A Q&A with the distinguished physician, who oversaw publication of the seminal "To Err is Human" report and who has prescriptions to help transform American medicine.
Even in a field sparkling with stars, Kenneth I. Shine stands out.
Shine began his career in Boston, earning his MD degree from Harvard Medical School in 1961 and training at Massachusetts General Hospital, where the cardiologist and physiologist became chief resident in medicine. Shine left the Bay State in 1969, joining the faculty at University of California, Los Angeles School of Medicine, where he was named dean in 1986. After a stint chief of the American Heart Association, Shine served as president of the Institute of Medicine from 1992 to 2002. In 1999, the nonprofit group published the earthshaking exposé on patient deaths linked to medical errors, "To Err Is Human: Building a Safer Health System." From 2003 to 2013, when he announced his (active) retirement, Shine served in several roles at the University of Texas System, including responsibility for six UT Health campuses and a budget of nearly $9 billion as executive vice chancellor for health affairs.
Kenneth Shine
I talked with Shine recently about the ongoing transformation of healthcare financing and processes, and whether healthcare delivery is any safer since the publication of "To Err is Human."
HealthLeaders Media: The shift to healthcare industry business models that emphasize value involves costly investments and complicated administrative processes. Are there sufficient financial resources to support this transformation?
Kenneth Shine: There are adequate resources. We are talking about 18% of the [U.S.] gross domestic product. That is substantially more than other Organisation of Economic Co-operation and Development countries that provide as good or better care in many areas. I don't believe the resources are the issue. The issues have to do with the organization of the system, the misalignment of financial incentives with the outcomes that we want, and the fact that our prices are the highest in the world. A couple of years ago, the average cost for a hospitalization in this country was about $16,000. That's cost—not charges. At that time in France, it was $4,700 and the length of stay was longer. The fact is that we pay far more for what we get, and we don't get the highest quality.
From my perspective, the issue is: Do we have the will to make the kind of changes that are required? This is an exciting time. Even in the absence of Obamacare, the cost of healthcare had risen to such an extent that there was an increased willingness of people to take on that cost. How do you take on that cost? You change the delivery system, you change the reimbursement system, and you make organizational changes. The resources are there … and physicians can make a good living, particularly if they are incented to keep people healthy and get paid for it.
HealthLeaders: Describe the ideal integrated health system of the emerging value-based era.
Shine: First, it does have to be value-based, where value relates the outcomes of care to the costs of care. And the health system has to be judged on the basis of whether it is providing value. Secondly, it has to be able to provide outcomes while maintaining the highest level of quality. The movement toward outcomes can only take place under circumstances in which you know how to measure quality and quality is very much a part of what the outcomes are to be measured. Thirdly, it has to be organized in such a way that it promotes health as opposed to solely treating disease. That's quite closely connected to the notion that the system has to be organized increasingly so that it is responsible for a population of patients, which is not only managed to minimize the costs of care but also organized in such a way that it promotes health.
Finally, the economic incentives, the value we pay for, have to clearly be aligned with the desirable outcomes, which include a healthy population. The incentives also need to have a process that finds the least expensive way to provide quality and takes into consideration the entire state of the individual patient's health. Such a health system has to be patient-centered: It has to be focused around the patient and the patient's needs in terms of where and how the patient gets information, gets advice, and gets treatment. And it has to be focused around the patient and the family in terms of the full spectrum of components that produce health. Only a fraction of those components are medications and procedures. Many of those components have to do with lifestyle and environment, and a truly successful health system would take those kinds of factors into consideration.
HealthLeaders: One of the areas you are working on now is supporting efforts to ease the sharing of healthcare data, such as your recent addition to the advisory board at Austin, TX-based vitaTrackr. Why do you think data sharing is one of the keys to improving healthcare?
Shine: We have a fragmented system—a fragmented industry, with a large number of large cottages. In many ways, it is a cottage industry that uses high technology but lacks organization as a real system. One of the ingredients of a real system would be a method for all of the elements of that system to effectively communicate with each other. The system I'm talking about involves physicians, it involves hospitals, it involves pharmacists, it involves everywhere where healthcare is provided. But it also, if it was a real system, would include social services, nutrition counseling, and a whole variety of elements that are critical to improve health. Having an information utility that can connect all of the different elements of the system so they can communicate with each other is essential. The patient is a key member of that system. I have talked for a long time about the concept that 21st-century care is team care, and the patient has to be a member of that team. That means we need a way to communicate between the patient and the rest of the system.
HealthLeaders: It has been 15 years since the Institute of Medicine's publication of "To Err Is Human." Is the healthcare industry safer today?
Shine: The definition of patient safety and the number of deaths from patient safety have expanded dramatically over what "To Err Is Human" described. What "To Err Is Human" focused on was the failure to carry out an action on behalf of the patient in a safe manner. It focused on medication errors, wrong-side surgery—a variety of those kinds of considerations. At that time, there was an estimate that there were between anywhere from 48,000 to 98,000 deaths. Since that time, the definition of patient safety has expanded dramatically. I am not sure the original [review] committee would have considered ventilator-associated infections as necessarily a medical error. It would have been an important complication, but it has become part of a much expanded definition of what errors are.
Many of the areas where "To Err Is Human" looked have improved substantially, and the overall system is substantially safer than it was 15 years ago. But there still is an enormous amount to do, and as the definition of deadly medical error has expanded, there are more and more things that we recognize that we have to do.
The formation of value-base payment models is the latest front in an ongoing struggle over whether to risk-adjust healthcare service reimbursement for socio-economic status.
Who pays for the medical maladies that poverty inflicts or inflames?
As the healthcare industry begins a historic shift from payment for services based on volume to payment based on value, providers serving economically disadvantaged communities are bracing for an existential financial blow.
"Anyone who serves a disadvantaged population is going to go under," says Barbara McAneny, MD, chairperson of the American Medical Association's Board of Trustees.
Based in Albuquerque, the practicing oncologist serves patients across New Mexico. McAneny's Gallup clinic treats many patients who live in poverty on Native-American reservations. "People have to decide between paying co-pays and buying food. They know what they have to do, but don't have the resources to do it," she says. Most oncology patients from the reservations have comorbidities and delay care until their health conditions have degraded to acute stages, as opposed to oncology patients from affluent Albuquerque suburbs who tend to be fundamentally healthier, McAneny says.
"The difference is not something we can control."
She says physicians who serve economically disadvantaged communities are anticipating a Dickensian nightmare as the Centers for Medicare & Medicaid Services crafts replacement payment methodologies for the long-reviled Sustained Growth Rate formula. Under SGR repeal-and-replace legislation enacted earlier this year, CMS officials are designing new value-based payment mechanisms through the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). Unless MIPS and APMs are risk-adjusted for socio-economic status, physician practices in disadvantaged inner-city neighborhoods and rural communities face crippling financial losses, McAneny says.
