To maintain Vidant Medical Center's ability to function as a safety net provider, it has adopted an approach called the 90-day cycle, in which data on outcomes and expenses are used to engage physicians in a discussion on clinical protocols so they can make improvements around cost and quality.
The great need for effective cost containment strategies among hospitals and health systems is only being exacerbated by healthcare reform legislation, says Brian Floyd, president of Vidant Medical Center, a 909-bed academic hospital that is the flagship institution of Greenville, NC-based Vidant Health.
"When you look at the [Patient Protection and] Affordable Care Act and reform changes, we all understand the intention is to shift dollars from the hospital industry into preventative care measures," Floyd says.
"There are no new dollars. There is a diminishing pie of dollars, and we have to fulfill our mission in eastern North Carolina now with less dollars coming in than have come in in the past."
Doing More with Less
Due to reimbursement changes, Vidant Medical Center will receive about $500 million less over the next 10 years than it would have if not for the PPACA, putting significant pressure on the hospital to cut costs, Floyd says.
"We have a mission to sustain ourselves in areas where the economics do not make it easy, and the future requires us to reduce our spend in order to be sustainable."
To prepare for the loss of revenue and maintain Vidant's ability to function as a safety net provider, executive leaders are looking for more ways to rein in costs while also improving quality. The focus now is on "product and process," Floyd says.
"We felt we had a lot of people working very hard on a variety of areas, but there was a lack of coordination that was in and of itself a challenge… It is difficult because of the sheer volume of work people have taken on. We wanted to move from a fragmented system to one that is coordinated."
A New Approach
While Vidant has long been working to remove cost from its supply chain, Floyd says the organization began about a year ago to apply an approach called the 90-day cycle, which is a method of identifying high-use, high-cost, and high-variation DRGs and working to make improvements around cost and quality.
Through the 90-day cycle, Vidant uses data on outcomes and expenses to engage physicians in a discussion on clinical protocols.
"We show each doc their costs relative to the rest of the physicians doing the same procedure. They all have preferences for how they do a procedure and what supplies they use. One doc, for example, might use a certain kind of glue, but another may use a different kind that costs $10,000 less," Floyd says.
"We let the docs negotiate among themselves based on our own data. If they could make a case for why something was necessary, then that is fine, but the process is about debating the evidence of prices and products in relation to quality."
The data makes it more difficult for physicians to resist change that would bring down costs without negatively impacting quality, Floyd says. "It makes it hard to be an outlier among the peer group… [It's a] system based on our own data. It's not national data; it's not a myth. It's the guy sitting across the table who can do the same procedure for less with the same outcomes."
Physicians have a set amount of time to "argue amongst themselves about the products," Floyd says, and then Vidant negotiates as quickly as possible with vendors to reduce spending on the supplies that ultimately make the cut.
"We want to do the entire process in 90 days so people can see the end-to-end accomplishment and start to feel good about it," he says. "We needed to create a systematic process and engage people and allow people to see the impact."
Vidant has experienced significant savings as a result of the 90-day cycle. In a typical year, the organization cuts about $3 to $5 million from its supply chain. This year, it's on target to cut $16 million.
"This has escalated our savings," Floyd says.
Achieving Physician Support
Gaining physician support of the process is essential to success, Floyd says, adding that one way to achieve buy-in is to emphasize the goal of doing what is right for patients.
"It's not just about supply chain. It's a value chain for the patient. When we are talking about the tools physicians use … docs are willingly coming to the table, and that process is creating a lot of engagement around the idea of making sure we are providing value for patients."
While physicians and staff were hesitant at first to embrace the 90-day cycle, Floyd says people are now on board because they can see results and they understand its importance as the healthcare industry moves away from fee-for-service reimbursements.
"It has taken us about a year to start to really have success because initially it looked like an administrative program so people were reluctant to participate… The first 90-day cycle was painful, but what we learned created a situation where it cost patients less to get the same or better quality and outcomes as before," he says.
"For the second 90-day cycle, everyone showed up and was trying to be part of the process. … Once we designed a timeline and processes to push hard for improved quality and value for patients, it became difficult for anyone to stand in the way of it."
Creating a Culture Shift
Rolling out a cost-savings program that puts patients at the center of the process and that is evidence-based has been a game changer for Vidant, Floyd says. People are now "hungry," he adds, for the next opportunity to participate in a 90-day cycle.
"We're getting tremendous savings, but I believe it's a cultural transformation for us, as well," he says.
"This is about more than supplies. It's about how much it costs to care for patients and using evidence to choose products and improve outcomes. Being able to fulfill our mission in the long term requires us to reduce cost for patients while pursuing better quality. We've been very transparent and intentional about this process, and it's yielding for us a better organization."
Without waiting for CMS's new bundled payments model, UPMC launched its own initiative to accelerate its transition away from fee-for-service care. Physician buy-in and data are key.
Earlier this month, the Centers for Medicare & Medicaid Services proposed a new reimbursement model that would hold hospitals financially accountable for the quality of the care they deliver for inpatient hip and knee replacements—from surgery through recovery for Medicare beneficiaries.
The Comprehensive Care for Joint Replacement Model is a bundled payment structure designed to improve cost, quality, and care coordination between hospitals, physicians, and post-acute care providers throughout an entire episode of care.
According to CMS, Medicare beneficiaries received 400,000 inpatient, first-time hip and knee replacement procedures in 2013, costing more than $7 billion just for the hospitalization. Quality, outcomes, and complications—such as infections, implant failures, and 90-day readmissions—varied widely by region and hospital.
"This proposed model is designed to support HHS efforts to drive the healthcare system towards better quality care, smarter spending, and healthier people by driving forward care transformation and payment reform for a major surgery experienced by many patients," CMS said in its proposal.
While some healthcare executives have expressed concerns about the disruptive effects of the new model, other hospitals and health systems have moved ahead with bundled payments for orthopedic procedures without waiting for a government mandate.
At Pittsburgh-based UPMC, the $10 billion integrated health enterprise with 21 hospitals and more than 5,100 licensed beds, bundled payments for orthopedic procedures are well under way. The program launched in 2013 with hip and knee surgeries, and it extended to spine surgeries at the beginning of this year.
