The coming shift to value-based health purchasing will dramatically alter hospital finances—instead of billing Medicare for services performed, hospitals will be paid based on patient outcomes. According to a survey by the American College of Hospital Executives, 71 percent of hospital CEOs cited concerns about Medicare reimbursement as a top financial issue facing their organization in 2014.1
As organizations adapt to the Hospital Value-Based Purchasing (HVBP) Program, more than ever, CFOs will be challenged to spearhead systemic changes within the organization, a fact that we've observed across our healthcare client base. The following strategies have been shown to effectively help hospitals adapt to the new payment system.
The HVBP program grades hospitals on a broad set of criteria—from adopting basic clinical safeguards to reducing mortality. Some of these goals are more readily met than others, so focusing on immediately achievable goals—like ensuring the timely removal of catheters—demonstrates progress while buying time for organizations to tackle more complicated ones, like improving heart attack survival rates. All clinical process measures are similarly straightforward and represent an avenue for immediate action, and CFOs can play a critical role in incubating a culture of safety and building consensus among the staff.
A good program can produce immediate results. Within three months of adopting a standardized set of evidence-based practices for the catheterization of ICU patients, all 100 of the Michigan ICU Project's participating hospitals saw the occurrence of bloodstream infections from central venous catheters virtually disappear.2 Although the Michigan ICU Project focused on a different set of criteria than the HVBP, the program's success demonstrated the ability of hospitals to implement new treatment protocols.
Organizational commitment can make most HVBP clinical criteria readily achievable. For example, Boston's Mass General Hospital adjusted its computerized patient-information systems to recommend discontinuation of antibiotics within 24 hours of surgery by default, resulting in a 96 percent compliance rate for this clinical requirement.3
To ensure clinical criteria are met, staff members should be held accountable for compliance. Organizational reforms that clearly delegate processes, timelines and responsibility for HVBP's clinical measurements to individuals at the ward level are a good start to instilling accountability in the culture. Specific accountability will assist organizations in avoiding the trap of collective oversight to ensure measurable progress is being made.
Numerous studies have shown better outcomes for patients in "closed" ICUs, in which a single physician is responsible for the unit's operation. Instead of dispersing responsibility for patients among admitting physicians, a closed ICU consolidates authority, allowing a dedicated critical care physician to make necessary changes. Closed ICUs have seen risk-adjusted mortality coefficients fall up to 10 percent.4
Ideally, the transition to value-based payments should not affect staff's work—physicians and nurses are already duty-bound to protect patient health. But, in reality, time-stressed hospital staff responds to incentives.
This is especially important for improving patient communication, as four of the seven criteria for evaluating patient experience are communication-related. A National Institutes of Health meta-study covering two decades of research on physician-patient communication found that effective communication not only improved patient experience, but was also effective in convincing patients to manage chronic ailments including high blood pressure and blood sugar levels.5
Griffin Hospital, in Derby, Connecticut, adopted a communication initiative designed to empower patients through education. Under the new program, every newly admitted patient at Griffin meets with an attending physician and primary care nurse for an information session in which daily treatments are explained in simple terms. The initiative has consistently placed Griffin in the upper 90th percentile of hospitals in patient satisfaction surveys.6
Physicians have always known that good communication is a key element in their work, but there may be opportunities for restructuring incentive plans to allow doctors and nurses to take the time necessary to discuss their patients' prognosis.
HVBP rewards hospitals for improving patient survival and reducing readmission for heart attacks, heart failure and pneumonia. Hospitals are now responsible for patients' health after discharge, making close coordination with outside healthcare providers essential.
Many patients never truly leave the healthcare system—following their initial hospital discharge, they return to a long-term care facility until the next crisis and hospitalization. Effectively coordinating with outside facilities can ensure proactive monitoring of chronic conditions, as well as promoting communication between hospital physicians and nursing home staff.
When New York's Coler-Goldwater Specialty Hospital and Nursing Facility adopted a bundle of best practices for patients on ventilators, the incidence of pneumonia in their long-term care nursing facility dropped 58 percent, tremendously improving patient outcomes and reducing the prevalence of antibiotics. By investing in improvements to patient care in their nursing facility, Coler-Goldwater was able to reduce rates of pneumonia-based readmission.7
Many organizations are seeking partnership programs with local long-term care facilities. Investments in care at nursing facilities can significantly reduce their residents' risk of readmission to the hospital.
According to the Mayo Clinic, a review of 78 randomized trials revealed that up to 50 percent of patients with chronic illnesses fail to follow their medication regimen.8 While medication adherence is a complex issue, improving patient behavior could have a greater impact on health than any other improvement in care. Investment in follow-up care and patient oversight can help prevent unnecessary and costly readmissions.
Failure to follow discharge instructions increases a patient's risk of readmission or death. While a hospital cannot force patients to take medication as directed, a multifaceted patient outreach program can provide reminders to fill prescriptions and schedule follow-up appointments.
Technological reforms, such as the use of e-prescriptions, have been shown to improve adherence to medication regimens. Prescriptions transferred electronically are 10 percent more likely to be filled by patients than those ordered via telephone or writing.9
Hospitals can no longer afford to leave the burden of compliance on patients. Successful plans have made strides to ensure that staff has the resources necessary to improve post-discharge oversight.
HVBP is merely the first step in the data-driven transformation of healthcare economics. By 2017, up to 2 percent of the Centers for Medicare & Medicaid Services reimbursements will be determined by value-based criteria.10 Value-based programs are spreading to the private sector as well. Last June, UnitedHealthcare—America's largest private insurer—announced a $50 billion expansion to its value-based reimbursement program. The initiative will affect between 50 percent and 70 percent of UnitedHealthcare's network providers by 2015.11
As information collection improves, readmission rates will be tracked and the current measures of clinical practice will grow into a comprehensive set of evidence-based protocols covering every routine aspect of hospital care.
The process of meeting new value-based goals will be long, with many stages. Building the right infrastructure, training programs and oversight mechanisms for any organization today is an investment that will continue to pay off in the future.
1 American College of Hospital Executives
2 Robert Wood Johnson Foundation
3 Massachusetts General Hospital: Quality & Safety
4 Critical Care Medicine
5 Canadian Medical Association Journal
6 Advancing Health in America
7 Agency or Healthcare Research and Quality: Innovations Exchange
8 Mayo Clinic Proceedings
10 Kaiser Health News
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