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Q&A: Atlantic Health System CEO Makes Big Bets on Value

Analysis  |  By Philip Betbeze  
   April 27, 2017

The New Jersey-based, six-hospital integrated delivery system has developed new metrics to gauge its success in value-based care, says its chief executive officer.

In 22 months as president and CEO of Atlantic Health System, Brian Gragnolati, FACHE, has tried to turbocharge transformation toward value at the $2.6 billion health system.

With 1,000 employed physicians, rehab, home care, hospice, and one of the largest ACOs in the nation (390,000 attributed lives) Morristown, NJ-based Atlantic Health is ideally suited for value-based care.

Gragnolati has embraced the idea that hospitals and health systems must lead the way toward demonstrating value to consumers, payers, and the government. He helped develop Johns Hopkins Medicine's Integrated Delivery and Financing System prior to coming to Atlantic Health.

HealthLeaders spoke with him recently about the measurement discipline such a broad transformation requires. Following is a lightly edited transcript.

HealthLeaders: What metrics are most important to an organization that is shifting its focus toward value?

Gragnolati: First, we want to measure things that can truly harm a patient. Second, we want to measure things that affect our ability to get paid. They dovetail because as we experience this shift to value, our payment structures are set up to hit certain quality measures like readmissions, mortality and HAIs [healthcare associated infections]—things like that.

So they're practical measures. This is about a quarter of the measurements.

Secondly we look at community benefit, which represents about 10%. Another 10% measures patient experience based on inpatient, ED and outpatient. We also measure people.

For the past eight years, we've been among Fortune's top 100 places to work, so employee engagement is really important. As we continue to become more integrated, we're measuring the degree to which direct care providers feel engaged. That's about 15%.

Growth is another piece, representing the balance. As we see more movement from inpatient to outpatient, we need to keep up with the criticality of our patients, the case mix index, and total operating revenue.

HealthLeaders: How is your revenue base shifting?

Gragnolati: 54% of it is now ambulatory. Two years ago it was less than 50%. We're pushing more care to the outpatient side so we stay attendant to operating revenue, which implies market share growth.

As inpatient become less relevant, you have to grow aggregate operating revenue, which comes from your patient touches. We need to make sure our balance sheet is completely connected to our P&L. When you look at EBIDA, you get a better view of where you're generating cash flow.

Also, in uncertain times, it's important to stay focused on building credit strength. It's a complicated dance with analysts, but we need sufficient reserves and a balance between debt and profitability.

HealthLeaders: Beyond metrics, what's most important to you in pushing the organization toward a value-focus?

Gragnolati: I go out to clinical sites a lot and I time my visits so I can go to patient care huddles. Those whole-house huddles take place at 11AM for 15-minutes. They're populated by the clinical staff and the leadership team, focusing on what's happened in the past 24 hours.

We start with activity levels by area, looking at quality metrics, focusing on things we can prevent and that need early intervention, like falls, fall precautions, pressure ulcers, and line management.

We discuss any patient who has a line or catheter, and make a deliberate effort to know when it's coming out. We also celebrate the days and months and in some cases, a year-plus that we haven't had a line infection.

HealthLeaders: You started your career as an emergency room technician. That department is a high-cost area. How does your experience help in transforming the ED?

Gragnolati: We do a lot of measurement on that. We measure door-to-physician time, and door time to disposition. In real time, we look at patients being held in the ED and focus on what we need to do to get them elsewhere. No longer do EDs feel like they're living in isolation. 

We also look in real time at patient experience, whatever the most recent scores are, and end with an open forum where anyone can express concerns or potential issues that need to be brought forward to leadership.

I encourage corporate folks to get into the huddle. I showed up at one a few weeks ago and my CFO was there. This has been transformative in our organization.

We also get reports on more traditional things, such as volumes and readmissions and we use a capacity planner to look at patients and predict future staffing levels.

Our physician enterprise also in realtime looks at not just our total patient activity, but at patients who are in our network, and how many of those patients are staying in our system for care. We also look at post-acute care report cards.

HealthLeaders: What helps you to understand what real people are experiencing as a result of the lack of affordability of healthcare?

Gragnolati: Value-based care and risk-based contracts represent a small percentage of total revenue, but we're learning a lot through our ACO work.

I'm looking forward to a day when everyone is connected on either our EHR or one that interfaces with us so we don't have to guess what's happened to the patient before they hit our door.

That inherently will create more safe and effective care. Affordability is a top concern to consumers and the reasons are apparent. They're experiencing more out-of-pocket costs, and healthcare takes a higher percentage of their income.

My daughter is on an exchange product, and her premium is $100 per month because she's subsidized. But she's got $5,000 of potential exposure via deductibles and coinsurance for someone who makes less than $20,000.

HealthLeaders: What do you think is important for political leaders to remember as the administration and Congress attempt to repeal and replace the ACA?

Gragnolati: For the past couple of decades, we've been working hard on the delivery side to make sure our country has the access to the right levels of care. We've had ups and downs on that, and the ACA brought that issue front and center.

While nowhere near perfect, it did a couple of important things: It created a series of insurance reforms that have helped people with pre-existing conditions, and eliminated lifetime limits. That was important.

I hope in the next iteration of change; we don't lose sight of that. The reality is that 22 million people are covered who hadn't been. In trying to drive down per-capita hospital spending, we've really bent that curve.

But there are pockets of costs we haven't been able to get at, like pharma. So as I look forward, it's important to continue to experiment with ACOs and medical homes.

Philip Betbeze is the senior leadership editor at HealthLeaders.

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