This document provides a roadmap for clinical integration as healthcare transitions from fee-for-service to value-based payment. It outlines three phases of integration - asset aggregation, functional integration, and system optimization. True clinical integration requires optimization across clinical, financial, and operational areas through shared governance, financial alignment, and clinical/business integration. Following this roadmap by focusing on vision, governance, alignment, and culture can help cardiovascular groups successfully balance the current and future healthcare worlds.

1. 1 | PERSPECTIVES A Roadmap to Clinical Integration
A Roadmap to Clinical Integration: How to
Successfully Transition to Value, While Still
Operating in the Fee-for-Service World
In healthcare, transitions of care from one practice setting to another can be
fraught with poor communication and inadequate collaboration among caregivers.
In the same fashion, challenging transitions in the business of healthcare can
create significant challenges for patients, physicians, hospitals, and payers. The
transformation of our healthcare system from volume to value-based payment is
proving to be particularly perilous for many providers – especially those, such as
cardiovascular physician groups, that have relied heavily on diagnostic testing and
therapeutic intervention.
Transitioning to a value-based future, however, requires more than just
collaboration among providers; it requires rethinking of the core elements of
practice organization and developing complimentary levels of clinical, operational,
financial, and cultural alignment that further advance the respective participants’
shared incentives with objectives that support the entire enterprise.
The resulting formal and informal relationships should move beyond the holding
company model of decentralized, autonomous units into one that will require layers
of integration and shared governance, structured around resource optimization
for both clinical services and business functions. When organized effectively, this
clinical integration will result in true performance optimization that will ready an
organization for the value-based model.
BALANCING IN TWO WORLDS
But the journey to clinical integration is not straightforward; it requires a roadmap
that focuses on specific steps in strategy, governance, financial alignment, clinical
and business operations, and culture.
During this transition, provider organizations must perform a delicate balancing
act – working effectively in the fee-for-service world, while preparing to make
the leap into the value-based future. One world has come to rely upon maximal
utilization and the more siloed model of care delivery, while the other promotes
and incentivizes collaboration in order to reach the entwined goals of high-quality,
cost-effective care. Providers find themselves challenged to continue optimizing
performance in the current environment, while making the necessary changes to
prepare for the new one.
CONTACTS »
James M. Palazzo
817.488.1453
jim.palazzo@navigant.com
Ronald J. Vance
678.845.7630
ron.vance@navigant.com
Rob Moss
817.807.8178
robert.moss@navigant.com
navigant.com/healthcare

2. 2 | PERSPECTIVES A Roadmap to Clinical Integration
WHY START NOW?
Taking a wait-and-see approach in preparation for the value
payment model may seem appealing, especially in light
of the traditionally slow pace of change in the healthcare
industry. But such an approach risks leaving physicians and
hospitals ill-equipped to compete and prosper. The leap
from the curve one to the curve two model comes with a
host of changes. Just how all the changes will ultimately
shape the industry remains to be seen, but the key drivers of
change for cardiovascular programs include:
»» Focus on output vs. input. Payment increasingly will be
based on quality outcomes, rather than high production
and utilization.
»» Cuts in reimbursement. Providers are being penalized
with lower payments for not meeting payer quality and
patient experience goals.
»» Collaborative, coordinated care. Through approaches
such as accountable care organizations and shared
savings plans, payers are incentivizing providers to work
together to improve quality and reduce the cost of
delivering care.
»» Population health management. Providers are utilizing
care models that better manage chronic and complex
diseases to lower the cost of care and meet outcomes-
based contract incentives.
»» Data/technology. Meeting government-mandated
meaningful use requirements and identifying practices
that foster cost-effective, quality care requires significant
investment in information systems to gather data and
analytical tools to profile performance.
»» Consumer-focused health care. Improving the patient
experience becomes increasingly important as out-
of-pocket costs continue to rise and patients choose
providers/services based on price, reputation, and
convenience.
Overall, the aim to provide the best care for an entire
population of patients at the lowest appropriate cost drives
the need for an integrated approach capable of meeting
the demands of patients and payers.
Historically, cardiovascular services have been a visible
element of a provider’s brand. In order to protect that
brand, as payment and utilization rates decline, systems will
have to acquire new connections and competencies.
THREE PHASES OF MATURATION
In achieving optimization and becoming a fully integrated
organization, provider organizations migrate through three
phases of maturation:
1. Asset Aggregation – Initially, growth is the basic strategy.
One hospital grows to two, two to four; health systems
merge and acquire physician practice groups. The
goal of aggregation is to obtain scale and clout; there
is limited central control, so local units are largely
autonomous. Critical mass is more emphasized than
efficiency.
2. Functional Integration – In this phase, the independent
units of an aggregated system begin to form neural
connections between business operations that can result
in the beginning of improved efficiencies. Centralizing
non-clinical functions such as information technology,
supply chain, revenue cycle, and human resources can
generate cost savings, but are limited in their impact
given value-based requirements. Generally, business
operational efficiency is more emphasized than clinical
integration and efficiency.
3. System Optimization – In the last phase of maturation, the
model is that of a high-performing operating company.
Strategic decision-making moves from the individual units
to the core of the organization. Service line leadership
takes place at the system level. Clinical integration
is the end goal, and dependent upon the successful
implementation of the first two phases above.
Many organizations have acquired or merged with other
providers and may have achieved some elements of
functional integration. Reaching true clinical integration,
however, requires optimization in clinical, financial, and
operational spheres.

