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Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations (2012)

Chapter: 5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services

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Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
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5

Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services

A number of lessons emerged from the committee’s examination of other collaborations in the federal and private sectors.1 The committee confined its analysis to Department of Veterans Affairs (VA)/Department of Defense (DoD) and private-sector approaches to health care collaborations, but did not evaluate either intradepartmental health care integrations in the VA and the DoD or interdepartmental health care collaborations with other federal agencies.

DEPARTMENT OF VETERANS AFFAIRS/DEPARTMENT OF DEFENSE RESOURCE SHARING AND OTHER JOINT INITIATIVES

1978 General Accounting Office Interagency Sharing Report

In 1978, at the request of the chairman of the House Appropriations Committee, the Government Accountability Office (GAO) (at that time called the General Accounting Office) conducted a study of resource sharing among federal health care providers. The ensuing 171-page report, Legislation Needed to Encourage Better Use of Federal Medical Resources and Remove Obstacles to Interagency Sharing (HRD-78-54), found a very

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1 The private-sector discussion draws on a paper commissioned by the Committee on Evaluation of the Lovell Federal Health Care Center Merger on the “Collaboration Among Health Care Organizations: A Review of Outcomes and Best Practices for Effective Performance,” by Thomas D’Aunno, with the assistance of Yi-Ting Chiang and Mattia Gilmartin (see Appendix D).

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

limited degree of sharing despite many opportunities to improve health care for beneficiaries while saving taxpayer dollars through “eliminating or consolidating underused or duplicative facilities, equipment, and staff,” reducing the reliance on purchased care, and “increasing staff proficiency and improving patient care by consolidating workloads and resources” (GAO, 1978, p. 28).

The 1978 GAO report contained a number of specific recommendations for the departments, the Office of Management and Budget, and Congress, including a draft bill. In response, Congress enacted the Veterans Administration and Department of Defense Health Resources Sharing and Emergency Operations Act of 1982 (Public Law 97-174) to remove obstacles to greater sharing of health care resources between the VA and the DoD and to give military treatment facilities (MTFs) and VA medical centers (VAMCs) greater incentives to share resources. Public Law 97-174 remains the chief legislative basis for partnering between DoD’s Military Health System and the Veterans Health Administration (VHA).

National Defense Authorization Act of Fiscal Year 2003

In 2002, Congress mandated initiatives intended to spur additional VA/DoD health care collaborations in the fiscal year (FY) 2003 National Defense Authorization Act (NDAA 2003).

DoD/VA Demonstration Projects

The NDAA 2003 directed the DoD and the VA to fund health care coordination demonstration projects between the two organizations’ health care facilities. Seven demonstrations were implemented in 2005, “designed to improve the coordination of health care resources between VA and DoD for application elsewhere” (VA/DoD, 2006, p. 19) in the areas of budget and financial management,2 coordinated staffing and assignment,3 and medical information and information technology (IT)4 (Navy Medicine, 2012).

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2 The sites for the budget and financial management demonstrations were the VA Pacific Islands Health Care System/Tripler Army Medical Center and the Alaska VA Health Care System/3rd Medical Group at Elmendorf Air Force Base (Navy Medicine, 2012).

3 The coordinated staffing and assignment demonstrations were the Augusta VA Health Care System/Eisenhower Army Medical Center and the Hampton VA Medical Center/1st Medical Group at Langley Air Force Base (Navy Medicine, 2012).

4 The medical information and information technology demonstrations were the Puget Sound VA Health Care System/Madigan Army Medical Center, the El Paso VA Health Care System/William Beaumont Army Medical Center, and the South Texas VA Health Care System/Wilford Hall Air Force Medical Center/Brooke Army Medical Center (Navy Medicine, 2012).

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

The demonstration sites evaluated four major IT solutions: the Laboratory Data Sharing Initiative; a DoD/VA credentials-sharing interface; the Bi-directional Health Information Exchange; and digital image sharing (DoD/VA, 2008, p. 5).

According to the final report from the DoD and the VA, there were a number of barriers to sharing. Some were amenable to policy changes, such as the different hiring authorities of the two departments, the need for procedures for paying for shared services and transferring funds, and limits on data sharing. The projects also demonstrated the importance of buy-in by all relevant local parties; the need for continuous education and training to overcome cultural differences; the problems presented by different business practices in such areas as staffing, procurement, funding, construction standards and timelines, and credentials; and the information-sharing limitations imposed by different information management (IM)/IT systems (DoD/VA, 2008, pp. 64–66).

Joint Incentive Fund

As part of the NDAA 2003, Congress also established the Joint Incentives Program to enable more collaboration between the VA and the DoD. The two secretaries were directed to contribute a minimum of $15 million per year each to a DoD-VA Health Care Sharing Incentive Fund and to use the funds to “carry out a program to identify, provide incentives to, implement, fund, and evaluate creative coordination and sharing initiatives at the facility, intraregional, and nationwide levels” (DoD/VA, 2004, p. 1). Known as the Joint Incentive Fund (JIF), the program was extended until September 30, 2015, by the NDAA 2010, the law that established the Captain James A. Lovell Federal Health Care Center (FHCC).

