If you don't, you should. A nearly empty hospital indicates you've achieved functional integration such that your continued existence doesn't depend on the hospital at all. It depends instead on how well you take care of people to make sure they seldom, if ever, end up there.
Who wants an empty hospital?
Most everyone, apparently.
That is, except, possibly those who work in hospitals.
As the most expensive site of healthcare delivery, an array of forces to keep patients out—unless absolutely necessary—is massing. Even you, a hospital leader, they argue, should want to see your hospital as empty as possible.
An emptier hospital would mean you have achieved functional integration, such that your continued existence doesn't depend on the hospital at all. It depends instead on how well you take care of people to make sure they seldom, if ever, end up there.
Corwin Harper wants an empty hospital, at least, in theory. In fact, the Kaiser executive coined what was arguably the most popular catchphrase of the 2014 American College of Healthcare Executives Summit in Chicago last month.
"Who is happy to have an empty hospital as readmission rates and hospital admissions are going down?" asked the senior vice president/area manager for Kaiser Permanente's Central Valley Area in California, to muffled laughter. (Few hands went up). "I am," he said, with a straight face.
"I consider it a system failure from a process improvement standpoint with respect to the entire continuum of care if we have someone who gets readmitted to the hospital after being discharged. How did we fail in that this patient needed to be readmitted into the hospital?"
Kaiser is perhaps the most-cited example of an integrated delivery system in history. Held up by many as the model of efficient healthcare delivery, the California-based system, from its inception, closed the loop on payer and provider battles over reimbursement rate increases through integration.
The point is, Harper and people like him have been operating under a truly integrated model for so long that it's second nature. He believes, and a lot of evidence would back him up, that it's a better, higher quality and more efficient way to deliver care. He's preaching the Gospel of Integration, and finally, people are listening.
No More Incentives to "Do More"
That doesn't mean Kaiser's way is perfect, but it does mean that its executives have unique perspective on how to deal with the basic model, which is rapidly proliferating across the US as employers, payers, and providers seek closer collaboration and shared risk/reward deals.
It boils down to this: The only way to really put a dent in healthcare costs is to have all sites of care working together to coordinate care. Perverse incentives to "do more" have been eliminated or at least significantly reduced by the practice of evidence-based medicine and the integration of data metrics that help providers make the best decisions.
Kaiser, effectively, is the original accountable care organization.
Against this backdrop, Harper notes the importance for health care organizations to maintain a wellness and prevention focus while ensuring that care is coordinated.
In other words, that means creating a system that ensures member loyalty well before more intensive and expensive healthcare interventions are needed. It also means expanding your notion of what your community needs for its healthcare, not only what will reinforce your organization's short-term bottom line.
Embedded within that transition is wholesale culture change around who the customer is (the patient, not the physician) and moves the dynamic far beyond volume-driven healthcare (which is what got us into this mess in the first place).
"At Kaiser Permanente, the member is at the center of our planning and care delivery," notes Harper. "In the past, most hospitals focused on the number of ED visits and admissions. We need to have more metrics that examine the entire continuum of care to look at the entire care experience."
The Big C
And that, essentially, is the crux of the transition most of healthcare will eventually face as the price for healthcare continues to outpace the rate of inflation–capitation. Whatever the mechanism, future healthcare survivors will be determined not by how many widgets they're able to produce, but by how much they save on producing as few widgets as are needed.
"Care has moved from the hospital to the outpatient setting and the reimbursement structure has moved along with it," Harper says. He notes that within Kaiser Permanente, for example, patients can email their physicians to get simple questions addressed without coming in for an office visit, and physician telephone appointments have become a key part of the delivery system, providing patients greater convenience.
This kind of innovation is much easier to incorporate in a capitated environment.
Harper went through some of the metrics to which he pays the most attention. Many of them were undoubtedly foreign to the executives attending his session, but he stressed that they need to become familiar with them.
"Does anyone know what 'days-per-thousand' means?" he asked, to silence. (Hint: it's an inpatient day utilization rate measurement over time.)
While you're thinking about that, what is your days-in-a-skilled-nursing-facility rate?
When you're capitated, you can focus on these things, because they represent expenses, and the name of the game is expense management, Harper says.
"We have a moral obligation to keep people healthy," he says. "We as healthcare executives need to collectively do a better job of moving from a sick care mindset to a health/wellness mindset."
In Kaiser hospitals, he says, 70% of the time patients will be out of the ED in 60 minutes. "That's our goal," he says. "And into the ICU in 30 minutes. We have an ED doc early in the process to help with throughput."
Harper notes his professional focus is to remove barriers from a process improvement standpoint.
"My job is to push down walls—moving patients to the right place of care with fewer hurdles to cross," he says. "For example, moving a patient from discharge directly to home care with no stop in a [skilled nursing facility] sometimes."
Being able to do that means that services have truly been aligned across the continuum of care. It's an example of patient customer service as much as it is about increasing efficiency or saving money, he says.
"We as healthcare executives need to do what is right for the patient," Harper says. "Since the cost of healthcare is not sustainable for many consumers and the businesses that are paying for it, focusing on affordability is key."
Joe Swedish says a revolution in healthcare is heating up and it will be dependent on a rapidly evolving tech landscape through big data, social networks, and personal connectivity.
"Revolutions happen because the status quo is unacceptable," says Joe Swedish, CEO of WellPoint Inc. one of the nation's largest health insurers, with 36 million health plan members. With healthcare on pace to soon consume one fifth of the nation's GDP, "today's healthcare environment is unacceptable."
Maybe so, but let's be honest, the status quo has been unacceptable for years. Over the past 10 years, healthcare costs borne directly by the patient have doubled while incomes have grown only 4%. If that's not fertile ground for a revolution, I don't know what is.
One of the key problems, however, is that until recently, there have been few weapons with which to stage such a revolution.
Swedish was the keynote speaker for the Malcolm T. McEachern Memorial Lecture and Luncheon at the 2014 Congress on Healthcare Leadership presented by the American College of Healthcare Executives in Chicago. What's different now, he says, is that the convergence of data and the technological gizmos that allow real-time intervention based on that data are now nearly ready for widespread adoption.
One of the reasons (and there are literally hundreds) healthcare is so expensive is that because of a lack of good data, physicians and other clinical caregivers had long been reduced to an educated guessing game on how to treat a patient's problem, which might be serious, and which might not, unless that patient was sitting right in front of them—maybe in the ED.
Another way to describe the magnitude of the coming transformation is that the art of medicine is changing to the science of medicine. With devices and data now available to nearly instantaneously guide clinicians on how to proceed, often without the patient having to physically visit a site of care, vast amounts of staff time and expensive interventions can be avoided.
Not an Insurer That's one reason Swedish, the former president and CEO of Trinity Health, doesn't like to use the word "insurer" when referring to his company. Instead, he calls it a health benefits company. As such, he wants his organization to lead the deployment of data-dependent decision-making tools and monitoring devices that he says have the potential to not only reduce the cost of providing care, but also to improve patient outcomes.
