When it comes to hiring, healthcare leaders shouldn't assume a Field of Dreams mentality, "If you build it, they [providers] will come." Quality talent acquisition doesn't work that way, nor does truly strategic workforce planning. Unfortunately that's exactly the approach that's been taken for years by most hospitals and health systems, due to the lack of data available for workforce planning. However, thanks to geographic information systems, healthcare leaders can start accessing already available geo-analytic data and transform reactive recruiting into proactive, strategic workforce planning.
GIS is a mapping technology that has been used in a variety of industries, however in healthcare it's mostly utilized (and recognizable) as a clinical epidemic map. Epidemiologists use GIS technology to create disease maps during large disease outbreaks in order to track the breadth of a crisis along with key medical details about the sick.
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It's this type of map that got David Schutt thinking. He's a principal workforce planner at Stanford University Medical Center in Palo Alto, Calif., which includes Stanford Hospital & Clinics and Lucile Packard Children's Hospital. Why, he wondered, couldn't GIS technology work for healthcare recruiting? After all, clinicians are required to be registered and licensed wherever they practice.
He decided to combine publicly accessible provider state licensing data with other geographic and demographic information (both internal and external, such as organization employment records and U.S. census data) and see what shook out. "Basically if something has a ZIP code, GIS can map it," he says.
Schutt explains that without the use of GIS, much of workforce planning is based on guesswork. Though compensation could be benchmarked against national and regional survey data, things like the type of shift clinicians prefer or the role location plays in retention were not quantifiable; the GIS map changes that.
Schutt is now successfully using this data-driven approach at Stanford University Medical Center to transform workforce planning into a strategic exercise that's saving millions of dollars by mitigating turnover, countless hours of recruiting, and hundreds of thousands of dollars in recruiting and advertising costs.
"There isn't a day that goes by where someone isn't talking about the shortage of nurses or physicians. What leaders in healthcare need is data that helps them understand their workforce today and in the future," he says. "But it isn't enough to only know your hospital's numbers; you need to know the information for the whole area."
To effectively recruit and retain providers, Schutt explains, healthcare leaders need granular geographic and demographic information them, such as:
How many, and what type of clinicians and providers are at the organization?
Where are there large concentrations of providers with specific credentials or expertise?
Where do these providers live and work?
When are provider populations reaching retirement age, by specialty?
When an employee leaves an organization, which hospital or health system did they migrate too?
"This type of information can help us keep ahead of turnover," Schutt says, adding that knowing the demographics of the rest of the workforce in the area can help HR trend employee turnover and migration. Ideally this information can be used to identify and remedy employee dissatisfiers (such as, mandatory call or uncompetitive pay).
"Those are key pieces of data you need to do strategic workforce planning, and it's data that's been available but wasn't accessed because no one knew how to get at it," he says.
For instance, when 885-bed Stanford University Medical Center decided to add more nurses to the 2,700 registered nurses it currently employs, Schutt used GIS to learn more about the nurses already working at organization as well as those in the area. Using the combined internal and external analytics on the workforce data, the leaders could see a dot-map of details about the staff. The map indicated where pools of nurses with the right skill set were located and it also showed the system's current nursing supply and licensure levels, and other key recruiting details such as employee commuting patterns and distance traveled to work.
"The data showed us that on average nurses at Stanford lived within 12 miles of the hospital," says Schutt. "It also showed us that a large number of nurses would be nearing retirement."
Not only would the health system need to fill new openings but it may need to fill many more in the near future, explains Schutt, a 20-year human resources veteran who has worked for organizations such as Nortel, HP, and Kaiser Permanente. The GIS map included regional nurse geo-analytics, so HR could pinpoint where to look for new recruits.
"When I worked at Kaiser Permanente recruiting for 26 hospitals, we'd set up career fairs in highly concentrated nurse areas and walk out of these events with 25 new hires, because we knew exactly the type of candidates we wanted and where to find them," says Schutt. The ability to home in on the right type of candidate from the onset of the recruitment process has reduced the Stanford University Medical Center's recruitment advertising budget of more than $250,000 by 90%.
Moreover, the trend and analysis provided by GIS can show the migratory behavior associated with an organization's staff turnover. Used correctly the data can anticipate staff shifts due to factors such as pay or work schedule, and enable leaders to address issues before employees leave. This not only prevents problems with patient care continuity, Schutt says, but it also saves on hiring and training costs. Schutt estimates that getting ahead of the retention curve will save Stanford University Medical Center as much as $22.5 million in the next couple of years.
In addition to the recruiting and retention benefits of using GIS, the software can also be used for new hospital site selection, Schutt explains. "You want to understand the demographics of a particular geography before a hospital gets built, and you want to know if there will be [clinical staff] who will work there."
Certainly GIS software cannot help organizations decide which provider candidates will do the most for their patients or for the bottom line, but such a tool that can tell healthcare leaders where to look for those candidates and where future gaps in staff might occur. And when you consider that GIS software costs only a few thousand dollars and can be operated by one person who has another function within the organization—such as a human resources information systems specialist—this software offers quite a potential return on investment. It may not offer the marvelous magic of the movies, but GIS can work wonders for the healthcare workforce.
With opportunities for healthcare mergers, acquisitions, and partnerships sprouting like so many April tulips, creating solid pacts that incentivize physician-hospital alignment is essential. However, it can be tricky to craft these agreements to achieve your strategic and clinical goals, while staying on the right side of the law, so tread carefully.
Two experts experienced in the ins and outs of physician-hospital agreements offer their insights on complexities to keep in mind. David Ping, senior vice president of strategic planning and business development at Health Quest, a three-hospital system in Lagrangeville, NY, and Kirk B. Jensen, MD, MBA, FACEP, who is CMO for physician staffing firm BestPractices, Inc., and vice president of physician services firm EmCare, Inc., say there are two big snares to avoid.
Pitfall #1: The gap between where your organization is today and where it's headed. Healthcare still has one foot planted in fee-for-service and another in fee-for-value, so how can you balance these in an alignment agreement? It's not easy, but let your strategy be your guide, suggests Ping.
Health Quest seeks to boost quality metrics. "We see the benefit as really getting the doctors involved now in the development of [quality] metrics [to track]. Ultimately that's really going to be better for the patient and better for our quality," he says. "But [focusing on quality] is really better for us on the value side rather than on the reimbursement one."
