Four Immediate Steps for Making the Move from FFS to Managing Health

December 8, 2014
iVantage Health

By Linda Albery, EdD, RN, Senior Director, iVantage Health Analytics.

Healthcare leaders have long been living in conflicting worlds governed by contrary incentives. What is operationally good for physicians may not be in the best interest of hospital staff or patients. What is best for a patient may not be supported by family or even allowed by state and federal laws. And what is good for the overall health of an organization may not be in its long-term best financial interest.

Now we have a new twist as we move from volume to value. The financial incentives for each model are in conflict so how do leaders progress to the Value model while living in the Volume model?

Most of our clients believe that fee for service will dominate their financial models in the future. Compensation or penalties based on value will increase – both in proportion and the number of indicators applied. But the underlying dominant payment model will remain fee for service for the near term future.

Given this projected reality, there are a few critical actions providers should embrace for current and future success.

#1 – Improve Quality

Whether you are paid for volume or value, high quality is critical. Determine your organizational pain points and focus on both outcome and process indicators to begin your journey of clinical improvement. Use your data. If you can’t get at it or need help turning data into information, get outside help. Expect that you will push people out of their comfort zone by challenging what and how patient care happens within your organization. Expect new roles to emerge and old roles to disappear. And expect new levels of cooperation, collaboration and teamwork. This is clinical transformation and it will provide a success model for both volume and value environments.

#2 – Reduce Costs

Whether paid for volume or value, attention to costs is critical. Payors, employers and patients will continue to become more and more price sensitive. Hospital leaders have used benchmarking to drive cost improvements and it’s time to take that practice and go deep.

  • Look at corporate costs if you are a system. Don’t assume that centralizing corporate functions is cheaper and better.
  • Look at your physician enterprise costs and find best internal performers. The scrutiny placed on hospital operations should be applied to physician operations. The physician enterprise can no longer be the sacred cow it once was.

#3 – Optimize your negotiating position with payors

To be successful, providers must now approach payor negotiations with robust comparative analytics and an emphasized effort on partnering with the commercial payer. Learn their internal incentives and use those to your advantage. Know your internal operational drivers and current state of affairs to make data driven decisions. If your organization (like most) is struggling to define quality- and value-based metrics, start partnering with the payor to help define those metrics. Incorporate new payment models and product populations to minimize future risk as the fee for service model continues to be scrutinized as a stand-alone payment system.

#4 – Start managing a population – your own

First, consider managing the health of your employees. The benefits are obvious from productivity improvements to reductions in benefit costs. Plus, your employees are an encapsulated control group for study purposes. You can determine measures of success from the onset and establish incentives to drive performance. Hospitals can also leverage employed providers and the institutional knowledge for program development, affinity groups and unique approaches to targeted health and wellness. Finally, risk stratify your employees based on healthcare spend and create targeted approaches to management which would mirror what is required for population health management in the open market.

Second, consider pursuing Medicare Shared Savings participation. Application dates have not been published for 2016 but one can expect a NOI deadline of April 1, 2015. Participation is complex but worthwhile if your Medicare volume supports the required infrastructure. Unless substantial internal resources can be liberated, get outside help. Few organizations have been able to position themselves for success without an infusion of resources knowledgeable about the process and journey.

In an environment where there is much to do and change feels rapid and unsustainable, it is time to apply resources to those efforts that play well in both the volume and value environments. The transformational journey required of healthcare is complex and messy. Breaking the work into manageable chunks and involving physicians, leaders and associates will smooth out the bumps of the ride and create a supportive and cohesive organizational culture required for future transformational iterations.

 

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