Greater transparency is coming to the healthcare delivery industry. The current spotlight is on the new (and controversial) overall hospital quality ratings from the Centers for Medicare and Medicaid Services (CMS) – but the introduction of this rating system isn't just a passing fad, it's a sign of the times.
Consumers can already access key data points and overall ratings through government sources like Hospital Compare and Physician Compare, third parties like HealthGrades, Leapfrog, and Consumer Reports, insurance companies' cost estimators, and a growing number of other websites and apps. CMS has begun to publish data annually on Medicare payments to hospitals for the most common 100 DRGs.
Additionally, most states have active health price transparency and price disclosure legislation, ranging from requiring hospitals and other providers to report prices to state health agencies to requiring providers to inform patients of prices for common procedures. A growing number of states have also created all-payer claims databases (APCD) that offer guidance to patients about the costs for common treatments in a way that encourages comparison among facilities.
The challenges posed by the growing demand for transparency will require advance planning, new investments, and new ways of conducting the business of caring for patients.
Here's where the industry needs to focus now:
To succeed as the market moves toward greater cost and quality transparency, hospitals and systems should consider these six areas for investment and constant improvement.
1. Ensure internal systems can provide robust data reporting and analytics. Most hospitals need to strengthen data reporting and analytics significantly to provide data efficiently for dozens of metrics to multiple requesting organizations. But providing that information is the easy part – understanding the current cost structure at the physician and patient level is what's critical for addressing cost and quality issues, and ultimately delivering greater value for patients and other stakeholders. For many organizations, the starting point could be as simple as looking at outcomes and cost for a specific procedure.
2. Adopt bundled pricing. Consumers, employers, payers, and other stakeholders seeking comparative cost and quality data for a specific procedure are likely to favor comparison shopping tools and facilities that simplify a procedure down to a single price for a clear set of services and outcomes. These dynamics will force acute care facilities to pay more attention to the treatment that takes place beyond discharge, as both bundled and reference pricing typically address the total cost of a procedure, including typical post-acute care like rehabilitation services. Healthcare delivery organizations that have already implemented bundled pricing models – either by choice or by mandate through CMS's Comprehensive Care for Joint Replacement initiative – will be better positioned to address stakeholders demands for cost and quality transparency.
3. Start focusing on outcome measures. Hospitals are going to have to be able to generate both process and outcome measures. Many acute care facilities currently track process measures almost exclusively, with little attention to outcomes to which patients might relate. There is a place for certain process measures, like ER admission to OR time, or compliance rate with stroke protocols. But patients also value the pace of recovery and the quality of life they experience as a result of treatment. This means being able to access quality data across the care continuum, from hospitalization through post-acute discharge. Evidence must support durable outcomes at 30, 60, 90 days and beyond. Thus, leaders of acute care organizations will need to broaden their view of where their care ends.
4. Build internal capability to diagnose and remediate process and outcome issues. Obviously, understanding the current cost and quality picture is a prerequisite to improvement, but currently, many organizations seem to view generating data as the end goal. Organizations need to build capability in using data to understand drivers of cost and quality variances. Beyond that objective, executives need to turn their insights into action. In short, they need to get better at implementing change.
5. Put your best foot forward, but don't ignore the rest. Hospitals will very reasonably want to focus their reporting on the services in which they perform well, and on accolades from the rating bodies that put them in the best light. Organizations that can demonstrate their performance with solid data for the services that are most important to patients and other stakeholders will have an advantage.
6. Assess implications for infrastructure development. Transparency in healthcare adds new emphasis to the phrase "accountable care." Achieving greater accountability will require rethinking critical infrastructure elements, from organizational structure to individual job requirements. Leaders will need to ensure alignment at all levels with the goals of improving costs and outcomes, both within an organization and beyond it through partnerships with providers across the continuum. As it evolves, transparency will stimulate more improvement in the quality of care than all the "best hospital" awards ever given.
Eric Abrams, MBA is Vice President at Numerof & Associates, Inc. (Numerof). Numerof is a strategy development and implementation firm with more than 25 years' experience helping major pharmaceutical, device, diagnostic, payer and delivery organizations define, create and deliver value across healthcare. Experts in business model transformation, Numerof specializes in understanding and managing variation in cost and quality, deploying bundled pricing and other new payment models, launching population health initiatives, reconfiguring care models and pathways, and integrating retail medicine, acute care and post-acute care. For more information, visit our website at http://www.nai-consulting.com.
The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.