The Boston Globe recently ran an article discussing layoffs at Baystate Health, a large health system in Western Massachusetts. The system is planing to lay off 300 employees to try to close a $75M deficit. According to the Globe, the deficits are mainly driven by declining Medicaid reimbursement, but, more interestingly, by a $23M hit to Medicare revenue driven by a mistake made by Partners Healthcare, a health system on the other side of the state.
Here’s the fascinating backstory.
I recently had lunch with an experienced physician executive from a large academic medical center. He told me that his organization was trying to migrate from fee-for-service to risk, and that management had appointed a bunch of large committees to oversee everything from a new cost accounting system to the development of multiple external partnerships. Continue reading
Communities don’t think, don’t believe, don’t want, don’t have needs, don’t have interests and don’t make decisions. Only individuals have minds that generate desires and needs – and only individuals can make choices and decisions. Harry Browne- Libertarian Candidate for American President, 1996 and 2000
When I visit my European in-laws, some who work in healthcare, I’ll often regale them with American Healthcare Horror Stories. They’ve heard the one about the $25 Aspirin and the $117,000 bill from the assistant surgeon in New York. They’ve also heard the $1.5M surgical robots now doing many surgeries about as well as they were done earlier, at far higher cost. (Blogger Paul Levy has stayed on top of this story). They laugh when I tell them about the $235 Million proton accelerators being put in around the country, despite the lack of great data to support their use in many cases.
A few months ago, I wrote about how healthcare is poised to segment according to cost and service levels– and that we will likely begin to see healthcare brands emerge that appeal to price-conscious consumers looking for reliable, basic care. My suspicion was that US healthcare is now facing its “Southwest Airlines” moment, where nimble and lean competitors will soon undercut inefficient legacy systems for market share.
Around the country, for every health system that is successfully navigating the early years of value-based healthcare, there are several others that are failing– even though many don’t yet realize it. These failing organizations can’t or won’t restructure themselves to deliver effective, efficient and affordable care.
I’ve come to the conclusion, after observing struggling systems, that two basic characteristics are necessary for systems to transform themselves in response to external pressures: these are execution and motivation. Successful systems have both of these characteristics in spades: failing systems suffer from an absence of one or both.