Health Care Landscape
Sg20 Then and Now: Sg2 Thought Leaders Reflect on Past Projections
Editor’s note: Answers have been edited for clarity.
Sg2 was formed in 2001, and, today, our cutting-edge expertise, analytics and tailored consulting offerings help health industry leaders anticipate health care trends and provide them with unparalleled insight into local market dynamics. We are just one of the companies that founder Michael Sachs started—and grew—with his vision, passion and leadership. Michael passed in 2019, and we are committed to honoring his legacy by doing what we were trained and inspired by him to do best—make bold predictions, create industry-leading tools and challenge the status quo in our quest to transform health care.
In 2008, Sg2 presented a talk called Health Care 2020: Tomorrow’s Clinical Enterprise where our experts predicted how the clinical enterprise would be recast over the next 12 years, as the health care industry redefined care delivery in response to the payment landscape, demographic realities and advances in technology.
In honor of Sg2’s 20-year anniversary, we asked our experts and leaders to revisit the presentation’s top ten takeaways and answer the question, “How did we do?” Read on below to explore their responses to the first set of five takeaways, then check out our second blog post for the rest!
Learn how some of our experts found their way to Sg2.
Doubling of the 65+ Market Will Reshape Health Care
Madeleine McDowell, MD, FAAP, Principal and Medical Director of Quality and Strategy
The doubling of the 65 and over market was clearly something that has reshaped health care. We've seen that the driving demand in the elderly has really been a growth opportunity but also has challenged hospitals’ ability to manage length of stay, throughput and margins because [of] sicker patients—but even in spite of that, we've seen a tremendous shift to the ambulatory world.
Joan Moss, RN, MSN, Managing Principal and CNO
That is absolutely true. The 65+ demographic is going to change the health care system—they are already, and they are going to stress the entire system again. What we underestimated: we did not anticipate the acceleration of obesity, depression and other behavioral health [issues] or mental illness across the population. In three years or five years, we are going to basically have 50% of the US population [as] obese, and, therefore, all the chronic illnesses we have historically talked about and associated more with the aging population—age has nothing to do with it anymore. Knee replacements, heart failure, hypertension, diabetes—[for] all of those, the incidence goes all the way down into our adolescent population. It was correct, we just didn't forecast the magnitude of what was going to happen because of the demographic changes in the biological changes we're seeing.
Payment Will Spur Hospital-Physician Alignment
Steve Jenkins
This is kind of true throughout [Sg2’s] history, when we're not so right it's usually because we're too early—we’re right, but we're too early—or we’re just a little too idealistic, and we need to temper that with the reality of how change happens in complex systems. Like payment evolution: payment has evolved since 2008. It hasn't been the revolution that we might have thought it would be, it's been slower. It's hard to figure out the details of that. We've got consulting teams working with [Sg2] members on that today, but it's been slower than any of us anticipated in 2008.
Joan Moss, RN, MSN
The payment landscape has been slower in terms of value-based care than we were thinking at the time, but we expect some pickup of acceleration when we really get through this pandemic. So yes, we were right to say it was going to move into bundled arrangements, but more than just bundles, it was going to move into a value-based care business model. We got bundled arrangement right, and we have success in procedural or surgical bundles. We have, frankly, not much success in medical diagnoses. That's an area of concern when you do population health—if you can't manage the medical diagnosis over time.
Bill Woodson, Senior Principal
I think there's always an optimism about the evolution of the payment system—of the reimbursement system and what CMS and employers are going to do—and it still was moving at a glacial pace. So I think what we didn't want to admit at the time—and I think more readily admit now—is that we're in the middle of a 30-year transformation of the reimbursement system, and not something that was going to happen relatively quickly, even though we try to raise urgency around it. We had stuff on bundled payment, then the first bundled payment models, and it's still going on. [In the future] we wouldn't even use the terms anymore, so it's lingo of the moment a little bit about, even, value-based care—we still use it, but I think we’ll have even more of a prospective-based payment system. We're on a continued journey to get to more risk on the shoulders of providers, but we will continue to overestimate when this is going to happen.
