sweet spot

As baseball teams across the country train for a new season, healthcare organ-izations are in training for a new system of value-based payment. Much oftheir efforts center on shifting from a value gap to a value potential, whichHFMA president and CEO Richard L. Clarke, DHA, FHFMA, describes as “astate in which improvements in the quality of care outpace the costs of care,where patients are engaged in improving their health, and where purchasersreap the benefits of improvements in value.”

But many organizations are struggling with the question of where to focus theirresources and efforts in improving the quality and cost of care.

The fact that most healthcare organizations are in the early stages of adoptingvalue-based competencies was corroborated by participants at HFMA’s mostrecent Thought Leadership Retreat, held this past October. An organization’sprogress toward a value-based business model often depends on its size: Ingeneral, larger organizations with greater resources are the most likely to havemade significant strides toward developing the competencies needed to suc-ceed under a value-based model, participants said.

“Although there is a lot of talk going on in the industry regarding ways toimprove quality and value, these discussions are taking place in silos,”Kenneth Fisher, associate vice president and CFO, University of IowaHealthcare, Iowa City, Iowa, said at the retreat. “We have to come together inthese discussions to develop the competencies needed to succeed under avalue-based business model.”

AT A GLANCE

Healthcare executives from three leading organizationsoffer these tips for driving sustainable improvements in value:> Focus on fewer initiatives, execute them, make surethat the results are sustainable—then move on.

> Ensure that both clinical and operational experts takepart in discussions on ways to improve value throughcare redesign and reengineering of processesthroughout the organization.

> Zero in on the elimination of adverse events throughevidence-based care for quick wins related to qualityand cost.

finding your organization’s sweetspots for cost management

84 MARCH 2012 healthcare financial management

CASE STUDIES

Jeni Williams

Hospitals across the country are seeking the right combination of evidence-based care, resources, technology, and staff to drive enhancedvalue. Here, three organizations share their innovative approaches forimproving quality of care while reducing costs.

Learn more about the role healthcare finance professionals can play in qualityimprovement—and view a graphic depicting Bellin Health’s project management charter—at www.hfma.org/hfm.

03_HFM_March_March 2/17/12 3:57 PM Page 84

How can healthcare organizations find their sweetspots in driving sustainable improvements in thequality and cost of care—while making the most ofthe resources available to them? Here, three inno-vative healthcare organizations of various size,type, and location share examples of ways they areclosing the “value gap” in health care.

Bellin Health: Small IDS Focuses Energy onImproving Value“If you look at the ability of healthcare organizationsto successfully execute their strategies, you’ll findthat our on-base percentage is not very high,” saysPete Knox, executive vice president and chief learn-ing and innovation officer for Bellin Health, a small,integrated delivery system (IDS) in Green Bay, Wis.“We’re woefully poor at execution; we fail to imple-ment about 70 percent of our strategies effectively. AtBellin Health, we strongly believe organizations needa business model that will help align their strategieswith the actions necessary to improve value.”

In 2003, when Bellin Health saw a sizable reductionin total volumes as measured by adjusted patient

days while costs escalated (see the exhibit below),the organization intensified its efforts to improvevalue by enhancing quality of care while reducingcosts and driving out waste and inefficienciesthroughout the system, says CFO Jim Dietsche.

In 2006, Bellin Health developed a process forprioritizing improvement initiatives within theorganization. Every 120 days, Bellin’s senior lead-ership team selects a handful of initiativesdesigned to improve quality of care and efficiency;engage staff, patients, and partners; grow revenueand market share; and drive out waste and ineffi-ciency. Then the system’s resources are focused onachieving these goals through initiatives that cas-cade down through individual service lines anddepartments throughout the next 120-day period.

“We focus all of our organizational support onmaking improvements in these select areasthroughout that 120-day cycle,” Dietsche says.“Every 120 days, we take another look at the tar-gets, using short-term measures and long-rangemeasures to gauge our progress. If the new

hfma.org MARCH 2012 85

GROWTH COMPARED WITH COST: BELLIN HEALTH

2003 2004 2005 2006 2007 2008 2009 2010

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

22.0%

24.0%

26.0%

28.0%

Adjusted Patient Days Cost to Produce

03_HFM_March_March 2/17/12 10:47 AM Page 85

processes that were implemented are hardwiredand we get the results we expected from a project,we determine that the project is complete andmove on to a new initiative. If the target for an ini-tiative has not yet been achieved—for instance, ifwe’ve experienced good results from the initiative,but the results are not sustainable—that projectmay undergo another 120-day cycle wherein wecan continue to devote organizational energytoward achieving the goals we’ve set.”

