For many hospitals, radiology can be just another contracted service. But for those who recognize the impact prompt and accurate radiology can add value to all the inpatient services hospitals provide, retaining the right partner is imperative.
Standardization to minimize duplication and waste is critical, but radiology isn’t always where many healthcare leaders expect to find those opportunities. It should be, says Allen Tseng, chief operating officer at Memorial Hermann Memorial City Medical Center, a 444-bed hospital in the Memorial Hermann Health System in Houston.
Memorial City, like many hospitals, contracts with an outside radiology practice, in this case, Radiology Partners.
“We needed them to go beyond interpreting images correctly,” says Tseng. “A few years ago, we looked into deep dive in ER processes because we had experienced a downward trend in turnaround for our 70,000 annual visits. Radiology was one of the stakeholders in interpreting the data.”
Fixing ER and Imaging Bottlenecks
Throughput bottlenecks are common in ERs, one of the most complex and uncertain places to practice medicine. Each of those bottlenecks can increase length of stay, and thus the cost of a patient encounter. Memorial City contracts with several key physician groups, including anesthesiology, emergency, and hospitalists.
An ER process redesign about four years ago was revelatory for Tseng because in part because of that engagement from the radiology group. The group found that the ER was failing to accurately anticipate peak volume and low-volume times and staff accordingly, radiology included. Fixing that problem led to marked improvements in turnaround times, and thus, length of stay.
The data showed that deploying the right resources at the right times, from 11 a.m. to 2 p.m. on weekdays and 8 p.m. to 11 p.m. on the weekends could save plenty of time and money through better radiology throughput. Before that exercise, staffing was flat at all times, with only two radiologists assigned. But increasing radiology staffing during peak times and reducing it during slack times improved ER discharge.
“When they only had two radiologists assigned, it held up patient discharge through the ER, so to improve that, we moved some resources from other campuses at certain times to help process patients quicker,” says Tseng.
Look at Imaging Utilization
As the bulk of revenue becomes bundled and capitated in risk, hospitals truly become a cost center, says Tseng, and though that trend hasn’t yet fully played out, Tseng says when it does, “everything has to be more efficient.”
Radiology can play a key role in reducing costs through the quality and turnaround time on their reads, in making sure expensive tests aren’t repeated, and in helping the hospital reduce length of stay.
“Post-surgical follow up requires several images and if they don’t have their act together and it takes them a day and a half to do reads, we just added another half day or another day in length of stay,” Tseng says. “And it’s not just about turnaround, but quality, in whether hospitalists or specialists can get key recommendations. Radiology can be a strong tool for physicians to make decisions behind.”
What’s unique about the partnership with the 600-physician radiology practice, says Tseng, is that their governance model is locally led. Local departments have the ability and autonomy to make decisions without having to go through several layers of bureaucracy.
For example, Memorial City’s radiologists have developed key clinical recommendations on thyroid nodules and abdominal aneurysms, and have standardized reporting procedures.
“Before, every radiologist interpreted differently. Now that they’ve streamlined and use similar styles to save time, referring physicians don’t have to dig through seven pages of detail,” says Tseng. “That’s been helpful.”
Thanks to benchmark data across all the practice’s partners, radiologists can compare how the local practice is doing against others. This is especially valuable in ensuring proper patient follow-up after discharge. For example, by reviewing data on abdominal aneurysms, the practice found that 36 patients did not have proper follow-up care, which could lead to much higher care costs, suffering, or death.
“So, they’ve standardized that to contact referring physicians to ensure follow up exams,” says Tseng.
“That alone has saved lives and avoided huge costs down the road.”
Invest in Radiology Focus and Leadership
Leading operations at a high-volume surgical hospital, Tseng counts on this type of partnership behavior, rather than just hiring a group of physicians to perform specific tasks.
Memorial City does about 5,000 orthopedic surgeries a year, and that level of volume had started to crowd out the ORs. In part by analyzing data over two years, leaders were able to successfully lobby the health system to build a $30 million standalone orthopedic hospital.
Without prompting from Memorial City’s leadership, the practice recruited a radiologist who specialized in orthopedics from a major teaching hospital and had that person hired and trained in time for the new facility’s opening.
“This is what I mean when I talk about a valued partner,” says Tseng. “What was amazing about that was they knew we had invested quite a bit to build a nationally-recognized ortho facility in Houston and wanted their radiology capability to be as recognizable—someone fellowship-trained on ortho.”
In terms of advice for other hospitals, Tseng says now that he’s seen this type of behavior in action, “these relationships can be so much more than just transactional. They get paid to do to be true partners, so there should be an expectation that they are engaged in medical leadership, and contribute in areas where they can impact operations.”
The two health systems will finalize a strategic partnership in 2018 that should lead to a definitive agreement that would make DeKalb a part of Emory Healthcare.
A letter of intent between DeKalb Medical and Emory Healthcare is the latest strategic agreement as dominant healthcare providers in the state continue to stake out their territories in a rapidly changing market.
Healthcare in Georgia continues to consolidate at a furious pace, with Atlanta-based Emory Healthcare and Piedmont Healthcare competing for scale in the state.
The deal between DeKalb and Emory is the latest escalation of a partnership that has evolved over several years. The letter of intent the two organizations recently signed signals the beginning of the process to formulate a definitive agreement to bring the two health systems together under Emory Healthcare system. The two institutions anticipate finalizing the partnership in 2018, after receiving final approval from regulatory agencies.
“We understand the importance of both community hospitals and academic medical centers in delivering optimal care to our patients,” said Jonathan S. Lewin, MD, Emory University executive vice president for health affairs and CEO of Emory Healthcare, in a press release. “A partnership with DeKalb Medical will strategically support these efforts.”
DeKalb Medical is a 56-year-old nonprofit health system with three hospital campuses in DeKalb County as well as 50 DeKalb Medical Physicians Group offices in DeKalb and Gwinnett counties. Its medical staff includes more than 800 physicians in 49 specialties.
“We are excited about the future,” Robert E. Wilson, president and CEO of DeKalb Medical, said. “This partnership will strengthen our ability to continue to deliver high-quality community-based healthcare.”