Organizations Will Reposition to Succeed in 2020
Steve Jenkins
The thing we absolutely got right in spades is the System of CARE. It has taken on this life of its own in the last 12 years; it's become the organizing framework for how so many of our members plot strategy, how they develop real estate, how they have conversations with leadership and board. At the time, as I remember back in 2008, we were really just trying to do two things. We were trying to help our members focus more on the growth opportunity in need in the ambulatory services market—because they were still so inpatient focused back then—and secondly, we were trying to help them think about investing in service locations off their campus because the campus kind of was the anchor, and that's all anybody could think about—what's the master facility plan for our campus. We were trying to challenge them: No, you need different types of facilities of different sizes, scaled to deliver different services out in the communities that you serve. So [the System of CARE] kind of had those two purposes, both of which I think have borne out. The ambulatory side of our members’ portfolios has mushroomed—they've made huge investments in that infrastructure, and they’ve made huge investments in facilities flung across their communities. To me, that's the biggest, most lasting legacy of Health Care 2020: the System of CARE. It came true. It actually came true.
Madeleine McDowell, MD, FAAP
“Dynamic systems of care will emerge to meet patients’ needs”: that's probably the most profound change we saw in the last decade, in that the hospital-centric care and the focus hospitals had—we forget about this, but in 2011, when you think of their percent of revenue, the percent of strategic imperatives and attention, [it] was all inpatient, weighed much higher on the inpatient side than the ambulatory side. And then they developed many more areas across the ambulatory setting, and part of that was also due to physician alignment—as we saw in the last decade, a big change in bringing back primary care and specialists to more hospital system networks through, oftentimes, employment but also through other alignment mechanisms. And this is really important.
In fact, we knew [the shift] was coming back in 2005 and 2006, and so we changed our CARE Grouper from a DRG grouping to that CARE Grouper that we have [now] in 2007. It was quite a dramatic change for us, and it also was at a time when nobody else was doing it. The main reason for it was so that we could be able to forecast trends and understand volumes across the entire System of CARE, not just the inpatient side, so the System of CARE diagram came around that same time [as] an emphasis on understanding [that] your hospital is only one piece of this—you have to have the entire care continuum in mind when you're looking at strategy growth opportunities in the future. So the two together, both the [CARE] Grouper and the System of CARE, propelled us into a direction that was really focused on health systems understanding the entire care continuum for a patient and understanding how to connect those dots—to really have more of a presence in the ambulatory setting, so it would support the growth in your hospital, but it would also allow you to have a lot greater impact on the care pathways and the management of a patient over time.
Jeff Moser, Principal
[Something] I think we did really well, and I'm really proud of the way we thought about it, was the System of CARE and the touchpoints that will change and the needs [that are] growing across the continuum of the System of CARE. If you look at those sites of care that we described: we were bullish on care moving to the home, and I think that's absolutely coming to bear; the community/lifestyle center with education, social networking, problem solving, behavior change. Maybe some of that was accelerated for us through the pandemic, but most of the health systems we talk to now, this is exactly what their boards are talking about—they're talking about how they’re engaging with the community. Access clinics: we stayed pretty true to this throughout the years, but it's also something that started to expand at pretty much the pace that we predicted it would. I remember interviewing Michael Sachs about eight years ago, and I asked him if he had a blank check, what would he do? And this idea of the diagnostic center—he said he would basically take advanced diagnostics, virtual care, pharmacy, all packaged into one kind of center. You think about what Walmart is doing, and lab diagnostics moving into an easy, accessible site of care—I think we're kind of right there.
Then you think about what's going on with the shift of inpatient to outpatient care—we were talking about ambulatory surgery centers 12, 13 years ago, [along with] low-acuity procedures moving; the need for care coordination across that continuum; putting people on the right side of care, with critical care then being left at the hospital; higher-acuity patients inpatient and the ICUs expanding—and that's exactly what's happening and continuing to happen very rapidly right now.
