Here's an easy opportunity to lead. Develop an iron-clad flu vaccination policy, and require your employees to get vaccinated unless they have a legitimate religious or medical exemption.
Sound draconian?
To many, it once did. But in today's healthcare environment, we're supposed to be about putting patients first. If a particular treatment proves more efficacious than another, or more efficacious than no treatment at all, it should be implemented outside any countervailing evidence.
The only reason requiring flu vaccination is perceived as different is that it involves medical treatment for the people providing the healthcare, whereas, in most cases, it deals with the people who are receiving it.
That's not a good enough reason not to do this.
Yet still a large percentage of hospitals and health systems rely on voluntary vaccination programs for their employees. On average, 98.8% of people working at healthcare facilities that require vaccination are in fact vaccinated. But less than 70% are vaccinated at facilities that don't require it, even among those that offer free vaccinations and personal reminders to employees.
As someone in the latter stages of recovering from a flulike illness, and as a relatively healthy person, I'm shocked that any organization that purports to be in the business of helping patients would not mandate flu vaccines for their employees who come in contact with them.
It's becoming more common to do so, but it's far from universal.
Again, I can't think of a reason why it isn't mandatory, and for the record, neither can Marjorie Bessel, MD, who is chief medical officer at Banner Health's Arizona East region. Banner, as you might imagine, does have a policy on mandatory flu vaccination for employees who come in contact with patients at any time, and that policy says you will be vaccinated.
"Getting out of jury duty is probably a little bit easier than getting out of this," she jokes. "The policy is very clear about what the medical and religious exemptions are and we want to make sure we apply those consistently."
To that end, a committee reviews all the religious and medical exemption requests and makes determinations quickly. Those who request an exemption that don't fit the requirements are allowed to provide any additional information that might exempt them. Otherwise they must comply with the policy by getting the shot, says Bessel.
And that's by Dec. 1, which for Arizona, according to the Centers for Disease Control and Prevention, is the start of the flu season.
This policy didn't just come from an executive decree, however. The requirement is couched in the very reason most people choose to work in healthcare, says Bessel—to improve health.
"There are a number of other organizations that have done this previously and we have done a lot of reading and research about this by speaking with them to get their lessons learned," Bessel says.
"One of the main points of emphasis of the campaign is that it's about doing the right thing for the patient. At minimum, doing the right thing for the patient includes protecting the patients who come to our facilities for care."
Like anything else, for some employees it's not an easy sell, Bessel says. "Some need a lot more information and communication." To that end, Banner has set up numerous ways to make it easy for employees to comply.
They have created a resource center on the company intranet that includes talking points, exemption forms, and links to other outside organizations that support the policy. Banner's mobile clinic comes to them to give the flu shot, and the vaccination costs nothing.
I'd love to write more, but I still need to go get vaccinated myself.
Besides, it's so simple, and you're in charge. Why not just do it?
This article appears in the September 2012 issue of HealthLeaders magazine.
Patients would like to think that their providers won't hurt them, that providers are coordinating their care, and, in an environment where patients are paying more out of their own pocket, that providers aren't wasting their money. Those are several factors that are supposed to improve under the medical home philosophy, but there are others that patients care more about—notably, their satisfaction. Economics is one reason hospitals and physician practices often evaluate the medical home somewhat differently. Medical home certification is a designation to be sought for prestige and reimbursement incentives from payers. It's also an advertising slogan. It's a way to achieve uniform clinical standards. But does something get lost in translation? Some leaders think so and are working to ensure that what the patients experience and internalize about their medical home matches what the organization thinks it's delivering.
Gradual transition Thomas Jefferson University Hospitals in Philadelphia began a transition to the medical home framework in its owned outpatient medicine group about two and a half years ago. Barry Ziring, MD, director of the division of internal medicine at the three-hospital system, has led much of the transition and says the impetus began with a desire to change the way the patient interacts with his or her primary care provider, but was also fueled by the knowledge that many of the highly trained, highly paid employees in its practices (especially physicians), were spending valuable time on patient needs that had little to do with actual clinical care.
"Most patients were seen by a physician for a 15- or 20-minute office visit and it was essentially the physician's primary responsibility to take care of the majority of the patient's needs," says Ziring. "Those needs are medical, but they are also psychosocial and administrative and insurance. A 15-minute visit isn't sufficient to have all those needs addressed—the problem being that the medical needs came almost at the end of the appointment."
In fact, that was only one problem among the dissatisfiers experienced by both patients and providers. Recognition of this dissatisfaction led to fertile ground for planting the seed of change among practitioners. In fact, the overriding goal in the evolution of the medical home, says Ziring, is to have everyone at the physician office functioning at the top of his or her license—that is, that they perform the work they were trained to do, work that no one else can do better. That's simple to say, but much more complicated to administer, especially in organizations where patients have come to expect the physician to address all their needs, and where practices may not have the expertise or the mix of specialized employees to provide the other services patients expect.
"That means many aspects of the patient's care are provided by people who are not physicians," Ziring says. "We all know that in the current economy, medicine is at best a zero-sum game, so it's not an opportunity to have physicians necessarily spend more time with patients. Instead, we can make use of everyone in a better way so the patient gets more quality time with their physician."
Jefferson has achieved Level 3 status as a patient-centered medical home—the highest designation from the National Committee for Quality Assurance, which certifies medical homes nationally—but the process takes some getting used to, by patients and providers alike.
Patients are finding they're summoned to previsit planning meetings that might involve lab visits so results are ready by the time the physician appointment takes place. Such meetings might also involve a consult with a social worker, a nurse, or nutritionist. And with an electronic medical record populated with the latest results, visits with the physician are more productive and offer fresh data for the doctor to review with the patient.
"Instead of the patient getting an appointment that's 20 minutes with one person, they might get an hour in sum total with others," Ziring says.
But do the patients like it?
"We're starting to measure that but at the moment, it's not something we keep particular track of," Ziring says. "But the physicians get the sense that there's improvement in patient compliance and satisfaction. And I should say that in practices that have been doing this longer than we have, when they measure physician and staff satisfaction, that improves as well. So happier doctors …"
And the doctors, unquestionably, are happier for the transition, Ziring says. That has also eased the transition to new work protocols, and other members of the care team, such as case managers and nurses, have direct contact with the patient in an advisory role.
