Healthcare industry experts predict that as the flow of government revenue streams for hospitals slows to a trickle, hospitals and health systems will need to look to cost-cutting as a means of stabilizing margins.
With the National Commission on Physician Payment Reform's recent recommendations pushing for a near-total abandonment of the traditional fee-for-service model within 10 years, providers should consider some of those cost-cutting measures sooner rather than later, says Erin O'Connor, practice leader in the accountable care solutions arm of Cammack LaRhette, a consulting firm based in New York City and Wellesley, Mass.
Here are three domains in which hospitals can make up for lost revenues, according to Ms.O’Connor:
The best technology options can aid providers on both the business and clinical ends. There are valuable solutions technology can offer hospitals, Ms. O'Connor says, but few deliver on the four essentials to drive changes needed for systems to maximize their efficiency to retain their shrinking revenues. Technology solutions must perform four functions:
Compile the right mix of information. A comprehensive data system will gather financial data related to cost, claims and employee productivity; clinical records to show patient history and lab reports; and engagement information, including gaps in care, post-discharge follow-up and member experience.
Integrate that data meaningfully. Done well, this will prioritize work that needs to be done in order to identify the most pressing issues to be addressed first.
"Push" tasks into workflows. "People perform better when the work is queued up for them," Ms. O'Connor says. If technology can automate that process for the provider and employees, that has huge potential to drive consistent best practice systemwide.
Measure triple aim indicators accurately. Systems that are positioned to thrive in the era of healthcare reform must achieve results beyond clinical outcomes, including cost and population health improvement. As a result, technology should measure a system's performance against these three aims.
Ms. O'Connor cautions though that technology cannot impact anything positively if lacks a high degree of usability. "[Technology] is not, by itself, a solution for anything," she says. It must achieve the right balance of automation in order to maximize the efforts of employees without causing employees to become desensitized to an abundance of warnings and alerts the system may generate.
To track physician productivity, Ms. O'Connor advises inviting a group of influential physician leaders to determine what will be measured and how it will be communicated to the staff, though she stresses data should be supplied and should tell a story when informing the staff of new productivity measurements. She also recommends establishing a recurring, non-punitive discussion be held to discuss the results periodically.
"Hospitals and physicians need reasonable room to experiment [with triple aims initiatives] without fear of financial ruin," Ms. O'Connor says. "The best place to do this is within the hospital's self-insured employee benefit plan. Think about it — the hospital is already at risk for the claims of this population. They have access to clinical and financial information — including absence and productivity data — and more control over measuring engagement and the member experience."
Using this wealth of data and control, the hospital can work to test changes in reimbursement schedules, pay-for-performance incentives and health plan designs to provide enhanced value-based benefits. "Unless you are already in a value-based contract for a risk population, you are still receiving fee-for service reimbursement for most of your other patients," she says. That limits the risk of financial loss, which frees the system to practice bold changes in care delivery in a sort of beta-test before venturing into an ACO model. Even stopping short of a full ACO, hospitals can use proof points from their internal trials to sell disease management services typically purchased through payors and third-party vendors.
"Hospitals and providers are going to need a revenue stream to replace lost fee-for-service income. Rather than paying the insurance-based disease management vendor to provide these services, the health system [or] provider organization can establish a service delivery model to command payment from the payor, including local self-insured commercial plans in their market," she says. Building these new services and programs within health systems can help recapture lost revenues and providers may wish to enlist the aid of outside consultants to broker new types of relationships with payors.
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With the National Commission on Physician Payment Reform's recent recommendations pushing for a near-total abandonment of the traditional fee-for-service model within 10 years, providers should consider some of those cost-cutting measures sooner rather than later, says Erin O'Connor, practice leader in the accountable care solutions arm of Cammack LaRhette, a consulting firm based in New York City and Wellesley, Mass.
