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Developing Value-Based Payment Models

By Christopher Cheney  
   October 14, 2015


At the outset, about 30,000 workers and their dependents enrolled in CHI's internal managed care initiative, Lofton says. This year, about 102,000 lives are covered in CHI managed care, including about 45,000 employees and about 58,000 dependents. CHI employs more than 95,000 people in 19 states.

"We began launching managed care initiatives about four years ago—as an initial pilot in Nebraska, then as the next wave in a pilot in Des Moines, [Iowa]," Lofton says. "The big launch really came at the beginning of last year, in 2014. We are still in the early stages. We now have about 50% of our employees and dependents in these programs. We've lowered costs in a few different areas. One is by managing high-risk individuals within our population, the 3% to 5% that drive 40% or 50% of healthcare costs. We have seen a drop in emergency department visits and hospitalizations, and an increase in medication adherence and preventive-medicine screening."

For employees and dependents who have received care through a clinically integrated network, ED visits have dropped 10% and the average length of stay for hospitalizations has fallen 10%, CHI reports.

In 2014, CHI launched Prominence Health. Lofton says Prominence has boosted CHI's health insurance know-how and opened new revenue streams. "We have built up an expert payer staff, when two years ago, we didn't have anybody."

With the additional acquisition in 2012 of a majority interest in Soundpath Health, a Medicare Advantage plan in Federal Way, Washington, and the 2014 purchase of QualChoice, a Little Rock, Arkansas-based commercial insurer, CHI is making market-share gains in Medicare Advantage, Lofton says. "It appears to be a little easier to manage that population, and you don't face the same level of competition as you do in other areas from commercial payers."

Lofton says physician leadership is a crucial component of CHI's adoption of value-based payment models and value-based redesign of care. "They're the ones who come up with the ideas. They have skin in the game."

The focal point for CHI physician leadership in the adoption of value-based care is the Medical Group Leadership Council, Lofton and Stanley say. MGLC members include about 26 physician enterprise leaders who represent each of CHI's markets. Council members have accountability in their markets for several key operational functions, including revenue cycle, clinical quality, labor productivity, patient satisfaction, legal compliance, provider compensation, managed-care contracting, and supply chain management.

Stanley says that "operational dashboards with key performance indicators—financial, productivity, supply chain, etc.—were put into place over the past couple years and are reviewed by MGLC members at frequently recurring leadership meetings. MGLC leaders are held accountable by their market CEO as well as by their peers [in areas] including goal-setting and transparency of information. Leadership
changes have occurred in circumstances where results did not meet expectations."

CHI's heavy investment in information technology combined with administrative support provided through an internal physician services business unit gives the MGLC significant resources, Lofton says. "We've relieved them of the electronic billing and business side of the value-based world."

With the health system's multibillion-dollar IT investment serving as an "absolutely critical" infrastructure component, CHI has focused care redesign efforts on enhancement of primary care capabilities, such as the formation of patient-centered medical homes, Stanley says.

He says one of the top goals of CHI's primary care transformation initiatives is to include behavioral health specialists in staffing. Adding social workers and mental health specialists to the resources available to primary care physicians "augments the physicians and augments the team approach," Stanley says.

CHI is banking on resource-rich patient-centered medical homes to help drive high quality at low cost, such as improvement in medication compliance, he says. "Sometimes, noncompliance is because of financial issues. Sometimes, it's because of psycho-social, mental health, or other behavioral issues, and the team can tackle these issues."

The health system is "just starting the journey" toward incorporating behavioral health resources in patient-centered medical homes, but the PCMH model of care is already generating patient engagement gains, Stanley says. "We are now identifying patients who are in need of care but are not following up the way they should. Using data to identify gaps in care, we are now making direct outreach to them and conducting collaborative interviews to get patients to take more direct care ownership."

Targeting primary care is part of a strategic decision to shift CHI away from reliance on hospital income as the dominant financial pillar of the organization, Lofton says. "We are at about 53% of our net patient service revenue coming from nonacute care sources. Our goal, which we set about five years ago, is to be at 65% of all net patient service revenue coming from nonacute care services by 2020. One of our biggest growth areas will be primary care, which is the real underpinning or foundation of all of our value-based programs.

"We are certainly going to see more and more outpatient procedures that were historically done in an inpatient setting, in part because our technology and care management is so much better," Lofton says. "We'll also be extending this care out to the communities—especially rural communities—through virtual health services."

Stanley acknowledges there are challenges to fostering physician leadership and quelling concerns among clinicians about the shift from volume to value. "That's probably what I spend 80% to 90% of my time on: leading the change in the organization," he says.

Among CHI physicians, eagerness to embrace value-based care varies widely, with three broad categories, Stanley says.

Physicians who have received training in population health and patient-centered care have stepped into leadership roles in the shift from volume to value at CHI, he says. "They're the champions. They're the leaders. They're the torchbearers."

Stanley says there are other CHI physicians "on the opposite end of the spectrum" who have spent their entire careers receiving volume-based payments for services and are deeply skeptical over the transition to value-based payments. He says CHI has eased the organizational tension from this clash of philosophies with a strategy rooted in an undeniable reality: There will always be health system settings and services such as emergency medicine that operate with volume-based payments. "There's a real value to physicians who just want to show up and see patients, and we have places for them to be successful."

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.

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