Reinventing the Health System Operating Model

In this “American Hospital Association (AHA) Associates Bringing Value” podcast episode, Kathleen Wessel, AHA vice president of Business Management and Operations, speaks with Eric Kammer, partner at Guidehouse, and John Beaman, CFO for Adventist Health. Their conversation focuses on what hospitals and health systems can learn from Adventist Health and other healthcare providers that are driving the reinvention of their operating models.

Listen to the Podcast

Highlights from their conversation are below.

Addressing the Strategic Gap

During the height of the public health emergency, living in the moment was necessary to address immediate healthcare needs — which included a relentless focus on our communities, the tremendous stress and burnout of clinicians and other staff, critical care bed capacity, and the shutdown of significant services, such as elective surgeries.

Hospitals and health systems were necessarily focused on day-to-day operations, with little to no time to invest in or focus on growth opportunities, technology advancements, or care delivery innovation. Meanwhile, innovators were infusing capital into these areas, said Kammer.

“With this difference in focus between operations and strategy and growth, providers were left with a pretty significant strategic gap,” he noted. “That’s requiring healthcare leaders to ask whether the operating model that has served the company well in the past continues to serve them well today and into the future.”

Because the operating model is the critical link that connects strategy, design, and execution, healthcare leaders are working with Guidehouse to determine what future state operating model could serve them best, both in the short term and the long term.

Focusing on Integration

Adventist Health is a faith-based, not-for-profit health system with about 25 hospitals, several hundred clinics, and post-acute operations across the West Coast. When asked to share what led Adventist Health to change its operating model, Beaman said that it had become too fragmented in recent years, with many elements driven from a corporate level instead of by the people who have a direct impact on those they serve.

"As we've refocused on what the people in our communities need, it's helped us be clearer on what matters most to them,” he shared. “We’re focusing a lot more on making sure our local leadership teams have the tools they need to be relevant in their communities."

The big question, Beaman added, was how to create an integrated platform of care at scale that would offer the best quality and service at an affordable cost. The solution for Adventist Health has been to develop a connected structure through technology and team integration — optimizing the patient experience across all avenues of care to be consistent and dependable.

"A lot of our strategies center on that integration and how we build capabilities to serve each part of the care journey,” Beaman said. “We’ve focused on the value-based arena, physician organization, care delivery, and empowering local leadership to make real-time decisions. And we've had great success in reducing turnover, recruiting people, and creating education and training programs to rebuild our workforce.”

Balancing Operational Demands and Long-Term Strategy

Adventist Health is balancing its need to meet day-to-day hospital demands with its long-term strategy to innovate in the direction that care is headed. This includes building the capabilities to offer services across the full continuum of care and partnering with employers and payers in unique ways to deliver care that meets community needs.

To be more intentional with capital investments, the health system created a Capital Management Council comprised of hospital presidents and operational leaders who decide where to invest major capital on a year-round basis. When members discuss why Adventist Health should, for example, invest in a new clinic versus adding a service line within one of its hospitals, the focus is on what the community needs and where things are headed to minimize internal tensions.

Driving Towards Financial Sustainability

Kammer said that while there’s no silver bullet for achieving sustainability through a reinvented operating model, some commonalities include asking tough questions and recognizing that they may not be able to be all things for all people in their communities. He recommended the following considerations for improving performance:

• Improving the ambulatory footprint, whether centered on surgery, diagnostics, retail offerings, urgent care, or other services, to achieve sustainable growth
• Nurturing a high-performing provider network that aligns physicians and groups with an intentional focus on retaining business that’s already attributed to that particular provider network
• Striving for robust, diversified revenue strategies by expanding portfolio services such as hospital at home or virtual offerings
• Standardizing workforce processes to ensure accountabilities are clearly defined across functions and roles to eliminate redundancies
• Supporting employees with sufficient training and development as people are asked to do new things and change the way they deliver care
• Embracing a comprehensive digital strategy that encompasses artificial intelligence, machine learning, automation, and other forms of consumer enablement and engagement
• Achieving a disciplined operating rhythm featuring routine monthly operating reviews and quarterly strategic reviews to provide discipline to the task of allocating capital in ways that are aligned to vision and strategy