Creating Economies of Scale in Service Line Development

Service Line Development in a dynamic health care setting


As the health care market continues to evolve, we can use the word dynamic to describe the moving parts. Organizations continue to challenge current paradigms in order to compete effectively, while striving to be the best quality in care delivery at the lowest possible costs. Many smaller organizations are finding it necessary to merge or affiliate with larger organizations to gain efficiency , while larger organizations are finding it necessary to find synergies in the care delivery models in order to better coordinate care for patients.

In a highly competitive Northeast market, one large tertiary care , level one trauma hospital (Northeast Medical Center) has an affiliation with an 8 hospital private not for profit system (Eastern Health System). The two organizations have recently had the state legislature pass a bill that allows them to work together on various quality and cost efficiency initiatives. The two organizations have identified several initiatives to work together on to improve health care delivery in the market. One such initiative is the development of an oncology service line.

The development of a coordinated oncology service line is daunting task but makes great sense in the market. Each organization has some oncology service presence in the market. A professional service committee(PSC) was formed with representatives from each organization to discuss how to plan and coordinate services to deploy across the market. Some key questions and considerations are the following:

1. What steps should the PSC do to organize their work?

2. How should the organizations identify the deployment of services across the market?

3. What structure should be set to optimize ideas and innovations?

4. What process should be employed?


Creating Economies of Scale in Service Line Development


How do we measure performance when we move from disease specific/age specific units to an integrated unit that is primarily geographical based.

Participant comments on Creating Economies of Scale in Service Line Development

  1. I would think one of the first priorities for the PSC would be to establish the parameters of who is going to do what and where? Which services will be offered in the various locations and who is going to be doing the billing? Is it going to be a cooperative billing process where the revenue is divided between the organizations, as in a bundled payment model, or are the different hospitals going to bill separately for the services they provide. Unfortunately, so much of how our healthcare is organized in this country is based upon how we get paid.

  2. We consolidate service lines with our clinically and financially integrated partnerships. This is usually a 12 month process and we have seen great success at expanded access, improved quality and growth in volume. Our experience has been in the areas of oncology, cardiology, pediatrics, infusion, orthopedics, women’s services, & neurology. There are many regulatory consideration as you plan and evaluate these consolidations. Obviously, best location for the patients in the market, clinical and staff compentencies, employment considerations, volume growth projections and operational efficiencies are key considerations. I can send you our project planning template for managing the integration of service lines with our partners.

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