Healthcare Evolution Today: The Emergence of Strategic Regional Organizations

The healthcare marketplace is changing in subtle but significant ways. Consolidation is happening through mergers and acquisitions, but other modes are also in play. As you engage healthcare providers, how well do you understand the concepts of clinical integration, and network formation?

Your clients in the department often rely on you to keep them focused on the important aspects of market changes that affect them. In TIGI’s latest blog post, readers learn what Strategic Regional Organizations (SROs) are, how they are affecting Value-Based care changes, and how to utilize your knowledge to increase business in this evolving market.

The Accelerating Transition: From Volume to Value Creating New Networks

The current transition from Volume-based payment toward Value-Based payment, including Value-Based Purchasing is a significant factor in driving your organization’s behavior, planning, and strategic direction.

TIGI sees remarkable increases with all kinds of alignment activity:

– Clinical Integration without central ownership is one important type of network formation and it is the new frontier in healthcare management.

– Organizations are striving for alignment, complimentary capabilities, and synergy by forming Strategic Regional Organizations (SROs).

– SROs are increasingly going to affect your business, and therefore, it is important to understand what they are, and how to anticipate their activities. Whether SROs compete with your business or not, considering how to smooth the transition to value-based care remains an imperative.

Strategic Regional Organizations (SROs)

SROs is a new industry term, and it was coined by our colleague Howard Peterson. These organizations are special types of networks that maximize alignment with or without ownership of constituents like physicians, groups, hospitals, and other provider entities.

SROs exist to enable their constituents to operate and achieve economic benefits from a population health care delivery orientation.

SROs:

• are not necessarily ACOs, or Medical Homes, but they can include these entities.
• span a continuum from a single to multiple provider organizations that strive to increase scale and competitiveness
• regionally focused
• require a level of overall interdependence to achieve clinical advancement, operational efficiency, and financial performance
• form around a payer program, an IDN/IHN affiliate strategy, or even among neighboring facilities seeking hybridization of Academic and Community medical centers

Whether your client organizations are pursuing a SRO strategy, or will be forced to react to one, your actions in sales and marketing should be planned by considering the following

Five things you should do to manage the volume to value transition:

There are a few simple things to keep in mind as we approach increasing emphasis on Value-Based payment in 2016.

1. Explore your best customers, and understand what they do differently, so that you can share best practices in the solution application and implementation.
2. Begin considering how supply decisions can affect your customer’s competitiveness.
3. Find a way to affect value analysis from a population-based cost of care delivery perspective if your solution can make an impact there.
4. Determine how you solution can enable infrastructure expansion and sharing; if you sell capital equipment, maintenance, or other services, you have a lot to do in this space.
5. Determine where current capabilities of your customers (Lab, Radiology, O.R., Security, IT, EVS, Revenue Cycle) can be shared with other organizations on a cost-plus basis.

Thinking a bit more broadly about your solution can open a new pathway to create a compelling value proposition. You are only limited by your understanding of the market, the application of your technology, and your creativity. We are here to help you find clarity in those areas, so let us know if we can help.

By:

Sam O’Rear
Total Innovation Group Inc., Senior Partner

and

Gunter F. Wessels, Ph.D., M.B.A.
Total Innovation Group Inc., Practice Principal, Partner