Bellin calls its model of aligning and deployingorganizational energy toward performanceimprovement its “high-performance healthcaremodel.” “We need to make tough choices when itcomes to performance improvement initiatives. Wecan’t do everything,” says Knox, who is also a seniorfellow for the Institute for Healthcare Improvementand author of The Business of Health Care.

“Every organization has a limited amount of energyand resources. Generally speaking, organizations

today are fortunate if they can dedicate 2 to 3 percentof their capacity toward improvement and innova-tion. So we have to make decisions: How do we usethat 2 to 3 percent of our capacity when we have over-whelming demands coming at us? It’s all aboutexecution: making decisions and aligning theorganization’s capacity with the actions that areneeded to achieve our mission and vision and strategy.”

The results include the following:>Bellin Health’s cancer service line is now able totreat patients within three days of diagnosis.(This process had taken three weeks to a month.)

>The health system has not had an incidence ofventilator-associated pneumonia in three years.

> The number of serious patient and employeesafety events has significantly decreased. (Inearly January, the organization had gone 268 dayswithout a serious patient safety event.)

>Bellin Health’s bond rating has improved from aBBB to an A status, and has been upgraded twicefrom 2006 to 2011 by two ratings agencies.

CASE STUDIES


PLAN FOR IMPROVEMENT MODEL: BELLIN HEALTH

ActionCycle

Innovation“Pool of Ideas”On Target or

Not PriorityHold

Current ProcessesReliable/Predictable/Safe

“Pool of Gaps”QualityControl

QualityImprovement

StrategicResults New

Performance

StrategicGoals

CurrentPerformance

Monitor

PriorityGate

QualityDesign

Portfolioof Priorities

Holdfor

Future

Spread Gate

Source: Pete Knox, Bellin Health.


“We’ve posted tremendous results in terms ofreducing cost and improving quality, and our uti-lization is lower than what is seen nationally,”Dietsche says. “And we’re receiving nationalrecognition for our efforts.”

The ultimate goal of Bellin’s high-performancecare model is to effect whole system change, ratherthan incremental change. “To achieve real results,an alignment has to occur within the organiza-tion,” Knox says. “Our high-performance caremodel creates a synergy within the organizationand the tremendous discipline and rhythm neededto focus our resources to improve and innovate at afaster rate.”

Avera: Multistate Rural Network DeliversVirtual ED/ICU Care One common challenge rural hospitals face is lim-ited access to physician specialists: Small townshave difficulty recruiting specialists; the cost ofsending specialists to rural locations for regularvisits—usually with a nurse or two in tow—adds upquickly; and not all specialists are willing to makethe drive.

It’s not uncommon for patients in small towns orrural communities to put off receiving more spe-cialized care until their health problems becomedifficult for them to manage on their own, which ispartly why rural Americans are more likely to suf-fer from chronic health conditions, heart prob-lems, or cancer (O’Toole, M., “Healthcare AccessLagging in Rural U.S.,” Reuters, July 27, 2011).

“Rural patients know that if they call an ambulancein the middle of the night, they’ll wake up theirneighbor who is an EMT, so instead, they get in thecar and drive to the nearest hospital, where theyarrive unannounced,” says Deanna Larson, vicepresident, quality initiatives and eCare for Avera,based in Sioux Falls, S.D.“Some rural areas arelucky to have more than one physician on staff, andsometimes the nurses who are working in hospi-tals late at night are the youngest on staff. Whenyou’re in an area where the next healthcare facilityis located 50 to 100 miles away, that puts a lot ofpressure on the physician and nurses who are

treating traumas, heart attacks, strokes, and othercritical conditions without the support of specialists.”

In 2002, Avera, a network of hospitals, family carepractices, and specialty clinics located in SouthDakota, Minnesota, Iowa, and Nebraska, began toaddress this problem through a telehealth initia-tive that allowed specialists in intensive care andemergency care to speak with physicians andnurses in rural hospitals at the point of care, provid-ing critical—and sometimes lifesaving—guidance.

“Telehealth allows us to take the medical expertiseof emergency department physicians, nurses, andspecialists and spread it across geography,” Larsonsays. “It enables faster access to more specializedcare and helps in avoiding unnecessary transfers toother medical facilities. When transfers areneeded, they are better transfers—patients aretaken to the facility where the right specialists areavailable to treat them, and they’ve received carethat helps prepare them for a transfer and that canaid in achieving better outcomes.”

Video consults are supported by special stetho-scopes, otoscopes, and examination cameras. Aphysician and a nurse are able to be accessed byvideo at all times through the push of a button inan ED room or inpatient room.

