Henry Ford Health Systems Positions Itself for the Future

In 1915 automobile mogul Henry Ford opened a hospital in Detroit with a vision of a comprehensive and coordinated medical care center focused on patient care, research and medical education. Based on that legacy, executives at Henry Ford Health System (HFHS) say they've been practicing integration since the original hospital opened. The system is a tightly integrated network of hospitals, community clinics, laboratories, pharmacies, nursing homes and hospice. HFHS holds a 10 percent share of the health insurance business in the Detroit metro area.

Despite the challenging and often frustrating nature of the healthcare marketplace there are ways for a health system to manage the changing landscape of the healthcare marketplace. Currently the transition from fee-for-service, volume-based model to one based on value requires them to reinvent what they do strategically, operationally and financially. Revenue from traditional sources will decline. Risks will rise and financial sustainability may be threatened. Carpenter (2012) asserts that hospitals and health systems are busy rethinking how they provide services and how they need to transform. The uncertainty is complicating their strategic planning process. In a sports comparison, health systems are under pressure to switch to a new playbook without abandoning the old one, and no one knows the new rules or when the next season starts (Carpenter, 2012).

The case under review indicates that the Henry Ford Health Systems has identified several pressing challenges as they face the future:

* Changing demographics is identified in regards to the need for cost effective strategies in managing the increased incidents and prevalence of chronic illness, treating culturally and ethnically diverse patient population, and an increasingly informed and demanding public.

* Continuing advances in medical technology and the biomedical sciences in that their investment in clinical research should be of assistance in incorporating the latest advances in basic science and biotechnology into patient diagnosis and treatment.

* The growth of information technology so as to manage the growing body of information and knowledge generated, and to provide effective interface with patients and the community.

* Workforce shortages and disruptions as shortages in various categories of health professionals, particularly nurses, may affect their ongoing pursuit of quality care.

* Dealing with implications of globalization, an effect through the outsourcing of functions from the big three auto manufacturers headquartered in the Detroit area as well as the proximity to Canada holds implications for both patient flow and supply of health professionals.

The auto industry continues to be the largest employer in Michigan. However, from 2000 to 2007 the state lost 402,000 jobs, mostly in the auto industry because of a variety of factors. The Big Three automakers; General Motors, Ford, and Chrysler, were not prepared for foreign competition. At the same time, not only were health-care costs rising for employees, but job reductions often resulted in early retirement (Glenn, 2012). This lead to a significant increase in the retiree population, whose health-care costs were covered by the car companies and many people no longer had health insurance because they lost their jobs. These factors led to reductions in the reimbursement rates and HFHS revenues were negatively impacted. HFHS needed to address the changes in reimbursement in order to survive. For its part, HFHS adopted electronic prescribing, developed a program for managing chronic disease, standardized MRI treatment, and reduced overall ICU and surgical infections. Even with the successful changes, primary care as a practice remained in danger. Higher co-pays result in fewer office visits. There are also many "non-revenue" patient demands, such as fielding telephone calls, providing social services, filling in forms, and reporting lab results.

A SWOT analysis of Henry Ford Health Systems reveals strengths as they are an integrated healthcare network with diversified health service offerings with consistent revenue