"For the most part, we here found it to be relatively easy," says Ziring of the transition. "But that may be in part because we had a group of physicians who really felt overburdened and felt they weren't providing the best possible care they could. It's an evolution and nothing succeeds like success, that is, if patients are happy and docs notice over time that their health improves. We're still implementing some of these changes, so it's a very gradual process."
Quick, big changes
Affinity Medical Group—a team of 250 healthcare professions and an insurance plan that is the physician group subsidiary of Affinity Health System, a three-hospital regional integrated delivery system based in Appleton, Wis.—started making the transition to the medical home philosophy about three years ago too. Its changes have been dramatic.
The effort started with two pilot programs. In one, leadership targeted an existing 400-patient practice that had big promise for patient growth. Interestingly, leaders didn't require existing workers to stay for the big experiment. In fact, employees were required to reapply for their jobs at the clinic.
"In that case, we basically started a new practice," says Tim Loch, senior vice president and chief operating officer at Affinity Medical Group.
Affinity took another existing practice that already had a 1,000-plus patient panel and implemented the medical home transitions there as well. There were big changes, which included keeping close track of metrics such as patient satisfaction, access to specialists, and the length of wait to get appointments. But the biggest changes were in work patterns and programs, says Loch.
Subsequent programs include integrating pharmacists into the clinics for direct consults with physicians and patients, and case managers come to the clinics regularly to help coordinate inpatient and outpatient care. Affinity even has developed a house-call program that not only provides care at home, but serves the additional purpose of assessing the patient's home situation and environment. That's probably where the change in routine is most obvious to the patient, says Loch, but how does he know patients are improving in outcomes and satisfaction?
"We put the care back closer to the patient and the primary care provider," he says. "Everything else has metrics."
And the metrics are impressive, especially in financial terms. Affinity's decision to adopt the medical home was perhaps easier to make than for other providers because its own health plan was involved. Any savings would be guaranteed to return to the overall organization.
"For two pilots the health plan invested $300,000 and got a return in excess of a million. That's proof of concept," says Loch. "Not every practice is like that, but those trends are in place and show medical costs are down and quality and patient satisfaction are up."
But even more impressive have been the cost results. Affinity broke out its outpatient costs into primary care, specialist care, and overall outpatient costs, and while the non–medical home practices' overall costs rose 9.7% over two 12-month periods in 2009–2010, those with medical homes rose only 0.62% during the pilot period. In its component parts, specialist care costs dropped 11.97% among medical home patients while rising 8.51% among non–medical home patients. When including both inpatient and outpatient cost information, the results were even more dramatic. Inpatient costs for patients in the medical home practices dropped 43.66% over the same time period while they fell only 6.38% among non–medical home patients. Overall, costs dropped by 14.22% among medical home patients while they rose 6.6% for non–medical home patients.
With results like that, the pilots are no longer pilots, and all of Affinity's owned practices have adopted the medical home philosophy, and all have received Level 3 designation from NCQA. What was the key to the successful transition from a senior leadership standpoint?
"From senior leadership, you're at the point where you've got to believe in it and you're moving forward," says Loch. "Quit questioning if this is where it's going to go."
Do the patients like it?
Believing in the changes from an executive and clinical point of view is one thing, but the success ultimately rests on whether the patient finds the changes to be an improvement. "We struggle with that because a lot of the work for the patient is done in the background, and it especially comes into play with chronic conditions," says Jane Curran-Meuli, the regional administrator for primary care at Affinity Medical Group. She says that care conferences, behavioral health, and automated outreach through Phytel (a Dallas-based company that provides Affinity a registry that uses evidence-based chronic and preventive care protocols to identify and notify patients due for care) offer multiple opportunities for providers to proactively manage patient care, which improves patient satisfaction and outcomes. "Those who have those conditions certainly see the difference."
Some of the things patients notice include turnaround times for lab results, and how quickly someone at the practice gets back to patients who have called in with a question, says Karla Repta, director of patient care services at Affinity Medical Group.
"The processes have really tightened up those time frames so patient experience is more positive than it was," she says.
Nine out of 10 Affinity patients would recommend the medical home format to their family and friends.
Loch says that measuring the impact on the patient is educated guesswork, and the metrics bear out that patients are generally more satisfied with their care, and costs per patient are going down, so that's good enough for him.
"We evaluate some through our marketing, but we were first out in the market telling people what a medical home is. Everyone's now copying that sell."
Affinity also recently hired a "connection specialist" to make the medical home case directly with employers. "She's talking about how things work, how we connect those with chronic conditions, and she's extolling the virtues of medical home. She's only been here two months, but it seems to be catching on."
One local employer has evaluated all local primary care providers on a 100-point checklist, says Loch, and "they're actually paying the employees and us more to take new patients because they want their employees to come to our clinics."
Reprint HLR0912-5
This article appears in the September 2012 issue of HealthLeaders magazine.
You might remember Saint Anthony Hospital from a story I wrote in 2010, when the hospital was executing an exit from its then-corporate parent, the nonprofit hospital giant Ascension Health. Even at the time, the hospital and its leadership were swimming against the tide of consolidation, which as many of you know, has only picked up speed since.
If the future is decidedly murky for standalone community hospitals, it is murkier still for standalone community hospitals in economically depressed areas such as Saint Anthony, a 151-bed safety net hospital in Chicago's South Side.
But instead of looking to ingrain itself even more deeply in the safety of Ascension's size, Saint Anthony was looking to strike out on its own.
By the CEO's admission, it wasn't being forced out. Guy Medaglia had to do a sales job on both Ascension and his own local board that going it alone would work after 6 years as a unit of Ascension.
So far, so good.
Saint Anthony reported a roughly $3 million net margin on total revenue of about $103.5 million in 2010, the latest period for which information is available.
But Saint Anthony needs a replacement hospital. There's money and vision to do that by 2016, says Medaglia, but the new facility will contain a lot more than a hospital, thanks to his enterprising vision and the cooperation of city officials.
In fact, it will contain one million square feet, retail tenants, a hospitality center available for community groups to rent, a day care center, an outpatient and specialty clinic, an education center, a recreation center, a variety of wellness programs aimed at the community, and a charter school.
And, oh yes, that new hospital.
"We really don't want to make this strictly a hospital project. It truly is a community campus initiative," says Medaglia, whose entrepreneurial vision was developed earlier in his career as an executive at Sara Lee, and later as a consultant at FTI Consulting.
