Risk-Reduction Strategies for Healthcare Finance Leaders

To get the program going, Spectrum Health assembled a quality improvement team led by nursing and medical directors and a financial analyst (assigned to look at complication rates, not profits and losses). The goal was simple: Reduce the complications as much as possible.

The team also ensured that the quality and safety goals were embedded in the system’s strategic plan and imbedded in the providers’ compensation plan. Then the team took this initiative one step further and added a quality evaluation as part of the staff’s annual evaluation and salary adjustments.

“We assigned key performance indicators to each director and manager, which they and their teams would have a direct impact on, then we tied meeting these goals to their annual review process,” says Byrnes.

Rather than use clinical benchmarks, 25% to 30% of the review and salary calculations were based on quality and safety metrics, and as an added incentive, two sets of goals were measured, a baseline and a stretch goal of 150% of the baseline. “It was a strong motivator,” says Fifer.

“But if we only focused on the financial impact of doing this, we’d have lost the engagement of the clinical folks, and that’s critical to the program’s success,” adds Byrnes.

Just by decreasing four specific complications associated with the cath lab, the system realized an ROI of $1.4 million. Since it began, Spectrum Health’s program has concentrated on clinical quality and safety; however, recognizing the changing payment landscape ahead, the system intends to more intensely track the financials connected to the program.

The organization is also piloting the Prometheus Payment initiative, which is testing bundled payments based on evidence-informed case rates for acute and chronic illnesses (e.g., acute myocardial infarction, hip replacement, congestive heart failure, diabetes, asthma). “The financial analysis doesn’t change the agenda at the hospital, but if you can get that ROI on the reduction of complications and the improvement on safety, that plays an important role in managed care contracting,” says Fifer.