The more services they provided, the more they got paid. A sound ... Statesâthe US ranked last in overall quality.3 Perhaps most trou- .... network services.
PREPARING FOR A NEW VALUE-BASED WORLD:
TIPS FOR SUCCESS
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PREPARING FOR A NEW VALUE-BASED WORLD:
Five tips for success Executive summary......................................................................... 2 Five tips for success under value-based care................................... 3 1) Take a cue from the auto industry................................................ 3 2) Focus on organizational goals and objectives................................. 3 3) Always examine the real value of your actions............................... 4 4) Know what you’re spending........................................................ 4 5) Turn knowledge into action.......................................................... 5
A new healthcare world................................................................... 5 Traditional players redefine their role............................................... 6 The importance of advanced analytics............................................. 7
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EXECUTIVE SUMMARY
In 2011, prices ranged from the $8 bill at Benedictine Hospital in Kingston, NY, for treating a case of gastritis that cost the hospital $2, to a $2.8 million charge for a blood disorder case at University Hospital of Brooklyn that cost that institution $918,462.2
For more than a half-century, healthcare provider organizations in the United States worked under a volume-based reimbursement model. The more services they provided, the more they got paid. A sound equation, right?
Certainly, when healthcare organizations don’t monitor quality and don’t scrutinize costs, the results simply don’t measure up. Consider the following: the United States spends more money on healthcare than any nation on Earth, but ranks lower for quality than other developed nations. Among 11 countries studied for a Commonwealth Fund report, Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States—the US ranked last in overall quality.3 Perhaps most troubling—the findings are nothing new. The United States has been in this trailing position for the past decade.
Not really. Things were not quite adding up correctly under this formula, which often resulted in a disconcerting quality to cost ratio. For example, the model encouraged the use of Computed Tomography (CT) scans, sophisticated x-rays that are primarily used for diagnostic purposes. However, these scans cause more than 29,000 cases of cancer and 14,500 deaths annually in the United States, according to the Annals of Internal Medicine.1 It has become increasingly clear that ordering test after test risks doing more harm than good. It is also now widely agreed that costs of care under this model are problematic. For example, reports from New York State, as detailed in a New York Times article, showed that healthcare costs vary widely:
The Patient Protection and Affordable Care Act (ACA) aims to change all that. Under health reform, healthcare providers no longer receive reimbursement based solely on the volume of services provided, but rather on the outcomes that emanate from their efforts. As such, a variety of factors, including the implementation of quality and safety measures, provision of recommended best practices, and avoidance of wasteful care, now determine reimbursement levels. This model dramatically alters how providers are paid. For example, under fee-for-service models, hospitals routinely received reimbursement for care delivered to readmitted patients. Now, under the valuebased reimbursement paradigm, hospitals need to get it right the first time, as payers no longer universally reimburse for care delivered to “boomerang” patients. With such dramatic change on the horizon, leaders at healthcare provider organizations are asking: What can we do to succeed under this new equation? And, what can we expect healthcare to look like as the new model becomes the norm?
1. B enson, C. New Study Finds More Than 29,000 Cancers Caused by CT Scan Radiation, April 23, 2010. Accessed at: http://www.lawyersandsettlements.com/articles/fda-investigations-ct-brain-perfusion-scanning-side/ct-brain-scan-radiation-perfusion-4-14000.html#.VBtB6NEtD3g 2. Bernstein, Nina. Big Markups, and Odd Bargains. The New York Times, December 9, 2013 3. C ommonwealth Fund. Mirror, Mirror on the Wall, 2014 Update: How the U.S. Health Care System Compares International http://www.commonwealthfund.org/publications/fundreports/2014/jun/mirror-mirror
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In this paper, we present some tips for success under value-based care and take a look at how the industry might evolve in the future, as the outcome-based model takes hold. In addition, we look at how healthcare organizations can better use information technology tools, specifically analytics solutions, to improve clinical and financial results, while reducing overall costs.
2) FOCUS ON ORGANIZATIONAL GOALS AND OBJECTIVES To move toward a quality driven model, leaders need to focus on long-term goals and establish a clear vision for their organizations. With such a vision in place, all clinicians and staff members can then work toward agreed-upon milestones, instead of merely carrying out disparate tasks.