It all sounds great for a new hospital campus in, say, Beverly Hills, or maybe Scottsdale. But maybe not the South Side of Chicago.
On one side of the new 11-acre site, home for a now-closed trade school that the city of Chicago was happy to sell, is what Medaglia calls a "food desert," and the other side is plagued by what Medaglia calls national gangs: the Latin Kings and Satan's Disciples. Hmmm.
Medaglia insists the new "community campus" will be financially self-sustaining, and that any profits received from tenant rents (Saint Anthony will also pay rent to the corporate parent, Saint Anthony Ministries) will be plowed back into community programs that at least tangentially will help improve the area's health.
"The challenge was going back and figuring out what would need to happen to create a viable entity and expand our current services, some of which are not healthcare-related, and make it sustainable," says Medaglia.
The idea of a vertically integrated private/nonprivate partnership came into being as Medaglia held conversations with local aldermen and the city's mayor.
"By creating this campus and providing services and using lease money from these services, we can pay for programs that aren't funded in the current healthcare environment," he says.
As part of its due diligence, Saint Anthony Ministries, a holding company that owns the hospital and which will operate the campus, worked with community leaders to find out what they needed that wasn't currently being offered in the area, and also worked with Jones Lang LaSalle, a company that manages retail malls, to vet and design the concept.
Additionally, it solicited philanthropic interests who said they would donate to a concept like the community campus where donating money for a replacement hospital would be a tougher sell, Medaglia says.
The model attracted interest from academia. It was recently the subject of a research study conducted by University of Nebraska Medical Center College of Public Health, the University of Nebraska-Lincoln College of Architecture, and HDR Architecture to help Saint Anthony Ministries better understand the needs of the Southwest and West Chicago area community.
Researchers employed several tactics to ensure a complete representation of the population, including key informant interviews, a community cross-sectional survey, focus groups and a spatial analysis with the Geographic Information Systems analytical tool.
An April whitepaper details the study and affirms that the campus "represents new social, economic, education and wellness opportunities that can significantly improve the health and quality of life of local residents."
Of course that is far from guaranteeing financial viability. But Medaglia says he had little choice, because the economics of building a new safety net hospital in a declining reimbursement environment most certainly make that proposition financially unviable.
"It's just not viable to build a safety net hospital today," he says. "I would have been irresponsible to say, 'I'll put up a safety net hospital.'"
Still, many are skeptical about the prospects of such a project, which is expected to open at the end of 2016.
"There have been many disbelievers," says Medaglia. "I could fill up my office with those people. But I really believe this concept can be replicated in New York, Boston, Pittsburgh, Philadelphia or LA. It's something that can be duplicated, so I want it up and running right so other cities can use it and copy it."
He could also probably fill up his office, and more, with the people who will be rooting for him.
When a possible heart attack strikes, time is of the essence. Quick diagnosis of the patient's status and needs while in transit can make the difference between life and death—and between a lengthy hospital stay and lengthy recovery. The problem is, it's not always that easy to tell if someone is having a heart attack.
Many, if not most, EMS providers, as independent entities, simply act on their own, do their best to stabilize the patient based on the information they are able to quickly obtain, and deposit the patient at the hospital, at which the emergency team takes over.
Often, EMS teams are not aware of some of the most current research on patient symptoms, don't have the ability to contact physicians at the hospital where the patient is to be delivered, and sometimes they simply have poor relationships with the professionals on the other end of the trip.
Derrick Suehs, chief quality officer at Crouse Hospital in Syracuse, NY, who knows such problems can cause a cascade of needlessly negative events to grow larger, decided to do something about one aspect of the problem at his hospital.
"Historically hospitals have thought of themselves from an inpatient point of view," he says. "They haven't understood the whole continuum of care to the community. But as we get closer to understanding how delivery of care and accountability are changing, we are redefining our borders and thinking differently."
Indeed they are.
It started about a year and a half ago with an attempt by Crouse and Suehs to improve the hospital's emergency department patient experience. They focused on former patients and recognized that EMS services in the area, despite being completely independent from the hospital, were key players in the delivery of the hospital's emergency services.
Suehs facilitated "listening sessions" with 10-12 different EMS providers from central to upper New York. He asked them questions about how the hospital interacts with them, what it does well, what it doesn't do well, and what they wished the hospital would do that it didn't do currently.
The conversation was enlightening and eye-opening, he says. He heard some difficult comments:
The ED staff was rude.
It was taking too long to offload the patient into the hospital.
The physicians didn't communicate very well with the EMS providers. They never found out what happened to the patient after they'd left.
Suehs and others representing Crouse in the listening sessions promised to work on those issues. The collaboration could have ended there, but as relationships developed with those in charge of quality on the EMS side, they thought they might be able to make a bigger difference.
Suehs got a meeting with the chief quality officer of the largest EMS service in the area. What came out of it? "What if we actually did a quality initiative together?" Suehs says.
The biggest area of opportunity, he explains, involved cardiac care, simply because those exhibiting symptoms of cardiac distress were the lion's share of those transported to the hospital for treatment. At the top of the list was finding a way to improve communication between the hospital and EMS providers so that patient care could be improved.
Along the way, they developed an entirely new treatment protocol.
"All this is being done simply by talking between the ED physician and EMS transporters," Suehs says. "Cardiologists can determine in real time what condition the heart is in and be prepared for that diagnostic event.
Improving communication is one thing, but here's where it gets really interesting: Suehs and his colleagues took a close look at the most serious and significant heart attacks and studied the use of EKG leads.
It turns out that about a third of the patients who were actually having a heart attack did not complain of chest pains. Results showed that limiting pre-hospital EKG testing only to patients who complain of chest pain can significantly delay diagnosis and negatively impact treatment time.
As a result of this combined research, Crouse physicians and the EMS service decided that they should do ambulance-based EKGs on patients who complained of other symptoms besides chest pain.
"As a result, we changed protocols," says Suehs. "This is a way to find more effective ways to push treatment of the patient further into the field while they're en route."
As Suehs points out, there are a number of reasons to do this kind of work, but making sure care provided is efficient and as quick as possible will have a positive impact down the road, not only for the patient but for the hospital as well, as they are increasingly held responsible through a variety of mechanisms for longer than average lengths of stay.
"But the main beneficiary is our patient—that is, collectively ours—the hospital's and the EMS service's. The mental attitude dividing line is disappearing. They actually get to learn more from the physicians, who are taking time to teach them clinically what's going on with their patients, which makes them a better EMT."