The JIF is administered by the VHA “under the policy guidance and direction of the HEC [Health Executive Council],” and its chief financial officer provides financial status reports to the Health HEC and to the chief financial officer of DoD’s TRICARE Management Activity (AMEDD, 2012). The HEC uses the funding to promote local VA/DoD sharing by paying for initial start-up costs of a project that is expected to become self-sustaining after several years. In some cases, the projects permit existing joint venture sites to expand their collaborative activities; in other cases, the JIF projects are awarded to encourage potential joint ventures. The VA/DoD partners submit proposals each year. The Joint Facility Utilization Resource Sharing Working Group (JFURSWG) is charged by the Joint Executive Council (JEC) to review the proposed sharing activities. In its ninth year, the JIF has funded 130 projects totaling $420.6 million (Interviews).

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

Joint Ventures

Joint ventures are characterized by specific resource-sharing agreements encompassing multiple services resulting in joint operations. They consist of local alliances or partnerships between the DoD and the VA for the purposes of longer-term commitments of more than 5 years to facilitate comprehensive cooperation, shared risk, and mutual benefit. Joint ventures may or may not involve joint capital planning and coordinated use of existing or planned facilities. They exist along a continuum in which the medical facility missions and operations are connected, integrated, or consolidated. Joint ventures are characterized by regular and ongoing interaction in one or more of the following areas: staffing, clinical workload, business processes, management, IT, logistics, education and training, and research capabilities (VA/DoD, 2008).

Joint Market Areas

The VA and the DoD have developed criteria for identifying “joint market areas” for increased health care sharing. They are health care markets with large DoD and VA beneficiary populations where shared facilities and services would provide access to services or infrastructure not available in one or the other organization; improve efficiency through economies of scale; reduce duplication of services, infrastructure, or both; and mitigate the impact of deployment on access. The JFURSWG under the VA/DoD HEC has identified more than a dozen joint market areas and has worked with them to develop additional sharing agreements. In 2010, the selection criteria for joint market areas qualifying for focused assistance from the JFURSWG were the amount of purchased care expenditures, the degree of facility proximity, the potential enrollment population, the current working relationship, the current and planned resource sharing initiatives, and the joint construction opportunities. The 2010 sites were Phoenix, Arizona; San Diego, California; Fayetteville, North Carolina; Oklahoma City, Oklahoma; and Omaha, Nebraska (Carlisle and Henius, 2010). The sites in 2011 were St. Louis, Missouri; Columbia, South Carolina; and Temple, Texas (Cox and Ruschmeier, 2011). One of the joint market areas—Charleston, South Carolina—became a joint venture in early 2011.

The JFURSWG developed standardized reporting templates for joint ventures and joint market areas in 2010, with performance metrics. Joint ventures and joint market areas are now expected to show a reduction of at least 5 percent in overall costs or cost avoidance through use of shared initiatives (Cox and Ruschmeier, 2011).

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

LESSONS LEARNED FROM DEPARTMENT OF DEFENSE/DEPARTMENT OF VETERANS AFFAIRS COLLABORATIONS

Overview

The committee reviewed the current nine formal joint ventures5 that share resources in a variety of arrangements (see Box 5-1). To examine lessons learned from the joint ventures, related congressional testimony was examined, as well as other historical and current documentation, and personal interviews were conducted as needed for clarification. In-depth interviews with and briefings by knowledgeable DoD/VA Program Coordination Office and VHA Intergovernmental Affairs Office staff were conducted to learn the history of and ascertain the lessons learned from the creation of sharing agreements through the development phase and into the current, ongoing operations. Discussions were held at the October 2011 annual VA/DoD joint venture conference in Charleston, South Carolina, with representatives of the joint ventures, who updated attendees on their progress and described the many lessons learned from their experiences. The committee was also briefed in public session at its fourth meeting by the DoD and the VA leadership of the U.S. Air Force Medical Center, Travis Air Force Base, and the VA Northern California Health Care System joint venture. The committee arrived at its summary of lessons learned across joint ventures by considering the information collected from these sources.

Collaborations and Sharing Agreements

The VA and the DoD joint venture oversight program offices have reported on the elements of successful VA/DoD sharing and the common barriers or constraints encountered by collaborations. The following barriers and constraints are commonly cited as inhibiting successful collaboration:

  • Lack of information management/information technology (IM/IT) interoperability
  • Lack of joint business processes
    • Accurate workload capture
    • Billing processes
    • Financial management systems that interface
  • Space/new construction needs
    • Getting facility planning and construction budget processes to align

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5 The Lovell FHCC is no longer formally classified as a joint venture because it is considered to be a unique organizational arrangement.

