The Evolving Value-Based World: Why Improving Clinical Care Will Optimize Future Reimbursements

In an Oct. 15 webinar hosted by Becker's Hospital Review, several executives with MedAssets — Executive Vice President and CMO Nick Sears, MD, Senior Vice President of Lean Healthcare Consulting Dave Munch, MD, and Vice President of Reimbursement Strategies and Analytics Mah-Jabeen Soobader, PhD — covered how revenue enhancement, resource management and physician alignment will change in the shift to value-based care.


Dr. Sears opened by briefly discussing the unprecedented change in healthcare, and how in order to survive, providers must begin to transform their business models.

He noted the Patient Protection and Affordable Care Act will lead to higher utilization of care, which is a net positive. However, the combination of declining Medicare reimbursements and the influx of 25 million newly insured patients present significant challenges for keeping healthcare providers and systems profitable.

Value-based care and reimbursement

Dr. Sears pointed out that the definition of value-based care is still evolving and it is doing so on a market by market basis. In addition, new models of care delivery, such as accountable care organizations and medical homes, are still being defined and evaluated not only for their outcomes, but also for what payment for these models should be.

The key to achieving success in value-based healthcare, Dr. Sears said, will be developing and implementing tools to manage and interpret the large amounts of data coming out of the healthcare system and using that data to help provide transparency. Good data management providing access to relevant performance insight is a crucial tool to integrating care, moving toward value-based payments and identifying features of excellent care on which to base blueprints for all care delivery.

Physician-Hospital Alignment in an Episode of Care

Dr. Soobader addressed the importance of physician-hospital alignment in revenue management. "Without this union, all other strategies fall flat. Organizational culture enables strategy execution," she said, indicating excellent physician-hospital alignment has the potential to drive down supply costs and achieve optimal resource utilization. A critical element of implementing bundled payments includes identifying high-performing care providers to partner with as key change agents.

Decreasing those costs through physician alignment requires both improved performance and clinical outcomes through the standardization of evidence-based pathways and protocols to eliminate diagnostic and treatment variability. In addition, identifying care improvement opportunities demands a system of benchmarking within organizations. Dr. Soobader suggested a successful benchmarking strategy is identifying and modeling practices of "gold standard physicians" — individuals who truly demonstrate the provision of high-quality care at the lowest cost possible. "This will also assist hospitals in building systems of coordinated care," said Dr. Soobader

To decrease care variation, organizations must define episodes of care. Furthermore, they must consider which services and preventive solutions are clinically relevant and where clinical risk is greater than financial risk. Inclusion and exclusion criteria can contribute up to 30% of financial risk for a given episode definition. While current industry episodes of care are condition-specific, Dr. Soobader also highlighted the application of episodes of care for many chronic conditions with the integration of multiple related conditions. Chronic Care is major cost driver of healthcare spending in the United States, with beneficiaries that have multiple conditions contributing cost of up to 3 times more than their counterparts with a single chronic condition.

Lean in a value-based environment

Dr. Munch discussed how improving the efficiency of care process ultimately leads to better patient outcomes and lower costs. "It's about making the right work easier to do," he said. "We have to develop standards of care by assessing workflows, identifying inefficiencies and eliminating those inefficiencies. We must separate value-added from non-value-added processes."

He emphasized that hospitals and health systems must have a baseline level of care variation and benchmarking, so when something goes wrong the problem is easily identifiable and can be acted upon as soon as possible. "You cannot define the abnormal until you define the normal," he said.

To define the normal, it's important to identify common areas in which waste occurs, Dr. Munch said. Different types of waste include having to repeat a process, having to do too much to complete a process, waiting, unclear events or instructions, unnecessary or excessive transportation, incorrect inventory, motion of people and excess processing.

Once these problems — and potentially others — are identified, hospitals can examine possible solutions. Any action taken to correct these problems should be measured to assess waste-reduction progress.

While the PPACA may present difficulties, it also offers a valuable opportunity for hospitals and physicians to partner, according to the MedAssets panel. By finding common ground and a shared purpose, health systems can build value-creating and waste-reducing partnerships with their clinicians.

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