Can VBP Put Healthcare on Right Track?

This article first appeared in the January/February 2013 issue of HealthLeaders magazine.

The overall state of the healthcare industry continues to confound and captivate healthcare leaders. Despite several years of preparing for healthcare reform standards such as care coordination, meaningful use, and value-based purchasing, leaders are still in a quandary: unhappy about the healthcare industry as a whole but convinced that their own organizations are moving in the right direction.
 
For the third consecutive year healthcare leaders view the industry as being on the wrong track, according to the 2013 HealthLeaders Media Industry Survey. If there is solace to be gained from these findings, it is that the tide appears to be turning—albeit slowly.

The percent of respondents who think the industry is on the right track increased from 25% to 32% from 2012 to 2013. Meanwhile, the percentage of naysayers dropped from 46% to 39% during the comparable time period.

At the same time, respondents continue to view their own organizations as being on the right track by a significant share (71%). For the most part they have confidence in their leadership and staff, and in their organization's prospects for growth. From process improvement to population management and care coordination, survey respondents are aware of the opportunities (and threats) posed by the shifting healthcare landscape, and they are taking the steps necessary to capitalize on the changes.

But Intelligence Report advisors and others note that the healthcare industry must approach all of these changes within an environment of reduced reimbursements and shifting payment models. Healthcare leaders must balance the pace of change to maintain an adequate revenue stream.

"Our concern is, can we reduce our costs fast enough, as fast as reimbursements are coming down and as fast as volumes are coming down, and still have a positive bottom line?" asks Dennis Vonderfecht, president and CEO of Mountain States Health Alliance, a Johnson City, Tenn.–based health system that serves 29 counties in Tennessee, Virginia, Kentucky, and North Carolina.

Most healthcare leaders seem to be optimistic that such a transition can be successfully navigated; indeed, 64% consider value-based purchasing their organization's greatest opportunity, just behind health information exchanges (78%).

Strategic planning
Vonderfecht says his organization began three years ago to prepare for population health management and the potential that MSHA could lose 30% of its inpatient volume with the change. The organization's 10-year strategic plan shifts the patient treatment focus away from expensive episodic care in hospitals and emergency departments to more reliance on disease management protocols and frequent patient contact with primary care physicians.

"It is common sense that you are trying to keep people healthy instead of trying to treat sick people," says Vonderfecht. He adds that MSHA is more focused on ambulatory outpatient and retail medicine "than we have ever been in the past."

Priorities
The old adage about the squeaky wheel may apply here. Patient experience and satisfaction was included among the top three priorities by 54% of respondents, putting it at the top of the list for the second consecutive year. With the introduction of value-based purchasing and its link to HCAHPS, the federal Centers for Medicare & Medicaid Services has certainly turned up the heat to transform patient satisfaction from a marketing opportunity to a meaningful measure with clear fiscal implications.

Healthcare leaders are responding, at least in the short term. Indeed, the presence of care models (population health, medical home, etc.) registering as high as the fourth priority (27%) indicates seriousness about changing the industry's status quo. Still, two key priorities—clinical quality (48%) and cost reduction and process improvement (45%)—continue to earn prominence, capturing the second and third slots, respectively.

Tied for fourth place, also with 27%, is physician-hospital alignment. While MSHA views population health as a key strategic path and is an early adopter, others may be taking a more measured approach to care models, explains Timothy D. Ranney, MD, MBA, vice president and chief medical officer at Missouri Baptist Medical Center, a 487-bed acute care hospital in St. Louis.

"Healthcare is still in a payment model that doesn't support population health," he notes, cautioning that "as you learn the competency, it is important that you don't transition so early that your revenue stream goes away." Ranney expects care models to quickly move up the priority list over the next few years. As providers make the transition, he says they need to think about how different payment models such as bundled payments and commercial reimbursements will affect their care model, as well as how accountable care organizations might play into the mix. "How successful will some of those CMS programs become, and what will they look like? How will that impact payments?" Even within an ACO model, he says some will still be paid on a "semi-fee-for-service basis."