3. 3 | PERSPECTIVES A Roadmap to Clinical Integration
THE JOURNEY TO OPTIMIZATION
Because changes continue to churn within the healthcare
industry, crafting the perfect cardiovascular partnership is
not possible. Rather, the strategy should focus on obtaining
optimization between the cardiovascular service line and
the overall enterprise.
Doing so requires following a roadmap of priorities while
crossing that bridge to value and moving from simple
aggregation to true clinical integration. Decision-makers,
therefore, should focus on building and strengthening these
core areas within the cardiovascular enterprise:
Vision and strategic direction. Provider organizations can
integrate using a variety of models, ranging from the
management service organization and joint venture to
co-management and full employment. These models are
not mutually exclusive, but no matter the type of affiliation,
each partner or entity in the network must share principles
and strategies that lead toward more efficient clinical,
operational, and business practices.
These stakeholders work together to redesign their system to
deliver high quality, cost-effective care. Meeting targeted
quality outcomes is not going to be enough. Nor is gaining
networked leverage in managed care contracts. Reducing
the enterprise cost structure is a core initiative in optimizing
an integrated networks.
As reimbursement drops along with volume, survival will
require employing practices to achieve scale. This will
include development of multiple sites with comprehensive
services and an extensive patient referral base in order to
leverage fixed costs. Inpatient, outpatient, and ancillary
services have to become less fragmented. Assets will have to
be redeployed and clinical operations must be redesigned
to incorporate practices that reduce clinical variation, such
as evidence-based protocols.
Such a system will require wide ranging skills to manage
operations along a continuum of care and support population
health management. This will require an understanding and
commitment of the need to invest in information systems
and technology, such as electronic health record systems
and data analytics that will equip physicians and other
stakeholders with the tools necessary to identify inefficiencies
and foster quicker, more effective decision-making. Physicians
will also have to be introduced to data historically not in their
domain, and trained in using it effectively to promote the
overall strategic direction of the network.
Shared governance. Shared governance involves removing
the walls between the once disparate entities so that all key
constituents participate in critical decision-making. Hospital
executive leadership, middle management, physician group
leaders, and other physicians and care-team providers all
play a role in making decisions that support the overall vision
and strategic direction of the partnership. These decisions
will foster improved performance across multiple dimensions
– clinical (inpatient and outpatient), operational, and
financial.
When a cardiovascular practice group partners with
another provider organization, system optimization means
that all strategic and operational decision-making for
an organization’s cardiovascular programs are under a
central cardiovascular governing body. The governing
body then develops and oversees the implementation of
cardiovascular strategies for the entire provider organization.
Significant attention should be given to the voice of
physician leaders in the clinically integrated network.
Accustomed to being the sole decision-makers in volume-
based care, physicians should not be made to feel
disempowered, but re-empowered (along with other
care-team members) as facilitators of the emerging
healthcare model. They play the central role in optimizing
utilization, managing expenses, and achieving required
clinical outcomes – the key tenets of population health
management whose implementation is essential in achieving
the value equation.
Physicians must also be able to collaborate, sometimes
serving as the captain and other times the lieutenant, in
teams with other caregivers to achieve financial incentives
offered in accountable care organization models. At
multiple levels, however, the physicians must be empowered
to help develop and implement the clinical and business

