4 Survival Tips for the Shift to Value-Based Reimbursements

The CFO of a regional medical center in Ohio knows that cost containment will be critical to its ability to survive in the swiftly approaching tighter reimbursement environment. He shares tips for a smoother transition.

Like most healthcare providers, Sandusky, OH-based Firelands Regional Medical Center, a 400-bed institution with $515 million in gross annual revenue, is working hard to prepare for the transition from fee-for-service to value-based reimbursements.

CFO Daniel Moncher knows that cost containment will be critical to Firelands' ability to survive in the tighter reimbursement environment that is rapidly heading its way. He shares some tips for making the migration smoother.

1. Cutting Costs
Although new payment models won't affect revenue for the most part this year, Moncher says he knows changes will be here soon, and organizations like his must be ready.

"We don't anticipate any significant impact in 2014 based on our market and contracts and the size of our organization, but we do fully think we will be impacted in subsequent years," Moncher says.

As a result, monitoring expenses and setting goals for lowering costs are high on Firelands' priority list.

Intelligence Report: Cost Containment—Harnessing Data to Drive Revenue Cycle and Productivity

"We've put metrics into place for the entire organization … to see how we are doing and to communicate that with our employees on a monthly basis," Moncher says. "The key to success is going to be cost containment. We've always been a very cost conscious organization, and we will be even more so. Not obsessive, but it is definitely something that will be top of mind, and we'll be scrutinizing everything, such as staffing requests, business opportunities, supply costs, and overhead costs. We'll be trying to lower our costs as effectively and systematically as we can."

2. Achieving Employee Buy-In
Moncher says part of Firelands' motivation to rein in costs is to avoid downsizing its workforce—something many healthcare providers have had to do in recent years.

"We don't want to lay off employees… Our goal is to meet all of our value-based purchasing metrics, and we've got a success sharing program with employees. If we meet 85% of our goals, which is 17 out of 20, we will have success sharing, so there is a financial incentive built in for everyone to work with us and watch those," he says.

Firelands' executive leadership holds periodic employee meetings to explain the metrics and goals, and to answer questions from staff.

"Our CEO is there. Our quality people are there. I'm there. Anyone who is needed to be part of the presentation is there to talk about what the goals are and why they are important. No one really has all the answers on health reform and its impact, but we tell employees what we do know, and we get a lot of good feedback," Moncher says.

Achieving staff buy-in for the new metrics has not been difficult, he adds.

"Employees are receptive, and they understand. We share with them headlines from other organizations that have had to cut employees, and we make sure they know this is what we are trying to avoid."

3. Increasing Outpatient Volume
In addition to cutting expenses, Firelands is also exploring opportunities for top-line growth and has identified expanding its outpatient market share as one major area of focus. To accomplish this, the organization has recently moved into the urgent care space, Moncher says.

"The most important strategy we've implemented to grow our outpatient business is [that] we purchased from a local physicians group a small urgent care center. That got us into the urgent care business in July 2012," he says.

"Since then, we've opened two more urgent cares in small outlying communities, which have given us a presence in those communities even though we are not the closest hospital. Whether or not we are getting new patients directly from that is hard to say. However, if those patients develop primary care relationships with physicians who are Firelands-friendly and are supportive of our organization, then that will also help drive growth."

4. Preparing for an ACO
As health reform continues to roll out over the next few years, Firelands realizes its cost containment and outpatient volume growth efforts may not be sufficient to keep pace. Although the organization is "taking a wait-and-see approach" to forming an accountable care organization, according to Moncher, it is also making some preliminary steps in that direction.

"We don't want to be a leader, but we do realize that if the [ACO] model continues to gain traction, our relationships with physicians, especially primary care physicians, will be of the utmost importance," Moncher says.

"We're working with physicians groups to solidify the trust between all organizations and to be ready if we need to go down that road of an ACO. Then we'll have the building blocks in place."

Creating strong relationships with long-term care providers is also important to Firelands' strategy to be ready to move toward an ACO, if it becomes necessary, Moncher adds.

"We've got our toe in the water to solidify relationships with long-term care facilities with respect to an ACO and the continuum of care," he says. "We've had discussions at the senior management level to see who the major players are in our community. At the clinical level we have great relationships, but we need to start building some trust at the leadership level. How do we do that? Who are the key players? That's what we've started thinking about."