Asking the audience to use their imagination, he described a patient whose EKG readings are being continuously monitored. Whose blood pressure, blood sugar, and any number of other vital signs are also being continuously monitored. You might envision that person in the intensive care unit of a major trauma center. But no, Swedish says such patients might be sleeping in their own bed at home.
"Connecting via smartphone is a preview of the changes we'll see in healthcare in our lifetime," Swedish told the audience of healthcare executives. "It's not just evolutionary, but revolutionary."
The contemporary consumer wants information to make informed purchase decisions, and wants access through a variety of forums. Further, they want this info shared with someone who can help them.
Integration Lacking Swedish argues that there is a lack of integration and context for such information, but the revolution in healthcare will be dependent on a rapidly evolving tech landscape through big data, social networks, and personal connectivity.
"Currently 4 billion people on earth don't have access to doctor, but 2 billion of them have access to a smartphone," he says. "There are great advances in data mining that lead to decision making that is fast, accurate, and predictive."
Wellpoint, like many peers, is leveraging these through consumerism, data and analytics to incentivize patients and healthcare providers to make smart choices that will revolutionize the marketplace in ways that are unpredictable.
Swedish, formerly CEO of Centura Health and before that Trinity Health, spent most of his 40-year career on the "other side" as a hospital or health system executive, argues that the modern health plan has to be much more than a payer. The so-called consumer-driven, high-deductible health plan-based member makes up one fifth of Wellpoint's membership, and that number is trending higher.
"They have skin in the game and are more engaged, which means we need to create tools that promote value-based decision making," he says.
Evidence of the revolution is abundant even now, says Swedish, whose company partnered with CalPERS, the state of California's retiree benefits agency, to establish so-called "reference pricing" for expensive hip and knee replacement procedures. Reference pricing helps employers set the maximum they will pay for a procedure based on aggregation and analysis of prices for specific procedures from hospitals and health systems across the state.
Revolutionary Pricing Swedish says the range in price for one common procedure was between $15,000 and $110,000 with no evidence of differentiation of quality. As a result, CalPERS established that it would pay up to $30,000 for the procedure, but that beneficiaries would be responsible for paying any costs over that amount.
CalPERS costs (per related surgical admission) dropped by 20% "overnight," Swedish says.
That's an example of a simple revolution that would have been impossible just a few years ago.
Another innovation that is part of the revolution Swedish says is here is exemplified in WellPoint's partnership with IBM to use its Watson technology in both utilization management and in oncology services to process preauthorization requests.
WellPoint employees "fed" Watson 25,000 real-life scenarios to help train the technology in how to apply WellPoint policies and clinical guidelines. By the end of last year, a third of the company's nurses were using Watson to make decisions, and more than 3,500 physicians were receiving real time authorizations for things that used to take days.
"As a health plan, our responsibility is to be the connective tissue that binds the ecosystem," Swedish says. "Relationships have to be based on trust and transparency. Our role puts us at the hub of the ecosystem as a convener and collaborator."
Information is the lifeblood of this revolution, says Swedish, who adds that the ability of consumers, providers and employers to access information they need to act will lead to better choices.
"This revolution may one day be as impactful as the discovery of penicillin," Swedish says. "There's vast potential to save lives and transform healthcare and health for millions of people."
Of course revolutions have victims too. Hospitals and other healthcare providers that don't heed the call to reduce waste and compete on cost and quality will fall by the wayside.
Having reached the probable limits of their healing powers, several clinicians and administrators at Gundersen Health System made sure a patient got what he really needed—no matter what.
Patrick Conway, MD, is usually all business when it comes to cancer.
The radiation oncologist at Gundersen Health System in La Crosse, WI, is used to being aggressive—the cancers he sees usually require immediate treatment and the plan has to be acted on quickly. His patients are usually as eager to get on with treatment as he is. But sometimes even he meets his match. Which is why what happened the Friday before Labor Day last year was so unusual.
That was the day Dr. Conway met with a 37-year-old never-smoker named Elvin Smothers who had previously been treated successfully for an oral tongue cancer.
His cancer, thought to have been in remission, had come back. Conway was meeting with Smothers and his fiancée, Kathy, to go over a new regimen that involved aggressive, grueling radiation treatments for cancer that doctors had found in his lungs and spine. Smothers' case was terminal, and he, his fiancée, and Conway all knew it as they sat together in the ICU.
Smothers had proposed to Kathy when a PET scan came back clean following two surgeries, chemo, and radiation treatments for his first cancer diagnosis. The wedding date was set for November 2013, but the new diagnosis gave Smothers a heightened sense of urgency.
"The cancer was growing despite treatments and we were making some adjustments," Conway says.
Conway asked Smothers what he wanted to do.
"He was a very quiet person, but we began talking to him about that," Conway says. "His fiancée spoke up and said what he really wants to do today is get married. That took me by surprise."
But for Smothers, it was the most important thing for his healthcare that day.
"He was acutely aware of his situation, and that's why he wanted to make sure they got married as soon as possible," says Conway.
A wrinkle was that the couple had a Minnesota marriage license, but not one for Wisconsin. Conway and his nurse navigator initially viewed the request as something beyond their purview, but, knowing the physical debilitation the new treatments would cause for Smothers, Conway promised to check into it.
Conway and his nurse navigator made their way back to their department, but as they talked about the request, Conway decided to head over to Gundersen's administration building to see if the request could be accommodated somehow. The person he was looking for wasn't there, so Conway began to walk out on the way to another appointment. That's when Bryan Erdmann, a Gundersen vice president, took an interest.
"He looked like he needed to talk to someone, so I just asked if there was anything I could do to help," says Erdmann.
Conway told Erdmann of Smothers' request and his idea that the couple could be transported via ambulance across the nearby state border into Minnesota and married quickly.
Erdmann said, "Well, let's get 'em married then" and went into action.
He checked with the Gundersen's legal department and found that an emergency Wisconsin marriage license could be issued. He talked with Smothers' attending physician to see whether the patient was up to it physically, if the service were performed on the hospital campus. Getting a yes, Erdmann passed the word around to the hospital staff, which , although short because of the impending holiday weekend, responded enthusiastically.
The next question was the wedding site. "We didn't want them to have to do this in his room," says Erdmann. The employees in facilities got to work on a courtyard that had been neglected because of construction of the new hospital next door.
"Then we bought a cake and got some flowers and the facilities guys decorated our courtyard," Erdmann says. "There was weed-whacking and leaf-blowing all over the place."
Erdmann enlisted the help of another staffer who he knew could play the piano, and she knew someone in the lab who could sing. The chaplain service worked out the details of the ceremony itself, and the media department prepared to shoot wedding photos and video the event.