Today, Avera’s telehealth program includes theability for rural patients to access specialty consul-tations via two-way video from their family physi-cian’s office, with nearly 5,000 such consultsrecorded in FY11. A telepharmacy service also provides remote medication order review andapproval prior to the patient’s first dose.

Since Avera’s telehealth program was launched, theorganization has reduced length of stay by 25 per-cent both in its intensive care units (ICUs) and inother hospital units, Larson notes. She also saysmore than 19,000 ICU transfers have been avoidedin the past seven years, resulting in an estimated$30 million in savings to Avera. The avoidance ofserious safety events through use of this programalso improves quality of care while reducing riskand costs (see the exhibit on page 88).

CASE STUDIES



For rural hospitals, the program has resulted inimproved documentation, decreased recruitmentcosts, reduced medication errors, and improvedrevenue due to their enhanced ability to care forresidents in their communities. For payers, thebenefits include a reduction in unnecessary trans-fers to other facilities, decreased incidence ofduplicate diagnostic tests, and reduced travelexpenses for families of patients. For patients,benefits include improved health outcomes, fasterservice, and greater access to specialists.

“Thirty percent of patients claim they would notreceive services without e-consult. That’s a lot ofincome,” Larson says. “We believe telehealth willprobably be the next boom in health care, particu-larly in rural healthcare facilities.”

Partners HealthCare: Large AcademicHealth System Redesigns Care PlansIn October 2010, Partners HealthCare in Bostonundertook an ambitious initiative to redesign careplans for five clinical conditions throughout adefined episode of care. The goal: to improvepatient outcomes while reducing readmissions andutilization by 10 percent and unit costs by 5 percent.

Partners HealthCare targeted five clinical conditionsthat were frequently experienced among the healthsystem’s Medicare and commercial payer popula-tion, and then defined episodes of bundled carerelated to each of these care targets:

>Acute myocardial infarction (AMI [heartattack])—from three days prior to admissionthrough 30 days post-discharge

>Coronary artery bypass graft (CABG) procedure—from 30 days prior to admission to 180 days post-discharge

>Colon cancer—from biopsy with a positive cancerdiagnosis through 30 days post-colectomy

>Diabetes—for adult, nonpregnant patients withType 2 diabetes, one year of care managementfrom the date of service of the trigger/index claim (ICD-coded professional claim)

>Stroke—for ischemic stroke, from hospital arrivalto 45 days after arrival; for transient ischemicattack, from first medical presentation to 45 daysafter arrival

“One of the conditions—diabetes—is a chroniccondition. The other target areas are acute ill-nesses or procedures that involve an inpatient stay;for these conditions, we asked the teams to designa care plan that included care after discharge dur-ing the recovery period,” says Elizabeth Mort, MD,senior medical director for Partners and vice pres-ident, quality and safety for Massachusetts GeneralHospital.

“We’d worked to improve quality in each of theseclinical areas in the past,” Mort says. “Our focus hadbeen on achieving process improvements, such asimproving door-to-balloon time for patients withmyocardial infarction. Now, we’ve added the chal-lenge of cost reduction and extended our work fromthe inpatient setting to longer, defined episodes ofcare. In doing so, our goal is to improve value byenhancing quality of care, reducing adverse events,and pulling waste out of the system. This work wasdesigned to prepare us for care delivery as we movefrom unfettered fee-for-service payment systems tosystems in which providers take more financial risk.”

Condition-specific teams of clinicians focused onredesigning care in each of the target areas bydeveloping a new process-of-care map for eacharea. “For each condition, we gave the teams datarelated to how much money we were spending onthese patients in a year, with the data sorted by areaof expense,” Mort says. “For example, we used a

AVOIDANCE OF SERIOUS SAFETY EVENTS BY TYPE,

AVERA HEALTH, APRIL 1, 2010-APRIL 30, 2011

CASE STUDIES


Dosing Issues50%

Anticoagulation Issues 26%

Allergy Issues11%

Drug/Drug Interaction4%

InappropriateAbbreviation

6%TherapeuticDuplication

Avoided 3%

03_HFM_March_March 2/17/12 3:57 PM Page 88

tool to review our commercial claims data for ourdiabetes population—which consisted of about4,000 patients—and looked at how much moneywas spent on these patients for medications, inpa-tient care, office visits, diagnostic tests, and morein a single year. For conditions that required ahospital stay, the largest area of expense was inpa-tient care. For a population of patients with dia-betes, the highest area of expense for a yearlongperiod was related to drugs, by far.”