"Consumers are demanding higher-quality healthcare at lower costs, and healthcare providers that cannot deliver that will not be around in the future," Tami Minnier, UPMC's chief quality officer, told me recently.
"We believe that bundled payments are one mechanism for achieving this alignment of incentives around high-quality, high-value care."
Through its insurance entity, UPMC Health Plan, UPMC has determined the average cost per procedure and created bundled payments to encourage physicians to reduce costs and improve quality.
"We are really trying to change our payment models as much as we can from volume to value and are really trying to transform our network to something that isn't based on fee-for-service or RVUs anymore," says Tom Aubel, director of medical payment strategy and policy at UPMC Health Plan.
"If [physicians] come in under the average cost, they can reap that benefit financially. As they are spending less, they are making more. It's a pretty basic design."
Achieving Physician Buy-in
UPMC's physicians have generally supported the bundled payment model, Minnier says, because they are invested in doing what is best for their patients.
"Creation of these bundles is driven by our physicians, who are highly engaged in understanding and measuring the quality and cost of care. They understand and care deeply about the physical and financial well-being of their patients, so it has been relatively easy to win their support for this process."
For physicians who have been hesitant to make the transition, there will ultimately be a financial incentive, Aubel says, as the bundled payment model is eventually redesigned to include some risk.
"Since there is no downside risk and they are only seeing the positives now, there is less motivation for some [physicians] to get onboard. But, at some point, we plan to move toward downside risk," he says.
Data is Essential
To gain the physician support necessary for the bundled payment model to yield substantial results, they need actionable data that can be used for clinical decision-making, Aubel says.
"What we found very quickly as we did the hip and knee bundle is that the most important part of it is to provide timely and accurate data to our physicians. If we didn't provide the why and how through the data, it would be useless to do the program."
UPMC uses a third-party vendor to minimize processing time and create reliable information, he says.
"We started off doing a manual process, which was very tedious and time-consuming and left a lot of room for error. We knew that if we are going to expand [bundled payments] to include more providers and hospitals, we would need to find something to make the process easier, quicker, and cleaner."
Using the vendor has "allowed us to really cut down on the time for the process to create meaningful data to provide to our physicians," Aubel says.
Having access to timely data "also supports our process of evidence-based pathways that guide the care and report outcomes," Minnier adds.
Changing Care Processes While Protecting Quality
Throughout UPMC's efforts around bundled payments, the number-one concern has been care quality, Aubel says. "On top of everything is quality. Physicians have to meet certain quality indicators in order to receive the financial incentives."
"All of our alternative payments, such as shared savings and bundles, include quality measures to ensure that patient outcomes are high," Minnier says.
Value-based reimbursements have prompted physicians to ask questions about surgery and follow-up care and to collaborate with each other in order to improve outcomes, Aubel says.
"They are looking at all the services they provide and trying to see if there are opportunities for improvement."
While this newfound level of communication is leading to some reduction in care variation, Aubel notes that altering medical practices is a difficult process that can take time to achieve.
"We are seeing some standardization of care, but we are not talking about changing the way you play golf. … Making changes to [clinical care] is not always as easy as it sounds."
A Classroom for a Value-Based Future
Bundled payment models are being rolled out to UPMC physicians in part, Aubel says, to help the organization prepare as the healthcare industry moves away from fee-for-service toward value-based reimbursements.
"One reason for getting into bundled payments is cost savings and looking for higher quality. We have the ability to teach our providers how to do this now so when the Aetnas and Uniteds of the world want to do this with our physicians, we'll be ready," he says.
"We are using this as sort of a classroom as much as a program for reimbursements."
A Cone Health revenue cycle executive shares strategies for reducing the health system's three biggest revenue threats: high-deductible health plans, uninformed patients, and the looming implementation of ICD-10.
At Greensboro, NC-based Cone Health—a six-hospital, not-for-profit health system with 1,242 beds and gross annual revenue of $2 billion—a number of revenue pressures are making it tougher than ever to collect payment for services provided.
"It's a combination of factors that are creating a major financial challenge," says Mike Simms, Cone's vice president of revenue cycle.
Simms outlines Cone's three biggest revenue threats and discusses the system's strategies to combat them:
1.High-Deductible Health Plans a Hurdle
Like most healthcare providers, Cone is experiencing a steep increase in the number of patients who have insurance plans with significant personal liability.
"We are seeing higher out-of-pockets with plans through the Patient Protection and Affordable Care Act and employer sponsored plans. We are seeing $5,000 deductibles and financial obligations that are $6,000 or $7,000 in total," Simms says.
This creates a collections hurdle because patients are often unable to pay in full for services they receive. To mitigate the impact on revenue, Cone has recently begun working with a third-party vendor to offer a loan program for patients who need time to pay in installments.
"We needed a way to allow patients to finance the debt because we didn't want to have a lot of long monthly payment plans. So, about a year ago, we started using a firm that does recourse financing, and we've changed our whole payment plan methodology," Simms says.
"If a patient has a balance and can pay it within six months, we will keep that account internally. If they can't, they have to go to the vendor that does the financing. If their [credit] scores are good, we'll get paid in advance so we don't have to wait two or three years. We get funded immediately. We have to pay a small discount rate for this program, but it's better than waiting years to be paid."
2. Patient Education and Engagement Needed
Another area of concern, Simms says, is the lack of understanding many patients have with regard to their insurance coverage.
Through its pre-service center, Cone is committing time and resources to educate patients about their financial obligations, because engaged patients who comprehend their health plan benefits before the time of service are more likely to pay, he says.
"It all starts with educating patients on what their benefits are and what their out-of-pocket responsibility is. Staff at the pre-service center verify benefits and use a vendor tool to estimate out-of-pocket costs," Simms says.
"We are calling patients in advance and advising them, which also goes back to patient engagement. Giving them an estimate of what they are going to owe for the service is better than waiting 60 days after service and surprising them with a bill."
Cone is also making an effort to collect up front, Simms says. "We try to get payment over the phone or at least a deposit. [Patients] can also pay at the time of service if they don't want to pay over the phone."
While the work being done in the pre-service center represents a new way of doing business, Simms says it's imperative to have these conversations with patients and to collect money in advance of service if possible.
"Before I came to Cone in March 2013, there was resistance to asking for money up front, but it's a necessity in this business. If you don't talk to patients before they have the service, the chances of collecting go down significantly."