Emory Healthcare includes the Emory Healthcare Network, a clinically integrated network with nearly 2,000 Emory and private practice physicians and seven hospitals in metro Atlanta, the Emory Clinic, the Emory Wesley Woods campus, 200 provider locations across the state, and nearly 60 urgent care clinics in metro Atlanta. Emory Healthcare is the clinical component of Emory University, and is part of the Robert W. Woodruff Health Sciences Center, an academic health center comprising hospitals and clinics as well as schools of medicine, public health, and nursing.
During recent roundtable sessions on innovation, CEOs say it can be done in healthcare, but it's their job to help remove the barriers.
Hospitals and health systems aren't typically known for innovation.
Incremental improvement: check. Making strides in healthcare quality: sometimes. Inefficiency and overregulation: Definitely.
Nevertheless, innovation can be found there.
We discussed innovation at the roundtable sessions at the sixth annual HealthLeaders Media CEO Exchange event in Austin, Texas, because we wanted to know how the healthcare industry's top leaders are setting the stage for improvement, such as new approaches to efficiency, quality, and overcoming its heavy regulatory burden, among other issues.
The CEO Exchange is an invitation-only event, and the folks who join us are the cream of the crop, people who aren't afraid to shake up their business models to better compete in modern healthcare.
The CEOs didn't fail to come up with themes, ideas, and suggestions to foster a work environment conducive to innovation. Below are some paraphrased thoughts those CEOs voiced during the roundtable discussions about what they think about innovation and why they are open to it.
Innovation comes from a relentless drive to make things better, but that drive has to be nurtured. Healthcare organizations are change-averse even though, in large part, their leaders feel they're moving forward at a pace they can't possibly keep up with. It's the CEO's job to nurture innovative thinking by finding ways to better communicate with employees. It's the CEO's job to make sure they don't feel intimidated, and if employees have ideas for improvement … leadership finds a way to say yes.
What differentiates an organization should give it a competitive advantage over others. Let innovation be one of those differentiators.
Innovation means looking outside the four walls of the hospital. Innovation is "out there," so to speak. One CEO says that at his organization, if they're going to invest in innovation, it's in the outpatient arena. To reinforce that sentiment, once a week, the leaders sit down and have a conversation about where to invest "out there."
Innovation, for some, is about redefining who they are at a brand, service offering, or mission fulfillment level by developing a direct connection to what the consumer is asking for. That's entirely new for much of healthcare services.
Innovation is historically something that's disruptive. People with great ideas define the organization. By bringing together people to brainstorm new ideas, the CEO doesn't necessarily develop a franchise in great ideas, but you set the stage as an organization to be a laboratory for this kind of work.
You can't necessarily be intentionally innovative, but you can set up groups of people to succeed in innovation. At its core, innovation comes from teams trying to solve a problem together. Groups bring a spark of creativity that isn't necessarily present at the individual level.
One CEO talked about how, in theory, they developed an "easy" button. If something looks feasible, safe, and has a limited financial downside for a pilot, they let those with good ideas try, even without a business plan. That releases other people's energy toward innovation.
The "easy button" is a great idea, but true innovation is anything but easy. Building a culture of innovation is squishy, murky, and can't be broken down into a database or spreadsheet. But as healthcare is increasingly counted on to deliver value, today's top CEOs know innovation is essential. And if they're not intimately involved in nurturing it, well, they're simply not doing the job they were hired to do.
There’s room to take share if you provide cost estimates for patients upfront. Only a quarter of providers are able to provide cost estimates, even though 91% of patients want them, and 47% would consider switching to get that information.
Healthcare providers could be missing out on a big opportunity by not providing cost estimates for patients at the time of scheduling their service. Not only that, but they’re providing a wide opening for others to take their market share by filling the gap in transparency. A new survey and study by Accenture, the global strategy and consulting firm, shows that only about a quarter of healthcare providers are now able to provide out-of-pocket cost estimates for patients, even though 91% of patients want them.
Providers shouldn’t be afraid of sharing cost estimate information—the majority of patients aren’t using it to shop around, but rather to better plan their budgets, and 60% of people who know their medical costs in advance choose to proceed with the service. But here’s where providers that don’t provide the ability to predict costs are vulnerable: 47% would consider switching providers in order to better understand their out-of-pocket cost responsibility at the time of scheduling.
Among the insights:
Nearly half (46%) of patients need up-front cost information for budget planning purposes and many (41%) have concerns about their ability to pay. This concern is highest among uninsured (61%) and Medicaid (59%) segments.
Three-fifths (60%) of patients who know their medical cost in advance proceed with the service, but roughly a quarter (23%) opt to delay care, rather than canceling or switching to a lower-cost provider.
About half (47%) would switch providers to understand the costs of services at the time of scheduling appointments.
Only 11% use this information to shop for better deals. More price shopping was reported for routine services, such as dental (40%) and vision (35%) but less for diagnostic testing (24%), chronic care (15%) and surgical procedures (13%).
Gen X and younger consumers are more than three times as likely to price shop as older generations (17% vs. 5%), a trend likely to intensify as younger consumers mature.
The full survey suggests that intensifying efforts in providing price estimates for those who want them would increase patient engagement and satisfaction, rather than shift business away due to sticker shock, and may help improve collections and reduce bad debt in the long run.
Is your hospital part of a health system? A turnaround and consulting firm's data suggest much of your organization's success can depend on just that one factor.
But it's rapidly becoming less so. Since I wrote this column years ago, the pressures on standalones have only increased.
Hospitals that are part of a system do far better financially than their counterparts.
"Over the past two years, we've noticed that the single greatest indicator of success for hospitals is whether or not they're part of a multi-hospital system," says Scott Phillips, managing director of Healthcare Management Partners, a Nashville-based turnaround and consulting firm that focuses on hospitals that are experiencing financial challenges and is led by experienced former C-level
executives such as Phillips.
"Just that one factor provides a bottom-line advantage of four to nine percentage points [in profitability], which is almost insurmountable."
Means to an End
Not that financial success is the overarching goal of healthcare—especially in nonprofit or government-owned healthcare, which still makes up 78.7% of hospital systems, according to Kaiser Family Foundation. But as I've heard countless CEOs say, "no margin, no mission."