As a result of the success of the cardiac program, Crouse is seeking a grant to do some of the same type of educational and research work for suspected stroke victims, Suehs says.
Given the amount of waste and lack of connectivity that plagues healthcare today, I can't think of too many better ways to spend a little grant money.
Over the years, healthcare has proved to be remarkably resilient against multiple attempts to control a supposedly unsustainable growth in costs. I say supposedly because costs keep growing so fast, and little seems to affect that trajectory even as we approach spending 20% of our GDP on healthcare.
According to the Kaiser Family Foundation, we now spend 10 times the amount we spent on healthcare in 1980. And although the rate of growth has ebbed and flowed, costs have always outpaced the growth in national income over that time period, and show no signs of ever growing slower than or even at the same rate as GDP in the foreseeable future.
Trying to slow healthcare cost increases without limiting services is like squeezing on a balloon. Squeeze reimbursements down in one area, and another one soon pops up.
But the rate of healthcare cost increase nationwide is a macro problem. Your challenge is managing a hospital, health system, or large physician group practice. That means your job is to grow the business—and let's not quibble about whether your institution is doing so only to maximize profits.
Yes, for-profit health systems are seeking profit first, and nonprofit health systems provide valuable and unprofitable services to their communities, but on the balance, you and many of your colleagues are out of a job when you can't grow the business or meet a targeted margin.
A big story in the New York Times has recently caught the attention of healthcare decision makers. Though it raises troubling questions about whether or not the for-profit hospital chain HCA has boosted profits at the expense of patient safety and quality—namely in the areas of dialysis and heart procedures in Florida—at least one of the tactics mentioned in the story just seems to make good business sense.
Here's the gist, according to the Times:
"In late 2008, for instance, HCA changed the billing codes it assigned to sick and injured patients who came into the emergency rooms. Almost overnight, the numbers of patients who HCA said needed more care, which would be paid for at significantly higher levels by Medicare, surged."
The way those two sentences read suggests that the hospital chain was up to something nefarious.
Now, I'm no defender of the sometimes-sordid way this corporation has conducted business over its long history. The $1.7 billion in fines paid to the government for tactics that took place under the leadership of former CEO and now Florida Gov. Rick Scott remains a giant black mark on its reputation.
Though legal, books and business school case studies could be written about the way HCA has used complex financial engineering to weave the company in and out of public ownership, meanwhile vastly enriching insiders as well as those who supplied it equity to undertake this bobbing and weaving business strategy.
But back to the billing and coding changes. What seems to have happened, at least on a grand scale, is that HCA got smart about how to better manage its ED and to better document the work its clinicians are doing on patients. On its face, what's wrong with that?
Let's be frank. Some of these changes, which have resulted in increased profitability, have been forced on hospitals and health systems through the threat of audit from both commercial payers and the dreaded recovery audit contractors authorized by CMS to review past cases. These RACs, as they are known, attempt to retroactively deny payment for poorly documented patient care. The reasoning is that such careful supervision, even retroactively, would cut down on Medicare fraud.
Perhaps the RACs have worked too well. In reality, many hospitals have done exactly the same thing HCA has—at least if they're paying close attention to the type of clinical documentation they need to be doing to avoid costly and potentially penalty-riddled audits later.
I talked recently with Gerri Birg, a managing director at healthcare consultancy Huron Healthcare, about changes in documentation strategies that hospitals have adopted in recent years in response to threats of audit. These are serious threats. In essence, improper and incomplete coding can result in the loss of payments already on the hospital's books—a huge threat to whether they will be able to carry on their missions going forward.
Over the past 12 years, Birg, a registered nurse and former administrative nursing manager at Henry Ford Health System in Detroit, has become an expert on clinical documentation strategies and consults with major health systems on how to do it better.
She says that in addition to the threat of audits, hospitals and health systems must be conscious of the fact that their quality and safety scores are generated directly from the codes applied to patients' medical records.
Inaccurate coding can mean hospitals get penalized once for not recording accurately the complexity of the treatment given, which may negatively affect quality scores, and they get penalized under fee-for-service payment by serial undercoding. Much of this undercoding stems from poor communication between physicians and coders, she says, and she works to fix that.
"Sometimes physicians feel they've told coders the story, but they do it in clinical and technical language," she says, meaning coders won't, and shouldn't, try to bridge the communication gap between what the physician knows he or she is treating but hasn't communicated. "The coder is very literal. If you think you've [implied] something to them, they won't code it. If you haven't said it in black and white, they don't assume anything. They can't. They can't put down something they think you mean."
It's a communication and education problem that when resolved, not only cuts down on the likelihood that hospitals will have to repay some of their reimbursement, but also increases their profitability—and the cost of healthcare.
"Sometimes multiple diagnoses aren't mentioned, but have been treated," she says. "We teach clinicians and coders how you document in a medical record to make sure you capture all diagnoses."
Many hospitals are putting case managers in the ER. Some of it is an answer to the RACs because they have picked up on medical necessity of admission to the hospital. Closer internal scrutiny of coding and the clinical processes surrounding it is all about appropriate admission, Birg says, because the hospital may not get paid if an admission is later judged to be medically unnecessary.
Indeed, much of HCA's recent profit gains, according to the Times story, revolve around its careful management of inpatient billing, specifically surrounding the reduction of costs in the ER, as well as careful triage of patients who, in HCA clinicians' determination, do not need emergency care and who can safely be sent to a less expensive care site.
It's undisputed that many uninsured patients use the most expensive area of care—the emergency room—as a de facto doctor's office, because they feel they have no other option. HCA will not treat those patients now unless they agree to pay in advance. My guess is that practically none of these patients elect to go that route when presented with the choice.
But in terms of profits, apparently, such measures amount to small potatoes compared with the changes in coding and billing that the company has encouraged.
Birg estimates that by using its documentation improvement programs, hospitals and health systems are "typically seeing a 3%-8% increase in their case mix. That can mean anywhere from a $1 million to $7 million annually."
Learning about the restrictions and what actually you're not getting paid for and putting processes in place to assist you so that at least you're getting the credit you deserve is smart business. If you don't do it, payers are happy to not pay you, says Birg.
It's up to you how far you're willing to push that envelope.
