Team-based care at the bedside and beyond has become a goal as healthcare organizations seek to improve handoffs and care continuity. But to make that culture change stick, leadership needs to model team-based behavior and accountability.
This article first appeared in the May 2016 issue of HealthLeaders magazine.
Team-based healthcare doesn't work unless the leadership team also adopts that ethos.
So says Nancy Howell Agee, president and CEO of Carilion Clinic, a seven-hospital health system based in Roanoke, Virginia. She remembers that developing the health system's dyad leadership model, in which a physician leader and a nonphysician vice president work together to manage a group of departments, was only one part of a critical reorganization. The organization needed a hard turn toward integration of clinical, operational, financial, and strategic responsibilities as a down payment on a future where value is king. As important was recasting the way the leadership team interacts with those departments to achieve strategic and operational goals.
"We made a material change a couple of years ago wherein we divided into departments and created a physician leader (the chair) and a nonphysician leader (the equivalent of a vice president) together in a dyad leadership model," she says. "Those two-person teams are fully responsible for their individual departments across the geography of seven hospitals."
But that was only part of reengineering change management at the health system.
Words have meaning
Most every organization has a leadership team. But do the individuals really act as a team when managing the organization? Is the organization managed holistically, or does each department behave as a fiefdom?
Don't answer too quickly.
Agee says her leadership team tried not to ask others to work in ways the senior leadership team was not willing to buy into itself, so it was critical the leadership team modeled the kind of teamwork it wanted those leading the departments to display.
Solution: Include the executive team in the incentives that encourage teamwork and managing the organization holistically.
Although she didn't know exactly how critical it was at the time, that inculcation of team-based management principles at Carilion included a new way for the dyad department leaders to work directly with members of the C-suite through what Agee calls her "board of governors," which includes all the department chairs as well as the organization's executive team. That group meets every other week to discuss new metrics and evaluate progress on current ones and to hear presentations and distribute key lessons learned so other departments can avoid missteps and learn together what works to meet the metrics upon which they all will be judged.
"We make our decisions together, and we usually do it by consensus," she says. "Not that there's not controversy, but these regular meetings have considerably moved the needle in terms of integration and support for our decision-making, understanding the strategic needs of the whole and how each area can help us achieve."
Metrics for which the group is collectively responsible include a scorecard with five domains, and compensation is tied to whether those goals are achieved. So where does the teamwork come in? The incentives are all or none.
"We do that in a team-based way, too," she says. "Any one department can't achieve the scorecard bonus unless they all achieve it."
Agee says because pay is, in part, tied to meeting patient safety, satisfaction, and financial goals, teamwork has become ingrained as a clear expectation. That approach can take the form of a small concept like the daily huddle, where key managers of each department get together.
"This morning, we had a code yellow—we were clogged in the ED, and at 6 we called in a team to help the nursing units be aware of the need for discharges and to help facilitate them," she says.
Agee says teamwork is most evident when the senior leadership team helps facilitate close cooperation between departments that wouldn't normally happen. In the past year, such cooperation has been critical to the development of two institutes: an orthopedics and neurosciences institute and a cardiovascular institute.
Carilion's Institute for Orthopaedics and Neurosciences was "our first foray into multidisciplinary areas working together," Agee says.
In that case, Carilion repurposed an old shopping center. During its development and planning phase, disparate senior physicians and nonphysician managers in neurology, orthopedics, and medicine worked together to design workspaces in the institute. Leadership simply wanted those doing the work to organize it (with help from industrial engineers) so that clinicians could work together more effectively to treat patient conditions that involve all three disciplines.
The facility opened in early January, so results are only anecdotal, but Agee says its potential for better patient outcomes is huge.
"It's amazing," she says. "It's all designed around the needs of the patient."
Now the team can more effectively treat such maladies as movement disorders, for example, and all that the patient might need for such treatment—such as physical therapy, occupational therapy, or various specialties in orthopedics—is in one place.
Agee says physicians designed it with the patient in mind and even extended that to their own office spaces.
"Physician offices are small and in the back of the building because this is not about where the physicians are but how to best serve the patient," she says. "It was an opportunity to have a fairly clean slate, and bringing those folks together was challenging at first, but it is amazing what they came up with. Across disciplines is how the patient experiences us, so taking things from their point of view, as we did with this facility, is important and perhaps uncommon, regrettably."
Everyone's a change manager
What Agee and others are doing in integrating senior leadership into this teamwork philosophy is critical, according to Andrew Garman, PsyD, CEO of the National Center for Healthcare Leadership, a Chicago-based nonprofit, and professor of health system management at Rush University in Chicago.
Fully aligned leadership development means, at a minimum, that senior leadership has ownership of the process, even if implementation is a department-specific responsibility, he says. Ideally, however, leadership development should be something in which senior leadership actively participates, not just as agenda-setters, but also as mentors and learning facilitators.
"There's broad recognition that we need to move to a team-based care model, but you can't think it's the magic bullet," Garman says. "As soon as you have a team of managers, you run the risk of massively expanding cost. So figuring out that balance between providing that coordinated service on behalf of the healthcare consumer while at the same time maintaining efficiency is a big challenge."
At Penn Medicine's largest facility, Hospital of the University of Pennsylvania in Philadelphia, the burning platform was transitions in care, says Craig J. Loundas, PhD, associate vice president of the Penn Medicine Experience program, launched by Penn Medicine Academy. It's likely the same for many healthcare organizations, given the increasing level of penalties and incentives associated, in part, with poor transitions in care that may drive such negative outcomes as readmissions, for example.
About six years ago, Penn Medicine's leadership team wanted to focus on a so-called blueprint for quality, which included team-based approaches to improving quality: transitions in care, reducing variation, coordination of care, and increasing accountability.
"The leadership challenge was to develop skills that were in these silos—for example, the nursing or quality silos—and look at things from an interdisciplinary concept," says Loundas.
Under Penn Medicine's unit-based clinical leadership model, each unit is fully accountable to the chief medical officer and the chief nursing officer.
"They're rounding together, and there are frequent calibration meetings with those teams," he says. "It truly is looking at not just the process at the unit level but at the sponsorship at the senior leadership level."
Loundas says leadership involvement in the improvement teams emphasized the power of small wins. In other words, thinking of transformation as monolithic can lead to paralysis. It was the senior leaders' job to emphasize that no improvement in the target areas was too small to consider.
"One of the more important things that probably we would factor in as part of the CNO's and CMO's job under this type of organizational structure is being a change manager and inculcating that attitude into the multidisciplinary teams," he says.
Boiled down to its core, the need for such interdisciplinary change management came when senior leadership team members recognized about five years ago that the care of patients has become increasingly complex, and because of that, Penn Medicine needed a more collaborative approach framed initially around transitions in care, Loundas says.
"We added significant framework to have our leadership teams upskill around this work and, more importantly, how you manage a project," he says. "Now things are hardwired into our regular way of doing business. The CMO and CNO work together, and that trickles down to the unit."
Loundas says the collaborative approach has been incorporated into a balance of formal education and day-to-day behavioral expectations around the team, which Loundas helps organize.
"There's constant whitewater in healthcare, and what is really important is my role and how I as a leader manage change," says Loundas, describing the guiding philosophy for the multidisciplinary change management program.
A noble calling
None of this is magic, says Carilion's Agee.
"I personally think people who choose to be in healthcare generally choose it because it's a noble calling, and sometimes we force that out of people instead of nourishing and encouraging why we came to healthcare to begin with," she says. "Finding our way together makes us a lot stronger, and so by a thousand examples, we all come together and are stronger together."