"While all this was going on, I communicated with the fiancée that it was going to happen," says Erdmann.
She didn't know her way around the town of La Crosse, so someone volunteered to drive her to pick up Smothers' clothes and her wedding dress.
"She met me in the parking lot, and I lugged her dress and the clothes up to the room, but I never told them we were setting all the rest of this up behind the scenes," Erdmann says.
But two more documents were required from another city 20 miles away.
"I thought there's no way we would get this done by 2 pm," Erdmann says. "All these people dropped what they were doing in the moment, and it wasn't like I had to even ask them. There are countless people who I don't even know who helped with this."
But they pulled it off. The bride's brother made it to the ceremony with minutes to spare. The wedding had at around 50 "guests" from the hospital in attendance.
Staff on the ICU floor made the couple a honeymoon suite and decorated the room. They added cards, sparkling grape juice, and candles. Later, they gave a wedding album and the video to the bride and groom as a wedding present.
"Our treatment plan took a back seat that day because of something much more important," says Conway, adding that the idea took on a life of its own and reminded him of what's really important when treating patients.
"We, as clinicians, sometimes kind of forget the most basic questions, like, 'What are the patient's goals for his care?' His goal that day was to get married," says Conway. "He was stuck in a hospital and if it didn't get done, he would've missed something. That refocused me to pay attention to the patient's goals. It's a basic question we should be asking. I got caught in doing what I do, which most times is, What are we going to do to address the cancer? It's a good lesson for me that patient goals are how we should start and end our conversations."
Smothers and his wife were so touched by the extra mile run by so many of Gundersen's staff that when the hospital asked to share their story, they were enthusiastic. Local station WKBT took an interest and produced a story and a touching video about how Elvin and Kathy Smothers met and married.
"They told us they wanted other people to hear this, so clinicians who find themselves with a patient goal that is out of the norm will pay attention. That's a critical part of care and we have to be mindful of it," says Conway.
Erdmann adds, "It wasn't about Gundersen; it wasn't about me or Dr. Conway. But look at what so many people came together and accomplished: what the patient really wanted. It was such a team effort."
After he was discharged, Smothers kept in close contact with Erdmann, texting back and forth about twice a week.
Elvin Smothers died the week before Thanksgiving 2013. He wouldn't have been able to make the original wedding date.
"I wanted to go to that funeral because I had developed a friendship with him," says Erdmann. "It was pretty amazing when I went because I didn't know one person other than Kathy, but there were multiple people who came up and thanked Gundersen, through me, for everything we did for this family."
Though Smothers' death turned out to be inevitable (as ultimately, everyone's is), the experience with his wedding helped remind a first-class healthcare organization that sometimes the best medical care and technology doesn't make a difference.
What you do when the patient can't get well matters just as much. Maybe more.
Many hospital and health system leaders acknowledge that if prices were more transparent, they would compare favorably with their peers and be able to attract more patient volume. So why isn't it happening?
When I talk to healthcare CEOs about how the negotiation dynamic is changing between the provider side and the payer side, they can provide lots of examples of how it's changing. In many regions, they're collaborating on risk-based contracts, forming accountable care organizations, and in general, getting better about sharing with each other what had previously been proprietary information: claims data and outcomes.
That information is critical to trying to improve the cost and quality of healthcare—a goal acknowledged by just about everyone involved.
But among many who are not yet benefitting from these innovations have not yet arrived, I hear a note of resignation. Often, they're leaders whose hospitals or systems are still negotiating fee-for-service contracts with commercial insurers. In these cases, innovations such as narrow networks, risk-reward contracting, and accountable care organizations are just something they hear about that other people are doing.
But why are these leaders resigned, and in some cases, even a little depressed about their ability to compete on a level playing field? Largely, it's because these people are running hospitals and health systems that are already among the lowest-cost, highest quality organizations in their geographical regions, yet they can't effectively leverage those attributes because of a variety of factors that seem beyond their influence.
Maybe they feel like they are well ahead of their competitors in being able to offer lower prices because they've been forced to operate in a lean environment for years. These organizations are lean precisely because they don't dominate their market.
They don't have traditional leverage. In fee-for-service negotiations, the size and market dominance of a health system can be much more important than the lower cost a less dominant system might be able to offer.
My story in the March issue of HealthLeaders magazine investigates that issue in more detail, but the crux of the situation for most of these leaders is that they are prevented contractually from revealing what commercial insurers pay them for their services.
So, for instance, a community hospital that has been squeezed for years on fee-for-service contracting, that has comparable quality scores and a much cheaper price for a course of care, gets no benefit for being more economical because critically, either what the payer pays for care doesn't make a difference to the patient, or that the patient doesn't know it makes a difference.
Let's hope that as taking risk on outcomes evolves, that price and quality truly become more of a differentiator than they are today.
Few are making much progress, but a small number of hospital and health system leaders are doing their best to change price opacity.
This article appears in the March 2014 issue of HealthLeaders magazine.
Many hospital and health system CEOs are embracing the triple aim of improving the patient experience, improving the health of populations, and reducing the per capita cost of healthcare, an objective popularized by the Institute for Health Improvement.
Of the three legs of that stool, the one on reducing cost is problematic because one person's (or organization's) cost is another's profit. A major obstacle in reducing the cost of care lurks in price opacity for healthcare services, and some say that rapid consolidation in the industry is not only not helping reduce the cost of care, it's actually doing the opposite.
The reasons for such a lack of transparency are inherent in a payment system that is unlike other industries, which generally have just two parties—a buyer and seller—involved in any transaction. In healthcare, a third party is almost always involved, and despite attempts by the government to make transparent the prices it pays for a variety of healthcare services and products, commercial payers and their partners are still very reluctant to reveal what they pay organizations for their services. In fact, such disclosures are contractually prohibited in most cases—not that most hospitals and health systems have historically minded.
But with pressure for transparency mounting and with higher variance in reimbursements, some hospital executives (mainly those who think they would do well in a price and quality comparison with their competitors) are pushing for greater transparency. Many of these are organizations that have historically been squeezed by commercial plans for reimbursement concessions because they lack market leverage. Their leaders feel that if prices become more transparent, they would compare favorably in a cost contest with their bigger and more market-dominant peers. But are they on a quixotic quest?
The paradox
Getting at the true cost of healthcare and rooting out the waste that resides there is critical to changing healthcare's unsustainable cost trajectory. What hospitals pay—and charge—for medical devices is part of this calculus as well, and those contracts have similar prohibitions on hospital disclosure. One of the chief reasons for the secrecy is that it offers a competitive advantage for insurers and device makers to obscure what they pay or charge any healthcare provider because profit and loss of both the healthcare organization and, of course, the payer, can be affected by negotiations when contracts are up.
If a hospital knows what another one is getting, the hospital can leverage that information when its negotiations come due. Many organizations have a general idea of how well they do on commercial reimbursement related to their peers, and the ones that are doing much better than their competitors—for whatever reason—would seem less willing to share that information even if they could.