The results of this strategy have so far been solid. About 10% of Cone's total patient payments are now made up front. "That is a good number, and it's increased significantly over the last two years," Simms says.
To increase patient engagement, Cone has also been working with a vendor to improve the readability of its billing statements and has begun offering patients the option of making payments online through a patient portal.
"We started a process over a year ago to find a vendor who could produce a patient-friendly statement that is colorful and easy for patients to understand. We weren't serving our patients very well before regarding the billing statements," Simms says.
Since changing the statement and launching the portal, Cone's patient cash has gone up by 20%, Simms says, noting that at 2.5% the organization's cost to collect is below the industry metric of 3%.
Assuming ICD-10 goes live as scheduled on October 1, 2015, it represents a significant potential threat to the revenue cycle, Simms says, because of the added specificity required for physicians' medical records.
Cone is using its physician champions to encourage compliance with the new coding rules. "Our physician leaders are going out and educating, and we are trying to stress how important it is to be specific on the documentation," Simms says, noting that Cone's health information management department is also involved in physician training around ICD-10.
Additionally, the health system's coders are now dual-coding in both ICD-9 and ICD-10 to be sure they are familiar with the new code set when it goes into effect later this year.
However, no matter how effective these training efforts are, Simms says, it is likely that Cone will see an increase in denials when ICD-10 is implemented, at least initially. The good news is that CMS has said that in the first year after ICD-10 is implemented, the agency will not deny or audit claims just for specificity.
Leaders at Cone are working to minimize the impact denials will ultimately have on revenue and the cost to collect, Simms says.
"One thing we are always working desperately on is to reduce our denials as much as possible, and that is going to be even harder with ICD-10. We have a denials team in place, and we also have back up with our vendor," he says.
"We've tightened up some processes in our pre-service center to verify insurance benefits and collect as much as we can up front and are working with our managed care department" to cultivate strong relationships with payers and enhance revenue.
The need to prevent the overuse of expensive hospital-based services is particularly pressing in Maryland, where significant payment reform is well underway. The CFO of Anne Arundel Medical Center in Annapolis discusses its focus "on the top 500 patients that we see the most."
Success in a value-based reimbursement environment requires senior hospital leaders to find strategies to keep people out of the hospital and out of the emergency department, where costs can mount quickly.
Payment Reform Incents Cost Containment
The need to prevent the overuse of expensive hospital-based services is particularly pressing in Maryland where significant payment reform is well underway. In January 2014, the state's global budgeting revenue system went into effect. Under this payment system, hospitals receive a set amount of revenue regardless of how many patients they treat or the services they provide.
"What that regulation is trying to do is to have hospitals manage their costs, because if you have fixed revenue, you are going to be worried about what you are spending," says Bob Reilly, chief financial officer at Anne Arundel Medical Center in Annapolis.
"It's the biggest financial challenge for us right now because whether we have one patient or 300,000 patients come through the door, we get the same amount of revenue."
Focusing on Heavy Utilizers
To meet this challenge, Reilly says, Anne Arundel is rolling out targeted population health management efforts designed to keep its frequent flyers out of the emergency department and out of the hospital and in the outpatient care setting as much as possible.
"We are working on finding the best methods for reducing readmissions and potentially avoidable utilization… If we discharge a patient who has the potential to come back in for a readmission, for example, we are looking at what kind of structure we can put into place to make sure they are going to stay healthy or stay on the path of recovery," he says.
"Logically, you can't reduce readmissions to 0%, but at any point in time there are probably some health concerns that can be handled without a readmission."
One of Anne Arundel's cost reduction strategies is to provide free in-home support to its top utilizers of expensive healthcare resources—those patients with manageable chronic conditions who often present in the emergency department for care that could be delivered in a lower cost setting.
"What we did was focus on the top 500 patients that we see the most in the ED and in the organization. For those patients who would cooperate, we pay for a care manager to go to their home and meet with them," Reilly says.
Care managers are currently working with about 400 patients "to help them create a better lifestyle," Reilly says, and to keep them from needing more intensive and costly services.
Increasing Access to Primary Care
Using a data analytics tool, Anne Arundel was also able to determine that it was receiving an inordinate amount of medical 911 calls from a subsidized low-income senior housing facility in its service area.
Rather than seeking regular primary care to monitor and control health issues like diabetes, chronic obstructive pulmonary disease, and congestive heart failure, many residents were commonly calling 911 to be taken to Anne Arundel's emergency department.
To help these patients receive better, more consistent care and to lower costs, the health system opened a one-doctor primary care clinic in the building in October 2013.
"About two years ago, we began working in collaboration with the housing authority and the state to put a clinic on the first floor. We have a primary care doctor there, and he can see patients in the clinic or he can do house calls," Reilly says.
The clinic is partially funded through a Health Enterprise Zone grant from the Maryland Department of Health and Mental Hygiene. The HEZ Initiative is a four-year pilot program designed in part to improve healthcare access and health outcomes in underserved communities and to reduce healthcare costs and hospital admissions and readmissions.
The grant provides about $900,000 over a three-year period to fund the clinic. And while that isn't enough to cover Anne Arundel's costs, Reilly says the clinic is still a success when all factors are considered.
"We spent about double [the grant] to build out the clinic, buy furniture, and staff the site. We probably lose about $300,000 a year on it because there is very little reimbursement for those kinds of visits, but it's a good investment in the health of those seniors."
The clinic has also gone a long way toward curtailing medical 911 calls from the building's residents, Reilly adds.
"It's reducing our readmissions and the visits we would have in the ED… It hasn't happened overnight, but over time, we have seen about a 50% reduction in the number of calls from that site to our ED. We are proactively dealing with health issues in an outpatient setting, and that has reduced ED utilization by these patients. It also frees up the ED for more emergent needs."
More Population Health Efforts to Come
Buoyed by the success it has had so far, Anne Arundel is looking for more ways to expand its efforts to work with other patient populations.
"We have just been awarded a $400,000 grant to do some planning for additional population health measures to try to keep people healthy and receiving care in the right place," Reilly says.
Those measures will be implemented beginning in January 2016 and are intended to "help stem the tide" of overutilization for patients dealing with diabetes, obesity, and mental health issues, he adds.