Education plays a role. In addition to the formal structure of team leadership, many leaders are also involved in informal book clubs to help educate themselves about how best to reengineer care with the patient in mind.
Carilion also has a physician leadership academy and an annual leadership conference for the board as well as physician and nonphysician leaders.
"We're disciplined and focused around teamwork and integration," she says. "It starts with the dyad leadership model and is apparent to the whole organization."
Sachin Jain, MD, reveals new insights on the Anthem subsidiary's national expansion plans via the continuous adjustments needed to make care more efficient and effective for high-cost, high-need patients.
Sachin Jain became a fan of CareMore while he was at the Centers for Medicare & Medicaid Services during the first Obama administration. A little more than a year after being recruited from a lofty position at Merck, he's been named to lead CareMore.
A strategically and operationally independent subsidiary of Anthem, CareMore started out 25 years ago as an elder-focused physician practice in Southern California. Over time, the company morphed into a health plan serving seniors based on care protocols initially piloted at the physician practice.
Now its care management system has been integrated into pilot programs at Emory Healthcare in Atlanta, and in Medicaid-based partnerships in Memphis and Iowa.
Jain discovered CareMore while he helped launch the Center for Medicare and Medicaid Innovation at CMS. Jain served as a senior advisor to the CMS administrator. He also was a special assistant at the Office of the National Coordinator for Health Information Technology. At Merck, he was chief medical information and innovation officer before joining CareMore as CMO and COO in January 2015. Named president and CEO a week ago, Jain is succeeding longtime mentor Leeba Lessin, who will retire.
During an interview with HealthLeaders, Jain shared his mixed feelings about succeeding his mentor, the imminent release of a peer-reviewed study showing the effectiveness of CareMore's interventions, and his plans for the expansion of partnerships with acute care hospital partners pioneered by a program at Emory in Atlanta. He cautions: Nothing less than transformation of care delivery is required, and transformation requires full commitment.
HealthLeaders:Congratulations on the promotion. Were you expecting it so soon?
Jain: It's exciting. It's like following Michael Jordan. Leeba is an innovative thinker and I learned a lot working with her and it shaped me as a leader. You never expect anything like this. You just do your job and try to make a difference. Things worked out.
She had been here for nine years when she recruited me, and she was a huge part of why I came here, so I had very mixed feelings that she was handing the reins over to me. But I do get to take over what I think of as the marquee organization focused on high-cost, high-need patients in the country. What we have is simply a better way to manage those who are responsible for disproportionate amount of healthcare spending in this country.
HealthLeaders: When we last spoke, you were excited that CareMore could "model the future for healthcare." We talked about some projects with local hospitals and health systems that CareMore was doing outside California—in Memphis and Atlanta, specifically. What are some of the highlights so far of those programs?
Jain: Anthem is committed to leading in this space. That's why they acquired CareMore. It's been an engine to serve the Medicaid population through the partnerships with Amerigroup entities (health plans in states where Anthem does not have a Blue Cross license) as well as the partnership with Emory, which has been a positive demonstration on how our principles can be applied to settings other than traditional Medicare Advantage plans.
As of March 1, Emory's enrolled 13,511 shared savings patients in that geography. They now have a single operating model for all Medicare patients and Emory's primary care capacity has increased because the [jointly developed] CareMore centers mean primary care physicians are seeing fewer visits for chronic disease management, resulting in more time for acute visits. Star ratings for Emory-specific products have increased significantly and the hospital readmission rate for patients seeing CareMore-trained Emory extensivist physicians is 8.9%, which is fantastic.
[The national average was 17.5% in 2013 for all causes, and Emory will publish a paper this week coauthored by former Emory University chancellor Michael Johns III, MD, that will further detail some of the findings from the partnership. Johns is currently interim executive vice president for health affairs at Emory.]
HealthLeaders: Those are good numbers. What about new partnerships? Do you see further expansion of the model gaining traction?
Jain: I'm an execution-focused leader and evidence-based. We need to prove things out before we extend too far. Since we last spoke we've taken the model of care we're building in Memphis and partnering with Amerigroup to provide that model of care to patients in Des Moines.
There are about 7,500 patients in that market. We're also in discussions with a select number of large health systems who see CareMore as a possible on-ramp to value-based care. We've done this now for 25 years. We have deep expertise in these areas. The model results in better outcomes for patients and we're delivering on transferring capabilities to shorten the length of the on-ramp and the pain they experience when transitioning to value-based care. The Memphis and Iowa work is different.
The delivery partner is Amerigroup Medicaid managed care plans. In traditional markets, we partner with both the delivery system and the health plan. The other model variation is that we actually become the primary care providers for those patients. We're not wondering how to pay for what's right for these patients. We are responsible for our patients on average for nine years, so that enables us to make significant investments in their health and well-being over the long haul.
We're also working on modifying our care centers so they can function as open-access centers for any kind of urgent need with extended hours. That is difficult in many organizations.
HealthLeaders: At the most basic level, what will make these partnerships successful?
Jain: We're simply looking at the downstream acute healthcare utilization that we can reduce by providing services to our members. That's a different conversation altogether from traditional medicine.
From our perspective, the key component in the next several years of our 10-year relationship with Emory, for example, is to grow the numbers of patients we serve. Primarily the patients come to us through the sale of Emory-specific Medicare Advantage products.
HealthLeaders: You've said that CareMore is a delivery system first, and a method of paying for that delivery second. What do you mean by that?
Jain: There are so many vendors who operate in this space and all seem to do it the same way. They bring data dump trucks to you, they analyze for high-cost and high-need patients and they say those are the ones you need to work on. Go build some care management forums.
But we are soup to nuts. That's not a transformation approach people are used to because transforming what care looks like from the patient perspective is very difficult.
HealthLeaders: Why do you think so many organizations go that route?
Jain: Traditionally, you have physicians who are not worried about chronic disease management. They will send you to several specialists who will poorly coordinate your care. There will be little emphasis on exercise and no one's thinking about behavioral health.
They're victims of the system to a degree.
Our system is designed so all those pieces fit together. Another important piece is we have a lot of humility. This is hard work. We don't have 10 clients because we believe we need to create and demonstrate real value for our partners and the creation of real value requires real buy-in.
A lot of people say they want to transform, but there's often not the will to transform care delivery. Those are not the types of organizations we want to partner with.
HealthLeaders: Have you heard anything about how your partners are scaling their experience with CareMore to better and more efficiently care for other populations than Medicare and Medicaid?
Jain: This will happen over time as healthcare leaders recognize the value of total transformation as opposed to patches. The reality is that commercial populations have the same needs. The issue is appropriately identifying those patients and being open to partnerships.
HealthLeaders: What are your goals in the new role for the first 12 months?
Jain: Number one, I need to learn every facet of this organization. There's a lot that I don't know. I have that humility and my goal is to touch every department and understand the work with great depth.
The next piece of it is really clinical innovation. We need to focus on not standing pat, and on constantly working to build and scale new programs. For instance, we scaled a diabetes prevention program across our partners, in advance of CMS. We beat them to diabetes management.
We also have a brain health program that we're now implementing across our markets for patients with early dementia. We're also working on back pain programs, thoughtful introduction of digital health tools across our care model, and a pilot for after-hours care. I am also interested in recruiting spectacular new clinical leaders.
We'll be a who's who of individuals interested in transforming healthcare. As someone who didn't train in internal medicine too long ago, many people want to change the delivery system and don't have anywhere to go because most delivery systems are not transforming. So I want to be a magnet for the best physician talent who want to change healthcare delivery.