While it may not always be possible to set up incentives that encourage better quality while hauling in greater fee-for-service revenue, Ping says, other prizes await hospitals that set up strong alignments now in preparation for the fee-for-value environment. They improve the odds of winning more physician referrals and increasing downstream revenue, and they should lead to higher-quality outcomes that will translate into value-based purchasing dollars, reduce 30-day readmission rates, and potentially improve patient satisfaction HCAHPS scores.
Ping adds that for Health Quest, getting proper physician-hospital alignment right is also a step toward an ACO and a "baby step toward working with our doctors on bundled payments. Also, we want to be sure they want to practice at our hospital and not at another."
When drafting hospital-physician arrangements, Jensen says financial leaders should ask four questions:
Are the incentives truly large enough to drive the desired physician behavior?
Has the organization "seriously thought through 'the law of unintended consequences'?"
Is the clinical and financial data accurate and transparent?
Do the goals align with the culture of the organization?
There are numerous physician-hospital alignment models that can be adopted, and which one is best will depending on the service lines it's applied to, as well as the organization's larger goals. Jensen recommends that leaders borrow a model from a similar-sized, successful institution, and then test and prototype it before full launch.
Health Quest uses three models for its alignment agreements:
Employment—for its 180-plus employed physicians, the organization starts with a work relative value unit (RVU) calculation coupled with quality and patient satisfaction score bonuses
Employment "lite"—a revenue expense approach with some incentives built in for patient satisfaction and quality
Non-employed physicians—a new approach, piloted just six months ago with 15 oncologists, that targets specific service lines for development as "institutes"
The leadership of each service line institute, consisting of a medical director from the hospital and the practice's management, is charged with developing strategy and operational plans for the service line's success. Physicians are paid a bonus based 70% on quality and 30% on patient satisfaction for five agreed-on metrics. The percentage of bonus paid to each physician is based on whether the participant reaches a baseline goal, a target goal, or a stretch goal.
"We used an outside [consulting] firm to do the valuation for our incentives, and we worked with the doctors to develop the five metrics being measured so they would be meaningful," explains Ping.
Pitfall #2: The law. There are multiple regulatory and legal issues to watch when it comes to physician-hospital alignment agreements, so get your corporate attorney involved from the beginning.
"There's the Stark law, actually three separate provisions that govern physician self-referral for Medicare and Medicaid patients," says Jensen. And, he says, don't forget to keep an eye on the Physician Payment Sunshine Act—Section 6002 of the Patient Protection and Affordable Care Act—which will require docs to reveal payments from pharmaceutical firms, medical device makers, and other companies.
However, Jensen says the rule that should concern hospitals the most is the federal anti-kickback law and regulatory safe harbors. This can get you in trouble with regulators and possibly sour a deal. That's because the compensation of the physician sellers cannot be in excess of fair market value (FMV). Although the physician sellers may feel they are worth a certain amount—which they might have even earned as an owner—FMV calculations might result in a lower level of compensation.
"When it comes to compliance with fair market value, we made sure we went to an outside consultant for our incentives and for the medical directorship positions," Ping says. FMV compensation was also an issue with Health Quest's service line institutes for non-employed physicians. "We developed job descriptions for each of the medical directorships and interviewed all of the candidates," and opened participation in these institutes to any physician on staff or who had privileges and appropriate credentials, he says. "Actually, it would be best for patient care if all the doctors in the area are in the institute."
But, I asked Ping, what if everyone physician hits the incentive bonus stretch goal target and receives the
maximum payout?
"That would be great for our patients, but it could be financially challenging. So we planned for it in our business plan. Even if the FMV says the incentive rate should be 15%-25%, if the business model only supports 5%-10%, then we'll go with that," he explains.
For financial leaders working with physician-hospital agreements, Jensen offers a final note ofprudent advice: "Be fair." That's a good way to begin and end any agreement between physicians and hospitals.
There's an expression that every obstacle presents an opportunity. The leaders at Denver Health and Hospital Authority in Colorado can relate. For while Denver Health has a less-than-ideal payer mix—35% Medicaid, 28% uninsured, 10% Medicare, and 28% other—and faced rapidly increasing costs, they used these challenges as an opportunity to get creative and come up with sustainable cost-saving measures.
Denver Health is a safety-net system and the largest provider of care to uninsured and Medicaid patients in Colorado. In 2010 it averaged $374 million of billed charges from uninsured patients, or nearly a third of the system's total billed charges.
As any healthcare financial leader knows, collecting from the uninsured is a challenging task. Denver Health's collection rate on the $374 million was roughly 5 cents on the dollar, with the rest categorized as bad debt and charity care. Healthcare leaders bemoan such losses, but they can also inspire creative thinking, because if a healthcare organization isn't making money from its patients then it needs to save money elsewhere.
Denver Health CFO Peg Burnette, CPA, says that back in 2005 the organization's cost growth rate was becoming unsustainable; bad debt and charity care were draining the bottom line, while the cost per unit of service was increasing. Under the direction of CEO Patricia Gabow, MD, the organization began seeking creative ways to contain costs. Beginning with the revenue cycle, Denver Health chose the Lean Production Model as the performance improvement methodology to turn things around.
"The consequence of issues with our financial viability could've been dire. If we couldn't eliminate the waste, we might have to do across-the-board cuts," says Burnette. "Those cuts are popular at hospitals, but we'd rather do targeted cuts. And we view layoffs as a last resort, as you have to maintain staffing ratios. So we were very interested in slowing the rate of growth and cost through Lean and other initiatives."
The Lean initiative was just the start. Over the last seven years, Denver Health has moved from low-hanging fruit to the long-term sustainable cost reductions that every financial leader seeks, Burnette says. She lists four measures for sustainability:
Continually and fully engage organizational leadership on what costs need to be cut and the role each person plays in the process.
Review each contract for every vendor annually. "The key is to look at your contracts and ask, ‘Why is this in here? Do we need it?'" says Burnett. "Look at the financial terms of the agreement, look for potential cost savings, and renegotiate."
For example, this past month Burnette and her team extended terms with two vendors. In return, one vendor made concessions worth $420,000 over the term of the contract. The second vendor gave Denver Health equipment and supplies, which meant avoiding the cost of purchasing those items—a savings of about $2 million in equipment and $1.3 million in supplies, she says.
Install automated programs for electronic invoices and requisitions to maximize the billing system.
Focus on the pharmacy, especially for Medicaid managed care members. "If you're not managing it, it gets quite expensive," Burnette explains. "We've done several Lean events around this area that have resulted in the average amount paid for a prescription decreasing significantly. Whereas in March 2010, the average per prescription cost was $76, by February 2012 it had dropped to $43, with a net savings in the millions.