As Vonderfecht notes, "it gets down to how far out is your vision." Organizations that are thinking in the shorter term will have different priorities than organizations that are thinking about 2014 and beyond.

Care coordination, continuum of care
Viewed by many as the future of healthcare and the process that will enable the realization of the triple aim—improving the patient experience of care (including quality and satisfaction), improving the health of populations, and reducing the per capita cost of healthcare—care coordination/continuum of care is ranked as the single greatest challenge for clinical quality improvement by 24% of survey respondents.

Shortages
While reduced reimbursements was the near-unanimous choice as the greatest threat facing organizations (92% chose it), second on the list was physician shortage, cited by 76% of respondents.

Vonderfecht says that the shortage as a threat is only true if "our model for delivering healthcare is the same going into the future as it has been in the past." Moving to patient-centered medical homes and supporting physicians with care extenders will allow physicians to practice at the top of their license and "we may find that we actually have an adequate supply of physicians in most cases," he says.

But sometimes, finding the case managers (also known as care coordinators and nurse navigators) is part of the challenge. Demand for that skill set exceeds supply in some areas thanks to healthcare reform trends in which case managers (usually RNs supplemented by social workers) are integral to population health management efforts and reducing 30-day readmissions.

Ranney explains that as recently as two years ago staffing companies could supply case managers for temporary and permanent work. But today the temp agencies have no one available. According to him, if you have a case manager position to fill, you have to "grow your own" or find the candidates yourself.

Louise Edwards, director of planning and business development for Bon Secours Virginia Health System in Norfolk, concurs that there is big demand for nurse navigators but notes that even hiring from within is becoming more difficult. The seven-hospital system, which is part of the six-state Bon Secours Health System, uses nurse navigators for its cancer program and has been unable to fill an open position for a lung cancer nurse navigator.

Cost control
As reimbursements change, reducing costs will play a prominent role for healthcare organizations. Process improvement (80%), labor efficiencies (62%), and supply chain efficiencies (57%) were the top three areas that respondents expect to focus on in the upcoming year to reduce costs.

A number of advisors mentioned their adoption of programs like Toyota Lean, which implements processes to optimize resources, assets, and productivity while improving quality. Vonderfecht notes that according to some literature there is 40% waste in healthcare processes.

At MSHA, a consulting firm has embedded full-time workers into the system to teach the Lean process and make it part of the culture. MSHA expects to have 2,000 of its employees involved in "rapid improvement events" associated with various value streams by midyear.

The key is "involving frontline people in process improvement" and moving quickly, says Donna Poduska, vice president and chief nursing officer at Poudre Valley Hospital, a 270-licensed bed regional medical center in Fort Collins, Colo. She explains that hospital officials might agree to change staffing for a few days to see whether the change is worthwhile. "We do it really fast. It could be a bust, so we don't wait and watch for a few months. Our decisions are faster."

Fueling growth
As the delivery of acute care medical services moves beyond hospital walls, it is not surprising that survey respondents identify among their top five methods to fuel growth expanding outpatient services (first, with 57%), entering into joint ventures (fourth, with 41%), and acquiring physician practices (fifth, with 38%).

Louis Papoff, vice president and CFO of ambulatory operations in the Chicago market of Nashville-based Vanguard Health Systems, credits accountable care organizations with the interest in outpatient services. The ACO approach of improving the quality of outcomes while cutting costs is "a value proposition. The objective is a reduction in bottom-line costs for the patient pertaining to an unnecessary or avoidable hospital admission." He points to the consideration of service lines for behavioral health and nutritional counseling as "a confluence of multiple approaches that are beginning to gel into one prevailing trend."

As for joint venture and physician practice acquisition, Papoff says both actions are "tried and true" and reflect the need to get all the parties in a care continuum as closely aligned as possible.

"It's relatively straightforward to assess a practice and to assess how we could improve operations." He says the medical home, which tries to provide for most, if not all, patient medical needs at one location with one coordination team, is "the more interesting approach," but without the track record "it's harder to get your mind around it. There's a level of uncertainty."

Reprint HLR0213-3