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Red-Tape Mandates Spark Innovation

Philip Betbeze, for HealthLeaders Media, March 20, 2012
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The big three mandates

Value-based purchasing, a sort of pay-for-performance initiative for Medicare; ICD-10, a new coding regime; and "meaningful use," an evaluation of how well organizations are meeting the mandates of the HITECH Act, are among the top five regulatory challenges that are currently worrying hospital senior executives, according to Reform's Impact: Staff and Service Cuts Expected, a December 2011 HealthLeaders Media Intelligence Report.

"If you're not setting aside investments in ICD-10 and meaningful use, you're teetering on being noncompliant, and that's where someone other than leaders in your organization will determine your fate," says Keckley.

Any one of these requirements alone would present quite a challenge, but with deadlines that have to be met within a tight timeframe, all three are the focus of significant investments in information technology solutions, consulting work, retraining, and labor costs—not to mention a significant disruption of entrenched processes that in the past were, and in some cases currently are, successful in keeping the organization financially viable, but that will be hindrances in the future.

So which ones are smart hospitals and health systems focusing on?

"We know financial pressures will continue," says Fifer. "We like to think that investing in what is truly an integrated health system from insurance to care delivery is the right direction, and outcomes will be better. As time passes, more care will be delivered entirely within our health system."

At CHI, Rowan says the leadership team's response to the new regulations will not only allow it to further streamline its operations, but also will position CHI to compete with other healthcare organizations on a risk basis, something hospitals and health systems have previously only done in unusual circumstances. He predicts that the data and coordination the organization will be able to achieve will allow widespread risk-based contracting directly with employers and third-party payers.

"Going at risk is important. For example, if we have a group of patients where it currently costs $15,000 for an episode of care, if we do it right, could we bring it down to $12,000 and commit to it and keep a piece of that savings?"

He thinks the answer is yes, and with expanded hiring of people in leadership areas with risk-based contracting experience, coupled with the data mining capabilities that will come from reaching meaningful use targets, CHI will eventually get into managing population health. That will allow it to approach large employers and make a contract offer based on their employees' epidemiology and cost of care.

The big three mandates

Value-based purchasing, a sort of pay-for-performance initiative for Medicare; ICD-10, a new coding regime; and "meaningful use," an evaluation of how well organizations are meeting the mandates of the HITECH Act, are among the top five regulatory challenges that are currently worrying hospital senior executives, according to Reform's Impact: Staff and Service Cuts Expected, a December 2011 HealthLeaders Media Intelligence Report.

"If you're not setting aside investments in ICD-10 and meaningful use, you're teetering on being noncompliant, and that's where someone other than leaders in your organization will determine your fate," says Keckley.

Any one of these requirements alone would present quite a challenge, but with deadlines that have to be met within a tight timeframe, all three are the focus of significant investments in information technology solutions, consulting work, retraining, and labor costs—not to mention a significant disruption of entrenched processes that in the past were, and in some cases currently are, successful in keeping the organization financially viable, but that will be hindrances in the future.

So which ones are smart hospitals and health systems focusing on?

"Well, all of them," says Spectrum Health's Fifer. "We don't have much of a choice. They're all on timelines."

ICD-10 implementation, for example, seems like a pretty straightforward process of changing over literally hundreds of information systems touched by coding. But it also involves cultural change. The systems can be in place, but coders, and especially clinicians, have to be taught how, and more important, why, they must use it. At Spectrum Health, Fifer chairs the ICD-10 work team, which has leaders from hospitals, medical groups, and the health plan to evaluate systems and processes.

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1 comments on "Red-Tape Mandates Spark Innovation"


S Daniels (3/20/2012 at 11:17 AM)
For whatever reason, hospital execs still ignor the 800 lb gorilla in the room.....physician practice behaviors. If the hospital wants to bring cost per case down from $15000 to $12000 they don't have to look furthr than individual physician practice profiles. The opportunities are there for all to see.