As a standalone hospital, you're distressed almost by definition, Phillips says.
The firm's data, based on Healthcare Cost Report Information System (HCRIS) data from more than 200,000 Medicare Cost Reports filed by hospitals, nursing homes, home health agencies, and other providers since 1994, supports this contention overwhelmingly. Standalone hospitals still represent roughly a third of hospitals and 30% of the beds, but they tend to be small, and are disproportionately government- or health district–owned.
When you look at standalones closely, Phillips says, usually they're not in a position to choose their own market in any way, and single-market nonprofit systems haven't wanted them as acquisitions for those reasons. This dynamic creates an increasing canyon between the so-called "haves" and "have nots."
"For the have-nots, life is getting increasingly difficult," he says. "Will many, or even most of those hospitals continue to operate inpatient beds?"
Maybe they shouldn't. And maybe they should instead switch to providing ambulatory health services.
Many standalones have such an increasing disadvantage, he says, that they, and healthcare costs generally, would be better off if they could convert. But many can't afford the investment to do so in either dollar terms—access to capital—or in political will.
"If they can convert to diagnostic and ambulatory centers, they would be very busy," Phillips says.
To convert into an attractive ambulatory center is a $6 million to $10 million investment, he says, and most of them don't have that money.
Phillips says HMP's data shows that every year in the system hospitals, particularly the larger hospitals, management keeps getting better. Hospitals in the top two quartiles keep getting more profitable in spite of the uncertainty around the changes in healthcare's business model from volume to value, he says. They're getting that principally through greater economies of scale but they are extracting more profitability at the expense of their competitors.
One of the bigger differentiators in terms of profitability is in labor efficiency, he says, the biggest element of cost.
"There's a pretty dramatic difference in labor costs between hospitals that are in systems than are not in systems," he says.
Government-owned hospitals are further challenged in this regard in the form of pension costs.
Secondly, standalone hospitals are in 90% of the counties in the U.S., many, if not most, of which are experiencing loss of population, he says. People are moving into cities, not into the hinterlands.
"Healthcare, whether you're talking nursing homes or hospitals, is essentially a fixed-cost business," Phillips says. "If your population is declining, your demand for services will decline. So the best you can hope for is an increasing share in a declining market."
That leads to declines in inpatient utilization, and for a few years, there's been a dramatic shift from inpatient to outpatient. Another distinguishing trend is that standalones are well behind the curve in reinvestment, particularly in new clinical technologies and information technology.
Phillips says rural areas could be better served by investing in remaking many hospitals into outpatient centers and taking advantage of telemedicine, where state laws and regulations have not made that impossible or impractical.
"It's insane that state policymakers have not opened that whole market to telemedicine," he says. "It could be a tremendous antidote to many of the problems these hospitals have."
Telehealth has moved from a novelty to a mainstream access point. But questions remain about the limits of its reach and effectiveness, and, most problematically, its reimbursement.
Despite a catchy name, telehealth isn't exactly cutting-edge technology. Really, very few of the components needed to make it work are in the vanguard of innovation for either healthcare or technology.
But to think of telemedicine in healthcare as a technology story really misses the point. In fact, telehealth is more than that: It's critical and strategic.
Telehealth plays a key, if not starring, role in a continuing saga familiar to senior healthcare executives nationwide: the quest to meet the so-called triple aim of quality, access, and reduction of unit costs.
Bound up in its promise is greater efficiency, patient convenience, and, to a certain extent, competitive advantage.
Many telemedicine strategies begin with the basic goal of providing patient services more efficiently to populations that are not in major towns and cities.
That's why much of telemedicine's growth has come not from major teaching hospitals and urban populations but from rural facilities that have trouble recruiting specialists to practice in their area, and thus face losses of patients who must often travel to more densely populated areas to access the care they need.
"What we're trying to do is a different move. Most big medical centers are trying to get as many patients as they can in their own medical center. We are trying to keep them as close to home as possible and keep them out of ours."
While many regional health systems are still doing well financially, the hospital concept, with all its fixed-cost infrastructure, is under a lot of pressure, for independent hospitals in particular.
That's true even if they are in locations with a desirable patient mix, says Greg Hagood, senior managing director with Evanston, Illinois–based middle market investment bank SOLIC Capital, who has worked on more than 50 healthcare-related M&A transactions in the past decade. Hospitals in secondary and rural markets face even more margin pressure.
"One area where they really struggle is in recruiting new docs," he says. "Either they have to overpay for specialists or partner with regional health systems, which means the higher-acuity volume they used to treat locally migrates to the large, centralized regional medical centers."
Investing in telehealth is one way to combat those losses. Rural hospitals can partner in areas such as telestroke, teleneurology, and even cardiology and psychiatry so that they can consult with top experts in the nation, while patients in many cases are able to get treatment close to home.
"[Hospitals] will eat the cost of the consult, but they get to keep the patient at the local site," says Hagood.
Hagood references one of the bigger challenges for telemedicine adoption—low reimbursement, a key strategic pain point for both physician practices and health systems.
In closed ecosystems, where a health plan and health system are part of the same parent organization, most of telemedicine's reimbursement roadblocks are essentially eliminated.
In large part, that leads to proclamations such as Kaiser Permanente Chairman and CEO Bernard Tyson's, who boasted to a Salesforce.com conference in late 2016 that 52% of the health system's 2015 physician-patient interactions were done through various telemedicine modalities.
But most hospitals and health systems are far from the type of integration between payer and provider that Kaiser has.
Providers typically have to negotiate reimbursement from commercial payers, while traditional Medicare puts big restrictions on the type of services and the geographic location of patients in reimbursing for telehealth, and does not currently pay for remote patient monitoring.
Commercial and Medicare Advantage plans have more flexibility, but have generally been slow to adopt telehealth reimbursement, especially at levels that rival in-person visits. And state Medicaid regulations run the gamut from permissive to restrictive.
"Reimbursement is still a huge roadblock," says Hagood. In part because of this, for many organizations, especially standalone physician offices, there's "limited motivation to employ telehealth other than where you have a real overcapacity issue," he adds. "The office visit still has more revenue attached."
Some states have perverse restrictions on telehealth such as requiring patients to have had a previous office-based clinical relationship with consulting physicians.
