'Somewhere in between': Finding the balance between quality and the bottom line

As healthcare continues its shift from fee-for-service to value-based care, hospitals and health systems are working steadily to try and improve quality while reducing costs. However, striking a balance between the two can be challenging.

At the Becker's Hospital Review 5th Annual CEO + CFO Roundtable on Nov. 8 in Chicago, healthcare experts discussed how their entities balance rewarding physicians for quality and clinical activity in what is still primarily a fee-for-service environment.

"We're not totally in a fee-for-service environment. We're not totally in a value-based care environment. We're kind of somewhere in between," said Patrice M. Weiss, MD, executive vice president and CMO of Roanoke, Va.-headquartered Carilion Clinic. "In the past, the two were felt to be mutually exclusive, but recent models of care have demonstrated that quality of care can be delivered in a low-cost model."

While the shift from fee-for-service to value-based care is slightly slower in coming to her organization's region, they are preparing, according to Dr. Weiss.

Carilion is a nonprofit organization with a network of hospitals, primary and specialty physician practices and other complementary services. The health system offers physicians a base salary, as well as a Tier 1 bonus and a Tier 2 bonus. The Tier 1 bonus is based on scorecard measures, which include quality metrics, patient experience metrics and operating margin.

"We have found we've been able to reduce the cost by using evidence-based medicine, standardization of care and appropriateness of testing and imaging," Dr. Weiss said. "This reduced utilization has not reduced the quality of care or outcomes but has reduced the cost of care, thereby positively affecting our operating margin. So improving quality care and reducing the cost of care are not mutually exclusive."

Physician-led, cost-reducing initiatives and physician engagement have been primary drivers in achieving reduced costs and improved quality, according to Dr. Weiss. For instance, Carilion has a significant physician-led initiative on early elective inductions or deliveries. This initiative, which was based on national guidelines, resulted in less utilization of obstetrical resources at an earlier gestational age.

Carilion also looked at its appropriateness of surgical interventions in charity care patients and made sure all nonsurgical means be utilized first prior to proceeding to more complex methods.

Rick Sheff, MD, principal and CMO of healthcare firm The Greeley Company, which offers solutions through consulting, education, interim staffing, credentialing management and external peer review, also discussed strategies to achieve higher quality and lower cost simultaneously.

"We're just playing on the edge of revenue and quality," said Dr. Sheff, "We start saying: 'If we're too good on quality than we might cut into revenue,' and there's some truth to that in a fee-for-service world. That's why the whole paradigm shift to population health management is such a big deal and how and when we make that shift."

To help navigate this shift, Dr. Sheff recommended service line co-management, where physicians are engaged in a collaborative effort of joint responsibility.

But, Dr. Weiss noted, a hospital or health system's ability to engage in these discussions and processes is highly dependent on the organization's culture.

"We found our physician-led culture, through buy-in from peers, has been facilitated. But you have to know your own culture. Are you ready for evolution, or are you ready for revolution?" she said.


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