Whether hospitals and health systems plan to own postacute providers or not, how your organization interacts with them after discharge will play an ever more critical role in both clinical and financial outcomes.
This article first appeared in the July/August 2016 issue of HealthLeaders magazine.
Why does postacute value matter for acute care hospitals and health systems?
Does it matter because they get dinged on reimbursements from Medicare thanks to penalties that kick in should a Medicare patient be readmitted within 30 days for the same condition? Those penalties can be significant. In the 2016 fiscal year, the fourth year of the Hospital Readmissions Reduction Program, some 2,592 of the nation's hospitals were penalized a combined $420 million from October 1, 2015, to September 30, 2016.
Does it matter because commercial health plans are starting to jump on the penalties pioneered by the federal government? In some cases, yes, commercial plans have moved in that direction, but that's a patchwork and baby-step process.
Acute care hospitals and health systems see that making large investments in everything from care coordination to patient monitoring to helping postacute providers with electronic medical record interoperability will be necessary to achieve their goals. Is that why postacute value matters?
It's important for all of these reasons—just not necessarily right now.
The truth remains that even though readmissions penalties hurt, they pale in comparison to the revenue a hospital receives for an admission. So to a large extent, hospitals are still on balance losing money for their investments in care coordination and other interventions to help prevent readmissions.
So why, generally, are healthcare leaders investing so heavily in making sure the hospital and its clinicians play a key role in supervising postacute care—making sure providers are doing everything clinically indicated to prevent readmissions?
"We really are doing this for patient care reasons," says Pam Stoyanoff, executive vice president and chief operating officer for the nine-hospital Methodist Health System in Dallas. "The incentives still aren't there to do this for business reasons. Even if we get readmission penalties, they are still small compared to what you get for an admission."
Managing postacute care is tied into the move toward value-based purchasing. Value-based purchasing, at its heart, attempts to inject risk for patient outcomes into the reimbursement equation. With so many variables at play in the patient's arc of care for a particular condition, any attempt to link healthcare purchasing and value measures is fraught with difficulty, especially at this early point in the trend. Indeed, hospitals have decried Medicare's blunt attempts to inject risk into reimbursement for hospitals through readmissions penalties. The drive toward value seems destined to continue.
Despite these mammoth uncertainties, most organizations are in the process of divining—many years after passage of the Affordable Care Act—how quickly to make a 180-degree transition from volume-based reimbursement to value. Stoyanoff says the Dallas-Fort Worth market is behind on this transition for a variety of reasons, but Methodist wants better outcomes for its own sake.
"The local economy is really strong and has been for a long time," she says. "Demographics are positive, the population is growing at a high pace, and there's no certificate of need in this state so there's still a big entrepreneurial spirit out there and employers and healthcare providers and insurers are faring pretty well economically."
That means except for Medicare, Methodist is facing little economic pressure to invest in postacute sites, labor, and other infrastructure necessary for value-based care. She says the health system still employs less than one-fifth of its physician base, behind the rest of the country.
"It's happening but slowly," she says. "Our transition is around the Methodist Patient-Centered ACO and our involvement in Medicare Shared Savings as well as some limited narrow-network commercial insurance plans."
Methodist is now in the fourth year of participation in the Medicare Shared Savings program and has saved the federal government money each year of participation. It received $6.2 million the first year and shared one-third of that with its physicians. One-third goes to Methodist, and the other third goes toward building more value-based infrastructure, Stoyanoff says.
She says the organization has learned largely through the lives it's managing through that plan. Overall, Stoyanoff says the health system is at risk for between 35,000 and 40,000 MSSPs, employees, and some commercial lives in a value-based manner, although that number is "not dramatic compared to the number of lives we serve in total," she says. "We believe in value-based care, but we're not necessarily getting paid for it."
But what does managing lives entail? If you've seen one system's method, it's likely unique, but some lessons are universal.
"We did it via the MSSP and creating an ACO," she says. "You will have to invest in a strategy, too. We had to commit to an investment of $3 million–$4 million to build an infrastructure to manage lives and think of it as R&D."
That included hiring new people and putting a physician in charge of the initiative full time. Then the work begins creating metrics by which you're going to measure everything.
"You can start by managing your own employees' lives," she says. "Most of us are self-insured, so practice on yourselves. Test out quality metrics, computer systems, investments in software—there's a lot of it out there."
Though in a vastly different region, with a vastly different reimbursement climate, the work being done at Crouse Hospital in Syracuse, New York, is surprisingly similar to what Methodist is doing in Dallas.
A lot of how fast Crouse makes the transition to value-based care has to do with how fast the payers are moving, says Kimberly Boynton, the hospital's president and CEO.