Already operating in one of the most labor-and capital-intensive of industries, healthcare leaders are caught at a critical strategic crossroads. As an army of payers arrays against the predominant fee-for-service payment system that has supported healthcare for more than 50 years, leaders can be paralyzed in determining how transformational they're prepared to be, and how quickly they'll take steps to get there.
And of course, by the time the right answer is easily apparent, it will be likely too late to make the changes necessary.
This is the key strategic issue facing healthcare leaders today: moving away from a system dedicated to paying for specific actions and toward paying for results.
It sounds simple, but only if you're looking at healthcare from the outside. One of the problems inherent in making the transition is that the entrenched business practices and operational imperatives that worked for one payment system will be huge disadvantages in the other.
Profit centers become cost centers. The pace of the change is uncertain. Capital and labor expenses need a fresh look under a different reimbursement scheme. And that's just the beginning of the transformation that so many healthcare leaders expect. Transforming too quickly can get you just as fired as not transforming quickly enough.
Timing, it seems, is everything.
Finding the answer to this question was the basis of a story in this month's issue of HealthLeaders magazine. Trouble is, I'm still not sure even now that I know the right answer on what the pace of change should be.
Perhaps there is no right answer.
"This is the biggest dilemma there is for hospital leaders going forward because it puts them between a rock and hard place," says Doug Fenstermaker, a managing director and vice president of healthcare at Warbird Consulting Partners. "The problem in the short term is that they need to begin preparing and working toward a number of complex issues—pay for value, and how that affects physicians in particular—that's transformational in how they're going to be paid going forward, and changes the mindset in how physicians will be dealing with patients."
Fenstermaker, an 18-year veteran healthcare chief financial officer, speaks from experience. He "grew up under capitation," and says much of reform is simply capitation under another name.
The difference this time, he says, is that in the ‘90's, only part of the reimbursement system was capitated. Government-based reimbursement was largely uncapitated—especially for physicians who, when working in the hospital, were paid fee-for-service, while DRG-based payments introduced some capitation to the hospital payment portion. All of this is to say that incentives weren't aligned.
They're still not, he argues, which is why as they become more aligned through payment incentives, leaders still have the difficult determination of how to change work processes just quickly enough to keep up with the staggered pace of change among payers.
"If you move too quickly to behave as if you're capitated and the rest of the world is fee-for-service, you go broke," he says flatly. In the same breath, however, he says, "but I think there's a way."
For instance, he offers up the Kaiser model, under which payer, provider, and hospital are under the same business entity. It can work, he says. But what about the vast majority of leaders at hospitals and health systems that have no hope of duplicating the Kaiser model?
"It's not so easy to do in communities where docs remain independent, and this is particularly true on the specialist side," he says. "They spend 90% of the money inside the hospital, and they're not thinking about whether there are less expensive alternatives to doing what they need to get done."
In the short term, he says, the majority of senior leaders he works with are trying to figure out a way to manage through on their own by cutting costs and becoming more efficient. And increasingly, their simple target is coming up with a game plan that manages their average cost per case to Medicare-level reimbursement rates.
"That's the strongest thing they can do in the short term," he says. "Some of the more strategically advanced systems are integrating clinical process improvement driven by the physicians as a way to drive down costs."
But for some hospitals and systems, this could mean a 20% or 30% adjustment to the revenues they are used to, including many of the top hospitals and health systems in the country—at least according to public opinion.
Fenstermaker says whether most or even many hospitals and health systems will ultimately be able to navigate such a drastic change depends on coordination of the shift between private payers and the government, although perhaps that's wishful thinking—sort of like betting that Congress will cooperate.
"The government and [commercial] payer side need to move at the same pace," he says. "If you have half on capitation but the rest is fee-for-service, that's going to create a mess. That's what happened in the 90's and it made HMOs fail."
A further shift toward paying for value will come with so-called bundled payments, though despite their prominence in public discussions and in industry circles such as HealthLeaders magazine, they have yet to be widely or even narrowly, implemented.
"The system has to change in this direction," says Fenstermaker. Combined payments will drive out costs…but unless the system gets integrated, where specialists' and hospitals' incentives are aligned, the whole thing will fail."
If you lead a healthcare organization that's constantly touted as one of the highest quality or most innovative health systems in the nation, congratulations. Just make sure you're not fooling yourself about why that's the case, says Nate Kaufman, managing director of Kaufman Strategic Advisors, in San Diego.
Kaufman, who provides tactical and strategic advice to many of those very same systems, is counseling his clients about misattributing the underlying reason for their success to patient care or innovation. Rather, he suggests, success comes directly from the fact that they are currently able, through their market dominance, to leverage much higher rates of reimbursement than other institutions.
"The reason they're better is they're able to charge more than others," he says.
And that can't continue, he argues.
"It's funny when politicians hold out certain health systems as the model of the future only to find out later that they're getting reimbursed at level that's 60% more than the average hospital," he says. "I don't think that's universally known."
But so what? Of course it takes money to invest in employing physicians, expanding your business footprint outside the traditional hospital-centric healthcare model, and in obtaining the most advanced clinical equipment and services.
And of course, in the largely market-based economy that has been commercial insurance rate negotiation, hospitals and health systems can't be faulted, barring any antitrust enforcement, from driving the hardest bargain they can from the private market.
Just don't get too used to being able to do that, Kaufman cautions. High commercial rates fund innovation, successful employment of a large group of physicians, development of a high-functioning clinically integrated network, and the ability to become nationally recognized for excellence.
But a rude awakening awaits when rate regulation and tiering become more prominent, as he expects.
"This transition we're going through is messy and sloppy," Kaufman says, speaking broadly about the reimbursement shift toward value measurements in determining reimbursement. "Infrastructure costs for clinical integration and the employment of entrepreneurial physicians is a disruptive process and requires sloppy revenue to sort of smooth it over. My message has been that while we talk about ACOs and bundling as some future state, if you're not currently getting 150% of Medicare [from commercial payers], you're not going to be able afford the transition."
Perhaps Kaufman's clients are the ones I hear so often saying that they need to manage to operate at a positive margin even if all of their reimbursement were at today's Medicare rates of reimbursement. It gives them a simple touch point on a goal of removing waste and inefficiency, even if they are currently able to leverage much higher rates of reimbursement from their commercial book of business.
Many, according to the most recent CMS data book, Kaufman says, have already spent a lot of time and effort getting to that point. The book identifies 742 hospitals that actually made money on Medicare in 2010.
