5 Ways to Improve Pay-for-Performance From the CEO, CMO and COO of Advocate Health Care

In 2002, Oak Brook, Ill.-based Advocate Health Care's major payor indicated it was only interested in giving increases if they were related to demonstrated value. In response, Advocate Physician Partners leadership created a clinical integration program and asked the payor to fund a pay-for-performance program for physicians confident that it would demonstrate value. The program evolved to include other major payors in the Advocate market over the next few years. Over the last seven years, Advocate Physician Partners has used the program to create alignment between the health system and its physician population.

Here Jim Skogsbergh, president and CEO, Bill Santulli, executive vice president and
COO and Lee Sacks, MD, executive vice president and CMO, discuss five strategies for building a quality pay-for-performance program.

1. Limit and tailor physician quality measures. Most pay-for-performance systems are based on a number of quality measures that hold physicians accountable for improving readmissions, turnover times and many other hospital processes. The Advocate leaders recommend limiting the number of measures per physician, as well as tailoring the measures for each specialty. At Advocate, while the entire system set 116 benchmarking measures in 2010, each physician had no more than 30 measures. For subspecialties, the number was even lower, at around 10 measures per physician. The key here is to concentrate your physicians on measures they can accomplish without feeling overwhelmed.

Dr. Sacks and Mr. Skogsbergh say Advocate also standardizes measures for each specialty. They say the system has seen dramatic improvement in chronic disease management for Advocate's patient population, due in part to the way the system incentivizes physician teams to work together. "It takes a team to manage a patient with chronic disease. It's not an individual physician who's responsible," Dr. Sacks says. "It really has gotten physicians to use our chronic disease registry and make every encounter a chance to optimize chronic disease management."

Because measures are standardized by specialty, measures for a cardiologist would be different than those for a general surgeon. For emergency medicine physicians, all the "individual measures" are measures that span the respective emergency medicine group at each hospital. "Most of those measures are related to work processes, and it's less about an individual physician doing things than the fact that they've set up the right checklist and processes and protocols," Mr. Skogsbergh says.

2. Hold under-performing providers to high standards. Holding physicians accountable for improving hospital outcomes only works if you stay true to your word, the Advocate team says. In 2009, one of Advocate's goals was to improve radiology turnaround times, an issue that caused frustration with primary care physicians and could enhance patient throughput if improved. The system created a group incentive for the physician hospital organization, and at the end of the year, all but one site had met the goal on improving radiology turnaround times.

When that site’s PHO board met in February, the board passed a resolution to tell the hospital president that because the radiologists missed the turnaround time goal, the physicians had lost money in their pay-for-performance incentive. "The board asked the hospital president to cooperate and they said if that happened again in 2010, the hospital should get a new radiology group to be more in tune with system improvement," Mr. Skogsbergh says. "By April, the radiologists were already better than [the set] target."

When a certain hospital or department falls behind on meeting their goals, your board should take immediate action. Don't let the poor performance become a habit.

3. Release annual report cards along with physician incentive checks. Many hospitals and health systems struggle to achieve physician buy-in when they first implement pay-for-performance. Physicians who are used to traditional payment structures may be hesitant to accept a "new era" of payment models. "I think it's fair to say that the first year, most of the physicians didn't pay any attention to quarterly report cards until the final one came out with checks," Mr. Skogsbergh says. "When people realized some people got much bigger checks with their report cards, there were lots of comments."

By pairing physician pay-for-performance checks with final report cards, Advocate helped physicians see the direct impact of their efforts to improve outcomes. Once physicians realized the financial benefits they could reap, they started flooding Advocate administrative offices with input on data and possible changes.

At this point, Dr. Sacks says Advocate physicians are very excited about the success they've had with quality improvements. "They're feeling really good about making improvements on behalf of their patients, and we appreciate the fact that we have data that can document and support the impact," Dr. Sacks says. "Before this, nobody could think about the impact on our 10,000 [diabetic patients]."

4. Stand behind physicians in payor disputes. During contractual negotiations, your system should take steps to build physician trust. If you don't start out by showing your support for physicians, you will probably have more trouble convincing them to participate in integration initiatives. "We've had a couple of moments of truth where you could either go backwards or go forwards," Dr. Sacks says. "I'm thinking about contractual negotiations where we walked away from a major player when our physicians were disadvantaged. We would forego the lucrative contract on their behalf."

In one drawn-out payor dispute, Advocate stood behind physicians for four years while ultimately winning a difficult arbitration trial. The negotiation process is difficult, and your system may have to endanger some payor relationships, but ultimately the struggle will pay off. Today, Advocate has a good relationship with the payor involved in the arbitration trial. "Those events are referenced frequently by the physicians in terms of why they feel confident about the changes we're about to embark on in 2011," Dr. Sacks says.

5. Retire measures when you reach your goal. Don't keep the same measures once you've met your desired targets, the Advocate team says. Obviously you want to aim for continued improvement, but if your system has reached 99 percent for high patient satisfaction scores, it's likely time to concentrate your efforts elsewhere. "In some cases, [measures] become a membership criteria [for physicians] and it's just a given that they have to do them to stay in the organization," Mr. Skogsbergh says. "In other cases, they're retired because there are only so many things you can focus on." Review measures carefully on an annual basis to make sure they still represent your system's goals.

Learn more about Advocate Health Care.


Read more on pay-for-performance:

-CMS to Hold Call on Proposed Rule for Value-Based Purchasing Program

-10 Points on the Upcoming Value-Based Purchasing Program for Hospitals

-5 Strategies for Integrating a Large Healthcare System

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