This is the first in a series of special issues taking a closer look at the factors shaping modern medicine.
Health Reform: New Value-Mindedness Forever Changing the Game
It’s not just new legislation to extend coverage to tens of millions more Americans (to the tune of $938 billion over 10 years) – it’s a seismic shift in the way providers practice medicine, the way doctors train, the way scientists chase cures, and the way third-party payors compete in offering insurance.
And while parties wage war over the legislation itself (it now awaits an official Supreme Court decision this summer), rumblings are afoot. Regardless of the Court’s ruling, dramatic transformations – changes that will be impossible to rein in – are already in motion as health systems, medical schools and insurers scramble to rethink business as usual.
How Medicine Happens
Anyone who’s been out to dine on a Friday night knows the drill: Harried waiters are eager to take your order, deliver your food, top off your drinks, and drop the check.
It’s a crude analogy, flipping tables, but it paints a fair picture: Medicine, like restauranteering, has rewarded throughput. In its current business model – “fee for service” – more tests, procedures and patient visits ultimately amount to more revenue. The business historically has favored providers with high volumes – offering little reward for pre-empting disease, using resources efficiently, and practicing the kind of prudent, quality care that systematically reduces the risk for repeat visits.
“That’s all changing now,” says URMC’s Chief Quality Officer Bob Panzer, M.D. “The public has grown wiser, thanks to more transparent, open reporting of safety outcomes data and other quality indicators. Pair that with pressures to reduce health care costs – and extend coverage to millions of uninsured Americans – and you can see the daunting challenge that’s redefining medicine: Covering more people, with higher quality care, all on a smaller tab.”
How does that happen? By moving away from a delivery model that rewards volume, towards one that rewards value.
“The seeds of change have been sown for awhile now (see the “Seeds of Reform” timeline), but the reform act has really lit a fire beneath us as a nation,” said Steve Goldstein, CEO of URMC’s Strong Memorial and Highland hospitals. “Government, through Medicare and Medicaid, is leading the way; it won’t blindly pay providers for services, but will instead be looking to pay for proven outcomes: Paying for performance.”
Medicine’s ‘Value’ Menu
Just how will this sea change – from “volume” to “value” – happen? How will the government incent health care systems to work smarter?
A key strategy comes through withholding a percentage of reimbursement payments (government money that flows back to clinics and hospitals in exchange for taking care of Medicare and Medicaid patients), and only paying the funds back to hospitals that meet benchmarks on various outcomes data, patient satisfaction scores, safety and efficiency measures. In fact, by fall of 2016, hospitals that perform poorly (as gauged by several dozen “quality/value” measures) could fail to recoup as much as 6 percent of their standard reimbursements; star players stand to earn beyond their expected repayments – perhaps an extra 2 percent, at the expense of the poor performers. (See the “Show Me the Money” chart for a breakdown of all revenue at risk by 2016.)
“It’s clear that Washington’s interested in buying care that’s the best value for the price,” Panzer said. “The pressure is that we’ll all be running hard against each other, chasing a moving target. But for the consumer, that’s a really good thing."
A Closer Look: Improving Quality
Value-Based Purchasing: Rewarding Quality and Efficiency
Through a multi-year plan, a portion of hospitals’ Medicare and Medicaid payments (1 percent in October 2012, increasing by .25 percent each fiscal year until it reaches 2 percent in Oct. 2016) will be withheld in a central pot. All monies will later be rewarded back to hospitals that perform best on a constellation of specific quality, safety and efficiency measures – and there will be winners and losers (e.g., some hospitals will see none of their 1 percent returned; others will see returns that are double their original withholding). Specifically, by 2016, Strong Memorial projects $4.8 million of its annual government repayments to be at risk if care isn’t deemed a “great value.” (By comparison, a current project to add three new floors to the Wilmot Cancer Center has a $45 million price tag.)
By 2016, criteria (phased in each year) will include adherence to: Best core practices (e.g., Are all patients 65 and older given a pneumonia vaccination?); patient satisfaction survey data, like HCAHPS scores (e.g., Does your doctor/nurse ALWAYS communicate well?); mortality data, patient safety data, and how cost-effective care is (e.g., What is the cost of care for a stroke patient from three days before to 30 days after their hospitalization – and how does that figure stack up nationally?). Already, a host of safety programs and service excellence projects are underway at Strong Memorial, as we work to innovate and score even better on applicable measures. (See sidebar for details on how we fared during our first “marking period.”)
