Developing a CIN for strategic value.

Clinically integrated networks (CINs) allow health systems and independent physicians to join in a mutually beneficial effort to adapt to new payment models. Key issues during planning for a CIN include organizational structure and governance, payer contracts, and incentive funds distribution. In assessing the network's potential financial impact, CIN planners should think in terms of managing total cost of care rather than in terms of revenues for care delivered.

The urge to merge.

For many stand-alone hospitals, a merger, partnership, or affiliation may be the only option to access scale and remain viable in the nation's emerging new healthcare delivery system. These organizations can consider many options for affiliation, including traditional options such as affiliation with regional academic medical centers, a merger or takeover to become the corporate member of a large system, and acquisition by a for-profit system. Emerging options include mergers for scale and access to capital, private-equity transactions, and arrangements involving insurance vertical integration.

5 pillars of clinical integration.

Implementing an effective clinical integration program requires deliberate investment of time and resources in five key areas: Physician leadership, Physician-led care management, Quality monitoring, Patient information and data sharing, Payer engagement.

Capital planning for clinical integration.

When assessing the financial implications of a physician alignment and clinical integration initiative, a hospital should measure the initiative's potential ROI, perhaps best using a combination of net present value and payback period. The hospital should compare its own historical and projected performance with rating agency median benchmarks for key financial indicators of profitability, debt service, capital and cash flow, and liquidity. The hospital should also consider potential indirect benefits, such as retained outpatient/ancillary revenue, increased inpatient revenue, improved cost control, and improved quality and reporting transparency.

Solving the ACO conundrum.

Hospitals contemplating developing an accountable care organization (ACO) will be rewarded for improving quality and reducing waste, but a chief strategic concern is the fear of losing volume. Hospital financial leaders considering an ACO should conduct a detailed financial analysis that examines the net impact of both shared ACO savings and hospital volume changes. A key part of this analysis should be an assessment of the organization's prospects for using the ACO to increase market share.