FIVE TIPS FOR SUCCESS UNDER VALUE-BASED CARE
To develop an overall rallying cry, organizations should focus on the specific attributes of their communities, striving to meet the healthcare needs of the populations they serve. They can then develop programs and services that meet these unique needs in a manner that optimizes quality and minimizes costs. For example, if a provider serves a primarily Hispanic population, leaders might want to consider developing diabetes prevention programs, as limiting the spread of the disease will simultaneously improve the health of the overall population, while also reducing costs.5
1) TAKE A CUE FROM THE AUTO INDUSTRY During the 1970s and 1980s, US auto manufacturers produced cars that didn’t really make the grade; those cars were poorly designed and cheaply assembled. In the Ford Pinto, for example, protruding differential bolts would puncture the gas tank, leading to frequent fires. The defect led to the deaths of 27 people.4 Because of such shortcomings, consumers moved away from these American-made automobiles, in favor of cars from Japanese manufacturers who focused on quality. To compete, American manufacturers followed suit. Healthcare organizations now need to make similar adjustments. Until recently, hospitals received reimbursement for readmissions within 30 days of hospital discharge. The penalty for the defect—failure to properly treat a patient before discharge—was non-existent and these readmissions often led to increased total reimbursement. Hospitals, however, now need to produce quality clinical results from the get go. To do so, hospitals need to adopt a philosophy that focuses on implementing the continuous quality improvements that increase quality while reducing costs. For example, by using data and analyzing information about patients being treated for specific conditions, healthcare organizations can more readily determine which patients are likely candidates for readmission once released from the hospital. By tailoring patient engagement materials and interactions specific to these patients, its possible to decrease readmission rates. With this approach, organizations will need to constantly analyze what works and what doesn’t—and, from there, make the quality improvements that can lead to better clinical outcomes.
Developing such programs can help organizations better define the information technology tools they need to succeed. With a diabetes prevention program in place, for example, organizations can purchase and implement information technology that provides features and functions to support the optimal delivery of diabetes care, which can lead to success under the value-based model. On the other hand, organizations that purchase information technology simply to tap into random features and functions will flounder since the computer systems won’t be connected to the organization’s overall goals. 3) ALWAYS EXAMINE THE REAL VALUE OF YOUR ACTIONS Every action of every leader, staff member, and clinician needs to stand up to one litmus test: Does it add value? To determine what adds value, healthcare organizations should adopt an overall strategy that aims to continuously measure performance. To do this, organizations should use advanced analytics to measure what they are doing in terms of cost and quality metrics. Fortunately, providers can now reach beyond claims data, and tap into all of the clinical and financial data emanating from electronic health records systems to truly assess their organizations’ clinical and financial performance.
4. Lee, MT and Ermann, MD. Pinto “Madness,” a Flawed Landmark Narrative: An Organizational and Network Analysis. Social Problems, Vol 46, No 1 Feb 1999 5. NCQA. Value of Effective Diabetes Management and Prevention. Accessed at: http://qualityprofiles.org/leadership_series/diabetes/diabetes_effective_management.asp
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Then, they can take the analysis one step further by digging deep into the data to understand what works, what needs improvement, and what needs eradication. 4) KNOW WHAT YOU’RE SPENDING To actually measure how “cost effectively” care is being delivered, leaders at healthcare organizations need to truly understand costs. The problem: Most leaders don’t have a handle on how much it costs to deliver a specific service to a specific patient. For example, healthcare executives typically cannot pinpoint how much it costs to perform a particular procedure, such as a hip replacement. Manufacturers, on the other hand, know exactly how much it costs to produce a product. To attain this knowledge, manufacturers routinely use advanced analytics programs that help them turn their organizational data into actionable intelligence. Healthcare organizations need to do the same. For example, healthcare organizations need to rely on analytics to determine exactly what goes into each and every service—assessing the costs associated with labor, supplies, and time, to come up with an exact cost.
Organizations should disseminate and share information about best practices. Unfortunately, clinicians often work in silos, holding on to established practices instead of trying to incorporate emerging best practices. Consider the following: At one northeast academic medical center, one care unit delivered care for more than 400 days without a single patient incurring a central line infection. Meanwhile, a second unit operating right across the hall could not even string together 100 consecutive days without an infection.
To determine if an organization is succeeding, leaders need to take the analysis a step further, by not only accessing but integrating clinical outcomes and cost data. By doing so, a leader would not merely look at cost data in a vacuum, a practice that might result in always going with the least expensive hip replacement materials. Instead, leaders might discover that there are significant cost variations across the hospital system for knee and hip replacements. However, very little of the variation is due to patient characteristics.6 As such, the provider might opt to use more expensive hip replacement materials that get better results—ultimately making a more cost-effective choice. By better understanding the cost drivers, hospitals can identify opportunities to substantially improve the total cost of care.
