A view from the Center

Deloitte's Life Sciences & Health Care Blog

The business case for hospital collaboratives

Race car driving: It’s an occupation that’s typically seen as a solo gig. One rider in the driver’s seat, the black pavement beneath his wheels, and the only thing on his mind is coming across the finish line in first place. But, Charles Duhigg once pointed out that while other sports depend on individual athletes or teams to win, winning in NASCAR depends on cooperation among competitors. One wrong turn of the wheel by one driver can send seven or eight cars spinning toward the wall.

In health care, this may also be the case. Indeed, we’re starting to see health systems today develop teams to collaborate and partner in new ways. Rather than having an “every man for himself” or takeover mentality, groups of health systems are working together to drive increased efficiencies and value through collaboratives.

Collaboratives are organized groups of entities that work together toward a particular goal. This is not a new concept in the health care industry, but one that we have seen rise in popularity over the past few years. We wanted to understand whether provider collaboratives are actually meeting their goals or if they are a fad that will go away. Are they helping health systems compete in today’s changing payment environment or are they complicating the market? And finally, what makes a collaborative successful?

In Provider collaboratives: Working together to navigate the changing health care delivery system, a new paper from Deloitte’s Center for Health Solutions, we analyzed the track record of nine provider collaboratives to find answers to these questions. Our research found that after investing time and appropriate resources into the formation of the collaborative, many are starting to see progress against stated goals and are evolving to expand their scope. Some successes include cost savings in the ranges of tens to hundreds of millions of dollars, resulting from supply chain optimization and better resource utilization (e.g., labs). Other examples of success include building the right foundation to engage in value-based care or improve population health, sharing best practices, and engaging in advocacy efforts.

Both “early days” collaboratives and ones that are more established often recognize that the road to success is a journey. And not all collaboratives result in lasting relationships. Some have attempted to align, but failed and chose to dissolve. We learned important lessons from those we interviewed for creating a road map to a strong collaborative:
Get a leader in the driver’s seat: Having the right team with the right skills can be critical, and engagement and buy-in should come from the top. Support and participation of CEOs was seen as necessary for the collaboratives to endure.
It’s a journey not a sprint: Success doesn’t happen overnight. Patience, persistence, flexibility, and a long-term vision are often essential.
Remain agile: Strong collaboratives can be dynamic. Many begin with one set of goals that shift over time.
Think beyond the dollars: Cost-savings and higher revenues are important, but value or “ROI” can be broader than just cost-savings. Stronger relationships, learned best practices, clinical improvements, and coming together for a louder collective voice can create value for the members.
Navigate through speed bumps as a team: The members of collaboratives value the relationships they’ve built and see them as a defense strategy for future challenges down the road.

Our view is that collaboratives will likely continue to evolve, primarily motivated by the transition from volume to value. These organizations offer their members an environment to create the necessary capabilities and the opportunity to participate in risk-based payment models. While existing collaboratives fall along a spectrum of commitment to transitioning to value-based care, the model can create an effective forum for experimentation and learning. Collaboratives can provide needed infrastructure for participating in value-based care and can lay the groundwork for identifying clinical and cost improvements.

Despite plenty of M&A activity, health systems’ desire to remain independent and focus on their communities is unlikely to go away. Collaboratives can offer an attractive option for health systems to do this and may put them in a winning position going forward.

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Author bio

Sarah is the managing director of the Center for Health Solutions, part of Deloitte LLP’s Life Sciences & Health Care practice. As the leader of the Center, she drives the research agenda to inform stakeholders across the health care landscape about key trends and issues facing the industry. Sarah has more than 13 years of government experience and has deep experience in public policy, with a focus on Medicare payment policy.