January 27, 2016
Over 60% of hospitals have now progressed to value-based payment pilots or beyond. How can they succeed with this payment model?
A new HealthLeaders survey confirms that hospitals are financially committed to value-based reimbursement. What is their strategic plan in pursuit of coordinated, high-quality care throughout the care continuum?
- Strategic Focus: With its next-generation ACO model, patient-centered medical home pilots, value-based purchasing program, and bundled payment program, CMS is clear in its future healthcare payment priorities. Many commercial payers have followed suit. For hospitals, that means episodic care represents a greater financial risk. Coordinated care, not more care, is now better for providers and their patients. At the same time, organizations can’t afford to lose revenue on high-margin procedures to competitors.
- Partnership Approach: Partnerships offer a solution to the loss conundrum. Current-generation healthcare is about interdisciplinary clinical teamwork. Next-generation healthcare is about inter-organizational teamwork. Some organizations are pursuing coordinated care through an ACO model. Others are merging with competitors and joining the consolidation trend (there were 100 hospital mergers in 2014 and Deloitte forecasts a 50% reduction in the number of health systems over the next decade). Still others are integrating with physician practices, retail clinics, and even payers through alliances and strategic partnerships. The goals are clear: economies of scale, negotiating power, standardized practices, integrated information, and a robust continuum of care.
- Institutionalization: The Harvard Business Review explored two organizations that have established value management offices to systematize care coordination and value management efforts. These VMOs resemble a hybrid of quality improvement and program management offices, with an added focus on costs. They concentrate on transferring methodologies—for quality improvement, outcomes measurement, process optimization, cost control, and payment models—across diverse clinical areas. For example, MD Anderson Cancer Center leveraged its VMO to develop the first cancer care bundle in the country.
- Health Everywhere: The end goal for organizations is to provide a range of services that meet all of a patient’s care needs. Focusing on population health changes where care is provided, from inside hospital walls to out in the community and even within consumer smartphones. For smaller organizations, that means finding strategic partners like long-term care facilities, physician practices, and retail clinics to maintain a high-quality ecosystem throughout a patient’s journey. As Ben Loop, Healthgrades senior vice president for Health System Solutions, summarized at a recent industry roundtable, “The idea of a physician group or a small hospital being completely independent is no longer possible…if they’re not working closely with others, they’re not going to be able to meet the needs of the population of patients they have.”
Organizations positioned for coordinated care success know one thing: Providing the right patient care means trusting the right strategic partners.