4. 4 | PERSPECTIVES A Roadmap to Clinical Integration
protocols that help reduce unnecessary clinical variations
and enhance efficiencies.
Financial alignment. Attaining system optimization requires
forming agreement on what is best not only clinically for the
organization, but also what is best financially enterprise-wide.
Service line operating and capital budgets, for example,
must be adopted across the enterprise.
Alignment also means that those involved in the delivery
of care have a vested interest in doing what is best for the
financial health of the organization. Compensation models
for both employed and independent physicians must move
beyond a dependence on volume to reinforce clinical
practices and behaviors that foster quality, efficiency,
and a positive patient experience. Financial incentives for
physicians are based on their ability to meet system-wide
goals for the cardiovascular service line. Compensation
arrangements will also reinforce accountability for minimum
work standards for all cardiac providers.
An individual physician or an entire department will be
rewarded for using best clinical practices that also support
cost efficiency. In a fully optimized system, a cardiologist
will use a stent that meets both quality and cost standards
developed by clinical and administrative leaders together.
Clinical and business integration. When an enterprise is fully
integrated, clinical practices and business operations are
structured around the entire enterprise. Service lines are
operated under the shared services approach, for example.
Fundamentally, integration requires a change in how
decisions are made. Essentially, physicians will find
themselves adjusting their thought processes from basing
their decisions largely on the good of their cardiovascular
group to the more encompassing benefit of patients of
the enterprise. Consolidating open heart surgery into one
hospital may not benefit the other hospitals in the system,
for instance, but it can produce improved outcomes and
operational cost savings for the enterprise and its patients as
a whole.
The adjustment to enterprise-wide decision-making changes
incentives from productivity to affordability – cardiologists
will follow care protocols that meet both quality and cost
standards. Individual physicians also must understand how
care practices have financial implications for the entire
organization. Although a cardiologist may once have been
concerned only with patient outcomes in use of a particular
implant, meeting the value proposition requires considering
the cost implications, as well. If the costs of treatment are
excessive, the organization may lose patients, its margins will
be negatively impacted and the ability of the enterprise to
continue investing in the service line will be compromised.
As the care delivery model evolves physicians will need
to understand how they fit into the larger issues around
management in the entire continuum of care. Cardiologists,
in particular, must reinforce links with primary care physicians
and work with care coordinators and other members of the
networked care team to cost-effectively manage patient
populations with chronic and complex conditions. Managing
the health of patients with conditions such as heart failure
will help to reduce hospitalizations, which serves the best
interests of both the patient and the provider organization.
Shared values and culture. In order for integration to work,
all members of the enterprise must truly understand, accept,
and support its mission and goals. Culture helps to connect
disparate pieces so every part is moving in the same
direction.
In order to help “right the ship,” everyone has to support
the reasoning and strategy for improving performance or
pursuing growth. If one piece of the process is not performing
up to standards, others will be needed do their part to
strengthen that element for the good of the organization.
Working together and achieving success will help to build a
culture of trust that will go a long way in smoothing out the
bumps along the road to system optimization.
The importance of shared values and culture doesn’t follow
the other dimensions of the roadmap, therefore, but moves
and grows along the journey. Being deliberate to develop
and foster a culture of partnership and excellence, with high
accountability for teamwork at all levels of the service line is
essential to an optimized program.

5. 5 | PERSPECTIVES A Roadmap to Clinical Integration
© 2014 Navigant Consulting, Inc. All rights reserved. 00003378
Navigant Consulting is not a certified public accounting firm and does not provide audit, attest, or public accounting services. See navigant.com/licensing for a complete listing of private investigator licenses.
PULLING IT ALL TOGETHER
Acquiring and employing the expertise to pull all these
strengths together presents the underlying challenge
in achieving system optimization. Realizing continuous
optimization requires not just experience in, but excelling in
clinical, strategic, financial, and operational disciplines.
There must also be a comprehensive understanding of how
a cardiovascular program operates, the role it plays within
the whole of a health system, and its interconnections with
external stakeholders, such as payers. Health system leaders
must recognize the gap between the existing competencies
of their enterprise and what is needed to meet the
requirements of the value-based payment model.
Although the goals of value-based payment are well
understood--better care both for the individual patient and
for a population of patients along with lower-cost care – the
form these objectives will shape in each market will vary.
Moreover, the pace of value-based payment incentives
will likely be highly fragmented across the nation, and vary
significantly by region and local markets.
What is clear is that provider organizations have a unique
opportunity to transform and redesign the healthcare
system. However, doing so requires more than forming larger
systems. Hospitals and physician groups must develop the
vision and acquire the tools necessary to collaborate, align,
and engage in order to become fully integrated and be
able to operate successfully in the fee-for-service world while
looking forward to the new world of health care – whatever
forms it takes. Given the current pressures and dependencies
on cardiovascular services and the integration of cardiac
providers, they have a unique opportunity and imperative to
successfully lead the way on this journey.