The business case is still a huge limiting factor to the growth of telehealth, says Bill Manzie, administrative director of telehealth strategy with Memorial Healthcare System in Hollywood, Florida.
"One of the major barriers is still reimbursement," he says. "When developing a telehealth program that adds clinical value, you also need to look at the business side and see if it's sustainable. Starting a program that you may end up taking away in a year or six months because there's no funding for it puts a provider in a bad position."
To avoid starting a program that might be unsustainable, he says an imperfect solution is pilot programs in partnership with managed care companies, which Memorial utilizes as part of its telehealth strategy.
Florida's Medicaid program does reimburse for some telehealth services as well. He's confident issues with reimbursement will evolve quickly over the next couple of years, allowing these programs to become more permanent.
By then, "we'll see a completely different reimbursement model that includes telehealth, because [the pilots] will show value to health insurers in ways we have never thought of," he says.
Just this September, a Florida state representative unveiled a bill that would implement most of the Florida Governor's Telehealth Advisory Council's recommendations (a 15-member council that includes the secretary of the Agency for Health Care Administration, and makes recommendations to help increase the use and accessibility of services provided via telehealth), which include requiring all state-licensed health plans (excluding Medicare) to provide coverage parity for telehealth, and to offer reimbursement for covered services provided via telehealth.
The legislation wouldn't force insurers to adopt new service lines or specialties, mandate fee-for-service arrangements, or hinder value-based payment programs, but it would allow insurers to negotiate telehealth-friendly contracts with providers.
Payers are getting on board with the value potential of telehealth too, he says.
"They are more open to working with healthcare facilities in developing meaningful programs," he says.
In Indiana, like in Florida, there are real business incentives and disincentives that must be overcome, says Ron Stiver, president, system clinical services, at IU Health in Indianapolis.
"State to state, there's a great deal of variety," he says, and the Medicare reimbursement level for an office visit is far greater than a similar telehealth interaction.
"When we're able to work with [a] health plan, we can solve those things internally, but as a society the reimbursement models have to catch up," Stiver says. "Our state legislature has been proactive in calling for parity in coverage for telemedicine, but it still needs to be negotiated with payers."
Though Stiver expects payer negotiations to yield successful models going forward, he believes IU Health is already creating that future by building telehealth models through its own IU Health Plans and its Next Generation ACO with CMS.
Stiver says he thinks other payers will be willing to negotiate similar arrangements with IU Health in the future.
Some states have been proactive on telehealth reimbursement as both a public health and, perhaps more important, as an effective cost-saving tool.
States make their own rules for telemedicine Medicaid reimbursement, and reimbursement policies vary widely as a result.
Mississippi, which is largely rural, has become one of the leaders in reimbursing for telehealth through Medicaid, partly as a result of the strategic leadership vision that originated in 2003, and largely funded through a series of grants, at the University of Mississippi Medical Center in Jackson.
Michael Adcock, a nurse by training, is executive director for the UMMC's Center for Telehealth.
He was involved in the early days of telemedicine adoption in Mississippi in 2003 with what he calls a telemergency program started with three rural ERs, funded by a grant from the Bower Foundation.
"We had an issue in our state of small, often critical access, rural ERs not finding the board-certified staffing they needed, so many patients were getting transferred often to us or other tertiary ERs," he says.
This fueled a structural problem of ER overcrowding. "We realized that if they had support, they could keep many of these patients in the community."
After a four-year stint as a hospital chief operating officer in Louisiana beginning in 2009, Adcock returned to UMMC in 2015 to lead a much bigger telehealth program.
Though Mississippi is now a leader in legislative mandates regarding reimbursement parity for telehealth, it wasn't always that way.
Starting with the opening grant, much of UMMC's expansion was funded through a variety of individual grants, and some budgetary line items, that helped build a system that now has 17 rural ERs across the state outfitted with telehealth capabilities.
"What we're trying to do is a different move," he says. "Most big medical centers are trying to get as many patients as they can in their own medical center. We are trying to keep them as close to home as possible and keep them out of ours."
In Mississippi, patients living in 53 of the state's 82 counties have to drive more than 40 minutes to receive specialty healthcare.
Some patients can't or won't travel; therefore, they are not receiving the healthcare they need, Adcock says. While the travel distance may be unique to Mississippi and other rural states, even patients close to specialty care have difficulty traveling even short distances to access care.
That's why telehealth is important, he says.
"While other health systems may have a similar desire, there are not many who have developed the infrastructure to work with local providers to make this a reality," he says.
UMMC does have the advantage of legislative help in making sure the investments needed for telehealth deliver ROI. Depending on the state, that's not something other systems can necessarily count on.
SB 2209, passed in 2013, provides payment parity for telemedicine services, requiring health insurance plans to cover telemedicine services to the same extent that the services would be covered if they were provided through in-person consultation.
The consultation must be done via live two-way audiovisual connection.
"If it is done in that manner, we are able to bill for the consult and, therefore, will receive consultation revenue," says Adcock. "Due to our parity legislation, the revenue for telemedicine consults is the same as in person."
The move has benefited rural hospitals and their ERs.
Adcock says telehealth capabilities allow rural hospitals to save 20%–25% on staffing costs and gives them roughly a 20% increase in admissions, which can go a long way toward the financial viability of revenue- and staff-challenged rural hospitals in the state.
Outside of the acute care space, UMMC's telehealth capabilities reach more than 200 sites in 68 of the state's 82 counties.
Scope of practice
"We offer a little over 30 medical specialties doing the major parts of telehealth, including live video between patient and provider or provider and provider," Adcock says.
UMMC also offers radiology and cardiology imaging, ophthalmology, pathology, neurology, mental health, and most recently, dermatology, just to name a few of the more than 30 medical specialties available for consultation.
"In dermatology, it takes an average of six months to get a live appointment in this state," Adcock says.
Through telehealth, patients can access dermatology services, for example, with their local family practitioner.
If that physician sees something unusual, he or she can transfer images securely to UMMC specialists, who will read the images and report back to the local physician within 24 hours.
"If they see something really suspicious, we can get them to see a [dermatologist] quickly. This allows us to filter and triage those patients," Adcock says.