"The reason they made money on Medicare is that their costs were 10% below the national average," Kaufman says. "Their profit margin from their non-Medicare business was negative so they had no choice but to modify their cost structure."
Those systems are in good shape to weather rate controls that are already being implemented at the state level in many instances across the country, but many so-called high performers may not be as the practice becomes more widespread.
That's why Kaufman says that if you aren't getting substantially higher commercial rates than your competitors right now, it's time to start thinking about a merger, or at the very least a precursor to a merger that helps your finances survive a big hit to reimbursements. All the higher current commercial rates buy you is some indeterminate amount of time.
Some 37 states, according to Kaufman, already have some ability to approve requests from commercial insurers regarding premium increases, and more will start to do so. Massachusetts has been on the front lines of this trend most recently, but other states are broke too, and increasingly are getting involved when insurers insist that they need to raise premiums at double-digit rates of increase each year.
Executives should take an honest look at their level of preparedness, Kaufman says.
"If, in fact, they've eliminated waste and redesigned care, and taken all the steps necessary to be as efficient as they possibly can, they may be in good shape," he says.
Like consumers, employers are always shopping for a better deal. Nowhere is that more apparent than in shopping for health plans. Some employers change health plans regularly in search of ways to insulate themselves against the ever-spiraling costs of healthcare.
Ironically, that may be a big reason why health insurance premiums stay so stubbornly high, according to an award-winning paper by three researchers at The Center for Health Care Research and Policy, a joint program by MetroHealth and Case Western Reserve School of Medicine.
While executives at small companies might believe their escalating insurance costs are attributable to pre-existing conditions and bad lifestyle choices by their employees, the research shows that is only part of the problem.
An equally big cause of rising prices is the fact that insurance companies offer such a wide array of benefits, conditions, and stipulations in their small group health plans, that employers perceive that there is always a better deal available elsewhere. This contributes to a high churn rate for those companies that provide employee health insurance. Further, the high churn precludes investment in care management and disease management programs that require a long-term investment to pay off.
"We were interested in the fact that the turnover rates for policyholders were very high," says Mark Votruba, a Case Western Reserve School of Medicine associate professor of economics and medicine, and one of the paper's authors. "What kinds of disincentives does that create in financing care to improve health down the road?"
Quite a lot, it turns out, but there's no big surprise there.
Questions about disincentives to financing long-term health improvement led the authors to consider the source of the constant turnover, and that's where the research got interesting, according to Randall Cebul MD, director of the Center.
And it is probably the reason the paper won a prestigious Arrow Award from the International Health Economics Association for the best paper in health economics in 2011. Essentially, employers can't effectively shop for plans because the choices are so mind-bogglingly complex.
"There's so little transparency that I'm not sure that without a clear expectation of transparency and clear benchmarked parameters that employers can make an informed choice, to say nothing of the individual insurance market," Cebul says.
That's at least partially by design, they contend.
While about half of health plan turnover comes from employees changing jobs, about 40% of turnover comes from employers changing plans, says Votruba.
If the insurance market worked like it's supposed to in the textbooks, insurers would have to sell the same products at roughly the same prices as one another. Votruba contends that there is a lot of unexplained variation in premiums for plans that look to be similar, and that even if you control for everything about the plan and group being covered, you can't predict the premium.
In economist jargon, the shopping problem is called search friction, meaning there is a general impediment to consumers' ability to evaluate all the options in the market. Generally, and smaller hospitals and physician practices should recognize this in negotiations to cover their own employees, they see a random sample of the insurance offers available in the market.
But they don't know whether they got the best possible plan because they didn't see all the options and that leads to more turnover. In a future year, they might find a better option that gets them to leave their current plan.
"The really important thing is that when the sellers (insurers) know that employers can't see everything, they don't have to compete as hard on quality and price," Votruba says. "Instead of everyone charging the same premium for the same type of plan, insurers will choose a variety of different strategies. Some might choose high-volume, low-premium offer.
The other strategy is the high-margin strategy where you set prices high, and you know you'll lose business from the more well-informed, but you will pick up enough of the less informed. Your volumes will be lower, but you're receiving higher margins."
In some other countries, the authors argue, the government takes a role in the private insurance market to alleviate the shopping problem, "because they have prescriptions on what the basic plan must look like," says Cebul. "The downside is that if you think there are benefits to letting lots of plans proliferate, you're limiting innovation of new health coverage products."
They permit the sales of auxiliary plans, mostly bought by individuals, but the group plans are prescribed. The authors predict that state health insurance exchanges may begin to alleviate the problem.
"If exchanges work well, the difference in premiums should start to go down, so then it becomes a little less attractive to send workers to individual market," says Votruba.
If they don't work well, employers will begin to offload their insurance responsibilities to the exchanges, paying the penalty and forcing their employees to obtain their own insurance in the individual market, and right now, individuals get very bad value in the market," says Cebul. "Anything that fosters churn has got to be an impediment to long-term investments in health."
Chief medical officers have an extremely tough job these days. No longer are they mere figureheads, owing their position largely to being noncontroversial and easy to work with.
Instead, they are expected to bridge the gap between the clinical and the financial. And that's impossible without the backing of a strong CEO. No two senior executives' fates are more closely tied together.
Mark Kestner MD, now a consultant with Guidon Performance Solutions, has been CMO at many stops over the years, and he bears the scars. Included among them was a stint as CMO at Alegent Health in Omaha, where an attempt to standardize clinical work patterns and establish operational efficiency ended with a physician revolt and the resignation of both the CEO and CMO (Kestner).
Alegent, given the predominance of fee-for-service reimbursement, was ahead of its time, Kestner says. Now that reimbursement is truly being shifted toward performance measures. And now that hospitals are being penalized for readmissions, the message is a little easier to deliver, he says. Still, the transition is slow, because physicians don't often recognize that the change is permanent.
"In most communities, the hospital is the common space for people to establish their relationships. And if there was a governance of physician practices, it was generally generated outside a hospital. Does that structure serve us going into the future?"
In short, he says, no.
"If you look at an ACO model, you are trying to avoid hospitalization, but there's no common point for physicians to congregate to have some organizational structure. Yet the hospital is de facto the entity where physicians participate in a legislative process. If your government isn't going to serve you well into the future, then you better have a backup plan."
He says he's learned over the years to find a way to respect that traditional legislative body, but to also bring in other allied medical providers to establish standards of care in a multidisciplinary fashion.
