Hospital CEOs to Physicians: Ride the Value-Based Wave or Wash Out

How two Kentucky hospitals are helping employed and independent physicians embrace population health and prepare for value-based care models.

At Our Lady of Bellefonte Hospital, preparing for the business-model shift from volume to value has been like a surfer paddling wildly to catch and ride the wave of a lifetime.

"The market you are in is important," says Kevin Halter, CEO of Ashland, KY-based Bon Secours Kentucky Health System, which operates the 215-bed acute-care hospital.

"We're not in a real aggressive market. My biggest challenge is getting my physicians educated on the front end because they all see the wave coming. And that's true for any of the new initiatives—bundled payment and financial changes like MACRA are in the journals, but it's not right in front of them as it is in places like Richmond, Virginia."

MACRA is a 'Trojan Horse' for Value-based Models

Bon Secours Kentucky Health System is part of the Marriottsville, MD-based Bon Secours Health System, which operates 19 acute-care hospitals in six states.

In Ashland and other markets that are just starting to fully embrace value-based delivery of medical services, the relationship between hospitals and physicians is absolutely critical, Halter says.

"Hospitals have been in value-based purchasing for five-plus years, now it's going to go to physicians, and my physicians are just now starting to see it. The reason they are seeing it is I am putting it in front of them. We had a board retreat with about 40 physicians to start educating them.

High Stakes Payment Reform Comes with High Hopes

The message, he says is "This is coming, you need to get prepared, we are going to help you get prepared by putting in a clinically integrated network.' Now, we are helping them work through the change so they don't find relief in the channels outside the hospital."

Our Lady of Bellefonte has 250 physicians on staff, with 30% of the staff hospital-employed. Employment status has had a significant impact on adoption of value-based care models among physicians at the hospital, Halter says.

"Employed docs get force-fed. They are in these programs. Bundled payments for instance, and MSSP ACO. We sign them up. As part of being an employed physician, some of your freedom of choice goes away, which is good and bad. The employed docs are much further along in the continuum of healthcare reform than our independents."

An Emphasis on Primary Care

Halfway across The Bluegrass State in Elizabethtown, Hardin Memorial Health is also devoting significant effort to working with physicians to ensure the shift to value-based care is as successful as possible, says President and CEO Dennis Johnson.

Hardin Memorial Health has a 300-bed acute-care hospital and is affiliated with Louisville, KY-based Baptist Health.

Investing in primary care capabilities and building relationships with independent primary care physicians are crucial for hospitals to thrive—or at least survive—as the healthcare industry adopts value-based care models and embraces population health, Johnson says.

"You don't have to employ every physician on the planet, but you do need to drive the primary care referrals... And if you have good primary care, you are going to be able to manage a population's health."

Primary care should be a central component of strategic planning at health systems and hospitals as they prepare for value-based care models, and healthcare provider leaders should be open to enlisting help from outside their organizations, Johnson says.

In 2011, Hardin Memorial and Baptist Health engaged the Healthcare Strategy Group, a provider of physician integration services, to assist with their strategic plan.

"That plan was approved in early 2012. We've seen a lot of gains from the strategies that were outlined in that plan, and we've just engaged HSG to do a refresh of our plan," says Johnson.

"HSG assisted both Baptist and Hardin on a primary care strategy about three years ago to help identify those markets where we had an opportunity."

He is bullish about Hardin Memorial's future. "Our investments in population health are good in either a fee-for-service world or a fee-for-value world. Primary care is really a low-risk, high-return investment."