For some organizations, forming or joining an ACO is a tentative first step toward taking on risk. For others, it’s just one milestone in a journey toward a full-risk integrated delivery system. In both cases, the advice is consistent: Dive in.
This article first appeared in the April 2016 issue of HealthLeaders magazine.
There was a time when many, if not most, hospitals and health systems doubted that they would ever have to veer from fee-for-service healthcare and all its simplicity despite its misaligned incentives for patient health. That time seems over.
Even in states where Medicaid has not expanded, and even where employers and commercial payers aren't pushing value-based contracting, hospitals and health systems are embracing and experimenting with new models to improve outcomes.
Whether those take the form of commercial or government payer accountable care organizations, they're putting the pieces together.
But how best to undertake the journey? What are some lessons learned from those at various places on the path toward taking full premium risk, or capitation? Two organizations that have been through some challenges provide a variety of perspectives through which others can pattern their journey.
Longevity equals leadership?
If experience with value-based care equals credibility, Montefiore Health System, a six-hospital health system in the Bronx, New York, can lead others. It traces its roots in the risk business to the late '90s, when it had plenty of company in health systems that took on risk through their own health plans, often to their ultimate regret.
"We're in our 20th year of managing populations at financial risk," says Stephen Rosenthal, the health system's senior vice president of population health management. "California excepted, many organizations left the risk business in the late '90s, but we stuck it out."
It helped that they didn't really have a choice.
"When you're managing a government programs population, you don't have a lot of room for mistakes, so you spend a lot of time understanding what that population needs, particularly those who have emotional and behavioral health challenges," says Rosenthal.
"We're in our 20th year of managing populations at financial risk," says Stephen Rosenthal, the health system's senior vice president of population health management. "California excepted, many organizations left the risk business in the late '90s, but we stuck it out."
Asked to pick out a couple of factors that have led to Montefiore's success with risk, Rosenthal starts with leadership supporting the move, but the second factor is much more difficult.
"There needs to be a delivery system that recognizes the value of providing quality services and addresses some issues that occur outside the hospital as opposed to using the hospital as the pivot point," he says.
Montefiore uses its physician network as the pivot point, utilizing the power of 5,000 frontline clinical providers, about one-third of whom Montefiore directly employs.
Rosenthal says conveying a message of trust and one that emphasizes that new tools and processes are about improving patient care for a group with more than 3,000 independent physicians is a challenge, but over time, through investments in technology and by helping them understand what quality means by the metrics, physicians begin to understand there's real value both for them and their patients in being part of the network.
"Building a strong population strategy takes time because you're changing culture," says Rosenthal. "These people have been in a fee-for-service world forever, and when you think about it as a physician, it's much easier to do business on a fee-for-service basis."
Montefiore can take on global capitation, but to get to that point, it began developing customer service, provider relations, case management for complex illness, as well as the ability to manage individuals who have social challenges. None of those efforts came about at the flip of a switch, and those are just the beginning.
The key is knowing the population through social workers and community organizations who are medically skilled to manage individuals at a certain level of care, Rosenthal says.
"If I know the population is 100,000 people, I can use data to drill in to look at subsets that need our attention," Rosenthal says. "I can find pockets of chronic illness—end-stage renal disease, for example. Many of the problems in these populations can be managed quickly on an ambulatory basis if they can be identified quickly."
Montefiore actively consults with other health systems to help scale population health programs.
Rosenthal says it brings significant experience tailoring interventions based on the known characteristics of certain populations. Interventions and skills that work for one group may not work for another, so capabilities have to be scaled based not only on the size of the population but the kinds of nonacute care interventions that will likely be needed by subgroups of that population.
Those needs are discoverable based on what Montefiore has learned over 20 years managing very different populations.
"There is no one answer," Rosenthal says. "A Medicaid population is very different from a Medicare or a commercial population. You build different components to your infrastructure based on the population you're serving."
For a Medicaid population, you might allocate more ancillary services, more behavioral health providers and case workers. You might have social workers in a centralized structure that does telephonic outreach. Through Medicaid, Montefiore has a large mental health population under risk, so they place behavioral health providers directly in primary care practices so the physician has that support at the point of care.
With Medicare, by contrast, the population is elderly, likely with multiple comorbid conditions and more frailties, and may need different kinds of support as opposed to social work—more durable medical equipment or more transportation, for example.
"Of course we use technology to build workflows and identify individuals who would benefit the most from our interventions," Rosenthal says, adding that the system has built a formula to help approach each individual patient for whom it is responsible.
"Care guidance is what we call our process. It means care managers have a fairly clear didactic approach to managing the individual so one case manager has the same tools as another," he says. "That way we're not purely relying on a skill set of an individual, but on a pathway of milestones and quality targets that's guiding them."
Systemically, Montefiore is not quite at its goal even now, which would mean taking full delegated risk through the government or the health plan, under which Montefiore would receive the majority of the premium. But even at that goal, the journey is not complete, says Rosenthal, acknowledging that there is a point of diminishing returns.
"As people live longer and as we do a better job of caring for them, costs will continue to rise," he says. "The way to best manage that is to continue to grow."
Montefiore manages about 450,000 lives at risk now, but Rosenthal says they need 1 million—the kind of scale where diminishing returns become less important.
"Price pressure is really affecting everyone," says Rosenthal. "Employers are pushing on insurance companies, and there have not been large increases in Medicare or Medicaid in the past several years. So as these pressures continue, the only way out is this model."
Ready, but few takers
Tricia Nguyen, MD, MBA, concurs with that sentiment.
However, the market she's in has yet to catch up with her health system. Fortunately, Texas Health Resources, her employer, sees a future where the ability to take full risk for populations, up to owning its own health plan, is critical to survival.
Nguyen is the system's executive vice president for population health and the president of its Texas Health Population Health, Education & Innovation Center. After experiences bringing risk contracting to Banner Health, and at two health plans prior to that, she came to Texas Health in 2013 charged with making the 24-hospital health system ready for risk.
Her early goals were modest, with each milestone intended to build upon the other.
"At the minimum, I was ensuring we would be able to manage the top 5% of the population whose risks were driving 50% of the costs," she says. "Every ACO should, at minimum, be starting at that point."
Upon assessment, Nguyen says Texas Health was already managing that cohort for its Medicare risk population, so there was some infrastructure in place for managing risk contracts from a complex care management approach, using the system's current suite of documentation systems from Epic, Allscripts, and Salesforce.
Over time, she says the organization will probably need a more robust tool to manage more than just the 5% and scale it, but is waiting to make that decision until the completion of the organization's clinically integrated network, which will include physicians and other clinicians at the hospital campus of UT Southwestern Medical Center in Dallas.
The joint operating company will put more than 2,700 providers under one network, called, in an amalgamation of both organizations' names, Southwestern Health Resources.
Asked to evaluate where Texas Health stands on its final goal of the ability to assume full delegated risk, Nguyen says the organization is at a 7 on the scale of 1–10, with 1 being completely new to risk-based contracting, and 10 the ability to take full risk.
"We have the assets to deliver on delegated risk minus a few assets like claims capabilities and actuarial analysis to do true product pricing to ensure we can manage to an allocated budget from the payers," Nguyen says.
"We believe that managing a percentage of health insurance premiums allows us to deliver high-quality care and services of high value, while keeping healthcare affordable."
Payers may be another story, and employers are perhaps even more reluctant for differing reasons. Nguyen says that some of the market's biggest payers seem to want to work directly with physician groups on risk contracting, and other payers with less market penetration are ready to delegate full risk to clinically integrated networks.
