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Live from HFMA-ANI: Searching for Savings in the Reform Era

 |  By Philip Betbeze  
   June 22, 2010

Hospitals aren't sitting on their collective hands waiting for healthcare reform to take a bite out of their bottom lines. In less than 24 hours at the Healthcare Financial Management Association's Annual National Institute in Las Vegas, I've heard nothing but a constant refrain about efficiency, value, and cost cutting. Hospitals aren't yet sure how to get there, but they know they must as they prepare for the gradual implementation of the healthcare reform law over the next several years.

They know that they will slowly be getting less reimbursement per patient over time even as more patients are covered. That means they must demonstrate that their services provide long-term value for patients.

Glenn Steele, MD, CEO of Geisinger Health System in Danville, PA, set the tone with a presentation about Geisinger's journey toward better value for patient care. That's famously been described, including in the pages of HealthLeaders magazine, as Geisinger's warranty, which means the hospital committed to paying for any readmissions within a guaranteed amount of time for cardiac procedures, initially.

They're rapidly working on more.

Steele, concerned that medical price inflation might mean eventual price controls unless a market-based solution is found, conceded that Geisinger had certain advantages over other hospitals in that it is an integrated delivery system, complete with a health plan. That allowed Geisinger to take these risky bets with procedures without jeopardizing its financial well being.

A telling quote: "If we had a magical technique for extracting that suboptimal care, and redistributing that, there would be plenty of resources out there to cover people who haven't been covered. So how do you extract that? There's no relationship between quality and costs. If we can attack that lack of relationship between quality and cost, we've got a lot of potential.”

But the best part is that the initiatives worked. Patients were healthier, they got better care, Geisinger made more money, and the health plan's costs went down.

So is Geisinger's example that "magic” formula that can be replicated across the country? Sadly, probably not. But that doesn't mean there aren't other solutions out there, if healthcare will just innovate in improving its processes. So, other than amorphous healthcare legislation whose rules are still being written, what incentives do you have to innovate? In other words, what happens when you're still getting fee for service payment and still trying to get ready for a shift to being paid for value, and getting paid for keeping patients out of your hospital?

I don't know, and neither does anyone else. But you're charged with finding your own way.

Some of Steele's suggestions for process re-engineering and innovation:

  • Unjustified variation
  • Fragmentation of caregiving
  • Perverse payment incentives (outcome irrelevant)
  • Patient as passive recipient of care

A huge amount of Geisinger's re-engineering is having non-docs do things that docs used to do. It frees up the docs to do other more valuable things that frankly docs enjoy doing, says Steele, a doctor himself. Quite often you get improvement in quality as well as increased value if you really redesignate who does what,” he adds.

EMRs aren't the only answer. Neither is greater patient participation in their own health maintenance. Neither are dedicated physicians or even interesting demonstration projects. But they're all part of a whole. The answer is there is no holy grail.

But such experiments and process re-engineering are necessary, even vital, if we don't want to face price controls in the future, says Steele.

We'll have more comprehensive reporting from HFMA-ANI tomorrow. Stay tuned.

Philip Betbeze is the senior leadership editor at HealthLeaders.

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