Revamping Physician and Payor Relationships: 3 Hospital Leaders Respond

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The Chicago Health Executives Forum held its 37th annual meeting yesterday in Chicago and a portion of the evening consisted of a panel discussion. Here are summaries of three panelists' discussions about what is happening at their healthcare organization or in their local markets, as well as excerpted answers to questions from the moderator.

Lynn Nicholas, president and CEO of the Massachusetts Hospital Association. Ms. Nicholas, who has lead MHA since 2007, spoke about the landmark reform initiatives taking place in Massachusetts. Since it implemented a statewide reform in 2006, which mandated near-universal health insurance, Massachusetts' focus turned to the cost of care and transparency. In August 2012, Gov. Deval Patrick signed a healthcare cost control bill that allows the state's health spending to grow no faster than its economy through 2017. After that, spending will grow even slower — to a half percentage point below the growth of the economy over five years.

"We agreed to change the payment system and move away from fee-for-service for all payors, including the government payors, and set up some cost-reduction goals," said Ms. Nicholas. "This agreement among providers, payors and the government unleashed an enormous reshaping of the market."

The healthcare landscape in Massachusetts "has just literally changed overnight," Ms. Nicholas added. "My members are speed-dating. They're doing deals, getting engaged and hooking up in every way possible. They're embracing population health management and partnerships that will help them do that."

Ms. Nicholas said that, from 2010 to 2012, there were 15 hospital acquisitions in Massachusetts, and she knows of more in the works. She also said physician groups are "moving around like crazing and changing allegiances" with providers and systems. Now, the state's focus is turning to the patient.

"The whole wild card in all this change is the healthcare consumer," said Ms. Nicholas. "As we build accountable care organizations and embrace different systems of providing care through the continuum, will the consumer come along?"

David Spahlinger, MD, senior associate dean for clinical affairs and executive director of the faculty group practice at University of Michigan Medical School in Ann Arbor. Dr. Spahlinger spoke briefly about U-M's experience with the Physician Group Practice Demonstration, which spanned from 2005 through 2010 and was the first pay-for-performance initiative for physicians under the Medicare program. Under the demo, the U-Michigan Faculty Group Practice and nine other physician groups from across the country continued to be paid under their routine Medicare fee schedules but shared in savings from enhancements in patient care management. All groups improved quality, and by year three, five of the groups saved money, including U-M.

Dr. Spahlinger said people often ask what U-M did to save money. "I'm not sure I know that, but I do know what we focused on," he said, explaining that a big part of the savings was linked to better management as patients transitioned between care settings.

Providers began calling patients who were discharged from the hospital and emergency department in 2005, and U-M also began focusing more on its complex patients.

"As part of the call-back program, we did an assessment for those individuals who might need ongoing complex care management," said Dr. Spahlinger. "We enrolled them in the program and directly worked with their primary care physicians and created care plans for when they came to the ED, hospital and were seen by a specialist." The system has also been following clinical guidelines for at least 12 years, which has helped its quality management.

The demo also led U-M to a major finding: "If patients had a U-M physician over the five years, we saw decline in readmission rates," said Dr. Spahlinger. "And if they didn't, we saw an increase. But we found that 40 percent of their care could be outside of the U-M system, even if they were attributed to us." This finding drove U-M to partner with primary care physicians to better care for the populations of which the system bears responsibility.

Paula Phillippe, president of network operations and chief human resources officer of Fairview Health Services in Minneapolis. Ms. Phillippe provided a summary of what's happening at Fairview Health, which has connections to more than 2,400 physicians and covers approximately 320,000 patients. Today, the system is driving progress in four key areas and "keep them moving in tandem," said Ms. Phillippe. Those are clinical initiatives, business models, operational capabilities and interactions with patients.

"Our journey is a little different in that we started our work in 2009 with the vision that healthcare was changing, and we wanted to prepare ourselves for that. We thought to start with care models before we got to payment models, so we started with pilots and clinical programs," said Ms. Phillippe. "About one year later, our CEO and the CEO of one of our commercial payor plans sat down and said, 'There has to be a better way of doing this,' a better way than coming to the table and beating each other up over rates. So we implemented the first shared-savings contract in 2010, and that unleashed an entire following. By 2011, we had shared-savings contracts with every one of the commercial payors in our market."

In late 2011, CMS also named Fairview as one of the first 32 Pioneer ACOs, and it has changed its compensation model for physicians, which includes metrics rather than pure relative value units — something Ms. Phillippe said "is not even factored in our plan."

Here are some excerpts from the panel Q&A, which was moderated by William Santulli, executive vice president and COO of Oakbrook, Ill.-based Advocate Health Care.

Q: Given the reform occurring in Massachusetts, are you seeing smaller payors fleeing?

Ms. Nicholas: We're dominated by non-profit regional health plans. We have a bit of national and larger companies, but Harvard Pilgrim is the highest-rated health plan in the nation. On the [medical loss ratio] issue, there isn't a flight. Legislatively, [payors] fought back that the MLR drop to 88 percent, because they needed some protection in up and down cycles to make a profit.

I will say, nationally, I see a real convergence between health plans and providers in general. Everybody is doing new relationships. I don't think, in 10 years, there will be a "this camp versus that camp." Systems are getting larger and mixed with all kinds of providers. There are less than 10 hospitals [in Massachusetts] that aren't in talks with some other systems right now. I'll guess we'll be a state of regional systems in the future.

Q: What's the stickiness you put together to partner with independent doctors?

Dr. Spahlinger: I think that people want to partner with you. I think sometimes, we're a little bit isolated. We've spent a lot of time changing our culture and trying to get people to understand that we're not being judged by the product that leaves our door but what happens over the next year.

But now, more and more, when you look at readmission rates and total cost of care, one of the "ah ha!" moments was in the demo. Even patients who said they received all of their care at U-M received 40 percent of their care somewhere else. You really have to partner with physicians and health systems across the state so patients get the care they need. We started first by changing internal culture to realize care we deliver is not only dependent on us, but on a whole lot of partners. We have to start thinking of ourselves as a partner in care.

Q: For organizations in early stages of population health management, what are some levers to pull on?

Ms. Phillipe: The data management piece is so critical — to look at patients holistically, rather than when they come to the door episodically. That is a really critical place to start. So, understanding that data, and also having additional resources in terms of care coordination and social workers is key.

After that, you can continue to see many opportunities, but once you start to see [population-based health], it becomes easier to see where you want to spend the next piece of time or effort. [This includes] looking for triggers of high prescription utilization and behavioral health. We're starting to move into social determinants in general and patient activation measures. Some complex patients do a good job of managing their care, and some don't. We look for patients who can benefit from managing those services. There are many opportunities right out of the shoot.

More Articles on Hospital and Health System Leaders:

Values Drive Everything: Q&A With Bridgeport Hospital CEO William Jennings
6 CEOs Weigh in on ACOs, Employee Wellness, Payor Relationships
5 Things the Most Extraordinary Hospital CEOs Do


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