Across the healthcare industry, many organizations struggle to achieve economic stability while embracing value-based models of care. As organizations are evaluating their ideal systems of care, service line growth, financial affordability, and overall sustainability, growth fluidity is the capability that will help drive these goals forward. While growth is defined differently by any given organization, 79% of health system executives believe regionalization and comprehensive network design will be the primary drivers to increasing their long-term financial sustainability.1 Addressing sustainability will require healthcare organizations to embrace a growth-fluidity approach to serve their populations and develop a comprehensive network of care focused on value.
Growth fluidity requires an organization to think intentionally – understanding what type of growth best fits your organization’s needs and will best align with serving your community’s needs. There are many variations to growth. Growth fluidity is realizing that there is no singular answer to growth. An organization must be fluid in thought and approach to determine which avenue is best for the organization and the community it serves while identifying the most impactful opportunities that yield long-term benefits. Fluid decisions are multi-factorial and interdisciplinary, requiring provider organizations to evolve from a silo-mentality to more of a community-based approach, both longitudinally and latitudinally as well as vertically and horizontally. In the past, organizational growth meant building a new facility or acquiring a smaller practice. Today’s growth fluidity includes expanding value-based capabilities around a comprehensive system of care, often requiring strategic affiliations, alliances, mergers, and partnerships, in addition to acquisitions. Forty-five percent of health system executives believe consolidation efforts will occur within their market service areas in the next five years.2 Successful and strategic growth-fluid organizations will evaluate these multi-dimensional factors to uncover areas of expansion or collaboration enhancing the value they can provide to their communities.
Factors Impacting the Need for Growth Fluidity
The Healthcare Consulting Practice at Forvis Mazars has identified several contributing factors to an organization’s need to be growth-fluid. The primary factors we see are tied to increasing value for patients and the communities that are served. The following influences are core components to consider for your organization’s approach to growth.
Increased Consumerism
Healthcare professionals are responsible for providing the highest quality and most appropriate care for their communities. Population health will continue to drive every strategic and value-planning decision to determine the health services needs of the community. Healthcare organizations must develop or acquire a comprehensive network of care that meets patient needs as part of their growth strategy.
Reimbursement & Payment Reform – A Shift to Value
In the fee-for-service model of care, a hospital’s profitability is driven by enhancing services related to emergency room volume, surgical case volumes, inpatient admissions, and outpatient visits. Value-Centric Enterprises improve profitability by understanding how to diagnose patients and direct them to the appropriate center of care across the organization’s health system. Increasing accessibility for patients in terms of how, where, and when patients need care will generate future revenue. As the traditional motivators of the fee-for-service model decline, healthcare leaders find new ways to support a new value-based equation focusing on access, quality, and engagement. This will be most important for systems of care supporting non-acute, pre-, and post-acute care systems.
Regionalization
Incorporating horizontal and vertical growth channels will allow healthcare organizations to achieve greater relevance across a broader geographic region with a consolidated services strategy. More than expanding across a physical geographic area, however, regionalization is about incorporating a pre- and post-acute strategy that covers an entire patient population. Consolidating skills, resources, and knowledge will enhance the value of care but also the financial sustainability of an organization while transitioning from the incentivization of quantity to quality.
New & Emerging Technologies
Technological innovation in the healthcare space has skyrocketed in recent years. COVID-19 placed a premier focus on telehealth and at-home care, but innovations like biosensors and remote patient monitoring have and will continue to change how we think about healthcare. These industry disruptors are outpacing the transformation to value. Organizations need to invest in emerging technologies and integrate them within a system of care where they can share these resources across a larger platform.
Many of the largest conglomerates in the industry increased both their revenue and cost savings by investing in new technology, like artificial intelligence and machine learning. Implementing these solutions can help healthcare providers identify opportunities for improvement while reducing costs associated with variations in care and administrative tasks.
Four of the critical capabilities essential to becoming a Value-Centric Enterprise—strategic agility, value-centricity, change clarity, and financial sustainability—are all powered by the fifth capability: growth fluidity. Executing strategic and value-based initiatives will not be possible without organizational growth, whether it be horizontal or vertical, organic or inorganic. The ability to adapt quickly as needs arise will be paramount to creating a comprehensive network of care that meets the needs of an organization’s patient population.
How Forvis Mazars Can Help
Achieving a higher organizational resiliency through inorganic growth requires careful planning and rigorous analysis. Our healthcare team at Forvis Mazars understands these problems because we have helped dozens of providers across the U.S. tackle challenges through enterprise planning, incorporating a system of care design philosophy including mergers, acquisitions, affiliations, and partnerships. Forvis Mazars’ healthcare mergers, acquisitions, affiliations, and partnerships team has the extensive knowledge and skills to help assess and close gaps through de novo development and potential transactions. We can help you evaluate the proper structure, assist with the transaction and with integrating operations to unlock your full potential toward becoming a Value-Centric Enterprise.
- 1Grappling with Growth: Mergers, Affiliations, Acquisitions, and Partnerships, ACHE, March, 2022.
- 2MINDSETS: FORVIS’ Executive Leadership Survey Results