"We want to help people deal with these issues so they don't wind up in the ED or the hospital but, instead, are managed through regular primary care office visits."
It's long been considered good clinical practice for hospital staff to wash their hands before and after coming into contact with patients and their surroundings, but now there is a financial incentive as well.
As part of the Patient Protection and Affordable Care Act, the Hospital-Acquired Condition Reduction Program went into effect for fiscal year 2015. Hospitals that rank in the quartile of hospitals with the highest total HAC scores will have their CMS payments reduced by 1%.
Add that to CMS' readmissions penalties, and senior healthcare leaders now have plenty of motivation to find strategies to prevent the spread of infections within their organizations.
A Focus on Hand Washing
Cleveland-based MetroHealth System, a safety-net provider with 731 licensed beds and $905 million in fiscal year 2014 operating revenue, has been focusing intensively on hand hygiene since 2010, says Alfred Connors, MD, the system's executive vice president and chief medical officer.
The need for more vigilance became clear when a bacterial infection spread from one patient room to the next, Connors says. The patient in the second room had been transferred from another hospital where tests had shown he did not have the bacteria.
"Four days later, he was sick with a bloodstream infection that was the same bacteria as the patient in the next room, even though we had supposedly put him in isolation. It was clear that our processes for protecting him didn't protect him," Connors says.
The patient ultimately died, and while it is not clear that the death was caused by the infection, it nonetheless spurred MetroHealth into action.
"I reported it to our CEO and to the board as a possible bad outcome due to a quality issue. They were highly motivated and very clear with me about how much they wanted me to fix this problem and how unhappy they would be with me if I didn't," Connors says.
"We decided to make the hospital safer. If someone comes in and doesn't have an infection and gets one here, then that is because we didn't protect them effectively. We didn't isolate someone else who had an infection or we didn't keep an infection from coming in on the doctor's hands."
Monitoring Staff Behavior
Connors began by auditing MetroHealth's hand washing practices. He hired four part-time hand hygiene monitors to observe anonymously what was happening in every unit in order to take a hospital-wide approach to fixing the problem.
"What I learned was that about 70% of people were washing their hands every time they came into or left a patient room," Connors says. "[The remaining] 30% was mostly people just running into a room for a second to grab something. But if you watch, you see that they might turn on a light switch, or touch a bedrail, or touch the TV. It was clear that this was not working."
MetroHealth then implemented its "Wash-In, Wash-Out" initiative, which consists of mandatory education and frequent monitoring and feedback to drive home the importance of following a more consistent regimen and to increase awareness and accountability, Connors says.
"Everybody believed their hand washing rates were fine, and that it was everybody else who was the problem."
After the first four weeks of the training program, MetroHealth's hand washing rates increased to 85%, which was better, but not good enough for Connors.
"I wanted to get above 90%," he says. "The next week, 12 units were above 90%, and the following week, all but one unit were above 90%."
Being Transparent with the Data
To encourage competition and adherence, the health system posts the numbers for hand washing rates on its Intranet site.
"Nobody wants to be the worst unit. It's kind of fun, and it also works remarkably well. In 2011, for the year, we were at 97%. We've been able to keep it consistently high for four years so that is a big win," Connors says.
Additionally, MetroHealth posts the date of the last infection in each unit. "When I first proposed that, everyone was against it, but the fact is that posting it motivates people because no one wants to see a bad number. It hurts when you haven't had an infection in six months, and then you have to post that you've had an infection. This is constantly reminding people how important this is. It's very visible, and we have a lot of transparency."
Achieving Staff Buy-In
Connors had to make about a dozen phone calls during the initial monitoring period to encourage participation from some hand hygiene offenders, he says, but most people were on board from the start.
"I didn't get a lot of pushback. It was more of a reaction of people being glad we are doing this. The fact is I've gotten really good support. People are really proud of this because they see the positive effects."
Improving Cost, Quality, and Patient Safety
MetroHealth spends about $400,000 per year on infection control measures such as the hand hygiene program. Other efforts include better antibiotic stewardship, better room cleaning, and chlorhexidine baths for ICU patients.
In return, the system is reaping a significant financial benefit. From its HAC prevention efforts between 2011 and 2014, MetroHealth has saved approximately $5.3 million of medical costs.
Additionally, infections are down substantially. From 2010 to 2014, central line-associated bloodstream infections dropped 35% and ventilator-associated pneumonia dropped 71%.
"This is clearly a win for the hospital financially. Better care costs less, saves money and lives, and is better for patients. It's doable. It's not expensive. And it's clearly the right thing to do for patients," Connors says.
Moreover, he adds, this attentive approach to infection prevention is also a key component of quelling patients' fears about being in the hospital.
"[HAC is] one of those metrics that CMS looks at when they are determining penalties, and that is part of this, but the real reason we are doing it is because infections scare people. When you come into the hospital, you are scared you are going to catch something, and the fact is you can. If you are ill and get an infection that is not a trivial thing."
Two health systems have improved payments by making healthcare payments mirror consumer experiences and by tapping the growing popularity of crowdfunding websites for healthcare bills.
Most hospitals and health systems claim to be patient-centered, but they don't all put their money where their mouth is when it comes to helping patients access and pay for care.
I've spoken recently with finance leaders at two health systems that are implementing tools that take the consumer perspective on bills, improve the patient experience, and in turn, boost the revenue cycle.
Patient-centric billing and payment
When Laurie Hurwitz became the executive director for revenue cycle at La Crosse, WI-based Gundersen Health System about a year ago, she was determined to simplify the system's billing and collections processes.
At that time, Hurwitz says, patient statements were difficult to read because they were payer-centric, not patient-centric. She worked to remove the healthcare industry jargon and increase readability for the average person.
"I was interested in finding a better solution for the patient. I wanted it to be easy for them to immediately understand what they owe and what they need to do to pay," Hurwitz says.
"I care more about the patient experience than I do about collecting from the patient, which might sound strange coming from a finance person, but I believe one follows the other. If we don't do what is right for the patient, I believe it will impact us financially."
The next step in Hurwitz's plan to "delight the patient" was to implement a simple, technology-driven way for patients to pay their medical bills—an idea she says stemmed from her own desire for the easiest way to complete tasks.
