'Business is challenging right now': How Intermountain's CEO looks to bend the healthcare cost curve

Intermountain CEO and President Dr. Marc Harrison has been on a bit of a PR campaign lately championing the 21-hospital Utah-based health system. Earlier this month, Harrison delivered a presentation to about 400 community and healthcare stakeholders in Salt Lake City showcasing the system's relationship to the community.

Harrison has a lot of which to be proud. Intermountain, according to the system, clocks in as the state's largest private employer with 39,000 caregivers. As a whole, the system is responsible for about 7% of all jobs in Utah as well as 6.6% of the state's GDP by generating $6.5 billion in revenue. In addition, the system provided $419 million worth of charity care last year and has led an environmental conservation focus which has resulted in annual reductions of water use by 8.8 million gallons and 6.9 million pounds recycled.

"Getting some of those ways we contribute back to the community out was important because in the absence of information, people will make up stories for themselves and I want to make sure we all worked off the same facts base," Harrison recently told Healthcare Dive. In addition to Intermountain's community successes, Harrison shared what's top of mind for some of the recent trendlines going on in the hospital industry today, such as shrinking operating revenues, the inclusion of health IT in the care delivery space and, yes, bending the cost curve. Below Intermountain's video are the main takeaways from the conversation.

Addressing the cost curve is helping Intermountain's margins

There's been a wave of stories across the industry showcasing falling operating incomes, from Cleveland Clinic to NYC Health + Hospitals, but Harrison sings a different tune at Intermountain. The system closed 2016 out on budget with EBITA of about 8.5% and a margin of around 3.7% of about $270 million, he said, adding that was in the face of implementing a new EHR and the government owing the system $400 million in risk corridor payments. Though the numbers aren't official for the first quarter of 2017, Harrison did say the financials look "even stronger" in the first part of this year over last.

Harrison attributes much of this success to continually addressing the cost curve of care. "Taking out costs is something we've done over a long period of time and we're rigorous about it," Harrison said. "We have a lot more to do and this will never be done but what you can expect from us year on year is that we're continuing to try and drive a safe, quality patient experience to create value at the same time that we are trying to take out costs."

Harrison shared the run rate at Intermountain is almost $1 billion a year in what would be incremental revenue but the system was able to take out $931.8 million in costs in 2016 over projections from 2011. Harrison looks for similar results this year by continuing to find new, more efficient means to service the patient while staying lean.

Some costs were taken out by the usual examination of supply costs, wastes and reducing redundancies. However, Harrison noted standardizing care using a continuous improvement process that engaged the clinical frontline and leadership to think how to best serve patients helped to make operations more efficient, cutting costs as a result.

One example: The system developed a tool internally – ProComp (now spun off into Empiric Health) – which uses technology to make transparent for surgeons costs for supplies they use in the operating room. "There's no mandate," Harrison said. "We believe clinicians make the right decisions for patients. Given the opportunity to use the $50 bone glue or the $500 bone glue, an orthopedist very often will say the less expensive option will be just fine." The thought is if clinicians think of themselves as good stewards of resources in tandem with serving safe and quality care to patients, that can drive out costs within a system. "We think Empiric Health is going to be attractive to others because it will empower their clinicians to do the same thing, which is use good common sense and to be careful with expensive resources," he said.

"Business is challenging right now and many systems are stressed and many, like we are, are really paying attention to how we run our business, maybe in a way like we've never done before."

Dr. Marc Harrison

Intermountain CEO, President

Telemedicine is a high priority tech initiative

Many health systems are looking into telehealth as technology options that can help them contain costs while expanding their patient base. As Palmetto Health's Chief Value and Informatics Officer Tripp Jennings told Healthcare Dive earlier this month, providers shouldn't wait to pursue a telehealth strategy until they switch to value-based care because by then, they'll already be behind the curve since such an effort can't be implemented overnight.

Harrison considers telehealth to be a "high priority" so the system is actively allocating money for such efforts. "We try to think holistically about what our mission and strategic goals are and one of our strategic initiatives is around empowering the consumer and making care accessible and affordable in novel ways," he said. "It would be shortsighted of us not to support that with resources to make it possible."

Intermountain's telehealth services have helped care for about 242,000 patients since 2013 and the system is looking to engage both primary and specialty care areas. "As a payer/provider, we're able to incentivize to keep the cost low for people so they can make the best possible decision for themselves [for care delivery]," Harrison said. "We believe if we're going to be successful in driving the value equation that engaging the patient as a full partner in a shared accountability approach is really going to be important. What we're seeing is people acting in a thoughtful way in ensuring they are getting what they need but not pay more for it than they need to." 

One example of how the system is trying to empower the patient to seek care where, when and how they wish to receive it is by allowing care to be delivered in the least restrictive environment that's appropriate for them. The system has saved over 50 helicopter rides through a program in the St. George region (somewhat remote from Salt Lake City) where children with mild to moderate head injuries get a distance consult from an emergency medicine physician and a neurosurgeon where their films are read remotely to decide if a patient needs to be transferred. 

Business is hard but don't lose sight of what's important

"Business is challenging right now and many systems are stressed and many, like we are, are really paying attention to how we run our business, maybe in a way like we've never done before," Harrison said. "But we need to keep talking about the patients and the fact that the relationship between a patient and their provider is a sacred one that deserves enormous respect."

Harrison continued, "We should never take our eye off the ball of why we're here. We're not here to make money. We're not here to build fancy buildings. We're not here for our own personal gratification. We're here to care for others. Sometimes in the stresses that we feel, that conversation gets lost. There's nothing more motivating for our caregivers and community leaders to hear and feel the tie back to the core which is to care for other human beings."

"We can and should talk more about . . . how to get upstream of disease and try and put ourselves out of business."

Dr. Marc Harrison

Intermountain CEO, President

Time to go upstream?

Intermountain is taking the approach of “moving upstream” to improve health in its community. This includes the LiVe Well public service campaign, creating a healthy eating environment at medical facilities and supporting community health initiatives. "We can and should talk more about . . . how to get upstream of disease and try and put ourselves out of business," Harrison said, adding Intermountain for decades has identified procedures and approaches and medications that do not need to be used and have forgone revenue as a result. For example, the system is addressing its vaginal hysterectomy rate this year to get closer to the national median utilization rate. Harrison says the move could be a hit from a revenue standpoint but he is glad to go through with the reduction because "we want to make sure that people only get procedures done when they absolutely need them."

"The number of systems that have really taken that on and actually forgone revenue are vanishingly small," he added.

In addition, the system is looking at community health needs and board level goals to address population health issues such as opioid misuse, hypertension and type 2 diabetes. "We want to create the healthiest communities with healthcare at the lowest per capita cost at Intermountain and the only way to do that is by getting upstream with chronic disease," Harrison stated.

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Filed Under: Hospital Administration Practice Management
Top image credit: Intermountain Healthcare