The Healthcare Financial Management Association have made urgent calls for healthcare systems to ditch fee-for-service payment in favour of value based models. David Hammer, a principal in Healthcare Performance Management Consultants' revenue cycle and managed-care practice in Fort Lauderdale, Fl, told attendees on the conference's opening day in response "We can't afford not to make the change".
At the annual conference set in Las Vegas, this is a topic which has been coming up for years. However, conversations this year seemed to reach breaking point. Healthcare costs are demonstratively unsustainable and the changes which need to come are being voiced now presenters echoed.
Speakers acknowledged the real fears about taking the leap. Margins are reportedly already tightly squeezed and that it's hard to agree to an albeit, temporary decrease in revenue.
"Honestly, there is too much fear. They're not clear on how they're going to make money. And that's why the bundled-payment programs are voluntary today."
Christer Johnson, health analytics advisory leader with Ernst & Young
Nonetheless, the resounding theme of this year's HFMA conference: It's time to bite the bullet. HFMA President Joseph Fifer in his June keynote speech urged a forging ahead into a value-based model despite a recent study by Leavitt Partners and McManis Consulting found models didn't lower the total cost of care. The findings stated a lack of incentive in the programs which in turn presents a little downside risk but with little chance of lowering the cost of care.
"If you invest, you're part of the solution, even if your fee-for-service revenue goes down. But if you don't invest, someone else will. And the revenue could still go down."
Joseph Fifer, President HFMA
A CFO will also formulate a value-based payment arrangement that fits within his/her specific healthcare systems and the market pricing. Perhaps that's why discussions about such programs can begin to sound nebulous, like when you've seen one, you've seen one. The chief financial officers of the future have a different mindset, he said. They're willing to implement payment models that truly share the risk and use metrics to assess the return on investment.
Healthcare systems and levels of adoption
Only a small portion of replacement surgery are performed on commercially insured patients are hospitals are paid for in bundles, or a gifted lump sum regardless of whether the total cost exceeds that amount.
"Working with those government bundles really caused us to re-examine what we were doing and take a whole new approach—not being so laser-focused on what's going on within the four walls of our own hospital and looking at what we're doing for patients before they come to the hospital and then after discharge," stated one hospital official.
Healthcare system's that aren't enrolled in the CMS program have adopted some of the hospital value-based strategies, such as using case managers to ensure that patients will get the valuable care they're looking for once they've left the hospital.
Using data to lower the cost of care
One thing which became clear at the conference, similar to several of our other articles (Future of Healthcare, 2018 & Who 'runs' the healthcare of the future?), the transformation will come from strong data analytics. Whereas data is commonly used today to examine single procedures of care, health systems will need to leverage this data in a value-based way.
HFMA, in partnership with Kaufman Hall created the Financial Analytics Leadership Council, a group which will host a series of programs designed to help healthcare systems use data, coming early 2019. The retail and telecom industries have used machine learning with big data to influence consumer behaviour.
"In other industries, when you influence behaviour, you're influencing to make a sale, and you can directly increase your revenue and benefit. In healthcare, when you do the things we're talking about today, you're reducing your revenue."
Data can help lower the cost of care through identifying outlier physicians with respect to their cost. At one Western healthcare system, Johnson ran the numbers and found that across 20 hospitals, their joint replacement costs varied by 400%. He declined to identify the system.
"Economics just don't allow the high prices of the past, I think," Fleming said.
Cedars-Sinai Medical Center in Los Angeles has a similar practice of using big data to identify low-value services being delivered at high rates to low-risk patients, Dr. Scott Weingarten, the hospital's chief clinical transformation officer, told conference attendees Tuesday. In doing so, for example, the system pinpointed one physician out of 47 peers who was accountable for 62% of the potentially inappropriate Pap smears that had been flagged. It also found a physician who had ordered six Lyme disease tests in a three-day period, despite the fact that Los Angeles County has had only one confirmed case in recent years, he said.
"A lot of the things we've been working on for operational efficiency are very, very important, but we're unlikely to significantly bend the cost curve if we don't focus on physician decisions."
Dr. Scott Weingarten, Cedars-Sinai Medical Center, L.A