But small organizations often say that their size, not their cost profile, is what prevents them from getting their due in negotiations with commercial insurers—despite their lower costs and, in some cases, higher quality. Through transparency of prices, they could better make that case.
One who resents this paradox is Steven Sonenreich, president and CEO of Mount Sinai Medical Center in Miami Beach, Fla., and not just because his revenues and margin are at stake through reimbursement that he says is on the low side versus his competitors because of their greater market power. He's also concerned in his role as a large employer in a state where large employers, who can sometimes serve as a lid on premium increases, are scarce.
"We wear one hat as CEOs of mission-driven large healthcare organizations, but under another hat, we're also employers," says the CEO of the 672-licensed-bed organization with more than 3,500 employees, adding that one of the greatest challenges any employer has is managing the expense of health insurance for its own employees.
"I have a little more insight into the management of health insurance premiums as an employer than CEOs who are not in healthcare, but we've all seen the cost of insurance rising at such an alarming rate, and that has also caused the expense to the employer and the employee to rise at a dramatic rate. That's of great concern to me as an employer."
Sonenreich claims that the rising cost of insurance is largely tied to consolidation and the market power of bigger, but not necessarily higher-quality, organizations. He says the lion's share of reimbursement from commercial payers goes to those organizations.
"What's occurred is we have many large hospital systems that are using size to leverage insurance companies for much higher rates," he says. "Many institutions would like you to believe consolidation is to improve operations; it's really to drive pricing leverage."
"Many institutions would like you to believe consolidation is to improve operations; it's really to drive pricing leverage."
He offers anecdotal examples of this. He says for two Mount Sinai employees who were hospitalized at neighboring large system hospitals for emergency care needs, the price Mount Sinai paid was 30%–40% higher than if those people had been able to get to Mount Sinai.
Another example comes from a Mount Sinai physician who performed an unusual emergency "limb-saving" surgery at a large system hospital in the area.
"His very grateful patient came to him after her two-day hospitalization and was appalled that the doctor's compensation for the surgery was less than $1,500 while the hospital's was $99,000," says Sonenreich, who adds that the physician and hospital were able to look at the bill and compare what the surgery would have cost at Mt. Sinai. They were tens of thousands of dollars apart "When you have these large systems using that pricing leverage against the insurance companies and them not being motivated to challenge that for whatever reason, then what you have is a great deal of challenge in a marketplace."
Subsidizing the money losers?
Of course, individual examples such as Sonenreich's do not necessarily prove that consolidation is the cause of such disparities in commercial reimbursement. Many hospitals and health systems claim that such large prices help subsidize services that lose money and would not be available if they were not subsidized.
But should commercial customers be expected to contribute to that subsidy? It's an open question, but the fact that such subsidies are not accounted for in the balance sheet means the truth about how much the subsidy system may be needed is elusive, lost in the complexity of reimbursement and the opacity demanded by contract.
One CEO who does not have the problem of subsidizing money-losers is caught in a conundrum. Jane Keller, RN, is CEO of Indiana Orthopaedic Hospital and OrthoIndy, the physician group practice that owns the 37-bed specialty hospital in Indianapolis.
"It's always amazed me how with any other service I know what I'm going to pay for it prior to purchasing. In healthcare it's not as black and white," she says. "A lot of variables go into it, but I really feel like we could do a better job of being transparent with our pricing up front."
Yet there are significant barriers, even for a specialty hospital. Neither she nor her board is interested in being a first-mover in sharing what they're paid by insurers.
"We've spent a lot of time talking about that," Keller says. "We would be willing to share, but we don't want to be the only one out there, so we've held off."
But it's not even that simple, she says; because of insurance contracts she doesn't really have a choice, as the insurers do not want other hospitals to know what each is paid. And while she says she can't quantify it, she knows her hospital's contracts are not as strong as the full-service hospitals.
"I don't really see much leadership from payers on this," Keller says. "We continually show them we are a good value for their constituents, but they're a little cautious about going down that road because we are single-specialty and they don't want to harm their relationships with some of the other full-service hospitals in the area by directing patients to one facility or the other."
She says that as more and more healthcare dollars get pushed onto the consumer to pay, movement on this front might come more quickly.
"We have health savings accounts and a high deductible in our current healthcare plan," Keller says. "More of our employees are aware of the value that's coming out of their pocket before their health insurance kicks in."
Blame insurers, lax employers?
There are differing opinions about price transparency. Some believe that due to the complexity of contracts, cross-subsidization, and the nature of business negotiation, the links aren't always clear and, indeed, that it would be impossible to make them clear.
"What's holding it back is the fact that it's hard to be transparent when there are so many different reimbursement methodologies," says Peter S. Fine, the president and CEO of Banner Health in Phoenix, who says the very purpose of Banner is to be a vehicle to reduce healthcare overhead. It operates or owns 24 hospitals in seven states.
"You can produce charges, but there are so many different contracts and relationships, it's hard to say, 'Here's the price you should pay for something.' In a different environment, where there weren't so many different contractual relationships, it might be possible."
Fine argues that because everything is driven by a contract that results from an organization-to-organization negotiation, price transparency is nearly impossible to achieve and not worth much even if it is.
"So much more of this is driven by the insurer than the healthcare organization," he says. "The kind of transparency you're looking for doesn't typically happen in our world because of decades of development of relationships with the employers through whoever they've chosen to be their insurer or through various relationships through federal programs; you have vast differences on what people or insurers or the government pays or doesn't pay."
Another approach
Instead of pushing for price transparency, Fine argues the biggest achievements that can be made in reducing the cost of healthcare—or at least the growth in costs—are not only through consolidation and elimination of overhead, but also through focusing on healthcare costs after about age 58.
"We don't have a healthcare system problem, but we have a problem in how we treat people at their highest level of usage," he says.
He says by focusing on the highest utilizers of the most expensive care, healthcare leaders and policymakers can "tune out the static" and have a better chance of solving the problem, and he adds that the Patient Protection and Affordable Care Act does little to nothing to address this.
"We tend to look at an insurmountable problem like fixing the healthcare system," he says. "I wonder how healthcare costs would be viewed as a problem to be fixed if we just focused on that population."
Banner is one of the hospitals in CMS' Pioneer program, the most aggressive and risky form of Medicare ACO, and despite a large exodus after the first year, Banner stayed. Fine says Banner approached the 50,000 lives in its Pioneer ACO by focusing on the 5% of those patients who were the highest consumers of healthcare services.
"We were one of the organizations who did pretty well," says Fine. "It could be dumb luck or focusing on the 5% who are the greatest drivers of cost. We could also reduce costs if we forced every Medicare enrollee to have a healthcare power of attorney and a living will and they had to produce these documents upon enrolling."
