During a panel titled “ACOs, Bundled Payment and Working with Exchange as Payers Withdraw,” three industry experts discussed healthcare markets, bundled payments and more at the Becker’s Hospital Review 5th Annual CEO + CFO Roundtable in Chicago on Nov. 8, 2016.
Market dynamics
Back in 2012, the Community Hospital of the Monterey (Calif.) Peninsula faced a challenge. Laura Zehm, the hospital’s vice president and CFO, said they ventured toward a value-based care model as they served patients in an area of California protected from managed care.
“We didn’t want to be a commodity and remain the problem,” explained Ms. Zehm. “We wanted to be part of the solution.” So, the hospital formed the Aspire Health Plan as well as a population health company. Ms. Zehm also serves as the CEO of the health plan.
Ms. Zehm noted the importance of trying ideas, and if they don’t come to fruition, fail quickly and fail wisely.
“You start one place thinking you’re going somewhere, and end up somewhere entirely different,” she said.
Jim McNey, senior vice president and CFO of North Kansas City (Mo.) Hospital, illustrated the unique landscape of his market, as it’s bifurcated by state lines and rivers. The hospital has expanded to about 450 beds and 160 physicians, earning the label of the largest governmental hospital owned by the smallest city in the United Sates.
“We started about five years ago, being an island out in the middle of this metropolitan [area]. How could we coalesce with the other independent hospitals as we saw changes coming with reimbursements?” said Mr. McNey. These hospitals are working together with a major market payer to establish a narrow network with some risk after the second year.
Bundled payments
Boston-based OM1 focuses on leveraging outcomes management and predictive analytics combined with an aggregated data set to assist providers with bundled payments.
“We believe that bundled payments are a winning strategy among alternative payment models,” said Richard Gliklich, MD, CEO of OM1. He noted bundled payments present a significant opportunity because they offer a gradual process and CMS is showing strong support for this payment model.
To succeed under bundled payments, providers must benchmark a base and apply advanced analytics to reduce costs and personalize care. Although the hospital is the anchor of the bundled payment model, the clinicians prove critical for its stability. And over time, more risk will transition over to the clinicians.
“The greatest opportunity to make a change in cost is actually to run the analytics at the operating physician’s office,” explained Dr. Gliklich. Therefore, you can identify key risk factors among patients pre-operation, such as readmission risk. “The message is, to make these things work, you have to be connected with your community providers and get them into the mix as early as possible.”
Although the Community Hospital of the Monterey Peninsula has not yet successfully implemented bundled payments, Ms. Zehm noted they hope to soon. Her facility has struggled with orthopedic surgeon engagement as a group.
“Even though we’re pushing really hard toward capitation, that’s going to take a while,” said Ms. Zehm. “And in the mean time, sure, absolutely, let’s get gains in efficiency where we can.” A step along that process involves enhancing relationships with their physicians, practicing transparency and sharing data.
“You have to go where the buck is going and right now it’s this gradualism,” said Dr. Gliklich. In orthopedics total joint, the cost difference of implants from the highest quartile to the lowest quartile is $4,000. It often proves challenging to convince surgeons to start using different devices, but Dr. Gliklich said data helps with this persuasion.
“I think bundled payments will have to be a core competency for every health system and driving that with data analytics is the easiest way,” said Dr. Gliklich.
The industry may very well be heading toward a total capitation model in the future.
“The reason that we’re headed down this road and actually pushing the market in that direction is because we want to be in control of our destiny,” explained Ms. Zehm.
Mr. McNey added, it all depends on the money: “I think the biggest question is how long these forces that like living off fee-for-service and like living off the fact that we have a totally dysfunctional, bifurcated system can keep that going?”
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