The term 'value' takes on different meanings for providers and payers. While providers strive to deliver the best value to patients, payers are focused on lowering costs and transferring risk.
Peter Mallow, PhD, director of health economics and market access at Cardinal Health, spoke to this predicament during his presentation, "Thinking Beyond the Procedure: Winning in a Value-Based World," at the Becker's Hospital Review 8th Annual Meeting, on April 18 in Chicago. Cardinal Health provides scaled logistics, product, business and patient solutions to those tasked with navigating the complexities of healthcare.
Healthcare is a complex landscape, and as the industry moves closer to a value-based model, providers bear the burden of increased administrative tasks. From healthcare consumerism to precision medicine, the provider workload is building, resulting in a tangle of administrative complexity.
"We don't seem to ever take anything away, and that's resulting in a whole lot of waste — $5 billion in wasted supplies and healthcare materials on an annual basis," said Dr. Mallow.1 "And it makes you think, what is this value-based care world we're getting into and how is this helping?"
Illustrating his point, Dr. Mallow said a 7.3 mm cannulated screw for hip and knee replacements increased from $129 to $360 between 1996 and 2016, even though the materials and distribution did not change.
To combat this striking increase in costs, CMS has its own vision of a value-based environment. Bending the cost curve in its favor and expecting to reduce costs by $480 billion dollars over the next several years, CMS has rolled out new payment models to shift risk from payer to provider in the form of value-based purchasing, shared savings, episodic bundles and partial capitation. These models are pointing in the direction of a fully capitated payment model in the future.
Dr. Mallow argues CMS' application of value-based care involves "adding more complexity onto you — not reducing it — causing your costs to increase, while you also assume more risk to provide that same level of care and try to achieve that triple aim. A new approach is necessary and it's up for you to decide how to win in CMS' value-based world."
Transitioning to the quadruple aim
While still focusing on the core elements of the triple aim — improved outcomes, enhanced patient experience and reduced per capita cost — the quadruple aim emphasizes provider satisfaction as a fourth aim.
As clinicians try to navigate this regulatory landscape, they are spending less time with patients and more time meeting administrative demands. Various surveys have revealed supply-related tasks take up 2.5 to 3 hours of a medical inpatient nurse's shift.
"The quadruple aim approach is about elevating the provider so that we can work with them and align the goals and incentives in place, knowing that they have a fundamental seat at the table," Dr. Mallow said.
Leveraging data analytics to achieve the quadruple aim
Dr. Mallow highlighted CMS data for total hip and knee replacements. The 90-day episode for a hip or knee replacement begins at an average cost of $12,900 during the index hospitalization, and hits $22,180 at the 90-day mark.2
Most patients don't align with the average benchmark, however, instead falling between $8,256 and $22,188 during the index hospitalization. At the 90-day mark, these patients' costs will reach between $10,038 and $36,663.2
"That's a big variation, and if we can think about how we standardize our operations, maybe we can narrow that variation," Dr. Mallow posited, breaking down the episodic costs. Fifty-eight percent of the cost comes out of the index hospitalization, directly tied to costly medical devices.2
"If we can tie those devices to outcomes that help us understand what's going on during the skilled nursing/long-term acute care stay, readmissions and the rest of that 90-day window, we can start to think about winning here," said Dr. Mallow. Additionally, by integrating a team-based clinical approach, providers can reduce procedure times and improve outcomes substantially.
Further, a focus on outlier cases is necessary, because about 10 percent of patients drive up the average costs.2 By leveraging data analytics to identify those patients upon arrival, combined with a comprehensive team-based clinical approach, hospitals will be able to provide proactive services to ease burden on the clinical staff.
These steps to winning in a value-based world cannot happen without accurate, timely and reliable data and analytics. Advanced analytics platforms integrate the EHR, materials management system and the billing system, allowing providers to view information at the clinician, patient, hospital and integrated delivery network level simultaneously. Equipped with the data, leaders can drive decisions about the future.
By implementing an advanced analytics platform, organizations will have the tools to achieve this quadruple aim, easing burden on clinicians. "We know that the value to the patient is the ultimate long-run win, but we have to deal with the realities we are faced with by our payers today, who have a short-run definition of value…focused on cost reduction and transfer of risk to win in this value-based world," concluded Dr. Mallow.
References
1 PNC Healthcare, GHX Quantitative Research Study, August 2011
2 CMS MedPAR Data 2014