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

BOX 5-1
Currently Active Department of Veterans Affairs/Department of Defense Joint Ventures
*

Albuquerque, New Mexico (established in 1987)

377th Medical Group, Kirtland Air Force Base/New Mexico Veterans Affairs Health Care System

El Paso, Texas (established in 1987)

William Beaumont Army Medical Center/El Paso Veterans Affairs Health Care System

Honolulu, Hawaii (established in 1992)

Tripler Army Medical Center/Veterans Affairs Pacific Islands Health Care System (Spark M. Matsunaga Medical Center)

Fairfield, California (established in 1994)

60th Medical Group, David Grant Medical Center, Travis Air Force Base/Northern California Veterans Affairs Health Care System

Las Vegas, Nevada (established in 1994)

99th Medical Group, Nellis Air Force Base/Veterans Affairs Southern Nevada Health Care System (Michael O’Callaghan Federal Hospital)

Anchorage, Alaska (established in 1999)

3rd Medical Group, Elmendorf Air Force Base/Alaska Veterans Affairs Health Care System

Key West, Florida (established in 2000)

Naval Branch Health Clinic Key West/Miami Veterans Affairs Health Care System Community Based Outpatient Clinic Key West

Pensacola, Florida, and Biloxi, Mississippi (established in 2008)

Naval Hospital Pensacola/Veterans Affairs Gulf Coast Health Care Center (Biloxi)/81st Medical Group, Keesler Air Force Base/96th Medical Group, Eglin Air Force Base/325th Medical Group, Tyndall Air Force Base (5 coequal partners)

Charleston and Beaufort, South Carolina (established in 2011)

The Naval Health Clinic Charleston and the Ralph H. Johnson Veterans Affairs Medical Center jointly constructed and operate an ambulatory care clinic at the Naval Weapons Station, Charleston, South Carolina

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* See Appendix C for brief histories of and lessons learned from these joint ventures.

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×
  • Disparity of DoD and VA rules and regulations, for example, for credentialing and for drug formularies
  • Competitive health care job markets
  • Leadership structures that do not align
  • Restricted access to facilities on military bases (Malebranche, 2011, p. 13)

However, a number of factors common to successful joint ventures exist. They include

  • Trust and integrity between VA and DoD
  • A patient-centered focus
  • Engaged and supportive leadership
  • Regular meetings/ongoing communication
    • Monthly joint working group meetings
    • Quarterly executive management team meetings
    • Annual joint strategic planning retreats
  • Addressing of issues early on
  • Identifying win-win opportunities
    • It “doesn’t have to be a zero sum game” (Malebranche, 2011, p. 13)

A brief history of each joint venture and a summary of self-reported lessons learned over time through trial and error is provided in Appendix C.

Summary of Lessons Learned from Department of Veterans Affairs/Department of Defense Health Care Collaborations

The committee’s review of the DoD/VA collaborations highlights several aspects of the arrangements that either contributed to their success or created significant barriers. Three themes emerged consistently as contributing factors to a successful collaboration: (1) strong and committed leadership, (2) joint strategic planning and decision making, and (3) continuous and transparent communication. Four issues arose nearly as consistently as significant barriers to a combined mission: (1) separate governance structures for participating entities; (2) mixed reimbursement methodologies; (3) separate human resources policies and procedures along with high rates of turnover; and (4) the major, universally identified barrier cited by joint venture staffs, namely, the lack of a comprehensive electronic health record (EHR) system due to non-interoperable IT systems. While workarounds were devised in most sites for several of these barriers, they were uniformly labor intensive and often incomplete or inadequate to resolve the identified barriers. Finally, local context—that is, the nature of the local private health

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

care system, the demographics of the target population, and the specific mission of the participating entities—affected the specific outcomes of the various collaborations.

Typical Factors Affecting Collaboration Success

Geographic Proximity Geographic proximity influenced the capability of the DoD and the VA to enter into collaborative efforts. A variety of terms were used to describe the new collaborative entity, the most prominent being “joint venture.” Integration was commonly used to describe activities that were planned or implemented that provided a more “seamless” or less separate experience for beneficiaries utilizing each entity of the collaborative system. However, as noted previously in this report, “integration” was used to describe a wide range of sharing activities that did not always result in combining or coordinating these health care activities into a unified whole. Capability and readiness of each organization to engage in the joint ventures varied. Several of the collaborations defined operational oversight parameters through the creation of specific joint venture oversight committees. The more defined the oversight process, the more integration occurred. In addition to the three success themes outlined above, the committee identified several critical factors that strengthened collaborative services, including joint strategic planning with defined goals, objectives, and joint performance measures; membership on key operational committees; governance structures; and bilateral commitment to education and training of medical doctors and other care providers.

Strong Leadership Those joint ventures that had been in place a number of years, as well as those that were established more recently, profited from strong leadership. Commitment of senior leaders to the collaboration and operational efficacy of the enterprise was perceived as critical to success. These leaders worked together as a team to direct aspects of the joint ventures. Successful collaboration was a gradual achievement over time and persistence was found to be a critical factor. After the initial implementation of planned collaborative services, a number of different strategies, including workaround processes, were used to improve operational effectiveness as the organizational model evolved. Strong leadership that was consistent and leaders who communicated long-term organizational commitment to joint strategic goals and objectives were also critical. Where feasible, leadership transitions in demonstrations should be minimized or mitigated. Military leadership of MTFs is rotated on a predictable periodic cycle, and changes of command can disrupt developing collaborations unless a strong organizational commitment to the strategy is maintained and communicated. This was evident in the successful DoD/VA collaborations. Generally, leaders and

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

managers of these case study models were supportive of the collaboration and committed to long-term goals to achieve better outcomes.

