Livonia, Mich.-based Trinity Health is accelerating a sweeping transformation of its care model, one that shifts the center of gravity away from hospitals and toward outpatient, virtual and home-based services.

Getting there requires overhauling a hospital-centric mindset that still shapes how most large health systems think, invest and operate, while also closing a $1.5 billion financial gap stemming largely from Medicaid funding cuts through H.R.1.

The strategy is not new, but the urgency behind it has intensified amid mounting financial pressures, policy uncertainty and rising costs, according to Mike Slubowski, president and CEO of Trinity Health.

“Our primary strategy has not changed. And it’s the movement from hospital centric to community based services,” Mr. Slubowski said during an April 13 fireside chat at Becker’s Annual Meeting. “Our medical groups, ambulatory surgery centers, freestanding imaging centers, virtual and home care, hospice and PACE programs — that’s where we’re focusing our investments right now.

“Our community-based services, outpatient and virtual, represent 62% of our revenue, and I see that going to at least 75% of our revenue over the next three to five years.”

The $1.5B problem driving the strategy

Behind Trinity Health’s transformation is a widening financial gap, and one that continues to grow as reimbursement lags behind rising costs.

Trinity Health already enters every budget cycle with a structural gap to close. The spread between annual cost increases and reimbursement rate growth runs $1 billion to $1.4 billion each year, which the system has learned to manage through operational discipline and continuous improvement. That baseline pressure has become the cost of operating at scale in nonprofit healthcare.

“We invest $2.9 billion a year in community impact. That’s 11% of our revenue,” Mr. Slubowski said. “And every year, the gap between revenue increases, price increases and cost increases widens.”

Recent federal policy changes have added even more pressure.

“[H.R.1] adds an additional $1.5 billion to our health system, so we’re in the throes now of how we’re going to close that gap,” he said.

Even beyond that legislation, the financial headwinds persist.

“Anyone following what’s happening with the federal government right now — even on the Medicare side — knows it’s still ‘death by a thousand cuts.’ So we have to be even more efficient,” Mr. Slubowski said.

To combat this, Trinity Health has launched Repositioning Trinity Health focused on three core areas: refining clinical service lines, expanding community-based care and aggressively reducing costs.

“It’s a focus on both sharpening our focus on clinical programs that we’re supporting, continuing to grow what we call our community based services, and a heavy focus on cost management — especially administrative expense,” Mr. Slubowski said.

The health system has already identified a significant portion of the savings needed.

“Of that $1.5 billion, we have identified about $850 million and we’re working on the other part of it to move forward over the next two years,” he said.

From hospitals to communities: Building the 75% model

At the center of Trinity Health’s long-term strategy is a deliberate shift in where and how care is delivered — moving away from inpatient settings and toward a distributed, community-focused model.

“You have to start with a strong primary care base, which we continue to build. From there, every one of our communities is different in terms of the physician makeup and the needs of the community,” Mr. Slubowski said.”Everybody knows the basic service lines — cardiology, oncology, neurosciences, etc. What’s the right mixture for each market that we’re in? That’s really what we’re focused on getting right.”

The system is prioritizing investments that are less capital-intensive and more flexible than traditional hospital infrastructure.

“We’ve called them asset-light investments rather than big brick and mortar,” he said. “We’re doing a lot in both the virtual space and in the freestanding space.”

That includes growth across ambulatory surgery centers, imaging, home care, hospice and PACE — an area where Trinity Health is the largest nonprofit provider in the country.

“It is truly a full at-risk program,” Mr. Slubowski said of PACE. “We manage their care and the social needs that they have within the fixed budget.”

He sees the model as increasingly essential as the population ages and alternatives to institutional care become more critical.

“It’s great for seniors who want to still live at home,” he said. “With the challenges in the nursing home industry and everything else that we’re facing, we’ve got to have options for people to live their whole life and do it within a cost effective way.”

As community-based care expands, the role of hospitals will evolve rather than disappear.

“The role of the hospital will be important, but more narrow in scope,”  Mr. Slubowski said. “And for any of the remaining hospital-based ambulatory services … we’ve got to be more efficient at how we deliver that.”

Epic, AI and the discipline to execute

Executing on this transformation at scale requires not just strategy, but operational discipline — particularly around technology.

Trinity Health has standardized on a single Epic EHR instance across the system, a move Mr. Slubowski said is already delivering meaningful efficiencies.

“Before we moved to a single instance, we had 20,000 order sets. Now we have 600 because our clinicians work together on what were the optimal order sets,” he said.

The organization is now focused on maximizing the value of that platform, particularly as Epic continues to roll out new AI capabilities and bolt-on applications.

“We really are relying on our common platform suppliers that are building AI and using all of those tools first and finding out which ones actually deliver the most value,” he said.

AI is already being deployed across both administrative and clinical functions, with early gains in areas like revenue cycle.

“We spend $120 million a year on denial management,” Mr. Slubowski said. “So anything that we can do in automating our claims process, in our coding process, in the communication with the payers, we’re all in on using AI in revenue cycle.”

Importantly, he emphasized that adoption — not just technology — will determine success.

“Human adoption is going to be one of the biggest challenges that we continue to have with AI,” he said. “It isn’t going to be that the tools are there. It’s people really camping on and trusting and using the tools.”

That philosophy extends beyond technology to leadership itself. Mr. Slubowski has pushed leaders across the organization to adopt what he calls a “beginner’s mindset” — rethinking long-held assumptions and questioning legacy practices.

“When you engage 130,000 people in using a beginner’s mind to question everything that we do, people come forward with great ideas,” he said.

“The reality is that with reductions in Medicaid and the expiration of ACA subsidies, more people will become uninsured — and many will end up in our emergency departments. So, we’re building processes to better meet people at the ED door and redirect them when possible — through urgent care, primary care, or more efficient inpatient throughput. We’re also working on improving payment plans to make care more affordable, and we’ve focused on the pricing of shoppable services like imaging, making sure we don’t apply hospital-based pricing models to outpatient care.”

Ultimately, he believes that beginner’s mindset — combined with disciplined execution — will be critical as healthcare continues to evolve.

“We have to get out of our mindset of what we’ve done up until now and relearn moving forward,” he said.

The post Trinity Health CEO’s plan to drive 75% of revenue from community-based care appeared first on Becker's Hospital Review | Healthcare News & Analysis.