"They are just hanging on to stay alive now."
With Medicare and other major payers cautious about risk-adjusting value-based payment models for socioeconomic status, patients such as Tiny Tim's character in A Christmas Carol by Charles Dickens likely will be an unwelcomed sight hobbling into a hospital or physician practice in the early phases of the shift from volume to value.
Historical Precedent The poor of 19th century London faced health-compromising living conditions similar to the hazards that the impoverished face in 21st century America, including exposure to environmental hazards, limited access to affordable healthcare services, and nutritional deficiencies.
The connection between poverty and increased risk for medical maladies is undeniable, says Otis Brawley, MD, chief medical officer of the Atlanta-based American Cancer Society and a top healthcare-disparity researcher. "The poor are more likely to live in impoverished areas. They are more likely to live down wind of factory exhaust, in smog-filled developments. There is even a correlation between living in crowded apartments with roach droppings and childhood asthma."
Consequently, "the poor are more likely to have cardiovascular disease, diabetes, cancer, asthma, and a number more acute diseases. Poverty is linked to increased risk of getting disease and being less able to deal with the consequences of the disease afterwards," he says.
But establishing and maintaining a high level of overall health is a longshot for impoverished Americans, Brawley says.
"Rather than saying poverty is causing a number of illnesses—and it is—let's focus on the fact that the middle and upper classes are more able to prevent these diseases… The poor are less likely to get healthcare services, both preventive counseling and effective treatment."
Otis Brawley, MD
"If those services are available, the poor are less likely to be able to understand and follow what can be complex instructions. There are even studies to show that the impoverished are more likely to miss appointments and fail to adhere to therapies. This can be due to [family and other] obligations as well as logistical issues such as lack of transportation.
"The thing about poverty that perhaps most drives disease is lack of education," Brawley says. "About 30% of Americans with a high-school education or lower smoke tobacco. Among college graduates, it's less than 5%. Smoking is associated with a number of chronic diseases. The children of smokers are more likely to have asthma. Obesity is a far greater issue among the impoverished versus the middleclass. This is not to say it is not an issue for the middleclass, [rather] it's disproportionately bad among the poor."
When designing MIPS and other value-based payment mechanisms, CMS and commercial health plans should take the additional costs of serving disadvantaged communities into account, Brawley argues.
"A successful healthcare system will have to recognize the additional challenges of getting care to the impoverished. These include the challenges of providing preventive care as well as treatment once a patient has been diagnosed. Some studies have suggested that the poor benefit more from patient navigation and counseling services. This involves personnel beyond the normal healthcare provider to spend time counseling the patient."
Risk-adjustment for socio-economic status should be part of value-driven payment models, says the CEO of Nashville-based DW Franklin Consulting Group, C. Timothy Gary, JD, MBA. "A value-based model can work, but it absolutely has to be adjusted for local demographics. [In disadvantaged communities,] you cannot count on the patients to have the support infrastructure in place; you cannot count on patients to follow the course of care. It's hard for them to get back to follow-up visits to their doctors. There's a shortage of physical-therapy facilities in these communities."
'An Entirely Different Mindset on the Costs'
Healthcare providers fear CMS and commercial payers will not risk-adjust value-based payment models broadly enough, including failure to account for the health-shattering impact of poverty, he says. "CMS tends to take a meat-cleaver approach when they need a scalpel… It's very similar to what we saw in the 1980s, when we moved to capitated payment rates. Providers went into deals without understanding the cost of care and the contributing factors to outlier cases… Doctors have a healthy degree of suspicion about the reimbursement models that are being crafted, and rightfully so."
Some patients, such as disabled, malnourished children like the Dickens character Tiny Tim, who grow up in grinding poverty, probably are not appropriate for participation in value-based payment models, Gary says.
"High-touch cases really don't fit into a risk-based model. There's an entirely different mindset on the costs," he says. "Higher-touch patients are a costly group that can drive costs… Providers will either eat the costs or avoid caring for that group of patients."
On Dec. 3, the Washington, DC-based National Quality Forum announced the roster of the nonprofit organization's 22-member Disparities Standing Committee. A "key focus" of the panel will be to review the findings of an ongoing two-year trial that is designed to determine whether quality metrics should be adjusted for socio-economic status and other demographic factors, according to a prepared statement from NQF. The committee is expected to make recommendations to the NQF board in 2017.
As Dickens illustrated in A Christmas Carol, accounting for the needs of the poor can be a matter of life or death, Gary says. "One way Scrooge goes, Tiny Tim lives. The other way Scrooge goes, Tiny Tim dies."
With shared interests in reducing readmission rates and associated Medicare payment penalties, hospitals and skilled nursing facilities are in the vanguard of an evolutionary movement.
This article first appeared in the December 2015 issue of HealthLeaders magazine.
The quest to deliver value for patients at health systems and hospitals has opened up a new frontier filled with golden opportunity: postacute care.
"The 30-day readmission penalty for hospitals and their SNF partners is a marker, not the endgame. The state of play right now is: How do we get to better longer-term overall care coordination?"
"There are huge benefits and very few downsides to the evolving partnerships between hospitals and postacute care settings," says Mary Naylor, PhD, RN, a gerontology professor at the University of Pennsylvania School of Nursing and director of the NewCourtland Center for Transitions and Health in Philadelphia. "It is evolutionary. It could be faster; but, nonetheless, we are not going back."
With shared interests in reducing readmission rates and associated Medicare payment penalties, hospitals and skilled nursing facilities are in the vanguard of this evolutionary movement, but the scale of change is much broader, Naylor says. "The 30-day readmission penalty for hospitals and their SNF partners is a marker, not the endgame. The state of play right now is: How do we get to better longer-term overall care coordination?"
Hospitals have faced Medicare payment penalties for patient readmissions since October 2012. SNFs and home health agencies began facing readmission payment penalties this past fall.
Mary Naylor, PhD, RN
In addition to slashing readmission rates, health systems and hospitals are banking on tighter relationships with SNFs and home care agencies to create continuity across the entire care continuum and to reduce unnecessary emergency department utilization, Naylor says. "Hospitals want to pair themselves with the best postacute care facilities."
Seizing postacute care opportunities
Whether a health system has decades of experience operating wholly owned SNFs or it is just beginning to venture into the postacute care realm, hospital executives are building new relationships with skilled nursing facilities and home health agencies.
North Shore-LIJ Health System operates wholly owned SNFs on three hospital campuses and has more than two decades of experience running postacute care facilities, says Merryl Siegel, regional executive director of postacute services for the Great Neck, New York–based organization, which has a workforce of more than 54,000. "We have lengthy experience and a well-known name in the community," she says of the health system's trio of SNFs. "The physicians trust us. We have a referral base."
"One of the key goals for us is reducing the patient leakage outside our health system."