The teams narrowed the patient population foreach condition—for example, in the area of dia-betes, focusing on adult patients with Type 2 dia-betes, and for stroke, focusing on ischemic strokeand transient ischemic attack—and then defined atime period deemed appropriate for managing thecondition and the processes of care that shouldoccur during that period. In doing so, the teamsalso looked at ways to improve value by developingplans that ensured all evidence-based care wasdelivered to increase the chances of achieving thebest clinical outcomes while avoiding adverseevents. The teams also identified their metrics forreporting to Partners’ senior leadership team.“The metric piece is really important: It gives ussome indication of whether the processes beingadhered to are resulting in improved value andgives clinicians and managers a tool to guideprogress and hold parties accountable for performance,” Mort says.

The exhibit below depicts some of the recommen-dations made by Partners’ diabetes care redesign

team. For example, the team estimated that bymoving 30 percent of diabetes patients from allbrand-name medications to generic medications,millions of dollars in pharmacy savings could beachieved. Partners’ stroke care redesign teamdetermined that there are significant opportunitiesto avoid costs related to unnecessary admissions forlow-risk patients with transient ischemic attacks.Its AMI team is working toward reducing unwar-ranted variation in cardiac catheterization lab pro-cedures, echocardiograms, and use of intensivecare beds for low-risk patients. The team estimatedthat readmissions after an AMI could be reduced ifPartners’ hospitals were to shore up the dischargeprocess by providing closer follow-up withpatients, including post-discharge phone calls anda clinician visit within a week after discharge.

It’s too early to determine the total savings thehealth system has achieved through this effort, Mortsays, but “we’ve made a lot of progress in just over ayear. We’re working incredibly hard, and it’s exhila-rating, but also challenging. We’re making goodprogress in getting decision support embedded inour electronic medical records to remind physicians to use generics when possible, and we’vepiloted a transient ischemic attack clinic with verypromising results. The metrics in our value dash-board are getting the attention of senior managersand clinical leaders across the system, and our pay-ment system has evolved over the past year.

“We’re investing in the resources needed to besuccessful in a population health management world,

REDESIGNING DIABETES CARE AT PARTNERS HEALTHCARE

CASE STUDIES


Team’s Recommendation

In accordance with established treatment guidelines,patients who are unable to achieve glycemic controlon two or more oral agents should be moved to insulin;patients and physicians should have access toresources to facilitate insulin initiation and ongoing use.

Improved Value

> Cost: If Partners were to move 30% of patientsfrom all brand-name meds to generics, pharmacysavings could reach multiple millions.

> Outcome: Improvement of HbA1c scores by 1%; reduced risk of microvascular adverse events(kidney and eye) by 35% and of macrovascularevents by about 20%.

Patient-Centered Medical Home

> Care is proactively managed with decision support and clinical registries. > Nonphysicians and electronic communication provide more flexible access points for patients .


which will require improved care coordination,registry management, and increased emphasis onworking with our high-risk populations to improvevalue,” she says.

Lessons LearnedThere are a number of lessons learned that couldbe applied by other healthcare organizations todrive sustainable improvements in value.

Start small. “Focus on fewer initiatives, executethem, make sure that the results are sustainable,

and then move on to the next initiative to improvevalue,” says Dietsche of Bellin Health. “The prob-lem that many organizations face is that they havemultiple projects going on at the same time, and atsome point, it becomes difficult to determinewhere to allocate resources. It’s better to focus onthree or four initiatives related to improving valueat a time so that the organization doesn’t run intoconstraints related to IT capabilities, resources, orcapital. Focus on a few things, do them very well,and move on to the next project.”

Focus on reducing adverse events for significant wins.“You can hit the sweet spot in improving value bymaking sure you are avoiding adverse eventsthrough the implementation of evidence-basedcare practices,” Mort says. “For example, theoccurrence of a blood stream infection in the ICUwill increase a patient’s length of stay and increasethe cost of caring for that patient by up to $45,000.When evidence-based protocols are followed toprevent adverse events such as this, patients arehealthier and costs are reduced.”

Ensure that both clinical and operational experts takepart in discussions on ways to improve value throughcare redesign, reengineering of processes, and more.“It’s really important that when you design an ini-tiative such as (care redesign), you have the rightdisciplines at the table—not just clinical experts,but also operational experts—helping to thinkabout the implementing of plans from the get-go,”Mort says. For example, some of the biggest chal-lenges Partners HealthCare has faced in imple-menting its care redesign initiative have beenrelated to its ability to manage care costs continu-ally across the continuum of care, to manage reg-istry of patients (i.e., to track patients in the targetareas and maintain their information within adatabase), and to ensure availability of accuratedata related to cost and utilization. These areinstances where involvement from IT and health-care finance can make a difference in the long-term success of an initiative—and hit home runsrelated to value.

Jeni Williams is associate managing editor in HFMA’s Westchester, Ill., office.Revenue Cycle Management Health Information Management ASP Hosting

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