These 4 Strategies Make Population Health Thrive

A shift toward wellness and prevention is a shift toward better care coordination and cost containment, says the CFO of Virtua Health System in NJ.

Building an organization designed around value instead of volume is critical to long-term financial success, but it's also a major challenge, says Robert Segin, executive vice president and chief financial officer at Virtua Health System, a $1.3 billion, 980-bed system based in Marlton, NJ.  

"It's a paradigm shift. We've been on this journey for about five years, and it's really the evolution of population health management as the healthcare industry moves toward wellness and prevention," he says.

According to Segin, Virtua's strategies for making the necessary shift include:

1. Becoming an Accountable Care Organization

About three years ago, Virtua launched VirtuaCare—its Medicare ACO—and has since formed ACOs for two of its managed care commercial insurers and its own employees and dependents. In total, roughly 50,000 patients are cared for through the ACO programs, which aim to improve communication between primary care physicians, specialists, and other providers.  

The main goals of the ACO model include supporting the systems' mission of helping patients get and stay well and developing better care management capabilities, particularly for patients with chronic disease, Segin says.  

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"It's really about learning how to improve healthcare coordination within our system as well as with our independent system of providers by having care coordinators working with chronically ill patients and using the necessary resources to keep patients healthy and out of the emergency department and acute-care environment."

2. Dealing with Social and Environmental Barriers

In addition to increasing communication between providers, the care coordinators use an algorithm that classifies patients by acuity level to determine how much in-home and community-based support is appropriate. Based on this information, the care coordinators conduct home visits and help patients work through the barriers that might prevent them from regaining and maintaining their health.

While many of the needs that are identified go beyond the typical scope of a hospital or health system, Segin says it is necessary to look at all factors that might lead to the use of expensive healthcare resources.

"A lot of the issues we deal with are environmental, particularly with elderly patients. You don't realize until you get into the home environment some of the issues from a safety perspective that would potentially bring someone into the ED or acute-care setting. Safety features like steps or the bathroom facilities. Things you don't typically think about as a health system," he says.

"Transportation is another big issue. We want to be sure patients get to their doctor's appointments and to the pharmacy. We are monitoring people to be sure they are taking their medications and have the ability to get their medications."

This comprehensive approach to the patient is fundamental to success as the healthcare industry evolves, Segin says, and is helping Virtua reduce hospital readmissions and raise quality scores.

"There are a lot of issues that as an acute-care provider we didn't think about until we got more broadly involved in the patient's care… Looking at the patient as a whole person is becoming more important as the environment of healthcare transitions to population health management."

3. Growing Outpatient Capacity

Like many health systems, Virtua has historically been dependent on its inpatient business, but that has "shifted dramatically" over the past several years as the system works to keep patients out of the hospital, Segin says. "Now about 53% of our business is based on outpatient revenue and that is growing exponentially at this time."

To keep pace with this growth, Virtua is expanding its outpatient capacity. For example, the system now has nine ambulatory surgery center joint ventures throughout New Jersey, including in areas that are beyond its usual footprint.

"We see more and more surgeries that have traditionally been done in an inpatient environment that are now being done as outpatient procedures," Segin says. "For instance, knee replacements are now commonly done on an outpatient basis where it used to be strictly an inpatient service. We see that as an opportunity to grow. It's all about outpatient growth, service, convenience, and quality for the consumers in our marketplace."

Virtua is also doubling its urgent care centers to six by the end of 2015—a decision that was spurred in large part by the strong growth its three existing centers experienced last year, Segin says.

"We are trying to make it convenient so that in lieu of going for an expensive emergency department visit when their primary care physician's office is closed, patients will go to an urgent care center… We had more volume than ever in 2014 in our urgent care centers."

Being able to deliver care in less expensive settings is a cornerstone for success in a population health management model, Segin says, adding that patients are responding well to Virtua's growth plans.

"The number one indicator of the positive response we've had from consumers to our outpatient strategy is our growth in market share, which at 33% is the highest it's ever been."

4. Focusing on Cost Containment

Along with its efforts to fuel top-line growth on the outpatient side of the business, Virtua is also taking a hard look at how it can rein in expenses to enhance value.

"We recognize that rates for inpatient services, whether through Medicare or commercial insurers, aren't going to grow as they have in the past. Our plan is to continue to grow our outpatient services and to complement that with cost reductions." Segin says.

One area where Virtua has had significant success in cutting some administrative and support costs is its vendor contracts.

"We are taking advantage of the soft economic market in the U.S. by renegotiating every contract that is going to expire in this organization. We have gotten price consensus in about 95% of our contracts," Segin says.  

The system is also yielding clinical savings by working with doctors to curb spending on costly physician preference items and unnecessary patient care.

"For the economies of scale, we are working on how we can narrow the selection of hip, knee, and shoulder implantables to just a few vendors to get the best quality at the proper price point moving forward," Segin says.

"We are also working with different groups of physicians in terms of reducing variations in clinical tests, pharmaceuticals and drug usage, and diagnostic tests that aren't needed and don't provide value to the patient."