Open Communication Key to effective collaborations was good communication among leaders, and frequent interaction among mid-level managers, directors, and care providers. The vision for the collaboration was established and communicated by leaders. This was achieved through joint meetings and planned exchanges of information and opportunities to solve problems encountered with the system of patient care, referrals, and services. Effective collaborations for specific services occurred when DoD and VA leaders worked together early and often to establish meaningful outcome measures.

Range of Collaborative Initiatives

Collaborative initiatives included one or more of the range of services expected from large health systems. No single facility or system included a full integration or merger of all patient care services available at one or the other DoD or VA facility involved in the collaboration. Likewise, within most of the joint venture collaboration models, some of the service operations were more effective than others. Many factors influenced success of individual services or departments of the joint venture.

Specific initiatives varied across the continuum of acute care subspecialties to outpatient clinics to programs of education and training of health care professionals. Many of the collaborative organizations emphasized emergency treatment, including different strategies to improve emergency services and to decrease wait times for patients. Several joint ventures were developed because of the need to build new facilities for increased capacity. Patient care services were then developed collaboratively to promote optimal use of buildings and local area facilities and to reduce the cost of health care facility construction to the DoD or the VA system. Both acute care and outpatient care systems evolved or were actively planned, including inpatient and outpatient surgery capabilities.

Mental health services were a present and growing concern for the DoD and the VA organizations. Demand for these services increased during the time of implementation of several of the collaborations. Different strategies were identified to cope with the challenges of treating behavioral health patients of different ages and affected by military experiences or stress-related illnesses. Evaluations of these approaches on health care quality, safety, access, efficiency, and patient outcomes were not available to make generalizable conclusions.

Support services, such as pharmacy, laboratory, radiology, physical therapy, and other ancillary specialty services, were included in some

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

measure in all of the case study collaborative organizations. Staffing for all collaborative services evaluated proved a difficult hurdle for full integration. There were instances of joint or collaborative staffing by both DoD and VA staff members. However, more often, these personnel remained separate with one or the other type of staff responsible for particular services. Personnel issues arose from differences inherent in the DoD and VA organizational cultures. These differences were difficult to surmount, often due to military readiness requirements of DoD staff members compared with civilian patient care mandates for VA staff members.

Outcomes

Intermediate outcomes and the long-term impact of these collaboration models varied with the length of time since their implementation. Financial targets were achieved by most of the joint ventures. Outcomes important to constituents were achieved at varying levels. Accountability and performance measurement were maintained through a variety of methods. In particular, many of the collaborative organizations attained better access to care for beneficiaries, reduced wait times, good patient satisfaction, improved coordination and time for referrals to subspecialties, more timely results for diagnostic tests, and better quality of care. In some cases, previously unavailable, new services were developed. In others, innovative approaches to care were initiated to address specific patient care or facility challenges. Longer-term plans were in progress for nearly all of the collaborations. As with other large-scale medical centers, leaders and members of these DoD/VA joint ventures are interested in meeting the demands of patient care that are arising from new technologies, better therapeutic interventions, and the increased need for reducing the costs of health care. To that end, many organizations are planning initiatives to address these goals, including programs for better care coordination across the joint venture and among care providers; improved processes to triage, admit, and discharge patients from the system in a more timely manner; the development of previously unavailable services; outreach to the community for better continuity of care for patients and families; and more appropriate management of medical emergencies.

Most of the DoD/VA collaborations had the goal of a “single standard of care” or improved clinical outcomes for patients as the primary focus of the joint venture. Graduate medical education, education of other licensed and unlicensed health care providers, and the best use and training of military medical personnel were important, but secondary, goals for the organizations. Educational aspects of these organizations were addressed as the situation for increased or improved opportunities for all types of students, residents, or learners arose.

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

Obstacles

Many obstacles were identified in achieving the vision of these joint ventures or models of DoD/VA collaboration. The obstacles were remarkably similar across the organizations. Most frequently identified were IT problems due to different and incompatible electronic data systems. Lack of shared EHR systems led to a number of cross-organizational systems problems. Efforts to address IT issues were costly and slow. Statistical data required for reporting and accreditation mandates proved more difficult to collect because of compatibility issues. Joint billing systems and procedures for sharing resources proved challenging as well. Purchasing of equipment and supplies was difficult due to different processes used by the DoD and the VA systems. Workarounds were created, but these were not always efficient.

Most of the joint ventures had issues with financing operations, financial systems, or tracking economic impacts. Efforts to address funding flow and allocation processes were an ongoing challenge. Mixed reimbursement regulations made the evaluation of revenues and expenses less accurate for the collaborative organization than for the DoD or the VA system alone. The economic impact of different staffing models using both DoD and VA personnel was difficult to measure for some of the organizations. Most included some type of joint planning or oversight as one way to improve human resource processes and financial management.