In addition to the wholly owned SNFs, North Shore-LIJ, which will officially change its name to Northwell Health beginning in 2016, also offers services for hospice, home care, and infusions. Having a postacute care division is part of North Shore-LIJ's integrated health system strategy, which is paying off financially, Siegel says.
"One of the key goals for us is reducing the patient leakage outside our health system. Our health system is really an integrated system serving the whole care continuum. Financially, we are able to keep all of that downstream revenue beyond the acute care setting. We know where every patient is being discharged to. You can really monitor your staff, your utilization, and your length of stay."
Merryl Siegel
Over the past five years, North Shore-LIJ's leadership team has been expanding the organization's postacute care capabilities beyond the integrated health system, Siegel says. The primary focus of that effort has been creating partnerships with approximately 20 independent SNFs to meet demand for long-term care services. "We realized that we needed to partner with other facilities."
North Shore-LIJ does not have an ownership stake in the health system's off-campus SNF partners, but several metrics are monitored at the affiliates, including Medicare Nursing Home Compare star ratings, readmission and mortality rates, department of health surveys, and length of stay, she says.
"We are using the metrics to evaluate the affiliates. We are trying to move our patients to the best facilities. We collect data from all of our affiliates. As everything moves to capitation and bundled payments, it is really important that we have these relationships," Siegel says, noting length of stay at SNFs is already a crucial factor in bundled payment contracting. Length of stay will become increasingly important as the Centers for Medicare & Medicaid Services and commercial payers roll out new value-based payment models, she says. "There will be financial implications for healthcare systems and skilled nursing facilities."
Pittsburgh-based Allegheny Health Network, which has eight hospitals and 17,500 employees, does not own any SNFs, but has been boosting its postacute care capabilities over the past two years, says Brian Holzer, MD, MBA, senior vice president of home and community services.
"We are using the metrics to evaluate the affiliates. We are trying to move our patients to the best facilities."
Under the Healthcare@Home brand launched in April, AHN is developing "a postacute care model focused on home health," Holzer says, noting the service pillars of the model include hospice, home health, palliative care, home infusion, and home medical equipment and supply sales. Healthcare@Home also includes transitional care, a coordinated care model focused on discharge planning and postacute care follow-up with patients that Naylor has helped develop over the past 20 years.
Brian Holzer, MD, MBA
"The aspiration two years ago was to test a provider-driven, postacute care network," Holzer says of AHN's strategy for Healthcare@Home, noting nonproprietary partnerships with SNFs are a crucial element of the health system's grand plan for postacute care. "We do not own SNF resources. We partner with a select number of skilled nursing facilities."
AHN's SNF partners have agreed to hire highly skilled nurses to boost quality at their facilities, he says.
"We request the skilled facilities to appoint nurse practitioners to round with our patients to make sure the clinical quality meets our clinical standards. The SNFs that believe in their capabilities are welcoming this step. They see this relationship as a way to sustain their volume. It's been an incredible journey already."
While acknowledging that clinical quality at SNFs has been a weak point in the healthcare industry for decades, Holzer says establishing mutually gainful partnerships between hospitals and SNFs has the potential to fundamentally transform the care provided to older patients with multiple chronic conditions. The benefits of this transformation will be not only clinically healthier patients but also financially healthier SNFs, he says.
"We hold SNFs to standards. They know if they don't meet our standards, we can go out and find someone else who will. They know this is a path to their sustainability. We are agreeing to collaborate to create a better model of care. Beating down on SNFs and putting them out of business is not the right approach. Our approach, which provides a large amount of volume, allows them to invest in themselves and get better."
Skilled nursing facility perspective
The drive to increase collaboration between hospitals and SNFs is closely linked to the healthcare industry's shift away from fee-for-service payment models, says Lisa Thomson, chief marketing and strategy officer at White Bear Lake, Minnesota–based Pathway Health Services, a professional management and consulting organization serving clients in the long-term care and postacute care industry.
"It's a tipping point now as we move to value-based payment. It's a paradigm shift for the skilled nursing facilities," she says.
Lisa Thomson
The fee-for-service payment model has created siloed healthcare for acute care, postacute care, and home care, Thomson says, noting value-based reimbursement models such as bundled payments are encouraging all healthcare providers to focus on placing patients in the most clinically appropriate and cost-effective settings.
"With more coordination, the acute care staff has additional confidence to move the patient to the SNF setting, based on the collaboration, which required streamlined clinical systems and expected quality outcomes for the patient across all healthcare settings. The SNF feels good because they can transition the patient to a home care partner. They are all looking at the patient as a whole," she says.
In a key financial development, value-based payment models such as Medicare's bundled payments for joint replacements have resulted in an unprecedented level of data sharing, Thomson says, adding that many health systems and hospitals are gaining access to SNF billing data for the first time. "We are seeing hospitals that are looking at the data, looking at the outcomes, and identifying the SNFs that they want to work with, based on their organizational data."
As AHN has discovered with its SNF partners, skilled nursing facilities are being drawn financially to the steady patient volumes linked to closer relationships with health systems and hospitals. "SNFs will not have the higher volume of Medicare referrals with a shorter length of stay. It's a win-win clinically and a win-win financially for everyone," she says.
The Medicare payment penalty for readmissions is just the beginning of value-based care's financial impact on the postacute care sector, Thomson says. "Readmissions are the first common ground of collaboration between all of us in the care continuum. We all have to work together to keep our readmission numbers down. That's just the first of many quality measures coming down the road for the whole healthcare continuum."
Revolutionary change comes with a measure of pain, she cautions. "It forces us as organizations to determine what we are really good at and to find opportunities to do the best that we can for our patients. It will result in better outcomes, but it will be difficult. But when I see facilities embrace it, they are really energized."
Transitional care coordination
Medicare reimbursement for transitional care started in January 2014. With financial support from the nation's largest payer, transitional care has the potential to raise care coordination for older patients to new heights.
Rani Khetarpal
"Transitional care has emerged as a huge, evidence-based approach to aligning care teams with the needs and goals of patients," Naylor says. "We have an opportunity to have people's needs met in their home rather than in a more intensive setting."
The transitional care model that Naylor helped develop at UPenn has 10 essential elements, featuring highly skilled transitional care nurses who help guide patients through an entire acute episode of care, from hospital admission to home care. Other elements of UPenn's transitional care model include in-hospital assessments and evidence-based plans of care, TCNs conducting regular home visits, engagement of patients and family caregivers, and a holistic approach to patient care that not only addresses the acute care episode but also other factors impacting a patient's health such as home safety and medication management.
"Medicare pays for 30 days of clinical transitional care postdischarge from a hospital or skilled nursing facility," says Rani Khetarpal, CEO of Global Transitional Care, a Newport Beach, California–based third-party specialty group provider organization dedicated to providing comprehensive transitional care. "We know what the needs are. We know the situation at home. And we can talk about all of that with the patient and all of the members of the patient's care team. It provides for a seamless transition from the hospital or the SNF to the home."