"I'm lazy. I walk around with a five-inch computer with me, and I want to do everything with it. I don't want to write a check. I don't want to go anywhere. And I think a lot of people my age are that way, and certainly my kids and their friends are that way."
With that in mind, Hurwitz led Gundersen's transition to a new billing process that offers self-service payment options via email and the MyChart patient portal in its electronic health record. The new billing methods were rolled out across 36 locations in five months.
"[We] launched a new billing experience designed to engage patients earlier with more transparent and friendlier information and offer easier and more flexible means to complete payments on their own. The simplified process is intended to mirror the types of experiences people have as consumers, supporting the overall goal as a patient-centered healthcare system," Hurwitz says, noting that the system has adopted self-service payment as a new success metric and now measures patient billing satisfaction.
The early results are significant. Gundersen has experienced a 132% rise in payments coming in through a self-service option and a 13% decrease in cost per statement. Additionally, in a patient satisfaction survey, 76% of patients indicated they would recommend Gundersen due to their recent payment experience.
Hurwitz believes patient convenience is increasingly important to the future of provider organizations.
"I'm concerned when I look at people in the next generation. … When I look at my kids who are in their mid-30s, I see people who have no loyalty. They want what they want when they want it, and if it's not convenient for them, they are going to go somewhere else. It's important in healthcare that we provide what the patient is expecting."
One of the positive "unintended consequences" of Gundersen's new self-service payment strategy is it shows staff that leadership is committed to changing the system's business practices to better meet patients' needs, she says.
"This sent a very clear message that we are not going to do things the way we have done them in the past. It's transformative."
Sponsoring crowdfunding campaigns for healthcare bills
At Harrisburg, PA-based PinnacleHealth System, senior leaders are trying to tap into the growing popularity of crowdfunding websites such as GoFundMe and Kickstarter.
In January, the system launched its HOPE Card program to help patients pay large medical bills associated with chronic illness, surgery, and other expensive procedures through online donations.
With the HOPE (Helping Others Pay Expenses) Card, patients work with a third-party vendor to create an online fundraising profile, which allows friends, family, and community members to make monetary contributions. PinnacleHealth sponsors the patient by paying the card's annual fee for the first year, and the vendor takes an administrative fee of 6% from the donations to maintain the individual website.
One main goal of the HOPE Card is to ensure that patients do not forgo healthcare due to an inability to pay, says William Pugh, PinnacleHealth's senior vice president and chief financial officer.
"It gives patients and their families a little bit of peace of mind that they will be able to pay their medical expenses. It helps them to get their drugs so they are more likely to stay on their medications," he says.
"They are also more likely to go to their follow-up appointments and get their tests done. From that perspective, it's really about patient care, comfort, and convenience."
By aiding patients in paying their bills, Pugh says, the HOPE Card will also likely improve collections for PinnacleHealth, which is dealing with a substantial increase in high-deductible health plans in its market in recent years.
"We are seeing growth in high-deductible health plans, both in the number of plans and the size of the deductible. When we first started seeing high-deductible plans, it might have been $1,000 for an individual and $3,000 for a family, but now it's increasingly up to $5,000 or $6,000 for an individual."
The HOPE Card is a tool to combat this sharp surge in patient financial responsibility, Pugh says, and positions PinnacleHealth as part of the patient's economic support system.
"We want to help individuals meet their financial obligations to the extent that we can in order to reduce the cost to collect, our bad debt write-offs, and our charity care," he says.
"We provide significant financial assistance to people above our charity care guidelines, but they still have some out-of-pocket costs, so they are good candidates for this program. Our intention is to help get those accounts paid and, hopefully, to reduce our write-offs."
And while it's too soon to know what the real impact on collections will be, Pugh says he and the leadership team at PinnacleHealth are optimistic.
"We are monitoring it closely. We did a soft launch in January and now we are doing some marketing and advertising … and we plan to keep pushing it. It's about the numbers. I would love to see hundreds of patients using it. We have large cancer programs and large transplant programs, and I think the growth potential and the financial upside is pretty significant. We're excited about it."
A shift toward wellness and prevention is a shift toward better care coordination and cost containment, says the CFO of Virtua Health System in NJ.
Building an organization designed around value instead of volume is critical to long-term financial success, but it's also a major challenge, says Robert Segin, executive vice president and chief financial officer at Virtua Health System, a $1.3 billion, 980-bed system based in Marlton, NJ.
"It's a paradigm shift. We've been on this journey for about five years, and it's really the evolution of population health management as the healthcare industry moves toward wellness and prevention," he says.
According to Segin, Virtua's strategies for making the necessary shift include:
1. Becoming an Accountable Care Organization
About three years ago, Virtua launched VirtuaCare—its Medicare ACO—and has since formed ACOs for two of its managed care commercial insurers and its own employees and dependents. In total, roughly 50,000 patients are cared for through the ACO programs, which aim to improve communication between primary care physicians, specialists, and other providers.
The main goals of the ACO model include supporting the systems' mission of helping patients get and stay well and developing better care management capabilities, particularly for patients with chronic disease, Segin says.
"It's really about learning how to improve healthcare coordination within our system as well as with our independent system of providers by having care coordinators working with chronically ill patients and using the necessary resources to keep patients healthy and out of the emergency department and acute-care environment."
2. Dealing with Social and Environmental Barriers
In addition to increasing communication between providers, the care coordinators use an algorithm that classifies patients by acuity level to determine how much in-home and community-based support is appropriate. Based on this information, the care coordinators conduct home visits and help patients work through the barriers that might prevent them from regaining and maintaining their health.
While many of the needs that are identified go beyond the typical scope of a hospital or health system, Segin says it is necessary to look at all factors that might lead to the use of expensive healthcare resources.
"A lot of the issues we deal with are environmental, particularly with elderly patients. You don't realize until you get into the home environment some of the issues from a safety perspective that would potentially bring someone into the ED or acute-care setting. Safety features like steps or the bathroom facilities. Things you don't typically think about as a health system," he says.
"Transportation is another big issue. We want to be sure patients get to their doctor's appointments and to the pharmacy. We are monitoring people to be sure they are taking their medications and have the ability to get their medications."