While Fine's suggestions could, indeed, go a long way toward reducing healthcare cost inflation, they have little to do with limiting market dominance or with allowing employers and consumers to better compare cost and quality among a group of organizations. And as Sonenreich notes, size does matter and is a factor in driving costs higher.
"We looked at state-level data of large systems in our marketplace. The reimbursement and pricing they were able to receive from insurance companies was at times 45% higher than all other hospitals in the marketplace. So all consolidation did was drive up price and cost," Sonenreich says. "Such systems are profiteering through pricing instead of efficiency."
He says employers must drive change.
"The difficulty in our marketplace is we're not in an area of large employers," Sonenreich says. "We have a lot of small and medium-sized ones. It takes the clout of very large employers to do this and create motivation from insurers to participate in this three-legged stool. From an economic standpoint, transparency in pricing for employers, employees, and insurers is at the crosshairs of affordability in healthcare."
A recent analysis finds lackluster results in both cost reduction and quality improvement from organizations that have achieved Patient-Centered Medical Home certification. Does that mean we need to go back to square one?
Have you heard the news? The patient-centered medical home model is a failure.
One takeaway from a recent analysis on the medical home is that for all its purported promise, the designation appears to be little more than window dressing for practices that achieve it.
The report, published in last week's JAMA, and covered well here by my colleague Cheryl Clark, compared quality, utilization, and costs of care delivered to about 120,000 patients in 32 Pennsylvania practices. About half of the patients were treated by physicians in PCMHs certified or recognized by the National Committee for Quality Assurance; the others were treated by physicians in traditional practices.
The conclusion? Physician practices designated as medical homes were no better at controlling costs than traditional practices and were better in only one of 11 quality measures evaluated.
But it would be wrong to dismiss the movement toward patient-centered care as ineffective based solely on the findings of the study.
The report found that compared with traditional practices, NCQA-certified PCMHs did no better at controlling costs than traditional practices. They also did not improve on traditional practices' performance on 10 of 11 quality measures evaluated, such as cholesterol testing and cervical cancer screening, or in avoiding emergency room visits of patients who could have been seen in an ambulatory setting. The only measure where some improvement was seen in the medical home groups was in nephropathy screening for kidney disease in patients with diabetes.
So, like other highly touted panaceas that have attempted to rein in runaway healthcare costs and address dubious quality only to fall far short, does the PCMH movement's hype far exceed its results?
Perhaps. In this limited sample size over three years, it appears so. But before we file the designation under "Bad Ideas," let's address what the report leaves out.
1. The sample size was too small.
Analyzing the cost and quality results from 120,000 people over three years is a big task, but perhaps it's not big enough. After all, this report analyzed only a small piece of the PCMH-designated universe in a very limited geographic area.
Other studies have come to strikingly different conclusions. This reportby the Patient-Centered Primary Care Collaborative, admittedly an advocacy organization, cites several PCMH initiatives that have gone on for much longer than three years, and that have saved significant sums (see page 9) in costs, and have had marked positive effects on utilization, quality and outcomes.
Health plans and the government are big believers, and since they pay the freight of healthcare services, there's no sign they are doing anything but increasing their investment in the PCMH structure.
2. Certification is only one of the first steps.
The fact is that Patient-Centered Medical Home certification is far from a guarantee that an organization is taking the necessary steps to both improve quality and cut healthcare spending. What it does do is assure that they have the tools to better coordinate care, and that staff at a particular practice have been trained to serve as the center of care for their patients.
Whether those tools are used effectively isn't measured. Practices are still learning, and clinicians are still figuring out the best way for their organizations to achieve goals of good patient outcomes, and they're still staffing up or rearranging the type of work that the physician's assistants should do to improve outcomes.
This is not surprising. You can have all the technological links in the world, and you can be certified, but if your practitioners don't use those tools to better communicate and connect with patients and their services at other sites, its promise is stillborn. Indeed, these softer skills are harder to quantify, but critical to the work. And aren't evaluated in the drive to achieve certification.
3. Principles pass the common sense test.
The principles of patient-centered care are still relatively new, especially to patients. And they aren't used to it. Patients are used to being on their own for healthcare outcomes, and the fact that a patient navigator is following up with them on needed care is unfamiliar. Old habits are hard to break.
It's common sense that acting on the principles of the PCMH, not just fulfilling the requirements to get the designation, should reduce healthcare costs and improve quality. If the PCMH designation leads to patients, payers and employers holding practices accountable for outcomes, it has promise.
At this point, certification is only a means to an end—perhaps we're still in the early innings of healthcare transformation. Certification, again, means that the tools are in place. Now practices have to figure out how to use them most effectively.
So PCMH designation is a necessary, but not a sufficient contribution to value and quality improvements in healthcare.
Anyone who's tired of the physician's responsibility to their care ending at the threshold of the office door or with the payment of a fee-for-service-based bill would have to root for adoption of the PCMH. It passes the common sense test. Fee-for-service, clearly, does not.
4. You have to do it anyway.
Big business is a big believer in patient-centered care, and many large employers and their insurers or third party administrators are as well. They see patient-centered medical home certification as an important first step toward forcing healthcare to take responsibility for outcomes. And many of the new risk-bearing contracting structures that health plans and government payers are debuting now and in the near future require PCMH designation as table stakes.
Healthcare organizations are rapidly ramping up their investment in achieving the designation. Last September's HealthLeaders Media Intelligence Report on physician alignment shows that 52% of healthcare organizations achieved or are involved in achieving PCMH certification, up from just 39% in 2012, and 58% expect to do so within three years.
The Patient-Centered Primary Care Collaborative report says WellPoint predicts its PCMH program could reduce its projected medical costs in 2015 by up to 20% based on analysis of its current medical home projects. So it's investing heavily. So is United Healthcare, which predicts that its PCMH efforts will save twice as much as they cost.
So that leaves us to determine the impact of the recent report. Clearly, it does not show positive results during the time period it measures. It also shows that achieving a certification or designation does not guarantee your investment in the tools of the PCMH will pay off. But does that mean all the time and effort setting up patient-centered medical homes, which payers are increasingly incentivizing, is wasted?
Certainly not. What it will deliver for healthcare is still to be determined, but I'm willing to give the benefit of the doubt to any scheme that will incentivize physician practices and other healthcare organizations to effectively work together to drive value and good outcomes.
Many healthcare organizations that never used to work together on these things are now doing so. It's a huge step forward for an insular, silo-based industry that has really never had to take business risk on how well it does what it's supposed to do—help people get better.
If the option is ditching it in favor of returning to the fee-for-service patient volume game, you can count me out.
Faced with a potential mushroom cloud of new regulations and new business models, interim leaders can quickly take the reins and make difficult decisions.
Dennis Millirons is retiring. Sort of.