The organization is only working with California patients this year, but it has applied to CMS for the ability to operate in all 50 states.
"As a provider, we now have the ability to make decisions on behalf of the patient. However, we prefer to collaborate with the patient's physician care team on any medical decisions," Khetarpal says. "Patients can self-refer to our care. We do not require a physician's order to provide services. Our focus is the patient. We are independent. That's the beauty of being a third-party provider."
GTC's third-party status distinguishes the organization from AHN and other health systems that are offering transitional care services, she says. "Health systems with transitional care are only managing their own patients. However, the capacity to provide transitional care to all their patients is somewhat limited due to the lack of necessary resources. But I don't want to disparage any healthcare provider that is offering transitional care. Any transitional care program is fantastic. There are so many patients who need this service. We cannot serve all of them."
Naylor says she is pleased with the rise of transitional care and the decline of silo-based approaches to healthcare service delivery, particularly for older patients.
"It is tremendously exciting," she says. "We cannot ignore that major drivers in this change are the patients and their family caregivers. They have been watching. They are saying, 'This cannot be the way we treat our most treasured citizens.' "
"What has emerged, more and more, are atypical relationships that aren't focused on ownership; they're focused on leveraging the strength of our partners," says one senior executive.
This article appears in the October 2015 issue of HealthLeaders magazine.
For health systems across the country, clinical affiliations have emerged as an attractive alternative to mergers and acquisitions, which come with ownership stakes attached.
Most health system clinical affiliations feature relationships with local medical service providers that help the hospital group cost-effectively fill gaps in the organization's care continuum, such as partnerships with independent urgent care centers. Junior partners gain several financially related benefits from health system clinical affiliations, including service volume growth and the ability to maintain most, if not all, of their independence.
"There is a tremendous amount of potential from partnerships," says Thomas Blincoe, executive director of outreach for The Ohio State University Wexner Medical Center and executive director of Ohio State Health Network, a regional affiliation of 15 community hospitals centered around Ohio State University Wexner Medical Center in Columbus. "What has emerged, more and more, are atypical relationships that aren't focused on ownership; they're focused on leveraging the strength of our partners."
For the fiscal year ending June 30, 2015, OSU Wexner Medical Center posted total gross revenues of $7.3 billion.
Vital Healthcare Capital has launched a nine-figure drive to jumpstart spending on care for a costly cohort of underserved patients and to invest in the development of frontline healthcare workers.
Deep-pocketed investors are bankrolling a bold effort to revolutionize healthcare delivery for high-risk patients.
"It's one of our concluding big bets," says Sara Kay, head of advocacy and health equity programs at Bermuda-based Atlantic Philanthropies, the world's largest limited-life foundation.
Sara Kay
The private foundation, established in 1982, has disbursed grants valued at more than $7 billion and is slated to cease grant activity by the end of 2016. As part of last year's spend-down activity, it awarded a $12.5 million grant to Boston-based Vital Healthcare Capital (V-Cap).
Financing efforts to retool care delivery for high-risk patients, including people with multiple chronic conditions who are the high-flyers of healthcare spending, "is the biggest opportunity to affect how care is delivered," says V-Cap CEO Steven Weingarten. "These high-need patients have been underserved by our siloed system of care, while consuming the highest amount of resources."
Launched in May 2014, V-Cap is a 501(c)3 nonprofit financing organization. It offers three types of loans:
Business financing for working capital, infrastructure and equipment, and cash reserves linked to regulatory requirements;
Facilities loans such as acquisition and construction financing for healthcare facilities, particularly in disadvantaged communities;
Bridge loans to help healthcare providers respond rapidly to opportunities to serve at-risk patients.
"We're not just limited to facilities and traditional service needs. We have flexibility," Weingarten says.
Last month, V-Cap announced the formation of a $30 million fund to accelerate the organization's lending activity. Managers of the fund plan to establish a $100 million revolving-loan fund over the next five years.
Weingarten says V-Cap is willing to understand and probe the changing context of the healthcare market whereas a traditional lender "may not take the time to understand a [healthcare] organization and its sources of strength."
Partnering to Balance Risk
V-Cap loans are targeted to range from between $500,000 and $5 million and larger projects are "typically [looked at] with other lending institutions," he says.
The nonprofit lender's largest loan to date, which was also its first financing project, followed the joint lender model. The $10 million loan to Boston-based Commonwealth Care Alliance (CCA) in June 2014 was made with financial support from the Robert Wood Johnson Foundation in Princeton, NJ.
CCA is a not-for-profit healthcare payer that features a prepaid care delivery network for about 16,000 Medicare- and Medicaid-eligible beneficiaries in Massachusetts. Most of the beneficiaries are medically complex patients, which make CCA an ideal candidate for V-Cap financing. Atlantic Philanthropies' Kay says CCA patients receive "much better, much richer" care than the vast majority of their peers across the country.
V-Cap exemplifies the kind of transformative "big bets" that Atlantic Philanthropies is wagering as the foundation whittles away its endowment. "The concluding round [of grant disbursement] is not limited by past practices or guidelines. The V-Cap grant falls into this category because it is market-changing, Kay says. "This grant is different in nature and size. Even for a foundation, this is a large grant."
In the past, Atlantic Philanthropies has focused on programmatic grants. "This grant is marketplace-facing and functions as an impact investment. It's more valuable to the grantee because it doesn't have to be paid back, so it brings others in by reducing their risk of loss."
V-Cap and Atlantic Philanthropies share the same values and ambitions. "We have a social justice mission, so that's kind of our sweet spot," she says, noting V-Cap's commitment to investing in healthcare organizations that provide high-quality service to high-risk patients in disadvantaged communities.
"At-risk patients are the people who tend to be poorly served by the healthcare system we have because it's so fragmented. By focusing on these at-risk groups, we feel we are going to make the healthcare system better for everyone."
"Forcing the whole system into a more integrated framework," Kay believes, "is better for everybody."
The foundation also embraces V-Cap's focus on workforce development in the healthcare industry, Kay says. "The healthcare sector is one of the fastest-growing sectors in the U.S. economy. It's important to develop the care models [alongside workforce development]. It's an incredible employment opportunity. Part of V-Cap's mission is to create good jobs… in this growing market segment."
Workforce Development
Last month, V-Cap's workforce development mission drew $5 million in financing from New York-based JPMorgan Chase & Co. "Healthcare is one of the key areas of opportunity," says Chauncy Lennon, managing director of global philanthropy for the banking behemoth, which holds assets totaling $2.4 trillion. "There are a lot of middle-skilled jobs in healthcare. The rest of the economy is U-shaped, with high-end or low-end jobs. In healthcare, you have a lot of technically skilled positions. They're skilled, pay good wages, have good career growth, but don't require a bachelor's degree."