Seven years after embarking on the Lean transformation, the financial results are enviable. Since 2006, Denver Health has uncovered a total of $70 million in savings or increased revenue. Of that, $17 million comes from the revenue cycle alone.
Denver Health consistently has the lowest cost per adjusted discharge in the 380-hospital UHC consortium of academic medical centers, which includes Denver Health. Moreover, Denver Health has increased cash collections per 100 discharges by 44%, from $1.036 million per 100 discharges in 2005 to $1.492 million in 2010. Bear in mind that cash collections have increased even as rates from Medicaid—the hospital's largest payer—declined significantly.
In seeking cost reductions, CFOs should ask themselves a key question: Are we going around the problem and looking for short-term savings only, or have we adopted an approach that hits the cost reduction problem head-on and will continue to uncover sustainable reductions?
"Although we're a public hospital, we have to stand on our own for financial purposes, and we put that message out to our staff," says Burnette. "We want to avoid haphazard cost-cutting, as it can hurt morale and patient care. We want to save costs by eliminating waste, and that resonates with our people and our leadership."
This article appears in the March 2012 issue of HealthLeaders magazine.
With a nationwide physician shortage juxtaposed against the need for organizational growth to bolster the bottom line, hospitals and health systems are constantly, and feverishly, trying to fill physician vacancies. However, the "fervor to fill" can create a reactive recruiting cycle that can cloud the strategic nature of the hiring process and ultimately result in ill-fated personnel choices. With millions to be gained or lost with each decision, creating a comprehensive recruitment strategy can help you hire and keep Dr. Right and sidestep Dr. Right Now.
Forecasting need Six years ago, J. Gregory Stovall, MD, senior vice president of medical affairs and organization development at Trinity Mother Frances Hospitals and Clinics in Tyler, TX, brought to light an employment issue: The 400-plus-bed organization was losing far too many physicians. His organization had a physician turnover rate of 14%, more than double the industry average, according to the 6th annual Physician Retention Survey from the American Medical Group Association and Cejka Search.
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The stats caused Trinity Mother Frances, which employs more than 250 of its nearly 500 physicians, to reevaluate how it approached the whole process. The organization estimated $50,000–$75,000 was spent per physician on recruitment. Then there was the additional $200,000–$300,000 spent to train, credential, market, and onboard the physician. Total cost per new recruit came to roughly $250,000–$350,000.
Stovall's initial estimate of the financial loss due to turnover was conservative. After calculating the recruiting and onboarding costs, the organization looked at benchmark data and also calculated the downstream revenue lost when a physician left the organization. The result: An estimated $1 million per physician was lost with each doctor's departure, Stovall says.
The retention numbers made it clear that the organization needed to keep the physicians it hired and to be certain it was hiring candidates that fit the organization. To do that, it needed to get ahead of recruitment and slow turnover. Stovall says to accomplish these goals the hospital created an annual $100,000 retention budget. The money was used for outings, training programs, and other events to appeal to physicians and bring them into the fold.
Additionally, Trinity took a proactive approach to the hiring process. "We directed our department chiefs to make recruiting plans that looked out three to five years. That plan translates down into our annual recruiting plan for the organization," he explains. "It goes out a couple of years because you can't wait until the fiscal year to start thinking about your recruiting."
Getting ahead of the hospital's physician demand meant the organization could search for the best fit for the position and culture. The approach has yielded results and saved millions—the organization's current turnover rate is just 5%, nine percentage points lower than when the effort started.
Getting ahead of the physician need is essential and an integral part of the plan at Morristown Medical Center in New Jersey, part of Atlantic Health. David Shulkin, MD, president at the 692-staffed-bed hospital and vice president of Atlantic Health, explains that his organization creates a medical staff strategic plan as part of the recruitment process.
The organization's department heads factor in the age of the physician, the specialty, and the demand for and potential growth of each service line, and then calculates the estimated number of medical vacancies. Those are the positions that the organization's six in-house recruiters strive to fill in advance of the need.
The data analysis is just one component of the process, Shulkin says. The organization does an annual review of its employment and compensation models to be sure these are in line with the national and regional norms. "I've run several different organizations and the one thing you learn when you move around is that each local market is different. There are some markets where the employment model is dominant and well-established, and other areas where another one is," says Shulkin.
In Morristown, he says, the independent practice prevails. "[Hospital] employment isn't dominant so we've worked hard to create a number of different alternatives to employment to help physicians feel comfortable and still be closely aligned with the system," he says. That can be through a professional service agreement, establishing an accountable care organization, helping the physicians form a single specialty group, or creating a joint venture. "Part of the skill involved in strategic recruiting is understanding the various modalities and choices available when addressing the needs of the physicians," adds Shulkin.
In some cases, however, quantifying the need for physicians may have to extend beyond the hospital's walls and into the larger community. For example, 47-bed Columbus (NE) Community Hospital is helping group practices with their own recruiting. The joint effort has resulted in success bringing candidates to the rural area over the past two years. In total, the small rural facility has recruited 27 physicians and three midlevel providers to practice at the hospital or within the community—and all for less than $5,000 per recruit (the in-house recruiter's time plus physician sign-on bonuses for in-house recruits).
The effort is part of a larger strategy at CCH. Two years ago, the organization's president and CEO, Michael Hansen, determined with the board that it was vital to place more emphasis on physician recruiting, particularly to fill gaps in specialty areas of care. Hansen hired Amy Blaser as the vice president for physician relations and business development to handle the recruitment efforts.
"The practices feed the hospital, and that's how we get patients—they're not our competitors," notes Hansen. "We want our patients to get their care as close to home as possible. So we think it's important for the physicians to be able to refer here."
The co-recruitment effort between the practices and the hospitals is working, too. "We decided if we were going to focus on the overall physician community, we didn't just need to look at which doctors we needed to hire, but the doctors that could also be added to help the group practices. So we help them with a lot of the recruitment process, but they also put money into the game with sign-on bonuses for candidates," explains Hansen.
Since Blaser joined the hospital she has been in constant communication with local practices and finding physicians for these practices when a need arises. Both Hansen and Blaser say the co-recruitment strategy is working and helping fill gaps in care within the community.
Intentional candidate profiling
Once a hospital has established the need for a physician, the next step is not advertising the job, but rather creating a profile of the type of doctor to fill the opening, explains Roger McMahon, director of physician employment services at Mercy Medical Center in Des Moines, IA, and T. Clifford Deveny, MD, senior vice president of practice management of the Catholic Health Initiatives system of Englewood, CO. Mercy Medical, part of CHI, employs 330 physicians and McMahon says annually the facility has 20–22 physician opportunities.