UMMC does not own the facilities that use its telemedicine capabilities, by and large. Of more than 220 sites of care that have telehealth capability with the academic medical center, only three are proprietary.
Recently, UMMC has developed remote patient-monitoring capabilities. Legislation also helps provide revenue for that program.
SB 2646, passed in 2014, requires reimbursement for remote patient-monitoring services for patients who have Mississippi-based insurance, which includes Medicaid and private insurance.
Legislation mandates the reimbursement rates.
Some such programs are for remote monitoring of patients in an ICU, for example, but "ours is more of a patient chronic condition monitoring program," Adcock says.
In its first six months of operation in the Mississippi Delta, the poorest area in the poorest state, the program recorded decreases in A1C levels, and discovered nine cases of diabetic retinopathy that would not have been found without the remote monitoring program.
"We calculated that we saved almost 10,000 miles of driving for these patients who were uncontrolled, and over the time period, we had zero admissions and zero ER visits, which amounted to $339,000 in savings to Medicaid," Adcock says.
UMMC still uses grants to bolster its telehealth capabilities, though. It just received a million-dollar grant from the U.S. Department of Agriculture to build an after-hours clinic in the Delta town of Belzoni, which will include multispecialty telehealth capabilities.
"We still apply for grants mainly for equipment to set up in different clinic locations," he says.
Not every condition is appropriate for telehealth, of course. It's important that it add value to the clinician experience as well as the patient one, says Memorial's Manzie.
"It will not be successful if you just have a bunch of business people on the back end," he says. "You have to work with providers to develop a program that really adds value to that patient and physician experience, or else you'll just set yourself up for failure."
He likes to call it "upgrading healthcare."
For a more urban patient population, it's even more important to base business decisions on patient demand, he says, meaning the suitability for telehealth depends on the condition.
The health system's MemorialDocNow application, developed with partner American Well, would be appropriate only for less severe types of illnesses, such as flulike symptoms, sinus pain, coughing—the same symptoms that might send most patients to their primary care physician—or the ER.
The offering is intended not necessarily to replace in-person physician office visits, but ER visits.
"A large percentage of the community still goes to the ER for those types of visits," Manzie says.
That's why it's so important to work with physicians on what's appropriate for telehealth—not because most want to protect their turf, but because they can guide its proper use.
"We work directly with them because they tell my team what is appropriate to be seen through telehealth," Manzie says. "You wouldn't want a cardiologist on there to see a patient with chest pain, but he may follow up [remotely] with test results, or to make sure the patient is following up with their care plan, so they don't have to come back for a readmission."
Attitudes have changed
Physicians have started to recognize independently that technology associated with telehealth can potentially add value to the patient experience, Manzie says.
Now, they don't need as much convincing from hospital or health system leaders that telehealth can be a helpful addition to their capabilities.
"More of them are seeing the value of offering telehealth services for patients, both for efficiency and for clinical outcomes," says Manzie. "And patients are no longer seeing [telehealth] as a shortcut for providers but as a shortcut for their own lives."
Like many states, Florida doesn't have a standard definition for telehealth. Medical boards each have their own. That can lead to problems with the limits of the scope of practice in telehealth, especially as the state wades into regulating the practice of telehealth services of many types.
"There's a lack of standard regulations because we don't have legislation specific to telehealth, so there's no regulation other than those boards governing their own people," he says.
However, Manzie sees willingness in Florida to "cherry-pick" from regulations other states have pioneered, such as mandated reimbursement guidelines.
"So knowing telehealth is on an upward trajectory and gaining traction, we don't want to start programs only after the state says you can get reimbursed. If you wait for the state, you'll be behind the game."
"It's something we're going to have to do," he says.
Telehealth changes how leaders at Memorial think strategically. With six hospitals, urgent care centers, and a pediatric hospital, telehealth lends itself to a "world of opportunities" for Memorial, Manzie says.
"So knowing telehealth is on an upward trajectory and gaining traction, we don't want to start programs only after the state says you can get reimbursed," he says. "If you wait for the state, you'll be behind the game."
But unless the rules define reimbursement, aren't health systems still at the mercy of the payer in finding acceptable revenue streams to fund the investment and its return?
That's correct to some extent, Manzie says, but "reimbursement is not the only win here.
Creating programs that have other clinical quality indicators as the success measuring stick creates an alternative ROI story."
To that point, he says, hospitals should not consider themselves only in the business of treating sick patients.
Instead, they are also in the business of trying to keep patients healthy. For that reason, telehealth should be viewed as a cost avoidance or cost savings model.
So Manzie spends lots of time educating the physician community on defining telehealth and potential programs to work out the details.
He meets regularly with various physician councils, planning up front with them on the appropriate patient or condition for telehealth, and the protocols.
He says that's where agreement can be reached on parameters where telehealth is appropriate, but it's also where the educational component can be employed with practitioners.
"My biggest recommendation would be to educate as much as possible. Educating the providers on [telehealth's possibilities] is equally as important as educating the community," he says. "The value of telehealth is going to be different for each person that telehealth touches."
IU Health, which also partners with American Well for on-demand telehealth services, says those visits get as much scrutiny from a quality perspective as any in-person visit or treatment.
"We audit those, because physicians need to feel comfortable with the model too," says Stiver.
IU Health also offers virtual complex care—typically for home health patients, but now expanded to patients who may not meet home health admission criteria, but who may benefit, such as patients with congestive heart failure.
"We have really good buy-in from our physicians, but they are rightfully protective of our brand and the quality of care associated with that brand," Stiver says. "We have very few skeptics, but we just want be thoughtful and move at [an] appropriate pace."
It's about efficiency
IU Health is building a large replacement regional hospital in Bloomington. It's in the early stages of planning, but it will be a much different facility than what exists today because of the new technologies incorporated, including telehealth capabilities.
The academic medical center in downtown Indianapolis already has agreements with 20 hospitals in the $6.23 billion (operating revenue) system to provide specialty services—many of which are via telehealth—at some of those hospitals that have difficulty recruiting certain specialties.
Stiver says the detailed designs of the new building are not yet finalized, but there will be fewer inpatient rooms and the facility will be more technologically enabled to leverage the benefits of telemedicine not only in the new hospital but across the region.
