disability is critical for accurate and effective reporting on absences and their impact. With FMLA lawsuits averaging over $300,000, the outsourcing of leave management can help protect employers by ensuring consistent treatment of employees, reducing the potential for abuse, and staying compliant with continually evolving legislation, all while removing the administrative burden from internal resources.
• The Hidden Cost of Identity Theft: Someone falls victim to identity fraud every two seconds. Employees and employers pay a steep price when personal information is stolen to obtain credit or loans, or commit fraud. On average, victims need 165 hours to resolve identity theft, are absent five time more than non-victims, and use twice as much sick time. Early detection is the best protection and the first line of defense in the fight against identity fraud. It's not a matter of if, it's a matter of when.
• The Burden of Student Loans: Heavy student loan debts have become more prevalent as tuition has skyrocketed. Non-profit student loan forgiveness and payment reduction programs are widely accessible for employees of 501(c)(3) organizations, as well as others who may not be traditionally considered "non-profit" employees. Programs such as the Public Service Loan Forgiveness Program can aid in the reduction of debt in a more manageable timeframe and protect an employee's credit by preventing defaulting on student loans.

• Technology’s Impact on Healthcare: Telehealth is becoming mainstream; retail clinics are reshaping local care access; and social networks and “Dr. Google” have become major factors in determining where patients go for care. Understanding how these trends impact consumers’ healthcare decisions is important for ensuring future market share, and for making sure our customers and patients are satisfied with the healthcare experience. (Recent studies indicate that an estimated 81% of consumers are dissatisfied with their healthcare experience.)
• Cloud Technology Expanding in Hospitals: About 51% of hospital executives think that by 2022, their hospital will implement secure, Health Insurance Portability and Accountability Act (HIPAA)-enabled cloud technology to promote collaboration and information-sharing across the organization and among providers, regardless of location.
• Lawmakers Examine Mobile Health: The U.S. Senate Commerce, Science, and Transportation Committee is examining the state of the mobile app economy. Since mHealth (mobile health) could be the wave of the future, this discussion bears watching. mHealth is a general term for the use of mobile phones and other wireless technology in medical care. The most common application of mHealth is the use of mobile phones and communication devices to educate consumers about preventive healthcare services.

• Psychiatrists Needed: There is one licensed psychiatrist for every 30,000 people in the United States. With the increasing mental and behavioral health problems our society faces, we clearly need more psychiatrists.
• Physician Shortage Approaches: Our nation faces a growing shortage of physicians that is projected to reach up to 104,900 by 2030. Shortages are expected in both primary and specialty care. Because it takes up to ten years to train a doctor, projected shortages need to be addressed now so that patients will have access to the care they need.
• Registered Nurse Shortage: The U.S. is projected to experience a shortage of registered nurses (RNs) that will intensify as Baby Boomers age and the need for healthcare grows. RN is among the top occupations in terms of job growth through 2024, according to the Bureau of Labor Statistics’ Employment Projections 2014-2024. The Bureau projects the need for 649,100 replacement nurses in the workforce, bringing the total number of job openings for nurses due to growth and replacements to 1.09 million by 2024.

• Micro-hospitals seem to be popping up across the country. What are micro-hospitals? They are independently licensed facilities with acuity comparable to a community hospital, but at a fraction of the size: 8 to 15 beds. The idea is to deliver pre-acute care in a given neighborhood in a place where people work, live, and play, and to bring a higher level of service than what you would find at a retail clinic or urgent care center. Micro-hospitals strive to provide patients a compassionate and patient-friendly experience. While there are some challenges with micro-hospitals, the small format helps drive high-quality care and higher patient satisfaction by enabling providers to focus on fewer patients and produce better outcomes.
• Cybersecurity risks are likely to continue to grow in healthcare. Boards should ensure their executive staff develop a cybersecurity strategy and culture that ensures proper defense and postmortem measures. Cyberattacks? Especially a ransomware infection that blocks access to critical medical data?are a human safety issue. A new trend: developing a Cyber Security Board Committee.
• Population health is a hot topic, as hospitals and health systems navigate the expansion in coverage and payment incentives. Board members should work with leadership to ensure there is a quality improvement approach to community benefit that helps to build internal population health capacity. Focusing resources on sub-county areas where health disparities are concentrated is a good starting place.