V-Cap's focus on workforce development for frontline caregivers was a crucial selling point for gaining JPMorgan Chase's financial backing, Lennon says. "There's a way to succeed while investing in your workers," he says about efforts to design training programs for the kind of mid-level jobs that employers are struggling to fill. "V-Cap is working directly with employers and helping them adopt the right strategy around recruitment and training."
JPMorgan Chase is urging healthcare providers and payers to "take the high road" strategy for workforce development, insisting that cutting wages is a losing game plan for all industry stakeholders. "You can provide service, make profits, and pay workers at the same time," Lennon says.
V-Cap is seeking to support workforce development efforts that include "compensation that is going to create a new set of good-paying jobs," Weingarten says. "Organizations in the pipeline of transactions" include healthcare providers who want financing to help raise pay for frontline workers and to launch training programs.
There are daunting hurdles to transforming the delivery of healthcare services to high-needs patients, but raising capital should not be problematic, Kay maintains. She notes the significant resources held at large health systems and payers and to the nation's 17%-of-GDP healthcare spend, which just broke the $3 billion mark. "It's hard to believe there isn't enough money."
Medicare's final rule on its mandatory hip and knee replacement bundled-payment program includes several concessions to hospitals and orthopedic surgeons.
With this month's release of the final rule for the Comprehensive Care for Joint Replacement program, a pair of hospital associations is cautiously optimistic about the mandatory bundled-payment program for hip and knee replacement procedures.
Joanna Hiatt Kim
The changes made by the Centers for Medicare & Medicaid Services "will better enable hospitals to be successful in the program," says Joanna Hiatt Kim, vice president of payment policy at the Chicago-based American Hospital Association.
Jessica Walradt, senior payment reform specialist at the Washington, DC-based Association of American Medical Colleges, says CMS's decision to delay implementation of the mandatory program from Jan. 1 until April 1 "was definitely something we were happy to see."
In addition to the implementation delay, the federal agency made several substantive changes to CJR, [the acronym for the bundled-payment program has been switched from CCJR to CJR] which sweeten the program from the provider perspective. They include:
Risk stratifying hip reconstruction episodes of care for cases involving a hip fracture
Reducing the number of regions set for mandatory participation in the CJR program from 75 to 67
Slowing the pace of change from local-based to regional-based benchmark pricing
Reducing the level of downside risk in Year Two and Year Three of the program to 5% and 10%, respectively
Hiatt Kim praises CMS for exempting CJR from two Medicare fraud laws, the Anti-Kickback Statuteand the Stark Law. "It protects hospitals that form alliances [and those that] share accountability for shared spending with those collaborators. The program would not have been successful without those waivers," she says.
Risk stratifying CJR for hip fractures will increase the reimbursement level for those procedures because they tend to be complex and prone to complications. This is a crucial change to the bundled-payment program's Final Rule, Hiatt Kim says. "They're breaking out hip fracture patients. That will make sure hospitals that treat a high [volume] of hip fractures are not penalized."
'CMS and Hospitals are in This Together'
CMS should have gone further she says, noting that hospitals that serve the most fragile patients, such as frail seniors, will be challenged to hold the line on episode-of-care spending. "We are fearful that lack of risk adjustment is going to penalize hospitals with more complex patients, and reduce participation in the program," Hiatt Kim says. "We will continue to look at ways for CMS to risk adjust this program more comprehensively."
While CMS has made several steps in the right direction to improve CJR, more improvements are necessary, she says. "The biggest concern is that hospitals are at different points in this process. Some are ready, and they are going to do very well. Others are not ready, and it will absolutely be a challenge for them."
The number of conciliatory changes CMS made to the proposed version of CJR indicates that federal officials are willing to adjust their most ambitious bundled-payment initiative, Hiatt Kim says. "CMS did realize this is different from their other payment systems, and they obviously need hospitals to be successful."
"At this point," she says, "CMS and hospitals are in this together."
Bullish on Bundles
Donna Cameron, FACHE, managing director at Chicago-based Navigant Healthcare, a consultancy, says CJR is a new and improved version of Medicare's first foray into bundled payments, the Bundled Payments for Care Improvement (BPCI) initiative.
"We see BPCI as a framework for how bundled payments are going to play out in 67 markets," she says and adds that that CMS limiting risk stratification in the bundled-payment program is unlikely to be a fatal flaw. "Data that CMS is gathering from BPCI shows increased quality, decreased length of stay, and lower post-acute care costs. Even though the methodology may not be a perfect payment model initially, we are typically seeing reductions in post-acute care costs and hospital readmissions."
An essential element of BPCI and CJR is data, Cameron says.
BPCI and CJR participants gain access to a wealth of Medicare claims data across multiple settings, including acute care, post-acute care, and home care, which generates comprehensive patient service-utilization data for hospitals and surgeons, she says. "The claims data informs them not only about what is happening in the hospital but also what's happening in the post-acute care setting."
Accessing and analyzing extensive claims data is one of five items on a "short list of key success factors" for CJR, Cameron says. "Use the data. We now have data for the 90 days we are serving the patients. The data gives us information that, historically, hospitals have not had to across the care continuum. The data shows where there are opportunities to improve care."
The other items on Cameron's short list of CJR bundled-payment success strategies:
Engaging physician leaders as pivotal participants in the design of 90-day episodes of care for hip and knee replacement, which includes pre-operative care, surgery and acute-hospital stay, post-acute care, and home care
Establishing post-acute care networks based on quality and cost-control standards
Enhancing care coordination and care navigation to boost transitions across the care continuum
Embracing a "leading practices" care philosophy over adoption of best practices "because best practices continue to change"
Hospitals will adapt and engage at differing paces. "We're really encouraging clients to get started right away so they can gain some momentum," Cameron says. "We are encouraging our clients to get going. There is no downside risk in the first year. A lot of learnings have already occurred in the BPCI program."
When CMS launches its first mandatory bundled-payment program in the spring, CJR appears poised to accelerate the pace of the federal agency's efforts to link payment to value.
Finance leaders need to consider a variety of metrics as health systems increasingly adopt strategies for urgent care.
This article first appeared in the November 2015 issue of HealthLeaders magazine.
As the healthcare industry shifts from service volume to service value, operating urgent care centers is emerging as a strategic imperative for health systems across the country.
"In the late 1970s and early '80s, urgent care was a cottage industry that bloomed then faded. Urgent care is once again peaking," says Sean McNeeley, MD, network medical director for Cleveland-based University Hospitals Urgent Care.
The University Hospitals health system operates 16 hospitals and more than 30 urgent care centers throughout northeast Ohio and reported total operating revenues of $3.5 billion in 2014.
Over the past three decades, UH has taken a do-it-yourself approach to developing urgent care centers, as opposed to building and operating the facilities with an urgent care organization partner, McNeeley says. "We have essentially followed urgent care as an industry."
