The Daily Beat

What you should care about in healthcare today, from the editors of Becker's Hospital Review

Mayo Clinic Wants to Cut Outpatient Costs by 30%: Here's How They'll Do It

In order to prepare for a future of value-based care with cost-conscious consumers (and as part of its efforts to stem the tide of growing national healthcare expenditures), Mayo Clinic plans to cut the total cost of the outpatient care it provides by 30 percent by 2019. 

In just five years, one of the most recognized health systems in the country believes it can cut its ambulatory costs by a third — a heady goal, but one its leadership believes is attainable.

"If you look at the future and consider the impact of the exchanges, of Medicare payment rates, and frankly the needs of society for a better healthcare system, between now and 2019, in terms of cost per unit of service, we have to reduce that by 20-30 percent," says Robert Nesse, MD, CEO of Mayo Clinic Health System. "So how do you work that equation?"

How does Mayo plan to achieve this 30 percent reduction?

Through practice redesign, community health transformation and care at a distance.


The Latest Corporate Cash Problem — And How It Affects Healthcare

This week, I received an interesting email from Standard & Poor's Ratings Services. I clicked through to read it, despite the rather thick headline:

Record U.S. Corporate Cash, Debt Growth Fueled By 'Synthetic Cash Repatriation,' Report Says

After I cleared that first hurdle, I realized it was actually a really significant report.


The Goldman Sachs Recruitment Model: What Healthcare Can Learn About Attracting Top Talent

A new study by researchers at The Wharton School of the University of Pennsylvania found that when it comes to attracting top talent, an organization's reputation is more important than salary, flexible hours, and other benefits — at least within the investment banking industry.   

Does the same hold true for healthcare? Let's investigate…

Certainly, I-banking and healthcare are vastly different industries. Yet, organizations within both share a common desire: To attract the best staff, across all levels, from front-line workers to physicians, and the CEO, who will in turn drive organizational performance.

In the study, as outlined by Harvard Business Review, Assistant Professor Matthew Bidwell and his colleagues polled MBA students on the top factors guiding their job decisions. The No. 1 determinant? "The extent to which firm reputation would help with future employability," according to the study.

Employers with top-tier reputations don't pay any more than other-tier employers, so paying more isn't a competitive advantage for recruiting top talent. Reputation is. Reputation is powerful for two key reasons. First, a top-tier organization has its pick of hires, which assures other top talent they'll be working alongside other bright minds — a good thing not only while at the organization but after, when these individuals will provide a top-notch professional network, according to HBR.

We see the same effect in other industries in well. In accountancy and law, for example, top-tier firms are highly sought-after employers, despite often longer hours and a more competitive environment than mid-tier firms. In these industries, higher-tier firms generally pay more, but even if they paid less, it's hard to imagine the a top-of-her class Harvard Law grad going to an unrecognized firm simply for more money. The "power" of a top-tier firm's name recognition virtually guarantees the employee will be an attractive candidate to a wide breadth of firms, if she chooses to go elsewhere later in her career.

The same happens in healthcare. The top college graduates attend the top med schools, and then attend the top residency programs. The Johns Hopkins' oncology resident knows he's training with some of the best oncologists in the world, and alongside the next generation's best of the best. Johns Hopkins doesn't have to pay residents significantly more than other programs to attract the best of the best — their reputation does that for them.

The problem with reputation — at least for those in the lower tiers — is that it's hard to come by, and hard to measure. While it's relatively easy to increase pay or offer new work-life benefits to improve competitiveness, improving reputation isn't as easily achieved. It's less tangible and more difficult to obtain, according to HBR.


Aligning Physicians Around Lowering the Cost of Care: UPMC's Approach

Americans spent roughly $2.9 trillion dollars on healthcare last year, roughly 18 percent of our nation's gross domestic product. By 2022, that figure is expected to rise to 19.9 percent, according to Health Affairs. Without significant spending reductions — which will only come from significant changes to how care is delivered — healthcare in America will become unsustainable.

This call to action is one heard many times throughout the healthcare world, and, in response, organizations across the country are rethinking how they deliver care to reduce their cost structures and eliminate unnecessary or inappropriate care.

Yet, it's not health system or insurance executives who will be key to bringing about these changes. Instead, it's the practicing physicians treating patients each day that hold the power of large-scale change. If each physician in an organization practices evidence-based care, and has access to information that allows him or her to coordinate that care, the savings — not to mention quality improvement — will ripple throughout the organization.

