Hard Medicine to Swallow: How Quality Reform in Healthcare Delivery is Reshaping the Industry…for Better or Worse

For the past several years, the buzz about healthcare reform and quality initiatives has become nearly deafening, not only in Washington but also throughout the medical community.

Quality care. Clinical integration. Outcomes management. Evidence-based medicine. Healthcare professionals are constantly being bombarded with the newest buzz words, whether it's at the hospital, in a private practice, in board meetings, from insurers, on television or even from the government.

President Barack Obama continuously has stated that the industry "must raise the bar on quality, while decreasing the costs of care." With this in mind, the biggest question, not to mention the greatest challenge, facing healthcare industry executives is this: "How much risk must I assume to achieve higher quality at lower costs?"

Frankly, more than you probably are comfortable facing.

But, change is on the horizon, whether you like it or not. Medical service delivery down the road will be vastly different even from what we're seeing today. To improve the quality of care and reduce hospital admissions, healthcare leaders must assume both risk and financial loss while taking the steps necessary to raise the bar of quality and bend the cost curve. Success will require a daring new leadership focus.

Major influences

A number of factors, including changes in payment methodologies, clinical data repositories, data analysis strategies and electronic medical records to name only a few, are moving the industry toward a system that can provide concrete outcomes data on physicians, ancillary providers and hospitals.

The future of healthcare will revolve around more detailed reports and pay-for-performance models based on quality information collected on each physician through billing and coding procedures. Indeed, EMR systems should improve the collection of treatment information and outcomes.

Additionally, the emergence of influential accountable care organizations has begun to put additional burdens of reporting and quality of care mandates on the healthcare industry. These networks of physicians and health systems contract with Centers for Medicare and Medicaid Services to provide high quality care at lower cost.

But, what about consumers' perceptions of quality? Most base their views of quality on their personal experiences at a provider's location. These perceptions, coupled with published data from such agencies as insurers, the CMS/ACO model and hospital systems, will determine the success of healthcare organizations. And this success will revolve around a drastic shift from the status quo.

How it will change?
Beyond recognizing these quantifiable influences, the leaders of tomorrow also must understand that there is going to be a change in the model of how healthcare is delivered and how professionals get paid for that delivery. There will be a shift from a procedural/reimbursement system to something vastly different than that — with quality and reduced costs at the heart of it all.

The key is reimbursement, or more likely, the lack of one in many cases. Real ingenuity happens when you get funding. When money dwindles, people get creative. In the future, you won't be paid for every MRI, every three-day length of stay and every hip replacement. You get the picture.

Change already has occurred and will continue to take place well into the future. A cataract surgery used to take 45 minutes per eye. Over the past decade, the reimbursed fee has been cut to less than $500 for physicians, while operating fees have been slashed to virtually nothing. Now, a skilled surgeon who does a good job can turn the procedure around within five to 15 minutes. The end result still comes out well, the technology also has improved with new innovations and infection risk has been reduced because the eyes are not open as long.

And, if length of stay wasn't cut for heart patients in diagnosis-related groups, the patient who had open-heart surgery would still be in a hospital bed a month later instead of walking on a treadmill within five days. While it might sound like oversimplification, reduced reimbursement does breed innovation. The reality is that you don't change until you're hungry. You talk about it. You dance around the edges, but until you're hungry, you're not going to change.

A leap of faith
Despite the ongoing buzz about the need for reform, healthcare organizations, executives and physicians have done little to change business practices and meet the increased demand for efficiencies and quality. Frankly, the truth hurts; making such changes likely will incur a temporary loss on the books, as much as 3 to 5 percent over a two-or-three year period.

It takes a special kind of leader, one who is willing to take risks and assume such a profit loss, to make the leap of faith towards quality. Wading in won't cut it. Dipping your toe into the water to check the temperature just won't work. Either you have to buy into the future vision and believe it is the way to go, or you won't and will just keep doing things the way you always have, for better or worse.

To achieve the kind of quality standards that will poise your organization for success in the future, you must be willing to adopt a leadership approach that includes:

•    A willingness to invest in the operational infrastructure necessary to achieve the quality objective, even in the face of short-term losses.
•    An understanding that bricks-and-mortar infrastructure may need to be downsized.
•    An ongoing commitment to track cost, quality and efficiency.
•    Training board members and physicians to help lead the organization through change.
•    Providing services that fulfill the organization’s mission at the highest quality and lowest costs.