Millirons has spent the past year as a vice president at Fargo, ND-based Sanford Health, a 39-hospital system that is on a growth spurt. His previous four years at the health system were spent as president of Sanford Medical Center Fargo, where he was instrumental in integrating the system's 2009 merger with MeritCare and where he played a key role in the design of the new $450 million hospital campus now under construction in Fargo.
He'll retire in June, but he's not necessarily finished with his career.
The 28-year veteran healthcare industry leader plans to take advantage of a blossoming opportunity for experienced senior executives who can bring a track record of experience in coping with dynamic change to an industry that needs to make tough decisions.
In short, he's interested in interim leadership opportunities.
In the upheaval that characterizes today's healthcare environment, margins are small, cash flow is low, and the future is uncertain. Temporary leaders can help with projects, evaluate turnover, or stabilize a critical situation.
Not only are more executives gravitating toward the temporary option for their own careers, but there are certain advantages from the institutions' perspective as well. They're using temporary leaders to more quickly adapt in a time of great change and uncertainty as organizations move forward under a variety of options to transform their business model.
Fresh Eyes on Hard Decisions There are other reasons the days of the career executive leader in healthcare may be waning. The trend is partially driven by demographics. Some experienced senior leaders, like Millirons, are semi-retired and aren't looking for long-term engagements. What's more, the sought-after skill sets for top leaders in healthcare have become very specialized because the challenges they need to tackle are so complex.
One other reason: It's often difficult for entrenched senior leadership to make the tough decisions required to ensure the survival of the hospital or health system.
"When leaders in the president and CEO area become well established, it might be more difficult for them to make the hard decisions," Millirons says. "In that situation an interim can feel less attached, stick to the facts, and be fair and appropriate, but make some hard decisions that may be more difficult for an established leader to make."
Millirons says the use of interims has grown significantly because healthcare is an industry in such turmoil and under great pressure to reduce costs and provide higher quality care. Those who can't navigate this transition while keeping revenues, admissions, and particularly margins relatively strong, will be forced to make difficult decisions.
If they can't, those decisions will be made for them. Millirons says that's a perfect opportunity for an interim turnaround artist.
"Most of the time, interim leaders are pretty seasoned people who have experienced a lot of different situations," he says. "Sometimes they even get the opportunity to become the permanent leader, but sometimes it's best for them not to be, because they made those hard decisions."
Finance, ConsolidationSkillsKey
Millirons has found plenty of good reasons to use interims himself in the past.
One was a situation at a former employer in which he was surprised by the unexpected departure of a valuable chief financial officer while the system was in the middle of a bond issue and other significant projects.
"I really didn't have anyone in that area who had the skills I needed," he says. "I was able to get a former 'Big 5' accounting firm partner who got us through that period."
In another situation, Millirons discovered improprieties on the part of another CFO whom he had to quickly terminate.
"I had to take quick action," he says. "I wanted someone with fresh eyes to come in and take a look above and beyond what we'd already done in terms of the investigation so that we could be aware of anything else that might've been going on." In both cases, the interim executives excelled, he says.
With the amount of consolidation the industry is currently experiencing, an interim president and CEO may be able to lead integration with a larger organization with greater skill and purpose than an entrenched president and CEO who is used to operating on his or her own, without corporate oversight.
Skills for interims are many, but the top one, according to Millirons, is financial. Right behind that are skills associated with the successful consolidation of organizations.
"These include knowing how to carry forward the development of relationships with a larger organization, and how to properly get the organization you lead to fit into the larger organization successfully," he says.
That means the interim needs the ability to quickly assess the leadership skills of people below his or her management level, supporting and encouraging those who are strong to stay with the organization, and making, in some cases, key terminations.
"One more that might be most important is working with boards," he says. "Making sure there are no surprises for them."
A Little Distance Helps When senior leaders become entrenched, they get their own set of biases and opinions, Millirons says, which may not reflect the current business environment accurately. Sometime those biases are accurate and sometimes they're not, but they can inhibit judgment for a legacy leader.
"Someone stepping in from outside taking a fresh look at the situation can recognize options that should be exercised," Millirons says. "Maybe there's something that needs to be divested and that [legacy] leader was part of building it."
The interim's performance is critical, he says, because for a senior position search, it can take six months to a year to identify a permanent replacement. Six months in today's healthcare business environment can be critical transition time lost. Millirons feels ready to tackle that challenge, even if he's never personally done it before.
"But I have done a lot of turnaround work," he says. "I'm very familiar with that process and I think I could be useful."
The chief operating officer of a small Minnesota health system says that small organizations can—and must—be among the leaders of the transformation from volume- to value-based healthcare businesses.
Michael Phelps—no, not that Michael Phelps—is convinced his small health system in Minnesota won't be left behind as its healthcare customers seek greater quality and value in the services they consume.
As I've mentioned many times before in this space, transforming from a volume-based business to a value-based one is monumentally complex. Most small systems are following the trend, rather than leading it, often out of necessity.
Phelps, who's the chief operating officer at Ridgeview Medical Center and Ridgeview Clinics in Waconia, MN, a small organization by most standards, has a different take. He says that small systems can—and must—be among the leaders of the transformation.
In a small system with a commensurately small war chest, however, it must be done selectively, choosing which modifications to the business model will work well in a future of value-based purchasing of healthcare services, as well as which will improve quality or efficiency regardless of the payer reimbursement protocol.
By changing rapidly, he risks being early, he risks that his system's initiatives will miss their targets, and he risks that Ridgeview won't be able to compete with bigger health systems despite the investments. In other words, he characterizes the health system's business strategy bets as "life-and-death." But he contends that these choices must be made—leadership won't stand by as the health system becomes an anachronism.
In case you missed my story in this month's HealthLeaders magazine, Phelps was my lead source. He represents an organization that, while simultaneously resisting the siren call of acquisition, is taking advantage of the way healthcare is consumed in a system where value is the currency of growth.
Ridgeview's early results are an example of what can be accomplished, he says. The health system stands out because it is doing something about the worry that small community hospitals and health systems soon won't be able to compete with regional or even national giants.
The light at the end of the tunnel that Phelps sees involves envisioning a future where small organizations can thrive—and then creating it. That's the only way to compete with systems that are growing through acquisition. Additionally, with an accountable and transparent healthcare organization, you can partner with bigger systems.
Ridgeview's ACO strategy revolves around a wholly owned subsidiary of the health system. In the worst case, that arrangement allows the system to enter limited value-based agreements with payers and independent physicians. However, Phelps is shooting for a bigger goal.
"The upside would be that we could enter total cost of care contracts and change the way we deliver care," he says. "Also, it allows us to create relationships with independent physicians that are just short of ownership and joint venturing."
He's careful about spending big. Not only does a project have to meet return-on-investment targets, but it also has to have a downstream impact to other areas of the organization. For example, it has to do something to improve coordination, help the previously uninsured obtain coverage through the healthcare marketplace, or help them choose a personal or family physician.
Phelps is convinced that such downstream benefits have come through Ridgeview's construction of a freestanding emergency room and urgent care center.