That is exactly the scenario Pittsburgh-based UPMC is working toward. The explosion of medical technology, including devices and drugs, as well as an aging population, has driven up the costs of care over time, says Steven Shapiro, MD, chief medical and scientific officer at UPMC and president of the Physician Services Division.

And while these advances have certainly led to extended and better quality of life for many people, their use must be closely monitored to ensure it's effective in today's value-based world.

Evidence-based care pathways
So how does UPMC monitor care delivery? In addition to physician "report cards" that track patient outcomes and costs for various procedures and conditions, UPMC physicians have developed numerous care pathways intended to help improve adherence to evidence-based medicine.

The care pathways are developed in two ways: For some, system leadership directs efforts to ensure that the most common and costly conditions are having pathways developed for them. In other cases, physicians within a service line have come together to develop a pathway in more of a "grassroots" approach.

UMPC has even commercialized its cancer care pathways, creating subsidiary Via Oncology to market its Web-based cancer pathway solution for oncologists. Dr. Shapiro says a product for pathways within the cardiac suite is also in the works.

These commercialization efforts reflect UPMC's goal of shifting up to a quarter of its revenue from non-traditional sources, or the system's patient care and health plan revenues.

Physicians can no longer ignore cost
While outcomes take highest priority, cost is also a consideration. Care pathways reduce duplication and other unnecessary care caused by a lack of adherence to evidence-based practices.

Encouraging physicians to consider cost of care is critical under value-based care.

"The most subtle, most profound part of healthcare reform is the movement of more cost on to the patient it. You can't avoid talking about cost," says Mr. Shapiro.


Plan Design, Cost Sharing and Beyond: The Next Frontier of Healthcare Cost Containment for Employers

Employers have been largely responsible for the healthcare coverage of Americans since World War II, when employers starting paying for healthcare coverage as a means of supplementing workers beyond wage limits.

Yet, in recent years, this historical benefit has become more and more costly for employers, with U. S. employers spending approximately $9,560 per employee in 2014, according to Towers Watson. As a result, in the last decade, employers have been using a few tactics to rein in growing healthcare spending.

According to Shawn Leavitt, senior vice president of global benefits at Comcast NBCUniversal, employers have adjusted plan design, implemented health and wellbeing programs and, most recently, relied on increasing cost sharing, to contain costs. They haven’t, however, focused much attention to reducing the waste in care delivery.

Waste employers can target include unnecessary and duplicative services, but also services that are provided at a higher-cost site of care than necessary. Mr. Leavitt, speaking at the 11th Annual World Health Care Congress in National Harbor, Md., on April 8th, explained that employers have a “huge opportunity to think about ‘how do we take all the unnecessary services, all the unnecessary care out of the system?’

“That’s where the big dollars are,” he added.


The Doctor Will Email You Now

Last year, physicians at Oakland, Calif.-based Kaiser Permanente received approximately 13 million secure emails from patients.

That number is more than the number of visits to Kaiser clinics for the year, said Megan Zimmerman, chief of staff for health plan business technology solutions and services at Kaiser Foundation Health Plan, at the 11th Annual World Health Care Congress in National Harbor, Md., on Monday.

3 challenges arise from the increase in patient-provider email communication
What does this mean for providers and health systems? It suggests patients are ready and eager for a new, more convenient form of communication with physicians. It also means new workflow challenges, and reimbursement issues.

Each physician handles email responses in their own way. For some, they respond directly and almost immediately on their mobile devices. For others, the emails may flow through medical assistants, registered nurses, nurse practitioners or others, and may never reach the physician unless absolutely necessary.

As the number of emails providers receive grows, they will need to adjust their workflows to accommodate the increasing number of responses required. Will they be able to manage responses on their own? How should emails be triaged and by whom? Should health systems and large practices standardize work flows around emails or leave it to individuals providers to devise the best systems for them?


ICD-10: The Epitome of U.S. Healthcare Dysfunction

This month, President Obama signed a piece of legislation that delayed a menu of healthcare policies. The law put off Medicare's sustainable growth rate cuts to physicians, and it also gave hospitals extra time for the two-midnight rule.