This comprehensive approach to the patient is fundamental to success as the healthcare industry evolves, Segin says, and is helping Virtua reduce hospital readmissions and raise quality scores.
"There are a lot of issues that as an acute-care provider we didn't think about until we got more broadly involved in the patient's care… Looking at the patient as a whole person is becoming more important as the environment of healthcare transitions to population health management."
Like many health systems, Virtua has historically been dependent on its inpatient business, but that has "shifted dramatically" over the past several years as the system works to keep patients out of the hospital, Segin says. "Now about 53% of our business is based on outpatient revenue and that is growing exponentially at this time."
To keep pace with this growth, Virtua is expanding its outpatient capacity. For example, the system now has nine ambulatory surgery center joint ventures throughout New Jersey, including in areas that are beyond its usual footprint.
"We see more and more surgeries that have traditionally been done in an inpatient environment that are now being done as outpatient procedures," Segin says. "For instance, knee replacements are now commonly done on an outpatient basis where it used to be strictly an inpatient service. We see that as an opportunity to grow. It's all about outpatient growth, service, convenience, and quality for the consumers in our marketplace."
Virtua is also doubling its urgent care centers to six by the end of 2015—a decision that was spurred in large part by the strong growth its three existing centers experienced last year, Segin says.
"We are trying to make it convenient so that in lieu of going for an expensive emergency department visit when their primary care physician's office is closed, patients will go to an urgent care center… We had more volume than ever in 2014 in our urgent care centers."
Being able to deliver care in less expensive settings is a cornerstone for success in a population health management model, Segin says, adding that patients are responding well to Virtua's growth plans.
"The number one indicator of the positive response we've had from consumers to our outpatient strategy is our growth in market share, which at 33% is the highest it's ever been."
4. Focusing on Cost Containment
Along with its efforts to fuel top-line growth on the outpatient side of the business, Virtua is also taking a hard look at how it can rein in expenses to enhance value.
"We recognize that rates for inpatient services, whether through Medicare or commercial insurers, aren't going to grow as they have in the past. Our plan is to continue to grow our outpatient services and to complement that with cost reductions." Segin says.
One area where Virtua has had significant success in cutting some administrative and support costs is its vendor contracts.
"We are taking advantage of the soft economic market in the U.S. by renegotiating every contract that is going to expire in this organization. We have gotten price consensus in about 95% of our contracts," Segin says.
The system is also yielding clinical savings by working with doctors to curb spending on costly physician preference items and unnecessary patient care.
"For the economies of scale, we are working on how we can narrow the selection of hip, knee, and shoulder implantables to just a few vendors to get the best quality at the proper price point moving forward," Segin says.
"We are also working with different groups of physicians in terms of reducing variations in clinical tests, pharmaceuticals and drug usage, and diagnostic tests that aren't needed and don't provide value to the patient."
Lessons from Reading Health: test clinical hypotheses, make few process changes, highlight patient quality over hospital costs, and switch to risk-based payment contracts.
Sepsis, the dangerous immune response to infection that overwhelms bodily organs, is the most expensive condition treated in U.S. hospitals, costing more than $20 billion per year to treat, according to the Agency for Healthcare Research and Quality. Many hospitals and health systems have responded with coordinated treatment approaches.
At Reading Health System in West Reading, PA, senior leaders recently created clinical effectiveness teams designed to find strategies for improving the care of patients with sepsis, along with renal failure, chronic obstructive pulmonary disease, heart failure and shock, gastrointestinal hemorrhaging, and for patients having bowel surgery.
Each of the six teams consists of a physician lead, a nursing lead, a quality expert who functions as the facilitator, and five to seven subject matter experts, such as an infectious disease specialist, a cardiologist, or a bedside nurse.
Gregory Sorensen, MD
Steep rise in sepsis garners attention
Gregory Sorensen, MD, Reading Health's senior vice president and chief medical officer, says the skyrocketing rates of sepsis motivated the health system to make it a key area of emphasis.
Hospitals in the state are required to report all inpatient information to the Pennsylvania Health Care Cost Containment Council, an independent state agency formed to address rapidly growing healthcare costs. The aggregated data has shown a sharp increase in sepsis in recent years.
"What we discovered over the past five years through this data is there has been a 74% increase in sepsis in patients. One reason is because we are better able to diagnose it. The other factor may be that there are, in fact, higher numbers of patients with comorbid diseases for sepsis," Sorensen says.
"With those two things in mind, we think the higher number of patients with sepsis is an important piece to focus on. Our goal for the sepsis team is to achieve reductions in mortality, morbidity, length of stay, and cost of care."
Building new clinical protocols
For about the last eight months, Reading Health has been focused on identifying ways to drive early identification and treatment of sepsis. One of the sepsis team's core strategies is to establish hypotheses, institute clinical changes to test them, and monitor their impact on patient care.
One hypothesis was that the earliest possible diagnosis of sepsis risk for patients coming into the emergency department would lower severity, Sorensen says.
"We modified early-warning systems that look at the risk factors and identify patients who may be high sepsis risk candidates. Then, we order additional diagnostic tests and intervene earlier with fluids, blood cultures, and antibiotics. We measure from the time they enter the ED to the initial diagnosis to interventions with fluid therapy and antibiotics," he says.
"That degree of rigor has helped us focus on potential hypotheses that are statistically relevant, and we are not wasting our time on those that don't have the potential to impact outcomes. We've seen some very important reductions in our morbidity, mortality, and length of stay numbers as a result."
So far, Reading Health has experienced a 17% reduction in length of stay, a 40% reduction in mortality, and a 13% reduction in costs for its sepsis patients, Sorensen reports.
Because of these new clinical protocols, patients are also now being admitted from the emergency department to the right level of inpatient care more often, which is another way of delivering better, more cost-effective care, he adds.
"We are looking at determining if a patient should be admitted to the intensive care unit first rather than going to a floor, getting sicker, and needing to be moved to intensive care. If we get it right to begin with, we won't have to move as many patients," Sorensen says, noting that since the inception of the sepsis team, the percentage of patients that need to be moved to a higher level of care has dropped from 7% to below 4%.
Small changes add up to big success
Robert Jones, DO, Reading Health's medical director for performance improvement and clinical integration, says that to achieve success when redesigning processes, it's important to make incremental changes so that clinicians are not overwhelmed and are more likely to support the new methodologies.
