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How Can We Afford the Affordable Care Act?

Posted by Guest Contributor on Aug 15, 2013

The Oxford Dictionary defines the word “afford” as “the ability to do something without risk of adverse consequences.” It is that very element of risk that has caused many to pause as the impact of the “Affordable Care Act” is slowly and deliberately revealed over the next several years.Who owns the risk? The healthcare provider? The insurance provider? The patient? The government? The most likely answer is “All of the Above.” But what does this all really mean to these stakeholders – especially the healthcare providers in the United States, who have been responsible for consistently delivering the highest level of healthcare in the world, under an (undeniably) unsustainable business model?

There have been hundreds (if not thousands) of uncertain predictions made regarding the impact of The Affordable Care Act on the design, construction and operation of healthcare facilities in the United States of America. It seems that the only thing for certain is uncertainty. While the reimbursement landscape for healthcare providers remains murky at best, it is clear that healthcare providers cannot “afford” to sit on the sidelines and wait for all of the answers before making important strategic decisions with 100% certainty. It has been observed that the old business models have essentially lulled healthcare providing organizations into comfortable and predictable operating patterns over the years that did not require organizations to take on any significant amount of risk – especially when compared with other industries in the developing technological world. So, it is natural to suggest that healthcare-providing organizations may want to look towards the trends in the general commercial marketplace for some cues regarding successful approaches to the way forward.

Stethoscope and Broken Piggy Bank

The most common denominators of successful businesses are innovation and agility – the ability to stay ahead of the wave of change with intelligent and informed thought followed by bold action, while quickly adapting if / when the wave should catch up to the organization. For an example, let’s look at the difference between Blockbuster and Netflix in the entertainment industry. Blockbuster – which has been in bankruptcy since 2010 - did not anticipate the wave of change in its marketplace and reacted much too late to what was apparent to even the casual observer. Netflix anticipated and acted on the change from physical to virtual media, and has been able to successfully rebound, with its stock trading close to its all-time high levels in 2013. What did Netflix do that Blockbuster did not do? Rather than just guessing correctly, it is more likely that Netflix leaders anticipated change based on the limited available data, in order to make critical decisions in a timely manner – and then took bold and decisive action to position itself for the future. Staying with the entertainment industry, one would think that movie theater chains should be out of business by now, since entertainment can be accessed instantly via the internet at low cost. However, the major movie theater chains have taken bold steps to invest billions of dollars in their facilities to create entertainment experiences that will never be replaced by virtual media. The list of successful innovators in other industries could go on forever: Southwest Airlines, Google, Apple, Disney, Amazon, Target, Wal-Mart, etc. They all share the common characteristics of innovative environments and agile operating models, combined with the fortitude to take bold and decisive action based on the limited information on hand.

Clearly, these examples are not directly transportable to the complex world of healthcare delivery, which is required to manage the very nature of our human condition in what is becoming an even more regulated environment. But there are aspects of these examples that are indeed teachable, and they are found in the innovative application of technology and resources in response to basic human needs and desires. The good news is that people will always “need” healthcare. The key is to develop and offer healthcare services that are beyond “needed” into to the realm of products and services that are “valued” and “desired.” Amazingly, Apple was able to create a revolution by offering a tablet computer that was technically not even “needed.” By offering a product that is so “desirable,” Apple has essentially created a product that people feel they “need.” Successful healthcare organizations will be those that develop platforms that respond to – and anticipate - these basic human needs.

Here are just a few examples of how these concepts can be applied to healthcare delivery:

Convenience and Access: The nature of the modern family has changed dramatically over the decades. Time has become the most valued commodity in the busy lives of the modern family. Organizations that respect the time of its patrons will be most successful. Already, we have seen healthcare organizations respond to these needs by beginning to offer convenient bundled services in outpatient environments that are more readily accessible to patients and families. Kaiser Permanente is at the forefront of this convenient care concept, but other organizations are catching on quickly. Successful organizations will be those that can understand how to efficiently re-tool their service brand and offerings to cater to the changing nature of its paying customers.

