All Hospitals Take Payment Risks Now: Get Used to It

You're as at risk for the self-pay or indigent populations you serve and their overall health as any of your bundled payment-taking, direct-to-employer-contracting, Pioneer-ACO-participating peers.

During my visit to the American College of Healthcare Executives' annual Congress event in Chicago this week, sessions predictably focused on the intersection of volume-and value-based reimbursement. To their credit, many organizations are taking this threat of lower reimbursement, higher patient acuity levels, and lower utilization to heart.

Not me, you may say. We steer clear of CMS demonstration projects and Medicare ACOs. And our commercial payers aren't even interested in any value-based determinant to reimbursement. So we're just fine.

But what about your own employees? What about the self-pay or indigent population? You're as at risk for those folks and their overall health as any of your bundled payment-taking, direct to employer-contracting, Pioneer ACO-participating peers.

It just may not show up the same way on your financial statements. But money is being spent—and lost—for this cohort of patients, especially if you're not strategically trying to manage the unhealthiest of these people so they don't over consume costly healthcare services, to say nothing of improving their health and quality of life.

That was one of the main points from representatives of a health system that is being proactive about risk-based reimbursement, where it can, even though in the sense of formal structures with government of commercial payers, risk-based contracting has not made inroads.

"All of you are at financial risk if you have a high percentage of self-pay and Medicaid patients," said Ed Rafalski, Memphis-based Methodist Le Bonheur Healthcare's senior vice president of strategic planning and marketing, in a session addressing fellow health systems at ACHE Congress earlier this week. "This is all about managing complex patients in a different way. That's how we're building our population health strategy."

Because the health system loses money on Medicaid and self-pay patients, reducing their acuity could pay big benefits in both patient outcomes and the system's financial health. So Methodist began working on a community faith-based network back in 2006 that by 2010–11 became a vehicle for better managing the health of high-acuity multiple comorbid patients in the area, Rafalski says.

Though the network was created as an outreach program for all faiths, Methodist staff soon realized they could use the network and geographical and demographic data from the system's patient encounters to help pinpoint the highest concentrations of self-pay and Medicaid patients.

Familiar Faces
The belief was that use of a trusted patient navigator would lead to better, more tailored care, and eventually, to better self-and family-management of chronic conditions. Most of these patients are familiar to any health system—they used the emergency department exclusively as a one-stop-shop for all their healthcare needs.

Methodist discovered that the top 10 ZIP codes consumed 56% of all charity care costs.

Further, the "hot spot" of utilization and cost came from South Memphis in one ZIP code, 38109. In 2010, this ZIP code, which had but one federally qualified health center safety net clinic, accounted for only 9% of inpatient visits, but 65% of total charity care costs for Methodist.

Methodist calls these folks "familiar faces," while other healthcare organizations often call them "frequent flyers." Whatever the moniker, they and the poor management of their chronic diseases figure heavily in the healthcare cost equation. Therefore, concentrating resources on this ZIP code would have a big impact on the charity care population.

Commercial payers in Memphis, where the eight-hospital Methodist Le Bonheur Healthcare is based, weren't and still aren't particularly interested in introducing value-based reimbursement structures at this point, although Cigna did provide some of the funding for the program. At this point, it has one patient navigator for about 70 patients, mostly in that one ZIP code.

In support of the goal of moving patients toward better chronic disease self-management and better health generally, the navigator offers nonclinical support, such as managing doctor's appointments, arranging transportation, securing meals or groceries, getting prescriptions filled or financial aid for prescriptions.

About two thirds of the patients approached with the offer of help with these functions have accepted the invitations thanks in part to the trust built from the interfaith network, which counts almost 600 houses of worship in the area as members. Results through 2014 show decreased per-patient costs by 43% compared to the 2010 baseline. Not surprisingly, ED utilization has decreased 23% for this group of patients managed by the care navigator.

Now that the program has shown such promise in high-risk patients, Methodist would like to expand it to those it considers "rising risk" patients. That is, those who are on track for high utilization absent intervention.

"We know the approach works, so we want to expand to the next level of patients who are at risk of becoming familiar faces," says Razvan Marinescu, MD, the director of planning and business development at Methodist.

Methodist leadership recognized the issue and did something to combat it, and the beauty is that it's a model that can be effective no matter your organization's payer mix or patient mix.

Obviously, this type of high intensity intervention is not cost-effective for most patients, but it can make a huge difference in cost and quality of life for some. That's what's known, annoyingly, but quite appropriately, as a win-win.