Three ways to establish a value-focused organization

December 24, 2015

From changing leadership to new payment models, find out what to expect and how to succeed in 2016.

Healthcare spending is its slowest level of growth in 50 years, at $316 billion less than the 2013 level, according to the U.S. Department of Health and Human Services (HHS). HHS says quality has gone up as spending has decreased, with hospital-acquired injuries and infections down 17%, saving an estimated $12 billion. Finally, accountable care organizations (ACOs) now provide healthcare to one in 14 Americans, resulting in $417 million in savings for Medicare, says HHS.

But the road to better healthcare doesn’t come easy. Slow and steady is the motto for dealing with the challenges payers will face in 2016, according to industry watchdogs. Here are three things that they say should top your to-do list to ensure a successful 2016.

1. Build up physician leadership at your organization

Don Hutton, founder of the Morgan Executive Development Institute, which specializes in executive and physician coaching and leadership development, says healthcare is going through a “transformational change” right now in terms of reimbursement and reporting, and hospital systems are also moving toward a shift in leadership.

Hutton“One of the things that is so hot right now is physician leadership,” Hutton says. “All sorts of [hospitals and health plans] are employing physicians as leaders, because of what is happening in the industry.”

Physicians have unique insight into the needs of the patient population, particularly in a climate that emphasizes value-based care over fee-for-service. Their knowledge of optimal patient outcomes and how to achieve them can aid in planning for a switch to value-based reimbursement, he says.

“What is required in today’s market is the need to make transformational changes in the way medicine in practiced without losing sight of the patient’s needs,” Hutton says. “The only group qualified to make these changes are physicians, and in order to get physicians to be involved in making those changes there must be physician leaders to lead the effort. In the past non-physicians have tried to force changes on physicians and these efforts have failed.”

Not all physicians are suited for leadership, however, and payers should carefully consider whether they have enough people, and the right people, in physician leadership roles. “Start finding your highly effective physician leaders, and if you don’t have them, train them,” Hutton says. “Lay people cannot drive this change.”
 

Next: The second to-do list item

 

2. Don't jump into new reimbursement models too fast

In terms of reimbursement and reporting mandates that come tied to incentives, Hutton says, this is one of those times health plans and providers may not want to finish first. “Don’t go too fast or too slow in making changes,” he says. “Go too fast, and you could get out ahead of yourself and end up bankrupt. Go too slow, and you will fall behind the curve and start losing money.”

In tackling a move away from fee-for-service payments into value-based and bundled payments, Hutton recommends that payers balance both payment types for awhile.

“As you move into bundled payments, do your homework well, know what you need to do and know how to execute it,” he says.

Orthopedics and cardiovascular services are both popular areas for payment reform right now, but Hutton says advance planning is key.

“Make sure you prepare your organization well before you go into it. Learning as you go through it can be very painful,” he says. “Make sure you have all the processes, systems and written agreements in place, and make sure everyone understands their part.”

Hutton also recommends keeping an eye on the long-term prize, rather than short-term fixes. “We watch people get into bundled payments, couldn’t make it work and get out,” he says. “They spent a lot of money getting in and then lost a lot.”

A better practice when problems arise, he says, is to reevaluate the system and make adjustments. “Even if it starts to bog down, don’t jump out to quickly,” he says. “Analyze the situation and look at what needs to change to make it work.”

 

Next: The third to-do list item

 

3. Define what "value" means for your organization

One of the biggest aspects of healthcare reform is the  shift to value-based reimbursement, but Marc O’Connor, chief operating officer for Curant Health, a medication management company says it’s not always clear what that entails. Healthcare organizations, he says, should define what “value” means to their organization, and make sure that definition is shared across the entire company or system. In all the literature and guidance about healthcare reform, there is no definition of what “value” means, and it is up to each provider to determine what value means to their own organization in terms of outcomes and goal-setting.

For health systems especially, it's critical to make sure all of the physicians are aware of how their pay will be tied to cost and quality, and what performance measures they will need to meet, says Hutton. “It’s all tied to value-based purchasing,” he says. “Make sure that everyone is agreed and aligned with what the incentives will be on payment, quality, and outcome. Physicians have a lot at stake in healthcare reforms, and 80% of their revenue is at risk."

The Medicare Access and CHIP Reauthorization Act was signed into law in April. The Act included plans to replace the sustainable growth rate (SGR) formula. While the act includes several changes to further propel the shift toward value-based reimbursement, O’Connor says it lacks a clear definition of what value really means.

“The definition of ‘value’ within the legislation, or the healthcare realm in its entirety for that matter, is not as clearly defined as it needs to be yet,” he says. “At Curant Health, we define value by the simple equation outcomes divided by costs. Returning to this equation when presented with complex situations and difficult decisions helps bring greater clarity to the situation while keeping the patient at the center of the conversation.”

Rachael Zimlich is a writerin Columbia Station, Ohio.