As for growth, the system sees rural opportunities in its region west of Minneapolis and is defending its market share through acquisition of its own. It is in the process of acquiring a critical access hospital that's 15 miles away from the Mayo Clinic "because we own that market share," he says.
"Can we leverage the critical access market? We're actually putting together the final pieces of a partnership with a post-acute organization that involves some memory care, elder housing, and transitional care," he says. "Again, that's back to point on taking risk. We've looked at things like this as an investment diversification strategy."
Because of its size relative to its competitors, Ridgeview had been at a strategic disadvantage in contract negotiations with private payers. But what was in the past a disadvantage, is now a strategic advantage, says Phelps, as the lower relative reimbursement forced Ridgeview to be "lean," while many competitors are only now beginning that journey.
"We haven't had the luxury of what the large market gets," he says. "There are models now that will hopefully let us leverage that through the public exchanges or even private exchanges such as the one we have with Medica (a Minnesota health plan). We're the low-cost option. That will help our community based ACO model to have a larger economic footprint."
Its geography and independence are stepping stones toward more accountable care and a reimbursement regime that will help Ridgeview thrive, Phelps says.
"We're in a desirable mix of urban and rural markets that are part of the referral sources for the big guys," he says. "Everyone wants a piece of you and it puts you in a good negotiating position."
An example of a project that wouldn't have been possible without independence and that good negotiating position is a neonatal ICU started at Ridgeview in a partnership with two children's hospitals.
"We ended up with great relationships with children's hospitals and clinics in Minneapolis," he says. "Our independence is the critical thing that got that here."
All this to say that if you lead a small health system like Phelps, you do have options besides being acquired by a bigger partner. You just have to actively seek them out and execute on them, because time is not on your side.
Seeking a strategic path for a healthcare organization amid historic levels of disruption can be exhilarating, but small systems and standalone hospitals are essentially betting their institutional lives on the changes they're making.
This article appears in the January/February 2014 issue of HealthLeaders magazine.
Mike Phelps is not shy about adapting to a rapidly changing healthcare business model under which healthcare organizations' success—or lack thereof—is less a function of their ability to attract referrals and patients and more a function of their ability to deliver better outcomes and, critically, better value.
Despite his willingness to change, he knows that as the chief operating officer for Ridgeview Medical Center and Ridgeview Clinics in Waconia, Minn.—a relatively small organization with an 85-staffed-bed hospital, several clinics, and about 1,700 employees—the strategic shifting required to adapt to a new measurement regime in healthcare is inherently more risky for him and for leaders of other small or standalone systems than for those with bigger war chests. By changing too fast or too much, are organizations like his essentially making life-or-death decisions?
They are, he says, but what's the alternative?
"Sticking to your knitting won't suffice in the new world," he says. "We can't stand still in a highly competitive market, so we need to carve a niche for a community health system."
Other community health systems are in the same pickle. Big systems are getting bigger, and unlike the lip service some of those behemoths previously gave to the promise of reduced overhead from their combinations, they're making a serious commitment to efficiency these days by fully integrating their hospitals into an operating company structure as opposed to the holding company structures of the recent past.
They are also increasingly expanding their footprint to dominate many markets that previously may not have had a dominant provider of healthcare services. For small systems or standalone hospitals to survive the clout of their competition, they need a niche. Phelps and others are using a variety of approaches to selectively carve out that niche.
"With a smaller war chest, you have to be pretty thorough in your due diligence," Phelps says.
The risk for hospitals in the near future, particularly smaller ones, is that they become marginalized. What may happen is a winner-take-all dynamic by which larger players gain market momentum due to their "network effect" and smaller hospitals begin to lose critical mass on the commercial side.
The answer could lie in some form of specialization, which culturally is difficult for hospitals, especially those that see themselves as providing comprehensive acute care and those that don't have businesses that extend outside the four walls of the inpatient facility. But there are strategies such hospitals and systems are using to turn business dynamics back to their favor.
Growth bets
Phelps, for one, says the niche he's hoping to carve out isn't based on limiting services, but on dominating his local market.
"We have everything larger systems have, just smaller scale," he says.
But with many organizations behaving through acquisition and partnership as though scale is the chief variable in determining future success among healthcare providers, Phelps is betting against the herd.
Scale isn't the only way to succeed, he argues. Home market growth can also yield big dividends, he contends, citing his system's debut in 2011 of a freestanding emergency department 12 miles from Ridgeview's main campus. The center sits in a highly competitive market where larger and more well-known health systems represent the competition.
Phelps says the new center is a true freestanding ED, which meets all the requirements of CMS rules such as hospital-based participation and provider-based rules, so it is paid at ED rates. In fact, it is a level IV trauma center, which is similar to small hospitals in the market, he says of the venture, which is paired with an urgent care center, which of course is reimbursed at a much lower rate.
Ridgeview budgeted for approximately 12,500 combined ED and UC visits in the first 11 months of operation but instead attracted more than 27,000 patient visits over that time. In 2012, its second year, it recorded more than 32,000 visits and will surpass that number in 2013.
"We evaluated the market share and we figured that even with the most conservative return-on-investment projections surrounding this proposal, it was still positive, so our risk was that it would be minimally successful," he says. "That would've been good enough for us, but it's gone gangbusters."
As a silo it is profitable, Phelps notes, but the intangible benefit to downstream service line growth has been its biggest benefit to the system.
"Many of these patients need additional care and follow-up, and some don't even have a primary care provider, which is another issue," Phelps says. "Referrals can be made directly to the services available on the campus, which has improved our service line market share in nearby geographies and, hopefully, we've found a better attachment for those patients who've gone without a PCP relationship."
Another area of projected growth is through Ridgeview's ACO strategy, something many, if not most, smaller organizations are still evaluating. Many small systems are trying to understand whether they are better off with their own such entity or as a partner with a bigger organization. Ridgeview plans to take its own ACO path.
"We've started an ACO through a wholly owned subsidiary of our health system," Phelps explains. "Worst case, we get into limited agreements [with payers]. The upside would be total cost of care contracts and conversations around changing the way we deliver care."
The ACO features relationships that Phelps characterizes as independent, but just short of ownership and joint ventures.
Phelps and Ridgeview have the inherent advantage of being low-cost providers, due at least in part to Ridgeview's historically less lucrative arrangements with payers, which he attributes to the fact that the health system does not dominate its greater market, while it has areas of real strength in more localized markets. But somewhat ironically, in an era in which demonstrating value should be of key importance, he now sees that low-cost culture that had been forced on his health system as a latter-day area of competitive strength.
Another growth prospect could be Ridgeview's recent acquisition of a critical access hospital that's 15 miles from the world-renowned Mayo Clinic "because we currently own that market share," Phelps says.
"Can we leverage the critical access market? We're actually looking at putting together the final pieces of a partnership with a postacute organization, so we think so."
