ADVANCE for Executive Insight 1 ADVANCE for Executive Insight

CFO perspective
James L. Starr is CFO,
Lumeris, and Richard Jones
is president and CEO,
Essence Healthcare.
In this emerging model, costs matter. But,
long-term clinical results will matter more,
because they are the key to lower costs.
right by enabling value-driven decisions that
have the right infrastructure, technology, patient-centric
programs, and incentives to deliver
high-quality, cost-effective care to your
chosen population across the entire continuum
of care.
It is now recognized that the volume-driven,
fee-for-service model is unsustainable. U.S.
healthcare spending stands at $2.7 trillion. Our
per capita spending – $8,500 per person every
year – outstrips that of any other nation. The
ROI is dismal: On average, Americans die sooner
and experience higher rates of disease than people
in other affluent countries. 1 These stunning
comparisons are global. But the healthcare challenge
is local. So is the opportunity.
Consider your own market. Using the U.S. average,
calculate what is spent locally. For example,
in Philadelphia with a population of 4 million,
healthcare represents a $36 billion market.
What does this mean for your organization?
intent and upfront investment in infrastructure,
technology, culture and resources – but it also
presents the best opportunity to achieve longterm
financial stability.
Building ROI in a Successful
Accountable Care Model
Accountable care is about getting healthcare
Spending Calculations
The number of potential patients is the starting
point. Factor in the number of healthcare systems,
provider groups and hospitals. Then calculate
the ratio of primary care physicians to
specialists, because PCPs are central to successful
accountable care. The right combination of
all participants sharing data transparently and
seamlessly will create a “network effect” and amplify
your results. Everyone benefits greatly when
they are all connected in a network of healthcare
providers and purchasers where incentives are
aligned for overall success.
This is the local opportunity. Seizing it requires
a strategy that moves your organization
from volume to value; from short-term cost
management to long-term results.
In this emerging model, costs matter. But,
long-term clinical results will matter more, because
they are the key to lower costs. Improved
patient outcomes will drive the needed ROI for
your healthcare system.
thinkstock/istockphoto
22 ADVANCE for Executive Insight