The problem: Clinicians across the enterprise did not universally adopt best practices; these two units followed entirely different protocols. To resolve such situations, leaders need to ensure that they are using information systems that make it possible to not only analyze data, but to easily use the knowledge emanating from these systems at the point of care. For example, systems should pull data into meaningful presentations, making it much easier for end-users to digest the information—and act upon it.
A NEW HEALTHCARE WORLD
5) TURN KNOWLEDGE INTO ACTION Healthcare organizations need to ensure that end-users are able to use analytics to actually change behavior.
As healthcare organizations take these tips to heart in an effort to adapt to value-based care models, the delivery of care is poised to change dramatically. To start, healthcare organizations will continue
6. R obinson, JC, et al. Variability in Costs Associated with Total Hip and Knee Replacement Hips Implants. J Bone Joint Surg Am. Sept. 19, 2012. Accessed at: http://www.ncbi.nlm.nih. gov/pubmed/22878562
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to move forward with the more strategic use of information technology. Indeed, the journey started several decades ago during Health 1.0, when healthcare organizations used business and administrative systems to facilitate transactions. Spurred on by the HITECH provisions of the American Recovery and Reinvestment Act, organizations have more recently begun to use computerized clinical systems. Under Health 2.0, providers started to use electronic medical records (EMRs), radiology picture archiving and information systems, patient and physician portals, laboratory systems, and other clinically focused HIT.7 Now, however, the industry is poised to enter the era of Health 3.0. During this period, organizations will find new, disruptive uses of HIT that take advantage of past technology investments to obtain maximum value from newly created technologies and digital trends. As such, HIT will prove extremely valuable in multiple areas including care collaboration, population health and cost accounting.
Traditional players redefine their role In addition to the new, disruptive uses of HIT during Health 3.0, many non-traditional providers, such as retail clinics, will start to provide care for a variety of common conditions (e.g., nurse practitioners will treat sinus infections). While these retail clinics are generally working to successfully solve the value equation by providing cost-effective care for common conditions, some traditional, trailblazing provider organizations are working the other end of the spectrum. They are contracting with payers and employers to treat complex conditions for entire populations, sometimes without regard to the geographic location of patients. For example, the Cleveland Clinic has entered into a deal with Lowe’s® to treat all of its complex heart patients. By bundling all costs for the surgery under one negotiated price and offering expertise that lowers the odds of complications, Cleveland Clinic is able to deliver on the value-based promise: Better care at reduced costs. In fact, the provider is able to deliver a level of savings that makes it possible to cost-effectively fly patients, as well as family members,
into Cleveland from locations across the country—instead of allowing a less experienced, and therefore less cost effective, local specialist to treat them. “It’s a win-win-win for patients, employers and the hospital,” said Michael McMillan, Cleveland Clinic’s executive director of market and network services. “The patient has no out-of-pocket responsibility, employers have a better long-term financial result, and we get patients.”8 Similarly, Wal-Mart® instituted a program that flies patients and family members to six premier providers, including the Cleveland Clinic, Virginia Mason Medical Center in Seattle, and Scott & White Memorial Hospital in Temple, Texas, for heart, spine, and transplant surgery.9
The Importance of Advanced Analytics While care delivery will continue to evolve under value-based reimbursement, one thing is certain. All providers—traditional and new— will increasingly rely on advanced analytics to ensure that services help to bring about the best patient care outcomes in the most cost efficient manner. Healthcare organizations will need to take advantage of information technology to improve care planning and management, and constantly strive to implement best practices at the point of care. In addition, organizations will use information technology to assess and analyze business and clinical operations in one fell swoop—instead of perpetuating the separate silos of years gone by. More specifically, in order to thrive in the era of value-based reimbursement, healthcare organizations will need tools that allow them to measure their outcomes. In fact, healthcare organizations will need a reliable, third-generation healthcare information technology tool that allows them to measure the true cost of care, while linking it to their clinical outcomes. Only then will they be able to deliver the highest quality of care at a reasonable cost. In the final analysis, successful organizations will understand how to best use advanced analytics solutions that make it possible to solve healthcare’s new value equation, which includes both clinical and cost factors.
7. Davenport, Tom, Analytics 3.0: Measureable Business Impact from Analytics and Big Data, Harvard Business Review, Oct. 15, 2013 8. C hen, C. Cheaper Surgery Sends Lowe’s Flying to Cleveland. Bloomberg News. Accessed at: http://www.bloomberg.com/news/2014-03-07/cheaper-surgery-sends-lowe-s-flyingto-cleveland-clinic.html 9. Ibid.
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