Point: Making the 'Big' Feel 'Small' Furthers Health Care Quality, Excellence and Savings
During the financial crisis of 2008, the phrase “too big to fail” entered the American lexicon. At the time, it referred to a business – specifically one of the ‘big banks’ – that had become so large and integral to the American economy, that if it ever failed, the effects would be so catastrophic that the federal government could simply not allow it to happen. If it did, economic ruin would come to the American people.
Now, nearly a decade and one long recession later, the phrase “too big to fail” has come to mean something a bit different. Today, those words are often invoked as a prediction that says any large organization is destined to become bloated, inefficient and crumble under the weight of its own largess and bureaucracy. In essence, the larger the organization, the more likely it becomes too big not to fail.
That premise does not apply to healthcare.
Merging Like it’s 1999
When it comes to health care, bigger is better. Health systems have been around for a long time. Large integrated networks began with Kaiser Permanente in Oakland, Calif. back in 1945. Large health systems across the country slowly evolved. More recently, however, our nation’s health care has reached a crisis point, and mergers and acquisitions have become the rule rather than the exception.
The Affordable Care Act (ACA) sparked a frenzy of hospital mergers, accelerating the pace of consolidations to the point where a record number of hospital deals were consummated in 2015 (112), more than at any time since the mid-to-late 1990s. And, there is no sign of it slowing down. Large health systems are here to stay and for good reason.
Looking out over the national health-care landscape, we can see large regional and national systems have continued to grow: HCA is now at $39 billion, Ascension Health is at approximately $17 billion and Community Health is around $19 billion. My own organization, Northwell Health, is now at $9.5 billion and growing.
To be clear, it is not only on the provider side that we have seen growth through mergers. The big insurers are consolidating as well: Aetna is merging with Humana; Anthem and Cigna are consolidating and United Healthcare remains the largest health insurer in the country. Aside from the ‘Big Three’ insurers, consolidation has occurred among suppliers and manufacturers, as well. It is one of the reasons that scale is now and will become even more important in the years to come.
Because the market is more competitive than ever before, there is still a great deal of uncertainty on how the players will be aligned once the dust settles. No matter how that alignment ultimately plays out, one thing is certain: both scale and size will be needed to not only compete in the marketplace but also to deliver added benefit and a greater level of quality to the patient.
Increased Market Share Improves Quality and Savings
Scale allows for increased efficiency in back-office and other functions, further reducing expenditures. Most importantly, when these savings are coupled with the internal bench marking on efficiency and quality metrics available at larger systems, providers can deliver higher quality care at reduced cost. The data set available at large health systems gives added weight to quality metrics and evolving best practices and can directly influence a health system’s ability to manage and subsequently improve a population’s overall health and wellness in a way that small providers cannot hope to match.
With greater resources to enhance care models, a health system’s commitment to smart growth benefits patients and populations at-large. The ability to offer consumers a vast network of inpatient and ambulatory care and centers of excellence in areas such as neuroscience, cardiology, oncology and multiple other disciplines, and also have the wherewithal to add the components of research and ongoing clinical and staff education, helps ensure that a health system remains on the cusp of latest innovations and treatments. Because of those factors, the larger health system is better equipped to provide a full continuum of care and in a better position to manage population health in a risk-based insurance world.
Centers of Excellence
The health system’s ability to create centers of excellence and avoid duplication of services is an essential component of improved quality healthcare for patients. For high-end neurological, cardiac or oncology services and procedures, volume is essential for ensuring and continually improving quality. In addition, a large, aligned and committed referral base allows for the sharing of expertise, resources and best practices. It provides clinicians with the ability to focus on enhanced patient care through the structural benefits of centralized shared services, integrated service lines and external partnerships.
The benefits do not end there. Another advantage intrinsic to larger systems is that increased financial resources can be directed to improve the range of services for the communities we serve. For Northwell Health, this means investing in important areas that enhance the community’s quality of life, such as military and veterans affairs programs and employment services, park safety and STEM-related (Science, Technology, Engineering and Math) events in local schools, among others. Health systems can also be strong advocates in the areas of government regulation and health policy. The diversity along the continuum of services for large health systems (and the elimination of duplication) also enhances the ability to manage a population’s overall health and wellness, while freeing resources that can be used strategically to target issues on a community level.
The Reality of Large and Small
Health systems, as a result of mergers and affiliations, are able to diversify and promote an array of services that allows them to access additional revenue-producing streams. This greatly enhances the potential for continued growth, the investment in new technology and the continued improvement in quality of care and innovation, which is difficult for smaller hospitals to do. At Northwell Health, for example, in addition to our 21 hospitals, research institute and a recently added medical and nursing school, we have expanded our ambulatory network to more than 450 locations, entered into joint ventures with like-minded providers and started our own insurance company, CareConnect.
Of course, for even the largest health systems, challenges remain. Perhaps the biggest of these is in keeping the benefits of health-care growth local. Our organization tries to keep its finger on the pulse of community needs through our physicians and the extensions into the communities we serve through multiple ambulatory sites, urgent care centers, community partnerships, affiliations and wellness programs. We are able to remain ever responsive to those needs, so that even as we grow and expand, our system is able to deliver higher-quality, more-efficient, personalized care to more and more people.
For us, healthcare means providing the right care, delivered in the right place at the right time. As a $9.5 billion organization, providing care to more than 1.8 million people annually, with affiliations from Australia to Sweden; Florida to Cleveland; and throughout the New York metropolitan area, Northwell’s commitment to better health and wellness means looking at the big picture while simultaneously ensuring that healthcare always remains local: making the big feel small. In that way, we are able to retain the intimacy and sanctity of the clinician-patient relationship.
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