Quality and Efficiency: It is no secret that the Affordable Care Act is requiring accountability of healthcare organizations when it comes to quality and service, with the advent of the ACO (Accountable Care Organization) reimbursement models. As most have realized, this model is not just about quality outcomes, but it is more accurately described as the efficient use of resources to produce quality outcomes. The “leaning” of healthcare delivery processes already has been in play for several years in anticipation of these conditions. Furthermore, where there may have been incentives to get patients into beds in the past with some models, successful healthcare organizations are now embracing the notion of keeping people healthy by offering services that maintain and improve the basic health of its members. For example, wellness programs are popping up like weeds throughout the country, and some healthcare organizations have been caught flat-footed in response to this trend. In the 1990s, traditional healthcare organizations dabbled in the world of developing “wellness centers,” relying on the traditional reimbursement models that often prevented these centers from flourishing. Successful organization will capture this market with innovative wellness service offerings that are appealing to customers and their insurance providers.

Value and Service: Under any reimbursement model, successful organizations are those that receive proper rewards for providing superior value and service to the patrons of the organization. One would imagine that people in general “value” their own healthcare, but in the absence of a fee-for-service environment, it is challenging to create a real sense of value. Many people quick to spend thousands of dollars on the maintenance and repair of an automobile pause when faced with similar costs for their own healthcare. The challenge is perceived value of service. With the understanding that reimbursement for basic healthcare needs will be subject to the regulatory environment for the foreseeable future, there is still much room for healthcare organizations to create a sense of value for paying customers by providing superior services that are truly valued. The hospitality industry has mastered this art by providing tiers of branded services to a public that is as varied as the colors in a rainbow. Successful healthcare organizations are developing specialty (often elective) branded services that appeal to a sufficiently sized base of patrons, so as to provide real and desirable value. This basic tenet will always be in play, with or without the Affordable Care Act.

Flexibility and Adaptability: With all of the uncertainty associated with the Affordable Care Act, the need for flexibility and adaptability is at a paramount level. This can be applied to the operating models and to the appropriate development of facilities in support of efficient and lean healthcare delivery operations. However, it is also important that the development of appropriate lean work processes do not drive facilities solutions that are so customized so as to compromise flexibility in the future. More often than not, lean work flow processes can be accommodated within a flexible facility framework, with proper thought and planning. Health care organization should take great care in developing sustainable and flexible facilities that can readily accommodate changes, whose nature may not even be able to be anticipated for years to come. The Gonda Building at the Mayo Clinic in Rochester, MN, is a shining example of a building designed with a flexible chassis that has accommodated significant modification without compromising the essential nature of its organizational integrity which includes discreet zones for staff, services, patients, families and visitors.

This list of examples is only limited by the imagination of innovative thought leaders who can stay ahead of the wave of constant change. Of course, the variables involved in the healthcare industry marketplace are much more complex when compared with other industries, and the appetite for “experimenting” is limited in this risk-adverse environment.

However, the risk of in-action can often outweigh the risk of deliberate actions that are informed by the appropriate amount of facts and strategic vision.

At Array Architects, we have assembled a group of professional thought leaders – Architects, Planners and Designers - who help our clients with the successful applications of bold strategic visions to create the physical reality of the day-to-day operating environment, enhancing the success and sustainability of healthcare organizations throughout the country. Array understands that this is not the time to sit back and “watch” the world change, but rather it is a time for our clients to attempt to take control of their own future with intense innovative thought followed by bold and decisive action to “make” the world of healthcare change for the better. We align ourselves with clients who are ready for this bold action, and look forward to helping our clients “afford” the Affordable Care Act.

This blog written by Adrian Hagerty, formerly Array's Chief Operating Officer.  

Topics: Healthcare Design, Affordable Care Act (ACA), healthcare reform, Continuous Improvement