Bill Woodson
For better or for worse, our members are still more focused on their buildings than we would like them to be, but it's reality—billions of dollars of investments. So there's still kind of the old definition. And when we first came up with the System of CARE concept, we talked about what the line meant in between the sites of care, and I think a lot more of it now is about the line. It's the connections, whether you call it care coordination or what we're doing with data as ministry or telehealth/virtual health sites of care. It definitely still has some runway—and with some stronger analytics around it, which is what we're aiming for right now as a company—we can keep playing it out and keep letting it evolve.
Information Technology (IT) Infrastructure Will Define Health Systems
Madeleine McDowell, MD, FAAP
The information technology infrastructure I thought was unique because of the “virtual connections, not locations, will provide structure,” but I think what I would look at is they will better define an organization in terms of how they work with all of their System of CARE [nodes]—when they work with other providers across the system of care, they're using virtual connections more and more—as well as how they will distribute their care to patients and consumers. It was happening, and we were projecting it to happen, and then one of the silver linings of COVID was this impetus to jump to virtual. And there's been lessons learned from that that have allowed providers to feel more comfortable with it; patients to feel more comfortable with it; payment from CMS now, which is now going to go through 2023; and also just people committing to that infrastructure that they needed. It's not a lot, but it is infrastructure you need to be able to do this better, and they got better at it.
Jeff Moser
Virtual Connections, Not Locations, Will Provide Structure
I like the way say how the IT infrastructure will define health systems, and how all of that connectivity isn't just bricks and mortar, but it's the information flow that's really defining the System of CARE or enabling the System of CARE to work—and we hit that. It's exactly what's happening now.
Chief Medical Information Officer Will Lead Care Standardization and IT Planning
I’d argue we probably got the organizational chart wrong, generally speaking. I’m sure, Joan [Moss] probably had some strong opinions about the chief nursing officer be reporting to the CIO. That would not happen. So if I had to rewrite the document, I think I'd push back on that one now.
Staffing Shortages Will Require Productivity Gains
Justin Cassidy, PhD, Senior Director
“Demand for primary care physicians and nurses will soar.” We saw the opposite over the last decade, and I was reading a Merritt Hawkins report yesterday that showed family practitioners’ demand for recruitment tanked, especially in the last year. But even before, there was a clear downward trajectory. So while there are primary care shortages and primary care primary care deserts—certain areas of the country where there are literally no primary care providers or very few of them—there certainly is demand for them. But the supply is not really there, and it's because the health care entities that be can't figure out how to make money off of primary care physicians, I think.
Steve Jenkins
We also talk in the publication about because of clinical labor shortages—which, of course, absolutely have come true—we'd have to create big productivity gains, and how we deploy scarce clinical talent to take care of more patients with more complex needs. And we have gotten more creative about how we use nonphysician professionals, but the productivity gains have been slow and sometimes elusive. So I think we have work on that front. How do we squeeze more value? More speed? More care for patients out of a really scarce clinical workforce?
Madeleine McDowell, MD, FAAP
Workforce has become a huge issue, and where I see this playing out is the team-based care, and team-based care allowed providers to practice more at the top of their license, to be able to see more complex patients or more patients. In this last decade, we've come a long way. I still think there's going be a lot of room to improve this area, because there needs to be some more aligned incentives and payment so providers, doctors feel comfortable handing over a lot of stuff to an advanced practice provider, but we've come a long way.
Jeff Moser
The one that we got wrong, in my opinion, is the physician panel. We have the patient types, and that's right—the way we coordinate and look at the different types of needs of the patients—but the idea of physicians managing more and more patients just hasn't really played out. In fact, it's literally gone kind of the other direction [with] concierge medicine. We didn't really talk a lot about that, and that has been playing out for the last few years, even pre-pandemic, where people are paying for more exposure to their physician or midlevel provider, so the panel sizes have actually either stayed right where they are at 2000 or gone down in some cases.
Joan Moss, RN, MSN
We have not addressed this. We have made some progress forward through, I would say, top-of-license practice, for example, improving physician productivity when correctly deploying advanced practitioners or scribes, or more voice recognition and documentation. But have we achieved the productivity gains that are needed? No. From the latest Vizient member survey, this is the number one concern of the C-suite: staff retention, productivity, hiring and replacing staff pretty much across the board.
Continue the Sg20 celebration…