Despite systems obstacles, leaders, managers, and caregivers sought a variety of ways to address problems because of strong commitment to high-quality patient care. At the time of this evaluation, most of the organizations had in-progress plans for enhanced services going forward, for example, expanded subspecialty care, restorative medical specialties, advanced rehabilitation services, vision services, and long-term pain management plans for patients. Self-reported progress on a variety of parameters for these nine case studies of unique DoD/VA collaborative efforts was generally positive. While challenges and obstacles remain and some joint ventures have reduced their overall sharing due to changing organizational needs (e.g., Albuquerque), none reported plans for dissolution of their entire collaboration effort.

OUTCOMES AND BEST PRACTICES OF PRIVATE-SECTOR COLLABORATIVE VENTURES

The committee commissioned a review of the literature evaluating collaborative ventures among private hospitals and physician groups (see Appendix D). The review, conducted by Thomas D’Aunno, summarized

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

the outcomes and best practices documented in the scholarly literature published in top-tier journals in the past decade (D’Aunno, 2012).

Collaboration Among Hospitals

Results from several studies show that certain initial changes in collaborative ventures among hospitals come quickly, relatively easily, and in a sequence: (1) integration of management functions (e.g., finance and accounting, human resources, managed care contracting, quality assurance and improvement programs, and strategic planning), followed by (2) integration of patient support functions (e.g., patient education), and then (3) integration of low-volume clinical services (e.g., Eberhardt, 2001).

However, integrating or consolidating larger-scale clinical services and closure of service lines typically encounters strong opposition—in many cases, clinical service integration did not occur at all. Similarly, some studies report little success at integrating the medical cultures of merged hospitals even after 3 years of effort. In short, substantial changes in core clinical services take a long time, and success is not guaranteed as conflicting interests emerge among stakeholders.

Despite these difficulties, there are examples of successful collaborations in which contextual factors and change processes made important contributions. Specifically, results from several case studies show that creating a centralized decision-making authority promotes effective collaboration, especially to the extent that this authority can develop shared values and vision with which the partner organizations must identify (Bazzoli et al., 2004). Furthermore, support from top managers is critical, but it should be complemented by buy-in from lower levels. This requires a great deal of communication within and across levels of hierarchy. Finally, at least one study identified strong and continuous external pressure on the partner organizations as a key for promoting the integration of clinical services.

Collaboration Among Physician Groups

Coddington et al. (1998) provide a useful case study of the early stages of change that focused on bringing physician partners together. They identify key phases of (1) establishing trust, (2) assessing the fit between the relative strengths of the organizations, (3) assessing the ability to deliver a high-quality product, (4) developing a business strategy, and (5) considering effects on competitive position. Similarly, Robinson (1998) emphasized the importance of fit and relative strengths of partners in bringing them together.

In general, results from studies of collaboration among physician groups emphasize the importance of managing trade-offs and tensions

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

involved in organizational change: involving physicians versus respecting their time for patient care; slowly building trust versus frustration with slow progress; and building stakeholder buy-in versus building technical capacity (especially when buy-in and trust are enhanced by demonstrated technical capacity and improved performance).

Hospital-Physician Collaboration

Given their importance and obvious potential for problems, a relatively large number of process studies have focused on hospital-physician relationships. A major observation is the importance of developing a climate for change within the partner organizations. In turn, the role of physician leadership is universally noted as critical in developing a supportive climate for change because physician involvement is needed in both governance and management decisions. Results also highlight the importance of putting in place structures (such as incentives) and systems (especially information systems) to support changes in organizational processes and culture. As noted above, investment in management and clinical technologies and core competencies matters, as do shared vision and values.

The work of Devers and her colleagues (1994) stands out for its development of a three-part framework for assessing the extent to which consolidations achieve functional integration (business and management activities, noted above), physician-system integration (alignment of incentives and physician involvement in decision making), and clinical integration (e.g., common protocols). They find much functional integration, but little integration in the other areas—a result similar to that for collaborations among hospitals. The results are discouraging, but it appears that external context can promote change. Pressure from capitation and regulation, in particular, are related to more effective integration.

Concluding Observations from the Literature Review

Several concluding observations about the outcomes associated with collaboration among health care organizations and best practices for improving these outcomes arise from the literature review. First, there is considerable variation in the outcomes of collaborative ventures regardless of the criteria one uses to assess their performance. In fact, many, if not most, of these ventures fail to meet expectations in either the health care or the non-health fields. An exception to this result is mergers among hospitals, which seem to improve their financial performance, though not necessarily to societal advantage because available evidence indicates that improved performance comes mainly from increased market power (increased revenue) rather than efficiency gains per se.

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
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Second, the financial performance of merged hospitals appears to be stronger than results obtained from other forms of collaboration. Mergers typically involve more centralization of authority compared with other collaborative ventures, such as alliances, and this may be an important factor in their relative success.

Third, mergers also are more costly than are alternatives for the organizations (and communities) involved, at least in terms of initial time and money needed to launch and implement them. Yet, one could argue that the risk involved in mergers seems to pay off for the hospitals themselves, though not uniformly given the variation that researchers observe in their performance.