So payers are interested, but maybe not to the degree the organization had hoped, she says, and employers are even farther behind. Nguyen has to manage the balancing act between investing for readiness for risk, while not getting too far out in front of the trend such that the organization is delivering quality and outcomes benefits without being paid for the extra investment needed to meet those goals.
One of the biggest of those investments is in clinical nurse leaders who were introduced into Texas Health's workflow redesign for acute care management, which Nguyen has co-led since her arrival. Traditionally, case managers had been tasked with ensuring that the health system was utilizing resources efficiently and coordinating with the care teams and transitions of care.
In the past, those nurse managers were responsible for doing both tasks. In the redesign, 75%–80% of that team was redeployed to focus just on transitions of care—starting when a patient first enters a hospital—in order to better tackle the readmission risk.
"That was a $10 million investment all by itself for a new set of masters-prepared clinical nurse leaders," Nguyen says.
Texas Health has been part of UT Southwestern's Medicare Shared Savings ACO for a year, with about 45,000 lives attributed just to its physicians. Another 20,000 are attributed to UT Southwestern.
In commercial ACOs and its Medicare Advantage plan, Texas Health has full risk for about 30,000 lives, and Nguyen says the health system is considering applying for the Next Generation ACO program through the Centers for Medicare & Medicaid Services for 2018. She says she has seen a substantial decline in readmission rates and a slight decline in admission rates.
Nguyen says other health systems have to answer a chicken-or-egg question, as Texas Health has, regarding their approach to risk and the investments that are required to take risk.
"Do I invest in care management before I get risk contracts or the other way around? There are some simple things you can do that do not cost a lot of money," she says. "You do not need to invest in the sexy IT systems.
You don't need a high-tech Cadillac of workflow programs to manage populations. Have a conversation with your payer, whether it's insurance companies or employers, which I would encourage, to build something together."
Texas Health is not immune to the chicken-or-egg quandary. Because of reluctance from employers to narrow networks, one promising risk program has had to be shelved, at least temporarily. Forward Health Partners, an ACO launched with four other health systems to great fanfare in early 2015, is on hold.
"The reason it's on hold is we find employers in this market are not quite ready to adopt narrow network products," says Nguyen. "To take it off the shelf, employers have to engage and accept that it's not just a discount off of current negotiated rates. It has to support clinical interventions that will mitigate inappropriate use of resources. They're just not ready."
Until Texas Health can make greater strides in attracting full risk from employers and other payers, it will have to slow-play some of its clinical efforts on some populations.
"Clinically and ethically we don't treat everyone differently, but where interventions do differ is on wraparound services," she says.
"For Medicare beneficiaries who we're at full risk for, because there are dedicated care managers on that cohort, because there's a budget to do that, they call and do home visits. Otherwise they don't. The basic core of how we take care of patients is the same. However, resources are limited."
By initiating partnerships to build 11 pediatric specialty centers throughout the Bay Area, Stanford Children's has not only protected its turf, but it has helped community hospitals and families keep more cases local.
Lucile Packard Children's Hospital is the most visible sign of the growth in children's healthcare in the Bay Area. It underwent a major internal renovation six years ago, and is on the cusp of the 2017 opening of a 520,000-square-foot addition to the main hospital on the Stanford campus. This will increase capacity to 360 beds and 13 operating suites.
But the really big changes are much less visible, at least on the home campus. Over the past six years, the big changes have taken place in 11 different locations across the Bay Area—some in close partnership with local community hospitals. The changes are transforming what was once a single, hospital-centric campus into one with nearly a dozen pediatric specialty centers throughout the broad Northern California marketplace.
President and CEO Chris Dawes says the transformation into Stanford Children's Health over the past few years, of which of Lucile Packard Children's Hospital is the anchor, has helped the organization navigate a challenging business environment for children's hospitals. Consolidation is happening throughout healthcare and children's healthcare is no exception, but Stanford's brand of consolidation, Dawes believes, will position it well as it partners with local community hospitals.
Children's hospitals are especially prone to consolidation, and the sector is arguably much further along in that sense than adult acute hospitals and health systems are. Part of that stems from necessity. Children make up less than a fourth of the population to begin with, and thankfully, most of that population is pretty healthy.
"So, in order for a place like ours to survive, we have to reach out to a much broader population than an adult organization already," Dawes says.
Children's hospitals are already predisposed to covering much bigger regions. For example, unlike adult services, where there are nearly 30 adult cardiac surgical programs in the greater Bay Area, there are only three locations that offer pediatric cardiac surgery. Stanford Children's operates two of them.
Also, unlike adult care, where there's an excess of specialists, in pediatrics, it's actually the opposite, says Dawes.
"There's an adequate number of primary care pediatric physicians in urban areas, however there's a national shortage on pediatric specialists," he says.
In part because of that shortage, children's hospitals have partnered with community hospitals to bring those services to those hospitals. It's a strategy Dawes has embraced wholeheartedly. It's a symbiotic relationship, because the Children's hospital is much better able to recruit and retain such physicians, while community hospitals want to try to keep as much care as possible local.
For Stanford Children's too, the strategy could be seen as a bit of a rear-guard action in the face of consolidation of healthcare in general. Stanford Children's strategy is a three-pronged approach, as Dawes describes it:
One consists of a group of 11 subspecialty centers scattered throughout the Bay Area, located at or near a local community hospital.
A second consists of creating Stanford Children's primary care network.
The third consists of partnerships with a number of community-based hospitals all over Northern California, not just the Bay Area.
Ideally all three prongs of the strategy are employed. "Some of those relationships are joint ventures, where we put all pediatric services into an LLC and the host hospital is 50/50 owner," says Dawes.
Two such examples include partnerships with California Pacific Medical Center (part of Sutter Health) and John Muir Health, an independent community hospital.
"In both of those cases, we provide all the pediatric specialty care to those facilities, and we opened a pediatric ICU at John Muir," says Dawes.
The idea is that Stanford Children's can expand its footprint, and a hospital like John Muir, which suffers under a tough payer mix, according to Dawes, can be seen locally as a comprehensive healthcare provider that can serve the entire family.
"We brought our physicians, our expertise, and in some cases, our community-based physicians to them," Dawes says. "As a result of this three-pronged strategy, we've grown to 500,000 outpatient visits a year, one of the largest in Northern California."
Dawes says he follows this strategy because the alternative is troublesome, and most children's hospital execs are loath to follow it, for a variety of reasons: a merger with an adult-based health system.
On the national scale of children's hospital trends, it may be that you have to grow or be subsumed, Dawes believes.
"When [children's hospitals] become part of larger systems, invariably because the economics favor adult services, pediatric services become second class," he contends. "My own bias is that children's hospitals that continue to grow scale and create different campuses will succeed without that. We wanted to create more access and focus on the continuum of care, which is why we created this network of community partnerships, these specialty centers and why we got into primary care."
Another reason is that it's less expensive leveraging other people's assets, he admits, returning to the one-plus-one equals three math he says results from a collaboration with a hospital like John Muir.
"Since we've partnered, we've seen volumes triple and quadruple in that community by helping them become more of a full-service provider to the whole community."
He says large regional players are becoming larger. Many of the biggest: Texas Children's, Boston, Philadelphia, and Cincinnati Children's, are substantially bigger than they used to be and bring in more than $3 billion in annual revenue.
Stanford Children's, at about $1.5 billion, will cross $2 billion in the next four to five years, says Dawes.
"You're seeing regional children's hospitals become much more dominant in their regions," he says. "We're not looking to be the biggest, but we do want to be the provider of choice in our market and we do attract patients from every state in high specialty areas."