"We can set up a neutral ‘Switzerland' which aspires to standardized care, order sets, and competencies, which will report to a regional clinical council of some sort which can be made up of nurses, leadership, the CMO and medical staff leadership," he says.
"That allows you to continue to respect the organized medical staff for hospital-based operations because most boards have delegated organizing quality to the medical staff. You have to respect that legacy entity."
Beyond that, for most community hospitals, Kestner says, the CMO has to be in charge of evidence-based medicine. The CEO can't be in this role, he says, advocating for a clear separation of powers. Rather, the CMO needs to help facilitate the development of these muitidisciplinary teams, clearing the CEO to focus on business models.
"I stay clear of business models. The best thing for CMOs is to always focus on the care delivery model and the evidence. That's supposed to be our expertise," he says. "If you aspire to that, people will respect you, however, that doesn't mean you won't be victim of politics."
CMOs can't be concerned with that, however. If you level the playing field among your nursing and pharmacy peers and ensure that physicians are part of a multidisciplinary team, that helps you weather political storms, he says.
If nursing and other leadership peers are behind the strategy toward standardizing care, then that structure can help break up some of the political storms that come along with the job. But he also counsels CMOs to know what it's like to try to do the job from other members' perspectives.
"What carries a lot of weight is knowing what the challenges are for the frontline staff. I need to be trained on it to have a constructive dialog with people," he says.
For example, one of his clients is in the middle of an Epic IT conversion and he's undertaking 45 hours of training on the system because the implementation is encountering more-than-anticipated challenges.
"That carries a lot of political weight too," he says.
Although Kestner, trained as a trauma and critical care surgeon, still practices on nights and weekends, he says the perception persists among other physicians that the CMO has permanently traded in his scalpel for a suit.
"When you stop practicing medicine, you have to build your credibility in different ways," he says, speaking of taking on Epic training, for example.
A CMO's job is fraught with political peril, because "providers have never been easily corralled into doing things a certain way, and they're powerful people."
The first thing the CEO should recognize is that they're asking the CMO to do a huge job and should make sure they have the resources.
"At Alegent, I had them," he says. "I had 150 employees who reported to me, and when I wanted to do transformational work, I could focus the workforce on accomplishing the task."The CEO also needs to make sure the organization is organized appropriately to address the future changes that need to occur, he says, and if not, re-delegate to accomplish those tasks.
Because everything in hospital databases has historically been financially based, that's where people most often start when they think of care standardization and resource utilization, but getting rid of the variance isn't the solution, he says.
Instead, you have to be able to provide a framework under which everyone agrees to how they should practice. Only then will you be able to start to address costs.
"I was working with a system and wanted to know how to manage their electronic medical records, so they went to see Geisinger (Health System, in Danville, Pa.)," he says. But likely, that was a mistake because most hospitals have nothing in common with Geisinger's organizational structure as an all employed-physician clinic model.
"Their governance and decision-making is altogether different and docs own their decisions because they have a vested interest," he says. "In a community-based system, most leaders haven't gotten over the idea that physicians are your customer. They're not. If you haven't bridged that gap, your solutions won't come from the Geisingers and Mayos of the world."
The real value of CMO is in determining where to be four to five years for now and creating the vision for clinicians to hope and aspire to, he says.
"The CEO can't provide a clinical vision any better than I can provide a financial or acquisition vision," he says. "The CMO has to be the mouthpiece for why care standardization is desirable and provide a vision of where we want to be a year or three years from now, extending care beyond the four walls of the hospital."
If they can do that, physicians will recognize them for something other than being a suit.
And one last piece of advice for both the CMO and CEO: "You won't get there without each other."
This article appears in the July 2012 issue of HealthLeaders magazine.
Decision-making in healthcare can be painfully slow, as any physician will tell you, because of complexity. Patient discharge, for example, can involve a coordination of gears that could make a clockmaker sweat, because of all the information that must be processed to coordinate care outside the walls of the hospital. But thanks to a flurry of innovation in real-time processing of data, many healthcare organizations, including physician group practices, are getting better—and quicker—at dealing with data.
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They're being spurred on in part because healthcare is beginning to deal with a shift in reimbursement toward one that rewards quality and disincents inefficiency and waste. Refreshingly, most hospitals and health systems have lots of data that can help improve outcomes and cut waste.
The problem is getting that data, which is often unstructured, into a format that allows clinicians to make decisions faster and in a more coordinated fashion. Leaders have long had difficulty with breaking down data silos and finding ways to use fragmented information. They strive to find ways to use leading, instead of trailing, indicators, so that interventions can be made not only in a more timely manner but with more predictive power behind them.
Catching up
Healthcare delivery organizations are 10–15 years behind other industries in managing and capitalizing on the data they own, says Greg Tipsword, healthcare provider practice leader for West Monroe Partners, a Chicago-based healthcare consulting firm. The need to catch up is urgent. Being able to do predictive modeling is critical to risk-based contracting because to reduce waste, labor-intensive interventions need to be used on a distinct group of patients who are most likely to exhibit a complex web of behaviors that, left unchecked, will result in the need for expensive care. The trouble lies in predicting who those patients are before they encounter those complications so that interventions can be made.
Numerous stakeholders need to be involved in defining the type of information required. This depends on the mission of the organization and many other variables, and should begin with the deliberative process, he says.
"The big challenge is getting data out of these systems, integrating it, creating information, and getting that into the hands of people who can do something about it," says Tipsword.
There is an abundance of data in healthcare, but in many cases, it's trapped in silos. That means it's important to develop a common enterprise goal—in other words, a governance platform that allows executives and clinicians to understand the organization's priorities as a whole. Tipsword calls it developing an information management master plan, and it's common, he says, to emerge with literally 100–200 needs for integrated healthcare data.
"How can we cut out nonvalue-add tasks and make sure they stay out? No two organizations are the same," he says, "but the organizations that are most successful at it have the highest levels of executive sponsorship."
Leadership at the top
Chicago-based Rush is a nonprofit healthcare, educational, and research enterprise consisting of Rush University Medical Center, Rush University, Rush Oak Park Hospital, and Rush Health, which is a network of providers including more than 800 physicians.
When the organization also owned a health plan, Rush Health's physician groups were bound together in a physician-hospital organization, and had to deal with capitation and risk on a daily basis. That required a huge amount of data processing power, but for the past 10 years, since it sold the plan, the organization has been operating largely on a basic fee-for-service model. As significant pay-for-performance incentives have been added to all of its payer contracts, says Rush Health President Brent Estes, its perspective on data management has changed significantly.
