Posts Tagged ‘case rates’

3 Factors Driving Healthcare’s Transition from Volume to Value

December 9th, 2014 by Patricia Donovan

Long term, the healthcare industry’s well-documented transition from a value-based system to one that rewards value will ultimately promote consolidation in the industry, putting some companies out of business while making consumers more accountable for their care, predicted Steven Valentine, president of The Camden Group, during HIN’s eleventh annual healthcare trends forecast.

But how rapidly will the market complete this transformation? Valentine shares three factors that will impact the change.

People always say how fast our market will change. There are three factors to consider as the market transitions from volume to value.

The first is the time frame for the transition. Driving the time frame are concerns such as competitors’ activities, payor payment models (capitation, shared savings, case rates). What is going on in payor models that will help move the market? Another driver is managed care penetration. Some parts across the country have little to no managed care penetration. Those will be areas with lower change in terms of that market.

The second factor is the delivery system change. Impacting this is the physician-hospital economic alignment. We look for contiguous geography. A hopscotch strategy doesn’t work very well for transitioning the market. We look at the integration along the continuum, starting with doctors through a minimum, then the ambulatory and acute area. Our belief is that this year, post-acute begins to show up. We see most of the money that can be made in bundled payment really comes from a longer period of time to be at risk: 90 to 120 days. We find it in the post-acute care arena to save the money. Other drivers for change in the delivery system include the use of population health tools (PCMH, ACOs and chronic care centers), as well as clinical integration.

Finally, we look at the payment system—incentives, pay for performance, shared savings—any value-based purchasing programs put in place. You will need to take risks. Organizations that take risks, especially well organized medical groups, will help to drive a market and the transition to value much more quickly.

healthcare trends 2015
Steven T. Valentine, MPA, is president of The Camden Group, a national healthcare management consulting company. With more than 35 years of healthcare consulting experience, he has considerable expertise in the areas of strategic planning, business transactions, mergers, hospital-physician relationships, and financial analysis.

Source: Healthcare Trends & Forecasts in 2015: Performance Expectations for the Healthcare Industry

Which Value-Based Reimbursement Model Will Ultimately Align Physicians?

February 24th, 2014 by Patricia Donovan


Move over, ACO: a new payment model in town “has an excellent chance of coalescing value around a single model,” according to Greg Mertz, MBA, FACMPE, managing director of Physician Strategies Group, LLC.

It’s not yet law, but the federal Better Care, Lower Cost Act introduced last month circumvents the ACO’s attribution model, which Mertz describes as “loosey-goosey,” and targets the sickest and highest cost patients, who are also eligible for financial incentives if they play by the act’s health management rules. In Mertz’s eyes, the ACO has a limited life span.

Touching briefly on the proposed legislation, Mertz all but left the accountable care organization off his list of six value-based physician compensation models explored during Physician Alignment: Which Model Is Right for You? workshop sponsored by the Healthcare Intelligence Network — except as a footnote under Population Management, a model Mertz described as still evolving.

And while three-quarters of healthcare leaders agree that quality is driving the need for alignment around a preferred reimbursement model, the simple presence of physicians in a hospital does not translate to alignment.

Instead, the financial catnip of incentives will draw physicians to collaborative efforts, he said. Mertz moved workshop participants along a “collaborative continuum” of alignment from an environment of “mutual toleration”—the state of many two- to four-doctor practices today where planning can be challenging—to Population Management, a model he termed “the least defined, most questionable of the value models right now.”

In all, Mertz explored the following six models:

  • Process Improvement
  • Physician-Hospital Organization (PHO)
  • Shared Savings
  • Case Pricing/Bundled Payments
  • Co-Management
  • Population Management

Engaging physicians in process improvement efforts is a first step toward much larger things, Mertz noted. “If you can’t get doctors to collaborate over something like standard orders, surgical trays or discharge orders, you’re going to be hard-pressed to move up the continuum toward any other kind of value models.”

Shared savings, a term nearly synonymous with kickbacks until a few years ago, now aligns with the government’s goal of reducing costs, Mertz noted, although it can be complex to implement. High cost service lines like orthopedics are good contenders, he added.

Case pricing and bundled payment models have great potential, while population management requires large numbers of physicians and patients. Many questions still surround population management, including the idea model to employ (Medicare’s ACO or a commercial payor’s), the best quality metrics to measure, and the likely short- and long-term benefits.

To guide workshop participants, Mertz presented examples of a small rural hospital, a competitive community hospital, and a large health system, outlining the challenges, likely realities and possible reimbursement models for each.

Regardless of an organization’s size, to foster alignment, healthcare companies should focus on education, engagement and fostering good citizenship among physicians, Mertz said, defining this last concept as being an active participant in organizational efforts.

“Help [physicians] develop the skills and ability to interact with their peers. Just because they have an MD or a DO after their name, doesn’t mean they know how to do that.”

Those efforts will pay dividends, he notes—including the kind that could eventually end up in physicians’ pockets.

Click here for an extended interview with Greg Mertz on the future of accountable care organizations.