"You want to know the individual is going to have the right qualifications but that the personalities will also fit," says McMahon
Shulkin agrees. "Depending upon the level of the position, we may approach [the creation of this profile] a little differently, but you want input. If we are doing a [department] chair search, for instance, we'd pull together a search committee and solicit formal input from members of the specialty as well as the broader medical community to get clinical and administrative characteristics of who should be in the position. For someone below that level, we might reach out to other physicians in the department and the nursing staff for that information."
The candidate profile should include the clinical qualifications, but also personality attributes that might make this candidate mesh within the department and hospital culture. These profiles can be used during telephone screening interviews and can prevent the wrong candidate from being flown in for an interview or, worse, selected for a position.
Work the in-house network The strategic recruitment of physicians goes beyond placing an ad or using an external recruiting agency. It is a targeted search to fill the vacancy, and the sources for this story agree that having an in-house recruiter is a key to finding the best candidate—though they may use an external agency occasionally.
Twelve years ago, Centra Health, a three-hospital, $700 million system in Lynchburg, VA, eliminated its in-house recruiting team due to budget reasons, but two years ago that changed, explains Chalmers Nunn, MD, senior vice president and chief medical officer at Centra Health and president of Centra Medical Group.
"If you look at the market and try to find a physician now, with the shortage, it's very difficult," he says. That is why the organization now uses three in-house recruiters to help locate doctors. "The other thing that has changed is hospitals are employing physicians more frequently. Now 50% of doctors are employed, and it's going up quickly—we're now in the physician business as much as we're in the hospital business."
Nunn says another reason the organization added an in-house team and stopped using agencies was the process. "It felt more like they were just résumé mills and the candidates being presented weren't vetted for how well they might fit the actual opening or hospital culture, plus the agencies were costly," he says. In 2009 the in-house team brought in 60 candidates and filled 22 slots. This past year the team addressed 33 requests, hosted 51 candidate site visits, and oversaw 22 placements. The total cost per candidate averaged $12,500 versus the agency cost of $25,000–$30,000 per candidate, plus another $12,000 for the marketing and any additional travel expenses for the candidates.
"We do it cheaper and better. We follow up with the candidates quickly, and if we want a candidate we get a contract to them within a couple of weeks. The only weakness with in-house recruiting is we can't cast a wide net like some of the big agencies," he says.
The ability to do a nationwide search, however, is not necessarily a weakness when it comes to locating the best candidate. Shulkin, Blaser, and McMahon say reaching out to internal staff is often a better approach to the process.
"We always start locally, and we always start with our own internal family of physicians and staff," says Shulkin. "We often find the best fit comes from the people who already know us. If we need a radiologist, we'll ask a mammographer or a breast surgeon or oncologist if they know of someone in the area or someone who might move to the area."
Larger systems have a network of physicians to draw upon—something Mercy Medical Center is able to capitalize on through the CHI network.
"Our size is an advantage that we can leverage to keep our recruiting search costs down. There's a national database for all our recruiters to use," says Deveny. "And when we do have to use an external agency, we've put together a set of standards for our vendor contracts so we can't get taken advantage of on the pricing of the services—plus CHI has agreements with nine national recruiting companies."
The organization is also developing a profile with the qualities a CHI physician should possess, as well as a set of standard benefits and cultural norms that can be expected at all hospitals within the network. With 76 hospitals and other healthcare facilities in 19 states, the organization anticipates that by adding these attributes into the network it can retain more physicians within its family of hospitals. "If a physician is ready to leave, then they can choose another of our hospitals and know there will be certain standards they can rely on," says McMahon.
Candidate searches can also be done over time by working with university medical students and residents. "If you have a local medical school or residency program, building relationships with those residents early on pays dividends," says Stovall. "We give free classes about practice management and offer training and leadership classes to those residents to create a welcoming environment early on in their residency so they'll consider staying in the area."
These targeted approaches to recruiting candidates for current and future vacancies do take more time; however, more traditional blanket searches done by agencies or through national job board postings can be more expensive. Ultimately, the difference between recruiting and strategic recruiting is time, money, and fit. Recruiting is the search for any candidate to fill a position—it can produce candidates quickly, and it can be expensive. In contrast, strategic recruiting is a laser-focused hunt for the best physician to fill an opening. It can take more time to find the best candidate, but the benefit is in the doctor's employment longevity with the hospital.
"It's hard to put the price on finding the right physician for a job. We know when we pick a person that's not the right fit it's very expensive to the organization," says Shulkin. "We're getting smarter about recruiting … we're looking for longer-term relationships with physicians."
Reprint HLR0312-7
This article appears in the March 2012 issue of HealthLeaders magazine.
Financial leaders, pay heed to your emergency department. EDs are rife with process inefficiency and the patient satisfaction and financial prognoses aren't good. Yet it's possible to improve care and cut costs.
First I'll share a personal story of a recent trip to a Boston-area emergency department with my 15-month-old son. It was a bad experience, but a good example of why so many hospitals are losing money in their EDs.
When my husband and I arrived at the ED with our hysterical baby, no one looked up or offered direction in the waiting room. I went to the nearest desk to ask for assistance and was pointed to another desk. That receptionist pointed to a sign-in sheet and asked what was wrong with my son.
After I explained that he had a fever of 102 degrees and hadn't been able to hold anything down for hours, she said, "Okay," then directed me to see the woman next to her about payment.
Over the next two hours, we were seen by two nurses and a doctor, each of whom asked the same questions and checked the same vital signs. The ED on weekday night wasn't very busy, yet two hours passed before a treatment suggestion was made&mdash:an eternity for parents with a sick and screaming child.
Once medication was given to stop the vomiting, we stayed in the room with our son for another hour and half before a nurse said we could go home. In total, we spent over three and a half hours in the ED, and our son spent more than 90 minutes in a bed. In hindsight I wondered why the first nurse couldn't have made the same diagnosis as the physician. Had I gone to a pediatrician's office, the same diagnosis plus a trip to the pharmacy to get the medication would've taken an hour.
As a CFO, do you see any flaws with this scenario? Is it reminiscent of patient visits to your hospital's or health system's ED?
As a consumer, I'm angry about having to wait so long to get my child some relief. My experience at this ED has soured me on the rest of the hospital. If this is how inefficiently the organization runs an essential area like the ED, what's the rest of the place like? The organization hasn't lost one patient, but three—me, my husband, and my son.
