HSG has released the whitepaper “Developing YOUR Clinical Integration Strategy: A Hospital Executive’s Guide to Preparing for Health Reform,” which addresses how hospitals and health systems should evaluate what clinical integration will mean to their organizations, and how to leverage that into a strategy for success under health reform.

Clinical integration is a strategy, not a goal. It is a strategy that will enable your organization to respond to healthcare reform, and ensure that a changing marketplace will not negatively impact your financial health. With a clinical integration strategy in place, we see four ways to leverage your organization’s skills into increased reimbursement and growth:

1.  Focusing on Making Medicare Volume Profitable

Medicare volume is a financial burden for most hospitals and physicians. Based on our client experience, most hospitals receive between $0.80 and $0.85 in revenue for every dollar of cost when serving Medicare patients, making serving Medicare patients a drain on hospital operating margins.

With the theoretical rise of healthcare insurance exchanges accompanying the mandate in 2014 and the possibility that their payer rates could approach Medicare rates, the importance of making Medicare volume as profitable as possible has never been more critical.

Your clinically integrated organization should be well-positioned to manage disease and, in turn, utilization for these populations, thereby lowering costs and allowing your organization to, at the least, break-even on Medicare.

2.  Engaging Self-Insured Employers

With costs of healthcare rising, self-insured employers are continually looking for ways to reduce costs. Engaging these employers in discussions to see what mutually beneficial arrangements can be explored is a great first step toward driving their volume to your physicians and hospital. Alternatively, ignoring these relationships is a great first step toward losing what volume these employers provide to a competitor.

Your clinically integrated organization should be ideally positioned to help manage the employer’s population, thus driving down costs for the employer. In turn, this should position your organization to reap the benefit of increasing your commercially-insured patient base.

3.  Engage Payers

Partnerships with private payers will be important to producing value from a clinical integration model. It is important to engage them to determine where their frustrations lie. Are there disease categories that are of particular concern to them? Services which are over-utilized? Define who you wish to work with, and engage them. Additional payments for the medical homes you’ve developed may be available. Shared savings for managing disease may be available.

The sooner you connect with these payers, the less risk that your competition will be first to the table, and that you will be boxed out of this market.

4.  Shared Savings Arrangements/Bundled Payments

Risk-bearing models such as Shared Savings models and bundled payments represent opportunities for leveraging your clinical integration strategy. CMS has developed both ACO models and bundled payment models for organizations to receive higher payments in exchange for downside risk. Similar models have sprung up in the private market, particularly with Blue Cross Blue Shield, in a number of states.

Exploring these opportunities, and perhaps helping structure them, can lead to success.

As a leader in hospital/physician alignment, HSG has helped numerous hospitals and health systems grow and leverage their alignment with physicians into success for their organizations. After reading this paper, please feel free to contact us to discuss YOUR clinical integration strategy and how HSG can help you develop and implement it.


Travis Ansel

Chief Executive Officer and Managing Director, Strategy