HIT: Hospitals must focus on value not volume, the ACO can help
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Recently Dean, a 100-year old physician group, turned itself into one of the largest integrated healthcare delivery systems in the Midwest and is now a representation of a present day ACO, he said.
Six years ago, Dean was in a “schizophrenic” state, said Samitt. Dean, which then had one foot in the volume world and one in the value world, decided to focus their efforts on value.
They had three options to navigate out of the state of “schizophrenia,” which occurred because 50 percent of its patients were on Medicare or were other fee-for-service payors, offered Samitt.
The three options Dean weighed were:
- To practice in the volume-base world whose focus is on specialty dominant care, hospitalizations, testing, imaging and readmissions;
- To practice in the value-based world which is exactly the opposite and is focused on primary care and avoiding sub-specialty care—avoiding rehospitalizations, testing and instead focusing on wellness and prevention; or
- Having physicians look at insurance cards and base care around the services covered.
“We [were absolutely sure we weren't] going to go with the last option,” said Samitt. "We picked value and chose to make sacrifices in terms of financials." Samitt said they saw a tremendous decrease in revenue from volume-based payors after the model changed, but they more than made up for it on the value side.
“If you are a volume-based organization and depend intently on revenue and rely heavily on volume, how can you possibly step into an ACO-value-based world when you are going to compromise your revenue?” Samitt offered.
Because the staff at Dean realized that it was not focusing enough on patient service, the system moved toward focusing on value, Samitt said.
“Technical competence alone is no longer sufficient to attract and retain patients,” he said.
The U.S. healthcare system offers low quality at high costs,” said Samitt. “We pay for volume, we pay for mistakes and we pay for readmissions.
“ACOs are very simply managed care all over again and we should take the opportunity to do it right this time,” he noted.
How do hospitals reduce costs and increase quality?
Most hospitals, Samitt said, are reluctant to move toward a value-based system because they are not rewarded; however, Dean Healthcare decided to deal with the upfront financial losses to move to a more quality-based approach.
To do so, Dean aligned a strategic plan where CEOs of physicians' offices, hospitals and health plans meet three to four times a week to talk about how to deliver quality care at a lower cost. In addition, Dean began to focus on rehab and prevention, worked together to drive change and invested heavily in comparing internal outcomes and quality data with national benchmarks.
“We also invested in innovation, technology and clinical analysis with an intensified focus on understanding the drivers of problems and creating out of the box solutions,” said Samitt.
In addition to the aforementioned tactics, by moving toward an integrated delivery system, Dean focused on:
- Improving quality and service by focusing on innovation;
- Creating better patient satisfaction by involving patients in the care process: Dean integrated medical home management and created a shared decision-making module for patients to understand risks/benefits; and
- Unbundling payments rather than bundling ACO payments: When dollars come in bundled payments, it is difficult to decide how to divide payment between the hospital and doctors or the specialists versus primary care physicians. There must be a gain sharing type model.
“We are moving away from a production-based compensation model and moving toward value-based incentives—growth, services, efficiency, quality,” said Samitt.
“We need to take other hospitals off the treadmill engine that is driving volume and move them toward value,” he concluded.