In 2005, the Agency for Healthcare Research and Quality awarded more than $9 million for 17 new grants under its Partnerships in Implementing Patient Safety program. One grant winner was "Improving Patient Flow in the Emergency Department," led in part by Twila Burdick, vice president of organizational performance at Banner Health in Phoenix. The project analyzed a patient flow process called Door to Doc, which reduces the time that ED patients wait to be seen by a physician by moving them through two different intake processes.
Under the government grant, Burdick's team created a free toolkit to allow hospitals and health systems to replicate the program. It contains resources for implementing operational changes including the Door to Doc split flow process, interactive spreadsheets that use queuing for patient flow, multidisciplinary training aids and methods, a plan for managing implementation, and project management tools.
Teri Johnson-Kelley, MSN, RN, CEN, the director of nursing for the ED at Banner Estrella Medical Center in Phoenix, used the Door to Doc process in her department. Banner Estrella's 34-bed ED saw 92,400 patients in 2011, though it was designed to handle 74,000 patients when it opened in 2004. Johnson-Kelley recounts that within two weeks of opening, ED volume hit 50% over the anticipated census.
Yet there was no money to expand the department or staff. "Unfortunately the other side of the house was empty," she says. "We didn't have a lot of surgeries yet or other things in the community that usually feed a hospital&mdash:the ED was the front door."
With an overabundance of patients, wait times grew long; Johnson-Kelley says it sometimes took 6-8 hours for patients to be seen, which led to staff concerns about patient safety. The hospital leadership soon decided it had to get creative about how it saw patients. Banner Estrella partnered with Arizona State University's College of Engineering to find ways to maximize throughput. The result was the split flow model.
How does it work? Say Patient X presents at the ED with belly pain she's had for three weeks. The first stop is a quick look, where a registered nurse assesses the patient's condition and assigns an Emergency Severity Index number to route the patient through the ED.
If the vital signs are stable (an ESI of 3–5) then the patient sees a physician and RN together for assessment and testing. Patients don't return to the waiting room to await test results; instead they go to a continuing care area so an RN can monitor their vital signs and reaction to medication. The patient receives a pamphlet explaining the process, and care providers must check off each step in the patient's pamphlet.
"The idea is the patients who are less sick move through the process quickly," Johnson-Kelley says. "These patients only use 12 of our beds in the ED. However, there are small wait areas for the other steps in the process."
Contrast the process for patients with an ESI of 1–2 (critical care). If Patient Y comes in with chest pains, he bypasses the intake process and an ER technician performs an EKG and works to differentiate the type of chest pain.
"The beauty of this is we decrease the risk for the acute care patient in getting them from lobby to bed," Johnson-Kelley says.
But even acute care patients don't "own" their beds, she explains. If the patient stabilizes, he is moved to continuing care so the bed can be used by the next acute care patient.
"We have 34 beds. If we stayed with the old process, I'd have one bed per patient and that doesn't work when you need to see 94,000 patients a year. We were able to increase our productivity, decrease our risk, and decrease our costs," she says. "Plus everyone was happier: the patients, the physicians, and the nurses."
Banner Estrella has come a long way from the 6-8–hour wait times in 2004. Now on the ED's worst day, the average wait time is 36 minutes. Overall patient satisfaction scores for the ED average 86%. And the department has won national awards for quality care for three years in a row.
Plus, the split flow model has a quick financial ROI. "Initially, doing this required a few more resources for redesign and staff, because we had to create separate areas for intake, quick look, and continuing care. But we gained better throughput, patient satisfaction and safety," Johnson-Kelley says. "This gave us the ability to bed acute care patients immediately and that far exceeds any amount we spent.,"
Editor's note: For more on the split flow model, check out the HealthLeaders Media webcast Lower Costs, Better Productivity in Your Emergency Department, in which Johnson-Kelley and other ED innovators will answer subscriber questions on how to turn around ED operations.
A riddle: What's the one document that costs an organization millions of dollars to create, takes months to complete, and is usually out of sync with financial reality from the moment it's approved by the board? Naturally, it's your annual budget. Could healthcare CFOs go budget-free? ThedaCare, an integrated community health system based in Appleton, WI, with five hospitals, 27 clinics, and 6,200 employees, switched to a rolling forecast, and it's making a difference.
ThedaCare CFO Tim A. Olson, BBA, MBA, and Brian Burmeister, PT, MPA, senior vice president of physician services, presented their budget-free approach for financial operations at the American Medical Group Association annual conference in San Diego earlier this month. Olson says the sheer size and inflexibility of the budget process made the document less useful as the organization grew over the years, so in January 2011 he eliminated the traditional annual budget.
"The budget didn't connect tightly to our priorities," he says. "Plus it had an inaccuracy rate of anywhere from 2% to 169%."
Moreover, like most budgets, ThedaCare's was extremely labor-intensive. Creating the budget took 10,000 hours, required 88,000 data points, and cost $500,000, Olson says. Then the monthly management of the document took another 10,000 hours and another $500,000. Despite this effort, the budget wasn't connected to daily management, and as an annual batch process, it did not adjust for varying levels of demand.
"This document took a lot of work, but we didn't necessarily see any value in it. So we set a course to see if there was a better model," Olson says.
ThedaCare has long used the Lean methodology in its approach to process improvement, so it was only natural for the organization to review its budget process with this approach. Olson's goal was to create a document from which ThedaCare could get the information it needed quickly while achieving period-over-period improvement. He also wanted a financial forecast that was connected to strategy and daily operations.
Starting in the fall of 2010, Olson's team set targets in two areas. To look ahead with financial planning, they wanted:
24 months of history
18 months of forecast
Divisional key metrics
13 four-week periods
Dialog among system and divisional leaders
To help with day-to-day financial management, the goals were:
Improved performance over time
Daily tracking of metrics
Daily identification for continuous improvement
Daily huddles to discuss business
Monthly scorecard review of drivers
With these priorities in mind, last year the organization began using quarterly rolling forecasts, doing run-rate forecasting, and making minor adjustments to the budget based on issues like cost of living. The new quarterly process uses established targets that the board approves annually, monthly monitoring of metrics to catch fluctuations early, and plans that describe what the organization intends to do to alter the forecast to attain the targets.
However, Olson says one of the biggest differences between the previous budget process and the new one is the reduction in line items. The previous budget had nearly 7,000 lines and was extremely detailed, whereas the current one focuses on a select few, significant items.
The quarterly approach is an upgrade over annual budgeting, Olson explains, because it allows the organization to be "nimble and focused." Moreover, he says, it spurs quarterly discussions and course corrections. The 20,000 annual hours used to create the original budget are now put into daily management and quarterly forecasting.