Draft regulations from The Joint Commission say that all hospitals, regardless of size, must develop programs to combat antibiotic resistance. CMS is expected to follow that lead. Intermountain Health is already hard at work.
At some point in the very near future, your hospital may have to certify its adherence to a formal antibiotics stewardship program in order to receive reimbursement from Medicare.
Such rulings are known as conditions of participation. Meaning, if you don't participate, you don't get paid for treating Medicare patients.
But that's only the regulatory hammer that will ensure compliance. The real reason to get your antibiotics stewardship program under way is that it's one big piece of the puzzle toward combating antibiotic resistance, which is turning into a huge public health problem, says Edward Stenehjem, MD. He is medical director of the Urban Central Region Antimicrobial Stewardship Program and co-chair of the Antimicrobial Stewardship committee at Intermountain Healthcare in Salt Lake City.
Pushing back against antibiotic resistance is also a piece to the puzzle of your financial viability, given the increasing risk of infection from antibiotic-resistant pathogens that can wreck a reimbursement system that is moving closer to capitation.
Antimicrobial stewardship is the systematic effort to improve the quality of prescribing of antibiotics. It's useful not only in improving clinical outcomes, but also in attempting to decrease antimicrobial resistance and adverse events. Drug-resistant bacteria are on the rise, and hospitals are ground zero.
There are only a few ways to slow this trend, Stenejhem says.
"The most important is improving antibiotic use, and we do that through optimizing prescribing. There's not going to be a day where we don't use these drugs. They're miracle drugs, they're curative," he says.
"Regardless of appropriateness of use, their use will always drive resistance. The challenge is to use the least amount that's clinically necessary to slow antibiotic resistance."
At its current rate, matching the rise of resistance with new drug development and delivery is a losing battle, he says, making stewardship even more important.
'A Public health Issue'
Although development of stewardship programs is only one piece of the puzzle, it's the piece over which readers of this space have the most control and influence. But it requires a coordinated effort. Outpatient prescribing and rampant antibiotic overuse in livestock are other targets if an appreciable impact on resistance levels is to be achieved.
"This isn't a single-center issue. In order to have an impact, every hospital has to have program to address this," says Stenehjem. "It does us no good in the Salt Lake Valley if two hospitals prescribe appropriately when the other hospitals don't have these programs. So really, this is a public health issue."
That's one reason Stenehjem is speaking out, as an effort to help educate other healthcare organizations that perhaps don't know where to start. Intermountain uses a variety of well-tested techniques to encourage appropriate antibiotics use by its prescribing clinicians at all of its hospitals, and is willing to share advice and techniques.
That's a valuable resource, he says, because soon operating such programs won't be voluntary.
Stenejhem expects antibiotic stewardship programs to be mandatory, likely by 2017. In December 2013, a presidential executive order directed National Security Council staff to define strategies to conduct antimicrobial resistance prevention. Following the release of a report on how to address this, a 2015 national action plan was developed to combat antimicrobial resistance.
In that strategy, one of the core recommendations was to make antimicrobial stewardship mandatory under a CMS condition of participation. In November 2015, The Joint Commission released draft regulations mandating every hospital, regardless of size, to have to have stewardship programs. Stenehjem expects final language from the body on those regulations will be in effect by 2017.
"We've not heard from CMS about the condition of participation part, but we are fairly certain that will soon follow as well," he says. "The writing's on the wall. You'll have to meet these requirements."
There are costs involved, of course, mostly in labor, but also in technology, but Stenehjem says they're well worth it. "We improve quality, outcomes, and decrease costs through this," he says. "That's a pretty small price to pay in terms of staffing."
And that price starts looking even smaller when you start to think about moving toward different reimbursement models—ones that incorporate ACOs and population health and capitation.
"Think about what is the cost to your organization from an outbreak of drug-resistant bacteria. You get one patient with severe c-diff infection and you have to remove part of their colon. The cost from adverse events far outweighs the cost of salaries for infectious disease physicians and pharmacists to develop these programs," says Stenehjem.
Further, it's just the right thing to do because there's hard evidence that such programs reduce costs and mortality.
It's challenging to say the least though, when you talk about the cost of such programs in small community hospitals. Some 70% of hospitals in this country have less than 200 beds. That's too small to hire an infectious disease clinician. "We have 15 such hospitals," says Stenejhem.
So how do they do stewardship?
Intermountain just completed a randomized control trial in those facilities to get at the optimum way to do that stewardship there. Stenehjem says the health system is still crunching the data at this point, so conclusions haven't yet been drawn or publicized, but doing stewardship at such facilities is "feasible and warranted," he says.
"Within our network, those facilities have access to infectious disease experts through a telehealth model, but others don't necessarily have those resources."
Moreover, Stenehjem says his job and the responsibility of clinicians like him is to make sure appropriate prescribing is made easy for the physician, that there are electronic care pathways that guide physicians to most appropriate care, and that care processes and models are derived and reviewed by the infectious disease and stewardship departments to understand whether they are being prescribed at the right dose and duration and route.
"This is a very collaborative effort and we're getting everyone to understand that these drugs are not benign," he says.
Intermountain posts transparent report cards for all the clinicians so they can see how they're doing on antibiotic stewardship in comparison with their peers and the system average. Intermountain recognizes high performers, and peers can see their names and their prescribing patterns.
He concedes there's not enough talent in the area of infectious disease and microbial stewardship, but that it's possible to extend the talent that there is.
"It's also important to develop physician champions who are not infectious disease clinicians," he says. "That means hospitalists and internal medicine folks. Those physician leaders understand the clinical consequences of drug resistant bacteria. It's a sad case that medicine continues to push boundaries and innovate, but if we are not careful, we may get to a point where all innovation will be undermined by drug resistance. Preventing and treating infections goes hand-in-hand with surgery. Failure to get a handle on this will limit our ability to innovate."
Launching an insurance company ensures narrow network capability and gives access to patient care information coming from a variety of disparate sources.
In one way, the announcement that Aspirus and WPS Health Solutions were launching an insurance company was not surprising. The two-state health system and the Madison, WI-based health insurance company had offered a co-branded product in the local market that had grown 225% in the two years prior to January’s announcement.
But forming a health plan in which it has ownership is only one of several strategic initiatives the eight-hospital system (four in Michigan and four in Wisconsin) is undertaking to preserve its independence. Its president and CEO concedes nothing to larger health systems on what he says will be his health system’s ability to compete on value.
The launch later this year of Aspirus Arise Health Plan of Wisconsin is but one step in that direction, says Matthew Heywood, president and CEO of the Wausau, WI-based health system.
The challenge exists on two fronts, he contends: The first is ensuring your health system has narrow network capability: the second is access to patient care information that may come from a variety of disparate sources, including the patient.
“Epic doesn’t get all the outside care,” he says, referencing the ubiquitous provider of electronic medical record systems for hospitals and physician practices. “The patient might go to a partner hospital, like [University of Wisconsin Hospitals and Clinics], or might get drugs at Walgreen’s. So you get other important chunks of information from the health plan, ideally.”
But that ideal for Heywood, as leaders of many hospitals and health systems can sympathize, remains far from reality. He says Aspirus tried to get the information it needed through various partnerships and contracts with health plans, but just wasn’t getting the full cooperation it felt it needed to fully focus on tactics it could use to drive efficiency and quality in care.
“We tried to work with the insurance companies and there was still a lot of not wanting to share the information,” he says bluntly.
Fine, the information is important and the new health plan will help Aspirus get it, but isn’t there danger in trying to compete with an insurance industry that is consolidating like mad for scale and scope?
“While there are major mergers going on, there’s still a blossoming insurance market within a certain size,” says Heywood. “That allows us to protect ourselves and get access to that information to manage patients more effectively.”