UH started riding the latest urgent care wave in 2000, when Lee Resnick, MD, a cofounder of the Naperville, Illinois–based Urgent Care Association of America, led an effort at UH to open new urgent care centers, McNeeley says, adding those efforts accelerated in 2008. "University Hospitals as a whole looked at access as part of its Vision 2010 initiative. … We started to expand urgent care to create greater access."
Although the scope of services at UH urgent care centers has increased over the past 30 years to include services such as x-ray imaging and blood work, improving patient access remains a key goal in the health system's strategic planning, he says. "We plan urgent care centers on access as the main criteria, making sure that we have our market share and that our footprint is where we want it."
The emphasis on patient access at UH urgent care centers is reflected in the facilities' open scheduling and business hours—from 9 a.m. to 9 p.m. on weekdays and 9 a.m. to 5 p.m. on weekends.
Beyond the bottom line
Assessing the financial impact of urgent care centers is as much art as it is science, McNeeley says. "It isn't an easy mark."
Lee Resnick, MD
With low margins and high competition relative to emergency rooms, urgent care is rarely a major source of revenue for health systems. "In and of itself, you can't expect an urgent care center to be a profit center, but it can produce sufficient downstream revenue. The goal is to be revenue neutral or net positive," he says, noting that UH urgent care centers as a whole have been able to break even financially in recent years. "We have to see a significant number of people. You can't do one patient an hour and survive in urgent care."
There are financial-dashboard metrics that can be monitored at urgent care centers. In addition to patients transferred from urgent care to a UH emergency room, McNeeley says other urgent care metrics with a financial impact on the health system include imaging services such as ultrasound exams and lab work that is sent out to UH facilities.
Some of the most important financial impacts of UH's urgent care centers are difficult to quantify, he says. "Access and patient experience is the main value of our urgent care centers. … Putting a dollar figure on that is really hard."
UH is gauging the financial impact of the health system's urgent care centers with multiple factors, McNeeley says. "First, you look at the bottom line. Second, you look at the number of urgent care patients, which generates exposure for our brand in the community. Then you look at transfers to the ED, labs, imaging, and referrals to other UH providers. This all generates money for the system. … When you look at the finances, just looking at the bottom line is short-sighted."
Urgent care centers can play a key role in boosting a health system's brand, he says. "You need to be efficient, friendly, and provide high-quality service. You're part of a health system, and you represent them at the front door. It may not show clearly financially, but it makes a big difference to your health system."
Developing partnerships
For health systems with less storied histories in urgent care, finding an experienced partner to help build and operate urgent care centers is an attractive alternative to the do-it-yourself approach.
Ron Stiver, MBA
Last year, Indianapolis-based Indiana University Health established an urgent care partnership with Premier Health, which is headquartered in Baton Rouge, Louisiana, and offers management, consulting, and joint venture services. The partners are opening three urgent care centers this year and plan to jointly operate at least 10 of the facilities in Indiana by 2017, according to Ron Stiver, MBA, president of system clinical services at IU Health, which reported net patient service revenue of $5.3 billion in 2014.
"This is a direct outgrowth of the five-year strategy we set last year … to expand and grow primary care," he says, noting other elements of the IU Health strategy include developing patient-centered medical homes to improve case management for patients with comorbidities, as well as on-site and near-site clinics to serve workers at several large Indiana-based employers. "We really wanted to put a focus on our primary care base, and the urgent care centers are part of that strategy."
Although IU Health is not expecting the new urgent care centers to generate significant net-positive revenue for the health system, several gains are anticipated, Stiver says. "We expect our urgent care centers to pay for themselves, and to provide access and convenience."
"We really wanted to put a focus on our primary care base, and the urgent care centers are part of that strategy."
The urgent care centers will open several opportunities for the health system's physicians. "New primary care physicians could start at the urgent care centers and move up," he says, adding that IU Health also plans to offer physicians the opportunity to "moonlight" at urgent care centers. "In part, we want to be a place where physicians want to work. We're in a service industry. There are recruiting battles out there in the urgent care and emergency department areas, and in primary care."
Steve Sellars
The main metrics IU Health will be monitoring at the urgent care centers are the financial viability of the clinics, service quality, and patient and physician satisfaction, Stiver says, adding that site selection is the first step in helping to ensure a clinic's success. In particular, IU Health is seeking to locate its new urgent care centers in communities with concentrations of patients who have insurance coverage linked to the health system. IU Health offers several health plans, including Medicare Advantage coverage and commercial coverage for health system employees. "It is a factor that we definitely looked at when siting our urgent care centers," he says.
Steve Sellars, CEO of Premier Health and president-elect of the Urgent Care Association of America board of directors, says the partnership between IU Health and Premier Health is based on a model that his company has perfected over the past 16 years.
"First," he says, "we focus on efficient operations—putting processes and procedures in place to operate an efficient model that ultimately results in lower patient wait times and higher patient throughput. Second is building customer loyalty. Third is setting the right financial projections." Sellars notes that several factors impact whether an urgent care center can generate sufficient revenue to sustain operations, including "payer strategy," patient volume, and costs such as staff, supplies, and equipment.
Patient volume looms large over the financial viability of urgent care centers, Sellars says. "At the end of the day, we have to have enough people walking through the door. … The average reimbursement is in the $120–$125 per visit range, which is significantly lower than reimbursement in the emergency room, which is in the $700–$800 range. Urgent care is high-volume, low-margin."
Premier Health's urgent care model features joint ventures with health systems and hospitals that have strong brand recognition, he says. "Most of our urgent care partners are hospitals with established brands in the communities we want to serve. We try to utilize the hospital brand; that is definitely part of our strategy."
In addition to capitalizing on the patient volume that urgent care centers can generate when the facilities operate under the banner of a strong health system or hospital brand, joint ventures have helped Premier Health to expand its footprint. "Each time we open an urgent care center requires a significant financial investment," Sellars says, noting the start-up costs include equipment, supplies, and the "build-out" of the clinic space. "Our partnerships involve sharing of capital expenses and other costs, which is beneficial to us versus going it alone."
The cost to open an urgent care center ranges from $500,000 to $800,000, he says, with the cost level depending mainly on whether a facility is sited at an existing retail property or requires construction from the ground up. "If you're including the construction cost for a new building, the number is going to be on the high end."
Premier Health assesses the financial standing of potential health system and hospital partners before entering any joint venture, Sellars says. "We partner with health systems that demonstrate a financial position of strength. If you are building a network of centers, you want to make sure that each of the partners has the wherewithal to follow through."
Most of Premier Health's joint ventures are 50-50 deals based on a "partnership agreement" that establishes a governance board with equal representation, he says. "In 16 years of operating partnerships with health systems, we never have had an issue that had to go to a tie-breaking vote, knock on wood. That goes to the front end, and making sure there is alignment with the partners to begin with."