ThedaCare also improved accountability for adhering to budget by switching from a silo view to a system view so that everyone is aware of the priorities. Burmeister says this change has created "a more collaborative experience because everyone has an understanding of how everyone else is doing quarter over quarter. So if there are cost drivers, they can address it and help. For instance, if we gain or lose payers or physicians, those things can impact [the budget] quickly, and now we can address them immediately."
Divisional leaders also now use scorecards to track key cost drivers. If numbers stray from the monthly projection for two months, it's a trigger for the group to discuss it and create an action plan. To ensure nothing slips through the cracks, each metric on the scorecard has a sponsor, who compiles monthly and year-to-date results and develops plans for each initiative as appropriate.
The new process has helped managers and supervisors get a better understanding of ThedaCare's patient demand, allowing them to adjust capacity as appropriate.
"There are no surprises at the end of the month. And we're able to do a better job load-leveling our hours worked with the demand," Burmeister explains.
After a fairly smooth transition from the traditional budget to the quarterly process, ThedaCare continues to refine its approach. Although the rolling forecast is (and will always be) a work in progress, Burmeister and Olson agree that the change has proven successful for the organization. Among the positive results, the rolling forecast is accurate to less than 2% (plus or minus), and the organization has redeployed 20,000 hours of finance staff time to other projects and discussions.
"We absolutely would not go back [to the previous budget process]. This approach is more proactive than reactive… and the results just keep getting better," says Olson.
Going budget-free isn't for every hospital or health system. But it could be worth considering if your organization is bogged down in the details, yet the numbers still come up inaccurate at the end of the year.
I often hear financial leaders say that cutting costs starts on the front line with doctors. You have to get the physicians on board with reducing utilization and acting efficiently if the organization is going to reduce costs. What CFOs and other healthcare leaders really seem to be asking is: Why do physicians make the decisions they do?
I came away with some insights—but not all the answers—earlier this month when attending the American Medical Group Association's national convention in San Diego. Over 2,000 providers and C-suite leaders from large multispecialty medical groups, IPAs, integrated healthcare delivery systems, and academic faculty practices attended the AMGA event, which was billed as a conference to "broaden leaders' strategic thinking and prepare them to meet the challenges of the new age of healthcare reform and the role they will play in leading the transformation of care delivery in this country."
I'm certain the attendees left with a lot of innovative ideas from both the presenters and their peers. When it comes to innovations for the payment system, however, I didn't hear much chatter. I did sense that attendees are experiencing the same question mark above their collective heads as their hospital and health system counterparts: why is the healthcare payment system failing, and how can we fix it?
During a networking session for large group practices that I attended, the moderator posed a simple question: "How do you create a culture of value?" The question sparked a few ideas and many other questions. Interestingly, many of the statements from these medical providers mirror the areas in which healthcare organizations also need more clarity. For financial leaders, this may help explain why providers aren't on board with your strategic cost-cutting vision—they are still trying to understand the problem.
Here are some of the thoughts of large group practice leaders on how to create a culture of value.
What is value and who defines it?
"Everybody from the insurance company to the employer."
"The problem is, how do you identify who is the customer?"
"How will a culture of value change as our relationship with the health plans changes?"
"How will the new, narrowed health plans impact care?"
"How do our patients know a test is important? We tell them it is; it's us [physicians] creating that demand."
"Politicians [do], but resource allocation is a societal issue and shouldn't be addressed through politics."
"Do you think when a patient comes in with chest pains they care about the total cost of care? They just care about getting well."
"You have to include patients in the culture of value; patients must be in the room learning and engaging with the team."
"As physicians we have to be responsible for not over-testing."
How important is data?
"Many of us know how to measure quality, but we need to have an idea of cost. Unless we get real cost data, we can't have discussions about reducing costs through quality."
"The payer uses claims data to tell us the total cost of care. I think we can do it better. We need a tool that tells us: Who is doing better than us [on cost]? Who is more efficient than us? Who's the most efficient doctor and medical group? And what are we actually putting into [the formula] that gives us the total cost of care?"
How should the physician shortage be handled?
"We've added a virtual cardiology group that's available to our internist to guide them on non-invasive procedures, and naturally the compensation is different for them."
"We're looking more into telemedicine." (Nearly half the group practices polled in the room were looking into or had added telemedicine to address physician shortages.)
"Telehealth is a transformative way to practice. We had a drop in our institutional costs."
What do we do about patient non-compliance?
"If the patient is non-compliant, then it's the physician's fault; you didn't convince them." (This comment was not well-received by the physicians in the room, as you might imagine, though they did acknowledge the need for more patient education.)
"We need to practice participatory [patient] medicine."
"Did you know the group with the lowest end-of-life care cost is the physicians? They also have the lowest cost of care when it comes to outcomes. Contrast that cost with Medicare's outcomes; it's a big difference. Why can't physicians educate patients about end-of-life care?"
"We have to have the tough conversations about what a patient wants versus what a patient needs if we are going to drive a culture of value."
The healthcare payment system will take years to heal, and no financial leader has the time (or bottom line) to waste waiting. However, if financial leaders give providers the evidence-based, benchmarked, best-practice data they need, then providers might be able to stop asking questions and start delivering the answer everyone wants: high-quality care at a long-term, sustainable, lower cost.
Hospital leaders, pressured with steering their organizations toward better care at reduced costs, may be inadvertently heading toward a financial precipice.
Follow this thought to its logical conclusion and you can see that achieving those aims would essentially put the most successful hospitals out of business.
Of course, healthcare executives deal more often with the daily realities of running a hospital, rather than abstract theories. Practically speaking, there will always be patients in need of hospital beds, no matter how efficient we collectively get at practicing medicine.
But the fact is that the number of beds needed is falling. In 2009, the average number of hospital beds was 2.6 per 1,000 people. In 1999 the national average was 3.0—a 13.3% drop. Length of stay stats are dropping, too.
Through investments in technology and care coordination to prevent readmissions, efficiencies are being gained at an accelerating pace. In California, already significantly below the national average, the rate fell from 2.2 to 1.9—a 9.13% drop between 1999 and 2009. And further cuts are coming.
Jim Lott, executive vice president of the Hospital Association of Southern California said in an LA Times article last week, "Everyone is scrambling on the hospital side to prepare for fewer patients…It does change the paradigm."
But how low can the numbers go?
Everyone understands the costs of associated with oversupply: In a word, waste. But undersupply is trickier; it can erode both quality of care and revenue. There is, for every organization, a "Goldilocks number" of beds—neither too many, nor too few, but just enough to serve the needs of the community and the hospital's mission.
