Several healthcare consultants shared their observations and opinions on providers transitioning from fee-for-service to pay-for-performance in a report called "Innovation in Action" from Chicago-based Huron Consulting.
The consultants spoke about the most prominent roadblocks providers may face, common errors in thinking and what advice they share with clients to integrate value-based payment models. Here are excerpted quotes from five professionals cited in the report.
Jim Gallas, managing director of Huron Healthcare. Many organizations are struggling to establish value-based or shared savings programs in a way that leaves them with a margin that is anywhere near their fee-for-service margin. If that trend becomes amplified during this transition period where pluralistic payment models are emerging, there will be a lot of organizations [that] could run out of operating cash — and strategic options — very quickly.
Nathan Kaufman, managing director of San Diego-based Kaufman Strategic Advisors. One of the things I hear frequently is, "We just don't know when to flip the switch from volume to value." Well, if you have a 500-bed hospital with five patients in it and you have really good value, you're going to go bankrupt. There is no clear delineation between volume and value — it's about maximizing value and volume.
I read a study where they asked a hospital to estimate how much it cost them to do a particular procedure. Then industrial engineers did an analysis of how much it really cost. The hospital was 30 percent off. The cost accounting systems most hospitals and health systems are using are not sophisticated enough to get organizations where they need to go in the future. And there's no tie between accounting systems and outcomes, so you don't even know the relation of cost to quality outcomes.
James Orlikoff, president of Chicago-based Orlikoff & Associates, a healthcare consulting firm. When you look at the organizations that are most advanced in patient-centered medical homes or other new models, you find that they are essentially taking existing models and simply pushing them into a different environment — and it's not affecting the cost at all. They say: "Pretty soon the costs are going to start going down."
Well, I'm not seeing them going down. I'm very concerned about organizations pursuing aggressive "new model" strategies that may make sense on paper, but that don't significantly or rapidly affect costs.
Jacque Sokolov, MD, chairman and CEO of Scottsdale, Ariz.-based SSB Solutions, a national healthcare management firm. I advise clients to build value-based products only after they have a payer in place to buy them. And even then, they have to have a very clear sense of what their margin is going to be on a specific product. A number of organizations have gone down the road of developing "clinically integrated organizations" at significant cost, without focusing on whether their CIO products are commercial, Medicare, Medicaid, etc. Many organizations hear the need to be clinically integrated and march forward without a discrete endpoint, which can be less than optimal.
Andrew Ziskind, MD, managing director of Huron Healthcare. What we're talking about right now is small or focused data, not even "big data" that is so popular to talk about these days. Organizations are struggling to leverage the data they already have to support evidence-based decision making.
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