The Age of Transparency and Consolidation

Ted Kloth , MD, FACEP

Chief Business Officer

Published April 23, 2013

The time is coming when consolidation and transparency will reign supreme, and the effects are already being felt throughout the healthcare arena.

Looking at the healthcare landscape and how the major players are reacting to the effects of reform, it is obvious to me that the need to consolidate is becoming a reality for many physician groups and service providers. Health systems are merging with larger health systems and clinical outsourcing groups are entering into joint ventures with their long-time clients to provide care at a lower cost. The rationale behind this shift is the belief that integrated systems reduce costs and increase profits for all parties involved. And with fewer reimbursement dollars at play, it seems most are looking for ways to increase profit margins by doing more for less.

The rush to consolidate services is also driven by another factor of healthcare reform: data transparency. Up until now, an under-performing group or hospital might have been able to fly under the radar. This is no longer the case. Hospital administrators, their board members, competition, and the community at large will all have access to performance metrics online and everyone will be held accountable. As a result, many physician groups are scrambling to integrate their services and produce measurable results.

As a practicing physician and an officer with a physician group, I have seen firsthand the effects of administrators’ having dollars on the brain and access to quality data at their fingertips. Whereas it was once sufficient to showcase successful cases at one or two hospitals, hospital administrators now come with performance metrics for numerous facilities, asking why this one or that one isn’t performing as well as the others. Although my organization has a long-standing commitment to quality and integration, more than ever it is necessary to translate that commitment into performance. Transparency is a game changer.

Fortunately, my group has the economies of scale and resources to translate our commitment into results. We have focused on developing initiatives to improve performance across the Acute Care Continuum while simultaneously aligning our organizational goals with those of our hospital clients. We listen to them to identify what’s most important and adjust our strategic plan accordingly. By focusing on better integration in this era of transparency, we’re able to justify our costs and deliver on our promises. A key component that is the basis of a successfully integrated system is the level of trust that emerges between the people and departments that are working together.

It is important for all physician groups and service providers to understand that administrators are not looking down a blind rabbit hole anymore. Without an organization-wide dedication to improving performance and integrating across departments, it will grow increasingly difficult to justify one’s value. We all must understand that what worked yesterday may not be sufficient today; and if we don’t evolve, we will face extinction. On the other hand, working collaboratively and with high levels of trust, while also utilizing advances in data analysis, will create a competitive advantage.

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