Forecastingwhat that number will be in 3, 5, or 10 years is complicated by a number of variables: the needs of the newly insured, the needs of an aging population, the needs of a population that is increasingly obese and diabetic, and the staffing needs of a nation facing a physician shortage.
But one thing is sure. Arriving at the "right" number of hospital beds is the shared responsibility of all senior leaders. Finance leaders must be able to identify the early warning signals emanating from waning revenue streams, and they have a responsibility to help guide senior leaders toward optimal operational conditions and new and sustainable streams of revenue.
We know, for example, from data collected in the HealthLeaders 2012 Industry Survey, that 20 % of finance leaders expect revenue growth exceeding 6% in their geriatric and ortho service lines. And we know that more patients than ever are being treated in outpatient settings.
It's the CFO's job to help preserve and enhance revenue—before his or her organization is hypothetically hyper-successfully managed into obsolescence.
In the HealthLeaders Media 2012 Industry Survey cross-sector report, just 13% of healthcare leaders say their organization plans to join a commercial ACO. However, 51% plan to be part of a Medicare Shared Savings Program—the so-called Medicare ACO.
It seems that many healthcare leaders may not recognize they already have the foundation in place for a commercial ACO that could prove more lucrative than the MSSP.
It's illogical to me that providers are so eager to join the ballyhooed Medicare ACO or even the Medicare Pioneer ACO program without first creating a commercial ACO. Why focus attention on secondary payers (Medicare and Medicaid) when primary payers (commercial insurers) are interested in establishing programs that should garner greater shared savings than anything being offered by the government?
This incentive certainly should inspire earlier adoption of a commercial ACO before the MSSP, and I think we'll see more announcements of these pursuits in the coming year.
Just last week Blue Shield of California, Greater Newport Physicians (an IPA of more than 500 doctors), and Hoag Memorial Hospital Presbyterian in Newport Beach, CA, announced a three-year accountable care initiative to provide integrated, cost-efficient care to approximately 11,000 Blue Shield HMO members in Orange County.
The providers and payer involved with this ACO, which starts July 1, 2012, will share clinical and case management information and coordinate healthcare services. The provider organizations' will align their incentive structures to improve healthcare quality and patient service while reducing costs.
"We coordinate the care of our patients as they navigate throughout the entire healthcare system, because we know that patient care includes prevention, chronic care management, acute episodes of care, and post-hospitalization recovery," Cassidy Tsay, MD, MBA, medical director of Greater Newport Physicians, said in a statement.
This partnership, subject to the approval of the California Department of Managed Health Care, is the sixth commercial ACO for Blue Shield of California, which is considered an early adopter of the commercial ACO model.
But is the commercial ACO really new? More than a few healthcare leaders have remarked that the ACO is a rebranded and refined model of pay-for-performance and capitation. That's somewhat true. The biggest difference between P4P/capitation and the ACO model is the joining of all stakeholders at the table (the physicians, the hospitals, and the payers) to all share data to guide better outcomes.
By comparison, in the 1990s the lack of alignment from these stakeholders contributed to the near demise of the capitated model.
Although the model has changed, for years payers have encouraged providers to achieve better patient outcomes, and much of that has occurred through P4P-type initiatives. Many of the payer-provider contracts have monetary incentives associated with them along with participant rankings.
The commercial ACO contains elements of capitation and P4P, and most hospitals and health systems nationwide are already working on quality and safety initiatives. All of this is the foundation for a commercial ACO—yet there still a great deal of hesitation to participate. Why?
"Think of P4P as the bachelor's degree; [a commercial] ACO is your master's degree. But moving forward depends [on an organization's] strategic plan," explains Mark Shields MD, MBA, vice president of medical management for Advocate Health Care in Mt. Prospect, IL, and senior medical director for Advocate Physician Partners. (On March 22, Shields will join leaders from Sharp Healthcare and Blue Cross and Blue Shield of Illinois for a 90-minute HealthLeaders Media webcast titled Successful Commercial ACOs: Early Adopters Answer Your Questions.)
In fall 2010, Advocate Health Care signed a three-year agreement with BCBS of Illinois to hold doctors and hospitals accountable for performance and quality service. Advocate, which operates 10 hospitals around Chicago, agreed to limit the rate increases it negotiates from the insurance company.
Additionally, physicians and hospitals must meet performance targets in quality, safety, and efficiencies of the medical care provided to patients covered by BCBS of Illinois's HMO and PPOs. Advocate makes money by getting a share of dollars saved under the arrangement (financial terms and rate increases were not disclosed).
This commercial ACO model puts a greater share of the risk onto Advocate, however, as it must improve patient outcomes and reduce patient care costs in order to reap greater financial rewards in shared savings.
Shields says that, although the commercial ACO agreement raises the bar even higher for Advocate's performance, it's a natural next step for the system. In fact, they were able to get the program off the ground in just three months.
Could your organization move as fast? Shields says it's essential that providers looking to establish a commercial ACO build off of existing payer relationships, as his organization did. Advocate Physician Partners is a joint venture between Advocate Health care and the 3,900-plus physicians on the medical staffs of the Advocate hospitals. It has spent the last nine years working with its payer and unifying practitioners through a clinical integration program—an important precursor to an ACO model.
Advocate Physician Partners' integration program was actually funded by health insurance plans as well as the Advocate system. The goal was to unify both employed and independent physicians into a single comprehensive care management program.
The integration model established a common set of goals and measures across all insurance carriers while giving the physicians an infrastructure and support. In addition, the payers established a pay-for-performance incentive system. It was this clinical integration program that gave Advocate a solid foundation to launch a commercial ACO with BCBS of Illinois, says Shields.
The commercial ACO "is a natural progression for us. We view it as a key to the reengineering of the care delivery system," he says. "We are making the shift from limited to full capitation, so this gives us additional dollars. … So we'll continue our clinical integration, which is a major source for our incentive pools, and now we have the opportunity for shared savings based on our performance."
Advocate Health Care is compiling its data and metrics on the patient outcomes from its first full year using this model and will release the information in the spring. In the meantime, Shields says the organization plans to pursue an MSSP ACO in the coming months. By doing so, the organization will change its reimbursement model—getting nearly 60% of its revenue from ACOs.
"We happen to think that expecting fee-for-service to last or hoping for continued rate increases will fail. We think both Medicare and commercial payers will decrease unit prices, so we'll just be running faster on the hamster wheel and getting paid less for it," says Shields. "However, we also don't think if a hospital or health system has not worked with their payers or physicians in a collegial way that an ACO is the first place to start—but this is [ultimately] the direction to move toward."