"We can deliver the same care without having docs on the road all the time," Stiver says.
While admitting that telehealth is a difficult term to pin down, it's a big part of IU Health's strategy of becoming more efficient.
"It really spans a broad spectrum of services, and we think of it in four buckets," he says.
In bucket one are the core, on-demand and scheduled video visits with which it partners with American Well.
Another bucket is kind of the hub-and-spoke concept, in which, for example, pediatric dermatologists might hold virtual clinics from Indianapolis, or where they might see pediatric patients in Evansville online. There's also the partnership with Schneck Medical Center in rural Seymour, Indiana, which offers access to a nephrologist 24/7 for the purposes of virtual consults.
"Another one I call virtual complex care," says Stiver, which offers care that is based in the home, including visits to help manage chronic obstructive pulmonary disease, CHF, diabetes, or multiple complex chronic conditions, through home monitoring devices such as blood pressure cuffs, scales, and other diagnostic tools.
Those help keep patients out of the hospital, and represent bucket number three.
The last bucket is what Stiver calls e-acute, which would include remote monitoring of ICUs by specialists in other locations. IU Health does not have that capability at the moment, but is evaluating it.
"We're at an inflection point," he says. "We've made a ton of progress, but there's so much more opportunity in front of us, it's hard to peg it with confidence where we are."
One issue is the flip side of efficiency. IU Health has its own health plan, but as it migrates toward more of a population health model, it still gets a lot of reimbursement in a fee-for-service manner.
"If you're becoming more efficient, you're taking revenue from somewhere, but you're also doing what you're supposed to do and taking care of the community better," he says. "And we shouldn't think about the hospital being in the business of taking care of patients when they're sick but taking care of patients before they get sick. I know we're maybe not getting reimbursed as much, but at the end of the day we're doing what's right for the patient."
The innovator's dilemma
And that's the crux of the innovator's dilemma, as coined by author Clayton Christensen, who describes the promise and pitfalls new technologies bring to industries (even healthcare) that cause established patterns to fail when they are unsuccessful in picking the right timing on innovation. Telehealth poses that problem to healthcare.
For a truly integrated health system, telehealth offers vast potential improvements, from a population health perspective, to delivering high-value care.
From a business perspective, it can also help create partnerships with community hospitals that are outside the system, and open up alliances that would have been difficult without it.
But as an industry in transition to a population health model, determining what to roll out when can be a career-limiting decision.
"In some cases, it does cut revenue streams," says Stiver, "but our fundamental belief is that we are moving to a value-based world, and you can't wait for that to occur before you build out your capabilities."
Pace and scale matter in situations that require investment, he admits.
"While we are aggressively building out new capabilities today, we are moving at a deliberate pace and on a safe scale when rolling these out," he says.
Doing so allows IU Health to learn and refine along the way, and to also keep a careful eye on how the environment is evolving from a regulatory and reimbursement perspective, he adds.
The rollout strategy
In the early stages of a telehealth rollout strategy, much of it is vendor partnership driven in a direct-to-consumer sense.
MDLIVE, American Well, and other groups offer all the expertise needed—if not necessarily the physician relationship-building—necessary to turn a telehealth strategy on much more quickly than even a large health system could do alone. These are important because of speed, says UMMC's Adcock.
Given its experience level, when UMMC evaluates a new program, it defines the clinical need, lets clinicians and other providers come up with a clinical solution that works, "and we wrap technology around it," he says.
"We've been successful working with different groups providing technology, but it's not a one-size-fits-all proposition," he says. "We use whoever is best able to meet our needs and our patients' needs. We're not interested in working with a vendor and using just what they offer in their catalogue."
An example of choosing the right technology by looking at the clinical need would be in mental health, Adcock says.
Adults receiving mental health consultations are generally sitting in one location having a conversation with their provider.
Therefore, there is no need for a telehealth cart with far-end camera control, only a webcam and monitor.
However, with pediatric mental health, it is important for the provider to have far-end camera control due to the fact that pediatric patients frequently move around the room.
Knowing UMMC's long experience in many facets of telehealth, other health systems often visit to learn from UMMC, but when Adcock questions them about what they want to do with telehealth, he says they often respond with a version of "We want to be just like you."
"That's not the right answer," he says. "You have to start with the issues and then look at how telehealth can help. If you start it because it's cool to have, your likelihood of success is zero."
Given the migration of healthcare toward a more outpatient-oriented business generally, telehealth is becoming a must-have, not only because of that shift but because there's a growing shortage of providers.
"You have to be as efficient as possible, and the tech is out there to do it," says Adcock. "The main thing to remember is that telehealth is not a profit center. It's about making sure we're providing care to as many as possible as efficiently as possible."
A healthcare entity that wants to use telehealth needs to look at not just revenue, but also cost savings and cost avoidance, Adcock says.
Telehealth can help decrease the overall cost of care and should be calculated into the ROI.
That said, it does ultimately have to pay for itself in some way.
Adcock says it is even reasonable to think telehealth could be a profit center—under the right circumstances.
"Our program operates with patient-generated revenue. While we are still actively pursuing grant funds, they are generally used to fund equipment at the away sites," he says. "Given the right reimbursement legislation or contracting with managed care payers, telehealth can generate enough revenue to sustain a program."
Manzie echoes this point.
"There's legislation saying there might be an opportunity to expand outpatient services to hold patients for 72 hours—that just shows you where the mindset is in trying to change healthcare and make it more efficient," Manzie says. "When more patients and physicians are educated on the value of telehealth, you'll see a steep incline on utilization."
He predicts even more companies will offer new technologies that will move patients further away from face-to-face care, but he's not sure what success ultimately looks like, especially for legacy organizations such as hospitals and health systems.
He is sure that they can't afford to ignore the trend, however.
"For me, [success] looks like organizations using telehealth as their normal way of delivering healthcare together with tech that's innovative and useful to the patient on an everyday basis," he says.
But what percentage of practice ultimately will be done outside of face-to-face interaction? No one knows for sure, Stiver says.
"We've thrown around some different numbers, but there's nothing definitive. The idea is that telemedicine is eventually not looked at as a separate offering, but how we do what we do."
