Darnell Dent

Darnell Dent, a Managed Healthcare Executive editorial advisor, is president and CEO of FirstCare Health Plans, a provider-sponsored health plan serving local communities in West Texas with offices in Abilene, Amarillo, and Lubbock; and, corporate offices

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Change is inevitable. None more evident than change in leadership. We have all experienced changes in leadership either within the organizations we serve in or personally, if we have had the privilege of serving in a leadership position.

Whether change involves a merger, acquisition, or reorganization, healthcare leaders must constantly evaluate the circumstances of the changes they face so that they can effectively make the right decisions. It is imperative that leaders determine how they respond so that they can help their organizations prepare, manage, and navigate the sometimes violent turbulence of organizational disruption.

With the M&A numbers holding steady at their current pace-due largely to industry conditions that favor large scale systems-it can be a difficult transition when organizations with different organizational cultures combine. This may be especially true since experts say healthcare mergers are increasingly driven by strategic alignment rather than cultural fit. One to watch is the recent 

. Only time will tell whether the $69 billion acquisition/merger will change the healthcare landscape culturally and dynamically.

Not only is change inevitable, its frequency and speed are at unprecedented levels, causing organizations to reexamine strategic direction including leadership. In many cases, as we are seeing, boards of directors are opting to make changes at the top prior to embarking on major organizational changes that drive transformation. This is especially true for healthcare organizations as they make the transition from fee-for-service to risk/population health. These two business models are very different and require vastly different management skills. Many hospital-based systems will try to make this transition under the same leadership, but will learn that it won’t work over time.

The principle drivers of change that will have its greatest impact on leadership will be the convergence of value-based care and digitalization. For healthcare organizations to achieve its value-based care initiatives, they will have to aggressively transition to implementing digital strategies. This means letting go of old established processes and embracing some of the newly emerging technologies.  Telehealth, artificial intelligence (AI)-enabled devices, robotics and blockchain to name a few that will have a dramatic impact on the delivery of healthcare across the entire spectrum.

I believe change will occur in rapid succession decomposing old established organizational structures and the emergence of new healthcare delivery models that enhance efficiency. Along with these changes, new types of leaders will have to emerge possessing more technical, analytical, and collaborative skills.

So, what are the takeaways for managed care executives as the changing face of leadership continues to proliferate? I believe boards and senior leadership ought to consider the following before jumping head long into making a change in leadership. Once a decision has been reached that a change in leadership is necessary, then the organization should take the following steps:

-expectations are discussed and agreed upon by the Board of Directors based on a clearly stated goals and desired outcomes.

-establish a steering committee to coordinate the planning activities including the selection of a search firm and recruiter to conduct the search.

design a communication process that acknowledges the change and be prepared to communicate at the appropriate time to employees and constituents the reason for the change; ensure the staff understands the vision for the future and their role within the organization.

once the new leader has been selected, take every opportunity to show commitment throughout to the new leader and the new direction.

Finally, organizations should only make leadership changes with the intention of improving results related to financial, cultural, or strategic direction. Before making the move, consider nearly 40% of new chief executives fail outright within the first 18 months on the job, and even more of them fail to live up to original expectations.

 Advisory Services, LLC, a management consulting practice focused on helping leadership improve organizational effectiveness and overall performance. He is a former presi

 and chief executive officer of a managed care organization. He is a member of the 

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How to cope with a rapidly-changing industry.

How to Prepare for Leadership Changes

Over the past several years, there have been several initiatives at national and state levels to move healthcare payments away from the traditional volume-based fee-for-service (FFS) reimbursement model toward alternative payment models (APM) that incentivize improved health care outcomes and increased efficiencies. In particular, the CMS has introduced an array of value-based care models, such as the Medicare Shared Savings Program and the 

To continue this forward progress on the payer side of the equation, states have adopted, to varying degree, the establishment of managed care organization (MCO) value-based payment (VBP) targets for their state sponsored benefit programs such as Medicaid. For example, the Texas Health and Human Services Commission (HHSC) set overall risked-based VBP contractual targets based on MCO expenditures on VBP contracts relative to all medical expense.

Beginning in 2018, HHSC established targets of 25% of provider payments in overall VBP and 10% of provider payments in risk-based VBP with targets increasing over four years to 50% overall VBP and 25% risk-based by 2021.

While this transition from fee-for-service to pay-for-value is inevitable, it is certainly one of the most challenging feats that the healthcare industry has undertaken.

As with any other formidable challenges, the power of compensation has been the most effective lever organizations have used to drive real change. This has never been more evident than the fact that bonuses and incentive payments for healthcare C-suite executives are on the rise as the industry transitions to value-based care according to the most recent AMGA Medical Group Executive and Leadership Compensation Survey. The survey of 55 participants indicated that median earned bonus to base compensation ratio increased 4.5% for physician chief executive officers between 2016 and 2017. The ratio measures the proportion of compensation driven by performance-based incentives beyond base salary.