Shields is right that launching into an ACO with no foundation is ill-advised. However, healthcare leaders should assess their readiness, as much of the foundation may already be laid.
Working with the primary payer on a commercial ACO, instead of concentrating on one with your secondary payer, will put your healthcare organization in a stronger financial position and soften the inevitable reimbursement transition.
There may be no 'I' in team, but there is one in self-interest, and 59% of healthcare leaders feel it's keeping the industry from solving its problems, according to the cross-sector version of the 2012 HealthLeaders Media Industry Report.
Yet while more than half of healthcare leaders say self-interest is inhibiting an industry solution, 53% of leaders say their respective organizations will participate in an accountable care organization in the next five years. These two conflicting stats provoke a question; how can an industry that's laden with self-interest become selfless enough to successfully operate ACOs, which require deep partnerships? The answer may lie in the collaboration that's necessary for population health management.
PHM is often defined as the health outcomes of a group achieved by addressing a broad range of factors that impact that group's health, such as environment, social structure, resource distribution, etc. Several pilot PHM programs across the U.S. report anecdotal success with improving patient outcomes while reducing costs.
HealthLeaders Media Industry Survey 2012 The priorities and concerns of nearly 1,000 of your colleagues in healthcare leadership are revealed in this year's comprehensive multi-part survey, our fourth annual HealthLeaders Media Industry Survey. Download the Free Reports
A report from the American Medical Group Association, ACOs and Population Health Management, clarifies the relationship between the two concepts. As the reimbursement environment transitions from volume-based reimbursement to a value-based one focusing on quality care and efficiency, providers will be held accountable and could lose out financially if the health of their patients doesn't improve.
"When Medicare and some private payers begin to contract with ACOs, they will initially reward these organizations on the basis of shared savings; however, the leaders of the ACO movement are predicting there will be other reimbursement methods, including prepayment models such as partial and full capitation," the AMGA report notes.
The report goes on to say that "unlike volume-based reimbursement, which encourages the provision of more care, prepayment forces providers to switch their emphasis from merely treating sickness to also maintaining or improving health to prevent costly avoidable illness and unnecessary care.
Payment bundling and shared savings—two other payment models for ACOs—also require the improvement of population health. So, it is clear that if physician groups aim to succeed as ACOs or ACO members, they will have to move to a population health management approach that is aligned with the new reimbursement models."
And it's not just the providers who need to "aim to succeed" through an ACO. Payers are banking on these approaches to patient care to help drive costs down for them as well. QualChoice, a health plan based in Little Rock, AR, fell into PHM about eight years ago when looking into pay-for-performance programs, says Richard Armstrong, MD, vice president of medical affairs for the health plan, which was started in 1994 as a third-party administrator by the University of Arkansas for Medical Sciences.
With 2010 premium revenue of $150 million, the company has grown considerably and now operates a provider network, administers corporate benefits, and markets healthcare insurance and other ancillary coverage.
"We started out looking at how to help primary care physicians do better in their practices with controlling the downstream costs and to develop pay for performance—and [P4P] has a certain quality to it that's like population health management," he says. "So pay for performance helped our PCPs [primary care physicians] learn to manage their populations."
The initial program has morphed into PHM, says Armstrong. QualChoice now looks at both quality and efficiency measures and establishes targets for physicians treating various patients within the plan, such as diabetics. Physician payments are based on practice results which are scored against the pre-determined metrics. Once all the segments being tracked are scored, they're totaled against a larger dollar target. With an eye on cost reduction, any savings that are shown in the comparison are then shared evenly between the practice and the payer.
"We are focusing on the quality of care, and the metrics help show how we're bringing value," explains Robert Hopkins, Jr., MD, FACP, FAAP, professor of internal medicine and pediatrics at the University of Arkansas for Medical Sciences. The University of Arkansas has been working with QualChoice in hopes of seeing a difference in the community's health through PHM.
Accurate and current data is essential from everyone participating in this program, says Armstrong. Payers and providers must find a way to aggregate data so the information can drive better treatment and results. Moreover, the payer must accurately identify the population to manage by acuity as well as the cost of the care to the overall system.
"As a well-known 2003 RAND study showed, patients receive only 55% of recommended acute, preventive, and chronic care.… In a PBPH [practice-based population health] framework with ACO financial and clinical performance requirements, patients who have all the precursors of high-cost/high-risk conditions will have to be identified and managed," the AMGA report states.
Moreover, the AMGA report says, "For patients with multiple chronic conditions, the number of 'care gaps' increases significantly. Overall, a PBPH practice will have thousands of care gaps to identify, manage, and close to achieve compliance across its population. … Validated Health Risk Assessment (HRA) instruments have been incorporated into the health benefits packages of many employers and third-party insurers, producing a lot of data demonstrating the magnitude of health risk in our populations."
Data can bedevil pilot PHM programs. Though in theory payers and providers are willing to work together, in practice data sharing can be a hurdle, especially with so many IT systems in use across the healthcare industry. Typically some type of shared technology system is needed.
"You want to look at those patients who are in the ambulatory [setting] all the time and understand how they become part of the ambulatory metrics. You also want to focus on those with diabetes, and to follow the patients with high blood pressure to make sure that these patients aren't developing worse problems," says Hopkins. "You need to look at all the data, but getting it can be a bit challenging."
Armstrong agrees that information sharing isn't usually due to a lack of willingness, but disparate IT systems. At the beginning of their PHM program, QualChoice was tracking patient populations manually and providing monthly progress reports (with month-old data) to the providers. Not an ideal scenario for those hoping to catch patient problems in the early stages. To help aggregate data for comparison and improve care-related communications between the payers and providers, this year QualChoice installed an integrated care management system from Trizetto.
QualChoice is hoping the new system, which automates the process of managing members' chronic illnesses as well as the continuum of care including case, disease, and utilization management, will allow it to use clinical resources more effectively, explains Armstrong.
"As we pioneer our program, we have to help the practices get accurate, on-time information about the patients," he says. "This [technology] delivers information about the members so that we can all spot the gaps in care. You can see when a patient is admitted and discharged; you can coordinate labs and put flags in the system. Now we can get the providers the information in real-time, so we can all work better together."
For CFOs, charged with protecting the financial best interests of their organizations, it's vital to recognize the role PHM can play in cost reduction efforts. Only by working together can the different entities of the healthcare industry reduce costs, achieve healthy balance sheets, and foster a healthier population.