Fourth, given substantial variation in their performance and relatively weak overall outcomes for many collaborative ventures, researchers and practitioners have begun to identify best practices for leading the processes involved in their implementation. Though results to date are useful, there is much more work to be done. See Box 5-2 (Box D-1 in Appendix D) for a relatively thorough checklist of best practices for implementing collaborative ventures. Few studies have examined the use of many of these practices in combination.

Fifth, the best available evidence nonetheless indicates that it is useful to conceive of these practices from the perspective of three phases or stages: (1) precollaboration activities, (2) transition work, and (3) follow-up efforts. Furthermore, these practices focus primarily on either technical tasks (e.g., due diligence with respect to antitrust issues, development of strategic plans, developing systems and incentives for change and improved performance) or people-oriented tasks (e.g., communicating effectively, involving key stakeholders, and overcoming resistance to change) (see Table 5-1 [Table D-4 in Appendix D]). Prior studies indicate that leaders need skills to focus on both technical and human tasks and, importantly, that failure to address both sets of tasks hinders implementation and performance (Battilana et al., 2010).

Sixth, the literature on collaboration and change among health care organizations in general has not given as much attention to the role of leadership as it should. To be sure, the importance of involving physicians in leadership roles is typically noted, but more fine-grained analyses are lacking (Gilmartin and D’Aunno, 2007). D’Aunno argues that effective leaders will communicate the need for change, mobilize others to accept changes, and evaluate implementation to make needed adjustments and promote optimal outcomes. Furthermore, though leaders need skills in both technical and people-oriented tasks to be effective, many individuals lack this combination of skills, which requires training or team approaches to leading change.

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

BOX 5-2
Checklist for Effective Implementation of Collaborative Ventures Among Health Care Organizations

I. Precollaboration Issues

a. Cost-benefit analysis

i. Choosing a collaboration model

ii. Potential for reconfiguring resources through collaboration

b. Partner selection

i. Strategic intent

1. Mutual and individual organizational interests

2. Mission/vision alignment

ii. Cultural compatibility

iii. Context

c. Strategic planning

i. Planning committee

ii. Setting priorities

II. Transition Issues

a. Governance

i. Monitoring and evaluation

ii. Problem analysis and solution

b. Decision making

c. Conflict management

d. Critical success and failure factors

i. Speed of collaboration

ii. Communication with employees

III. Follow-Up Issues

a. Cultural integration

b. Human resources

i. Redeploying; managing layoffs; reducing employee resistance

c. Operational integration

i. Resource allocation

d. Ongoing governance

SOURCE: D’Aunno et al., 2012.

Finally, relatively fragmented and narrow disciplinary approaches have hindered both research and practice in this area. For example, the vast majority of studies of hospital mergers focus on their financial performance (Vogt and Town, 2006), with little attention given to other key outcomes, such as access to care, and, similarly, with little attention to leadership using the concepts and principles discussed above. Promoting more effective col-

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

TABLE 5-1 Application of Best Practices to Collaboration Among Health Care Organizations: Technical and People-Focused Leadership Tasks

Technical Leadership Tasks Best Practices
Plans and protocols for change are needed to manage complexity and are needed (see Box 5-2 [Box D-1 in Appendix D]) Blueprints promote due diligence and effective decision making by leaders of change (e.g., conducting thorough premerger assessment of potential partners)
 
Technical capacity building Investment (time, money) is needed to build capacity for improved performance
 
Structures and systems to support change Structures (especially incentives) and systems (especially information systems) are needed to promote change and to improve organizational performance
 
People-Focused Leadership Tasks
External pressure In most cases, external pressure/support for change increases both its speed and likelihood of success
Buy-in from all levels; critical role of central authority and shared vision Support from top managers and leaders is essential, but buy-in is also needed from lower-level staff; a centralized group with authority for implementation of changes is critical, especially to develop a shared vision and goals for change
Communication Communication is needed at all levels: What is the vision; why change is needed; what progress has been achieved
Role of physician leaders Involvement of physician leaders, both formal and informal, in key decisions is critical to success
Managing tensions, trade-offs inherent in change Involving physicians versus respecting their time for patient care; time needed to build trust versus frustration with slow progress; building stakeholder buy-in versus building technical capacity (especially when buy-in and trust are enhanced by demonstrated technical capacity and improved performance)
Core versus peripheral organizational features Change in peripheral features of organizations, including management and support services, is easier to achieve than change in either core clinical services or organizational culture

SOURCE: D’Aunno et al., 2012.

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

laboration in health care will require a broader, interdisciplinary approach. Indeed, it is likely that current collaborative ventures among health care organizations may face greater challenges than in the past due to the increased complexity of the organizations themselves, including, for example, the difficulty of integrating their information technologies.