He says most of the products offered by Aspirus Arise will be of the narrow network variety, not surprisingly. It’s an extension of the strategy pioneered by the previous incarnation, a joint venture HMO, which has 12,000 lives at this point. Heywood expects eventual growth to 50,000 lives.
He envisions simplicity and partnerships with other hospitals for the pieces of the continuum Asprirus does not have, like tertiary care, which is referred to UW, and partnerships with certain skilled nursing facilities.
But Aspirus is already a member of what Heywood has previously called a “super-ACO” with other similar-sized systems in the state. That confederation, AboutHealth, is based on statewide narrow network contracting for major employers, and includes seven independent health systems:
Bellin Health in Green Bay
ThedaCare in Appleton
Gundersen Health System in La Crosse
UW Health in Madison
Aurora Health in Milwaukee
ProHealth in Waukesha
Aspirus
Why not further cement that partnership and form an insurer with that group?
“We talked with AboutHealth members about whether we as a group should have an HMO,” says Heywood. “Three members, Marshfield, UW, and Gundersen, already have an HMO, so they didn’t want to fully merge. We realized that wasn’t probably something all members would support, so we had to go our own way on this.”
However, there are still opportunities for the systems to cooperate down the road, he says. For example, the state of Wisconsin is looking at moving all state employees to a different insurance model. About Health, or another integrated health network with statewide reach could be modified to offer insurance throughout the state for employees. Or state officials could carve the state up into regions and call for bids.
“[About Health] would allow us to go to the state or another major employer and offer a network for the whole state,” he says. “And we are all still working on how to cut costs together.”
Is he concerned that major insurers will be able to price him and any allies out of the market?
“It may make things tougher to work through, but if they would start to share more information more readily and help us be more effective, we wouldn’t have to go down this road,” he says. “I respect that you won’t share, but you have to respect that I need to do something else too. Besides, some of them are getting into the business of providing care. Ultimately there’s still room for us to do business with them.”
Wisconsin may be different because it’s one of the top two states for provider-owned health plans, and doctors, hospitals, and postacute care are often more aligned there, says Heywood, who has worked in Florida, Alabama, and Michigan in his career.
For instance, Aspirus has more than 400 employed physicians, urgent care, postacute care, and an ACO network. Heywood says the organization is looking to grow the health plan slowly, but will eventually reach the 50,000-member mark, “which makes us more actuarially safe,” he says.
Adding its own employees, which will take place as soon as possible, will bring numbers up to 20,000.
“We think it’s a good way to start the product and we’re excited for it,” says Heywood of the new health plan. “This will not be a huge moneymaker, but it will allow us to manage the population and give people in our communities a choice.”
As episode-of-care payments begin to go mainstream, leaders are learning how to avoid critical and costly business mistakes.
This article first appeared in the March 2016 issue of HealthLeaders magazine.
The Centers for Medicare & Medicaid Services has mandated that hospitals in 67 markets participate in bundled payments for hip and knee replacements. It's part of an acceleration in the transition to risk-based payment arrangements, and about 800 hospitals will be subject to the new reimbursement regime.
This is the first time CMS is requiring mandatory participation in any bundling; before, all such initiatives have been voluntary for hospitals. It shows a commitment from Medicare—some employers and commercial payers are already beyond the experimental stage—to integrate care and put providers at financial risk for outcomes.
There are variations in the level of downside risk based on the year of the program and the type of provider organization, but maximum stop-loss limits are set at 5% in year 2, 10% in year 3, and 20% in years 4 and 5 for specified procedures.
Align physicians, incent performance
Commercial payers and even employers have directly contracted with healthcare organizations in irregular fashion for a few years now—more on that later—but because CMS is the biggest payer for most hospitals and is mandating participation, its new requirement has many hospital leaders worried. Will they be able to perform?
Baptist Health System, a San Antonio, Texas-based five-hospital organization that is part of Dallas-based Tenet Healthcare, has plenty of experience with bundling; Baptist Health was one of the first participants in CMS' acute care episode demonstration project, aimed at testing the feasibility of bundled payments for cardio and orthopedic procedures.
Though not all organizations that participated experienced success, Gary Whittington, Baptist Health's chief financial officer, says the benefits that have accrued over time go much further than the financials since the organization began the Medicare Acute Care Episode (ACE) pilot in 2009.
Whittington says the pilot evolved into a market differentiator for the health system. But more important, it became a powerful physician alignment tool for an organization that didn't employ any orthopedic surgeons, yet had a large orthopedic service line. He says the leadership team was betting back in 2009 that this kind of payment regime was going to grow dynamically over time.
"We could see bundles coming down the line and we wanted to help influence how it happens rather than be pulled along," he says.
Leadership thought that, if well executed, the program could provide a competitive advantage through expected efficiencies in care, but more immediately, he says, it gave the organization a blueprint to "be inclusionary" for physicians involved in their system, however peripherally.
The doctors were initially very skeptical, says Whittington. Ultimately, he says, they cooperated, but not on the promise of a gainshare check. Instead, their hopes were more modest.
The surgeons didn't ever really expect to receive a gainshare check, but they were convinced that the health system was sincere (even if they thought leadership was wrong), and they hoped they could work together for good operational efficiency and build a busier practice, Whittington says. "They actually got both."
As the health system and the physician groups, through representative boards, sought to set up treatment protocols, supply chain agreements, and care pathways, they also began to focus on the postacute market, which was eye-opening.
"One thing we quickly learned is that there are nearly 70 skilled nursing facilities in San Antonio," he says. "I couldn't believe it. And we were probably using at least 50 of them."
Patient physician preference and geography are factors in those choices, but Whittington says the physicians were very engaged by that point; they understood the marketplace and the need for better rules of engagement.
Baptist used third-party data to analyze outcomes results for the SNFs the physicians on staff used at the time, and then evaluated them on care pathways the health system wanted them to follow, their ability to communicate, whether Baptist could share and receive data from them, and whether there were processes that the organizations could use jointly to reduce readmissions.
"We found that half of the 30-day readmissions were very preventable just with better communication between the postacute provider and the physician," says Whittington.
Baptist has no contractual relationships or volume guarantees with those organizations, but it did use its evaluation tools to create a preferred provider network.
"It's made up of postacute providers who understand how we want them to care for patients," Whittington says. "If they comply, we'll send them more patients."
This kind of transformation isn't a temporary one though, given the infrastructure requirements, says Reeve. "If you're going to be in bundles, you have to do them right, and that means committing resources to data, measuring with data, and working with doctors in a wholly different collaborative fashion," he says.
Where are the savings?
Bajner says one revelation was how much care and cost existed outside the walls of the hospital. In fact, one key question for participation in the ortho bundle, and the subsequent seven or so bundles Baptist has added since, was whether the hospital and the resources developed in conjunction with the surgeons would be enough to manage care effectively in a postacute environment without owning various pieces of the care continuum.
Overall, it's really about redefining how to deliver healthcare, and betting the organization was up to the challenge.
"We do not anticipate losing on anything; that's not how we do business. But you're right: We bet a lot on being able to change the way we deliver healthcare," says Whittington.
Under the ACE program, which is no longer active, Baptist participated in both the orthopedic and cardiac pilots. Now it participates in seven bundles in CMS' Bundled Payments for Care Improvement initiative, in which more than 500 organizations nationwide are testing how bundling payments for episodes of care can better coordinate care, achieve better quality, and lower costs for Medicare. At this point, almost 30% of Baptist's Medicare volume is bundled.