Preventable Readmissions: Endorsing Carefully-Planned Discharges
Quality care makes every attempt to ensure that, when patients go home, they stay healthy (in fact, that’s the heart and soul of our “Safe Transitions” project, headed up by Chief of General Medicine Marc Berliant, M.D.). To that end, an additional 1 percent of reimbursement funding – climbing by another 1 percent each fiscal year, until it caps at 3 percent in October 2014 – will be withheld and dispersed back based on readmission rates (that is, what percent of our Medicare patients – admitted for any condition – are readmitted to ANY hospital within 30 days). Since excess readmissions suggest a failure to provide proper care the first time around, there are no “winners” here – only losers and those that come out even (i.e., there’s no chance to earn back beyond your initial percent withholding. That means, come 2014, another $3.6 million of Strong Memorial’s revenue will be at risk annually.)
Hospital-Acquired Conditions: Getting Better, Not Sicker
Another important aspect of excellent care? Building safer hospitals, in which patients are treated for their initial medical condition without acquiring a secondary complication – like an infection or accidental fall. Starting in October 2014, another 1 percent reimbursement penalty (a projected $1.2 million for Strong Memorial) will apply to hospitals in the lowest-performing quartile – those who do the poorest job warding off what some call “never events” (several hospital acquired-conditions that should “never” occur, such as a wrong-site surgery, or the development of complications that are often preventable and never desirable, like a severe pressure ulcer after admission).
Reducing Costs: Moving Toward Integration
Besides incenting health systems to achieve unparalleled levels quality care, reform is also challenging leaders to rethink the logistics of how such care is delivered.
“To consumers, this is going to be the piece of reform they’ll really be able to notice,” Goldstein said. “Care will be coordinated more carefully, more proactively.”
In today’s managed care models, more and more primary care practices are embracing their roles as true “homes” for keeping patients well, and their chronic conditions under control.
What does this look like? To start, medical homes go beyond merely conducting “reactive” and “transactional” visits (e.g., to prescribe an antibiotic), working hard to proactively monitor and prevent disease across their entire patient population, even if it means a bit of hand-holding. It’s not uncommon to see the homes’ new “care managers” goading women over 40 to complete their annual mammograms, or actively helping diabetic patients as they learn to manage their blood sugar levels. Recently, all 22 practices in URMC’s Center for Primary Care were designated as Level 3 (the highest ranking available) Patient-Centered Medical Homes.
“The medical home makes a point to analyze data, forecast trends, and plan for them,” Panzer said. “It’s moved from simply treating walk-in issues, to strategically educating and safeguarding an entire population, minimizing harm from costly and devastating acute and chronic diseases.”
New payment models further drive integration and cooperation, by causing health systems to have more financial “skin in the game.” For instance, federal and private insurers and employers are increasingly moving to “bundled payments” – paying a single, appropriate lump sum to a group of providers in exchange for managing an episode of care (e.g., a hip replacement surgery), rather than reimbursing doctors, hospitals, rehab facilities and others separately. The change turns the business on its head, transferring a sizeable chunk of the financial risk from private or governmental insurers and on to hospitals, physicians, and other providers, who must work as a team to determine how to best mete out resources for the patients’ sakes.
“Because insurers will reward contracts on the basis of publicly available outcomes data, providers sharing these bundled payments are really incented to provide the best possible care,” Goldstein said.
On a larger scale, accountable care organizations (ACOs) operate on the same premise – to work with a predetermined pool of funds (from insurers, Medicaid/Medicare) to manage all health needs of a given population enrolled in the particular ACO. (URMC leaders are working to decide if the approach could work here.)
“With a whole team partnering to decide how resources should be spent and costs can be controlled – all while quality is under a microscope – you can see why close collaboration and an unparalleled degree of communication are absolutely essential,” Panzer said. “The game is changing.”
To help, information technology advances – like telemedicine, eRecord (our health record that seamlessly shares patient information between URMC hospitals and outpatient clinics), and even our Rochester RHIO (Regional Health Information Organization) will prove even more critical for keeping all providers on the same page as they partner for patients.
Research also plays a key role in reducing waste and definitively determining where health care dollars are best spent. “Comparative-effectiveness” studies – which aim to scientifically establish which treatment regimens are most advantageous for a given condition – should help to reduce geographic inconsistencies (and therefore, wasteful patterns) in terms of treatment and intervention.
“In the face of these imminent pressures, we can’t underscore enough the importance of bold leadership and a flexible faculty and staff who are willing to remain nimble as we keep pace with changing times,” said URMC CEO Bradford C. Berk, M.D., Ph.D.
“We’ll navigate these new business models, these new changes, together. And in the end, we hope our community – our nation – is healthier for it.”