• Amazon and Healthcare: A survey recently conducted by LendEDU of 1,000 consumers who purchased something from Amazon in the past 30 days, revealed 35.8% of consumers would use an Amazon health insurance plan, and 54.7% would trust Amazon to provide them with over-the-counter and prescription medicine.
• Alcohol-related ER Visits: Hospital emergency department visits related to alcohol use increased 47% between 2006 and 2014, averaging 210,000 per year, according to “Trends in Alcohol-Related Emergency Department Visits in the U.S.” a report from the National Institute on Alcohol Abuse and Alcoholism.
• Spending on Prescription Drugs: Total annual spending on prescription drugs has reached $309 billion, the fastest growing segment of the U.S. healthcare economy. The price of drugs, not utilization, is the predominant contributor to the increase.

• Board Self-Assessment. The best way to actively create the future of board governance is to bring annual goals front and center. If the board clearly writes down its annual goals at the beginning of the year, that same document can act as its self-evaluation template at the end of the year. The self-evaluation—administered by the board’s governance committee or an outside organization—can ask trustees to judge whether each of the board’s goals for the year have been met and if they have satisfactorily contributed to achieving those goals. Visit the HTNYS website to help improve your self-assessment process.
• We need to continue to improve the customer experience; otherwise patients will go elsewhere for care. The more competitive the market becomes, the more work providers must do to continually improve the patient experience and develop customer loyalty. This can partly be done through improving communication and creating a more retail-focused experience. Online and mobile platforms are already important for engaging customers, and they will only grow more essential in 2018.
• Self-monitoring health is a rapidly expanding business. As you might know, Apple recently announced its latest iPhone iOS beta update that will include an option for patients to input their electronic medical records. The Health app update marks a key step in solving interoperability issues with electronic health records. Eventually, the update could turn into a platform for patients to add real-time data to their medical records, which could give care providers a more detailed look at patients’ health.

• Congratulations to New York State for being ranked in the Top 10 states for improving their health. The hard work of our hospitals and health systems have contributed to this Top 10 ranking through their efforts in working on New York State’s Prevention Agenda.
• The social determinants of health are an increasing focus of hospitals and healthcare systems as they continue work to improve health outcomes in their communities. Social factors such as income, education, and food security can determine health status, health needs, and health outcomes.
• Genomic medicine is increasingly being used in patient care. Cancer screening and treatment, and rare diseases are some of the areas in which genomics has been transformational. Some experts say that hospitals should consider genomic medicine as they plan to strategize for the future.

• According to data reported to the Office of Civil Rights at the Department of Health and Human Services, hacking or information technology-related incidents in healthcare compromised the records of 111 million Americans.
• Did you know that most hospitals in New York State have chosen to focus their Prevention Agenda efforts on preventing chronic disease and substance abuse, and addressing mental health issues? The Prevention Agenda is a state initiative designed to get hospitals to focus on prevention to make New York State the healthiest state in the nation. If you are unaware of your hospital or health system’s Prevention Agenda efforts, please ask for an update at one of your upcoming board meetings.
• As hospitals and organizations mature, effective boards update how their members are selected-moving away from informal, relationship-based board formation to a more intentional, competency-based process.

• About 70% of patients say they have become more engaged in their healthcare. By 2021, 99% of hospital executives think it is at least somewhat likely that their patients will demand a greater role in planning their own treatment.
• According to the American Hospital Association’s Institute for Diversity in Health Management, although minorities represent 32% of patients in hospitals, they represent only 14% of hospital board members. HTNYS will unveil a new online resource in the first quarter of 2018 to assist boards with strategies and tactics on board diversification.
• As the size, scope, and scale of healthcare systems grow, so does the complexity of effective system governance. Hospitals and health systems should look at competency-based board composition when recruiting new board members.

• As hospitals and health systems grow increasingly complex, they are creating dedicated leadership staff for their boards. These positions include: manager, director, and chief governance officer. Texas Health Resources, a 24-hospital system, is using a chief governance officer to oversee its governing board functions.
• By 2020, mental health and substance abuse disorders are projected to surpass all physical diseases as a major cause of disability worldwide.
• According to a presentation for HTNYS by governance expert Jamie Orlikoff, boards should begin to ask key disruptive leadership questions as they govern through rapid change and complex challenges:
  • How can we save money for our patients?
  • How can we provide value based on how patients define value?
  • How can we give patients a better experience, and safer care?
  • How can we achieve the above and still stay in business?