LESSONS LEARNED FROM OTHER FEDERAL AND PRIVATE-SECTOR COLLABORATIVE APPROACHES

The committee’s review of both the DoD/VA and the private-sector collaborations suggests several lessons for the consideration of future attempts to combine federal health care facilities. First, while reduced expenditures and improved quality of care are among the top stated goals of these collaborative efforts, the published evidence does not support these expectations. Second, both public and private efforts demonstrate the importance of several key features of collaborative ventures that heavily influence their outcomes. These key features are

  • strong, stable, and committed leadership;
  • shared vision and values for the collaboration;
  • clear and combined governance structures;
  • combined, or at least compatible, policies at the department level;
  • shared strategic planning and decision making;
  • interoperable IT systems;
  • compatible administrative processes;
  • clear mechanisms to share resources, both human and financial; and
  • constant and transparent communication.

These internal features then interact with pressures from and features of the external environment to determine the outcome of the collaboration.

Lessons Learned Relevant to the Lovell Federal Health Care Center

The Lovell FHCC was intended to address several lessons learned and barriers often cited by VA/DoD joint ventures seeking to improve services or reduce costs, or both. One is the need for strong leadership. Others are the problems caused by the differing accounting and billing systems of the VA and the DoD, which make it difficult to determine how much each partner should pay, and those caused by differing workforce policies, which put people with different pay levels doing the same jobs next to each other. The joint ventures are unanimous in citing the problem of incompatible IM/IT systems.

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

Strong Leadership

The departments chose local leaders for the Lovell FHCC merger process who were committed to its success. The Navy has consistently selected commanders of the naval hospital who strongly support the FHCC concept and even assigned a commanding officer to an unusually long tour of duty—4 instead of 2 years—for the period leading up to the launch of the FHCC in 2010. In addition, it was decided at the beginning to appoint the director of the North Chicago VAMC as director of the FHCC, who does not rotate as do military officers, which has provided important continuity in the key leadership position. Meanwhile, there have been four Navy medical leaders since 2003. There is also regular turnover in the active duty servicemembers leading the main subdivisions of the FHCC.

Differing Financial Systems

Differing financial systems have made it difficult for joint ventures to function optimally in several ways. First, they make it difficult for the partners to determine the costs of the services they provide to the other partner and to bill fairly. Second, they impose constraints on what each partner can pay for, even though it would be better overall for one partner to fund the equipment or the personnel of the other partner. The Lovell FHCC was designed to pool and spend funding in a way that does differentiate the sources. Instead, the departments are developing an innovative process for assigning responsibility for funding the FHCC in proportion to each department’s patient workload, which takes place after the fact. That process for reconciliation is scheduled to be completed and automated by FY 2014 and to form the basis for each department’s funding of the FHCC. The Hawaii joint venture is developing an alternative joint system, called the bi-directional enhanced document referral, or eDR, system, which has four modules: billing, third-party collections, analytics, and patient referral management.

Differing Personnel Systems

The DoD and the VA personnel systems for civilians have different statutory bases—Title 5 and Title 38 of the U.S. Code, respectively—and different job descriptions, which result in differences in pay, benefits, career ladders, and bonus systems for people who do the same work. This situation affects employee morale. The FHCC expects to solve this problem by transferring everyone into the same personnel system, the VA’s in this case.

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

Differing Electronic Health Record Systems

Each joint venture has developed workarounds for managing patients seen by both VA and DoD providers. The most advanced is Janus, the graphical user interface developed by the Hawaii joint venture, which has been chosen to be the basis for developing a joint user interface for the VA/DoD integrated EHR system. Janus was originally developed to manage prescriptions for VA patients being admitted to the Tripler Army Hospital. The planners of the Lovell FHCC were well aware of the importance of having the capability of accessing and updating VA and DoD patient health records simultaneously, and they insisted on having some basic interoperability capabilities in place. The delays in delivering those capabilities have subjected the Lovell FHCC to the same limits on seamless patient care as the joint ventures have faced.

Conclusion

Collaborations are challenging, time-consuming, and expensive, even in the best of circumstances. A literature review focused on private-sector health care collaborative ventures (see Appendix D) leads to the conclusion that there is much we do not know about how to reduce the uncertainty and to increase the success of sharing resources. Additional interdisciplinary work in this area is critical to expanding our ability to create collaborations that achieve the desired outcomes.

REFERENCES

AMEDD (U.S. Army Medical Department). 2012. AMEDD DoD/VA Healthcare Resource Sharing Program: Joint Incentive Fund information. DOD/VA Joint Incentive Fund guide link. http://vadodrs.amedd.army.mil/jif.html (accessed September 6, 2012).

Battilana, J., M. J. Gilmartin, M. Sengul, A.-C. Pache, and J. Alexander. 2010. Leadership competencies for planned organizational change. Leadership Quarterly 21(3):422–438.

Bazzoli, G. J., L. Dynan, L. R. Burns, and C. Yap. 2004. Two decades of organizational change in health care: What have we learned? Medical Care Research and Review 61(3):247–331.

Carlisle, M. A., and J. Henius. 2010. VA/DoD Joint market opportunities update. Presentation at the 2010 VA/DoD Joint Venture Conference, Las Vegas, NV, October 26. http://www.tricare.mil/DVPCO/downloads/lvjvc/Day3-1045_JVConfJMOUpdateBriefv45.ppt (accessed September 21, 2012).