Here are three domains in which hospitals can make up for lost revenues, according to Ms.O’Connor:
1. Data and system analytics
In addition to providing real-time evidence to inform care decisions and quality, effective data systems boost the business end of hospitals and health systems through efficient use of staff time. Byautomating data analysis and instantly prioritizing and queuing tasks, the amount of time spent performing clinical tasks instead of assigning them maximizes staff productivity.The best technology options can aid providers on both the business and clinical ends. There are valuable solutions technology can offer hospitals, Ms. O'Connor says, but few deliver on the four essentials to drive changes needed for systems to maximize their efficiency to retain their shrinking revenues. Technology solutions must perform four functions:
Compile the right mix of information. A comprehensive data system will gather financial data related to cost, claims and employee productivity; clinical records to show patient history and lab reports; and engagement information, including gaps in care, post-discharge follow-up and member experience.
Integrate that data meaningfully. Done well, this will prioritize work that needs to be done in order to identify the most pressing issues to be addressed first.
"Push" tasks into workflows. "People perform better when the work is queued up for them," Ms. O'Connor says. If technology can automate that process for the provider and employees, that has huge potential to drive consistent best practice systemwide.
Measure triple aim indicators accurately. Systems that are positioned to thrive in the era of healthcare reform must achieve results beyond clinical outcomes, including cost and population health improvement. As a result, technology should measure a system's performance against these three aims.
Ms. O'Connor cautions though that technology cannot impact anything positively if lacks a high degree of usability. "[Technology] is not, by itself, a solution for anything," she says. It must achieve the right balance of automation in order to maximize the efforts of employees without causing employees to become desensitized to an abundance of warnings and alerts the system may generate.
2. Employed physician productivity
Years of organizational research has shown incentive-based compensation has produced mixed results. "The culture is what drives performance, especially over time. Leaders motivate and managers break down performance barriers," Ms. O'Connor says. "So what prevents [physicians and health system employees] from optimal performance? Primarily, knowing what to do and having the right tools to get it done. Leaders establish these two things at a high level and keep people motivated by sharing results in an environment that encourages improvement," she says, and they rely on their managers to guide their teams over the daily obstacles.To track physician productivity, Ms. O'Connor advises inviting a group of influential physician leaders to determine what will be measured and how it will be communicated to the staff, though she stresses data should be supplied and should tell a story when informing the staff of new productivity measurements. She also recommends establishing a recurring, non-punitive discussion be held to discuss the results periodically.
3. Experimentation in value-based care
New and innovative models of integrated care delivery, including accountable care organizations, can help health systems simultaneously hit on all of three legs of the triple aim and offer potentially lucrative financial incentives for successfully meeting benchmarks. But, much uncertainty remains for hospitals leery to make such sweeping changes in their structures for fear of further losses."Hospitals and physicians need reasonable room to experiment [with triple aims initiatives] without fear of financial ruin," Ms. O'Connor says. "The best place to do this is within the hospital's self-insured employee benefit plan. Think about it — the hospital is already at risk for the claims of this population. They have access to clinical and financial information — including absence and productivity data — and more control over measuring engagement and the member experience."
Using this wealth of data and control, the hospital can work to test changes in reimbursement schedules, pay-for-performance incentives and health plan designs to provide enhanced value-based benefits. "Unless you are already in a value-based contract for a risk population, you are still receiving fee-for service reimbursement for most of your other patients," she says. That limits the risk of financial loss, which frees the system to practice bold changes in care delivery in a sort of beta-test before venturing into an ACO model. Even stopping short of a full ACO, hospitals can use proof points from their internal trials to sell disease management services typically purchased through payors and third-party vendors.
"Hospitals and providers are going to need a revenue stream to replace lost fee-for-service income. Rather than paying the insurance-based disease management vendor to provide these services, the health system [or] provider organization can establish a service delivery model to command payment from the payor, including local self-insured commercial plans in their market," she says. Building these new services and programs within health systems can help recapture lost revenues and providers may wish to enlist the aid of outside consultants to broker new types of relationships with payors.
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