"We decided we needed to change the rules of our organization such that we required all hospital and physician members to establish data interfaces," he says. For its part, Rush Health built a data warehouse to process information coming from the practices, "so we could look at it on a holistic basis."
By integrating that data into one platform that is usable by all practices, the warehouse allows Rush to look at patient population health across every payer class, and allows it to implement P4P programs that are payer-neutral. It makes extensive use of prompts to help clinicians keep track of patients' needs based on practice-initiated treatment protocols.
"Without going down that path, we couldn't do a patient-centered medical home or get Level 3 NCQA designation for seven of our practices," Estes says. The Web-based patient registry that came from the collaboration among practices identifies populations within those practices and, critically—because of the expense of extra labor and monitoring required—which patients may require a higher level of intervention.
"We thought about a lot of these clinical data points in our master planning process before we spent a dime of money," he says of a process that dates to 2006. "That was an invaluable decision. We took a lot of time to engage people from different segments of the enterprise and [learn] what they would do with the tools."
Many such projects have a tendency to die on the vine in the face of inertia on user engagement. With its medical home and patient registry tools, Estes says, "we mitigated that to some degree because we engaged the clinical people in the design process of the registry tool itself before we did any coding work. The only way it's going to be a useful tool for them comes from asking them what they want it to do."
One of the issues that can affect adoption is the question of data quality, which can be a big problem for an organization like Rush because it includes a wide variety of clinics, some owned by Rush and some not.
"That has been a significant challenge to our physician practices, many of which are private and have already made decisions independently on EHR or practice management systems," Estes says. "They all have different functionalities and different usage of the functionalities. Just getting the data out and figuring out how usable it is has been a significant barrier."
Estes and his team are addressing that problem in a couple of different ways. The Rush hospitals in the PHO and all physicians employed by the hospitals are using Epic for clinical documentation, scheduling, and patient billing. That's not necessarily true of some of the other practices, but Rush is attempting to solve that problem through PHO structure, which allows the rest to get on Epic for essentially no cost.
"We will absorb the cost, but there's been a slow uptake for a lot of reasons," Estes says.
Some are suspicious, some are too busy, and Estes thinks that third-party billing companies can also be agitators against the change.
"We're not mandating you use the same business office and you can continue to do billing on your own," he says. "We'll even train the third-party billing company to do it. But the big thing is standardizing and shared clinical data. We're trying to show them the cool things we can do, but in many cases, the data they have is not in the state it needs to be."
There are opportunities for immediate financial benefits as well. Rush has built a surveillance application that allows executives to look at all claims across the network and see if they were paid as expected. "It allows us to calculate an expected payment," Estes explains. "This application allows us to aggregate all the issues and work with payers on behalf of all our members at the same time. For instance, here are the 200 claims we found that were not paid in the right way. That is a big benefit to any physician practice because it doesn't force them to chase underpays one by one."
Such underpays are small individually but big in the aggregate, he stresses. In addition, executives can look into productivity and outcomes both organizationwide and on the individual level. More important over time will be its ability to allow executives to monitor growth in terms of new patients over time, and per capita cost.
"Those will be two things important for me to focus on," Estes says. "If we want to take population management and get ready for
ACOs, whatever those end up being, or direct contracting or direct-to-consumer work, we need to focus on clinical data and change how care is delivered to reduce costs and improve outcomes."
Graduating from process to prevention
Ryan Leslie says success with population health strategies will hinge on enabling effective decision-making by clinicians, both in real time and for planning purposes. Leslie is vice president of analytics and health economics at Seton Healthcare Family, a 10-hospital system based in Austin, Texas, which has been working recently with IBM on the problem. Using the same software components that run the famous Watson computer of Jeopardy! fame, Seton is helping its clinicians identify patients who would benefit most from extra attention following discharge. The program started with congestive heart failure patients, and Leslie hopes to expand to other disease states.
"A lot of it is about enabling decision-making," he says. "It's taking the whole universe of information we have and cutting out what's extraneous and giving clinicians the information they need to make decisions."
Taking unstructured clinical information and connecting that with billing or administrative information and social demographic information, "you start connecting all those things together and you get a more complete picture of the patient as a person, rather than as a recipient of a bill," he says. "That's been the exciting thing recently. You realize that a patients' success or failure may not have to do with the care plan details or the clinical attributes of the patient as much as the social attributes."
The program is the backbone of the Seton Total Health Partners program, which, as Leslie explains, is an "extensivist" program, under which a physician outside the hospital works with a team of social workers, nurses, and others to visit patient homes and figure out what's keeping a patient from effectively following treatment protocols that will likely keep them out of the hospital. The problem is, as Leslie says, "you'll never have the resources to do that with every patient."
The software helps determine based on a host of combined data which patients are most likely to be rehospitalized within 30 days. Targeting the patients is like looking into a crystal ball. "If you target the wrong patient, you get all the cost and accrue none of the benefits. That's where we're taking this sea of information and filtering it to make it relevant, predictive, and actionable."
It's a task that's easier described than done. Much of the magic comes from natural language processing technology that integrates clinician notes from the patient's EMR—which are too often ignored by other clinicians because they are difficult to review in a timely manner—to be used to determine social or other difficulties that might result in a readmission. Combined with statistical analysis and data mining, such tools can provide a powerful picture of the patient's needs outside the hospital.
Seton chose to focus on CHF patients first because it already had clinical programs to address such patients. The disease is prevalent among the large number of uninsured patients it treats in Central Texas.
"Untreated, it steadily gets worse, but it's very treatable," says Leslie. "But like a ratchet, when it gets worse, you can't get people back to where they were before. We're trying to prevent people from getting sicker."
Next, Seton might look at using the technology to take better care of patients with diabetes or other chronic maladies.
"Now we have a number of these modular programs set up, and we're refining the process of using the predictive information," he says. "This particular work with IBM was a proof of concept of the value of our unstructured data and the value of the technology."
As one of a handful of organizations that are part of CMS' Pioneer ACO program, the work holds big promise for cutting treatment costs, he says.
"Pioneer is really putting a lot of this stuff on the line for us," he says. "We have to do this to bend the cost curve."
This article appears in the July 2012 issue of HealthLeaders magazine.