Bundled Payment Environment
The Centers for Medicare & Medicaid Services’ (CMS) bundled payment initiative for joint replacement surgery likely means it is just a matter of time before such forms of finance are normalized in healthcare delivery.
Bundled payments can reap significant savings when well executed. Euclid Hospital, a member of the Cleveland Clinic healthcare system, was able to perform lower extremity joint replacements at 9.8 percent below the cost target set in a CMS demonstration project that began in 2013. The average length of hospital stay also dropped in some cases more than 20 percent, from 3.4 days to as low as 2.67 days. Cases of catheter-associated urinary tract infections were completely eliminated. As a result, Euclid Hospital saved $362,818 beyond the initial target, while CMS saved $159,571. Patient experience surveys also improved.
But how does a medical group, hospital or healthcare system succeed in transitioning from fee-for-service to bundled payments?
Teamwork is a big key, say several top physician executives.
“With payment bundles, the providers are focused on well-defined segments of patients with similar needs. Whether or not the work they are performing is surgical or non-surgical, you need great teams where people are really working together, have to deliver value, have to be technically excellent and give patients a great experience as well,” said Thomas Lee, M.D., chairman of the Geisinger Health hospital system.
Yet there is even more important pre-clinical teamwork that has not yet been performed in many healthcare organizations. That is creating a bridge between hospital/healthcare system management and the medical staff.
Sachin Jain, M.D., chief executive officer of CareMore Health, a Medicare Advantage health plan and provider in Cerritos, Calif., observed that the financial, management and clinical teams of healthcare organizations often don’t trust each other. Moreover, he believes physicians “don’t ever learn a lick about financing healthcare” unless the opportunity is presented to them directly.
“No one ever went to medical school to be a deliverer of value-based healthcare,” Jain said, “but to to treat COPD and other diseases.”
Andrew Agwunobi, M.D., chief executive officer of the UConn Health system in Farmington, Conn., believes that succeeding in a bundled payment environment requires a nexus of high quality care, incremental but steady financial improvements, business growth and customer service.
However, there is one significant problem: “Physicians are too disengaged,” Agwunobi said. He added that there are currently misalignments in the agendas between clinicians and management, and even a misalignment in the incentives available to cut costs and improve outcomes.
That leads to the overarching question Agwunobi said many physicians ask: “Why should I do anything different?”
Jain has a similar view: “Physicians have difficulties consuming change,” he said.
Given their training and backgrounds, Agwunobi noted that data is critical in changing the hearts and minds of doctors. Any compelling vision toward a shift in bundled payments is going to have to be based on hard data that is “bulletproof.”
But that shift should not pivot specifically on hard savings projections.
“Don’t start by saying your initiative is going to save $10 million,” Agwunobi said. Such a firm commitment can lead to concerns among clinicians that the quality of care is going to suffer to reach that goal. Instead, he recommended communicating a more flexible target, say $5 million to as much as $20 million. “That will help everyone look for every way to implement cost savings while keeping quality intact. And you can probably get more out of that than you think,” he added.
Education Can Help
To try and better engage physicians with management, CareMore has created a special academy to provide educational opportunities to physicians on healthcare delivery and business, with a particular focus on recently on-boarded doctors.
Although UConn Health has not gone that far, Agwunobi has recommended that management do its best to try and educate physicians on their terminology and jargon.
“You have to explain all the business terms. They’re embarrassed if they don’t know, and they’re not going to ask what a FTE (full-time employee) or an RVU (relative value unit – a factor in determining employee productivity) is,” he said.
At the same time, management also needs to bone up on the clinical operations within their organizations. According to Jain, nothing is more disastrous for trust building than having a manager mention to medical staff that he’s heard the cardiac catheterization lab is important to the ongoing operations of the hospital – what does it do, exactly? As silly as such a scenario sounds, Jain said it happens more than is expected.
“Managers need to spend some time shadowing clinicians,” he said.
Poring over patient data and preferences together can also help. This leads to what Jain calls “micro-insights” – which can help drive incremental changes in how care is delivered to CareMore enrollees. One example: Older patients are worried about preserving their teeth so they can continue to eat solid foods. They are significantly more likely to visit their dentists multiple times a year than their doctors. As a result, Jain said CareMore is experimenting in merging oral and medical care visits. That could lead to better control of chronic conditions and therefore improved performance in a bundled payment environment.
Such work is difficult and complicated. But it must be performed in order for doctors, hospitals and other healthcare providers to be able to effectively accept a flat payment to perform specific clinical tasks at a consistently high level of quality.
“I believe teamwork in almost every area of medicine is going to be a very important competitive differentiator for providers,” Geisinger’s Lee said.