The partnership will provide some elder housing and other transitional care for patients being discharged from that hospital.
"Again, that's back to the point about risk," says Phelps. "We've looked at that as an investment diversification strategy, run by someone who knows how to run these. We'll look at other opportunities for leveraging relationships, too."
Strategic partnerships, low-cost care
With the world-renowned Mayo Clinic on its doorstep, Ridgeview has to be innovative and wrap its arms around its local market, Phelps says.
He and his leadership team are considering other opportunities that he sees as higher risk, but are where he feels his health system may have an advantage thanks to its relatively small size and low cost.
"Unfortunately, we can hang our hat on being low cost. We haven't had the luxury of what the large players get in commercial contracting. There are models now that will hopefully let us leverage that through exchanges or even private exchanges such as the one we have with Medica [a health plan operator based in Minnesota]," he says. "We're the low-cost option. With our community-based ACO model, in order to have a larger economic footprint, we finally can leverage that position."
Other areas Phelps labels as high-risk include deals with physicians and decisions on whether to own or partner with existing physician practices.
"The higher-risk areas typically surround things like owning physician groups, which we haven't been shy to do in particular areas, but we have in others," he says.
Outside of primary care, he feels Ridgeview has done better in partnership with best-of-breed independent physician practices. Ridgeview has joint venture partnerships, which have done well by employing such groups as gastroenterology practice and an oncology group. Cardiology was another area where he says a system like Ridgeview would undergo a lot of unnecessary risk to start its own.
"What if you have bad outcomes?" he asks, for example. "All of a sudden no one's coming to your multimillion-dollar cath lab. So we partnered with one of the best groups in the market, and we're doing that through a partnership instead of organically."
Thanks to these growth and efficiency moves, Phelps see a bright and, critically, independent future.
"We're in a desirable mix of urban and rural markets that are part of the referral sources for the big ones," he says. "Everyone wants a piece of you, and it puts you in a good negotiating position. Our independence is the thing that got us here."
Reprint HLR0214-7
This article appears in the January/February issue of HealthLeaders magazine.
One DC-based physician says making house calls is the only way he can maintain his solo practice. Demand is heavy and his business is growing. Should hospitals get into this business line, too?
Could house calls be a major business opportunity for your health system?
It has been for Stephen Kinney, MD, who calls on the homes of dozens of patients a week through his own private practice, Metro Direct Care Medical in Washington, D.C. He provides same-day service and is available 24 hours a day, seven days a week.
Not that he's getting rich off his business model, for which he eschews commercial insurance but accepts Medicare. He isn't. But at about $200 a visit, he does make a comfortable living and says his services are less than many other physicians in his area that are performing the service.
Could this model work for a large-scale implementation by a medical group from a hospital or health system?
Well, it depends. If you are far along in your journey toward value-based care, I don't see why not. Kinney says he's been able to keep dozens of patients out of the hospital in his time doing house calls, and keeping patients from needing high-cost care that a hospital provides is a key metric for success in risk-based contracting.
Like many physicians, Kinney grew tired of dealing with work in a traditional physician practice, where he took insurance and had to see patients every 15 minutes in order to make ends meet.
"As I got older I felt like I needed to spend more time with my patients, and I was getting more worried I might make a mistake in that environment. I got the idea of doing house calls," he says. "The number one reason was I'd have my own business and schedule patients as I want to."
Startup costs were very low. Although he has an office location in an office park, he doesn't see patients there.
"It's just an address," he says.
Reduced Hospital Admissions
Through home visits, Kinney says, he gets much more information on how a patient lives day-to-day—critical information that's key to whether they are likely to need home health assistance, better chronic care, or other needs that don't fit into the medical spectrum, but that could affect whether or how quickly they will recover, as well as affect whether they might need to be hospitalized.
"I see how people live, and I'm shocked and amazed day-to-day," he says. "I get to know family members and understand better why a person has a problem, where in an office setting you don't get to see that."
He also says he believes that the aging of the population, among other factors, is driving a trend toward more interest in house calls. He says he's amazed at how well he's kept "really sick" patients out of the hospital compared to his previous work in an office-based practice setting. That alone would be key to any hospital strategy that might incorporate house calls into the management of care for the chronically ill.
Kinney's virtual office is minimalist, but incorporates an electronic medical record system as well as several time-saving tools, such as temporal artery thermometers and pulse oximiters for oxygen saturation. He also does Skype calls on some patients. He keeps patient charts on his home computer and links it with an IPad with keyboard to see patients.
"I can do this all mobile and it works pretty well," he says. "It's really logical and all the charts are in front of me."
He says that thanks to his technological helpers, he can do almost everything at a patient's home that he could in the office.
Limitations Are Minor "I can't do GYN in house calls and I can't do a 12-lead EKG right now, but that's about it," he says. "I'm sort of nurse and doctor. Blood work is an issue, but I have a phlebotomist who comes to the patient's home who will do labs. I am also limited with urine cultures."
Still, those are minor issues, for the most part, and he thinks that they will be surmounted by technology in time.
What Kinney is doing is not a concierge practice, with a set amount of patients, and an annual fee.
"Right now, I don't do that," Kinney says. "I don't want to make it so people who don't have money can't afford to see me."
The question for healthcare leaders, however, is whether this model is viable in larger practices or even hospital-based practices.
Although I've found little research on the issue, the house call model appears to be a profitable line of business for a hospital or health system. The key, it seems to me, is whether the underlying hospital or health system has reached the tipping point on transforming from volume-based to value-based reimbursement.
Most are not there [yet], but once health systems become responsible for the care of populations, I can envision how it would be cost effective to deploy a certain number of physicians, care coordinators, and physician assistants, not to mention lab workers, to work in a mobile setting. Some systems are dabbling in mobile medicine already, but I have not seen many who incorporate house calls into their service repertoire.
Still, it seems to me that if you're responsible for keeping patients out of high-cost areas of care in the future, this could be a worthy investment.
Keep the Basket As Full as Possible
One health system COO recently described to me the way he got his employees to understand the shift that is going on in medicine by using a basket as a visual aid. He placed an empty basket on a table and said, "this was our job in the past: There's an empty basket that represents revenue that needed to be filled by the end of the year. This is our job for the future: The basket is full of money at the beginning of the year, and after you treat all the patients you're responsible for during the year, we get to keep what's left."
It's a great, simple analogy. Hospitals and systems that are well on their way to transforming from volume to value, might have house calls in their future. Though Kinney's business is supported by his location in a big urban market with lots of international travelers and others who have money but not insurance, the economics behind house calls might still be very cost effective in a closed system.
At least you should investigate whether it's a viable option for at least part of your patient population.
Kinney is convinced that house calls are a growing business. And it will continue to grow with or without you.
"I won't go back unless I find I can't survive doing this," he says. "I'm not making a huge amount of money, but every month I surpass the month before."