Building a team for the future
The first line of change is a big one. To meet future demands, you cannot hang on to your old organizational infrastructure. That system was designed to work with the old model of reimbursement and procedural medicine. The new model is completely different than how we are providing services today. Right now, we're set up to care for acute patients, but if you're going to change healthcare delivery and aim to slash readmission rates, you won't be doing this with hospital beds. It will be done preventively and through follow-up care. Consequently, the financial monitoring, the key indicators, the delivery sites, the equipment used and even the skill sets will be vastly different than what we're using today.

For example, new quality of care standards involve more than nursing staff checking up on admitted patients during rounds. It involves medical home care follow-up once those patients are released. However, a nurse who is used to working on the floor and taking care of an acute patient is not the same one who is used to doing follow-up care.

If you're really committing to this new model, you will need to invest money upfront for a new talent pool. And, here's the difficult part — get rid of your old talent pool. You need nurses who not only can care for acute patients but ones who also can make the necessary follow-up calls to see if they are taking their medications, following diets, filling prescriptions and following other instructions after they are discharged and who also can understand why a patient is not complying.

The new model requires deploying resources to follow patients through admission to beyond discharge to ensure they don't end up back in the hospital. It must be done efficiently and cost effectively — without increasing your payroll. So, how do you staff appropriately?

In hiring, look for physicians, nurses and even young administrators who understand the direction in which quality of care is headed. Groom them to follow this new vision of keeping people out of hospitals from day one. You must train your physicians and administrators to lead and the rest of your staff to commit to quality delivery.

As noted previously, you can't just dip your toe into the change process. You have to jump into it, and it means making hard decisions, including re-assessing your existing staff and strategizing your future needs. It takes commitment and vision, and the ones with vision will invest and engage the talent to help foster the organization's growth.

Strategizing service delivery
Change also means realigning your physical infrastructure. Perhaps you have three hospitals in your system, and all do the same thing and all are relatively close to one another. Why should you have three, half-full cardiology departments? Instead, it's time to consider dedicating specific facilities for specialty areas. After all, the more you do something, the better you become at it. Obviously, you'll get some push back, as no one wants to give up services, but it all comes down to thinking long term. It’s better for the hospitals' future health overall.

That's where regionalization comes in — sharing services among hospitals in the same general area or even in the same city, even if they aren't part of the same system. It makes sense, both in terms of quality and cost efficiency. If you don't regionalize, you have multiple administrations that keep growing and competing or the same doctors or internal competition within your system. It slows things down, costs money and dilutes the quality of available care.

Such consolidation then will determine the kind of facilities you need and how you need to have them equipped. Again, such changes cost money, but in the end should pay off once you have adopted the vision and work toward the new quality goals.

Tracking results
To ensure you stay on the right trajectory for change, you have to have definitive tools for measurement. The traditional hospital statistics for staffing, length of stay, etc. will not be acceptable for the future.  The key indicators of success will evolve during each stage of the process as the organization moves forward to a mature accountable care organization on quality. Quality is far more subjective. The reality is that the real measures of quality are still evolving.

Fulfilling the mission

As nice as an omniscient crystal ball that could tell us exactly how healthcare will evolve into the future would be, it just doesn’t exist. The best we can do at this point is wager our best guess, based on the shifts in reimbursement and demands for new quality standards, on how the future of healthcare delivery will evolve. And this wager involves risk.

The willingness to risk it all and take the leap into the vision is your first step. Then, you have to start with an incremental plan that builds. It's not a dream that we’re facing. It's reality, and it needs a concrete plan designed around achieving the end goal — cost-efficient, improved quality of care — whether it is reducing your hospital beds by 60 percent over a five- or 10-year period or consolidating services within the hospitals in your system and determining the kind of facilities and technology you need. The technology is there to assist with these changes in patient focus. It just requires an investment and a vision.

Yes, it's going to be a difficult concept to present and explain to your board, but regardless of what happens in Washington, the train is leaving the station without hesitation on healthcare delivery reform. Are you on board, or are you still waiting at the station? The future is yours to decide.


Thomas J. Ferkovic is the managing director of SS&G Healthcare Services LLC, an Ohio-based company that offers a unique mix of outsourced, hands-on practice management and healthcare consulting expertise. Mr. Ferkovic holds a Bachelor of Science degree in pharmacy from the University of Toledo and a Master of Science in information science from Case Western Reserve University. He is a member of the Healthcare Financial Management Association.

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