The pending implementation of CMS’s Final Rule for the Comprehensive Care of Joint Replacement (CJR) model will force business model change on at least a portion of the healthcare delivery universe. Unlike the Bundled Payments for Care Improvement (BPCI) programs currently underway, there is no opt-out clause for CJR model participants. Consequently, the need for up-front planning and preparation, both internally and in guiding and formulating collaborative efforts with downstream provider partners, will be critical.
By paying hospitals a fixed target price per hip or knee replacement episode that extends for 90 days post-discharge, CMS is expecting to realize Medicare savings of $343 million over the five performance years of the CJR model. Given that lower extremity joint replacements are only one of a broader array of expensive and common procedures, the fast approaching launch of the CJR model is merely a precursor to what will be a much greater emphasis on the need for closer and more strategically aligned collaboration between hospitals and post-acute care providers in the years to come. As industry momentum toward bundled payments, at-risk contracting and population health continues to build, the need to collaborate with downstream providers will grow in tandem.
What will it take to establish successful collaborative relationships in this new environment? Hospital executives should focus on four fundamental questions:
1) As we seek to develop relationships with potential post-acute partners, have we taken the steps necessary to establish ourselves as a partner of choice?
2) Have we performed the necessary due diligence to identify partners that align with our cost and quality goals?
3) Do we have the knowledge and skills required to negotiate successful partnership agreements?
4) Do we have the systems, reporting tools and infrastructure required to measure the ongoing costs and quality of the partnership, adjudicate issues, and make course corrections, as needed?
Partner of choice
A post-acute partner will have a greater incentive to affiliate with hospitals that already have a strong reputation for care quality and cost management as well as care management systems and processes that support its ability to operate cost effectively. Potential partners will be more inclined to establish gainsharing relationships with hospitals that have the ability to deliver quality care below the regional average cost, thereby ensuring that there is actual gain to be shared! They will also have a stronger propensity to partner with hospitals with demonstrated ability to begin post-acute care planning as early in the process as possible and, in the case of the CJR model, already employing tactics such as fast-track care pathways for fracture patients.
Partner identification
Hospital executives will focus on cultivating relationships with post-acute partners who do their part to ensure that the cost and quality of the episode of care across the continuum results in an upside payout at the end of the year. This will require a solid understanding of a potential partner’s cost, quality and LOS performance. Beyond the hard data, hospitals will want to understand an organization’s philosophy and commitment to quality improvement, care delivery innovation, patient satisfaction and cost management. While hospitals might already have some impressions about their current post-acute partners, they will need to evaluate potential partners more objectively and thoroughly going forward, because their own margins will be at stake.
Partner selection and expectations negotiation
Hospitals will increasingly need to structure and negotiate new types of contractual and service level agreements with target partners, encompassing both cost and mutually agreed-upon quality metrics. The focus of these negotiations needs to include both outcomes and the processes and shared governance mechanisms required to improve care pathways and adjudicate payer and patient issues. While some hospitals might already have adequate resources in place to take on broadened negotiation activities, others will need to expand resources in this area and should look to other industries where the importance of strong alliances with upstream and downstream partners is the norm.
Performance monitoring
At the end of the day, partnerships are only as good as the results they produce. For the CJR model and other similar bundled payment models, a strong data analytics infrastructure is essential, as are processes that allow for efficient monitoring of for cost and quality outliers. CMS has indicated it will provide raw claims or summary data to participants, but it will be incumbent on the providers to request this data and turn it into actionable insights that inform quality improvement and cost reduction opportunities. Hospitals lacking a strong data analytics infrastructure will need to be prepared to make investments to manage and analyze data from across the care continuum.
These are exciting times and, with the impending launch of the CJR Model, CMS has signaled that the momentum towards models where bundled payments, at risk contracting and population health are the norm is starting to heat up. Those that fail to adequately invest in building strong collaborative partnerships across the care continuum are doing so at their own peril.
About the authors
Michael N. Abrams, MA is Managing Partner, and Gordon Phillips, is a Consultant 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.