"When making process changes, you don't create tasks that are incredibly difficult to do and require a lot more work. You look for small changes that have a large impact," he says.
"We are identifying things that look to have statistical significance, and the team will work to identify what is the best way to execute those so they make the most sense. Then our leaders are going out on the floor and making sure everyone is engaged in the process. They are also looking at how successful it is or isn't and seeing how to improve upon it."
Highlighting quality over finance
Another critical component of attaining long-term success for these kinds of efforts is to emphasize the impact on patients rather than the financial benefits to the organization, Sorensen says.
"One of our early missteps was to talk about this in terms of cost of care. Physicians don't care about what the cost is as long as the outcomes are right, and that is the correct approach. But we know that it almost always costs less to do it right."
Although the implementation of the sepsis team hasn't been a "bump-free process," Sorensen says Reading Health's physicians and nurses are now generally supportive of the effort to improve patient care.
"They are very engaged, and they are actually excited," he says. "This is the right thing to do by patients. If we truly think about it from the patient's perspective, then we have to be focusing on better quality, better access, less cost, and a higher degree of patient safety."
Quality is key to success in population health
While it's the insurance companies who currently profit the most from quality enhancements like the sepsis initiative, Sorensen says that will change over time as Reading Health engages in more risk-based payment contracts built around population health models.
"Many of these benefits go back to the insurance company because we don't have the right structures in place yet to share in some of that benefit … [but] it is how we are going to get paid in the future," he says.
Joining the Mayo Clinic Care Network allows a stand-alone hospital to stay that way, for now. The partnership brings clinical and financial benefits, but depends on cultural fit.
Mergers and acquisitions are happening at a rapid-fire pace within the healthcare industry, but the leadership teams at some hospitals and health systems are finding strategies to remain independent.
Rather than merging or being acquired by a larger system, many organizations are forming collaborations and partnerships with other healthcare providers. In the HealthLeaders Media Intelligence Report, "The M&A and Partnership Mega-Trend," published in February, 38% of respondents say their organization's most recent activity was a contractual relationship. In comparison, 34% say it was an acquisition and 10% say it was a merger.
Designed with the goals of improving financial performance, patient outcomes, and population health management capabilities, these arrangements are helping some stand-alone hospitals withstand the revenue pressures that are driving so many others to enter into M&A deals.
Staving off a merger or acquisition
At Virginia Hospital Center, a 342-bed, not-for-profit, teaching institution located in the Washington, D.C., suburb of Arlington, the senior leadership team is determined to remain independent despite competition from several major players in the area.
"Virginia Hospital Center is unusual because we are the only independent hospital in our region. Every other hospital in this area has teamed up with a large local system or a national system," says Adrian Stanton, vice president and chief marketing officer.
Being independent makes Virginia Hospital Center "an oddity," says Stanton, but "we like that and our board likes that. We believe it allows us to move quickly on things, and we can get things done in an efficient manner,"
One tactic for remaining autonomous is to form strategic partnerships to find clinical and financial benefits without becoming part of a larger entity, Stanton says. "Staying independent has served us well over the years, but as things are changing, we are absolutely looking for opportunities where we can collaborate with other healthcare providers."
Finding the right culture fit
As part of that strategy, Virginia Hospital Center joined the Mayo Clinic Care Network in February 2015. Launched in 2011, the network now has 32 member organizations across 19 states, Puerto Rico, and Mexico.
One reason his organization decided to become part of the network, Stanton says, is cultural fit.
"Mayo has a very prescriptive sequence they go through to vet whether or not a hospital is the right fit to be part of the Mayo Clinic Care Network. As we were looking for those opportunities to collaborate, Mayo was the first name that came to mind, and as we were researching them, we saw a lot of similarities with Virginia Hospital Center," he says.
"Culture is absolutely critical for us. We talked to some other organizations, and I think very early on in the conversation, we could feel it wasn't going to be the right fit. [Mayo's] perspective is that the patient comes first, and that rings very true to the way our culture is structured here."
Expanding clinical expertise to treat more patients
eConsults, which allow Virginia Hospital Center physicians to connect electronically with Mayo specialists and subspecialists when they want additional input on a patient's care.
AskMayoExpert, which provides Virginia Hospital Center with medical information compiled by Mayo physicians on disease management, care guidelines, and treatment recommendations.
eTumor Board Conferences, where Virginia Hospital Center physicians can present and discuss the management of complex cancer cases with a multidisciplinary panel of Mayo Clinic specialists and other members of the network.
"If a patient comes to see any doctor on our medical staff with a very complex diagnosis and wants a second opinion, we can send it over to Mayo Clinic. They have scheduled times on their schedule to review cases. They will take 15 to 30 minutes to do a consult, which we will get back within two business days," DiLisi says.
Having access to Mayo's clinical expertise means Virginia Hospital Center can now treat patients with highly complex conditions who otherwise would have to be referred to another institution, DiLisi says.
"For example, Mayo actually has a physician who only deals with cardiac tumors. In my 17 years [as a physician], I don't think I have ever seen a cardiac tumor. We've got great doctors on our medical staff, and we are a tertiary hospital that does everything except trauma and transplants. With the eConsult with Mayo, patients with complex diagnoses can still be treated here," he says.
"As an independent hospital, we aren't going to hire a doctor who just deals with cardiac tumors. We couldn't do that, and it wouldn't make sense for us to do that. So for us to have this clinical affiliation, it gives us some benefits of having the expertise of a quaternary hospital without us having to be owned by a large system. It also allows us to do more for our patients."
Benefits to the bottom line
Virginia Hospital Center pays a subscription fee to be part of the Mayo Clinic Care Network, and while the hospital does not pass that cost onto its physicians or patients, the leadership team expects it to be offset in other ways, such as a stronger community reputation and increased patient volume.
"[The collaboration] enhances our already strong image, keeping patients in the community who may have chosen to go elsewhere," says Robin Norman, Virginia Hospital Center's senior vice president and chief financial officer.
"Further, it may attract patients from our region who may not have thought of Virginia Hospital Center as a destination for the care of patients with a rare or challenging diagnosis."
