Idea 6: Approach to Over Capacity
Bob Hoban, Chief Strategy Officer
St. John Providence Health System &
Ascension Health – East Michigan
Evolutionary Transformation of the
Healthcare Industry
• Care needs are changing in Michigan: Predominant
capital investment has been bricks and mortar resulting
in excess capacity
• Future focus: Access to primary care services and
chronic disease management
• Evidence: Per MDCH, Michigan has an excess of over
5,000 beds, on a base of 26,000. In SE Michigan,
nearly 3,000 bed excess on a base of 14,000 beds.
• Change requires: Aligning the economic incentives of
hospitals, physicians and other providers to manage the
health of a population
Alignment of Economic Incentives
 Value Base Purchasing will change the incentives of
providers - from producing more services to efficacious care
(efficient and effective)
• Bundled or Global payment for an episode of services; Hospital, Anesthesia,
Surgeon, Pre-, Post-care
• Pay for Performance (P4P) on quality of the system of care
• Global payment for a population over time
 Providers will respond to economic incentives
• Drive integration to improve quality outcomes and reduce overall costs
 Hospitals will become cost centers – the system will adapt
Disease-Centered System of Care
St. John Providence Health System
Current Actions to Right Size Capacity
 Patient-Centered Medical Home
• Coordinated integrated care emphasizing access, quality and safety
• 163 SJPHS primary care physicians are currently designated as
BCBSM PCMH providers
 Evaluating effectiveness of serving healthcare
needs in three communities with acute care
hospitals
 Examining potential for program consolidation
• St. John North Shores inpatient rehabilitation consolidating to St
John Hospital & Medical Center
• Continuing to look for other opportunities
Accelerating Industry Change
 Alignment of economic incentives via Value Based
Purchasing initiatives to drive out excess capacity will
evolve the industry over a 5-10 year horizon
 Opportunity exists to accelerate the change process
 Create a “Reverse Hill-Burton” incentive program