"To be honest, with four of those five we added in April 2015, we were higher than the target price, meaning that we were upside down. So there's that risk," says Whittington. "But we learned from what we did with the ortho bundle that there are things we can do that we've already put in place as a system to help with moving transitional care to the appropriate settings."
He says the biggest savings in all the bundles has come, not surprisingly, from moving away from heavy SNF utilization. Mobilizing home health to help patients stay in the home has been a big satisfier for them—and also a big money-saver.
"Lowering the appropriate level of care to really what it should be rather than the easiest place to get into has driven most of the savings, but still a quarter of savings is coming from operational efficiency because everyone's so engaged and aligned," says Whittington.
Part of that comes from achievements in the supply chain, especially with implants. With a standardized order set, Baptist now pays on average between 60% and 67% of what it was paying six years ago. That one standard order set for joint replacement has greater than 95% adherence.
But gainsharing has a notorious reputation among physicians for fading over time, which makes sense. Efficiencies and better standards of care can reduce cost only so far.
"That is the major concern of everyone involved, that gainsharing fades," says Whittington. "Physicians tell us this is great, and we can do this for a while, but CMS will see how efficient we've been and reset at a lower rate. It is a concern. Medicare probably has that in the back of their head."
Whittington and Reeve advise others in their position to carefully oversee any transition to a bundling program, and that leadership has to come from the C-suite. It can't be delegated because it is such a radical change.
Then, "understand your data and where your patients are going after they leave the hospital. Almost half the cost occurs after they leave, so there's a lot of work there that can be done," says Whittington. "And you need a physician champion; they might start skeptical, but get someone that others will listen to. Without a doubt we couldn't do this without them."
Commercial payer experience
Commercial bundles can also be a good place to get some experience, and the agreements are certainly potentially more flexible than CMS' bundling decrees.
It's hard to believe it's been going on so long, but Trisha Frick-Hoff, MS, RN, a nurse by training and nurse manager by background, has been overseeing the Johns Hopkins HealthCare LLC commercial bundled payment program for the past 15 years, although the volume and interest hasn't always been as hot as it is now.
As director for bundled rates contracting, she's responsible for price development, contracting, and operations. Glen Burnie, Maryland-based JHHC manages medical care contracts with organizations, government programs, and healthcare providers for more than 250,000 plan members and is owned jointly by Baltimore-based Johns Hopkins Health System and the Johns Hopkins University School of Medicine.
Before 2011, most of the bundling at Johns Hopkins was on bone marrow and solid organ transplants—strictly academic medical center-type, super-specialized stuff. Although Johns Hopkins still has bundling programs at one of its two academic medical center locations, much changed when PepsiCo and Johns Hopkins' struck the health system's first direct employer bundling agreement, also at first focused only on orthopedics.
"We had a short screening process that focused on quality, cost, and patient satisfaction," says Frick-Hoff. "When we passed the first test, we then had to submit more detailed data: pricing information and proposed bundled rates. We had a site visit, developed contracts, process flows, and what the deliverables were."
That grew eventually to become Johns Hopkins' high-volume travel surgery program. Other top customers that have signed on include the Pacific Business Group on Health, Lowe's, McKesson, and Walmart. With those programs and some specialized bundles with commercial payers, Johns Hopkins now offers commercial bundles on bone marrow transplants, solid organ transplants, joint replacements, and cardio. These are prospective bundles, as opposed to retrospective ones, as in the CMS mandatory program.
Although it will not be a participant anytime soon in any CMS bundling program (the state of Maryland is under a Medicare waiver), Johns Hopkins is betting that more bundling is on the way, and not just in the academic medical center.
"We are working on bariatric surgery and spine, and looking at certain surgical oncology procedures," Frick-Hoff says. "It's definitely a growth area. We're a pretty well-oiled machine now and generating almost $46 million in revenue this year on approximately 400 procedures."
A major difference in Johns Hopkins' commercial bundles versus the new CMS ones is that they do not include postacute care. Instead, the focus is on eliminating waste in the operating room as well as avoiding the need for skilled nursing altogether. The success of the bundling program lies more in selecting the right patient and providing the right care, she says.
By product line, joint replacement is 23% bundled, bone marrow at 50%, and solid organs are in the 20%-25% range. But cardio is at less than 5%.
"I think we still have a fair way to go," says Frick-Hoff. "We haven't launched this in any of our community hospitals, so there's still a lot of room for growth and for us to be more innovative. Not everything can be bundled, but it's one piece of the puzzle to help meet the triple aim."
Reeve, from San Antonio, also expresses a strong desire to participate in commercial bundles.
"We think we could help people and employers with better outcomes at a better cost," he says. "The commercial side will eventually head that way. There are numerous things that need to happen, but eventually it will and we'll be well positioned. From our side, we're ready to do it today."
Philip Betbeze is senior leadership editor with HealthLeaders Media. He can be reached at pbetbeze@healthleadersmedia.com.
Lessons from the nation's top intelligence bureau can help healthcare CEOs and other senior leaders prepare their organizations for the day when value replaces volume.
Michael Leavitt learned about weak signals from his time as Secretary of Health and Human Services from 2004 to 2009.
It's a cabinet position, of course, but what many people don't know is that it is in the succession line for president.
"It's kind of like telling the eighth-string quarterback to pay attention," because he might end up going in the game, Leavitt jokes. He delivered the keynote address at the Malcolm T. MacEachern Memorial Lecture and luncheon at the American College of Healthcare Executives' 2016 Congress on Healthcare Leadership in Chicago this week.
Actually, the secretary of Health and Human Services is 11th in line, but who's counting?
Regardless, we are all in pretty serious trouble if the Health and Human Services secretary is taking the presidential oath of office, but one of the responsibilities of people in the presidential line of succession is understanding current conditions in relation to domestic and international security.
This select group of people receives a version of the president's daily briefing—a top-secret document prepared by the director of national intelligence daily, and culled from the work of analysts from CIA, FBI, the Defense Intelligence Agency, and the National Security Agency.
A CIA colleague explained to Leavitt that the daily briefing was an attempt to make sense and some predictions based on what he called "weak signals."
Read the Signals; Find the Links
The idea behind the daily briefing is that if analysts can effectively synthesize information from events going on around the world from disparate sources and give them shape, they can heighten focus for the president and help avert many negative situations. The analysis an also provide clues on how to develop contingency plans should certain events take place.
"This is a very important part of the way we stay safe," says Leavitt.
Had the daily briefing existed in 1941 (it debuted 20 years later), the attack by the Japanese that sunk the majority of the U.S. Pacific fleet in the first battle involving the United States in World War II, might not have been such a surprise. There were plenty of weak signals—and even some strong ones—that were missed by many people prior to that attack. Partially, that's because no one linked the weak signals.
But as Secretary of Health and Human Services, Leavitt never found these daily briefings of much use, until he mentioned to a CIA colleague how much time he felt was wasted in going through them each day. The man responded that Leavitt just wasn't using the tool correctly.
Give tasks to these CIA operatives, he was told. If you give them questions to answer that are relevant to you and your priorities, they'll give you information that is relevant.
The CIA colleague said something else that stuck with Leavitt, and it applies just as well to executives who are trying to make the critical determination of how quickly value-based reimbursement is coming to their organization's market (there are 316 distinct medical markets in the U.S., according to Leavitt).
The CIA operative told Leavitt that major intelligence failures are usually caused by failures of analysis, not failures of collection. In other words, the signals are there. It's up to you and your executive team (the analog to CIA analysts) to accurately interpret them.
Three Questions
So Leavitt asked the executives in the room to task themselves and other organizational leaders with answering three questions on the volume/value transition as it applies to their local market:
1.Will value actually replace volume?