Like McNeeley at University Hospitals, Sellars says there are financial metrics for urgent care centers that are relatively easy to monitor, such as patient volume and expenses, and financial impacts that are much harder to quantify.
"More generally, we look at the impact on the health system beyond the bottom line. How are we improving access to care? How are we improving our partner's brand name recognition? Are we alleviating emergency room overcrowding? Are we helping prevent readmissions at the hospital? Is there better coordination of care to help keep patients out of the ER? Then, because most health systems are self-insured, you start getting into things like cost savings for health system employees."
The lines are blurring between payer and provider perspectives on total cost of care as healthcare's payment model shifts from volume to value. Now, using a payer's methodology, providers are mastering TCOC accounting.
For decades, commercial payers have been trying to track the total medical-services "spend" of individual beneficiaries and beneficiary cohorts on an annual basis.
Providers are catching up.
The total cost of care [TCOC] calculation accounts for a beneficiary's spending in every healthcare setting along the entire care continuum, and can yield operational and competitive advantages to those who know how to apply it.
Katherine Hempstead
"Payers use [TCOC] to identify their most expensive beneficiaries. They use it to evaluate how providers are performing," says Katherine Hempstead, health insurance program director at Princeton, NJ-based Robert Wood Johnson Foundation.
Under fee-for-service medicine, providers have had far less compelling incentives than payers to focus on TCOC. "As a provider, you have to be in a risk relationship for it to be relevant," Hempstead says. Growth in risk-based contracting such as bundled payments has hospitals and physician practices focusing on costs more intensely than ever, she says.
But [providers are] "increasingly involved in risk contracts. Basically, in bundling, you are bidding jobs. You have to give a number and be able to make that number; and to make that number, you have to know your costs… You don't want to be systematically losing money on each procedure."
Now, using a payer's methodology, providers are mastering TCOC accounting.
Rooted in Insurance
Founded as a health insurance cooperative in 1957 and operating today as an integrated health system based in Bloomington, MN, HealthPartners is the national leader in measuring TCOC. HealthPartners provides medical and dental insurance to 1.5 million beneficiaries in Minnesota, Wisconsin, and the Dakotas, with a seven-hospital health system serving more than a million patients.
In January 2012, the National Quality Forum endorsed cost and resource use indexes developed at HealthPartners, marking the first attempt to standardize TCOC measurement across the country.
And in 2013, the Portland, Maine-based Network for Regional Health Improvement (NHRI) launched the Total Cost of Care Pilot program, which is designed to collect TCOC information for primary care practices. The initiative started with regional partners in five states and has added partners in six more states this year. It enables participants to share TCOC information so they can compare themselves against their peers and bear down on costly elements of their practices.
"Physicians need to see where they are spending. This information helps them manage overall costs," says Ellen Gagnon, senior project and operations director at NRHI, and project leader of the Total Cost of Care Pilot program.
For primary care practices, TCOC accounting can be a powerful decision-making tool, says Meredith Roberts Tomasi, program director at Oregon Health Care Quality Corporation, a founding partner in the Total Cost of Care Pilot program. "This information can verify assumptions they already had and guide improvement efforts," she says.
For example, TCOC data can identify cost-saving opportunities for coding improvements and it can ferret out high-priced specialists. And, she adds, "accountable care organizations want to share this information to address cost variability. It's really up to the practices to decide how this information is used moving forward."
Identifying Cost-Cutting Opportunities Analyzing TCOC information helps primary care physicians compare their practice's costs to the average costs of other practices in their markets, allowing them to "drill down on those costs," says Doug Rupp, senior healthcare analyst at Oregon Health Care Quality Corporation. "Identifying high costs creates opportunities to reduce inefficiency and waste. When you find physicians with lower costs, we can learn from them."
The longtime secrecy surrounding healthcare-service pricing deals between payers and providers is one of the biggest hurdles in tracking TCOC, Gagnon says.
"Historically and still, what health plans pay to health systems and providers has been closely held information—confidential and protected. That has made [controlling costs] more difficult than the patient experience and quality goals of The Triple Aim… We are moving out of the infancy stage [in accounting for provider costs]. More standardization will reduce the complexity of reporting. What's really challenging is bringing multiple payer information sets together."
TCOC data can help primary care physicians benchmark costs, peg the average cost to care for a group of patients, and assess the factors that impact negotiated prices for medical services, Rupp says. "[TCOC] is different than price and it's different from what goes into services."
Intermountain Healthcare's Cost Quest
Rather than tracking TCOC to gauge the total annual healthcare spend for the patient population in their markets, a handful of health systems have been measuring and monitoring the total cost of their medical services. This form of cost accounting helps health systems track total spending by healthcare setting, as opposed to TCOC's actuarial objective to track the total spending of patients over an entire healthcare market.
Salt Lake City-based Intermountain Healthcare has been tracking the cost of procedures, materials, and patient services since the early 1980s, says Greg Poulsen, senior vice president and chief strategy officer at the not-for-profit integrated health system. He compares Intermountain's cost-accounting methodology, to supermarket pricing.
"It's like a smorgasbord," Poulsen says. By pricing out the cost of 18,000 procedures, materials, and services, Intermountain "can understand, in real time, the costs of two different physicians… We can calculate the cost of having twins rather than [the cost of] having a single baby."
Greg Poulsen
For providers, there are several operational and competitive advantages to tracking costs closely, he says. "We've been doing it nonstop for 30 years. It gives good analytical capabilities and an early warning system for changes, whether they're good or bad. [Instances of] identifying new approaches have yielded cost improvements and quality improvements simultaneously."
High prescription drug prices have been healthcare-industry headline fodder since the marketing of the hepatitis drug Sovaldi in 2013. Intermountain detected the oncoming wave of costly medications at least a year earlier, Poulsen says. "We started to see the first wisps of that about three and a half years ago in some areas. Sovaldi and Harvoni are the [iconic costly drugs] now, but we saw cost increases in generic drugs. We were able to identify some of those. We identified that there were a number of drugs that had been around a long time or generic drugs that had all of a sudden become more expensive."
With a wealth of cost information stretching back three decades, Intermountain can conduct valuable analytical exercises, he says.
"We can slice it and analyze it in ways that we now know may be useful, which is what we did in the area of mental health integration [with primary care]. What the data shows is the cost of primary care goes up somewhat, not surprisingly. But hospital visits go down dramatically. The number of ER visits goes down significantly. If you look at the whole, it ends up saving thousands of dollars per year [per patient]. It's good to have real cost savings information available. The lack of this information has led to some of the strange cost anomalies we have seen, with high prices at some doctors [practices] and hospitals. That ends up in the lay press as shocking information."
