Achieving Integration: It’s More Than Governance

Integration is one of the most important concepts for healthcare institutions to embrace in order to thrive in the next several years.  Yet, most AMCs and health systems believe that integration has been achieved once an integrated governance structure is in place.

Most institutions will interpret “integrated governance” as the need for one corporate board with accountability for all aspects of the operating units.  An AMC or health system might go through great efforts to develop one board, with accountability for all of these components – and rightfully so.  However, one board is just the tip of the iceberg in achieving integrated governance.

ECG uses the following framework to assess integration:

  • Governance Structure – The structure and roles/responsibilities of governing bodies are critical.  The key element when assessing organizational integration is the presence of one board, with clinical (i.e., most often physician), business/administrative (usually hospital and other business), and, increasingly, patient [1] participation, that sets the strategic direction for the whole enterprise.
  • Management Structure – ECG looks for one management team with enterprise accountability and measures across the institution that the team is accountable for, shared management between physician and business leaders, and representatives across all missions who have a management role.
  • Operations/Infrastructure – There are many indicators that ECG considers in this category.  Ultimately, integrated organizations require operations and infrastructure that allow seamless patient care delivery from a patient’s perspective, with the information and analytic capability in the right hands at the right time.  We also look for cost-efficient operations such that shared services are optimized and effective.
  • Compensation/Funds Flow – Incentive alignment will continue to be an area of interest and much activity, especially as institutions move toward outcomes- and value-based reimbursement models.  Funds flow across business units and departments that breaks down traditional barriers to cooperation and maximizes enterprise-wide performance will be increasingly important.  Furthermore, the financial incentives of physicians, leaders, and employees will need to be aligned toward new priorities.  All institutions will need to revisit at least compensation to optimize incentive alignment in the next 1 to 3 years.
Near-Term Considerations

Achieving integrated governance encompasses much more than having one board, although this is often where a significant amount of work can begin.  Integration must be pervasive in your organization, as reflected in governance, management, operations, and compensation.  Health systems and AMCs have additional complexities to address to achieve integrated governance, given that the funds flow model and incentive alignment often can be improved to further integration across departments and missions.

If you have not started down this path, it should be a priority area of focus for the next 1 to 3 years – integration will be essential for thriving in our healthcare market.

[1]      Medicare ACO shared savings regulations require patient representation on the ACO board.

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