"We are still very much in early stages throughout the country," Adcock says. "Right now [telehealth] is a buzz-term, but when we get to true maturity, it will simply be how healthcare is delivered. There will be some visits using technology and some in person, but people won't distinguish the two. It won't be a term anymore."
The Atlanta health system is expanding statewide and will reach 10 hospitals with pending Columbus Regional deal.
By Philip Betbeze
Piedmont Healthcare has reached another milestone as the boards and hospital authority that governs Columbus (Ga.) Regional Health approved the letter of intent that would merge the two systems, first announced last May.
The deal, which would bring under Piedmont’s control the 225-bed Columbus Regional Hospital’s two campuses, Midtown Medical Center and Northside Medical Center, would effectively represent a merger between the two systems. The deal’s closure now only awaits state attorney general approval, a decision expected in early 2018.
“Columbus Regional has a long history of delivering quality healthcare to the west Georgia community, and it’s a privilege to partner with them in these efforts,” said Kevin Brown, Piedmont’s president and CEO, in a press release. “This is an important step in achieving that goal.”
“We’re excited to move forward in the partnership process with Piedmont. We have worked together to create an agreement that honors the letter of intent we signed earlier this year,” said Scott Hill, CEO and president of Columbus Regional Health. “The Boards of Columbus Regional Health, Piedmont Healthcare and the Medical Center Hospital Authority have collaborated to bring us to the point where we’re poised to meet the healthcare needs of our community now, and well into the future.”
Like Columbus Regional a nonprofit organization, Piedmont has expanded aggressively within the state of late, and competed with several for-profit hospital companies and other nonprofits in an affiliation evaluation process last spring, before it was chosen by Columbus Regional’s board as the sole finalist for what they called a “strategic affiliation.”
Two business groups seek targeted deregulation and market-based purchasing strategies based on employer tactics they say have improved healthcare efficiency and effectiveness.
If the federal government wants better value for the healthcare dollars it spends, it should take a few lessons from the experience of large employers, say the representatives of two large employer associations that have banded together to advocate policy recommendations to improve value-based care.
The DRIVE Health Initiative, launched by the Pacific Business Group on Health (PBGH) and the ERISA Industry Committee (ERIC), is pushing President Trump and CMS to adopt value-based strategies large employers have undertaken in recent years to improve the quality and efficiency of their employees' healthcare.
Large employers' solutions have centered on value-based care principles, and while direct contracting and bundled payments for procedures have been effective for large employers in reducing costs and improving quality, their effectiveness on the health system has been limited because government schemes to improve value do not have consistent measures with those of the private sector, they say.
"DRIVE's primary purpose is to advocate for public policies that will improve quality and reduce costs based on innovations developed by private employers," says Annette Guarisco Fildes, ERIC's president and CEO.
Before he resigned in the wake of the private plane travel scandal, former HHS Secretary Tom Price managed to torpedo several value-based programs initiated under the Obama administration.
Mandatory bundle programs were scaled back, and some were scrapped entirely because the Trump administration ostensibly wanted more freedom in their design, and principally, because it wanted participation to be voluntary.
Employers have had success with bundling, says Bill Kramer, executive director for national health policy with PBGH, even if providers have perhaps been less enthralled with the practice.
"The federal government has experimented with these, and most people would say they have had mixed results, but in the private sector, those programs have been very successful in bringing lower costs, improved patient experience, and satisfaction," Kramer says.
Data from the PwC survey 2015/2016 Strategy& Annual Bundles Survey support the claim that bundles have helped hospitals and their patients alike, with the following findings:
63% of hospitals realized savings from bundles
69% of hospitals improved quality through bundles
55% of patients were more satisfied with bundled service than previous service
"If Medicare wants to do them right, they should look at the experience of large employers," Kramer says.
To reduce federal spending on healthcare, Kramer says more bundle programs, not fewer, is the antidote to paying for these services through fee-for-service.
"It's important for Medicare and Medicaid to be partners with private sector purchasers to develop consistent ways to measure quality, consistent payment models, and ways to make consumers informed so they can make smart decisions," he says.
The government cannot continue to spend the amount it's been spending on healthcare, which is nearly 18% of GDP right now.
That's easily twice the amount spent by other developed nations, says Fildes.
"At this rate, the government will [soon] spend more on healthcare than the entire discretionary budget," she says. "Government can learn from strategies the private sector has used that have worked."
A second example where government can learn from and coordinate with the private sector is in ACOs. Medicare ACOs have been developed under several categories, but results have been mixed.
Many ACOs in the private sector, by contrast, have been successful, say Fildes and Kramer.
One crucial way private sector ACOs are different is that under Medicare ACOs, beneficiaries don't choose the ACO, but are attributed to the ACO based on where they've been going for care. There's no active choice based on features, benefits, value propositions, or quality scores.
In the private sector, beneficiaries choose whether to join the ACO or not.
"There's active consumer engagement in the private sector models and patients are known to the ACO in advance, so the ACOs work with them closely to manage their care more effectively," says Kramer.
Whether the president or Congress will act upon these recommendations anytime soon is certainly doubtful at this point, as Republicans have seemingly moved on from meaningful legislative action and CMS remains leaderless following Price's resignation.
But regardless, Fildes and Kramer say these issues will only get bigger as healthcare continues to consume a larger share of GDP and the federal budget.
"We're moving in the direction of improved quality and reduced costs," says Kramer. "[Health system and physician leaders] want to move in that direction too but they want clinical and business models aligned so this will work."
The move follows last year’s rebranding of markets in Michigan and Wisconsin and reflects the nation’s largest Catholic healthcare company’s unification of diverse brands as well as its transition from holding company to operating company model.
St. Louis-based Ascension announced it will rebrand under the Ascension brand six of its markets that have been known locally for years by other names.
The hospitals and other sites of care that will take on the Ascension identity are:
Texas: Seton in the Austin region and Providence in Waco
Gulf Coast: Sacred Heart in the Pensacola, Florida, region and Providence in Mobile, Alabama
Binghamton, New York: Lourdes
Birmingham, Alabama: St. Vincent’s
Jacksonville, Florida: St. Vincent’s
Kansas: Via Christi in Wichita and central Kansas
The brand strategy helps unify the affiliation of the various regions and the health systems within them, according to Ascension executives. The company began this move last year in Michigan with six previously distinct health systems, and in Wisconsin, with four, that were brought under the Ascension brand.