Crouse has tried to be ready by creating Crouse Health Network, a physician network with both Crouse-employed and independent physicians, aimed at creating relationships with commercial payers.
"We already have an at-risk contract to lower costs with the local Excellus BlueCross BlueShield plan, and we are also part of a Medicare ACO," she says. "All these pieces become very important in building value-based care. We're not at the beginning; we're somewhere in the middle. We've got the physicians, we've got a couple of risk contracts, and we hope to add more with nationwide payers in the near future. Simultaneously we're refining our care protocols."
Key metrics include quality measures and cost per case in the hospital, she says.
"We view postacute as critically strategic for value-based care."
They're also changing the way they work with postacute care providers, and that's where the majority of cost reduction and quality improvement will take place, she says. For example, in nursing homes, Crouse is working toward placing nurse screeners at the facilities to quickly and frequently evaluate patients in cooperation with the main hospital to try to limit unnecessary readmissions, and who will set up and follow up on plans of care and patient education.
Own some, influence some
The key to strategic decision-making in getting value out of postacute care is the decision of whether to own or partner with providers of skilled nursing, rehab, home health, and other sites of postacute care.
"We view postacute as critically strategic for value-based care," says Methodist's Stoyanoff.
She explains that in the health system's experience with Medicare Shared Savings, it's shared materially in the savings each year of the program, but she says the first couple of years' success came not from reducing hospital costs but by reducing costs in postacute care, especially in home health.
With more than 500 home healthcare providers in the market, the choices are overwhelming for patients in Methodist's service area. Although Methodist can't require patients to choose any particular postacute provider, including home health providers, it uses a preferred provider list when discharging patients that informs them or their caregivers about their choices.
Certain providers don't meet the information-sharing and care protocol agreements that preferred providers do, which are often listed higher and are ranked based on metrics that are revised quarterly. Methodist's list also uses a star ranking, from one to five stars.
"We try to influence as much as possible within what we're allowed to do," Stoyanoff says. "That has helped us."
Part of Methodist's strategy for gaining some influence over how patients are cared for postdischarge included forming a home health agency in a joint venture two years ago with a competitor, Texas Health Resources, also based in the Dallas-Fort Worth metroplex. She says generally with that organization, care transitions are better, although other agencies also carry a five-star rating. So far, home health and rehabilitation are the only segments in which Methodist has delved into owning a piece of the postacute care continuum.
"We do feel like it's easy to get into home health, and as we've grown that agency, it's helped us reduce costs," she says.
Home health had been the largest subsection of costs within Medicare where Methodist was off from national standards, she says. The joint venture has improved that metric considerably.
Two of the four main Methodist hospital campuses, soon to be three, have leased out space to a variety of different postacute providers who are located on the campuses. Those modalities include hospice, long-term acute care, and skilled nursing. Stoyanoff says colocating these providers has brought incremental rent revenue for space that was under-utilized, and their proximity makes it easier to follow and intervene with patients before they might otherwise be admitted for an acute episode. She says the leasing idea is one area in which Methodist is being innovative with its foray into value-based reimbursement.
"I don't see a lot of health systems doing that," she says. "You get some money for space you're not using, and it brings those providers on-site."
That proximity can help with end-of-life care decision-making, especially when a death in the acute care space can count against the hospital's mortality scores, she says.
"It can be really difficult to get a patient to move to hospice, but when the facility is on campus, it's easier," she says.
Areas Methodist is not interested in owning include skilled nursing and long-term acute care.
"Those business models are just really different, and there are a lot of them out there," she says. "They can take the risks for the business model, and we can work as partners from a referral perspective."
Crouse, for its part, does not own any home health modalities, but it does have partial ownership of two of the skilled nursing facilities in the Syracuse area. Crouse does have preferred provider relationships with two home health agencies and an infusion company.
"Those are partnerships without ownership because that's not our forte, and we feel there are agencies here in town that do a wonderful job in these areas and that's their business," says Boynton.
She says partnership provided Crouse with great benefits for patients, and because it has more than one preferred provider, "we actually have more control than if we had just one," she says.
"Both know they have the obligation to respond to us when it's necessary, and they have to be at the top of their game as far as technology and information flow," she says. "Information flow is really a significant piece. We work very closely with them to set up disease-specific protocols."
As for other modalities, she says Crouse has not found it necessary or even desirable to own when those services are readily available, and providers agree to treat patients according to clinically proven protocols.
"They don't need a parent, so to speak," she says. "We've worked with them on how they recruit the nursing professionals, how they follow the proper protocols, and they work with us to make sure the patients have good outcomes."
Philip Betbeze is the senior leadership editor at HealthLeaders.