Coddington, D. C., K. D. Moore, and R. L. Clarke. 1998. Capitalizing medical groups: Positioning physicians for the future. New York: McGraw-Hill.

Cox, K., and E. Ruschmeier. 2011. Joint Facility Utilization Work Group update. Presentation at the 2011 Joint Venture Conference, Charleston, SC, October 18.

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×

D’Aunno, T. (with the assistance of Y.-T. Chiang and M. Gilmartin). 2012. Collaboration among health care organizations: A review of outcomes and best practices for effective performance. Paper commissioned by the IOM Committee on Evaluation of the Lovell Federal Health Center Merger (see Appendix D).

Devers, K. J., S. M. Shortell, R. R. Gillies, D. A. Anderson, J. B. Mitchell, and K. L. Erickson. 1994. Implementing organized delivery systems: An integration scorecard. Health Care Management Review 19(3):7–20.

DoD/VA (Department of Defense/Department of Veterans Affairs). 2004. Memorandum of agreement for DoD/VA Health Care Sharing Incentive Fund. http://www.tricare.mil/DVPCO/downloads/MOAforJIF.pdf (accessed July 6, 2012).

DoD/VA. 2008. Fiscal Year 2003 National Defense Authorization Act, Department of Defense and Department of Veterans Affairs Demonstration Projects: Final report. July. http://www.tricare.mil/DVPCO/downloads/DSS%20Consolidated%20Final%20Report%20v%202.31%20formatted.doc (accessed August 7, 2012).

Eberhardt, J. L. 2001. Merger failure: A five year journey examined. Healthcare Financial Management 55(4):37–39.

GAO (U.S. General Accounting Office). 1978 (June 14). Legislation needed to encourage better use of federal medical resources and remove obstacles to interagency sharing. Report to the Congress of the United States by the comptroller general. HRD-78-54. Washington, DC: GAO. http://archive.gao.gov/f0902a/106271.pdf (accessed February 16, 2012).

Gilmartin, M. J., and T. D’Aunno. 2007. Leadership research in health care: A review and roadmap. Academy of Management Annals 1:387–438.

Malebranche, K. T. 2011. VA/DoD collaboration and medical sharing. Briefing by Karen T. Malebranche, Acting Chief Officer for Intergovernmental Affairs, Veterans Health Administration, Department of Veterans Affairs, for the IOM Committee on Evaluation of the Lovell Federal Health Center Merger, February 25.

Navy Medicine. 2012. Joint initiatives. http://www.med.navy.mil/BUMED/DODVA/Pages/JointInitiatives.aspx (accessed July 6, 2012).

Robinson, J. C. 1998. Consolidation of medical groups into physician practice management organizations. Journal of the American Medical Association 279(2):144–149.

VA/DoD. 2006. VA/DoD Joint Executive Council FY 2005 annual report. http://www.tricare.mil/DVPCO/downloads/VADoD2005.pdf (accessed August 7, 2012).

VA/DoD. 2008. Health care resources sharing guidelines: Memorandum of understanding between VA and DoD, October 31. AMEDD DOD/VA Healthcare Resource Sharing Program link. http://vadodrs.amedd.army.mil/Policy/MOU.html (accessed July 6, 2012).

Vogt, W. B., and R. Town. 2006. How has hospital consolidation affected the price and quality of hospital care? Research Synthesis Report No. 9. Princeton, NJ: Robert Wood Johnson Foundation, The Synthesis Project.

Suggested Citation:"5 Lessons Learned from Other Federal and Private-Sector Collaborative Approaches to Health Care Services." Institute of Medicine. 2012. Evaluation of the Lovell Federal Health Care Center Merger: Findings, Conclusions, and Recommendations. Washington, DC: The National Academies Press. doi: 10.17226/13482.
×
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×
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×
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×
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×
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×
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×
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×
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×
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×
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The 2010 opening of the Captain James A. Lovell Federal Health Care Center (FHCC) created a joint entity between the Department of Defense (DoD) and the Department of Veterans Affairs (VA) that replaced two separate centers in North Chicago. VA and DoD leaders envisioned a state-of-the-art facility that would deliver health care to both DoD and VA beneficiaries from northern Illinois to southern Wisconsin, providing service members and veterans seamless access to an expanded array of medical services. Unprecedented for the military and the VA, the Lovell FHCC would integrate clinical and administrative services under a single line of authority.

The DoD asked the IOM to evaluate whether the Lovell FHCC has improved health care access, quality, and cost for the DoD and the VA, compared with operating separate facilities, and to examine whether patients and health care providers are satisfied with joint VA/DoD delivery of health care.

Evaluation of the Lovell Federal Health Care Center Merger: Findings, conclusions, and Recommendations finds that initial implementation of the Lovell FHCC has provided important lessons about how to integrate VA and DoD health care services and has identified remaining obstacles that the departments could overcome to make such mergers more effective and less costly to implement. The IOM recommends that the VA and the DoD develop a comprehensive evaluation plan to objectively judge its success or failure, with measurable criteria, that would provide essential knowledge for both the Lovell FHCC and future endeavors.

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