Clinical Integration and the Healthcare System of the Future

When one speaks on topics like healthcare reform and the future model of healthcare delivery in the United States, we will often hear about innovative technologies that are going to revolutionize the healthcare system and solve all of its inequities.  Technologies that tell your elderly family members when to take their medication; or, tools that allow people to track their medical history via the Internet – these types of things are often presented as the future of the US healthcare system.  The multitude of innovative solutions flooding into the industry on a daily basis promise to enhance the quality of healthcare services and decrease costs associated with these services for patients.

Technological innovation will be a critical component of any US healthcare model that is adopted in the future.  Our medical services are too vital not to embrace advanced tools, resources and technologies that can absolutely make the system better.  But aside from technology’s role in the future of America’s healthcare, the predominant theme driving much of the change within the industry today is what we refer to as “clinical integration.”

Clinical integration refers to the trend whereby hospitals and physicians are aligning through various types of transactions and structures.  This further contributes to the evolving “integrated delivery system,” which refers to kind of a hub-and-spoke delivery model that provides healthcare consumers (i.e., patients) with a vertically integrated, one-stop-shop solution for all of their medical needs.

In plain terms, this means that I can go to my primary care physician for a consult related to the pain in my back, and he will send me downstairs to the radiology department that takes x-rays and sends them immediately back up to my PCP for review.  Once he finds the source of my ailment, my PCP can send me down the hall to meet with one of the hospital’s employed orthopedic surgeons or neurosurgeons, who can walk me through my various options to remedy my problem.   If surgery is required, the specialist can send me to central scheduling, which will coordinate my surgery with the physician’s schedule and the hospital’s operating room availability, as well as take care of pre-registration protocols that arrange everything related to my hospital stay, insurance registration and home health, if necessary.

Taking the example of the integrated delivery system further, in the event that long-term care is needed for an elderly patient, the same health system where a patient’s primary care doctor and consulting providers are employed would also have a long-term care division, which may likely include a Long-Term Acute Care Hospital (LTACH), nursing home, assisted living / skilled nursing or other type of senior care facility.   So, say my grandmother needs a knee replacement; she can go from consulting with her physicians (specialists coordinated by her PCP) to the OR – either in an outpatient setting or more likely for a major surgery in a hospital setting – and then directly into a rehabilitation facility or other long-term care environment, depending on the procedure’s outcome and the physicians’ coordinated care plan.  Throughout this entire process, the patient’s medical charts, records and film are available electronically to every clinical provider that touches that patient until they complete recovery.  Even after that particular episode is complete, all of the relevant information and data will go back to the patient’s primary care physician who manages her long-term health and medical needs, far beyond any single medical episode.

As I have described the hypothetical situation above (which is indeed very much a reality for many patients already and at health systems all over the country that have proactively embraced this model), this model would provide for a much more efficient continuum of care and quality patient management throughout the patient’s various medical milestones and progression.  The idea is that the health system should be able to serve all patients from birth to end-of-life care, with quality and efficiency in regards to everything that occurs in between.

The integrated delivery system is an innovative model that is a response to a system that has reached its limit, in terms of government burden and economic imbalance.  To be clear, clinical integration is a market-driven response to the healthcare industry’s challenges, as opposed to being some grand idea of politicians in a reform package.  The truth is that something like clinical integration is a long-term strategy to addressing challenges with a market-driven solutions and innovation with resources like advanced technologies and new methodologies.  Such a concept extends far beyond the political re-election cycle that drives Washington’s “long-term” vision of public policy.

All that being said, it seems that one of the most critical components is still being left unaddressed as the government tries to keep up with the industry’s evolution towards a new model, and this is the economic value for those providing care within this continuum.  An integrated delivery system does not work very well without the only people that can actually deliver these services (i.e., the physicians) getting on board.

The move towards clinical integration is resulting in one of the greatest periods of consolidation that the healthcare industry has ever seen.  As the health system moves towards becoming the “delivery hub,” executives within these organizations have realized that they must acquire the elements that will give them the scalability to compete under the integrated model.  However, this is not the first wave of clinical integration that we have seen; only we did not refer to it this way when hospitals first started buying medical practices and employing physicians during the 1990’s.  During that first wave of clinical integration, physicians flocked to hospitals because there was a clear and compelling economic case for them to do so.  This consolidation was cut short, however, when the models that hospitals were deploying ultimately dismantled, because it clearly did not make sense for the physicians to be under these arrangements and hospitals jumped into the business of running medical practices, which they actually knew very little about.

The catalyst for integration this time around, however, is different, in that it is being driven by a need on behalf of the physician to turn to the hospital, because the current system has evolved to a point of eliminating any other alternatives.  Perhaps this is not the case for every physician specialty yet, but the emphasis there is that it will likely only be a matter of time until the current model reaches a point where practically all physicians will no longer be able to sustain their independent practices.

For the hospital, the game has changed for them as well, in that they are also being forced into aligning with physicians once again.  This time around, however, they are having to recognize the value of the physicians and their critical role in the hospital’s delivery model.  This means that the hospital and the physician must align together as partners that are mutually dependent on each other, in order to sustain growth and value over the long run.

Size and scale are the wave of the future; however, unless we determine how to compensate the key stakeholders throughout the continuum of healthcare delivery, why should we anticipate any other result than what we have already seen in the past?  My answer would be that in most cases, since the hospital and the physician are coming together as partners this time around, this should mean that there is an equitable level of compromise in any arrangement between these two parties.  Even if a group of physicians are turning to the hospital to purchase their practice essentially as a last alternative, the hospital must still treat them as a partner, thus acknowledging the physicians’ tremendous value.  Moreover, the hospital cannot do this in lip service and manners alone; meaning, they must put their money where their mouths are, specifically in how flexible they are with compensating their employed physicians.

Since the government closely regulates physician compensation from a hospital (compensation must be at fair market value), the range of values that hospital / physician transactions are occurring at is not remarkably wide.  However, the value of these transactions for the physicians does not lie in the numbers alone.  The degree of a deal’s partnership between the parties can often be more critical than the pure economics.

So, what have we learned about the future of the US healthcare system?  First of all, the answer to solving the system’s problems does not fall exclusively in the category of technological advances.  Indeed, these are only an element contributing to a much greater solution.  Second, in order to achieve a model that poses long-term sustainability, there must be equitable value for the medical provider, just as there is for the hospital, the insurance payors and the patients.  And finally, clinical integration is here and likely will stay for some time, so the onus is on us – both as industry stakeholders and in our role as consumers of healthcare – to make sure we get it right this time.  If we want a model that works, so guys like me do not have to come back around in the next five years to dismantle all of the consolidation that is taking place today, then we must determine embrace a model that allows for the greatest benefit across the entire system.  Only then will we truly be able to recognize the healthcare system of the future.

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