But the most interesting delay stems from one minuscule sentence on page eight of that law: "The Secretary of Health and Human Services may not, prior to Oct. 1, 2015, adopt ICD-10 code sets as the standard for code sets."

That's right. For the second time in two years, ICD-10 has been pushed back. What makes this delay most significant is the fact CMS reiterated time and time again that another delay will not happen, which in turn led many providers to move ahead, full force, to adopting it.


Hospitals Claim They Provide High-Value Care — But Opposed to What?

The term "high-value care" has become a staple in most healthcare conversations, but also many hospitals' marketing campaigns. Shouldn't high-value care be an implicit part of any healthcare organization? And what's more, how can consumers ever know the difference?

Before going further, it's interesting to take stock of high-value care's place in healthcare marketing and promotion. It's not often you see hotels advertising rodent-free rooms, banks plugging fraud-free credit cards or airlines touting their low crash rates. The mere mention of these violations of trust would taint consumer perception and possibly raise suspicion, a classic case of "the lady doth protest too much, methinks."

But many hospitals and health systems promote their services as "high-value," as if this somehow puts them above the sea of hospitals that aspire to deliver no-, low- or mid-value care. Aside from my coverage of healthcare fraud and abuse, I have yet to encounter a healthcare organization with such offensively modest goals. Though some may miss the mark on value, I'm not so sure it's a widespread aspiration to do so.

The definition of value, in this post at least, is that it equals quality (outcomes and safety) divided by cost. It's a simple definition, but tricky in that it's intangible, at least in the immediate sense. This is another reason it needs to be reigned in its use with consumers: They have a hard time identifying the value of their care. It's not perceptible.

You can see a rat in your hotel room, fraud on your credit card and, unfortunately, you can track plane crashes. But for the average consumer to "bust" their physician visit or medical procedure as low-value? It seems far-fetched. It's reasonable to assume many patients undergoing a blood test, CT scan or other procedure don't have the medical or economical expertise to determine whether this service is worth the money.


What Skills Are Needed of Healthcare Leaders in an Era of Value-Based Care?

In previous decades, hospital performance was based largely on volume. Leaders kept an eye on revenue and expenses, engaged in physician relations to ensure cases continued to be referred to the hospital, and left quality mostly to its medical staff, with some guidance by chief quality or nursing officers.

Today, we are starting to see the metrics of success shift, and in the future they are likely to be markedly different. To start, as providers take on risk, volume will be the enemy. That is, while providers will work to oversee care for large populations of patients, they won't want them in the hospital or ER. Instead, care will need to provided at the lowest-cost site of care, be it a physician's office or the home, to keep costs down.

When the overarching metrics of an organization move from fairly straightforward, cost vs. revenue goals, to more complex goals of keeping a population healthy and properly pricing risk-based contracts and products, leadership requirements change.

In response to this, the American College of Healthcare Executives plans to study the skills needed for successful leadership in this new era, a project which it announced it would undertake at last week's ACHE Congress on Healthcare Leadership, which took place in Chicago.

Why more information is needed
The ACHE is smart to explore the changing leadership requirements for healthcare executives, especially as it recently announced hospital CEO turnover hit a record high in 2013, with 20 percent of top executives leaving their roles.

Further, recent research suggests that the number of healthcare leaders with performance that is categorized as "struggling" is on the rise.

Given this, the ACHE's decision to provide additional guidance on which skills and traits are correlated with leadership success will be very important to ensuring the industry is developing a cadre of future leaders ready to take on the challenges ahead.

Skills expected to top the list
The ACHE's announcement got me thinking about which skills and characteristics would appear on the list. In attempt to explore this, I asked a two healthcare leaders their thoughts, which led to the following list. While ACHE's much more extensive project will provide greater insight, here are a few skills critical for leaders in a new era of healthcare leadership:


8 Critical Traits for a Successful Affiliation, Collaboration

As healthcare providers look to adapt to the changing and challenging environment ahead, many are partnering with others to tackle issues together. However, not all collaborations are successful. What distinguishes those that succeed from those that fail? finding-allies-3d-300

Mike Leavitt, former three-term governor of Utah and HHS Secretary, explores this question in his new book, "Finding Allies, Building Alliances." The book, which Gov. Leavitt wrote along with former Chief of Staff Rich McKeown, who now serves as CEO of his consulting firm Leavitt Partners, proposes eight key elements required for the success of any sort of collaborative network.