No weak signals here anymore. The answer is yes. Last week Medicare issued a proposed rule for part B (drugs administered in hospital outpatient departments and physician offices) that will incorporate outcomes and value analysis, which will dramatically change how drugs are reimbursed in hospitals. It's also already announced that 50% of CMS payment will come through alternative payment models by 2018. The number of lives in ACOs, about 25 million now, according to Leavitt, is tripling every two years. Value based purchasing has bipartisan support.
"Some say take a wait and see attitude," says Leavitt. "Do it at your peril."
2.If value does replace volume, how quickly will it occur in my market?
The trend is happening at different rates in all markets. Misperceiving how quickly it's happening is dangerous, says Leavitt. This is vital to success and monitoring it is of great importance.
Leavitt, who is founder and chairman of Leavitt Partners, a healthcare consulting company, says his firm has been working on trying to predict the speed of the shift from volume to value, and while it has not yet reached the point of being predictive, it has identified a series of factors that will increase or decrease the speed of the transition locally.
"If I was reporting to a board and my career was dependent on how quickly the shift was coming, I would be gathering the weak signals and watching them closely," he says. Factors such as the presidential election winner, whether interest rates normalize (which would increase the cost of borrowing), whether your state has expanded Medicaid and the speed and extent of commercial insurer adoption of value-based contracting are just a few factors that will affect the transition.
"Making sense of the weak signals will provide opportunity for you to be right, but not all weak signals are created equal. You need to weight them by what's most important," he says.
3.Do my organization and its partners possess the competencies to succeed in a value world?
The readiness of organizations to assume risk is not fully mature, in most cases, says Leavitt. In that collision there will be tension, so being able to ascertain your own readiness and that of your partners is a key competency, and requires monitoring and frequent assessment.
The signals are there. Like the signals that presaged the Pearl Harbor attack, in healthcare, they're often misinterpreted, ignored, or overlooked because they fail to fit into the predominant mindset, says Leavitt. Geopolitics is not only place where missing weak signals has serious consequences. It's also true in business and economics.
Blockbuster Video missed the weak signals. Kodak owned digital technology but missed the weak signals that may have helped them determine where it was going. Blackberry also missed weak signals. Look what happened to them, Leavitt says.
The challenge remains measuring total cost of care. Contracting with risk can help get you there.
Anil Keswani, MD, is disheartened about the integration of behavioral health into the health insurance equation but not necessarily for the reason you think. Yes, he believes people can be treated more efficiently and with much more success if behavioral health can be better-integrated into the healthcare continuum.
There is a more pressing business problem with carving out behavioral health from most health plans—which is more often the case than not these days: It becomes more difficult for hospitals and health systems to make accurate calculations on total cost of care. Those calculations are critical for future success at Scripps Health, where Keswani is corporate vice president of ambulatory care and population health management.
Divorcing behavioral health from the equation is not the best patient care. It also screws up predictive analytics, which is the key to managing the health of populations, he says.
"The challenge is sometimes that's not how the game is played," he says. "When you get to ACOs and capitation, you bring more of that total cost of care in the conversation. What I like about value-based contracts is they allow you to look at the entire spectrum of care, not just the episode."
For that reason, Keswani hopes that behavioral health can be integrated sooner rather than later. In any case, he feels better-positioned to do something about the disconnect because there's promise in risk-adjusted capitation, which Scripps has encouraged in its commercial contracting strategy.
This risk-adjusted capitation has allowed Keswani and the system's physicians to focus on value, which is something that has been extraneous to the hospital or health system's business model for far too long.
That's why Keswani is happy to talk with any payer who wants to negotiate with the health system on the total cost of care for its beneficiaries.
"I don't care what they call it, I'm interested," he says.
It's important that Scripps is evaluating dedicating analyst support to the issue. Keswani says he's confident the health system will improve faster under these contracting arrangements, which is why the system is pursuing them so aggressively.
"There are large data sets we can use to look at total cost of care, risk adjusted," he says.
Keswani credits Scripps CEO and President Chris Van Gorder with recognizing "a couple of years back" that the health system wouldn't move as quickly toward understanding population health and total cost-of-care concepts unless the organization pushed into risk-adjusted capitation, so it converted many of its contracts to that model.
There were growing pains, as expected, but Keswani says pushing into the space was critical because it kept Scripps off the back foot in negotiations.
"One of our medical groups had trouble with capitation because they were seeing a lot of adverse selection and so (they) were struggling under that model," he says. "We should not be harmed for doing the right thing for people who need more intense care. Our risk-adjusted cap allowed us to re-enter that model."
Physicians have been patient, Keswani says, thanks to a decade-long relationship with the health system that put physicians at the negotiating table and supportive and focused on moving the organization the right way.
"If we get them to help build the system, the process will be ongoing," he says. "Now we're building a process around formulary management. I know it's going to work because I'm having the physicians develop it."
The business model that works for Scripps has changed as it has embraced capitation, he says. Much of the evolution that's taken place in the health system over the past several years would not have been possible without embracing new reimbursement schemes that reward value.
"We know the world of healthcare is changing toward more value-based care and we've seen a million presentations on it. The challenge is how do you and your team execute?" says Keswani, who first encountered discussions about value in healthcare nearly 10 years ago.
A simple-sounding, but critical component how "quality" is measured and defined. Process measures are only a half-step, and surveys can only tell you so much. Keswani is encouraged that quality has as much sway as financials in the boardroom these days. Indeed, the goal of capitation is to better-align the two measures.
"Our community board members know more detail about some of our top quality issues than you would imagine," he says. "I find this fascinating because quality has entered the boardroom."
Scripps is also redefining its business model in public-facing ways. "We're known for being a hospital system, but our access points should not be ERs," Keswani says.
The health system recently built a new sub-brand, Scripps Health Express, a network of quick care clinics creating convenient system "access points" for patients. Scripps is also collaborating with employers to develop what Keswani calls "near site clinics" for employers not large enough to have an onsite clinic.
Progress is being made, but Keswani hopes to achieve better value through integrated behavioral health.
"For people with the means, there is still a fragmented system but the means to pay for it. If you don't have the means, you'll find a fragmented system and sometimes people slip through the cracks," he says. "There's a structural problem around behavioral health but we're beginning to chip away at it."
Scripps is in two commercial ACO models. One is a Cigna collaborative and one is a California Blue Shield ACO, which both provide data on an episodic and risk adjusted basis. Representatives from the insurers confer with physician and staff leaders about the data, and Keswani says Scripps has gotten actionable data on total cost of care.
"We want them to show us how we're doing compared to others in the ACO model," he says. "We want to get high performers in room and have them teach others, and to tell us where we're not great."
One ongoing challenge and frustration remains the speed of change, Keswani says.
"One of my mentors when I was younger and learning management noticed my impatience and he pulled me aside and told me every dance has its steps," he says. "I learned from that. We want to move faster, but if you're moving faster than the music, that's out of sync. We're aligned a little bit ahead of the curve but we can't go tomorrow when the market isn't there yet."
Healthcare provider organizations have increased their embrace of population health management, according to HealthLeaders Media research. How they approach population health is strongly connected to leaders' strategic vision. One route is a clinical integration strategy, another to receive funding from federal programs, such as Delivery System Reform Incentive Payment. The choice of strategic pathways determines how a provider organization builds and executes a population health strategy, and is tightly bound with the governance process. Organizations are at different levels of sophistication in understanding what a PHM strategy requires, so leaders must think clearly about their strategy and ensure that tactics follow suit, or their efforts may flounder.