Hospitals, health systems and other provider organizations are increasingly taking on more responsibility for the quality of care they provide, and they are being held accountable for that care over a longer period of time. Changes in how hospitals care for patients on an ongoing basis combined with the transition to value-based payment models is creating the need for health systems to adopt tools that will enable them to increase their reimbursement for the care they provide.
Benefits of using information exchanges
For many organizations, those tools take the form of extended data sharing networks that enable them to track and keep up with patients and their care.
"The term 'extended network' could refer to a number of resources that help hospitals better manage patient data for improved outcomes," says Mark J. Jacobs, CIO for the Delaware Health Information Network. "For physicians and hospitals, there has been a focus on developing a strategy in their systems for how and when they want to connect with the community and leverage an extended network, one that enables them to share digital data with a health information exchange that provides data back to the hospital."
The DHIN aims to provide healthcare providers — including physician office practices, hospitals, nursing homes, labs and diagnostic facilities — across the state with patient data via an integrated, statewide health data system to support their information needs. In 2007, the DHIN began offering a statewide health information exchange that utilized a community master patient index and record locator services to enable patient record searches of laboratory reports, radiology data and admission, discharge and transfer sheets. Demand for DHIN's servies have evolved to offering encounter notifications, radiology image sharing, medication history and clinical gateways for analytics.
There are three key forms of HIEs — directed exchange, query-based exchange and consumer-mediated exchange. A directed exchange allows care providers to send and receive secure information electronically among one another, which can benefit both providers and patients. For instance, a primary care physician can use the exchange to directly send electronic care summaries to a specialist when referring a patient. This information helps prevent duplication of tests and medication errors, according to HealthIT.gov.
The number of hospitals partnering with HIEs or extended networks to exchange information with other systems and organizations is growing steadily, according to an American Hospital Association report. The information exchanged most often includes test results, clinical care summaries, radiology reports and medication histories, all of which grant providers a more complete picture of a patient's care plan.
A study published in the Journal of the American Medical Informatics Association found that including an HIE query for every patient encounter in an emergency department setting could significantly reduce the number of tests and examinations ordered in hospitals and reduce costs. Efficient HIE usage was associated with a 52 percent reduction in the total number of laboratory tests per patient and a 36 percent reduction in the number of radiology examinations ordered per emergency department patient, according to the study.
The connection between HIEs and reimbursement
Hospitals and health systems are increasingly using value-based payment models as they transition away from fee-for-service medicine: As of February, 42 percent of hospitals reported that 10 percent or more of their revenue stems from value-based contracts, according to a survey from Kaufman, Hall & Associates. In August 2014, only 22 percent of hospitals reported that 10 percent or more of their revenue stemmed from these types of contracts.
The survey found even more dramatic growth in expectations for future use of value-based payments. The percentage of responding hospitals anticipating that value-based contracts will constitute 50 percent or more of their revenue within the next 24 months tripled in six months, from 7 percent to only 22 percent
Although value-based contracts come in a variety of forms, the premise behind the majority of them is to efficiently provide high-quality care to patients to increase reimbursement, and an HIE can be a helpful tool in reaching this goal.
A HIE can help hospitals and health systems improve on quality measures while also reducing costs, and the flow of data can ultimately contribute to them securing greater reimbursements under their value-based contracts.
"The HIE is going to allow hospitals to more robustly manage populations," says James LeBuhn senior director, healthcare sector head at Fitch Ratings.
When hospitals participate in information networks, they are able to receive valuable patient data that can be leveraged to ensure better outcomes. Without access to those networks, hospitals have a more difficult time knowing how patients are following up and what their care plans include after they are discharged.
In contrast, when hospitals leverage the data and communications they receive through information networks, such as HIEs, they can better manage patient populations and have the ability to secure increased reimbursements for improved patient outcomes.
Affect on credit ratings
Choosing not to connect to an extended network could negatively affect hospital bond ratings if it causes their reimbursement levels to slip. That reimbursement reduction could have a negative impact on a system's ability to secure capital in the future.
"If you look at the old episode of care, when a patient was discharged from a hospital, they were wheeled down the hall with their balloons and were waved goodbye," Mr. Jacobs says. "But managing that patient in the new episode of care means [hospitals are responsible for] 30, 60, 90 days, even up to a year post-discharge. And that's a really long time to manage a patient if you're depending upon making a solid financial balance sheet."
Although some hospitals and systems are voluntarily entering into agreements that make them accountable for the care they provide for a period of time after a patient is discharged, CMS is moving toward requiring this type of patient oversight for certain procedures. In July, CMS proposed requiring hospitals to be held accountable for the quality of care they deliver to Medicare beneficiaries for hip and knee replacements from surgery through recovery.
Through the proposed five-year Comprehensive Care for Joint Replacement payment model, hospitals would continue to be paid under existing Medicare payment systems. However, the hospital where the hip or knee replacement takes place would be held accountable for the quality and costs of care from the time of surgery through 90 days after discharge.
HIE barriers and how hospitals are overcoming them
There are a number of barriers that are keeping healthcare providers from participating in HIEs, according to a report by the National Opinion Research Center at the University of Chicago presented to the ONC for Health IT in June.
A survey of healthcare providers in six states found the cost of establishing HIE connections was a recurrent challenge for hospitals and providers in five of the six states, with a significant cost coming from EHR vendors charging for interfaces, service fees and upgrades.
"EHR vendors typically charge a fee to set up the interfaces, monthly service fees for using the system and additional fees for product upgrades," the report states. "These costs have become a key impediment to connectivity."
Representatives from several critical access hospitals reported their narrow profit margins and limited available resources further constrained their ability to improve EHRs and install new interfaces to establish connectivity with the HIE system.
One way smaller hospitals are addressing this issue is by coming together with larger systems through partnerships, acquisitions and mergers. Many of the larger health systems that are stronger financially have already made key technology investments, as they have economies of scale that allow them to spread the costs over a larger revenue base. However, some smaller organizations, like critical access hospitals, can't absorb the costs of those investments.
"The incremental cost for a larger system to bring on a smaller hospital to their platform is minor," says Mr. LeBuhn from Fitch.
Adding a smaller organization onto a larger system's platform is more cost effective than a smaller organization paying for the upgrade on its own.
Mergers and acquisitions are rampant in the healthcare industry, and "the HIE is just one more item that is going to further cause consolidation," says Mr. LeBuhn.