“Our brand identity is rooted in our mission to deliver compassionate, personalized care to all, with special attention to persons living in poverty and those most vulnerable,” said Anthony R. Tersigni, Ascension’s president and CEO, in a press release. “The adoption of a consistent identity across our systems of care fosters collaboration and ultimately ensures our patients receive the right care in the right setting at the right time through a truly integrated national system.”
Beyond the unified identity, Chief Marketing and Communications Officer Nick Ragone said that a consistent brand makes it easier for consumers to navigate sites of care both physically and online, where most healthcare engagements now begin. He added that Ascension’s unified identity supports its shift to a more quantitative marketing model that helps the health system better understand patients and anticipate their needs.
Patricia A. Maryland, president and CEO of Ascension’s Healthcare division, its patient care arm, said the rebranding supports the creation of a culture of clinical excellence and safety, adding that the it also encourages collaboration across Ascension’s systems of care to improve population health and eliminate healthcare disparities.
Ascension’s Healthcare Division operates 2,500 sites of care, including 141 hospitals and more than 30 senior living facilities, in 22 states and the District of Columbia.
Oak Street's network of primary care centers for Medicare eligibles in medically underserved communities offers a blueprint for success in value-based care—and a warning for acute-care focused organizations.
Rapidly growing Oak Street Health, a healthcare organization that delivers a unique primary healthcare experience, offers both a blueprint and a warning for organizations that depend largely on complex acute care services.
The warning: Innovators are looking to cut expensive hospital care for their patients.
The blueprint: Oak Street's methods could serve as a model for health systems to move into population health and blunt the impact of a reduction in acute care demand.
Oak Street’s network of 24 primary care centers caters exclusively to adults on Medicare, and primarily to those on Medicare Advantage health plans.
After launching in Chicago in 2013, the company has expanded to smaller cities in Illinois, Michigan, and Indiana, and recently announced its expansion to Philadelphia.
Each center has between 2,000 and 4,000 patients, and it has reduced hospital inpatient visits by 40% for its more than 30,000 patients.
One of Oak Street'sfounders, Mike Pykosz, a Boston Consulting Group alumnus, has bet large on the company’s ability to attract physicians and patients while driving better outcomes at lower cost and with better patient experience. Following is a lightly edited transcript of that interview.
HealthLeaders Media: How did you get involved with this company?
Pykosz: In consulting, one of my clients was a big Medicare management plan. We thought it would make a good business to find a way to take better care of at-risk older adults.
We spend twice as much on healthcare per capita as most other industrialized countries, but we’re not getting quality for it. This population is the one driving the highest costs and the poorest results. In late 2011 one of my cofounders and I, Chief Operating Officer Geoff Price, decided to do it.
HLM: What’s the business case?
Pykosz: If you have the right components, payment model, and interventions, you can create differentially good outcomes at a lower cost and with better patient experience. Healthcare’s so local and based on payer and provider mix.
The issue is how to create a replicable platform to do it in markets where it didn’t evolve organically. In late 2012, we were able to talk our third cofounder, Griffin Myers, MD, our chief medical officer, into joining us. We raised private capital from a lot of individuals.
HLM: How do you choose your markets?
Pykosz: The first thing we look at is where there are a lot of older adults, and where there are not so many doctors. Our ideal locations are more blue collar and low income. Our first centers were built on the South and West sides of Chicago in neighborhoods that have a lot of challenges, and from demographic and cost data, where there is a lot of chronic disease burden.
We want to go to places where we can provide services that don’t exist and where we can make the most impact. The patient is ours. We’re accountable for their entire care and we’re very data-oriented.
In our financial model, we take full risk and global capitation for Part A and Part B. That’s risky, but for us, our whole model is driven to provide higher-quality care. In 2016, every plan ran a surplus.
HLM: Describe your patient population and what’s different about the locations.
Pykosz: The majority of our patients are Medicare Advantage, and we work with eight MA plans. We start all centers from the ground up—we don’t try to take existing assets and change the way they practice.
We are never in medical office complexes. We’re in retail locations of about 15,000 square feet. We want to provide more access and lower barriers.
We start with zero patients and hire providers and the team, and we go into the community and talk about why it’s important to have a medical home and a doctor. This is basic stuff, but a lot of these patients have never had a primary care or insurance.
We encourage them to go to the doctor regularly, not just when they’re sick. We have transportation, we average 30-minute visits, and we have 24/7 phone coverage. Ninety-seven percent of those who try a visit remain with us long term.
HLM: How do you recruit clinicians?
Pykosz: We have to find physicians who are aligned with the mission. It’s a challenging patient population and the model is different.
Our panel size is about 500 patients versus a national average of about 2,300. It’s a different way to practice medicine, and bonuses are based on quality, not RVUs.
This is better alignment and it’s not a model for everyone, but we have plenty of providers. We have a waiting list of docs who want to do this in Chicago.
HLM: How do you ensure that you’re not keeping patients out of the hospital who need to be there?
Pykosz: We send patients to specialists or the hospital if they need it. If we don’t, it’s just going to get worse and cost a lot more money. If we send patients to hospitals early enough when they really need it, they’ll need a shorter stay.
Think of it from quality perspective first: Outcomes and quality of care is 99.9% of the time what ends up making the company money in the long term.
HLM: What’s your vision of full deployment?
Pykosz: We had to have conviction that the model was sustainable and replicable. We knew what we wanted to build.
We learned a lot on the way because with a small number of patients you couldn’t take full risk. So we pretended we were in a value-based world when we were in fee-for-service.
We lost a lot of money on the way, but it got us to a place where we had a lot of conviction we would be successful in a risk model. When we did, we got paid differently and the financials looked a lot better but the care model didn’t change.
We could put up hundreds of these but we struggle with what’s the proper pace, because the need is so high. We won’t have imaging or surgery centers. There are plenty of those around. Going to Philly is a big step from the Midwest. It puts us in the national conversation. The model works.