Henry Ford achieves smooth integration
System integrates with eye on local market
At Henry Ford Health System in Detroit, integration isn't exactly a new idea. In fact, Henry Ford himself translated his innovative ideas from the automobile industry into health care when he started the hospital in 1915. Just as Ford saw the need to own the components necessary to make a car - from forests to rubber plantations to ships that delivered the materials - he also saw the need for the hospital to own the physicians' group practice. From the start, physicians have been salaried staff of the hospital as well as members of their group practice, says David Nerenz, director of the Center for Health System Studies at the Henry Ford Health System.
In the mid-1970s, the system got the idea of satellite ambulatory primary and specialty care facilities spread throughout the region with formal links to the hospital. The facilities are staffed by members of the group practice and share common records, billing, scheduling, and reporting systems with the hospital. In the mid-1980s, the system established a formal affiliation with a managed care plan that essentially makes the Health Alliance Plan part of the health system.
Along the way, the system has acquired numerous provider components. It now owns or is affiliated with 12 hospitals and operates 30 ambulatory centers, two nursing homes, two home health agencies, two HMOs, and many other health services. The result is that virtually any type of care or service patients need falls under the same administrative umbrella. The Henry Ford Medical Group employs 1,000 physicians, and 1,800 additional physicians in private practice have admitting privileges or contracts with the Health Alliance Plan. "One of the things you need to do is try to align the incentives for the providers and the insurers within the same organization," Nerenz says. "That can be difficult. A lot of bad feelings can come from an adversarial relationship between physicians and health plans. You have to try to reduce or eliminate the conflicts by balancing the needs of both sides."
It's not easy to get 1,000 physicians to agree on anything, but Nerenz says the medical group has a strong governance structure that allows it to develop and enforce policies and guidelines. An operations committee enforces the formulary and disseminates and enforces clinical practice guidelines. The medical group also employs a reward and discipline system based on physician-specific measures such as patient satisfaction, clinical productivity and specific behaviors like the use of formulary drugs. Rewards can include bonuses; disciplinary actions can be as serious as firing. The medical group benchmarks through the Group Practice Improvement Network, a national organization with headquarters at Henry Ford. The network allows the medical group to assess financial and clinical measures and to share best practices.
The common information system is the glue that holds the operation together and the part that's most visible to patients, Nerenz says. "Our goal is to have the look and feel of a single care plan, a sense of seamlessness. The information moves with the patient so that tests don't have to be repeated and questions don't have to be asked all over again. If a patient is discharged from the hospital, we want that discharge plan to follow him back to the outpatient setting. We don't always meet that goal, but we're working on it."
One of the challenges, Nerenz says, is drawing the line between what's best for an individual business unit and what's best for the system as a whole. "We're moving toward a more decentralized approach," he says. "For example, the Health Alliance Plan has developed new provider agreements with some of our hospital or physician group competitors. We've gone to a more flexible approach where we say if it's in their best interest, they can do it even if it's not necessarily in the best interest of the medical group. We're allowing more autonomy, but we can't tell yet if that's a better way to do it. We're making our management decisions in response to changing conditions, and we think we need to be flexible. The overall theme is that we have a strong belief in the value of vertical integration."
Nerenz says the ability to survive in the marketplace depends on that flexibility. The Hoechst Marion Roussel Integrated Health System Digest defines Detroit as a Stage III market in which there is HMO consolidation and extensive formation of group practices and hospital systems. Detroit has seven integrated systems with 60% of area hospitals and 27% of area HMOs participating. That means stiff competition and a great need to pay attention to purchasers. The other issue is that the largest employers are automobile companies whose union has negotiated comprehensive coverage with no restrictions on provider choice.
"The ultimate model for integration is a closed system," Nerenz says. "But a tight model doesn't offer much to the auto company employees. If we tried to push that, it's not clear the local purchasers would accept it. People want the ability to choose, to get second opinions, and our direction has to depend on what they want."
He says it's difficult to measure the effect integration has on the bottom line at Henry Ford because there's no way to do a trial that would compare vertical integration to not being integrated. But the system shows continuing success in market share, patient satisfaction, and finances, and that's good enough to make the system keep progressing toward full clinical integration. The success of integration depends on how well the system is configured to address the local circumstances. Most hospitals should look toward integration as long as they keep an eye on the local market. It's analogous to mergers: Some work and some don't. It can depend on something like whether the CEOs get along and whether the organizational cultures mesh. It might not be the right strategy for all hospitals, but I can say it's been the right strategy for this organization."
[For more details, contact David Nerenz, director, Center for Health System Studies, Henry Ford Health System, 1 Ford Place (3A), Detroit, MI 48202. Tele phone: (313) 874-5454.]
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content