Additionally, Norman says, working with Mayo Clinic to strengthen clinical protocols and improve patient outcomes will be a financial boost to Virginia Hospital Center as reimbursements become more value-based.
"Providing the best, evidence-based care also reduces the cost of care by reducing readmissions and complications," she says. "[That is] good for the patient and good for our bottom line."
Staying independent, for now
By improving its financial and clinical strength through the collaboration with Mayo Clinic, Virginia Hospital Center will be able to retain its independence in an era of consolidation—at least for now.
"This affiliation gives us a connection to a world leader in healthcare, but we remain independent, and we can make the decisions about what we think is right for our patients," Stanton says.
"I don't know where the future of healthcare is going, and I don't know that five years from now we'll be able to remain independent. But, for right now, our board sees it as a positive that we are independent, and this collaboration is surely helping us to continue down that path."
Why hospitalists are essential to population health management, how to get physician leaders on board with shared clinical protocols, and how data can rein in patient complications, mortality, and length of stay.
By standardizing clinical protocols across all hospitals and care sites, health systems seek to produce reliable patient outcomes, reduce the overutilization of expensive resources, and decrease the overall cost of care.
But it's much easier said than done to align clinical staff around these goals.
Catholic Health Initiatives, the 105-hospital, not-for-profit healthcare giant based in Englewood, CO, has found success in gaining these kinds of efficiencies through its hospitalist program, in which its roughly 900 hospital-based physicians assume the traditional care coordination duties of primary care doctors.
At CHI, which operates hospitals in 18 states, more than 75% of all hospitalized patients are cared for by one of its hospitalists, accounting for about $1.5 billion in annual net patient-service revenues.
Manoj Pawar, MD
Hospitalists are key for population health
Before CHI connected its hospitalist programs across the system to share best practices and help define standards, the outcomes from hospitalist teams at different locations varied greatly.
Now, better and more consistent outcomes are being achieved at a lower cost through a coordinated effort, says Manoj Pawar, MD, CHI's vice president of clinical operations and physician leadership development.
Providing efficient and effective care is critical to success as the healthcare industry moves toward value-based reimbursements, he says. "You can't be successful in a population health environment without having a progressive and robust hospitalist program. We want to leverage our hospitalists to take advantage of these new payment schemes by focusing not on the location of care but by looking at the stratum of patient complexity and acuity."
For example, Pawar says, hospitalists have been the linchpin of success for CHI's bundled payment structure in its orthopedic service line.
"We are able to achieve some of the best outcomes at the lowest cost by integrating the work of our hospitalists. They are doing pre-op assessments and understanding the complexity of the patient to avoid additional complications or a greater length of stay. We couldn't be successful in managing that bundle without the hospitalists."
Amanda Trask, national vice president for CHI's hospital medicine service line, agrees that hospitalists are an important component to the system's long-term population health strategies and believes they will take on an even bigger role over time.
"Hospitalists have the responsibility for caring for the sickest of the sick in our populations and our ministries. These are also some of the highest-cost patients. … Hospitalists are working in partnership with primary care physicians and ED physicians in a triad model for high-acuity patients. They are working with subspecialties like cardiology and surgery to identify how the hospitalist can play a key role in assuring a smooth transition from the hospital to a post-acute site," Trask says.
"We see our hospitalists expanding their reach and caring for high-acuity patients beyond the four walls of the hospital to meet some unmet needs. They are looking to provide the same type of services in the outpatient, post-acute setting for higher-complexity patients and to provide gap care for patients who don't have a primary care physician and need to find one."
Building a Culture of Cooperative Physician Leaders
In order to create a successful, system-wide hospitalist program, CHI first invested time in developing a culture where physician leaders are willing to work together, Pawar says. Once physicians from across the system understood they were all facing the same challenges and working toward the same goals, it became easier for them to develop standard protocols for the hospitalist program.
"One thing we did that was very intentional was we spent a lot of time on culture-building and alignment. We spent a few years bringing program leaders together, building a sense of community, and finding that the key drivers and issues they were dealing with were very similar. They started to realize they should not all be operating separate programs," he says.
Having a high level of cooperation among physician leaders is the only way to achieve the desired results, Trask adds.
"To get to the financial gains, process improvements, and population health strategies, we have to have the right leaders in place and they have to be connected with other leaders. It comes back to making sure that we are able to remove any barriers. It's a highly collaborative environment," she says.
Data for clinical decision-making and benchmarking
CHI has been able to advance the conversation among physicians to improve care and lower costs, Trask says, by providing trustworthy, actionable data to guide clinical decision-making.
The data has spurred deeper analysis of clinical protocols and is also encouraging better alignment with quality teams.
"Hospitalist groups and their physician leaders are now going to their quality leaders and asking for more information to drive care for patients. The questions that are being asked and the research that is being done now is something that wasn't present in the past. We believe, as a result, that our hospitalists are more attuned to making the right decisions for patients," Trask says.
"This is about quality improvement and financial improvement. … Our work has been to tie the two together so we are not functioning in a silo environment. We are really trying to demonstrate with the data how all of it is interconnected."
To that end, CHI uses benchmarking data to compare its hospitals to each other and to hospitals outside of its network with regard to metrics such as patient complications, mortality, and length of stay.
"We really wanted to understand those three measures across all of our hospitals. When we looked at it less than a year ago, for example, we had tens of thousands of excess patient days beyond what we would have expected based on patient presentation or illness," Trask says.
Armed with the data, CHI's hospitalists are working with quality teams to make improvements, and the results so far have been substantial. In under one year, the organization's excess patient days have been cut by about 60%, Trask says, adding that this will equate to $2 million in savings in fiscal year 2015.
A Boon to the Bottom Line
Brad Ludford, CHI's vice president, operational finance, says he expects the organization to reap even bigger savings this year thanks to the hospitalist program.
"A consistent approach to hospital care led by our CHI hospitalist physicians ensures we're appropriately utilizing our hospitals. By managing more consistently and intentionally, we are on pace during the current fiscal year to save approximately $4 million of avoided direct costs," he says.
Additionally, CHI is experiencing indirect "positive financial outcomes through these efforts," Ludford says. "Other financial improvements not easily quantified include additional hospital capacity, which enables us to serve more patients than we could before, and fewer hospital-acquired conditions emanating from unnecessary and excess hospital patient days."