Industry Insight: Health Care

Dr. Bill Cron, senior associate dean for graduate programs and research, has spent much of his career focused on the health care industry and has served on numerous industry boards. We asked Dr. Cron about the changes taking place and challenges faced in the health care industry today. 

The health care industry is rapidly changing, shifting toward risk-based payment systems and community-based care. No longer do hospitals, rehab and urgent care centers, wellness and fitness centers, diagnostic sites or home care centers operate independently. All these different health care components will now work cooperatively.

Health care professionals must expand their understanding of the industry to accommodate this seismic shift. The Neeley School’s new Health Care MBA program, opening this summer, will equip those professionals to manage and lead the transformation.

Payment Systems

Today, up to 95 percent of health care revenue is generated by fees from services provided, and this system has been in place for decades. Today, health care is moving toward “risk-based payment systems, meaning the provider is paid not for the services performed, but for the outcome of those services,” explains Dr. Cron. “If a patient experiences negative outcomes (e.g., complications, re-admitted to the hospital, etc.), doctors are paid less.”

Beyond this, payment systems will shift toward a shared savings model, where Medicare, for example, will pay providers based on performance metrics. “If a physician is able to meet these performance metrics and do it at a lower cost, then that provider will get a certain amount back from the shared savings.”

The next phase in the evolution of payment systems involves bundled payments for a health care episode. For example, if a patient undergoes a hip replacement, Medicare will pay the physician a lump sum for every service provided under that “episode” — from diagnosis to pre-op to surgery, physical therapy and any subsequent rehab services. This lump sum will then have to be divided among the service providers, including doctors, surgeons, physical therapists and rehab specialists.

Ultimately, Dr. Cron explains, the health care payment system will end up in a capitation situation, where health care providers are paid a set amount for each healthy patient. Providers will have to meet performance metrics for that population and do whatever it takes to meet those metrics while being paid one flat rate to manage the health care of an entire population.

With each step toward capitation — or population health — there’s an increasing financial risk to the provider.

Community-Based Care

The trend toward community-based care requires health care providers, who have always worked independently, to work cooperatively with other providers. Primary care physicians, specialists, surgeons, physical therapists, rehab specialists and even fitness and nutrition experts must now collaborate as a team to provide patient care.

“There’s no history of this type of coordination,” says Dr. Cron. Health care providers have been trained on a knowledge base, but the knowledge needed for this team-based communication is nowhere in their training. “The MBA is all team-based. That’s what business is about these days,” he says. “Wellness is dependent on the experience the patient has with each different service provider.”

This community-based approach is driven by the changes in payment systems from a fee-for-service-based system toward a risk-based system. “The present one-size-fits-all doesn’t fit anybody,” Dr. Cron says. “All of that has to change because the new payment system won’t allow you to take a really simplistic approach to the encounter.”

All of this — risk-based payments systems and community-based care — require advanced databases and analytics. This is where information technology comes into play. Advancements in technology, such as electronic medical records and even wearable technology, play a role in the industry shifts.

Health care and the Neeley School

Students in the new Health Care MBA program at TCU will take courses that touch on these issues, from finances to IT, all with a team-based approach, preparing students to deal with the shifts taking place in the industry.

“Within health care, our focus is on the triple aim: how to enhance outcomes or value, how to reduce costs and how to increase patient satisfaction,” says Dr. Cron. “We will look at accounting, finance, operations, project management and marketing — these are the parts of health care we want to put together [for the student].”

Another focus of the Health Care MBA program at TCU is to develop health care professionals who are “the best-connected health care people in DFW.” Not only will students receive an education from an experienced faculty, ranked No. 2 in the nation by The Economist, they will be connected with industry leaders through speaker series, research and dinners with key figures in the local and national health care markets.

As Dr. Cron says, the end goal is to “expand students’ network, their perspective and their toolset” to prepare them for the challenges facing the rapidly evolving health care industry.

Learn more about the Health Care MBA at TCU

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