STRATEGIC PLANNING

“The Old Service Line Is Not the New Service Line”: Developing Strategies for the Service Line Growth of the Future  

Service line growth strategies have evolved significantly within the past decade, due to factors such as changes in site of care and payment models, consumer demands set forth by the COVID-19 pandemic, competition for physician talent and disruptive forces in the industry such as artificial intelligence and personalized medicine.  

How can hospitals and health systems develop responsive, informed clinical service line strategies, tools and concepts to drive success in an environment like this? At the SHSMD23 Connections annual conference, industry experts offered strategies to develop and modify clinical service line strategies to adapt to changing external pressures in ways that respond to your own unique market.  

“Accelerated innovation in healthcare is driving change, and providers have to plan today for the impacts of advancements and disrupters of tomorrow and the future,” says Lindsley Withey, a senior strategic health care advisor. 

Common Considerations 
  
Strategic considerations for responsive service line planning include, in no particular order: 

• Market pressures: “Where’s the growth, where’s the opportunity, where’s the competition? Data is fundamental to understanding that accurately,” Withey notes; 
• Consumer engagement; 
• Site-of-service pressures and virtual health tools; 
• Rightsizing and optimization: “Health systems have the disadvantage of millions or billions of dollars in capital investments, while disruptors don’t have that latent burden,” Withey says. Health systems must optimize their real estate resources; 
• Defensive investments: “Make sure you’re investing in areas that may be nontraditional,” Withey explains; 
• Physician networks; 
• Technological disruption; 
• Home-based care; 
• Social determinants of health and health equity: “How are you reaching patient populations you have perhaps not been able to reach in the past, with a strategic mindset in alignment with your organization’s goals?” Withey asks; 
• Care coordination throughout continuum of care; and 
• Convenience care such as online scheduling. 

That list can be overwhelming, acknowledged Amanda Trask, the senior vice president of clinical institutes and service lines with CommonSpirit Health, one of the nation’s largest nonprofit health systems. She adds: “How you encapsulate all of this into your vision for where you are going is strategically necessary.” 

First, she says, it is important to understand what a service line is (and should be) and what it is not (and should not be). “Service lines need to be part of your organizational commitment, focused on specialties that suit your market and location—you can’t be all things to everyone—and have a structured approach, with a framework to collectively deliver on your chosen strategy for service lines,” Trask explains. 

A service line cannot be disconnected from your overall strategy. “If it’s not part of your core strategy, then choose something else to focus on. Also, ‘pay for play’ with your physician partners is not always the most effective strategy for service lines,” she notes. 

A Solid Strategy 
 
Effectively executing a coherent, organized service line strategy means developing a vision and understanding the opportunities, prioritizing service lines based on the health system’s unique institutional factors, implementing care delivery models and aligning incentives into those models, establishing effective service line governance and cultivating physician engagement and balancing overall strategies with those that are local and unique to your market.  

Withey shared an example of a market analysis, which plotted nearly two dozen clinical service lines on an x-/y-axis balancing business strength (volumes, net revenues, payer mix, etc.) and market attractiveness (size, growth, revenue, competitive intensity), with a bubble size for each service line representing its contribution margin for case. For that particular institution, service lines like neuroscience and gastrointestinal surgery fell on the low side of the graph for business strength and market attractiveness, while infectious disease, pulmonology and cardiology were high on both.  

“Some of these results are not what you might expect, and these findings will be different for every organization,” Withey explains. “Anecdotally, a lot of service lines come to the top at every organization, but even if you think it might be a huge revenue generator, if you’re not doing it well or have competition down the road doing it better, it can still move to the bottom. That said, while you should definitely prioritize service lines that have strong market attractiveness, where you are doing it well and making great margins, you shouldn’t necessarily neglect those at the bottom.” 

She cites a maxim from Jill Horwitz, a professor of health policy and management at the University of Michigan School of Public Health, in Ann Arbor: “If you are only providing the services that are most profitable, you might not be doing the best service for the patient.” 

Once you have prioritized your service lines, Withey notes, there are several key factors essential to success: 

• Develop service line performance and quality metrics. 
• Ensure you have a good pipeline of physician expertise, recruitment and referrals. 
• Understand the balance between profitability and mission. If a service line is “mission” driven but not profitable, determine how to account for the lack of revenue somewhere else. 
• Know your competitors and do your due diligence to understand the market. 
• Balance access, infrastructure and patient experience. If you have a superstar in one location, determine how that strength is translated across your continuum of care. 
• Ensure that you have staff resources to build service lines in multiple locations. 

“With the fractionation of care delivery service models, getting to the lowest cost of care point has caused a lot of disruption in historically successful service lines,” Withey explains. “You can no longer have the four walls of the hospital bounding your service lines. You truly want to make sure you’re permeating across the continuum of care, including remote/digital, retail, primary and specialty, ambulatory, post-acute, long-term care, wellness and fitness, behavioral health, and home care as well as acute care. Your services need to be effectively distributed across the market, in the most appropriate, efficient and lowest-cost settings.” 

To develop effective service line governance, particularly in a larger health system, it’s important to align health-system incentives with service line objectives, according to Trask. This includes a structure for each service line that involves overall executive councils, site and facility senior leadership, and specialty and subspecialty clinical councils and sub-councils at each site. “At CommonSpirit, we engage physicians with a clear strategy that provides leadership opportunities and gives a voice, formally connects each group to the organizational structure, and develops deeper connections to our purpose and mission, while empowering the service lines to think about and drive systemwide initiatives,” she says.