Newsletter
Motivating Employees Under an ACO
Presented by Integrated Healthcare Strategies, as authored by Kevin Haeberle
Much has been written and discussed about the development of Accountable Care Organizations (ACOs) under the Section 3022 of the Patient Protection and Affordable Care Act (PPACA). The relevant section of the PPACA amends Title VIII of the Social Security Act to allow Hospitals, Insurance Companies and Physicians to group together to become ‘accountable’ for a patient population, with the desired outcome to be at a higher level of coordination which will hopefully improve the quality of care and reduce costs. The incentive to encourage participation in the program is that any savings achieved through the coordination will be shared with the participants as long as quality standards are met. Prior to the passage of this amendment, any savings would generally solely benefit the Medicare program at the likely expense of the providers and insurance companies.
Much is mentioned in both the legislation and subsequent commentary about how ACOs will impact the relationship among physicians and hospitals, and insurance companies and hospitals, but there is no mention in the legislation or commentary about how ACOs may fundamentally impact the hospital’s relationship with its employees. The potential impact on employees is especially concerning because of the existing high level of job insecurity and wage issues already straining hospital and employee relations as the result of the economic recession.
The most significant impact on employees will be the higher accountability for quality and service outcomes. Although all hospitals are at various points along the spectrum in developing improved systems to enhance quality and customer service, there is little, if any, direct financial return for those efforts and the costs incurred. Typically, the main financial motivation for launching quality and customer service initiatives is that if a hospital can demonstrate higher quality outcomes and better patient and family relations, it is more likely to have better physician relations and ultimately improved volumes and fewer readmissions. Under ACOs, not only does this indirect motivation remain, along with the hospital’s inherent desire to better serve their communities, but there will also be a financial motivator that can be used to offset the investment in costs and effort. By adding a direct financial component, the willingness to commit more resources to quality and patient relations improvement is likely to be elevated.
Through information and data analyzed from the IHStrategies Employee and Leadership Engagement Surveys in healthcare organizations throughout the nation, it is clear a majority of employees already feel the strain of meeting higher performance, customer service and productivity requirements with fewer and fewer resources. Add to that stagnant wages, reduced benefits, and generally flat employment in healthcare, and adding on even higher accountabilities for quality and customer service could be a tipping point for many employees.
Many hospital leaders are not fully prepared to take the motivation of employees to ‘the next level’ which will be required under an ACO environment. Much of senior executive focus in developing ACOs is on negotiations with insurance companies and determining how to manage the changing relationship with physicians. Little is typically being done to provide education and support for the operational leaders of the hospitals as they prepare employees for the changes ACOs will bring to their workplace. From requiring more demonstrable results from every employee, to more rigorous and sophisticated performance reviews, simply telling employees they must perform at a higher level will not be sufficient to make the changes occur. For the desired outcomes of ACOs to occur – higher quality and service at reduced costs - not only will there need to be a high level of buy in from physicians, but also from employees- particularly those involved directly in clinical activities.
Hospital leaders at all levels are typically highly effective at communicating information, but tend to be less effective in ‘selling’ an idea or persuading large groups due to a lack of ability and experience with this skill. Also, healthcare management must carefully weigh the broad implications of initiating new programs designed to create additional motivational tools for first line leaders. As a result, many hospitals may develop and implement an ACO before the tools for motivating employees are in place.
For example, hospitals will need to look at employee incentive pay programs which reward directly for improvement in the patient experience. Such a program could also be used to illustrate to employees how the savings the hospital may experience as the result of improved coordination through the ACO can be shared at all levels, not just with the physicians. This broader ‘sharing’ will create more buy-in and acceptance, and ultimately higher performance by employees and better outcomes for patients.
Also, a new value model will need to be developed that is consistent for all the participants in the ACO, not just the hospitals. Creating a common value system among insurance companies, physicians, and hospitals (employees and leaders) is quite daunting considering each group currently has various business propositions and differing focus on ‘service’ and the patient experience.
In any healthcare initiative led by hospital leadership, having a well thought out and ready to implement ‘people’ plan can be the difference between success and failure. With the advent of ACOs, it is clear little discussion has occurred on the ‘people’ side of development, particularly the changes that will need to occur in operational leadership and for all employees, particularly those involved directly in patient care. Developing a ‘people’ plan now, in parallel to all the other ACO development activities, is crucial if the ACO concept is to achieve its lofty goals of higher quality at a reduced cost.
About the Author
Kevin Haeberle is Executive Vice President and Practice Leader of the MSA HR Capital practice of Integrated Healthcare Strategies. Mr. Haeberle may be contacted by calling 800.821.8481 or emailing Kevin.Haeberle@IHStrategies.com.
About Integrated Healthcare Strategies
Integrated Healthcare Strategies provides not-for-profit healthcare organizations with direct access to a comprehensive array of healthcare-specific services, delivered by professionals from the industry who understand the rigors of running a healthcare organization – from the lunchroom to the Board Room. Its client list is a “who’s who” of healthcare organizations including over 1,200 major healthcare providers, 1,800 hospitals and 700 independent and affiliated medical groups. Integrated Healthcare Strategies specializes in the areas of physician strategy and compensation, employee compensation, executive compensation, human capital solutions, labor relations, leadership transition planning, executive search, employee surveys, performance management and board governance solutions.
The MSA HR Capital practice helps clients develop a human resources organization that supports their strategic goals. MSA HR Capital provides comparative data from over 1,000 hospital organizations to tailor solutions for your specific work environment to ensure that you reach objectives by integrating your management, compensation, labor relations and employee engagement goals into one seamlessly operating strategy. Our process is simple - turn data into information which helps develop more knowledge, better decisions and positive actions.
For more information, visit www.IHStrategies.com.
