What to do in uncertain times? Build competencies for value and sustainability

Aug. 7, 2017 / By Kristine Daynes

Healthcare pundits agree this is a time of uncertainty. Depending on your media of choice, uncertainty either reigns (New York Times), looms (CNN), or trickles down (Public News Service).

Given the ambiguity and indecision around healthcare reform, providers and health plans might hesitate to make bold moves. They could wring their hands in worry about escalating costs, collapsing health plans, and bankrupt hospitals. Or they could rally around initiatives that will have enduring benefit, regardless of how regulations shake out. I suggest they use this time of uncertainty to build competencies for value and sustainability, regardless of what policymakers might do.

Innovations in health care don’t always come from mandates. In a HealthAffairs blog, Joseph Antos and James Capretta note that many successful health systems evolved years before the ACA, developing cost-effective, high-quality systems that respond to their patients’ preferences. According to Messrs. Antos and Capretta, “It is more accurate to say that these systems have succeeded despite strong incentives in Medicare policy for more fragmented and unmanaged care delivery, rather than because of any Medicare initiatives.”

This is true among provider-sponsored health plans (PSPs), too. Montefiore Medical Center in New York State consistently met financial and quality targets as part of a Medicare Pioneer ACO. Now a Next Generation ACO, its success is due to the infrastructure it began building years earlier to support managed care, according to an interview by The King’s Fund with Stephen Rosenthal, senior vice president of population health management for Montefiore Health System and president of its subsidiary, The Care Management Company.

Over twenty years ago, Montefiore decided to assume full financial responsibility for those patients covered by government programs, which was about 85 percent of the business attributed to their Bronx facility. According to Mr. Rosenthal, capitated payment was the only way the organization could survive. “If we didn’t have that prepayment and we weren’t able to manage the dollars within that prepaid environment around the government programs, the transaction revenue [from the remaining fee-for-service business] wouldn’t be enough to sustain us. We would be in much more financial distress,” he says.

“But because we were able to use the benefits of those dollars, we were able to sustain ourselves much better and have much improved financial outcomes over the course of those years. It was a systematic process that we believe was the right way from the beginning. It was long before people thought about the Affortable Care Act. When Obamacare came into play, all of the sudden we were an important piece of business, because we were doing it. But it wasn’t as though we created it for that purpose.”

Providers and health plans such as Montefiore, Kaiser Foundation, Geisinger Health, and Intermountain Health began investing years ago in capabilities that made them sustainable at that time and adaptable to regulations and funding changes, regardless of when and how they happened. Those common capabilities are:

• Efficiency
• Clinical outcomes
• Diversification or partnerships

Efficiency. Healthcare leaders believe the industry is hobbled by inefficiency in the form administrative burden, repetitive tests, and overtreatment, according to the EY Health Advisory Survey 2017. Nearly all respondents said their organizations are looking to lower the cost of care by:

1. Reducing medical errors and increasing reliability
2. Decreasing unnecessary variation and utilization
3. Peer benchmarking and competitive benchmarking
4. Increasing patient access to primary and specialist care
5. Reducing hospital use and emergency departments by high-cost patients

Cost-control initiatives like these require reliable measurement. But data alone doesn’t solve the problem. According to the Bain 2017 Front Line of Healthcare Report, professionals on the front lines of care delivery want a clear rationale for doing things differently. “Physicians need a clinical rationale for changing the way they deliver care—financial logic alone will not change long-established behaviors.”

It’s not that physicians don’t think health care needs to change, but that they aren’t convinced that recent value-based models have made a difference. Why waste effort on something else if it isn’t in the best interest of patients?

“For example, clinicians’ and administrators’ views differ on the importance of cost-saving initiatives,” notes the Bain report. “Physicians and finance officers rank care-management teams the top priority, while procurement officers say vendor consolidation and purchasing automation are most important.”

One way to engage and align physicians is to balance financial cost-control efforts with a renewed focus on clinical outcomes.

Clinical outcomes. Focusing on clinical outcomes isn’t the polar opposite of cutting costs. In fact, there is a wide intersection where cost efficiency and clinical outcomes meet. And it’s no coincidence that most of the EY top five cost-control initiatives are in that intersection: Reducing medical errors, increasing reliability, increasing patient access to primary and specialist care, and reducing unnecessary hospitalizations and emergency department use.

Achieving these cost controls involves reducing complications of care, redirecting referrals to high-value providers, reinforcing primary, ambulatory and post-acute care, addressing social determinants of health, improving health literacy—all of which are patient-focused activities with a clear clinical benefit. But few of which can be accomplished by a single hospital or physician practice without broader support.

Diversification or partnerships. It will take payers, hospitals, physicians and community partners working together to change the effectiveness of the healthcare system. Their perceptions of inefficiency and cost may differ depending on who loses or gains by it, but they likely share similar goals for clinical outcomes and patient success. “Those are two options that are hard to refute,” says Mr. Rosenthal. “It also provides an unusual opportunity to provide incentives to providers for doing the right thing. . . But it is a gradual process, and it takes time for people to feel comfortable with that. As long as you are transparent, and as long as you are always being forthright and truthful with the providers, they come on board over time.”

It takes time, consistency, repetition, and transparency to develop value-based payer-provider relationships. But Mr. Rosenthal assures that the efforts pay off. By adopting a patient and quality focused mentality, organizations can build a more sustainable healthcare business model that is resilient to changes in how health care is funded.  

Kristine Daynes is senior marketing manager for payer and regulatory markets at 3M Health Information Systems.