NYU Langone Medical Center / CC-BY-SA-3.0

The New York Times is reporting that “NYU Langone Medical Center, a highly specialized academic medical center, and Continuum Health Partners” have signed a memorandum of understanding in order to explore a potential merger.  The two organizations stated, “that a successful partnership would achieve economies of scale that reduce health care costs while enhancing the quality of care and allowing for investment in new facilities.”   Given the continued pressures on healthcare reimbursement and efforts to reduce total healthcare costs, I expect to see other organizations explore similar strategies.

Community Health Systems’ (CHS) purchase of MetroSouth Medical Center caught my attention.  The Chicagoland healthcare market is one of the most fragmented in the country and many communities in south Chicagoland do not have the attractive demographics that a for-profit health system often target.  It will be interesting to see CHS’s strategy to compete in this market.

Poudre Valley Health and University of Colorado Hospital just announced a merger to form “University of Colorado Health.”  The merger addresses the challenges to revenue growth posed by accountable care.  As reimbursement shifts from volume-based to value-based, many providers will find fewer growth opportunities. 

By merging, Poudre Valley and University of Colorado will expand their revenue base while consolidating duplicate services to achieve economies of scale.  The move also expands Poudre Valley’s continuum of care to include academic medicine.

 A recent opinion in the New York Times predicts that health insurance companies will be uneccessary by the year 2020.  The authors claim that the formation of Accountable Care Organizations (groups of doctors, hospitals, and other healthcare providers) will eliminate the need for insurance companies.  A.C.O.’s will be responsible for a large group of patients (risk-pooling) and “…insurance companies will no longer be needed to handle complicated billing and claims processing, nor will they need to be paid a fee for doing so…”

However, insurance companies are much more skilled at collecting and using data than most health systems.  In order to eliminate the need for insurance companies, A.C.O.’s will need to get much better at using data.  Providers should also consider the information technology investment required to implement “enhanced information systems to track patients and figure out how to deliver more effective care.”

One of the first steps of strategic planning is evaluating the existing mission and vision statements.  These statements provide guidance for the overall direction of the organization and set the tone for all strategy development. 

A mission statement should clearly describe why the organization exists and specify who the organization serves (e.g. “Cloud Hospital exists to provide quality healthcare services to our 3-county region”).  It also helps to consider whether the organization’s focus is on the health services within its institution, or if population health also plays a role in its purpose.

A vision statement should provide a roadmap for the organization’s future.  It should be memorable, challenging, and provide hope (e.g. (“Rainbow Healthcare will be a national leader in quality”).    

If the existing mission and vision statements do not meet these characteristics, then new statements should be developed to ensure future strategies will fulfill the organization’s purpose and aspirations.  During this process, it’s important to get stakeholder input and to develop statements that everyone can get behind.  Once finalized, these statements will provide direction for the rest of the strategic plan, and help to convey the organization’s goals to staff members.

Highmark is investing $1 billion to transform itself from an insurer to a provider.  Half of the investment will support West Penn Allegheny Health system.  The remaining $500 million will be used to develop network of medical malls, ambulatory care centers, and hospitals.

This strategic move will greatly impact UPMC (the dominant provider in the area).  Hospitals and health systems in similar markets should take note of this move by an insurer and conduct a scenario planning session.

Catholic Healthcare West has announced an end to its status as an official ministry of the Catholic Church.  This strategy will certainly allow the organization more flexibility as it seeks opportunities for growth.  The change in organizational structure takes place after several years of discussions, which highlights the significance of the change and the difficulty in making quick strategic decisions in many healthcare organizations.