Providers not only need to develop efficient care bundles to secure attractive reimbursements, but they also need to stress to patients the importance and the value of sticking with the system for the full course of care.
Most hospitals and health systems have a good idea of what it costs them to provide the components of care episodes, but even now, ask many of them to show the costs to them of a given course of treatment, and you'll likely get blank stares, or a lengthy explanation of how that's impossible because of the many pieces of a course of care that take place outside the hospital and that are affected by any number of variables that make the cost of that course of care vary widely.
That does make the task difficult. But it is possible to do it. And it's increasingly necessary.
The big reason it is important is that health systems are increasingly forced by government payers to take on mandatory payment regimes that pay for a course of care, not for the individual pieces that comprise it. Some commercial plans are following suit and some large employers are far along this path—doing deals directly with health systems that provide a level of cost-certainty previously unheard of. But if you're going to provide cost certainty for a customer, you'd better know what it costs you to do so.
Cost certainty for the payer often means cost uncertainty for the payee. If hospitals and health systems, which increasingly will be paid based on this bundle of services, can't determine the longitudinal cost of care for certain episodes, neither can they effectively identify gaps in care that raise costs, and they can't easily identify areas that need the most attention and improvement, says West Johnson, a principal with KPMG's Healthcare Provider Solutions practice based in Atlanta. Hospitals and health systems will also be much more likely to lose gobs of money if they can't determine the gaps in care that lead to cost overruns.
Johnson identifies at least two areas on which healthcare provider CEOs and their leadership teams need to get a handle to be able to demonstrate to payers and even individual consumers that cost risk falls on the providers, not the payer or the patient. Knowing the longitudinal cost of care for a variety of episodes is critical, and so is the ability of care providers to get patients to stick with their organization for the full course of care.
"Ultimately no one has a truly 360-degree view of the patient," says Johnson. "The challenge, using the hospital as an example, is that they have the most granular data all the way to procedures and tests for a lot of patients, but a patient will go to multiple hospitals and certainly multiple docs. So they have individual data but not longitudinal."
In order to calculate the longitudinal cost of care, healthcare organizations that take risk in bundles need structured data and a way to aggregate the likely services a patient will need during a course of care, based on service lines.
"Hospitals certainly can't tell you the aggregate underlying costs of a course of care, even within their four walls," he says. "The approach we take to it is a hybrid approach based on the claims we have access to and the grouping technology that lets you group a common episode of care from pretreatment, treatment, and post-treatment across providers."
Getting that longitudinal cost of care is a huge benefit, but it's less valuable if you can't get patients to stick with your organization and its collection of owned or partnered organizations. Johnson says longitudinal cost of care information makes clear the benefits of keeping patients entirely within the organization's ecosystem whenever possible.
"This is an area where we are ahead of where many are: giving the provider a lens not only into their own treatment, but what the aggregate is for a patient who stays within their care system, compared with those who migrate in and out," Johnson says. "If you're advanced clinically, they will stay in the system pretreatment and post-treatment, and they end up with lower aggregate costs."
Philip Betbeze is the senior leadership editor at HealthLeaders.