Top 4 Challenges Healthcare Executives Face in 2019

So, the key takeaway is this: MCO boards and their compensation committees need to take note that the pathway to driving effective and sustainable change toward value-based care is to shift more compensation from fixed base pay to incentive-based compensation with clearly defined performance metrics that moves the “value-based care needle.”

B.E. Smith Executive Compensation Intelligence Report

 based on the survey results of 350 surveyed leaders, 10.8% of respondents said that “determining metrics for pay-for-value tasks” and 8.3% said “determining goals for pay-for value tasks” were among some of the top compensation challenges healthcare organizations face led by “balancing quality of care” and financial goals.”

The reason I believe effective executive compensation plans are the best levers in driving value-based care and reimbursement models because the continuing escalation of healthcare costs, the pursuit of higher healthcare quality, and the demonstration of better outcomes demand that we make these our top priorities.

Keeping this in mind, MCO boards and compensation committees should:

Review and modify existing compensation plans for its executives to ensure that incentives are appropriately set to drive desired results.

Look at the broader healthcare market, not just other MCOs for effective compensation plans and metrics.

Pay closer attention to what works vs. what the payout of the compensation plan. Every incentive dollar should count toward moving the needle toward effective value-based care.

Establish a process to evaluate the effective of value-based payment models and the impact of these models on utilization, quality, cost, as well as return on investment.

 Advisory Services, LLC, a management consulting practice focused on helping leadership improve organizational effectiveness and overall performance. He most recently served as presi

 and chief executive officer for the past seven years of a managed care organization. He is a member of the Managed Healthcare Executive advisory board.

As healthcare struggles to make the switch to value-driven models, why effective executive compensation plans could be the way forward.

Why Executive Compensation Drives Value-Based Care Transitions

	The Pareto principle-also known as the 80/20 rule or the law of the vital few-states that across most topics and populations, roughly 80% of effects result from 20% of causes. Trends across the healthcare landscape appear to be tracking closer to this principle as disparities in healthcare access between rural and urban populations continue to escalate.

	According to the Health Resources & Services Administration (HRSA), while only 20% of the nation’s population resides in rural areas, those residents comprise more than half of the geographic population centers lacking basic medical care, including over 50% of all behavioral health shortage areas.

	HRSA identified over 17,000 Health Professional Shortage Areas (HPSAs) nationwide and, of those, 4,224 were designated as “medically underserved.” At FirstCare Health Plans, our members reside throughout 143 counties-mainly in northern and western Texas-which include 538 of these HPSAs. The size of the geographic area in which these individuals live, combined with relatively sparse population densities, amplifies the problem of accessibility. Our challenges have been identifying the vast number of hurdles our members face and implementing relevant operational solutions to improve their access.

	While cliché, healthcare providers and health plans need to collectively think outside the box when it comes to providing access to care. Experience shows what has typically yielded positive results in an urban setting does not always translate to rural populations when it comes to available providers, distance and transportation, specialty care, etc.

	One feasible remedy is to increase basic member outreach via phone, web, community events, and in-home visits using licensed third-party providers for basic screenings. Other possibilities include leveraging robust case management-FirstCare’s

 Maternity Program uses early identification and intervention for high-risk pregnancies to significantly increase occurrences of healthy babies and mothers, resulting in over $1.7 million in healthcare cost savings during its first year-and using ever-emerging telemedicine capabilities to link rural healthcare centers to larger regional centers typically found within urban areas.

	The remarkable shortage of behavioral health providers in rural areas directly contrasts with the rising demand for behavioral health services. We’ve found that case management specific to behavioral health, integrated with our existing medical case management, allows us to help the member holistically. However, even with the expansion of managed care, many behavioral health providers have yet to move to managed care integration for both medical and mental health services. In response, we’re promoting further integration and access to behavioral health providers by encouraging large primary care medical practices to offer behavioral health telemedicine services to our members.

	The access problems many rural health plan members face cannot be rectified overnight. Resources, creativity and time can bring these populations up to par with their more urban counterparts. It is the duty of those of us working within the healthcare space-be it providers, health plans, or system administrators-to identify these opportunities and find sustainable solutions to help improve the health of those we serve.

 editorial advisor, is president and CEO of 

, a provider-sponsored health plan serving local communities in West Texas with offices in Abilene, Amarillo, and Lubbock; and, corporate offices in Austin, Texas.

The access problems many rural health plan members face cannot be rectified overnight, but resources, creativity and time can bring these populations up to par with their more urban counterparts.

Author | Darnell Dent

Articles

How to Prepare for Leadership Changes

Why Executive Compensation Drives Value-Based Care Transitions

Health plan addresses urban vs. rural healthcare disparities