As the retooling of the healthcare industry with telemedicine capabilities advances, the technology is supplementing rather than supplanting traditional modalities of medical service delivery.
As a veteran of the newspaper business, I have experienced the fear and loathing of outsourcing firsthand: market-driven consolidation of an industry and the rounds of layoffs that follow.
The outsourcing of some medical services through the use of telemedicine appears to be moving in a kinder and gentler direction.
Bloomington Radiology of Normal, IL, started contracting telemedicine services from Eden Prairie, MN-based vRad about eight years ago. A measure of handwringing at the radiology practice accompanied the deal, says Practice Administrator William Wilson. "It was a nervous move for a variety of reasons, but it's turned into a source of supplementing the practice," he says.
William Wilson
For Bloomington Radiology, the partnership with vRad has boosted staffing of the practice and expanded the range of services the practice offers.
The ability to rely on vRad radiologists to cover shifts on nights, weekends, and holidays has been a significant business gain for the practice, Wilson says. "It provided an opportunity to provide services 24/7… and costs far less than having an in-house person cover those shifts."
With a telemedicine partner, Bloomington Radiology is capable of providing more services with fewer staff radiologists, he says. The practice peaked at 15 staff radiologists several years ago, but employs 11 physicians now while delivering a 10% increase in service volume. The vRad partnership also helps control staffing costs, Wilson adds. "We know exactly what our costs are going to be with vRad… The work gets done. There are no 'I'm sicks' and no 'I quits.'"
With vRad radiologists available at all times, Bloomington Radiology is providing patients every kind of subspecialty exam except advanced pediatric care, he says. The practice provides services at three hospitals, including a facility that treats a high volume of neurology patients, and the ability of vRad to expand Bloomington Radiology's neurological exam capacity has become crucial to the practice's success. "That demand is really hard to handle, but vRad helps us meet [it]."
Despite all of telemedicine's advantages, Wilson says there will be limits within radiology for the foreseeable future. "I'm a huge advocate of outsourcing, but it has to be proper outsourcing." It is critically important, he says, for radiology practices to have staff radiologists working closely with their local hospital partners. "Relationships are everything in this business. You have to be careful in outsourcing the group's functions."
Telemedicine's Scale, Scope, and Efficiency
With 350 physicians, vRad provides services to 2,000 healthcare facilities in the United States and 10 other countries, according to Chief Information Officer Shannon Werb.
The majority of vRad clients are radiology practices that need "subspecialty coverage in the middle of the night," he says. "We're the market leader. We have made considerable investments in technology. We provide the complete service 24/7."
The telemedicine outfit provides more than clinical services, says David Trachtenberg, vRad's chief solutions officer. "We're more than a clinical provider; we provide insights for our clients," he says.
vRad has access to a wealth of radiology exam information and collects data that allows clients to track performance metrics and compare that data against their peers. "We're an information provider to help clients make better decisions, whether that's on the cost side or the revenue side… Clients are actually managing their service lines with the information we're able to provide them," Trachtenberg says.
'We're Active. We're Involved.'
Bloomington Radiology uses vRad analytics to help show its hospital partners how they can improve their performance. vRad tracks key metrics such as exam volume, which can identify hospital physicians who are ordering the most radiology exams. "It shows that we're active; we're involved," Wilson says.
The scale, scope, and efficiency of vRad's services generate financial gains for health systems, hospitals, and radiology practices, Trachtenberg says. "We're able to deliver services in a much more cost-effective manner because of our scale," he says, noting the costs associated with recruiting and paying full-time subspecialists such as neuro-radiologists. "We provide [that expertise] on-demand."
Benjamin Strong, MD, who serves as vRad's chief medical officer, says the telemedicine outfit offers a uniquely broad range of clinical services, including 24-hour coverage for several hospital neuro-stroke centers. "It is very important to these hospitals to have this service… It is an unreasonable expectation that hospitals and radiology practices will have the full gamut of services," he says, "We run the whole gamut."
Telemedicine for Language Interpretation
Atlanta-based Northside Hospital health system began ramping up its use of virtual remote interpretation (VRI) on iPads last December. "We've been heavily using this technology for almost a year, says Interpretation Services Coordinator, Darrin Bearden. "Because we’ve only used the technology for a year, we can’t yet attest to the financial benefits – but I do know we are more efficient."
In a partnership with Clearwater, FL-based Stratus Video Interpreting, Northside started using VRI in the health system's Atlanta hospital emergency department about three years ago to help serve patients who communicate in American Sign Language. "Last December, we introduced 145 iPads all at once," he says.
A decline in the average duration of interpreter encounters with patients shows that the VRI service has improved efficiency. The hospital tracks the duration of in-person, telephone and VRI interpretation encounters. "I've seen the average duration go down five minutes. We did the same amount of work [on iPads] in less time."
Northside operates three hospital campuses and "is currently purchasing physician practices all over Metro Atlanta. We're also purchasing imaging centers," Bearden says. Sending an interpreter to an off-campus physician practice is usually not cost-effective when accounting for the costs of travel, parking, and waiting for the physician visit to begin. "It's not cost-effective for us to send someone. [With VRI], we're only paying for what we really need. It reduces that down-time cost."
'Looking for the Balance'
With Stratus offering VRI for 17 languages and Northside serving a patient population that speaks 90 languages, the health system has no plans to stop hiring staff members to conduct in-person interpretation. Bearden says there will always be a need to have staff interpreters.
"It's an enhancement to our services. Traditionally, we had the telephone and the in-person. Obviously, those are two extremes… I do not want to get rid of the in-person interpreters. In-person communication is a more caring, empathetic approach. I'm looking for the balance between the video and the in-person interpreters."
As telemedicine matures in the years to come, the outsourcing balancing act is likely to play out in every sector of the healthcare industry.
"What has emerged, more and more, are atypical relationships that aren't focused on ownership; they're focused on leveraging the strength of our partners," says one senior executive.
This article appears in the October 2015 issue of HealthLeaders magazine.
For health systems across the country, clinical affiliations have emerged as an attractive alternative to mergers and acquisitions, which come with ownership stakes attached.
Most health system clinical affiliations feature relationships with local medical service providers that help the hospital group cost-effectively fill gaps in the organization's care continuum, such as partnerships with independent urgent care centers. Junior partners gain several financially related benefits from health system clinical affiliations, including service volume growth and the ability to maintain most, if not all, of their independence.
"There is a tremendous amount of potential from partnerships," says Thomas Blincoe, executive director of outreach for The Ohio State University Wexner Medical Center and executive director of Ohio State Health Network, a regional affiliation of 15 community hospitals centered around Ohio State University Wexner Medical Center in Columbus. "What has emerged, more and more, are atypical relationships that aren't focused on ownership; they're focused on leveraging the strength of our partners."
For the fiscal year ending June 30, 2015, OSU Wexner Medical Center posted total gross revenues of $7.3 billion.
